Document:

Exhibit 10.18

    Exhibit
      10.18

    

    Named
      Executive Officer Salary, Bonus and Perquisite Arrangements for
      2007

    

    Set
      forth
      below is a description of certain compensation arrangements for 2007 for the
      following officers of ITLA Capital Corporation (the “Company”) and Imperial
      Capital Bank, referred to below as the “named executive officers”: George W.
      Haligowski, Chairman of the Board, President and Chief Executive Officer; Norval
      L. Bruce, Vice Chairman of the Board and Chief Credit Officer; Timothy M. Doyle,
      Executive Managing Director and Chief Financial Officer; Lyle C. Lodwick,
      Executive Managing Director and Chief Operating Officer; and Phillip E.
      Lombardi, Senior Managing Director and Chief of Lending Operations.

    

    Base
      Salaries

    

    Effective
      January 1, 2007, the base salaries of the named executive officers were set
      as
      follows:

    

    
      	
              Name 

            	
              Base
                Salary

            
	
              George
                W. Haligowski  

            	
              $590,000(1)

            
	
              Norval
                L. Bruce 

            	
              248,200

            
	
              Timothy
                M. Doyle 

            	
              259,875

            
	
              Lyle
                C. Lodwick 

            	
              247,200

            
	
              Phillip
                E. Lombardi

            	
              185,000

            

    

    ______________

    (1) Mr.
      Haligowski’s base salary was not changed from 2006.

    

    2007
      Executive Bonus Plan

    

    Under
      the
      Company’s 2007 Executive Bonus Plan, the named executive officers are eligible
      for cash bonuses at the discretion of the Compensation Committee of the
      Company’s Board of Directors based on their review of the Company’s performance
      and the individual’s performance in 2007, with Mr. Haligowski providing
      recommendations for the bonus amounts for the named executive officers other
      than himself. The target bonus for Mr. Haligowski was set at 200% of his base
      salary, and the target bonuses for the other named executive officers were
      set
      at 50% of base salary.

    

    Corporate
      Vehicle Program

     

    The
      Company maintains a corporate vehicle program, under which officers at or above
      the First Vice President level are given the choice of the use of a
      Company-purchased vehicle, with the Company covering the purchase cost up to
      a
      specified amount and the costs of operating the vehicle (including insurance,
      gasoline, maintenance, repairs and personal use), or a monthly allowance
      intended to cover the costs of the officer’s operation of his or her own
      vehicle. The maximum Company-covered purchase cost and monthly allowance options
      for the Managing Director level and above are currently as follows:

     

    

    
      	
              Officer
                Level 

            	 	 	
              Max.
                Purchase Cost

            	 	 	
              Monthly
                Allowance

            	 
	
              Chief
                Executive Officer

            	 	
              $

            	
              98,750

            	 	
              $

            	
              2,600

            	 
	
              Vice
                Chairman, Unit President
                or Executive/Senior
                Managing Director 

            	 	
              $

            	
              62,000

            	 	
              $

            	
              1,600

            	 
	
              Managing
                Director 

            	 	
              $

            	
              50,000

            	 	
              $

            	
              1,300

            	 

    

    

    Additional
      Chief Executive Officer Compensation and Benefits

    

    Mr.
      Haligowski receives various other perquisites and other personal benefits,
      including, among other things, the use of up to 35 hours of chartered aircraft
      services during 2007.Exhibit 10.19

    Exhibit
      10.19

    

    Director
      Fee Arrangements

    

    Fees
      for
      the non-employee directors of ITLA Capital Corporation (the “Company”) for 2007
      will continue to be $1,000 per Board or board committee meeting attended, plus
      a
      monthly retainer of $2,250. In addition, Preston Martin, the Chairman of the
      Audit Committee, will receive an annual retainer of $15,000 for his service
      in
      that capacity. Individual directors may also receive honorariums for additional
      work performed on behalf of the Company. The honorariums paid to directors
      for
      2006 were as follows: (i) an honorarium of $5,000 to Director Robert Reed for
      his active assistance with legislative matters; (ii) an honorarium of $5,000
      to
      Director Jeffrey Lipscomb for his Chairmanship of the Compensation Committee
      and
      active assistance with compensation matters; and (iii) an honorarium of $15,000
      to Director Hirotaka Oribe for his extensive work with the Executive Committee
      and large loan approval process.EX 10.72.2 Fretus PSA membership interests

