EX-10.71.01

ASSET PURCHASE AGREEMENT

                          THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is
made as of June 9, 2008 (“Effective Date”) by EMERITUS CORPORATION, a Washington
corporation (“Buyer”), and HEALTH CARE REIT, INC., a Delaware corporation
(“HCN”), together with the affiliates of HCN listed on Schedule 1 hereto
(individually and collectively with HCN, “Seller”).
 
Seller owns the land, improvements and certain personal property located at the
facilities listed on Schedule 2-A hereto (the “Tranche 1 Facilities”) and at the
facilities listed on Schedule 2-B hereto (the “Tranche 2 Facilities”).
 
Buyer leases 18 of the 19 Tranche 1 Facilities and certain other facilities from
Seller pursuant to an Amended and Restated Master Lease Agreement dated as of
September 30, 2003, as amended, and the Tranche 1 Facility located in Auburn,
Massachusetts pursuant to a Lease Agreement dated as of February 26, 1996, as
amended.  The two leases that relate to the 19 Tranche 1 Facilities are
collectively referred to herein as the “Master Lease 1.”  Buyer leases the
Tranche 2 Facilities and certain other facilities from Seller pursuant to a
Master Lease Agreement dated as of September 30, 2004, as amended (the “Master
Lease 2”) except, however, that the Tranche 2 Facilities located in Louisville,
Kentucky and Ontario, Oregon are leased under a Lease Agreement dated as of
February 26, 1996, as amended (the “Louisville Lease”) and the Master Lease 1,
respectively.  All references hereinafter to the Master Lease 2 shall also mean
and include the Louisville Lease except where noted otherwise.  The Tranche 1
Facilities and Tranche 2 Facilities are each individually referred to herein as
a “Facility” and collectively referred to herein as the “Facilities.”  The
Master Lease 1 and Master Lease 2 are each individually referred to herein as a
“Master Lease” and collectively referred to herein as the “Master Leases.”  The
Master Leases and all agreements, instruments and documents executed by Buyer in
connection with either Master Lease are collectively referred to herein as the
“Master Lease Documents.” 
 
Based solely upon the representations and warranties of Buyer as set forth in
each Master Lease, Buyer is the licensed operator of each Facility, either
directly or through certain of its wholly-owned subsidiaries and
subtenants.  Buyer desires to purchase the Facilities from Seller on the terms
and conditions set forth in this Agreement (the “Acquisition”). 
 
                          NOW, THEREFORE, in consideration of the foregoing
recitals and the mutual agreements, representations and warranties contained
herein, Seller and Buyer agree as follows:
 
ARTICLE 1:
SALE AND PURCHASE OF ASSETS

 
1.1 Acquisition Assets.  Subject to the terms and conditions of this Agreement,
Buyer shall purchase from Seller, and Seller shall sell, transfer and convey to
Buyer, the following assets that relate to the Facilities (the “Assets”):  [i]
the real property, as legally described in Exhibit A attached hereto, and the
improvements and fixtures located thereon, together with all rights, easements
and privileges appurtenant thereto (the “Real Property”); [ii] the furniture,
equipment and other personal property located at the Facilities to the extent
owned by Seller (the “Personal
 

 
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Property”); and [iii] all of Seller's right, title and interest (if any) in and
to all intangible property now or on the applicable Closing Date (as hereinafter
defined) owned or held in connection with the Real Property or the Personal
Property, including, without limitation, governmental approvals and development
rights, directly related to the Real Property (the “Intangible Property”).
 
1.2 Excluded Assets.  Notwithstanding anything to the contrary in this
Agreement, the Assets do not include any rents, issues or accounts arising from
or payable due to Seller’s interest in the Facilities or Seller’s interest as
“Landlord” under either Master Lease.
 
1.3 No Assumption of Liabilities.  Except as expressly provided herein, Buyer
shall not assume any liabilities, obligations or debts of Seller, including
without limitation, the obligations of Seller, as Landlord, under either Master
Lease; provided, however, that the indemnification obligations of Buyer under
Section 5 of each Master Lease and Sections 4.6.1 and 8.1 of each of the leases
that relate to the Auburn and Louisville properties, shall survive each Closing
(as hereinafter defined) for the time periods defined in each such Master Lease
and leases.
 
