Document:

Exhibit 10.37
                          EXECUTIVE SEVERANCE AGREEMENT

Steven L. Gish                                             Executive
12707 S.W. 59th Circle
Portland, Oregon 97219

Regent Assisted Living, Inc.                               Company
An Oregon corporation
121 S.W. Morrison St., Suite 1000
Portland, Oregon  97204

Date:  September 19, 2001.

         The Company considers the establishment and maintenance of a sound and
vital management to be essential to protecting and enhancing the best interests
of Company and its stakeholders. In this connection, Company recognizes that, as
is the case with many publicly held corporations, the possibility of a change of
control may exist and that such possibility, and the uncertainty and questions
which it may raise among management, may result in the departure or distraction
of management personnel to the detriment of Company and its shareholders. In
order to induce Executive to remain employed by Company in the face of
uncertainties about the long-term strategies of Company and a possible change of
control of Company and their potential impact on Executive's position with
Company, this Executive Severance Agreement ("Agreement"), which has been
approved by the Board of Directors of Company, sets forth the severance benefits
that Company will provide to Executive in the event Executive's employment by
Company is terminated under the circumstances described in this Agreement.

         1. Employment Relationship. Executive is currently employed by Company
as Chief Financial Officer and Treasurer. Executive and Company acknowledge that
either party may terminate this employment relationship at any time and for any
or no reason, subject to the obligation of Company to provide the severance
benefits specified in this Agreement in accordance with the terms hereof.

         2. Release of Claims. In consideration for and as a condition precedent
to receiving the severance benefits outlined in this Agreement, Executive agrees
to execute a Release of Claims in the appropriate form attached as Exhibit A
("Release of Claims"). Executive promises to execute and deliver the Release of
Claims to Company within the later of (a) 45 days from the date Executive
receives the Release of Claims or (b) the last day of Executive's active
employment.

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         3. Compensation Upon Termination. In the event of a Termination of
Executive's Employment (as defined in Section 6.1) at any time other than for
Cause (as defined in Section 6.2 of this Agreement), death or Disability (as
defined in Section 6.4 of this Agreement), or within 12 months following a
Change of Control or prior to a Change of Control at the direction of a person
who has entered into an agreement with Company, the consummation of which will
constitute a Change of Control, and contingent upon Executive's execution of the
Release of Claims and compliance with Section 9, Executive shall be entitled to
the following benefits:

                  3.1 Base Amount. As severance pay and in lieu of any other
compensation for periods subsequent to the date of termination, Company shall
pay Executive, in a single payment after employment has terminated and eight
days have passed following execution of the Release of Claims without
revocation, an amount in cash equal to one year of Executive's annual base pay
at the rate in effect immediately prior to the date of termination.

                  3.2 Health Insurance. Executive is entitled to extend coverage
under any group health plan in which Executive and Executive's dependents are
enrolled at the time of termination of employment for an 18-month period.
Company will pay Executive a lump sum payment in an amount equivalent to the
cost to extend such coverage for a period of 18 months, based on the then
current rates for COBRA employee only group health and dental coverage under the
Company's group health plan in effect at the time of termination. Executive may
use this payment, as well as any payment made under Section 3.1, for such
continuation coverage or for any other purpose.

                  3.3 Stock Options and Stock Awards. All outstanding stock
options, restricted stock, stock bonuses or other stock awards shall be governed
by the terms of the applicable agreement or plan.

         4. Tax Withholding; Subsequent Employment.

                  4.1 All payments provided for in this Agreement are subject to
applicable tax withholding obligations imposed by federal, state and local laws
and regulations.

                  4.2 The amount of any payment provided for in this Agreement
shall not be reduced, offset or subject to recovery by Company by reason of any
compensation earned by Executive as the result of employment by another employer
after termination.

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          5. Other Agreements. In the event that severance benefits are payable
to Executive under any other agreement with Company in effect at the time of
termination (including but not limited to any employment agreement, but
excluding for this purpose any stock option agreement or stock bonus agreement
that may provide for accelerated vesting or related benefits upon the occurrence
of a change in control), the benefits provided in this Agreement shall not be
payable to Executive. Executive may, however, elect to receive all of the
benefits provided for in this Agreement in lieu of all of the benefits provided
in all such other agreements. Any such election shall be made with respect to
the agreements as a whole, and Executive cannot select some benefits from one
agreement and other benefits from this Agreement.

         6.       Definitions.

                  6.1 Termination of Executive's Employment. Termination of
Executive's Employment means that Company has terminated Executive's employment
with Company (including any subsidiary of Company). For purposes of Section 3,
if Executive is assigned additional or different titles, tasks or
responsibilities from those currently held or assigned, consistent with
Executive's areas of professional expertise and with no decrease in annual base
compensation, whether at Company or any subsidiary of Company, such
circumstances shall not constitute a Termination of Executive's Employment. For
purposes of Section 3, Termination of Executive's Employment shall include
termination by Executive, within 12 months of a Change of Control, by written
notice to Company referring to the applicable paragraph of Section 6.1, for
"Good Reason" based on:

                           (A) the assignment to Executive of a different title,
                  job or responsibilities that results in a decrease in the
                  level of responsibility of Executive with respect to the
                  surviving company after the Change of Control when compared to
                  Executive's level of responsibility for Company' operations
                  prior to the Change of Control; provided that Good Reason
                  shall not exist if Executive continues to have the same or a
                  greater general level of responsibility for the former Company
                  operations after the Change of Control as Executive had prior
                  to the Change of Control even if the former Company operations
                  are a subsidiary or division of the surviving company;

                           (B) a reduction by Company or the surviving company
                  in Executive's base pay as in effect immediately prior to the
                  Change of Control;

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                           (C) a significant reduction by Company or the
                  surviving company in total benefits available to Executive
                  under cash incentive, stock incentive and other employee
                  benefit plans after the Change of Control compared to the
                  total package of such benefits as in effect prior to the
                  Change of Control;

                           (D) Company or the surviving company requires
                  Executive to be based more than 20 miles from where
                  Executive's office is located immediately prior to the Change
                  of Control except for required travel on company business to
                  an extent substantially consistent with the business travel
                  obligations which Executive undertook on behalf of Company
                  prior to the Change of Control; or

                           (E) the failure by Company to obtain from any
                  successor (whether direct or indirect, by purchase, merger,
                  consolidation or otherwise) to all or substantially all of the
                  business and/or assets of Company ("Successor") the assent to
                  this Agreement contemplated by Section 7 hereof.

                           6.2 Cause. Termination of Executive's Employment for
         "Cause" shall mean termination upon (a) the willful and continued
         failure by Executive to perform substantially Executive's reasonably
         assigned duties with Company (other than any such failure resulting
         from Executive's incapacity due to physical or mental illness) after a
         demand for substantial performance is delivered to Executive by the
         Board, the Chief Executive Officer or the President of Company which
         specifically identifies the manner in which the Board or Company
         believes that Executive has not substantially performed Executive's
         duties, (b) any misappropriation of funds or property of the Company by
         Executive, (c) the conviction of or plea of guilty or nolo contendere
         by Executive of a felony or of any crime involving moral turpitude, (d)
         Executive's engagement in illegal or immoral conduct tending to place
         Executive or the Company, by association with Executive, in disrepute,
         (e) indulgence in alcohol or drugs to an extent that renders Executive
         generally unable or unfit to perform his duties hereunder, (f)
         Executive's gross dereliction of duty, or (g) any act or omission that
         constitutes a material breach by Executive of his obligations under
         this Agreement.

