As filed with the Securities and Exchange Commission on May 14, 1996
Registration No _____________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
__________________________
STERLING HOUSE CORPORATION
(Exact name of issuer as specified in its charter)
Kansas 48-1097141
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Suite 500
453 South Webb Road
Wichita, Kansas 67207
(Address of Principal Executive Offices) (Zip Code)
_____________________
1995 STOCK OPTION PLAN and 1995 DIRECTOR'S STOCK OPTION AGREEMENTS
(Full Title of Plan)
______________________
Timothy J. Buchanan
Chairman and Chief Executive Officer
STERLING HOUSE CORPORATION
Suite 500
453 South Webb Road
Wichita, Kansas 67207
(Name and Address of Agent for Service)
Telephone Number, including area code, of
agent for service: (316) 684-8300
______________________
Copy of Communications to:
R. Gail Knott Michael R. Biggs, Esq.
Chief Financial Officer, KLENDA, MITCHELL,
Secretary and Treasurer AUSTERMAN & ZUERCHER, L.L.C.
STERLING HOUSE CORPORATION 1600 Epic Center
Suite 500 301 North Main Street
453 South Webb Road Wichita, KS 67202-4888
Wichita, KS 67207
_____________________
(Continued on Following Page)
<PAGE>
CALCULATION OF REGISTRATION FEE
Approximate date of commencement of proposed sale to public:
From time to time after the Registration Statement becomes
effective.
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum Amount
Title of Amount Offering Aggregate Of
Securities to to be Price Per Offering Registration
be Registered Registered(1)(3) Share(2) Price(2) Fee
<S> <C> <C> <C> <C>
Common Stock,
No Par Value 309,000 Shares $18.44 $5,697,960 $1,964.81
<FN>
1) Plus such additional number of shares as may hereafter
become issuable pursuant to the Plan in the event of a
stock dividend, split-up of shares, recapitalization or
other similar transaction without receipt of consideration
which results in an increase in the number of shares
outstanding.
2) This estimate is made solely for the purpose of
determining the amount of the registration fee and is
based upon the amount of $18.44 per share, the average
high and low sale prices for the Registrant's stock as
traded on the American Stock Exchange on May 6, 1996.
3) 237,000 shares issuable under the 1995 Stock Option Plan
and 72,000 issuable under the 1995 Directors Stock Option
Agreements.
</TABLE>
<PAGE>
REOFFER PROSPECTUS
The material which follows, up to but not including the page beginning Part
II of this Registration Statement, constitutes a Prospectus, prepared on Form
S-3, in accordance with General Instruction C to Form S-8, to be used in connec-
tion with resales of securities acquired under the Registrant's 1995 Stock
Option Plan (the "Plan") by affiliates of the Registrant, as defined in Rule
405 under the Securities Act of 1933, as amended, and resales of securities
acquired under certain Directors' Options granted outside of the Plan by certain
directors of the Registrant.
<PAGE>
REOFFER PROSPECTUS
309,000 SHARES
COMMON STOCK
(No Par Value)
STERLING HOUSE CORPORATION
This Reoffer Prospectus ("Prospectus") relates to the
offering by STERLING HOUSE CORPORATION (the "Company") and the
subsequent resale by employees, officers, directors and
affiliates of the Company (collectively "Affiliates") of up to
237,000 shares of the Company's no par value common stock
purchasable pursuant to the Company's 1995 Stock Option Plan (the
"Plan"), and of up to 72,000 shares of common stock, no par
value, issuable upon the exercise of certain Directors' Options
granted outside of the Plan. As of April 1, 1996, 32,089 shares
were subject to outstanding options under the Plan and 204,911
shares remained available for the granting of options.
This Prospectus may be used by persons who are affiliates
(as that term is defined under the Securities Act of 1933, as
amended) of the Company to effect resales of the common stock
issuable upon exercise of the above-described options (the
"Shares"). See "Selling Stockholders." The Company will receive
no part of the proceeds of any such sales. Sales will be made at
the then current market prices at the time of sale. Sales may
involve the payment of brokers' commissions by Selling
Stockholders.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
No person is authorized to give any information or to make
any representation not contained in this Prospectus in connection
with the offer made hereby, and, if given or made, such
information or representation must not be relied upon as having
been authorized by the Company. The delivery of this Prospectus
at any time does not imply that the information herein is correct
as of the time subsequent to the date hereof. The expenses of
preparing and filing the Registration Statement of which this
Prospectus is a part are being borne by the Company.