    PURCHASE
      AND SALE AGREEMENT

    (Membership
      Interests)

    

    This
      Purchase and Sale Agreement (“Agreement”) is entered into between Emeritus
      Corporation, a Washington corporation, (“Buyer”), CP ’02 Pool, LLC (“CP”) and
      FSPP Fretus I, L.L.C. and FSPP Fretus II, L.L.C. (together “FSPP Fretus” and
      together with CP, “Sellers”), and Fretus Investors LLC (the “Company”), as of
      February 22, 2007;

    

    RECITALS

    

    A. CP
      and
      FSPP Fretus formed Fretus Investors LLC, a Washington limited liability company,
      pursuant to that certain Amended and Restated Operating Agreement of Fretus
      Investors LLC dated as of September 26, 2002, as amended (the “LLC Agreement”),
      regarding the leasing, management and sale of certain assisted living facilities
      located throughout the United States, all as listed on Exhibit
      A attached
      hereto (the “Properties”).

    

    B. Buyer
      desires to acquire the membership interests of Sellers pursuant to the terms
      and
      conditions of this Agreement. 

    

    NOW,
      THEREFORE, in consideration of the mutual covenants contained herein, and for
      other valuable consideration, the receipt and sufficiency of which is hereby
      acknowledged, the parties agree as follows:

    

    
      	1.  	
              PURCHASE
                AND SALE

            

    

    

    Each
      Seller agrees to sell and Buyer agrees to purchase such Seller’s entire interest
      (the “Membership Interest”, and collectively, the “Membership Interests”), as a
      member in the Company. The Membership Interests shall be purchased subject
      to a
      loan (the “Loan”) to the Company from Capmark Finance, Inc (“Capmark”), and all
      other Company obligations. 

    

    
      	2.  	
              PURCHASE
                PRICE

            

    

    

    
      	2.1  	
              Purchase
                Price:

            

    

    

    Buyer
      and
      Sellers hereby agree that the purchase price (the “Purchase Price”) for the
      Membership Interests shall be Fifty Three Million One Hundred and Four Thousand
      Six Hundred Eighty Six Dollars ($53,104,686). The Purchase Price was calculated
      based on all of the Company’s assets, as set forth on Schedule
      I
      attached
      hereto; provided that the value of the oil and gas lease for the Fort Worth,
      Texas Property shall be mutually agreed by Sellers and Buyer prior to the
      Closing Date. The Purchase Price shall be paid by Buyer to Sellers in all cash
      on the Closing Date.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	2.2  	
              Deposit:

            

    

    

    On
      or
      before February 23, 2007, a promissory note in principal amount of $2,500,000
      and substantially in the form attached hereto as Exhibit
      B
      (the
“Deposit”) shall be delivered by Buyer to FSPP Fretus. The
      Deposit shall be non-refundable, except as provided in Section 9.2.

    

    

    

    
      	3.  	
              “AS
                IS” SALE

            

    

    

    
      	3.1  	
              “AS
                IS” Sale:

            

    

    

    Buyer,
      as
      the manager of the Properties and as an affiliate of the Administrative Member
      in the Company, is familiar with the leasing, maintenance, management and
      operation of the Properties. Sellers and the Company have provided Buyer with
      full access to all books and records regarding the Membership Interests and
      the
      Properties, and Buyer has made such investigation of the Membership Interests
      and the Properties (including, without limitation, the physical condition and
      condition of title of the Properties) as Buyer deems necessary or appropriate.
      Buyer acknowledges and agrees that Buyer will be concluding its purchases of
      the
      Membership Interests based solely upon (i) Buyer’s knowledge and investigation
      of such matters, (ii) Buyer’s assessment of the fair market value of the
      Membership Interests, and (iii) the representations and warranties of each
      Seller provided in Section 6 below. Buyer acknowledges and agrees that any
      cash
      or cash equivalents in any and all of the Company’s accounts (other than the
      Company’s property tax reserve on account with Capmark in accordance with the
      Loan) shall be distributed to Sellers prior to Closing, subject to the
      prorations set forth in Section 5.2 hereof. Buyer further acknowledges that,
      except as to representations and warranties expressly provided in this
      Agreement, neither the Membership nor any Seller, nor any of their respective
      partners, officers, agents, directors, members, attorneys, employees, brokers,
      or other representatives has made any representations or warranties of any
      kind
      whatsoever, either express or implied, with respect to the Membership Interests
      or the Properties, and that, except for such representations and warranties
      of
      each Seller provided in Section 6 below, Buyer is acquiring the Membership
      Interests “AS IS”, and that by doing so, Buyer is accepting Sellers’ indirect
      interest in the Properties owned by the Company in an “AS IS” condition with all
      faults. 