                  No act, or failure to act, on Executive's part shall be
         considered "willful" unless done, or omitted to be done, by Executive
         without reasonable belief that Executive's action or omission was in,
         or not opposed to, the best interests of Company. Any act, or failure
         to act, based upon authority given pursuant to a

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<PAGE>

         resolution duly adopted by the Board or based upon the advice of
         counsel for Company shall be conclusively presumed to be done, or
         omitted to be done, by Executive in the best interests of Company.

                  6.3 Change of Control. A Change of Control shall mean that one
of the following events has taken place:

                           (A) The shareholders of Company approve one of the
                  following ("Approved Transactions"):

                                    (i) Any merger or statutory plan of exchange
                  involving Company ("Merger") in which Company is not the
                  continuing or surviving corporation or pursuant to which
                  Common Stock would be converted into cash, securities or other
                  property, other than a Merger involving Company in which the
                  holders of Common Stock immediately prior to the Merger have
                  the same proportionate ownership of Common Stock of the
                  surviving corporation after the Merger; or

                                    (ii) Any sale, lease, exchange, or other
                  transfer (in one transaction or a series of related
                  transactions) of all or substantially all of the assets of
                  Company or the adoption of any plan or proposal for the
                  liquidation or dissolution;

                           (B) A tender or exchange offer, other than one made
                  by Company, is made for Common Stock (or securities
                  convertible into Common Stock) and such offer results in a
                  portion of those securities being purchased and the offeror
                  after the consummation of the offer is the beneficial owner
                  (as determined pursuant to Section 13(d) of the Securities
                  Exchange Act of 1934, as amended (the "Exchange Act")),
                  directly or indirectly, of securities representing at least 20
                  percent of the voting power of outstanding securities of
                  Company;

                           (C) Company receives a report on Schedule 13D of the
                  Exchange Act reporting the beneficial ownership by any person
                  (other than Walter C. Bowen or any of his affiliates) of
                  securities representing 20 percent or more of the voting power
                  of outstanding securities of Company, except that if such
                  receipt shall occur during a tender offer or exchange offer
                  described in

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<PAGE>
                  (B) above, a Change of Control shall not take
                  place until the conclusion of such offer;

                           (D) During any period of 6 months or less, any
                  transaction or series of transactions that results in the
                  holders of a majority of the outstanding securities of the
                  Company prior to such transaction or transactions holding less
                  than a majority of the outstanding securities of the Company
                  after such transaction or transactions;

                           (E) During any period of 12 months or less,
                  individuals who at the beginning of such period constituted a
                  majority of the Board of Directors cease for any reason to
                  constitute a majority thereof unless the nomination or
                  election of such new directors was approved by a vote of at
                  least two-thirds of the directors then still in office who
                  were directors at the beginning of such period;

                           (F) The entry of an order for relief under Title 11
                  of the United States Code as to the Company or the
                  determination of the Company as insolvent or bankrupt pursuant
                  to the provisions of any state insolvency or bankruptcy laws;
                  the commencement by the Company of any case, proceeding or
                  other action seeking any reorganization, arrangement,
                  composition, adjustment, liquidation, dissolution or similar
                  relief for itself under any present or future statute, law or
                  regulation relating to bankruptcy, insolvency, reorganization
                  or other relief for debtors; the Company's consent to,
                  acquiescence in or attempt to secure the appointment of any
                  receiver of all or any part of its properties and such
                  receivership or trusteeship shall continue undischarged for a
                  period of sixty (60) days or more; the Company shall generally
                  not pay its debts as they become due or shall admit in writing
                  its inability to pay its debts or shall make a general
                  assignment for the benefit of creditors; or the Company
                  (including the shareholders of the Company) shall take any
                  action to authorize any of the acts set forth above in this
                  paragraph; or

                           (G) Any case, proceeding or other action against the
                  Company shall be commenced seeking to have an order for relief
                  entered against it as a debtor or seeking any reorganization,
                  arrangement, composition, adjustment, liquidation, dissolution
                  or similar relief under any present or future statute, law or
                  regulation relating to bankruptcy, insolvency, reorganization
                  or other relief for debtors, or seeking appointment of any
                  receiver for the Company or for all or any substantial part of
                  its property, and such case, proceeding or other action is not
                  dismissed or stayed within sixty (60) days after it is filed.

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<PAGE>
Notwithstanding anything in the foregoing to the contrary, no Change of Control
shall be deemed to have occurred for purposes of this Agreement by virtue of any
transaction which results in Executive, or a group of persons which includes
Executive, acquiring, directly or indirectly, securities representing 20 percent
or more of the voting power of outstanding securities of Company.

                  6.4 Disability. Termination of Executive's Employment based on
"Disability" shall mean termination without further compensation under this
Agreement, due to Executive's absence from Executive's full-time duties with
Company for 180 consecutive days as a result of Executive's incapacity due to
physical or mental illness, unless within 30 days after notice of termination by
Company following such absence Executive shall have returned to the full-time
performance of Executive's duties.

          7.      Successors; Binding Agreement.

                   7.1 This Agreement shall be binding on and inure to the
benefit of Company and its Successors and assigns. Upon Executive's written
request, Company will seek to have any Successor by agreement, assent to the
fulfillment by Company of its obligations under this Agreement. If such a
request is made, failure of Company to obtain such assent prior to or at the
time a company becomes a Successor shall constitute Good Reason for termination
by Executive of his or her employment and, if a Change of Control of the Company
has occurred, shall entitle Executive to the benefits pursuant to Section 3.

                  7.2 This Agreement shall inure to the benefit of and be
enforceable by Executive and Executive's legal representatives, executors,
administrators and heirs.

          8. Resignation of Corporate Offices. Executive will resign Executive's
office, if any, as a director, officer or trustee of Company, its subsidiaries
or affiliates and of any other corporation or trust of which Executive serves as
such at the request of Company, effective as of the date of termination of
employment. Executive agrees to provide Company such written resignation(s) upon
request and that no severance will be paid until after such resignation(s) are
provided.

          9. Governing Law, Arbitration. This Agreement shall be construed in
accordance with and governed by the laws of the State of Oregon. Executive and
Company agree that should the issue arise of whether either party to this
Agreement has failed to satisfy or has breached the terms of this Agreement, any
dispute regarding the issue, shall be, upon the demand of Employee or the
Company, conclusively arbitrated in Portland, Oregon, pursuant to the rules of
the Arbitration Service of Portland, Inc. In the event that any arbitration or
action is filed in relation to this Agreement, the unsuccessful party shall pay
to the successful party, in addition to all sums that either party may be called
upon to pay, a reasonable sum for the successful party's reasonable attorney
fees and costs.

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<PAGE>

          10. Amendment. No provision of this Agreement may be modified unless
such modification is agreed to in writing signed by Executive and Company.

          11. Severability. If any of the provisions or terms of this Agreement
shall for any reason be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other terms of this Agreement, and this
Agreement shall be construed as if such unenforceable term had never been
contained in this Agreement.

                            [SIGNATURE PAGE FOLLOWS]

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<PAGE>
         IN WITNESS WHEREOF, the foregoing Agreement is hereby executed as of
the date first above written.

Regent Assisted Living, Inc.

By: /s/ Walter C. Bowen                 /s/ Steven L. Gish
   ---------------------------------   ----------------------------------------
      Walter C. Bowen                      Executive
      Chief Executive Officer

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<PAGE>
                                                                     EXHIBIT A
                                RELEASE OF CLAIMS

1.       PARTIES.
         -------

         The parties to Release of Claims (hereinafter "Release") are _________
_________________________  and Regent Assisted Living, Inc., an Oregon
corporation, as hereinafter defined.