The date of this Prospectus is May 14, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports and other
information with the Securities and Exchange Commission
("Commission"). Reports and other information, including proxy
materials prepared in accordance with Section 14 of the Exchange
Act, filed by the Company can be inspected and copied at the
public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549; Suite 1400, 500 West
Madison Street, Chicago, IL 60661; 7 World Trade Center, New
York, NY 10048; and 5670 Wilshire Boulevard, Los Angeles, CA
90036. Copies of such material can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Company's
common stock is traded on the American Stock Exchange under the
symbol "SGH." All reports, proxy and information statements may
also be inspected at the offices of the American Stock Exchange,
8620 Trinity Place, New York, NY 10006.
The Company furnishes annual reports to its shareholders
which include audited financial statements. The Company may also
furnish quarterly financial statements to shareholders and such
other reports as may be authorized, from time to time, by the
Board of Directors.
INCORPORATION BY REFERENCE
Certain documents have been incorporated by reference into
this Prospectus, either in whole or in part. The Company will
provide without charge (I) to each person to whom a Prospectus is
delivered, upon written or oral request of such person, a copy of
any and all of the information that has been incorporated by
reference (not including exhibits to the information unless such
exhibits are specifically incorporated by reference into the
information), and (ii) documents and information required to be
delivered to the Company's employees pursuant to Rule 428(b).
Requests for such information shall be addressed to the Company,
ATTN: Ms. R. Gail Knott, Chief Financial Officer, Secretary and
Treasurer, at Suite 500, 453 South Webb Road, Wichita, KS 67207,
telephone (316) 684-8300.
<PAGE>
TABLE OF CONTENTS
Page
Introduction 5
Selling Stockholders 5
Use of Proceeds 6
Method of Sale 6
SEC Position Regarding Indemnification 7
Incorporation of Certain Documents by Reference 7
Legal Matters 8
Experts 8
<PAGE>
INTRODUCTION
STERLING HOUSE CORPORATION constructs, owns, operates,
manages and franchises Sterling House assisted living residences,
providing a wide range of assisted living care and services to
the frail elderly. Assisted living care is an emerging segment
of the long-term care industry serving the rapidly growing
elderly population who may require assistance with the activities
of daily living, such as dressing, bathing and eating, or routine
skilled nursing services. The Company's operations provide
elderly residents with a broad range of cost-effective health
care and personal support services on a twenty-four hour basis,
enabling them to maintain an independent and dignified lifestyle
in a residential home-like setting.
STERLING HOUSE CORPORATION was co-founded in 1991 by Timothy
J. Buchanan, Chief Executive Officer, and Steven L. Vick,
President, and has actively expanded its assisted living
operations through the development, operation and selective
franchising of Sterling House residences. Sterling House
residences are located primarily in small to medium sized
communities with populations in excess of 10,000 as well as
select affluent suburban areas. The Company is following its
plan to construct, develop, manage, and, to a lesser extent,
acquire additional assisted living residences in states which the
Company believes possess attractive demographic and favorable
regulatory environments.
The Company is a Kansas corporation, with its principal
executive office located at Suite 500, 453 South Webb Road,
Wichita, Kansas 67207.
SELLING STOCKHOLDERS
This Prospectus relates to possible sales by directors,
officers and employees of the Company of Shares which they may
acquire through exercise of options granted under the Company's
1995 Stock Option Plan ("Plan") or through the exercise of
options granted to certain directors of the Company outside of
the Plan ("Directors' Options"). The names of Affiliates (all of
whom are officers or directors) who may be Selling Stockholders
from time to time are listed below, along with the number of
Shares owned. The number of Shares which may be sold by each
such Affiliate from time to time will be updated in supplements
to this Prospectus, which will be filed with the Securities and
Exchange Commission in accordance with Rule 424(b) under the
Securities Act of 1933, as amended.
<PAGE>
<TABLE>
<CAPTION>
Market
Price on
Shares Exercise Date of
Beneficially Options Price Grant Expiration
Name Owned Granted ($/Share) ($/Share) Date
<S> <C> <C> <C> <C> <C>
R. Gail Knott 465 8,444* (1)(3) $ .10 $ 11.25 10/26/05
Gary W. Anderson 3,289* (1)(3) $ .10 $ 11.25 10/26/05
Michael F. Frey 8,889* (1)(3) $ .10 $ 11.25 10/26/05
A. Kay Cook 3,200* (1)(3) $ .10 $ 11.25 10/26/05
Marla L. Lopeman 4,889* (1)(3) $ .10 $ 11.25 10/26/05
Gary L. Nelson 3,378* (1)(3) $ .10 $ 11.25 10/26/05
Michael F. Bushee 18,000* (2)(3) $ 11.25 $ 11.88 11/20/05
D. Ray Cook, M.D. 630,001 18,000* (2)(3) $ 11.25 $ 11.88 11/20/05
Diana M. Laing 18,000* (2)(3) $ 11.25 $ 11.88 11/20/05
Ronald L. Mercer 20,000 18,000* (2)(3) $ 11.25 $ 11.88 11/20/05
<FN>
* Will represent less than 1% of the total outstanding Common
Stock of the Company.