    

    
      	4.  	
              CLOSING

            

    

    

    
      	4.1  	
              Escrow
                Office, Closing:

            

    

    

    The
      purchase and sale for the Membership Interests shall occur on or before February
      28,
      2007
      (the “Closing Date” or the “Closing”). Old Republic Title Insurance Company,
      2201 6th Ave; Seattle, WA 98121; Contact: Cathrin Weis; cweis@ortc.com;

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (206)
      441-1955,
      shall
      act as Escrow Agent hereunder, and, unless otherwise agreed to by Buyer and
      Sellers, the closing shall be held at its offices.

    

    
      	4.2  	
              Transactions
                at Closing:

            

    

    

    4.2.1  Deliveries
      by Sellers.
      On or
      before the Closing Date, each Seller and/or the Company shall deliver to Buyer,
      with respect to such Seller’s Membership Interest, the following, duly executed
      and acknowledged by such Seller or the Company where appropriate:

    
      	(i)  	
              An
                Assignment and Assumption of Membership
                Interest;

            

    

    

    (ii)  A
      Certificate executed by a responsible officer of such Seller reaffirming all
      of
      the representations and warranties made by such Seller hereunder as being true
      as of the closing date; and 

    

    (iii)  Reasonable
      proof of the authority of such Seller’s signatories; and

    

    (iv)  The
      consent of the Company to the sale of the Membership Interests and, effective
      upon the Closing Date, the acceptance of Buyer as a substituted Member and
      the
      Administrative Member and the withdrawal of each Seller as a Member and CP
      as
      the Administrative Member; 

    

    (v)  Such
      other documents as are necessary to close the transaction as reasonably
      requested by Buyer and/or Escrow Agent, and the Deposit shall be returned to
      Buyer at Closing.

    

    4.2.2 Deliveries
      by Buyer:
      On or
      before the Closing Date, Buyer shall deliver to each Seller, with respect to
      such Seller’s Membership’s Interest, the following, duly executed by Buyer and
      acknowledged where appropriate:

     

    (i)
       Deposit
      into escrow the Purchase Price in cash; 

    

    (ii) A
      counterpart of the applicable Assignment and Assumption of Membership
      Interest;

    

    (iii)  A
      Certificate executed by a responsible officer of Buyer reaffirming all of the
      representations and warranties made by Buyer hereunder as being true as of
      the
      Closing Date;

    

    
      	(iv)  	
              Reasonable
                proof of the authority of Buyer’s
                signatories;

            

    

    

    (v)  Documentation
      providing reasonable proof that Buyer has obtained from Capmark financing for
      a
      purchase money mortgage to refinance the Loan in its entirety;

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (vi)  Written
      documentation that other consents or approvals reasonably necessary for transfer
      of all membership interests has been given.

    

    (vii)  Such
      other documents as are necessary to close the transaction as reasonably
      requested by Sellers and/or Escrow Agent.

    

    

    
      	5.  	
              CLOSING
                COSTS; PRORATIONS

            

    

    

    
      	5.1  	
              Closing
                Costs:

            

    

    

    Escrow
      fees shall be paid by Buyer. Sales taxes, real estate transfer taxes, if any,
      and recording charges, if any, and all other closing costs typically paid by
      a
      seller in transactions of this type shall be paid by the Buyer, and all such
      taxes, charges, and costs typically paid by a purchaser in transactions of
      this
      type shall be paid by the Buyer. Buyer acknowledges and agrees that all costs
      associated with any refinancing or extension of the Loan, including the premium
      for any policy of title insurance, and any fees or costs payable to Capmark
      in
      connection with the Loan or this sale of the Membership Interests, shall be
      paid
      by Buyer.