          1.1     EXECUTIVE.
                  ---------

                  For the purposes of this Release, "Executive" means __________
_________________ , and his or her attorneys, heirs, executors, administrators,
assigns, and spouse.

          1.2     THE COMPANY.
                  -----------

                  For purposes of this Release the "Company" means Regent
Assisted Living, Inc., an Oregon corporation, its predecessors and successors,
corporate affiliates, and all of each corporation's officers, directors,
employees, insurers, agents, or assigns, in their individual and representative
capacities.

2.       BACKGROUND AND PURPOSE.
         ----------------------

                  Executive was employed by Company. Executive's employment is
ending effective __________ pursuant to Section 3 of the Executive Severance
Agreement dated ________ between Executive and the Company ("Agreement").

                  The purpose of this Release is to settle, and the parties
hereby settle, fully and finally, any and all claims Executive may have against
Company, whether asserted or not, known or unknown, including, but not limited
to, claims arising out of or related to Executive's employment, any claim for
reemployment, or any other claims whether asserted or not, known or unknown,
past or future, that relate to Executive's employment, reemployment, or
application for reemployment.

3.       RELEASE.
         -------

                  Except as reserved in paragraphs 3 or 3.1, Executive waives,
acquits and forever discharges Company from any obligations Company has and all
claims Executive may have including but not limited to obligations and/or claims
arising from the Agreement or any other document or oral agreement relating to
employment compensation, benefits severance or post-employment issues. Except as
reserved in Paragraph 3.1, Executive hereby releases Company from any and all
claims, demands, actions, or causes of action, whether known or unknown, arising
from or related in any way to any employment of or past or future failure or
refusal to employ Executive by Company, or any other past or future claim
(except as reserved by this Release or where expressly prohibited by law) that
relates in any way to Executive's employment, compensation, benefits,
reemployment, or application for employment, with the
<PAGE>
exception of any claim Executive may have against Company for enforcement of
this Release. This release includes any and all claims, direct or indirect,
which might otherwise be made under any applicable local, state or federal
authority, including but not limited to any claim arising under the Oregon
statutes dealing with employment, discrimination in employment, Title VII of the
Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans With
Disabilities Act, the Family and Medical Leave Act of 1993, the Equal Pay Act of
1963, Executive Order 11246, the Rehabilitation Act of 1973, the Uniformed
Services Employment and Reemployment Rights Act of 1994, the Age Discrimination
in Employment Act, the Fair Labor Standards Act, Oregon wage and hour statutes,
all as amended, any regulations under such authorities, and any applicable
contract, tort, or common law theories.

         3.1      Reservations of Rights.
                  ----------------------

                  This Release shall not affect any rights which Executive may
have under any medical insurance, disability plan, workers' compensation,
unemployment compensation, applicable company stock incentive plan(s),
indemnifications, or the 401(k) plan maintained by the Company.

         3.2      No Admission of Liability.
                  -------------------------

                  It is understood and agreed that the acts done and evidenced
hereby and the release granted hereunder is not an admission of liability on the
part of Executive or Company, by whom liability has been and is expressly
denied.

4.       CONSIDERATION TO EXECUTIVE.
         --------------------------

                  After receipt of this Release fully endorsed by Executive, and
the expiration of the seven- (7) day revocation period provided by the Older
Workers Benefit Protection Act without Executive's revocation, Company shall pay
the lump sum of ___________ DOLLARS ($__________ ) to Executive (less proper
withholding) for severance and the reasonable estimate of COBRA continuation
coverage as provided in Section[s] 3.1 and 3.2 of the Agreement.

5.       NO DISPARAGEMENT.
         ----------------

                  Executive agrees that henceforth Executive will not disparage
or make false or adverse statements about Company. The Company should report to
Executive any actions or statements that are attributed to Executive that the
Company believes are disparaging. The Company may take actions consistent with
breach of this Release should it determine that Executive has disparaged or made
false or adverse statements about Company. The Company agrees to follow the
applicable policy(ies) regarding release of employment reference information.

6.       CONFIDENTIALITY, PROPRIETARY, TRADE SECRET AND RELATED
         INFORMATION.
         ------------
<PAGE>

                   Executive acknowledges the duty and agrees not to make
unauthorized use or disclosure of any confidential, proprietary or trade secret
information learned as an employee about Company, its products, customers and
suppliers, and covenants not to breach that duty. Moreover, Executive
acknowledges that, subject to the enforcement limitations of applicable law, the
Company reserves the right to enforce the terms of Executive's Employment
Agreement with Company and any paragraph(s) therein. Should Executive,
Executive's attorney or agents be requested in any judicial, administrative, or
other proceeding to disclose confidential, proprietary or trade secret
information Executive learned as an employee of Company, Executive shall
promptly notify the Company of such request by the most expeditious means in
order to enable the Company to take any reasonable and appropriate action to
limit such disclosure.

7.       ARBITRATION OF CERTAIN DISPUTES.
         -------------------------------

                  Executive and Company agree that should the issue arise of
whether either party to this Agreement has failed to satisfy or has breached the
terms of this Agreement, any dispute regarding the issue, shall be, upon the
demand of Employee or the Company, conclusively arbitrated in Portland, Oregon,
pursuant to the rules of the Arbitration Service of Portland, Inc. In the event
that any arbitration or action is filed in relation to this Agreement, the
unsuccessful party shall pay to the successful party, in addition to all sums
that either party may be called upon to pay, a reasonable sum for the successful
party's reasonable attorney fees and costs.

8.       SCOPE OF RELEASE.
         ----------------

                  The provisions of this Release shall be deemed to obligate,
extend to, and inure to the benefit of the parties; Company's parents,
subsidiaries, affiliates, successors, predecessors, assigns, directors,
officers, and employees; and each parties insurers, transferees, grantees,
legatees, agents and heirs, including those who may assume any and all of the
above-described capacities subsequent to the execution and effective date of
this Release.

9.       OPPORTUNITY FOR ADVICE OF COUNSEL.
         ---------------------------------

                  Executive acknowledges that Executive has been encouraged to
seek advice of counsel with respect to this Release and has had the opportunity
to do so.

<PAGE>

10.      ENTIRE RELEASE.
         --------------

                  This Release and the Agreement signed by Executive contain the
entire agreement and understanding between the parties and, except as reserved
in paragraph 3 and 3.1, supersede and replace all prior agreements written or
oral including but not limited to the Agreement, prior negotiations and proposed
agreements, written or oral. Executive and Company acknowledge that no other
party, nor agent nor attorney of any other party, has made any promise,
representation, or warranty, express or implied, not contained in this Release
concerning the subject matter of this Release to induce this Release, and
Executive and Company acknowledge that they have not executed this Release in
reliance upon any such promise, representation, or warranty not contained in
this Release.

11.      SEVERABILITY.
         ------------

                  Every provision of this Release is intended to be severable.
In the event any term or provision of this Release is declared to be illegal or
invalid for any reason whatsoever by a court of competent jurisdiction or by
final and unappealed order of an administrative agency of competent
jurisdiction, such illegality or invalidity should not affect the balance of the
terms and provisions of this Release, which terms and provisions shall remain
binding and enforceable.

12.      PARTIES MAY ENFORCE RELEASE.
         ---------------------------

                  Nothing in this Release shall operate to release or discharge
any parties to this Release or their successors, assigns, legatees, heirs, or
personal representatives from any rights, claims, or causes of action arising
out of, relating to, or connected with a breach of any obligation of any party
contained in this Release.

