EX-10.71.21

LOAN MODIFICATION AGREEMENT

“Emeritol Facilities”
 
This LOAN MODIFICATION AGREEMENT dated October 30, 2009, is made by and among
EMERITOL STONECREEK LODGE LLC, a Delaware limited liability company and EMERITOL
MEADOWBROOK LLC, a Delaware limited liability company (each a “Borrower” and
collectively, “Borrowers”), KEYBANK NATIONAL ASSOCIATION, a national banking
association, its successors and assigns (“Lender”), and EMERITUS CORPORATION, a
Washington corporation (“Emeritus” or “Guarantor”).
 
Recitals
 
 
A.           On or about October 17, 2008, Lender made a loan (“Loan”) to
Borrowers in the original principal amount of $9,802,500.00. The Loan is
evidenced by Borrowers’ Promissory Note (“Note”) and is secured by (i) a Deed of
Trust, Assignment of Rents, Security Agreement and Fixture Filing (“Meadowbrook
Deed of Trust”), recorded as Instrument No. 2008-7454, records of Malheur
County, Oregon, encumbering certain real property (“Meadowbrook Property”)
located in Malheur County, Oregon and legally described on Exhibit A to the
Meadowbrook Deed of Trust; and (ii) a Mortgage, Assignment of Rents, Security
Agreement and Fixture Filing (“Stonecreek Mortgage”), recorded October 23, 2008
in Mortgage Book 11355, Page 0506, in the Office of the Clerk of Jefferson
County, Kentucky, encumbering certain real property (“Stonecreek Property”)
located in Jefferson County, Kentucky, and legally described on Exhibit A to the
Stonecreek Mortgage. Disbursement of the proceeds of the Loan is governed by a
Loan Agreement (“Loan Agreement”) between Borrowers and Lender dated October 17,
2008.  Payment of the Loan is unconditionally guaranteed by Guarantor under an
Unconditional Payment Guaranty (“Guaranty”) dated October 17, 2008.
 
B.           Borrowers have requested that the Loan Documents be modified to
allow the release of the Meadowbrook Property.  Lender is willing to do so
subject to the terms and conditions of this Agreement.
 
Agreement
 
NOW THEREFORE, the parties agree as follows:
 
1.  
Definitions.  Capitalized terms used but not defined in this Agreement are
defined in the Loan Agreement.

 
2.  
Release of Meadowbrook Property. Notwithstanding the restrictions in the Loan
Agreement and the Meadowbrook Deed of Trust, Lender will cause the Meadowbrook
Deed of Trust to be released and reconveyed from the Meadowbrook Property,
provided that all the following conditions are satisfied:

 
2.1  
Borrower has provided evidence satisfactory to Lender that the Stonecreek
Property has been approved by Freddie Mac for permanent financing.

 
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2.2  
Lender has been paid the “Release Price” for the Meadowbrook Property.  The
Release Price for the Meadowbrook Property is $2,595,000.

 
2.3  
There is then no Event of Default, nor any event or condition which would be an
Event of Default if not cured within the time allowed.

 
2.4  
Borrower has provided to Lender, at Borrower’s expense, an endorsement to
Lender’s policy of title insurance for the Stonecreek Property, insuring the
continued priority of the lien of the Stonecreek Mortgage against the Stonecreek
Property.  There shall be no exceptions to title other than those previously
approved by Lender.

 
2.5  
Borrower has paid all costs and expenses (including all attorney, trustee, title
and recording fees) incurred by Lender in connection with Borrower’s request for
a release of the Meadowbrook Property.  Borrower covenants to pay all such costs
and expenses even if the release is not given because the conditions have not
been met.

 
2.6  
Emeritol Stonecreek Lodge LLC has executed and delivered to Lender an Amended
and Restated Promissory Note in the form attached as Exhibit 1 hereto.

 
3.  
Loan Modifications.  The following modifications to the Loan Documents shall
become effective upon the date that the Meadowbrook Deed of Trust has been
released.