    

    
      	5.2  	
              Prorations:
                

            

    

    

    5.2.1 General.
      Except
      as otherwise provided herein, each Seller shall be responsible as a Member
      in
      the Company for all items of income and expenses of the Company for the period
      prior to the Closing Date, and Buyer shall be responsible as the sole Member
      in
      the Company for all items of income and expense for the period on and after
      the
      Closing Date. The particular items of such income and expense are delineated
      in
Schedule
      II
      attached
      hereto along with an estimate of the particular amount for such item expected
      by
      the Company to be earned or incurred in February 2007, the expected month of
      Closing. The Company shall update Schedule
      II
      in good
      faith as of one business day prior to Closing and the proration shall be based
      upon the updated Schedule. Said prorations shall be made on the basis of the
      actual number of days of the month which shall have elapsed as of the day of
      the
      Closing. All revenues and expenses of the Company shall be prorated and
      apportioned as of 12:01 a.m. on the Closing Date. The Company shall provide
      Buyer and Sellers a report stating the actual amount of such income and expenses
      within 60 days after the Closing. If the actual net amount of such income and
      expenses differs by 10% or more from the estimated net amount, Buyer or Sellers
      (on a pro rata basis), as appropriate, shall reimburse the other for such
      difference. Notwithstanding anything to the contrary in this Section
      5.2.1,
      Buyer
      shall receive as a credit, a prorated amount of the rent that affiliates of
      Buyer paid as tenants of the Properties attributable to any days including
      and
      after the Closing Date.

    

    5.2.2  Prorated
      Items.
      Revenues
      and expenses shall be prorated as follows: all rental or other income payments
      which are payable to the Company under any leases for any of the Properties
      shall be prorated as of Closing Date.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    6. REPRESENTATIONS
      AND WARRANTIES OF SELLERS     AND
      THE COMPANY

    

    Each
      Seller severally and not jointly represents, warrants, and covenants with
      respect to its Membership Interest as follows:

    

    (a) The
      individuals who have executed this Agreement on behalf of such Seller have
      full
      power and authority to enter into this Agreement and to perform this Agreement
      in accordance with its terms;

    

    (b) The
      execution, delivery and performance of the Agreement by such Seller have been
      duly authorized and approved by all requisite action;

    

    (c)
       The
      LLC
      Agreement is in full force and effect, and has not been amended or modified
      except as previously disclosed to Buyer;

    

    (d) Such
      Seller is the owner of its Membership Interest, and has not hypothecated or
      otherwise transferred any interest therein; and

    

    (e) There
      are
      no claims or encumbrances affecting such Seller’s Membership
      Interest.

    

    

    7. REPRESENTATIONS
      AND WARRANTIES OF BUYER

     

    Buyer
      represents, warrants, and covenants that the individuals who have executed
      this
      Agreement on behalf of Buyer have full power and authority to enter into this
      Agreement and to perform this Agreement in accordance with its terms, and the
      execution, delivery and performance of the Agreement by Buyer have been duly
      authorized and approved by all requisite corporate action.

    

    8. CONDITIONS
      TO CLOSING

     

    8.1 Conditions
      Precedent to Buyer’s Obligations:

    

    The
      obligations of Buyer under this Agreement with respect to the Closing are
      subject to the satisfaction of the following conditions precedent (the
      satisfaction of which may be waived only by Buyer):

    

    (i) The
      representations and warranties made by each Seller in Section 6 above shall
      be
      true and correct in all material respects as of the Closing Date without
      exception with the same force and effect as if they had been made on and as
      of
      such date: 

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (ii) Each
      Seller shall have performed in all material respects all of its obligations
      and
      conditions herein require to be performed or observed by it at or prior to
      Closing, and 

    

    (iii) Buyer
      shall have obtained from Capmark financing for a purchase money mortgage to
      refinance the Loan in its entirety.

    

    (iv) The
      Committee of Independent Directors of Buyer’s Board of Directors shall have
      taken all necessary action to approve this transaction on or before February
      28,
      2007.

    

    

    
      	8.2  	
              Conditions
                Precedent to Sellers’
Obligations:

            

    

    

    The
      obligations of each Seller under this Agreement with respect to the Closing
      are
      subject to the satisfaction of the following conditions precedent (the
      satisfaction of which may be waived only by the applicable Seller):

    

    (i) The
      representations and warranties made by Buyer in Section 7 above shall be true
      and correct in all material respects as of the Closing Date with the same force
      and effect as if they had been made on and as of such date; and

    

    (ii) Buyer
      shall have performed in all material respects all of its obligations and
      conditions herein required to be performed or observed by it at or prior to
      Closing, including, without limitation, the deposit of the Purchase Price into
      escrow, and the Committee of Independent Directors of Buyer’s Board of Directors
      shall have taken all necessary action to approve this transaction on or before
      February 28, 2007.