13.      COSTS AND ATTORNEY'S FEES.
         -------------------------

                  The parties each agree to bear their own costs and attorneys'
fees which have been or may be incurred in connection with any matters released
herein or in connection with the negotiation and consummation of this Release.
In the event of any administrative or civil action to enforce the provisions of
this Release, the prevailing party shall be entitled to attorney fees and costs
through trial and/or on appeal.

14.   ACKNOWLEDGMENTS.
     ----------------

                  Executive acknowledges that the Release provides severance pay
and benefits which the Company would otherwise have no obligation to provide.

                  Executive acknowledges that Company has provided the following
information: (a) the class or group of employees offered the opportunity to
obtain severance benefits similar to those in the Release, (b) the eligibility
factors required to obtain severance benefits similar to those in the Release,
(c) the time limits required to obtain severance benefits similar to those in
the Release, (d) the job titles and ages of employees eligible or selected for
severance benefits
<PAGE>

similar to those in the Release, and (e) the ages of employees in the same
classification either not eligible or not selected.

15.      REVOCATION.
         ----------

                  As provided by the Older Workers Benefit Protection Act,
Executive's is entitled to have forty-five (45) days to consider this Release.
For a period of seven (7) days from execution of this Release, Executive may
revoke this Release. Upon receipt of Executive's signed Release and the end of
the revocation period, payment by Company as described in paragraph 4 above will
be forwarded by mail in a timely manner as provided herein.

                                                Dated:  __________ __, 2001
---------------------------------------------
[Name of Executive]

STATE OF ________  )
                                 ) ss.
County of _________   )

         Personally appeared the above named __________________________and
acknowledged the foregoing instrument to be his or her voluntary act and deed.

                   Before me:
                                  --------------------------------------------
                                  Notary Public for
                                                    --------------------------
                                  My commission expires:
                                                         ------------

Regent Assisted Living, Inc.

By:                                                     Dated:
   --------------------------------------------------         ------------------
Its:
    -------------------------------------------------Exhibit 10.38
                              AMENDED AND RESTATED
                         AGREEMENT TO PROVIDE ACCOUNTING
                      AND CONSULTING SERVICES TO CALIFORNIA
                           ASSISTED LIVING FACILITIES

                  This Agreement made as of the 31st day of December, 2001, by
and between Regent Assisted Living, Inc., an Oregon corporation (hereinafter
referred to as "Owner") and Emeritus Corporation, a Washington corporation
(hereinafter referred to as "Emeritus").

                  WHEREAS, as set forth more fully in Exhibit A, Owner either
owns, leases or manages under contract or in its capacity as the managing member
of the owner or lessee of, the assisted living facilities described in Exhibit A
(the "Facilities" and, where the context requires, individually, a "Facility")
and is, in each instance, authorized to engage a Emeritus or submanager in
connection with its operation of the Facilities;

                  WHEREAS, Owner wants someone to manage the Facilities on its
behalf;

                  WHEREAS, Emeritus is experienced and qualified in the field of
assisted living facility management and has agreed to manage the Facilities on
behalf of Owner, pursuant to the terms and conditions set forth herein;

                  WHEREAS, Emeritus is required as a matter of law to be
licensed to operate the Facilities;

                  WHEREAS, pending issuance of a license to Emeritus to operate
the Facilities, Owner is interested in engaging Emeritus to provide certain
accounting, reporting and consulting services to Owner with respect to the
Facilities; and

                  WHEREAS, Owner and Emeritus are interested in documenting the
terms and conditions under which such services will be provided.

                  NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants herein contained, IT IS AGREED AS FOLLOWS:

         I.               Accounting Services:
                          -------------------

            (i) Emeritus shall, at its expense, provide accounting support to
the Facilities. Owner acknowledges and agrees that such accounting support shall
not include the preparation of Owner's corporate financial statements or
securities filings, but only the individual financial statements for the
Facilities, in each case meeting the requirements of Section II. Emeritus shall
not be required to reflect in the financial statements for the Facilities any
corporate accounting adjustments provided to Emeritus by Owner until such time
as Emeritus fully understands the rationale for such adjustment.

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<PAGE>

            (ii) All accounting procedures and systems utilized in providing
said support shall be in accordance with the operating capital and cash programs
developed by Emeritus, which programs shall conform to generally accepted
accounting principles ("GAAP") and shall not materially distort income or loss;
provided, however, Emeritus shall have no liability for errors in the financial
statements prepared during the term of this Agreement which arise from errors in
starting accounting balances provided by Owner to Emeritus pursuant to Section
I(v).

            (iii) In addition, as a cost of operating the Facilities, Emeritus
shall prepare or cause to be prepared all payroll tax returns, sales and use tax
returns, real and personal property tax returns, informational tax returns,
Forms 5500 and local or state gross receipts and/or business and occupation tax
returns and Emeritus shall cause to be paid all of the taxes reflected on such
returns as being due, which taxes shall be paid from the cash receipts of the
Facilities or the working capital provided by Owner under the terms of this
Agreement. All other tax returns, including Owner's local, state or federal
income tax returns and state corporate franchise tax returns and third party
payor cost reports, shall be prepared by Owner or its designee and the taxes and
other payments due thereunder shall be the sole responsibility of Owner.

             (iv) Nothing herein shall preclude Emeritus from delegating to a
third party a portion of the accounting duties provided for in this section;
provided, that such delegation shall not relieve Emeritus from ultimate
liability for the timely and complete performance of the obligations provided
for herein or for the expense thereof, to the extent such expense is to be borne
hereunder by Emeritus. Owner acknowledges and agrees that in the event Emeritus
retains one or more third parties to review the real and/or personal property
tax returns or utility bills of the Facilities or other third party charges in
an effort to effect cost savings for the Facilities, the fees and expenses of
such third parties shall be paid from the cash receipts of the Facilities or the
working capital provided by Owner under the terms of this Agreement.

            (v) In order to enable Emeritus to provide the accounting support
services described in this Section, prior to the Commencement Date, Owner shall
provide to Emeritus the information and shall take the transition actions
described in Exhibit B hereto (the "Accounting Transition Services"), it being
understood and agreed that Emeritus will not be able to fully perform its
obligations under this Section I unless and until Owner has fully complied with
its obligations with respect to the Accounting Transition Services.

           II. Reports: Emeritus shall prepare and provide to Owner any
reasonable operational information with respect to the Facility which may from
time to time be specifically requested by Owner, including any information
needed to assist Owner in completing the tax returns for which it is responsible
under Section I , in complying with any reporting obligations imposed on Owner
or Owner's parent under its leases and loan agreements or as a publicly traded
company, in refinancing any of the debt secured by the Facilities and in
complying with the reporting obligations described in Exhibit C. In addition, by
no later than thirty (30) days after the end of each calendar month, Emeritus
shall provide Owner with an unaudited balance sheet of the Facilities, dated the
last day

                                       2
<PAGE>
of such month, and an unaudited statement of income and expenses for
such month and for the fiscal year to date relating to the operation of the
Facilities showing the variance between the actual and budgeted operating
results of the Facilities for said month and in the form attached hereto as
Exhibit D and with a census report for the month indicating the number of units
occupied and the number of units vacant. Upon request Emeritus shall cooperate
with Owner or Owner's certified public accountant in the event Owner elects, or
is required, to have audited annual financial statements prepared. The financial
statements prepared by Emeritus shall be prepared in accordance with (i) GAAP,
consistently applied, (ii) this Agreement, and (iii) the procedures and
practices provided for in this Agreement.