 
3.1  
Definitions.  The definitions of the following terms in the Loan Documents are
revised to mean the following:

 
Borrower:  Emeritol Stonecreek Lodge LLC, a Delaware limited liability company.
 
Debt Service:  (a) For each quarterly period (based on calendar quarters)
commencing October 1, 2008, and continuing through September 30, 2010,
interest-only payments on the Loan (assuming that the Loan was outstanding
commencing October 1, 2008) during such period at the greater of the Applicable
Rate or 6.85% per annum, and (b) for each calendar quarter thereafter, the total
payments of principal and interest which would be required during such period in
order to fully amortize the stated principal amount of the Loan ($7,207,500.00)
over a 25 year amortization period at an interest rate equal to the greater of
the Applicable Rate or 6.85% per annum.
 
Debt Service Coverage:  For each calendar quarter commencing with the calendar
quarter ending December 31, 2008, the ratio of the aggregate Net Operating
Income of the Stonecreek Lodge Facility during such period, to the Debt Service
during such period.

 
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Facilities:  All references to the Facilities shall be deemed to refer to the
Stonecreek Lodge Facility located at 9251 Stonestreet Rd, Louisville, KY  40272.
 
Loan Amount:  Seven Million, Two Hundred Seven Thousand, Five Hundred and No/100
Dollars ($7,207,500.00), as reduced by principal payments made from time to
time.
 
Note:  The Amended and Restated Promissory Note in the Loan Amount, executed by
Borrower and payable to the order of Lender, evidencing the Loan.
 
3.2  
Compliance Certificate. The form of Compliance Certificate attached as Exhibit B
to the Loan Agreement is hereby replaced with the Compliance Certificate
attached as Exhibit B hereto:

 
4.  
Conditions.  This Agreement shall be effective only upon satisfaction of the
conditions set forth below:

 
4.1  
Borrower has paid Lender all costs, fees and expenses relating to the execution
and performance of this Agreement, including all legal fees, title insurance
premiums, and other out-of-pocket expenses of Lender.

 
4.2  
Lender has received certified copies of such duly adopted resolutions as Lender
may require, authorizing Borrower’s and Guarantor’s execution of this Agreement
and naming the persons authorized to execute this Agreement on their behalf.

 
5.  
Guaranty.  Guarantor consents and agrees to this Agreement and ratifies and
reaffirms the obligations of such Guarantor under the respective Guaranty of the
Loan as modified by this Agreement.

 
6.  
Representations.  Borrower and Guarantor represent to Lender as follows:

 
6.1  
Neither Borrower nor Guarantor has any claim, defense, counterclaims or right of
offset against Lender or its agents arising out of or in any way connected with
the Loan.

 
6.2  
Borrower and Guarantor have full right, power and authority to enter into this
Agreement and perform their obligations hereunder, and no information or
material submitted to Lender in connection with this Agreement contains any
material misstatement or misrepresentation nor omits to state any material fact
or circumstance.

 
6.3  
There is no Event of Default by Borrower under any of the Loan Documents, nor,
to Borrower’s knowledge, any event, circumstance or condition which with notice
or the passage of time or both would be an Event of Default.

 
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6.4  
Except as disclosed to Lender in writing, all representations made by Borrower
and Guarantor to Lender in the Loan Documents are true and correct.

 
7.  
Ratification.  Each and every representation and warranty made by Borrower in
the Loan Documents and the Environmental Indemnities are hereby renewed and each
and every provision of the Loan Documents, as amended by this Agreement, is
hereby affirmed and ratified.  This Agreement is not intended and shall not be
construed to impair the validity, priority or enforceability of the Mortgages or
the other Loan Documents.  As further consideration for Lender’s execution of
this Agreement, Borrower and Guarantor hereby release and discharge Lender from
any and all claims, defenses, actions, counterclaims or rights of offset in
connection with the Loan and arising out of any act or circumstance prior to the
date hereof.