(1) A one time grant of Non-Qualified Stock Options to purchase
32,089 shares was granted to executive employees and options
to purchase 4,911 shares were granted to key employees on October
26, 1995, at an exercise price of $0.10 per share. The options
vested immediately and are exercisable in three 20% increments at
the end of each six month period commencing at the end of April
1996 and with the remaining 40% balance becoming exercisable on
October 26, 1997. These options expire ten years from the date
of grant.
(2) All such options were granted on November 20, 1995, for the num-
ber of shares indicated at a price of 100% of the Company's
initial offering price. The options are exercisable in three
33.33% increments commencing on November 20, 1996 and on each
of the next two anniversaries of the date of grant and expire
ten years from the date of grant.
(3) Sales under this Reoffer Prospectus are limited to the number
of Shares issuable under the options.
</TABLE>
The address of each Selling Stockholder is the same as the
Company's address. All Shares listed above for sale represent
Shares issuable upon exercise of options granted under the Plan.
USE OF PROCEEDS
The Company will not receive any proceeds upon the sale of
the Shares issuable upon the exercise of the stock options.
METHOD OF SALE
The Shares are being sold by the Selling Stockholders for
their own accounts. The Shares may be sold or transferred for
value by the Selling Stockholders, or by pledgees, donees,
transferees, or other successors in interest to the Selling
Stockholders, in one or more transactions on the American Stock
Exchange, in negotiated transactions or in a combination of such
methods of sale, at market prices prevailing at the time of sale,
at prices related to such prevailing market prices or at prices
otherwise negotiated. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker/dealers,
and such broker/dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the
Selling Stockholders and/or the purchasers of the Shares for whom
such broker/dealers may act as agent (which compensation may be
less than or in excess of customary commissions).
<PAGE>
There can be no assurance that any of the Selling
Stockholders will sell any or all of the Shares offered by them
hereunder.
SEC POSITION REGARDING INDEMNIFICATION
The Company's Articles of Incorporation and Bylaws provide
that the Company shall indemnify all directors and officers of
the Company to the fullest extent permitted by the Kansas general
corporation code. Under such provisions, any director or
officer, who in his or her capacity as such, is made or
threatened to be made, a party to any suit or proceeding, shall
be indemnified if it is determined that such director or officer
acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the Company.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to
directors, officers or persons controlling the Company under the
provisions described above, the Company has been informed that in
the opinion of the Securities and Exchange Commission that such
indemnification is against public policy as expressed in that Act
and is therefore unenforceable.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference into this
Prospectus the following documents heretofore filed with the
Securities and Exchange Commission pursuant to the Securities Act
of 1933 and the Securities Exchange Act of 1934:
1. The Company's Annual Report on Form 10-K for the year
ended December 31, 1995, filed under Section 13(a) of
the Securities Exchange Act of 1934;
2. The description of Common Stock included in the
Company's Registration Statement on Form 8-A as filed
with the Commission on or about October 26, 1995; and
3. The Company's Report on Form 8-K dated March 26, 1996,
filed under Section 13 of the Securities Exchange Act
of 1934.
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934, as amended, after the date of this Registration Statement
and prior to the filing of a post-effective amendment, which
indicate that all securities offered hereby have been sold or which deregister
all securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the
date of filing of such documents.
<PAGE>
LEGAL MATTERS
The validity of the Shares offered hereby will be passed on
for the Company by Klenda, Mitchell, Austerman & Zuercher, L.L.C.,
1600 Epic Center, 301 North Main Street, Wichita, Kansas 67202-4888.
EXPERTS
The financial statements of the Company incorporated by
reference in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995 have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report included therein
and incorporated herein by reference. The financial statements
referred to above are incorporated herein by reference in reliance
upon such report given upon the authority of such firm as experts
in accounting and auditing.
<PAGE>
PART II.