           III.   Bank Accounts:
                  -------------

            (i) With respect to each of the Facilities, Emeritus shall establish
and maintain a checking account for each of the Facilities in the name set forth
opposite the name of each of the Facilities in Exhibit E (each of which accounts
shall hereinafter be referred to as the "Depository Account") and shall deposit
therein all money received during the term of this Agreement in the course of
the operation of the applicable Facility including any money received upon the
collection of accounts receivable which are outstanding as of the Commencement
Date for goods sold or services rendered at the Facilities prior to the
Commencement Date and shall pay therefrom the expenses incurred in the operation
of the applicable Facility during the Term of, and in accordance with the terms
of, this Agreement.

           (ii) During the Term hereof, withdrawals and payments from the
Depository Account for each Facility shall be made only on checks signed by a
person or persons designated by Emeritus but Emeritus shall have no ownership
interest in or other rights to the Depository Account other than the right to
make withdrawals therefrom and to make deposits thereto; and provided, further
that Owner shall be given notice as to the identity of said authorized
signatories.

          (iii) Withdrawals from the Depository Account for each Facility shall
be made first to pay to Owner the fee due with respect to such Facility as set
forth in Exhibit F (the "Regent Fees"), which Regent Fees shall be deposited in
an account established by Owner in Seattle, Washington (the "Regent Account")
and thereafter to pay the expenses of operating such Facility, including payroll
and related state and federal payroll tax obligations (the "Daily Operating
Expenses") and rent and debt service payments to the lenders and landlords set
forth in Exhibit G and in the amounts set forth in Exhibit G as the same may be
amended from time to time to reflect changes in such rent and debt service
payments or in the amounts otherwise specified by Owner to Emeritus in writing
from time to time (the "Property Expenses"). Exhibit G shall also reflect when
the rent or debt service payment is due under the terms of the applicable lease
or loan documents and any available grace period. The Daily Operating Expenses
and the Property Expenses shall be paid by Emeritus in such order of priority as
Emeritus deems appropriate from time to time to the operation of such Facility,
provided however, Daily Operating Expenses and the Property Expenses shall be
paid by no later than their due date or, if applicable, before the expiration of
any applicable grace period in which payment may be

                                       3
<PAGE>

made prior to the occurrence of a default under the terms of the applicable
lease, loan agreement, contract, agreement or purchasing arrangement, unless
resulting from the failure of Owner to provide the Working Capital Funds (as
defined in Section II(v) below) or Service Fee Funds (as defined in Section
II(v) below) as and when due in accordance with Section II(v) below. Emeritus
shall make any rent and debt service payments which are made by it by wire
transfer in accordance with wiring instructions provided by Owner to Emeritus.

           (iv) Any excess funds in the Depository Account for a Facility, after
establishing the working capital reserves required by Section II(vii), shall be
distributed by Emeritus to Owner.

            (v) In the event (A) at any time Emeritus determines in the exercise
of its reasonable judgment that there are insufficient funds in the Depository
Account or in the Other Authorized Accounts (as hereinafter defined), in the
case of a Designated Facility (as hereinafter defined), to maintain the minimum
bank balance required by Section II(vii) and pay all Daily Operating Expenses
and Property Expenses due and payable in the following thirty (30) day period
(the "Working Capital Funds") or (B) in the event there are at any time
insufficient funds available in the Regent Account to pay Emeritus's Service Fee
(as defined below) (the "Service Fee Funds"), no less than three (3) days prior
to the date on which Emeritus determines that Working Capital Funds or Service
Fee Funds, as applicable, are required, Emeritus shall provide Owner with a
verbal demand therefor followed by a written confirmation of such demand, which
written confirmation shall specify in reasonable detail the amount needed and
the reason therefor and, Owner shall, within five (5) business days of its
receipt of such written demand by Emeritus, deposit in the applicable Depository
Account or the Regent Account, as applicable, the amount so demanded by
Emeritus. For purposes hereof, the Other Authorized Accounts shall be defined as
those accounts designated in writing by Owner to Emeritus from which Emeritus is
authorized to draw funds in order to meet the working capital needs of certain
other Facilities designated in writing by Owner to Emeritus (the "Designated
Facilities" or individually a "Designated Facility"), provided the designation
shall not be effective unless the same is accompanied by either (i) an opinion
of Owner's outside legal counsel confirming that it has reviewed all necessary
legal documents and determined that Owner is authorized to lend money from the
Other Authorized Accounts for the benefit of the Designated Facilities or (ii) a
certificate, in form and substance reasonably acceptable to Emeritus signed by
Owner's Representative to the effect that Owner is authorized to lend money from
the Other Authorized Accounts for the benefit of the Designated Facilities,
along with appropriate supporting documentation with respect to the statements
contained in such certificate, which documentation shall be in form and
substance acceptable to Emeritus in the exercise of its reasonable discretion.
Owner acknowledges and agrees that in no event will Emeritus have any obligation
to pay any Daily Operating Expenses or the Regent Fee other than from funds
available in the applicable Depository Account, including funds deposited
therein by Emeritus after withdrawing funds from the Other Authorized Accounts,
if applicable, or to provide its own funds to satisfy or support in any manner
the working capital needs of the Facilities or to pay its own Service Fee and
that (i) such working capital is to be provided solely from the cash receipt of
the Facilities, if applicable,

                                       4
<PAGE>

withdrawals from the Other Authorized Accounts and the working capital provided
by Owner pursuant to this Section I(h) and (ii) such service fees are to be paid
from the funds deposited by Emeritus in payment of the Regent Fees and by Owner
pursuant to this Section II(v), if applicable, in the Regent Account.

           (vi) Owner acknowledges and agrees that in the course of providing
the consulting services described in this Agreement Emeritus may incur common
expenses benefiting all of the facilities owned and/or operated by Emeritus,
including the Facilities (the "Common Expenses"). Such Common Expenses shall be
included in the Daily Operating Expenses of the Facilities and may be paid from
the cash in the applicable Depository Account(s) if (i) the same relate to the
direct cost of corporate, regional or divisional meetings or training sessions
held by Emeritus and in which the administrative personnel of the Facilities
have participated ("Meeting and Training Common Expenses"), (ii) the same are
included within the approved annual capital or operating budgets ("Budgeted
Common Expenses") or (iii) the same are not Meeting and Training Common Expenses
or Budgeted Common Expenses (the "Other Common Expenses") but are approved by
Owner, which approval shall not be unreasonably withheld, after Emeritus has
provided Owner with a specification setting forth in reasonable detail the
nature of such Other Common Expenses.

          (vii) During the Term hereof, Owner and Emeritus shall attempt to
agree on the necessary minimum cash balance to be maintained in the Depository
Account for each Facility but if they are unable to so agree such minimum cash
balance shall upon demand of Emeritus be required to be equal to the amount
reflected in Exhibit H opposite the name of such Facility and Owner shall upon
demand in accordance with Section II(v) provide Emeritus with any working
capital which may be needed to enable Emeritus to maintain such minimum cash
balances. In addition, during the Term hereof, Owner shall at all times maintain
a minimum balance in the Regent Account of $80,000.