    

    

    

    

    
      	9.  	
              BREACH

            

    

    

    
      	9.1  	
              Buyer’s
                Breach:

            

    

    In
      the event of termination of this Agreement by Sellers due to the material breach
      by Buyer of any of its warranties, representations, covenants, agreements or
      obligations hereunder, Sellers shall be entitled to retain the Deposit
      and
      all interest accrued thereon, as Liquidated
      Damages,
      and
      not as a penalty, (together with reasonable fees and disbursements of attorneys
      incurred by Sellers in enforcing this Section 9.1), and the retention of the
      Deposit and the collection by Sellers of all amounts due under such promissory
      note shall be in lieu of any and all other remedies which are or may be
      available to Sellers at law or in equity. Upon any termination of this Agreement
      by Sellers due to a material breach by Buyer as described above, the principal
      amount of the Deposit and all interest accrued thereon shall be accelerated
      and
      immediately due and payable by Buyer to Sellers.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    BUYER’S
      INITIAL:
      _/s/ EM_ SELLER’S
      INITIAL: /s/ DB_ 

    SELLER’S
      INITIAL: /s/ MR______ SELLER’S
      INITIAL: _/s/MR_

    SELLER’S
      INITIAL: _/s/DB_

     

    9.2 Seller’s
      breach:
      In the
      event of termination of this Agreement by Buyer due to the material breach
      by
      any Seller of any of its warranties, representations, covenants, agreements
      or
      obligations hereunder, the Deposit and any payments previously received by
      the
      Sellers thereunder shall be returned to Buyer. 

    

    
      	10.  	
              INDEMNITIES

            

    

    

    
      	10.1  	
              Sellers’
                Indemnification:

            

    

    

    From
      and
      after the Closing, each Seller shall severally and not jointly indemnify, defend
      and hold Buyer and its officers, directors, employees, subsidiaries and
      affiliates, and its and their respective successors and assigns, harmless from
      and against any and all damage, loss or liability resulting from any breach
      by
      such Seller of any of its representations or warranties under this Agreement.
      

    

    
      	10.2  	
              Buyer’s
                Indemnification:

            

    

    

    From
      and
      after the Closing, Buyer shall indemnify, defend and hold each Seller and its
      partners or members, and their respective officers, directors, partners,
      members, employees, subsidiaries and affiliates and its and their respective
      successors and assigns, harmless from and against any and all damage, loss
      or
      liability resulting from any breach by Buyer of any of its representations
      or
      warranties under this Agreement. 

    

    11. NOTICES

    

    All
      notices, requests, demands, instructions, and other documents shall not be
      effective unless personally delivered or couriered, or sent by facsimile, or
      mailed, certified or registered mail, return receipt requested, to the following
      addresses:

    

    If
      to
      Buyer: Emeritus
      Corporation

    3131
      Elliott Avenue, Suite 500

    Seattle,
      WA 98121

    Attention:
      Eric Mendelsohn

     

    If
      to
      Sellers: FSPP
      Fretus I, L.L.C.

    FSPP
      Fretus II, L.L.C.

    c/o
      Fremont Realty Capital, L.P.

    199
      Fremont Street

    San
      Francisco, CA 94105

    Attention:
      Matthew Reidy

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    With
      copy
      to:  Fremont
      Realty Capital, L.P.

    199
      Fremont Street

    San
      Francisco, CA 94105

    Attention:
      General Counsel

    

    and
      to:  CP’02
      Pool, LLC

    2025
      First Avenue, Suite 890

    Seattle,
      WA 98121

    Attn:
      Brandon Baty

    

     

    If
      to
      Company: Fretus Investors LLC

    c/o
      CP’02
      Pool, LLC

    2025
      First Avenue, Suite 890

    Seattle,
      WA 98121

    Attn:
      Ruth Verhoff

    

    A
      personal or courier delivered or faxed notice shall be effective on delivery;
      a
      mailed notice shall be effective upon the date shown on the return receipt
      or
      other evidence of delivery; provided, however, that if the recipient refuses
      to
      accept delivery, such notice shall be effective when mailed. Receipt of copies
      by the persons copied above shall not be necessary for the effectiveness of
      the
      notice. The addresses may only be changed in the manner provided for giving
      notice.

    

    12. MISCELLANEOUS
      PROVISIONS

    

    
      	12.1  	
              Time

            

    

    

    It
      is
      agreed that time is of the essence in the performance of and compliance with
      each provision of this Agreement.