Information Required in the Registration Statement
Item 3. Incorporation of Certain Documents by Reference
There are hereby incorporated by reference into this
Registration Statement the following documents heretofore
filed with the Securities and Exchange Commission pursuant to
the Securities Act of 1933 and the Securities Exchange Act of
1934:
1. The Company's Annual Report on Form 10-K for the year
ended December 31, 1995, as filed under Section 13(a)
of the Securities Exchange Act of 1934;
2. The Company's Report on Form 8-K dated March 26, 1996,
filed under Section 13 of the Securities Exchange Act
of 1934; and
3. The description of Common Stock included in the
Company's Registration Statement on Form 8-A as filed
with the Commission on or about October 26, 1995.
All documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended, after the date of this
Registration Statement and prior to the filing of a post-
effective amendment, which indicates that all securities
offered hereby have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and
to be a part hereof from the date of filing of such documents.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests in Named Experts and Counsel
Not Applicable.
Item 6. Indemnification of Directors and Officers
The Company's Articles of Incorporation and Bylaws
provide that the Company shall indemnify all directors and
officers of the Company to the fullest extent permitted by the
Kansas general corporation code. Under such provisions, any
director or officer, who in his or her capacity as such, is
made or threatened to be made, a party to any suit or
proceeding, shall be indemnified if it is determined that such
director or officer acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best
interests of the Company.
<PAGE>
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
The exhibits to this Registration Statement are listed in
the Index to Exhibits on Page 7 of this Registration, which
Index is incorporated herein by reference.
Item 9. Undertakings
The undersigned Registrant hereby undertakes to file,
during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to
include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
The undersigned Registrant hereby undertakes to remove
from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that for the
purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's Annual Report
pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to deliver
or cause to be delivered with the Registration Statement to
each employee to whom the Registration Statement is sent or
given a copy of the Registrant's Annual Report to Shareholders
for its last fiscal year, unless such employee otherwise has
received a copy of such report, in which case the Registrant
shall state in the Registration Statement that it will
promptly furnish, without charge, a copy of such report on
written request of the employee. If the last fiscal year of
the Registrant has ended within one hundred twenty (120) days
prior to the use of the Registration Statement, the Annual
Report of the Registrant for the preceding fiscal year may be
so delivered, but within such one hundred twenty (120) day
period the Annual Report for the last fiscal year will be
furnished to each such employee.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant to
the foregoing provisions, or otherwise, the Registrant has
been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by
such director, officer, or controlling person in connection
with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-8 and has
duly caused this Form S-8 Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Wichita, State of Kansas on this 14th day of May, 1996.
STERLING HOUSE CORPORATION
/s/Timothy J. Buchanan
Dated: May 14, 1996 By _________________________________
Timothy J. Buchanan,
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in
the capacities and on the date indicated. Each person whose
signature appears below hereby authorizes Timothy J. Buchanan and
Steven L. Vick, or either of them, as attorneys-in-fact to sign on
his behalf individually and in each capacity and as stated below,
and to file any amendments, including post-effective amendments, to
this Registration Statement.
Signature Title Date
/s/Timothy J. Buchanan
_______________________ Chairman of the Board and 5/14/96
Timothy J. Buchanan Chief Executive Officer
(Principal Executive Officer)
/s/Steven L. Vick
______________________ President and Director 5/14/96
Steven L. Vick
/s/R. Gail Knott
______________________ Chief Financial Officer, 5/14/96
R. Gail Knott Secretary and Treasurer
(Principal Financial Officer)
/s/Michael F. Bushee
______________________ Director 5/14/96
Michael F. Bushee
/s/D. Ray Cook, M.D.
______________________ Director 5/14/96
D. Ray Cook, M.D.
/s/Diana M. Laing
______________________ Director 5/14/96
Diana M. Laing
/s/Ronald L. Mercer
______________________ Director 5/14/96
Ronald L. Mercer
<PAGE>
EXHIBIT INDEX
Exhibit Description Sequential
Number of Exhibit Page Number
4.1 Specimen of Stock Certificate, Incorporated
by Reference from Company's Registration
Statement on Form S-1 (Commission File No.