         IV. Consulting Services. During the term of this Agreement, Emeritus
shall supervise the day to day operation and management of the Facility. In
furtherance of the foregoing, utilizing the resources provided or made available
by Owner in accordance with the terms of this Agreement, Emeritus shall be
responsible for the supervision and management of the operation of the
Facilities, in accordance with applicable laws and regulations, including the
supervision of employees, hiring and discharge of employees in consultation with
Owner, billings and collection, and regulatory compliance, including compliance
with the State Agreements (as hereinafter defined). Emeritus shall have no
authority to commit the expenditure of the Facilities' funds or the funds of
Owner during the terms of this Agreement unless it has secured the prior written
consent of Owner's Representative and Owner's Representative shall have no
obligation to approve any non-routine expenditures of the Facilities' funds or
Owner's funds during the term of this Agreement. For purposes hereof, the State
Agreement shall be defined as that Stipulation, Waiver and Order dated May 25,
2000 entered in Case No. 7099344003-C (the "2000 Order"), a true and correct
copy of which is attached hereto as Exhibit I, and that Stipulation and Waiver;
Decision and Order dated June 28, 2001 entered in Case Nos, 7400271001D,
7400271001E, 7400271001F, 7400271001G, 7400271001H, 7400271001K, 7400271001L and
7400271001M (the "2001 Order"), a true and correct

                                       5
<PAGE>
copy of which is attached hereto as Exhibit J. In furtherance and not in
limitation of the foregoing, Emeritus shall designate an individual currently in
its employ who, subject to Owner's review and approval, which will not be
unreasonably withheld, shall be hired/engaged by Owner, to act as the training
officer required by the terms of Paragraph 6(O) of the 2001 Order (the "Training
Officer").

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

        VI.                Term of Agreement and Termination Payments:
                           ------------------------------------------

         (i) The Term of this Agreement shall commence on January 1, 2002 (the
"Commencement Date").

         (ii) The Term of this Agreement shall terminate upon the first to occur
of the following:

         (A) the occurrence of an Event of Default hereunder and the exercise by
         Emeritus or Owner, as applicable, of its right to terminate this
         Agreement as a result thereof; or

         (B) on written notice from Owner to Emeritus delivered within the last
         ninety days of the third year of the term of this Agreement (the
         "Termination Period") terminating this Agreement as of the end of the
         third (3rd) year of the term of this Agreement (the "Termination
         Notice"); provided, however, if the Termination Notice is not delivered
         by Owner within the Termination Period, then this Agreement shall
         automatically renew for successive one year terms, subject to Owner's
         right to terminate the same on no less than ninety (90) days written
         notice to Emeritus; or

         (C) on no less than ninety (90) days written notice from either Owner
         or Emeritus as to all, but not less than all, of the Facilities; or

         (D) with respect to one or more Facilities, by Owner or Emeritus on no
         less than ninety (90) days prior written notice in the event that at
         any time

                                       6
<PAGE>

         during the term of this Agreement Owner will no longer own or control
         such Facilities whether resulting from a sale or other reasons, whether
         voluntary or involuntary; or

         (E) with respect to one of more of the Facilities, by Owner in the
         event it is unable on or before February 28, 2002 to secure any
         consents of its lenders, landlords or joint venture partners which may
         be required for it to enter into this Agreement with Emeritus (the
         "Third Party Consents"); provided, however, that Owner shall be solely
         responsible for any and all costs of securing such Third Party
         Consents, including any consent fees or other consideration required by
         such landlords, lenders or joint venture partners as a condition to
         granting their consent; or

         (F) on receipt by Emeritus of licensure approval from the State of
         California, in which case Emeritus shall commence management of the
         Facilities in accordance with the terms of the Agreement to Provide
         Management Services between Owner and Emeritus of even date herewith;
         or

         (G) if at the end of any year, the actual "Net Operating Income/Loss
         Before Property" less "Property Insurance" and "Liability Insurance"
         for any Facility as reflected on the financial statements of the
         Facilities is more than ten percent (10%) less than the amount for "Net
         Operating Income/Loss Before Property" less "Property Insurance" and
         "Liability Insurance" as reflected in the annual approved operating
         budget for such Facility but such termination right shall only apply
         with respect to the affected Facility.

         For the purposes of Sections VI, VII and VIII of this Agreement, any
termination due to an Owner Event of Default or a Emeritus Event of Default or
by Owner pursuant to Section VII shall be a partial termination as if there were
a separate Agreement for each Facility if the Event of Default or failure to
secure the necessary Third Party Consent relates to less than all of the
Facilities. In such event, Owner's or Emeritus' required termination payments
shall only be with respect to the Facilities covered by the partial termination.

         (iii) In the event of the termination of this Agreement prior to the
end of the third year of this Agreement, the following payments shall be due and
owing from Emeritus or Owner, as applicable:

         (A) In the event of the termination of this Agreement by Owner as a
         result of the occurrence of a Emeritus Event of Default, Emeritus shall
         pay to Owner an amount equal to one month's Service Fee concurrently
         with the termination of this Agreement.

         (B) In the event of the termination of this Agreement during the first
         year either by Emeritus as a result of the occurrence of an Owner Event
         of Default of the Term or by Owner pursuant to Section VI(ii)(C) other
         than

                                       7
<PAGE>
         with respect to the Bowen Facility (as hereinafter defined), Owner
         shall pay to Emeritus an amount equal to the difference between the
         aggregate Service Fee due during the first year of the Term and the
         Service Fee actually paid to Emeritus to the date of such termination.
         For purposes hereof, the Bowen Facility shall mean the Facility located
         in Santa Cruz, California.

         (C) In the event of the termination of this Agreement at any time after
         the first year of the Term either by Emeritus as a result of the
         occurrence of an Owner Event of Default or by Owner pursuant to Section
         VI(ii)(C) Owner shall pay to Emeritus an amount equal to the then
         applicable Service Fee multiplied by three.

         (D) In the event of the termination of this Agreement by Emeritus
         pursuant to SectionVI(ii)(C) no payment shall be due from Emeritus to
         Owner upon termination and in the event of the termination of this
         Agreement by Owner pursuant to Section VI(ii)(E) or (F) no payment
         shall be due from Owner to Emeritus upon termination.

         (iv) Examples of the calculation of the termination fees due pursuant
         to this Section VI are set forth in Exhibit K.

         (v) In the event of the termination of this Agreement by Owner or
         Emeritus in accordance with the terms hereof, (A) no such termination
         shall be effective until all amounts due and owing from one party to
         the other in accordance with the terms of this Agreement, including the
         monetary damages specifically provided for in Sections VI(a) and (b),
         but specifically excluding any other damages alleged to have been
         suffered by a party as a result of the termination of this Agreement
         after the occurrence of an Event of Default, have been paid in full and
         (B) Emeritus shall cooperate with Owner or its designee, at no cost to
         Emeritus and without the assumption of any further liability by
         Emeritus other than the liability imposed on Emeritus under this
         Agreement, in an orderly transition of accounting responsibility for
         the affected Facility or Facilities to Owner or its designee.

         VII. Default: Either party may terminate this Agreement, as specified
in this Section V, in the event of a default ("Event of Default") by the other
party.

         (a) With respect to Emeritus, it shall be an "Event of Default"
hereunder:

         (i) If Emeritus shall fail to keep, observe or perform any material
agreement, term or provision of this Agreement, and such default shall continue
for a period of forty five (45) days (subject to the force majeure provisions
below) after notice thereof shall have been given to Emeritus by Owner, which
notice shall specify in detail the event or events constituting the default; or

                                       8
<PAGE>
         (ii) If Emeritus shall (A) apply for or consent to the appointment of a
receiver, trustee or liquidator of Emeritus of all or a substantial part of its
assets, (B) file a voluntary petition in bankruptcy, or admit in writing its
inability to pay its debts as they become due, (C) make a general assignment for
the benefit of creditors, or (D) file a petition or an answer seeking
reorganization or arrangement with creditors or taking advantage of any
insolvency law, or if an order judgment or decree shall be entered by a court of
competent jurisdiction, on the application of a creditor, adjudicating Emeritus,
a bankrupt or insolvent or approving a petition seeking reorganization of
Emeritus, or appointing a receiver, trustee or liquidator of Emeritus, of all or
a substantial part of its assets.