    

    
      	12.2  	
              Attorney’s
                Fees:

            

    

    

    If
      any
      legal action, arbitration or other proceeding is commenced to enforce or
      interpret any provision of this Agreement, the prevailing party shall be
      entitled to an award of its actual expenses, including (without limitation)
      expert witness fees and reasonable attorneys’ fees and disbursements. The phrase
“prevailing party” shall include a party who receives substantially the relief
      desired, whether by settlement, dismissal, summary judgment, judgment or
      otherwise.

    

    
      	12.3  	
              No
                Waiver:

            

    

    

    Waiver
      by
      one party of the performance of any covenant, condition or promise shall not
      invalidate this Agreement, nor shall it be considered to be a waiver by such
      party of any other covenant, condition, or promise hereunder.

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    
      	12.4  	
              Severability:

            

    

    

    If,
      for
      any reason, any provision of this Agreement shall be held to be invalid or
      unenforceable, such event shall not affect the validity or enforceability of
      any
      other provision of this Agreement.

    

    
      	12.5  	
              Construction:

            

    

    

    Where
      required by the context of this Agreement, the masculine, feminine, or neuter
      gender and the singular or plural shall each be deemed to include the other.
      This Agreement shall be construed as a whole and in accordance with its fair
      meaning, and not in favor of or against any party. The captions are for the
      convenience of the parties only and shall not affect the provisions of this
      Agreement. 

    

    
      	12.6  	
              Entire
                Agreement:

            

    

    

    This
      Agreement contains the entire agreement between the parties regarding the
      purchase and sale of the Membership Interests and supersedes all prior and
      contemporaneous agreements, whether written or oral between the parties
      regarding the same subject. This Agreement may only be modified by subsequent
      written agreement signed by the party to be charged. 

    

    
      	12.7  	
              Further
                Assurances:

            

    

    

    Before
      or
      after Closing, each Seller shall execute and deliver to Buyer, and Buyer shall
      execute and deliver to Sellers, all such documents reasonably necessary to
      effect, confirm or otherwise perfect the transfer of Sellers’ Membership
      Interests to Buyer, and Buyer’s assumption of all obligations relating to such
      Membership Interests, as contemplated by this Agreement. 

    

    
      	12.8  	
              Survival:

            

    

    

    Each
      of
      the agreements, warranties and representations contained herein shall survive
      the Closing and shall not be merged into any document executed and delivered
      at
      the Closing, but shall expressly survive and be binding thereafter on each
      Seller and Buyer. 

    

    
      	12.9  	
              Venue;
                Governing Law:

            

    

    

    Any
      action to enforce or interpret this Agreement may only be brought in the courts
      of the State of Washington. This Agreement shall be governed by all construed
      in
      accordance with the laws of the State of Washington.

    

    
      	12.10  	
              Successors:

            

    

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    This
      Agreement shall bind and inure to the benefit of the parties hereto and to
      their
      respective transferees, assignees, executors, devisees, guardians and other
      successors in interest; provided, however, Buyer cannot assign its interest
      in
      this Agreement to a non-affiliate without the prior written consent of Sellers,
      which consent may be withheld in each Seller’s sole discretion. Buyer may assign
      its interest in this Agreement to its affiliate, provided that Buyer shall
      remain liable hereunder notwithstanding such assignment.

    

    
      	12.11  	
              Counterparts:

            

    

    

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

    

    
      	12.12  	
              Brokerage
                Commission and Finder’s
                Fees:

            

    

    

    Each
      party warrants to the other that no person or entity can properly claim a right
      to a real estate commission, real estate finder’s fee, real estate acquisition
      fee, or other real estate brokerage-type compensation (collectively, “Real
      Estate Compensation”) based upon the acts of that party with respect to the
      transaction contemplated by this Agreement, and each party hereby agrees to
      indemnify, defend, and hold harmless the other from and against any loss, cost
      or expense (including but not limited to attorneys’ fees and returned
      commissions) resulting from any claim for Real Estate Compensation by any other
      person or entity based upon such party’s acts. 

    

    12.13 Limited
      Management Reporting Under Master Lease:

    

    Affiliates
      of Buyer are currently tenants in the Properties pursuant to that certain Master
      Lease (“Master Lease”) dated as of October 1, 2002, as amended. Buyer, Sellers
      and Company agree that during the period beginning upon execution of this
      Agreement until the Closing Date, or the earlier termination of this Agreement,
      Buyer shall not be required to prepare, for the year end meeting of the landlord
      under the Master Lease, the quarterly management report required in accordance
      with the terms of the Master Lease; provided however that, notwithstanding
      the
      provisions of this Section 12.13 or any other provision herein, tenants under
      the Master Lease must comply with all of the other provisions of the Master
      Lease, including without limitation, the preparation of audited and unaudited
      financial statements.