 
8.  
General.

 
8.1  
This Agreement and the documents and instruments to be executed hereunder
constitute the entire agreement among the parties with respect to the subject
matter hereof and shall not be amended, modified or terminated except by a
writing signed by the party to be charged therewith.

 
8.2  
Borrower and Guarantor agree to execute such other instruments and documents and
provide Lender with such further assurances as Lender may reasonably request to
more fully carry out the intent of this Agreement.

 
8.3  
This Agreement may be executed in a number of identical counterparts.  If so,
each such counterpart shall collectively constitute one agreement.

 
8.4  
No provision of this Agreement is intended or shall be construed to be for the
benefit of any third party.

 
8.5  
The Loan Documents are hereby modified to include this Agreement within the
definition of the term “Loan Documents” as used therein.

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

 
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IN WITNESS WHEREOF, the parties execute this Agreement as of the day and year
first above written.
 
 “Borrowers”
 
EMERITOL STONECREEK LODGE LLC,
 
a  Delaware limited liability company
 
 
By:
Summerville Senior Living, Inc., a Delaware corporation, its Sole Member

 
By:
/s/ Eric Mendelsohn _

 
Eric Mendelsohn, Senior VP Corporate Development

 
EMERITOL MEADOWBROOK LLC,
 
a Delaware limited liability company
 
 
By:
Summerville Senior Living, Inc., a Delaware corporation, its Sole Member

 
By:
/s/ Eric Mendelsohn ___

 
Eric Mendelsohn, Senior VP Corporate Development

 
 “Lender”
 
KEYBANK NATIONAL ASSOCIATION, a national banking association
 

By:           /s/ Bellini Lacey ____
Name:                      Bellini Lacey _________________
Title:           AVP Closing Officer ___________________
 
 “Guarantor”
 
EMERITUS CORPORATION, a Washington corporation

   By:           /s/ Eric Mendelsohn ____________
   Name:  Eric Mendelsohn
   Title:                      Senior VP Corporate Development

 
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EXHIBIT B
to
Loan Agreement
Certificate of Compliance
 
KeyBank National Association
KeyBank Real Estate Capital
Healthcare Finance
1301 5th Ave, 23rd Floor
Seattle, WA 98101
Attn: ____________________
 
Re:
Loan Agreement dated as of October 17, 2008 (as amended, modified, supplemented,
restated, or renewed, from time to time, the “Agreement”), between EMERITOL
STONECREEK LODGE LLC, a Delaware limited liability company, (“Borrower”), and
KEYBANK NATIONAL ASSOCIATION (“Lender”).

 
Reference is made to the Agreement.  Capitalized terms used in this Certificate
(including schedules and other attachments hereto, this “Certificate”) without
definition have the meanings specified in the Agreement.
 
Pursuant to applicable provisions of the Agreement, Borrower and Emeritus
Corporation hereby certifies to Lender that all information furnished in this
Certificate and in the attachments hereto and in the financial statements (such
statements the “Financial Statements” and each periods covered thereby the
“reporting period”) submitted herewith is true, correct and complete in all
material respects.
 
Emeritus Corporation further certifies to Lender that:
 
1.           Compliance with Financial Covenants.
 
 
A.
Covenant:  Minimum Facility Occupancy.  As of the end of each calendar quarter
commencing with the calendar quarter ending December 31, 2008, the Occupancy of
the Facility shall no time be less than 90% of the Occupancy for the Facility as
of September 30, 2008.

