ILM II SENIOR LIVING INC /VA
AMENDMENT TO MERGER AGREEMENT
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>AMENDMENT TO MERGER AGREEMENT
<TEXT>


                                                                    EXHIBIT 10.1

                               SECOND AMENDMENT TO
                              AMENDED AND RESTATED
                          AGREEMENT AND PLAN OF MERGER

      SECOND AMENDMENT TO AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
dated November 28, 2000 (this "Amendment"), among CAPITAL SENIOR LIVING
CORPORATION, a Delaware corporation ("CSLC"); CAPITAL SENIOR LIVING ACQUISITION,
LLC, a Delaware limited liability company, all of the outstanding membership
interests in which are wholly-owned by CSLC ("Sub"); and ILM II SENIOR LIVING,
INC., a Virginia finite-life corporation (the "Company").

                              W I T N E S S E T H:

      WHEREAS, CSLC, Sub and the Company entered into an Amended and Restated
Agreement and Plan of Merger dated October 19, 1999, as amended by the First
Amendment thereto dated April 18, 2000 (the "Merger Agreement");

      WHEREAS, at a special meeting of the holders of the Company's Common Stock
convened on June 22, 2000, the holders of not less than 66-2/3% of such
outstanding common stock duly approved the Merger Agreement and the transactions
contemplated thereby;

      WHEREAS, the parties hereto acknowledge that the Merger was not
consummated on or prior to September 30, 2000 and the non-satisfaction of the
condition set forth in Section 6.3(d) of such Merger Agreement;

      WHEREAS, pursuant to Section 7.3 and Section 7.4(a) of the Merger
Agreement, the parties to the Merger Agreement desire to amend and extend
certain terms thereof as hereinafter set forth;

      NOW, THEREFORE, in consideration of the mutual premises and the
representations, warranties, agreements and covenants, herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:

      1.    Subject to any approval by the holders of the Company's Common Stock
            or CSLC's Common Stock required by applicable law, the Merger
            Agreement is hereby amended as follows:

            (a)   the termination fee payable to CSLC upon the terms and subject
                  to the conditions prescribed by Section 5.6(b) of the Merger
                  Agreement is hereby amended by deleting in such Section
                  5.6(b), each time it appears, the number "$1,858,200" and, in
                  each instance, inserting in lieu and stead thereof, the number
                  "$1,000,000";

            (b)   Section 7.1(d) of the Merger Agreement is hereby amended by
                  deleting the provisions thereof in their entirety and
                  inserting in lieu and stead thereof:
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                        "(d) by either CSLC or the Company, if the Merger shall
                        not have been consummated at or prior to 5:00 p.m.,
                        Eastern time, on March 31, 2001.";

            (c)   Section 4.1(b) is hereby amended by the addition at the end
                  thereof of the following sentence:

                        "Notwithstanding anything to the contrary contained in
                        this Section 4.1(b) or elsewhere in this Agreement, the
                        Company shall be permitted at any time to distribute
                        (and such distribution shall not be construed as a
                        breach by the Company of any provision of this
                        Agreement) to its stockholders all or any portion of any
                        proceeds received from CSLC from the sale of the Santa
                        Barbara Property (as that term is defined in Section
                        5.10(d) hereof), provided that any such distribution
                        shall be considered a partial payment of the Merger
                        Consideration hereunder and shall be treated as a return
                        of invested capital which reduces the original issue
                        price per share for purposes of calculating the ordinary
                        cash dividend limit of 8.5% of original issue price per
                        share set forth in this Section 4.1(b)."

            (d)   All references to the Merger Agreement shall hereafter refer
                  to the Merger Agreement as amended by this Amendment.

2.    Except as amended in this Amendment, the Merger Agreement remains in full
      force and effect. All capitalized terms used in this Amendment which are
      not otherwise defined in this Amendment shall be as defined in the Merger
      Agreement. Unless otherwise expressly stated herein, nothing contained in
      this Amendment shall be deemed to constitute a waiver by any party hereto
      of any of the provisions contained in the Merger Agreement, or a waiver of
      any remedies of the parties in respect of the past or future breach or
      violation thereof, including without limitation, the provisions of Section
      5.6(e) of the Merger Agreement. All remedies hereunder and under the
      Merger Agreement are cumulative and not exclusive of any other remedies
      provided by law or in equity.

3.    This Amendment may be executed in counterparts, all of which, when taken
      together, constitute but one and the same original agreement.

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      IN WITNESS WHEREOF, CSLC, Sub, and the Company have caused this Amendment
to be executed and delivered by their respective officers thereunto duly
authorized all on this 28th day of November, 2000.

                              CAPITAL SENIOR LIVING CORPORATION


                              By:     /s/ James A. Stroud
                                      ------------------------------------
                              Name:   James A. Stroud
                              Title:  Chairman of the Company


                              CAPITAL SENIOR LIVING ACQUISITION, LLC


                              By:     /s/  Lawrence A. Cohen
                                      ------------------------------------
                              Name:   Lawrence A. Cohen
                              Title:  Chief Executive Officer


                              ILM II SENIOR LIVING, INC.


                              By:     /s/  J. William Sharman, Jr.
                                      ------------------------------------
                              Name:   J. William Sharman, Jr.
                              Title:  Chairman of the Board of Directors,
                                      President and Chief Executive Officer


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