EMERITUS CORP\WA\
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>14
<FILENAME>ex10685.txt
<TEXT>


                     AMENDED AND RESTATED FUNDING AGREEMENT

     THIS  AMENDED  AND RESTATED FUNDING AGREEMENT (the "Agreement") is made and
entered  into as of the 1st day of May, 2002 by and between Emeritus Corporation
("Emeritus")  and  HB-ESC  I, LLC ("HB-ESC I"), HB-ESC II, LLC ("HB-ESC II") and
HB-ESC  V,  LP  ("HB-ESC  V"  and  together with HB-ESC I and HB-ESC II, the "HB
Entities").

                                    RECITALS

     A.     Emeritus  is a party to that Sale Contract dated as of April 4, 2002
among  Integrated  Living  Communities  of Alexandria, L.L.C., Integrated Living
Communities of Lake Charles, L.L.C., Integrated Living Communities of Lafayette,
L.L.C.,  Integrated  Living  Communities  of  Henderson, L.P., Integrated Living
Communities of Oakwell, L.P., Integrated Living Communities of San Antonio, L.P.
and  Integrated  Living  Communities  of  McKinney, L.P. (the "Leased Facilities
Seller"),  and  Emeritus, as Buyer (the "Leased Facilities Purchase Agreement"),
pursuant  to  which  Emeritus  agreed  to purchase the assets owned or leased by
Leased  Facilities  Seller and used in connection with the leasing and operation
of  the  assisted  living facilities described therein (the "Leased Facilities")
including  Seller's  rights  under the Facility Leases (as defined in the Leased
Facilities  Purchase  Agreement").  The Leased Facilities are leased from Health
Care  Property  Investors, Inc. ("HCPI") and Healthcare Realty Trust ("HRT") and
are  hereinafter  referred  to  as the "HCPI Facilities," a list of which is set
forth in Exhibit A hereto and the "HRT Facilities," a list of which is set forth
in  Exhibit  B  hereto.

     B.     Emeritus is also a party to that Sale Contract dated as of April 17,
2002,  between  Senior  Lifestyle Shreveport, L.L.C., as Seller (the "Shreveport
Seller"  and  together  with  the  Leased Facilities Seller, the "Sellers"), and
Emeritus,  as  Buyer  (the "Shreveport Purchase Agreement" and together with the
Leased  Facilities  Purchase  Agreement, the "Purchase Agreements"), pursuant to
which  Emeritus  agreed  to purchase the real property and other assets owned by
Shreveport Seller and used in connection with the ownership and operation of the
assisted  living  facility  described  therein  (the  "Shreveport  Facility" and
together  with  the  Leased Facilities, the "Facilities").  Immediately prior to
Closing,  Emeritus intends to assign to HB-ESC I, and HB-ESC I intends to assume
from  Emeritus,  all  of  Emeritus'  rights and obligations under the Shreveport
Purchase  Agreement  and  HB-ESC  I  will  thereafter  purchase  the  Shreveport
Facility,  subject  to the obligations of the Shreveport Seller under certain of
the  loan  documents  entered into by the Shreveport Seller with GMAC Commercial
Mortgage Corporation ("GMAC"), which loan documents shall be assumed by HB-ESC I
and  concurrently amended by HB-ESC I and GMAC at the closing of the purchase of
the Shreveport Facility by HB-ESC I (the "Shreveport Loan Documents").  The loan
evidenced  by  the  Shreveport Loan Documents will hereinafter be referred to as
the  "Shreveport  Debt."

C.     Under  the  terms  of the Purchase Agreements, the Sellers have agreed to
fund  the  Operating  Losses  (as  defined  in  the  Purchase Agreements) of the
Facilities during a two year period after the closings of the transactions which
are  the  subject  of  the  Purchase  Agreements  subject to certain caps on the
obligations  of  the  Sellers  thereunder.

D.     As  a  result  of certain accounting issues presented by the structure of
the  transaction, Emeritus agreed, with the consent of the Sellers, to assign to
the  HB  Entities  its  rights  and  obligations  under the Purchase Agreements,
including  its  rights  with respect to the funding of the Operating Losses, and
the  HB  Entities  agreed  to engage Emeritus to operate the Facilities, and, in
furtherance  thereof,  Emeritus and the HB Entities have entered into Management
Agreements  of  even  date herewith with respect to all of the Facilities, other
than those which are located in Texas and leased from Healthcare Realty Trust as
to which management agreements will be executed concurrently with the closing of
the transaction related thereto as provided for in the Leased Purchase Agreement
(the  "Management  Agreements").