Facility
Occupancy as of 9/30/08
Occupancy at end of reporting period
Compliance?
Stonecreek Lodge
_______%
________%
________

 
See attached rent rolls and operating statements for calendar quarter ending
_______________, 20__
 
 
B.
Covenant: Minimum Debt Service Coverage. For each calendar quarter commencing
with the calendar quarter ending December 31, 2008, the

 
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Debt Service Coverage shall be no less than the required Debt Service Coverage
set out below:
Quarter End
Required Debt Service Coverage
12/31/2008
1.00
3/31/2009
1.00
6/30/2009
1.00
9/30/2009
1.00
12/31/2009
1.10
3/31/2010
1.10
6/30/2010
1.10
9/30/2010
1.10
12/31/2010
1.10
3/31/2011
1.15
6/30/2011
1.20
9/30/2011
1.25

 
 
Quarter Ending ________________, 20___

 
 
Required Debt Service Coverage:  1.___

 
 
Actual Debt Service Coverage:  1.___

 
Compliance? (Yes or
No)                                                      ____________________
 
See attached Financial Statements
 
2.           Compliance with Emeritus Covenants.
 
 
A.
Covenant: Minimum Liquid Assets.  Emeritus shall maintain minimum Liquid Assets
of Twenty Million Dollars ($20,000,000.00)

 
Emeritus Liquid
Assets:                                                      $_________  as of
period ending ___________
 
See attached Financial Statements
 
Compliance? (Yes or
No)                                                      ____________________
 
 
B.
Covenant: Minimum Fixed Charge Coverage. Emeritus agrees to maintain a minimum
Fixed Charge Coverage Ratio of 1.10 to 1.00 (measured at the end of each
calendar quarter beginning with the calendar quarter ending December 31, 2008,
and building to the previous four calendar quarters).

 
 
Quarter Ending ________________, 20___

 
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EBITAR1 ($______________________) divided by  Fixed
Charges2  ($____________________) = Fixed Charge Coverage Ratio of ____________
.
 

 
See calculations of EBITAR and Fixed Charges attached to this Certificate
 
Compliance:   __________ yes  _________________ no
 
See attached Financial Statements
 
 
C.
Covenant: Emeritus agrees to permit no Change of Control without the prior
written consent of Lender.

 
Compliance? (Yes or
No)                                                      ____________________
 
More Restrictive Financial Covenants
 
If Emeritus has entered into an agreement with any other entity providing
financing to Emeritus or to any Affiliate of Emeritus to comply with any more
restrictive covenants than the Emeritus Covenants set out above, those more
restrictive covenants and Emeritus’ compliance or non-compliance therewith are
described on Schedule B to this Certificate.  If Schedule B indicates “none,”
this Certificate shall constitute Emeritus’ representation to Lender that no
such more restrictive covenants have been agreed to.
 
3.           Review of Condition.  Emeritus has reviewed the terms of the
Agreement, including, but not limited to, the representations, warranties and
covenants of Borrower set forth in the Agreement and has made a review in
reasonable detail of the transactions and condition of Borrower and Emeritus
through the reporting periods.
 
4.           Representations and Warranties. To the actual knowledge of
Emeritus, the representations and warranties of Borrower and Emeritus contained
in the Loan Documents, including those contained in the Agreement, are true and
accurate in all material respects as of the date hereof and were true and
accurate in all material respects at all times during the reporting period
except as expressly noted on Schedule A hereto.
 
5.           Covenants.  To the actual knowledge of Emeritus, during the
reporting period, Borrower and Emeritus observed and performed all of their
respective covenants and other agreements under the Agreement and the Loan
Documents in all material respects, except as expressly noted on Schedule A
hereto.

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1 Net income computed in accordance with generally accepted accounting
principles, plus facility lease expense, income taxes, interest expense
depreciation, amortization, asset impairment and other non-cash charges and plus
or minus, as applicable, non-recurring and/or extraordinary items.
 

 
2  Interest expense, facility lease expense and principal payments on
indebtedness.

 
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6.           No Event of Default.  To the actual knowledge of Emeritus, no
Default or Event of Default exists as of the date hereof or existed at any time
during the reporting period, except as expressly noted on Schedule A hereto.
 
IN WITNESS WHEREOF, this Certificate is executed by this ____ day of __________,
20__.
 
EMERITUS CORPORATION, a Washington corporation
 

By:           _________________________________
Name:                      _________________________________
Title:           _________________________________

 
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Exhibit 1

Amended and Restated Promissory Note

 
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