    

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the
      parties have executed this Agreement by their duly authorized officers the
      day
      and year indicated after their respective signatures.

    

    

    BUYER:

    

    EMERITUS
      CORPORATION

    

    /s/
      Eric
      Mendelsohn

    By:
      Eric
      Mendelsohn_

    Its:
      _Director of Real Estate and Legal Affairs__

    

    SELLERS:

    

    CP’02
      POOL, LLC

    

    /s/
      Daniel R. Baty

    By:
      Daniel R. Baty_

    Its:
      Authorized Signatory

    

    

    FSPP
      Fretus I, L.L.C.

    

    
                

                      _/s/
        Matthew J.
        Reidy

    

    By:
Matthew
      J. Reidy__________

    Its:
      Authorized Signatory

    

    FSPP
      Fretus II, L.L.C.

    

                    _/s/
      Matthew J.
      Reidy
      By:
Matthew
        J. Reidy______

    

    Its:
      Authorized Representative

    

    

    THE
      COMPANY

    

    Fretus
      Investors LLC

    By
      CP’02
      Pool, LLC, its Administrative Member

    

    /s/
      Daniel R. Baty

    By:
      Daniel R. Baty_________

    Its:
      Authorized Representative

    

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    List
      of Exhibits and Schedules:

    Exhibit
      A List
      of
      Properties

    Exhibit
      B Form
      of
      Promissory Note

    Schedule
      I Calculation
      of Purchase Price

    Schedule
      II Income
      and Expenses

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    Exhibit
      A

    

    List
      of Properties

    

    

    
      	
               

              Property
                Name

            	
               

              Location

            	 	 	 
	 
	
              Texas

            
	
              Houston
                Area

            	 	 	 	 
	
              Champion
                Oaks

            	
              Houston,
                Texas

            	 	 	 
	
              Memorial
                Oaks

            	
              Houston,
                Texas

            	 	 	 
	
              Sugar
                Land Oaks

            	
              Sugar
                Land, Texas

            	 	 	 
	
              Dallas
                Area

            	 	 	 	 
	
              Collin
                Oaks

            	
              Plano,
                Texas

            	 	 	 
	
              Kingsley
                Oaks

            	
              Dallas,
                Texas

            	 	 	 
	
              Tanglewood
                Oaks

            	
              Fort
                Worth, Texas

            	 	 	 
	
              Village
                Oaks at Farmers Branch

            	
              Farmers
                Branch, Texas

            	 	 	 
	
              San
                Antonio Area

            	 	 	 	 
	
              Northwest
                Oaks

            	
              San
                Antonio, Texas

            	 	 	 
	
              Village
                Oaks at Hollywood Park

            	
              Hollywood
                Park, Texas

            	 	 	 
	
              Austin

            	 	 	 	 
	
              Duval
                Oaks

            	
              Austin,
                Texas

            	 	 	 
	
              El
                Paso

            	 	 	 	 
	
              Village
                Oaks at Cielo Vista

            	
              El
                Paso, Texas

            	 	 	 
	
              Florida

            
	
              Orlando
                Area

            	 	 	 	 
	
              Village
                Oaks at Conway

            	
              Orlando,
                Florida

            	 	 	 
	
              Village
                Oaks at Tuskawilla

            	
              Winter
                Springs, Florida

            	 	 	 
	
              Jacksonville
                Area

            	 	 	 	 
	
              Village
                Oaks at Orange Park

            	
              Orange
                Park, Florida

            	 	 	 
	
              Village
                Oaks at Southpoint

            	
              Jacksonville,
                Florida

            	 	 	 
	
              Melbourne

            	 	 	 	 
	
              Village
                Oaks at Melbourne

            	
              Melbourne,
                Florida

            	 	 	 
	
              Indiana

            
	
              Indianapolis

            	 	 	 	 
	
              Village
                Oaks at Greenwood

            	
              Indianapolis,
                Indiana

            	 	 	 
	
              Meridian
                Oaks

            	
              Indianapolis,
                Indiana

            	 	 	 
	
              Fort
                Wayne

            	 	 	 	 
	