1.4 Close in Tranches.  The sale of  the Assets shall be closed in two separate
tranches (each a “Tranche”) with the Tranche 1 Facilities closed in “Tranche 1”
as designated on Schedule 2-A and with the Tranche 2 Facilities closed in
“Tranche 2” as designated on Schedule 2-B (each a “Closing”).  Concurrently with
each Closing, Buyer and Seller shall amend the Master Lease 1 and, if and when
applicable, the Master Lease 2, to delete the sold Facilities and adjust the
Investment Amount (as defined therein) and corresponding provisions.  Within 20
days of the Effective Date, Seller shall provide Buyer with an initial draft of
the form amendment to the Master Leases to be executed in connection with each
Closing.
 
1.5 Section 1031 Transaction.  Seller or Buyer, or both of them, may close
either Tranche 1 or Tranche 2 or both as part of a like-kind exchange of
properties under Section 1031 of the Internal Revenue Code of 1986, as amended,
and applicable rules and regulations.  The exchanging party shall bear all costs
of the exchange.  The other party shall cooperate with the exchanging party and
do all things reasonably required and requested by the exchanging party
(provided that such actions do not increase the other party’s obligations or
liabilities under this Agreement) to effect and facilitate such an
exchange.  The exchanging party shall and does hereby indemnify, defend and hold
the other party harmless for and from all liabilities arising as a result of the
exchange that would not have arisen had the exchanging party not closed Tranche
1, Tranche 2, or both as part of a like-kind exchange.  Anything in this Section
1.5 to the contrary notwithstanding:  [i] no party makes any representation or
warranty to the other as to the effectiveness or tax impact of any proposed
exchange; [ii] in no event shall any party be required to take title to any
exchange or replacement property; [iii] in no event shall completion of any such
exchange be a cause or excuse for any delay in either Closing; and [iv] no party
shall be required to incur any costs or expenses or incur any additional
liabilities or obligations in order to accommodate any exchange requested by the
other party or any exchange intermediary or facilitator.
 

 
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1.6 Condition of Assets.  EXCEPT AS EXPRESSLY PROVIDED IN ANY REPRESENTATION AND
WARRANTY CONTAINED HEREIN OR IN ANY CONVEYANCE DOCUMENT EXECUTED AND DELIVERED
AT A CLOSING, THE ASSETS ARE SOLD IN “AS IS, WHERE IS” CONDITION WITH NO
WARRANTIES WHATSOEVER, EITHER EXPRESS OR IMPLIED, WHETHER OF THE SUITABILITY
THEREOF, THE DESIGN OR CONDITION THEREOF, THE MERCHANTABILITY THEREOF, THE
FITNESS THEREOF FOR A PARTICULAR PURPOSE, THE PHYSICAL CONDITION THEREOF, THE
QUALITY OF WORKMANSHIP THEREOF, THE CONFORMITY THEREOF TO FEDERAL, STATE OR
LOCAL GOVERNMENTAL REQUIREMENTS, THE OWNERSHIP, NON-INFRINGEMENT OR RIGHT TO USE
ANY NAMES, DESIGNS OR MARKS ASSOCIATED WITH ANY FACILITY (INCLUDING, WITHOUT
LIMITATION, THE NAMES SET FORTH IN SCHEDULE 2-A AND SCHEDULE 2-B HERETO), OR
WITH REGARD TO BUYER’S TENANCY, OPERATION OR LICENSURE OF THE FACILITIES OR ANY
RIGHTS WITH RESPECT THERETO.
 
ARTICLE 2:
PURCHASE PRICE

 
2.1 Purchase Price.  The “Tranche 1 Purchase Price” and the allocated purchase
price for each Tranche 1 Facility is set forth on Schedule 2-A and the “Tranche
2 Purchase Price” and the allocated purchase price for each Tranche 2 Facility
is set forth on Schedule 2-B.   The total of the Tranche 1 Purchase Price and
the Tranche 2 Purchase Price is $299,819,368.00 (the “Purchase Price”).  All
cash payments shall be payable in immediately available funds by wire transfer
to an account designated by Seller.
 