33-96288), Exhibit No. 4.1
4.2 Form of Sterling House Corporation Grant of
Incentive Stock Options, Incorporated by
Reference from Company's Registration Statement
on Form S-1 (Commission File No. 33-96288),
Exhibit No. 4.2
4.3 Form of Sterling House Corporation Non-Qualified
Stock Options Agreement, Incorporated by
Reference from Company's Registration Statement
on Form S-1 (Commission File No. 33-96288),
Exhibit No. 4.3
4.4 Schedule of Employees Receiving Stock Options
Grants, Incorporated by Reference from
Company's Annual Report on Form 10-K for the
year ended December 31, 1995, Exhibit No. 4.4
4.5 Form of Sterling House Corporation Director's
Stock Option Agreement, Incorporated by
Reference from Company's Annual Report on
Form 10-K for the year ended December 31, 1995,
Exhibit No. 4.5
4.6 Schedule of Directors Receiving Stock
Option Grants, Incorporated by Reference
from Company's Annual Report on Form 10-K
for the year ended December 31, 1995, Exhibit
No. 4.6
5 Opinion and Consent of Klenda, Mitchell,
Austerman & Zuercher, L.L.C.
23 Consent of Ernst & Young, LLP
24 Power of Attorney (included on the signature
page of this registration statement
<PAGE>
Exhibit 5
May 7, 1996
Sterling House Corporation
Suite 500
453 South Webb Road
Wichita, KS 67207
RE: Sterling House Corporation
Registration Statement on Form S-8
Gentlemen:
We have acted as securities counsel for Sterling House Corporation
(the "Company") in connection with the preparation of a
registration statement on Form S-8 (the "Registration Statement")
under the Securities Act of 1933 to be filed with the Securities
and Exchange Commission (the "Commission") on May 14, 1996, in
connection with the registration of two hundred thirty-seven
thousand (237,000) shares of Common Stock, no par value, to be
issued under the Sterling House Corporation 1995 Stock Option Plan
(the "Plan") and of seventy-two thousand (72,000) shares issuable
upon the exercise of certain Directors' Options granted outside of
the Plan (the "Directors' Options") (the aggregate of such three
hundred nine thousand [309,000] shares of Common Stock referred to
herein as the "Shares").
In connection with the preparation of the Registration Statement
and the proposed issuance and sale of the Shares in accordance with
the Plan and the Directors' Options, and the Form S-8 prospectus to
be delivered thereunder, we have made certain legal and factual
examinations and inquiries and examined, among other things, such
documents, records, instruments, agreements, certificates and
matters as we have considered appropriate and necessary for the
rendering of this opinion. We have assumed for the purpose of this
opinion the authenticity of all documents submitted to us as
originals and the conformity with the originals of all documents
submitted to us as copies, and the genuineness of the signatures
thereon. As to various questions of fact material to this opinion,
we have, when relevant facts were not independently established,
relied, to the extent deemed proper by us, upon certificates and
statements of officers and representatives of the Company.
<PAGE>
Based on the foregoing and in reliance thereon, it is our opinion
that the Shares have been duly authorized and, after the
Registration Statement becomes effective and after any post-effective amendment
required by law is duly completed, filed and becomes effective, and when the
applicable provisions of "Blue Sky" and other state securities laws shall
have been complied with, and when the Shares are issued and sold in accor-
dance with the Plan or the Directors' Options, as the case may be, and the
Form S-8 prospectus to be delivered to participants in the Plan and/or the
participating Directors, the Shares will be legally issued, fully
paid and non-assessable.
We hereby consent to the inclusion of our opinion as Exhibit "5" to
the Registration Statement and further consent to the reference to
this firm in the Registration Statement. In giving this consent,
we do not hereby admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act of 1933
or the rules and regulations of the Commission thereunder.
This opinion is rendered solely for your benefit in accordance with
the subject transaction and is not to be otherwise used,
circulated, quoted or referred to without our prior written
consent. We are opining herein as to the effect on the subject
transaction only of United States federal law and the General
Corporation Law of the State of Kansas, without regard for choice
of law principles, and we assume no responsibility as to the
applicability thereto, or the effect thereon, of the laws of any
other jurisdiction.
Yours very truly,
KLENDA, MITCHELL, AUSTERMAN & ZUERCHER, L.L.C.
By /s/ Michael R. Biggs
__________________________
Michael R. Biggs, a Member
MRB:bll
<PAGE>
Exhibit 23
Consent of Independent Auditors
We consent to the reference to our firm under the caption Experts"
in the Registration Statement (Form S-8) and related Prospectus
pertaining to the 1995 Stock Option Plan and Directors' Stock
Option Agreements of Sterling House Corporation and to the
incorporation by reference therein of our report dated March 26,
1996, with respect to the consolidated financial statements of
Sterling House Corporation included in its Annual Report (Form 10-K) for the
year ended December 31, 1995, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Wichita, Kansas
May 8, 1996
</PAGE>