              Village
                Oaks at Fort Wayne

            	
              Fort
                Wayne, Indiana

            	 	 	 
	
              Arizona

            
	
              Phoenix
                Area

            	 	 	 	 
	
              Village
                Oaks at Glendale

            	
              Glendale,
                Arizona

            	 	 	 
	
              Village
                Oaks at Mesa

            	
              Mesa,
                Arizona

            	 	 	 
	
              Village
                Oaks at Chandler

            	
              Chandler,
                Arizona

            	 	 	 
	
              Nevada

            
	
              Las
                Vegas

            	 	 	 	 
	
              Village
                Oaks at Las Vegas

            	
              Las
                Vegas, Nevada

            	 	 	 
	
              Alabama

            
	
              Birmingham

            	 	 	 	 
	
              Galleria
                Oaks

            	
              Birmingham,
                Alabama

            	 	 	 

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

    

    FORM
      OF PROMISSORY NOTE

    

    EARNEST
      MONEY NOTE

     

    February
      __, 2007

    

    FOR
      VALUE
      RECEIVED, EMERITUS CORPORATION, a Washington corporation (“Buyer”) promises to
      pay in lawful money of the United States of America to the order of CP ’02 POOL,
      LLC (“CP”) and FSPP FRETUS I, L.L.C. and FSPP FRETUS II, L.L.C. (together “FSPP
      Fretus” and together with CP, “Sellers”), the principal sum of Two Million Five
      Hundred Thousand Dollars ($2,500,000) together with interest as provided herein,
      payable upon the earlier of either of the following:

     

    
      	1.  	
              Upon
                Closing of the sale of Membership Interests pursuant to that certain
                Purchase and Sale Agreement (Membership Interests) by and among Buyer,
                Sellers and Fretus Investors LLC of even date herewith (the “Purchase
                Agreement”); or

            

    

     

    
      	2.  	
              Upon
                the termination of the Purchase Agreement by Sellers due to the material
                breach by Buyer of any of its warranties, representations, covenants,
                agreements or obligations thereunder, as provided in Section 9.1
                of the
                Purchase Agreement.

            

    

     

    This
      Note
      is executed in connection with the Purchase Agreement, and all capitalized
      terms
      used herein which are not defined in this Note shall have the meanings as set
      forth in the Purchase Agreement. 

     

    Buyer
      waives presentment for payment, demand, notice of nonpayment, notice of protest,
      and protest of this Note, and all other notices in connection with the delivery,
      acceptance, performance, default, dishonor, or enforcement of the payment of
      this Note. Buyer agrees that its liability hereunder shall not be affected
      by
      any other indulgence, extension of time, renewal, waiver, or modification
      granted or consented to by Sellers.

     

    This
      note
      shall bear simple interest at the rate of six percent (6%) per annum.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

     

    Any
      notice, request or communication required or permitted hereunder shall be in
      writing and shall be deemed to have been duly given if personally delivered
      or
      mailed by registered or certified mail, postage prepaid, or by recognized
      overnight courier or personal delivery at the respective addresses of the
      parties as set forth in the Purchase Agreement. 

     

    In
      the
      event that the Buyer fails to pay when due all amounts due hereunder, any of
      the
      Sellers may, by written notice to Buyer, declare this Note due and payable,
      whereupon this Note shall be due and payable without presentment, demand,
      protest or other notice of any kind, all of which are hereby expressly waived
      by
      Buyer. 

     

    Buyer
      shall reimburse Sellers for all costs incurred by Sellers, including without
      limitation, reasonable attorneys’ fees, in the enforcement and collection of any
      amounts under this Note. All payments received on this Note shall be applied
      first to any cost of collection, second to payment of accrued interest and
      third
      to the payment of principal. If not paid when due, all accrued but unpaid
      interest shall be added to the outstanding principal balance of this Note and
      shall thereafter bear interest at the rate provided for above.

     

    This
      Note
      shall be governed by and construed in accordance with the laws of the State
      of
      Washington, without regard to the conflicts of law provisions of the State
      of
      Washington or any other state. 

     

    ORAL
      AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR
      FROM
      ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

     

     

    MAKER:

     

    

    EMERITUS
      CORPORATION

    

    By:
      ______________________________

    Its:
      ______________________________

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    Schedule
      I

    

    Calculation
      of Purchase Price

    

    

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    Schedule
      II

    

    Income
      and Expenses

    

     

     

    
 

    
      
        
        

      

      
        17

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