         (b) With respect to Owner, it shall be an Event of Default hereunder:

         (i) If Owner shall fail to make or cause to be made any payment to
Emeritus required to be made hereunder (other than its working capital
obligation which is addressed in clause (iii)) and such failure shall continue
for a period of thirty (30) days after notice, which notice shall specify the
payment or payments which Owner has failed to make;

         (ii) If Owner shall fail to keep, observe or perform any material
agreement, term or provision of this Agreement and such default shall continue
for a period of forty five (45) days after notice (subject to the force majeure
provisions below), which notice shall specify in detail the event or events
constituting the default thereof by Emeritus to Owner;

         (iii) If Owner shall fail to provide necessary working capital upon
demand by Emeritus with respect to the payment of the Daily Operating Expenses
or the Service Fee due to Emeritus within the time provided in Section I(h), and
such failure continues uncured for five (5) business days after Emeritus gives
Owner notice of such failure;

         (iv) If Owner shall fail to make payments, or keep any covenants, owing
to any third party which are beyond the control of Emeritus to make or keep
(which for purposes hereof shall include any covenants by which Owner may be
bound as of the Commencement Date (the "Pre-Existing Covenants") or to which
Owner may agree to be bound after the Commencement Date without the prior
approval of Emeritus (the "Unapproved Covenants")), and which would cause Owner
to lose possession of the Facilities or any personal property required to
operate the Facilities in the normal course; provided that Emeritus shall give
Owner prompt notice of any such payment and failure to pay of which Emeritus has
knowledge;

         (v) If Owner shall be dissolved or shall apply for or consent to the
appointment of a receiver, trustee or liquidator of Owner or of all or a
substantial part of its assets, file a voluntary petition in bankruptcy, or
admit in writing its inability to pay its debts as they become due, make a
general assignment for the benefit of creditors, file a petition or an answer
seeking reorganization of arrangement with creditors or taking advantage of any
insolvency law, or if an order, judgment or decree shall be entered by a court
of competent jurisdiction, on the application of a creditor, adjudicating Owner

                                       9
<PAGE>
a bankrupt or insolvent or approving a petition seeking reorganization of Owner
or appointing a receiver, trustee or liquidator of Owner of all or a substantial
part of its assets; or

         (vi) If Owner or any of its principal officers is convicted or a crime
that materially affects the operation or regulation of the Facilities.

          VIII.   Remedies and Obligations Upon Default:
                  -------------------------------------

         (i) If any Event of Default by Owner shall occur, Emeritus may, in
addition to any other remedy available to it in law or equity on account of such
Event of Default, forthwith terminate this Agreement, and neither party shall
have any further obligations whatsoever under this Agreement except for
Emeritus's right to receive damages from Owner in the amount specified in
Section IV and except any settlement and payment obligations and other
obligations that by their nature survive termination of this Agreement.

         (ii) If any Event of Default by Emeritus shall occur, Owner may, in
addition to any other remedy available to it in law or equity on account of such
Event of Default, forthwith terminate this Agreement and the exclusive right to
possession of the Facilities granted to Emeritus hereunder, and neither party
shall have any further obligation whatsoever under this Agreement; except for
Owner's right to receive payment of liquidated damages from Emeritus in an
amount specified in Section IV.

            IX.   Accounting and Consulting Fee:
                  -----------------------------

         (i) In consideration for the provision of the services contemplated in
this Agreement and the provision of the Training Officer, Emeritus shall receive
a fee of $8,000 per month for each of the Facilities other than the West Covina
and Merced Facilities as to which the fee shall be $2,000 per month per Facility
until Owner is licensed to operate the West Covina Facility, which is currently
anticipated to be on or about March 1, 2002, at which time the fee shall be
increased to $8,000 per month for the West Covina Facility and until Owner is
licensed to operate the Merced Facility, which is currently anticipated to be on
or about March 1, 2002, at which time the fee shall be increased to $8,000 per
month for the Merced Facility (the "Services Fee"). The Services Fee shall be
increased by 5% on the second anniversary of the Commencement Date.

         (ii) If the services of Emeritus commence or terminate (for any reason,
including those set forth in Paragraph V) other than on the first day of the
month, the revenues upon which the fee is calculated shall be prorated in
proportion to the number of days for which services are actually rendered.

         (iii) The Services Fee provided for herein shall be disbursed by
Emeritus to itself out of the Depository Account in accordance with the
provisions of Section III.

         (iv) Any amounts due from Owner to Emeritus or Emeritus to Owner
pursuant to this Section IX which are not paid when due shall bear interest at
the annual rate equal to the Prime Rate as set forth in the Money Rates Section
of The Wall Street Journal (as

                                       10
<PAGE>

the same may change from time to time) plus 5% from the date due to the date
paid in full.

             X. Assignment: This Agreement shall not be assigned by either party
without the prior written consent of the other party; provided, however,
Emeritus shall have the right to assign this Agreement to an entity which is
owned or controlled by Emeritus or its principal shareholder, Daniel R. Baty,
without the prior written consent of Owner.

            XI. Notices: All notices required or permitted hereunder shall be
given in writing by hand delivery, by registered or certified mail, postage
prepaid, by overnight delivery or by facsimile transmission (with receipt
confirmed with the recipient). Notice shall be delivered or mailed to the
parties at the following addresses or at such other places as either party shall
designate in writing. All notices shall be deemed duly given when delivery is
received or refused by a party if delivered by hand, three (3) business days
after being deposited in the mails if sent by registered or certified mail, on
the next business day if sent by overnight delivery and on confirmed receipt, if
sent by facsimile transmission.

                  To Emeritus:      Emeritus Corporation
                                    3131 Elliott Avenue
                                    Suite 500
                                    Seattle, WA  98121
                                    Facsimile:  206-301-4500
                                    Attn:  Raymond R. Brandstrom, Vice President
                                                -Finance

                  To Owner:         Regent Assisted Living, Inc.
                                    Bank of America Building
                                    121 SW Morrison
                                    Suite 100
                                    Portland, OR  97201
                                    Facsimile:   503-274-4685
                                    Attn:   Walt Bowen, President

           XII. Relationship of the Parties: The relationship of the parties
shall be that of principal and independent contractor and all acts performed by
Emeritus during the term hereof as Emeritus of the Facility shall be deemed to
be performed in its capacity as an independent contractor. Nothing contained in
this Agreement is intended to or shall be construed to give rise to or create a
partnership or joint venture or lease between Owner, its successors and assigns
on the one hand, and Emeritus, its successors and assigns on the other hand.
Notwithstanding the foregoing, Emeritus shall be authorized to execute certain
documents in the course of the day to day operation of the Facility as the agent
of Owner, such as credit applications for supplies, banking resolutions for the
Depository Account, utility deposit forms, etc.