E.     Emeritus  and  the HB Entities previously entered into an Agreement dated
as of May 1, 2002 (the "Original Funding Agreement") which documents (i) certain
additional agreements which they have reached with respect to the Facilities and
(ii)  certain amendments to the Management Agreements to the extent necessary to
reflect  such  additional  agreements.

F.     In  order  to address certain concerns raised by GMAC with respect to the
Original  Funding  Agreement  and  the  Management  Agreement  related  to  the
Shreveport Facility (the "Shreveport Management Agreement"), Emeritus and the HB
Entities  have agreed to amend and restate the Original Funding Agreement in its
entirety.

G.     The Original Funding Agreement provides that it may be amended by written
agreement  signed  by  Emeritus  and  the  HB  Entities.

NOW,  THEREFORE,  in  consideration  of  the  foregoing  premises and the mutual
covenants of the parties set forth herein, IT IS HEREBY AGREED THAT THE ORIGINAL
FUNDING AGREEMENT SHALL BE AND HEREBY IS AMENDED AND RESTATED IN ITS ENTIRETY AS
FOLLOWS:

1.  For  a period commencing on May 1, 2002 and ending on the earlier of (i) the
date  on which Emeritus acquires title to the Facilities from the HB Entities in
accordance  with  Section  3  hereof or (ii) April 30, 2007 or (iii) the date on
which the Management Agreements are terminated with respect to the Facilities in
accordance  with  the  terms  of Section 2 hereof (the "Funding Period"), on the
terms  and  conditions  set  forth herein, Emeritus shall be responsible for any
Operating  Losses  (as  defined  in the Purchase Agreements) attributable to the
Facilities,  taken as whole, which are in excess of the sum of the cash receipts
of  the  Facilities,  taken as a whole, and the Operating Losses with respect to
all  of the Facilities taken as a whole actually funded by the Sellers under the
terms  of  the  Purchase Agreements (the "Covered Expenses").  In furtherance of
the  foregoing and for purposes of clarification, the parties further agree that
regardless  of  the fact that the Operating Losses for the Leased Facilities and
the Shreveport Facility are calculated separately under the Purchase Agreements,
for purposes of determining the liability of Emeritus under this Agreement, such
Operating  Losses  and  the amount thereof which are funded by Sellers under the
Purchase  Agreements and which are to be funded by Emeritus under this Agreement
shall  be  calculated on an aggregate basis for all of the Facilities taken as a
whole.  The  parties  further  agree  that  the amount of Operating Losses to be
funded  by  Emeritus  shall  not be affected by a breach by the Sellers of their
obligations  under  the Purchase Agreements, it being understood and agreed that
should  such  a  breach occur, Emeritus will nonetheless be required to fund the
Operating  Losses of the Facilities in accordance with the terms of this Section
1  but  the HB Entities shall, upon request, execute any and all documents which
may be necessary to assign to Emeritus any rights which the HB Entities may have
under  the Purchase Agreements to pursue the Sellers and/or any guarantor of the
Sellers'  obligations,  for  a  breach  of  their  funding obligations under the
Purchase  Agreements.

In  furtherance  of  the foregoing, Emeritus and the HB Entities acknowledge and
agree  that Section 4 of each Purchase Agreement establishes a mechanism for the
submission  of  a  Monthly  Report  (as defined in Section 4(b) of each Purchase
Agreement) which will reflect the Operating Losses for the Leased Facilities and
for the Shreveport Facility, as applicable, during the relevant reporting period
and that Emeritus shall be required under the terms of this Agreement (A) during
the  first  two years of the Funding Period, to be responsible for the aggregate
Operating Losses reflected in the Monthly Report which relate to the Facilities,
taken  as  a whole, and which are not covered by the total amount of the Monthly
Reimbursement  paid by the Sellers under the Purchase Agreements, (B) during the
last three years of the Funding Period, to continue to prepare and submit to the
HB Entities a Monthly Report for all of the Facilities, taken as a whole and (C)
during  the  last  three  years  of the Funding Period to be responsible for the
aggregate  Operating  Losses reflected in the Monthly Report for the Facilities,
taken  as a whole. During the Funding Period, the obligation imposed on Emeritus
under  this  Section 1 shall supersede any obligation imposed on the HB Entities
under  the terms of the Management Agreements to provide working capital for the
Facilities.