2.2 Earnest Money.  Within one business day after the Effective Date, Buyer
shall deliver an earnest money deposit in an amount equal to one percent (1%) of
the Purchase Price (the “Earnest Money”) to the Title Company (as hereinafter
defined) for deposit into an escrow account and which shall be held pursuant to
an escrow agreement in the form attached hereto as Exhibit B, to be executed by
Buyer, Seller and the Title Company in connection with the deposit of the
Earnest Money.  The Earnest Money, together with all interest earned thereon is
referred to herein as the “Deposit.”  The Title Company shall hold the Deposit
in an interest-bearing account.
 
2.3 Due Diligence Period.  Due to Buyer’s existing tenancy and operation of the
Facilities, Buyer has determined that it will complete all of Buyer’s due
diligence with respect to the Facilities within 30 days after the Effective Date
(“Due Diligence Period”).  At any time during the Due Diligence Period, Buyer
shall, in its sole discretion, be entitled to deliver a written notice to Seller
in accordance with the terms of this Agreement, stating that Buyer has elected
to terminate this Agreement.  If Buyer terminates this Agreement in accordance
with the terms hereof within the Due Diligence Period, the Title Company will
pay the Deposit as follows:  [i] to Seller, the reasonable amount of outside
counsel’s legal fees incurred by Seller in connection with the Acquisition, as
mutually instructed in writing by Buyer and Seller, and [ii] to Buyer, the
balance of the Deposit.
 

 
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2.4 Deposit at Closing; Failure to Close; Remedies.  [i] In the event that each
Tranche shall close as provided herein, the Deposit shall be applied to the
Tranche 2 Purchase Price at the Tranche 2 Closing.  [ii] In the event that Buyer
has not terminated this Agreement within the Due Diligence Period pursuant to
Section 2.3, and either Tranche shall fail to close as provided herein due to
Buyer's default under this Agreement, then, as liquidated damages, the Deposit
shall be retained by Seller and Buyer shall pay Seller the reasonable amount of
out-of-pocket costs incurred by Seller in connection with the Acquisition.  The
retention of the Deposit and receipt of such out-of-pocket costs as liquidated
damages shall be Seller’s sole and exclusive remedy for such failure to close,
at law or in equity; provided, however, such retention of the Deposit by Seller
and its receipt of such out-of-pocket costs shall not limit, release or
otherwise affect Buyer’s indemnity obligations under this Agreement and under
the Master Lease Documents.  [iii] In the event that Buyer has not terminated
this Agreement within the Due Diligence Period pursuant to Section 2.3, and
either Tranche shall fail to close as provided herein due to Seller’s default
under this Agreement, then as liquidated damages, the Deposit shall be returned
to Buyer and Seller shall pay Buyer the reasonable amount of out-of-pocket costs
incurred by Buyer in connection with the Acquisition.  The return of the Deposit
and receipt of such out-of-pocket costs as liquidated damages shall be Buyer’s
sole and exclusive remedy for such failure to close, at law or equity.  [iv] In
the event that Buyer has not terminated this Agreement within the due diligence
period pursuant to Section 2.3, if either Closing does not occur for any reason
other than Buyer's or Seller’s default under this Agreement, then the Deposit
shall be retained by Seller after payment to Buyer of its reasonable
out-of-pocket costs incurred in connection with the Acquisition.
 
2.5 INTENTIONALLY OMITTED
 
2.6 Liquidated Damages.  The parties hereto acknowledge that the actual damages
sustained by Seller and Buyer if the transactions contemplated hereby shall fail
to close are difficult to ascertain, and the parties hereby further agree that
the liquidated damages amounts set forth in Section 2.4 are reasonable estimates
of the amount of damages, including consequential damages, which Seller and
Buyer would suffer by the other’s failure to close under this Agreement, gauged
by the circumstances existing at the time this Agreement is executed, and such
amounts are not intended as a penalty.
 