                                       11
<PAGE>

          XIII. Indemnification: Emeritus shall indemnify, defend and hold
harmless Owner from any loss incurred by or damage to Owner where such loss or
damage results from the negligence or willful misconduct of Emeritus in
performing its obligations under this Agreement or from a breach of this
Agreement by Emeritus; provided, however, Owner specifically acknowledges and
agrees that nothing in this Section XIII shall be construed as imposing any
liability on Emeritus for any insurance deductibles for which Owner shall be
solely responsible. Owner shall indemnify, defend and hold Emeritus harmless
from any loss incurred by or damage to Emeritus where such loss or damage
results from the negligence or willful misconduct of Owner in performing its
obligations under the Agreement or from a breach of this Agreement by Owner.

           XIV. Entire Agreement: This Agreement contains the entire agreement
between the parties relating to the operation of the Facility and shall be
binding upon and inure to the benefit of their successors and assigns. This
Agreement may not be modified or amended except by written instrument signed by
both of the parties hereto.

           XV Captions: The captions used herein are for convenience of
reference only and shall not be construed in any manner to limit or modify any
of the terms hereof.

           XVI. Arbitration: In the event of any dispute among the parties
regarding the Facilities or this Agreement, the parties agree to submit the same
to resolution before an arbitrator, in the case of disputes alleged to involve
less than $250,000, and before a panel of three arbitrators, in the case of
disputes alleged to involve $250,000 or more, selected by mutual agreement of
the parties or, if the parties are unable to agree on an arbitrator or panel of
arbitrators within a period of twenty (20) days, selected by a court of
competent jurisdiction. Such arbitration shall be held in accordance with the
rules of the American Arbitration Association and the decision of the arbitrator
shall be final and binding on the parties and may be enforced by a court of
competent jurisdiction.. The party requesting arbitration shall do so by giving
notice to that effect to the other party, specifying in reasonable detail in
said notice the nature of the dispute; provided, however, in the event that
notwithstanding the terms hereof, a party commences legal proceedings, rather
than arbitration proceedings, before a court of competent jurisdiction, the
other party shall be deemed to have forfeited its right to have such dispute
determined by binding arbitration in accordance with this Section XVI unless
within thirty (30) days after being served with the first pleading in such legal
proceedings, it files a motion to dismiss such legal proceedings and serves on
the other party notice of its intent to submit such dispute to arbitration. Any
party who fails to submit to binding arbitration following a lawful demand by
the other party shall bear all costs and expenses, including reasonable
attorneys fees (including those incurred in any trial, bankruptcy proceeding,
appeal or review) incurred by the other party in obtaining a stay of any pending
judicial proceeding concerning a dispute which by the terms of this Agreement
has been properly submitted to mandatory arbitration and/or in compelling
arbitration of any dispute. All disputes under this Section XVI shall be
determined in the City of Portland, Oregon, if the arbitration is initiated by
Owner and in the City of Seattle, Washington, if the arbitration is initiated by
Emeritus, by a single arbitrator. All arbitrators shall be a licensed attorneys
having at least ten (10) years experience, with at least five (5) years
experience with assisted living facility sale, lease or management transactions.

                                       12
<PAGE>
The award in such arbitration may be enforced on the application of either party
by the order of judgment of a court of competent jurisdiction. The prevailing
party shall be entitled to recover the reasonable fees and expenses of its
attorneys and experts. The arbitrator(s) shall resolve all disputes in
accordance with the substantive law of the state of Oregon. The arbitrator(s)
shall have no authority or jurisdiction to award any damages or any other
remedies beyond those which could have been awarded in a court of law if the
parties had litigated the claims instead of arbitrating them. The parties shall
not assert any claim for punitive damages . The Federal Arbitration Act, Title 9
of the United States Code, is applicable to this transaction and shall be
controlling in any judicial proceedings and in the arbitration itself as to
issues of arbitrability and procedure. Nothing herein shall preclude a party
from curing either their own or the other party's alleged default which is, or
could be, the subject of an arbitration proceeding under this Section XVI or
from seeking equitable relief which the arbitrator or panel of arbitrators is
not empowered to award, such as an injunction, receivership, attachment or
garnishment.

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

           XVIII. Cumulative; No Waiver: No right or remedy herein conferred
upon or reserved to either of the parties hereto is intended to be exclusive of
any other right or remedy, and each and every right and remedy shall be
cumulative and in addition to any other right or remedy given hereunder, or now
or hereafter legally existing upon the occurrence of an Event of Default
hereunder. The failure of either party hereto to insist at any time upon the
strict observance or performance of any of the provisions of this Agreement or
to exercise any right or remedy as provided in this Agreement shall not impair
any such right or remedy or be construed as a waiver or relinquishment thereof
with respect to subsequent defaults. Every right and remedy given by this
Agreement to the parties hereof may be exercised from time to time and as often
as may be deemed expedient by the parties thereto, as the case may be.

           XIX. Authorization for Agreement: The execution and performance of
this Agreement by Owner and Emeritus have been duly authorized by all necessary
laws, resolutions or corporate action, and this Agreement constitutes the valid
and enforceable obligations of Owner and Emeritus in accordance with its terms.

           XX. Counterparts: This Agreement may be executed in any number of
counterparts, each of which shall be an original, and each such counterpart
shall together constitute but one and the same Agreement.

           XXI. Confidentiality: Throughout the Term of this Agreement and for a
period of one (1) year after the expiration or earlier termination of this
Agreement, each of Emeritus and Owner agrees to maintain the confidentiality of
any proprietary information concerning the other or the Facility to which they
may gain access during the term of this Agreement and shall only disclose the
same with the consent of the other party or as required by an order of a court
of competent jurisdiction.

                                       13
<PAGE>

           XXII. Construction: Each of the parties acknowledges and agrees that
it has participated in the drafting and negotiation of this Agreement.
Accordingly, in the event of a dispute with respect to the interpretation or
enforcement of the terms hereof, no provision shall be construed so as to favor
or disfavor either party hereto.

                                       14
<PAGE>

                  IN WITNESS WHEREOF, the parties have hereto caused this
Agreement to be duly executed, as of the day and year first above written.

                                    REGENT ASSISTED LIVING, INC.

                                    By:     /s/ Walter C. Bowan
                                            --------------------------------

                                    Its:    CEO
                                            --------------------------------

                                    EMERITUS CORPORATION

                                    By:     /s/ Raymond R. Brandstrom
                                            --------------------------------

                                    Its:    Vice President of Finance
                                            ---------------------------------

                                       15
<PAGE>

                                    EXHIBIT A
                           DESCRIPTION OF THE FACILITY

                                       16
<PAGE>

                                    EXHIBIT B
                         ACCOUNTING TRANSITION SERVICES

                                       17
<PAGE>

                                    EXHIBIT C
               ADDITIONAL FACILITY SPECIFIC REPORTING OBLIGATIONS

                                       18
<PAGE>

                                    EXHIBIT D
                          FORM OF FINANCIAL STATEMENTS

                                       19
<PAGE>

                                    EXHIBIT E
                        FACILITY BANK ACCOUNT INFORMATION

                                       20
<PAGE>

                                    EXHIBIT F
                             REGENT FEES BY FACILITY

                                       21
<PAGE>

                                    EXHIBIT G
                   RENT AND DEBT SERVICE PAYMENTS BY FACILITY

                                       22
<PAGE>

                                    EXHIBIT H
                              MINIMUM BANK BALANCES

                                       23
<PAGE>

                                    EXHIBIT I
                                   2000 ORDER

                                       24
<PAGE>

                                    EXHIBIT J
                                   2001 ORDER

                                       25
<PAGE>

                                    EXHIBIT K
                         CALCULATION OF TERMINATION FEES

                                       26

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