2.  In consideration for the obligations assumed by Emeritus pursuant to Section
1  hereof,  the Management Agreements are amended to provide that (a) they shall
have  a term of five (5) years commencing on May 1, 2002 and ending on April 30,
2007 (the "Term") unless earlier terminated by the applicable HB Entity upon the
occurrence  of a Manager Event of Default (as defined in Exhibit C hereto) or by
Emeritus upon the occurrence of a Licensee/Owner Event of Default (as defined in
Exhibit D hereto) and by mutual agreement of the parties upon the acquisition of
title  to  the  Facilities  by  Emeritus, (b) that any and all references in the
Management Agreements to the Commencement Date shall be May 1, 2002,  (c) except
with respect to the Shreveport Management Agreement which may only be terminated
by  HB-ESC  I  or  Emeritus  in  accordance with the terms of this Section 2 and
subject  to  any  rights  granted  to  GMAC  under  the documents evidencing the
Shreveport  Debt,  an  election  by  any  HB  Entity  to  terminate a Management
Agreement  shall  be  deemed  to  be  an  election  by all of the HB Entities to
terminate  all of the Management Agreements and (c) to provide in the Shreveport
Management  Agreement  that  for  so  long  as  the  Shreveport  Debt  remains
outstanding,  the  reports due from Manager under Section I(G) thereof will also
include  the reports due from HB-ESC I with respect to Manager or the Shreveport
Facility  under Section 5.5 of the Loan Agreement included within the Shreveport
Loan  Documents  assumed  by  HB-ESC  I.

3.  In further consideration for the obligations assumed by Emeritus pursuant to
Section  1 hereof, each of the HB Entities acknowledges and agrees that Emeritus
shall  have  the right between the date hereof and April 30, 2007 (the "Exercise
Period"),  on  written  notice  to  the  HB Entities (the "Exercise Notice"), to
require  the  HB  Entities  (i)  to assign to it the Facility Leases and (ii) to
convey  to  it  title  to  the Shreveport Facility, subject, however, (A) if the
Shreveport  Debt  to GMAC remains outstanding, to the receipt by HB-ESC I of the
prior  written  consent  and  approval of GMAC or (B) if the Shreveport Debt has
been  refinanced,  then  to the receipt by HB-ESC I of the prior written consent
and  approval of the holder of the New Shreveport Loan (as defined below) if and
to  the  extent such consent is required by the terms of the New Shreveport Loan
documents,.

Conveyance of title to the Shreveport Facility shall be made only with the prior
written  consent  and approval of GMAC (or, if applicable, the holder of the New
Shreveport  Loan),  and  the  rights  of  Emeritus under this Section 3 shall be
subject  and subordinate to the rights of GMAC (or, if applicable, the holder of
the  New  Shreveport  Loan)  and  the  obligations  of  the "Borrower" under the
Shreveport Loan Documents (or the obligations of the "Borrower" under any of the
New Shreveport Loan documents, if applicable), as such documents may be modified
by  agreement of Emeritus and GMAC (or the holder of the New Shreveport Loan, if
applicable)  at  the  time  of,  and  as  a  condition to securing, such written
approval,  it  being  understood and agreed that it is the intent of the parties
that  Emeritus  will  assume the Shreveport Debt (or the New Shreveport Loan, if
applicable)  concurrently  with  its  acquisition  of  title  to  the Shreveport
Facility.

In  furtherance  of the foregoing, the HB Entities acknowledge and agree that in
the event HB-ESC I refinances the Shreveport Debt at anytime during the Exercise
Period,  then  HB-ESC  I shall use its commercially reasonable efforts to ensure
that  any  loan  secured  by it in conjunction with such refinancing transaction
(the  "New  Shreveport Loan") shall specifically provide that the New Shreveport
Loan is assumable by Emeritus in the event Emeritus exercises its rights granted
under  this  Section 3 during the Exercise Period or if an assumable loan is not
available,  in  the  reasonable  determination  of  HB-ESC  I,  on  commercially
reasonable  terms,  then the terms of the New Shreveport Loan shall not, without
the  prior  written consent of Emeritus, which consent shall not be unreasonably
withheld,  vary  materially from the terms of the loan evidencing the Shreveport
Debt.