2.7 Financing of Acquisition.  Buyer intends to finance the Acquisition of each
Tranche through one or more loans from third party lenders (individually and
collectively, the “Acquisition Loan”).  Buyer will borrow not less than 70% of
the Purchase Price pursuant to the Acquisition Loan.  The balance of the
Purchase Price for each Tranche (the “Balance”) will be paid as follows:  [i]
40% of the Balance will be paid in cash by Buyer, and [ii] 60% of the Balance
will be obtained pursuant to a single loan (the “Seller Loan”) to be made by HCN
or an affiliate thereof (“Lender”) to Emeritus Corporation, irrespective of any
assignment of Buyer of its rights under this Agreement.  Notwithstanding the
foregoing, the maximum Seller Loan amount will be $50,000,000.00 and Buyer will
increase its cash investment as necessary to cover any shortfalls.  Buyer may
draw up to the entire Seller Loan amount to fund the Tranche 1 Purchase Price;
provided, however, that Buyer shall have given reasonable assurance to Seller
that Buyer has the cash assets and other resources necessary to pay the Balance
of the Tranche 2 Purchase Price in cash.  The proceeds of the Seller Loan shall
be applied solely to the payment of the Purchase Price.
 

 
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2.8 Seller Loan Terms.  The terms of the Seller Loan are set forth in the Term
Sheet for Sale of Facilities and Seller Loan issued by HCN and accepted by Buyer
dated as of March 25, 2008 (“Term Sheet”), which Term Sheet is attached hereto
as Exhibit C.  Notwithstanding the terms of the Seller Loan set forth in the
Term Sheet, the Seller Loan shall not be secured by a pledge of equity interest
of any subsidiary of Emeritus Corporation to whom Emeritus Corporation assigns
its rights under this Agreement, or to whom Emeritus Corporation nominates to
take title to the Facilities.  In lieu of taking a pledge of an interest in any
subsidiary of Emeritus Corporation, Emeritus Corporation shall provide Lender
with a leasehold mortgage of its interest in Master Lease 2 and a contingent
leasehold interest in Master Lease 1 to secure Emeritus Corporation's
obligations under the Seller Loan.  Within 20 days of the Effective Date, Seller
shall cause Lender to deliver to Buyer the proposed documents (the “Loan
Documents”), all of which are to be executed and delivered at the Tranche 1
Closing to evidence and secure the Seller Loan, including any leasehold or
contingent leasehold mortgages, which Loan Documents shall comply with the terms
for the Seller Loan set forth in the Term Sheet, as modified by this Section
2.8.
 
2.9 No Prorations.  Buyer and Seller acknowledge and agree that each Master
Lease is absolutely net to Seller, as Landlord, and that Buyer, as tenant
thereunder, is solely responsible for all Impositions (as defined therein), real
estate and personal property taxes, insurance premiums, utility charges,
licensure expenses and all other expenses incurred in connection with the
operation, maintenance and use of the Facilities.  Accordingly, Buyer shall be
solely responsible for all such amounts whether accruing prior to or after the
respective Closing Date and there shall be no prorations on account thereof
between Buyer and Seller hereunder, except that Buyer shall be entitled to a
credit against the Purchase Price for any rent or other charges paid to Seller
and which are applicable to any period after the applicable Closing Date.
 