     In  the  event  any  of HCPI, HRT, GMAC or the holder of the New Shreveport
Loan,  if  applicable,  refuses  for  reasons  beyond  the reasonable control of
Emeritus to consent to the assignment of its Facilities Leases or the assumption
of  the New Shreveport Loan, then, at the option of the HB Entities exercised by
written  notice to Emeritus, either none of the Facilities and the rights of the
HB  Entities  therein  shall  be  conveyed  to  Emeritus  or  such  lease
assignment/conveyance  of  title  shall  be effective as to those Facilities for
which  the  necessary consents have been secured and, in either event, as to the
remaining  Facilities,  Emeritus  will continue to manage the same in accordance
with  the  terms  of  the  applicable  Management  Agreement  as amended by this
Agreement; provided, however, in the event that the only party refusing to grant
the  necessary  consent  is  the  holder of the New Shreveport Loan, then the HB
Entities  shall be required to transfer to Emeritus their rights with respect to
all  of  the  Facilities  other  than  the Shreveport Facility and Emeritus will
continue  to  manage the Shreveport Facility in accordance with the terms of the
Shreveport  Management  Agreement,  as  amended  by  this  Agreement.

The  assignment of the Facility Leases and conveyance of title to the Shreveport
Facility  (i)  shall be evidenced by conveyancing documents in substantially the
same  form  and substance as those under which the HB Entities took title to the
Facility  Leases  and/or  the  Shreveport  Facility or under which the HB Entity
later took title, in the case of any of the Leased Facilities which are acquired
by  the  HB Entities during the Exercise Period and (ii) shall be subject to the
payment by Emeritus at the closing of the assignment/conveyance transactions (A)
to the applicable HB Entity of an amount equal to the sum of (I) all of its cash
invested in connection with its acquisition of fee and/or leasehold title to and
leasing/ownership of the Facilities (or so many thereof as are being conveyed to
Emeritus  pursuant to this Section 3) and (II) interest on such investment in an
amount  equal  to 9% per annum calculated from the date of the investment to the
Closing  Date  (as  hereinafter  defined) and (B) to the applicable HB Entity or
appropriate  third  party  of all of the costs of the transaction, including but
not limited to, title insurance premiums, surveyor fees and expenses, legal fees
for  Emeritus  and  the  HB  Entities  and  other third party costs and expenses
incurred  in  connection with the transaction.  For purposes hereof, the Closing
Date  shall  be  defined  as  the  date  on  which  Emeritus acquires fee and/or
leasehold  title  to the Facilities (or so many thereof as are being conveyed to
Emeritus  pursuant  to  this  Section  3).

4.  In  further  consideration  for  the  obligations  assumed by Emeritus under
Section  1, the HB Entities shall, upon request, pay to Emeritus an amount equal
to  the  sum  of  (i)  all  of  the  legal  fees  and expenses incurred by it in
connection  with  the negotiation of the Purchase Agreement and the consummation
of  the  transactions  provided  for  therein  and  (ii) $15,000 per Facility to
reimburse  Emeritus  for  its  due  diligence  costs  and  expenses  incurred in
connection  with  such  transactions.

5.  This  Agreement  represents  the  entire  and final agreement of the parties
hereto  with  respect  to  the  subject  matter  hereof and supersedes all prior
negotiations,  discussions  or  writings with respect thereto including, but not
limited  to,  the Original Funding Agreement.  This Agreement may not be amended
or  modified  except by written instrument signed by the parties hereto.  In the
event  of  a  conflict  between  this Agreement and any or all of the Management
Agreements, this Agreement shall control and this Agreement is intended to amend
the  Management  Agreements  in  the  manner  provided  for  herein.

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

7.  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 any party hereto.

8.  In the event of dispute with respect to the interpretation or enforcement of
the  terms  hereof,  the  prevailing party shall be entitled to collect from the
other  its  reasonable costs and attorneys fees, including its costs and fees on
appeal.

<PAGE>

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


                         EMERITUS  CORPORATION


                         By:     /s/    Daniel  R.  Baty_______
                              Daniel  R.  Baty
                         Its:     Chief  Executive  Officer

          HB-ESC  I,  LLC

     By:     /s/    Daniel  R.  Baty_______
               Daniel  R.  Baty
               Manager

          HB-ESC  II,  LLC

     By:     /s/    Daniel  R.  Baty_______
               Daniel  R.  Baty
               Manager


     HB-ESC  V,  L.P.