ARTICLE 3:
THE CLOSINGS

 
3.1 Closing Deadlines.  Subject to Section 8.4, the Closing on Tranche 1 must
occur no later than June 30, 2008 (“Tranche 1 Closing Deadline”).  The Closing
on Tranche 2 must occur no earlier than October 1, 2008 and no later than
October 31, 2008 (“Tranche 2 Closing Deadline,” and with the Tranche 1 Closing
Deadline, each a “Closing Deadline”).  Notwithstanding the foregoing, Buyer
shall have [i] an initial option to extend the Tranche 2 Closing Deadline until
December 1, 2008, and [ii] a second option to extend the Tranche 2 Closing
Deadline until December 31, 2008.  Buyer may exercise either such option by
delivering notice thereof to Seller on or before the then applicable Tranche 2
Confirmation Deadline (as hereinafter defined), in which event the Tranche 2
Confirmation Deadline shall be extended to October 31, 2008, with respect to the
initial such option above, and to November 30, 2008, with respect to the second
such option above.  For each such option exercised by Buyer, $100,000 of the
Deposit, which might otherwise be payable, returnable or refundable to Buyer
under Section 2.3, 2.4[iv], 8.4 or 8.5 or any other section of this Agreement,
shall, except as provided in Section 2.4[iii], become non-refundable, but shall
be applied to the Tranche 2 Purchase Price at the Tranche 2 Closing.  Buyer’s
right to purchase the Tranche 1 Facilities and Tranche 2 Facilities shall
terminate on the Tranche 1 Closing Deadline if the Closing on Tranche 1 has not
occurred by such date.  Buyer’s right to purchase the Tranche 2 Facilities shall
terminate on the Tranche 2 Closing Deadline (as such deadline may be extended by
Buyer as described above) if the Closing on Tranche 2 has not occurred by such
date.
 

 
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3.2 Escrow Closing.  Each Closing shall be held on such date as the parties may
agree upon in writing (each a “Closing Date”) but in each case no later than the
respective Closing Deadline.  All documents necessary for each Closing,
including, but not limited to, those documents specifically described in this
Agreement, shall be placed in escrow on or before the applicable Closing Date
with the Title Company or at such other time or place or in such other manner as
the parties may agree.  Seller shall deliver possession of the respective Assets
to Buyer on the respective Closing Date.  Each Closing shall be deemed to be
effective as of 12:01 a.m. on the respective Closing Date.
 
3.3 Legal Fees.  Except as provided herein, each of Seller and Buyer shall pay
its own legal fees and expenses incurred by it in negotiating and preparing this
Agreement and in closing and carrying out the transactions contemplated herein.
 
3.4 Closing Costs.
 
    (a) Seller shall pay the costs for real property transfer taxes, conveyance
fees, deed stamps (if applicable) and title insurance premiums for an owner’s
policy (except for the cost of any special endorsements) up to $1,125,000 for
the Closing on Tranche 1 and up to $375,000 for the Closing on Tranche 2;
provided, however, such costs shall not include any costs (and shall be solely
Buyer’s responsibility) of curing title defects that Title Company would not
insure but which Lawyer’s Title Corporation of America has noted in writing that
it would insure.
 
    (b) Buyer shall pay all other closing costs for each Closing of the
Acquisition, the Acquisition Loan and the Seller Loan (excluding Lender's or
Seller's legal fees), including, but not limited to, the following:
 
        (i) real property transfer taxes, conveyance fees, and deed stamps (if
applicable);
        (ii) all due diligence expenses, including survey, environmental
reports, property condition reports and appraisals;
        (iii) title insurance premiums, title search and commitment fees, and
the cost of any closing escrow or escrow agent; and
        (iv) recording fees.
 
 
ARTICLE 4:SELLER’S REPRESENTATIONS AND WARRANTIES

 
             Seller represents and warrants, both as of the Effective Date and
as of each Closing Date, as set forth below.
 
4.1 Organization and Standing.  HCN is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and is
qualified to do all things required of it under this Agreement.  Seller has the
requisite power and authority to own or lease its property and to conduct its
business as now being conducted.
 

 
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4.2 Authority.  The execution and delivery of this Agreement and the
consummation of the transaction contemplated hereby have been duly and validly
authorized by all necessary action of the Seller and no other proceeding on the
part of Seller is necessary to authorize this Agreement or to consummate the
transaction contemplated hereby.  Seller has all requisite power to execute and
deliver this Agreement and the documents, instruments and agreements referred to
or provided for herein (“Seller’s Transaction Documents”) and to consummate this
Agreement and all transactions contemplated hereby.  This Agreement has been
duly executed and delivered by Seller.
 