     By:     HB-ESC  III,  LLC
Its:     General  Partner

          By:     /s/    Daniel  R.  Baty_______
                    Daniel  R.  Baty
                    Manager


<PAGE>
                                    EXHIBIT A
                               THE HCPI FACILITIES

Kingsley  Place  at  Alexandria
351  Windermere  Blvd
Alexandria,  Louisiana

Kingsley  Place  at  Lake  Charles
2420  Country  Club  Road
Lake  Charles,  Louisiana

Kingsley  Place  at  Lafayette
215  West  Farrel  Road
Lafayette,  Louisiana



<PAGE>
                                    EXHIBIT B
                               THE HRT FACILITIES

Kingsley  Place  of  Henderson
1000  Richardson  Drive
Henderson,  Texas

Kingsley  Place  at  Oakwell  Farms
3360  Oakwell  Court
San  Antonio,  Texas

Kingsley  Place  at  The  Medical  Center
9000  Floyd  Curl  Drive
San  Antonio,  Texas

Kingsley  Place  at  Stonebridge
1650  S.  Stonebridge  Drive
McKinney,  Texas


<PAGE>
                                    EXHIBIT C
                            MANAGER EVENT OF DEFAULT

     With  respect  to  Emeritus  ("Manager"), it shall be an "Event of Default"
under  the  Management  Agreements:

(a)     If  Manager  shall  fail  to  keep,  observe,  or  perform  any material
agreement,  term,  or  provision  of  the Management Agreement, and such default
shall  continue  for  a  period  of  thirty (30) days after Manager's receipt of
notice  of  such default from the applicable HB Entity ("Licensee/Owner"), which
notice  shall  specify in reasonable detail the event or events constituting the
default;  or

(b)     If (i) Manager shall  (A) apply for, or consent to, the appointment of a
receiver,  trustee,  or  liquidator  of  Manager of all or a substantial part of
Manager's  assets,  (B)  file  a  voluntary  petition in bankruptcy, or admit in
writing  Manager's inability to pay Manager's 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 (ii) an order, judgment or decree shall be entered by
a  court  of  competent  jurisdiction,  on  the  application  of  a creditor (A)
adjudicating  Manager as bankrupt or insolvent, (B) approving a petition seeking
reorganization  of Manager, or (C) appointing a receiver, trustee, or liquidator
for  Manager  or  for  all  or  a  substantial  part  of  Manager's  assets;  or

(c)     If  as  a result of the acts or omissions of Manager an Event of Default
shall  occur  under  any  of the Leases or any of the Shreveport Loan Documents;
other  than an Event of Default related to the failure of the Facility to comply
with  any  financial  covenants  set forth in the Leases, or the Shreveport Loan
Documents,  which  failure  shall  be  subject  to  clause  (d)  below;  or

(d)     If  any  of  the Facilities fails to comply with any financial covenants
set  forth  in  the Leases or in any of the Shreveport Loan Documents whether or
not  any  cure period applicable to such failure has expired it being understood
and agreed that Licensee/Owner shall have no obligation to grant Manager a right
to  cure  any  failure  to  comply with the financial covenants set forth in the
Leases  or  in  any  of  the  Shreveport  Loan  Documents;  or

(e)     If  Manager defaults in its funding obligations set forth in Paragraph 1
of  the  Amended  and Restated Funding Agreement dated as of May 1, 2002 between
Manager,  Licensee/Owner  and  certain  affiliates  of  Licensee/Owner  and such
default  is  not  cured  within ten (10) days after Manager's receipt of written
notice from Licensee/Owner setting forth in reasonable detail the nature of such
default.

<PAGE>

                                    EXHIBIT D
                         LICENSEE/OWNER EVENT OF DEFAULT

     With respect to the HB Entities ("Licensee/Owner"), it shall be an Event of
Default  under  the  Management  Agreements:

(a)     If  Licensee/Owner  shall  fail,  other  than as a result of a breach by
Emeritus  ("Manager")  of its obligations under either that Amended and Restated
Agreement  dated as of May 1, 2002 between Licensee/Owner and its affiliates and
Manager  (the  "Funding Agreement") or under the applicable Management Agreement
in  effect between such Licensee/Owner and Manager, to keep, observe, or perform
any  material  agreement,  term, or provision of this Agreement and such default
shall  continue  for a period of thirty (30) days after Licensee/Owner's receipt
of notice of such default from Manager, which notice shall specify in reasonable
detail  the  event  or  events  constituting  the  default;

(b)     If  Licensee/Owner  shall  fail,  other  than as a result of a breach by
Manager  of  its  obligations  under  either  the  Funding  Agreement and/or the
applicable  Management Agreement, to make payments, or keep any covenants, owing
to  any  third  party and which would cause Licensee/Owner to lose possession of
the  Facility  or  any personal property required to operate the Facility in the
normal  course  of  operation;  or

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







</TEXT>
</DOCUMENT>