4.3 Binding Effect.  This Agreement has been duly authorized, executed and
delivered by Seller. This Agreement is, and when executed and delivered at each
Closing each of Seller’s Transaction Documents will be, the legal, the valid and
binding obligation of Seller, enforceable against Seller in accordance with
their respective terms.
 
4.4 No Bankruptcy or Dissolution.  No bankruptcy or dissolution event has
occurred with respect to Seller.
 
4.5 Litigation.  To Seller’s knowledge and without due inquiry, there are no
actions, suits or proceedings pending or threatened before or by any judicial,
administrative or union body, any arbiter or any governmental authority against
or affecting Seller that would have a material adverse effect on the Assets or
Seller’s ability to complete the transaction.
 
ARTICLE 5:
BUYER’S REPRESENTATIONS AND WARRANTIES

 
                      Buyer represents and warrants, both as of the Effective
Date and as of each Closing Date, as set forth below.
 
5.1 Organization and Standing.  Buyer is a Washington corporation duly
organized, validly existing and in good standing under the laws of the State of
Washington and is qualified to do all things required of it under this
Agreement.  Buyer has the requisite power and authority to own or lease its
property and to conduct its business as now being conducted.
 
5.2 Authority.  The execution and delivery of this Agreement and the
consummation of the transaction contemplated hereby have been duly and validly
authorized by all necessary action of the Buyer and no other proceeding on the
part of Buyer is necessary to authorize this Agreement or to consummate the
transaction contemplated hereby.  Buyer has all requisite power to execute and
deliver this Agreement and the documents, instruments and agreements referred to
or provided for herein (“Buyer’s Transaction Documents”) and to consummate this
Agreement and all transactions contemplated hereby.  This Agreement has been
duly executed and delivered by Buyer.
 
5.3 Binding Effect.  This Agreement has been duly authorized, executed and
delivered by Buyer.  This Agreement is, and when executed and delivered by Buyer
at each Closing each of Buyer’s Transaction Documents will be, the legal, valid
and binding obligation of Buyer, enforceable against Buyer in accordance with
their respective terms.
 
5.4 No Bankruptcy or Dissolution.  No bankruptcy or dissolution event has
occurred with respect to Buyer.
 

 
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5.5 Litigation.  To Buyer’s knowledge and without due inquiry, there are no
actions, suits or proceedings pending or threatened before or by any judicial,
administrative or union body, any arbiter or any governmental authority against
or affecting Buyer that would have a material adverse effect on the Assets or
Buyer’s ability to complete the transaction.
 
ARTICLE 6:
INFORMATION CONCERNING THE FACILITIES

 
6.1 No Reliance.  Buyer acknowledges that [i] Buyer is the current tenant and,
together with certain of its wholly-owned subsidiaries, the licensed operator of
the Facilities, [ii] Buyer is familiar with the operations and condition of the
Facilities, [iii] Buyer has sufficient knowledge of the Facilities in order to
assess the value of the Facilities and evaluate the terms of the Acquisition,
and [iv] except as may be expressly set forth herein, Buyer is not relying upon
Seller to provide any information or evaluation of the Facilities and shall not
rely upon any information or materials that may have been obtained from Seller.
 
6.2 Governmental Approvals.  Buyer acknowledges and agrees that its ability to
obtain any licenses, consents and approvals of governmental authorities in
connection with the operation of the Facilities is not a condition to any
Closing.
 
6.3 Facility Operations.  Buyer acknowledges that the Personal Property to be
transferred by Seller at each Closing does not include all personal property,
receivables, contract rights, governmental approvals and other assets of
whatever type or nature that may be necessary or desirable for the operation of
the Facilities (the “Operator Assets”).  Buyer is solely responsible for the
acquisition of any Operator Assets and for any agreements made or to be made by
Buyer with respect to the Facility operations.
 
ARTICLE 7:
OBLIGATIONS OF THE PARTIES UNTIL CLOSING

 
7.1 Conduct of Business Pending Closing.  Between the Effective Date and each
Closing, Buyer shall conduct the operation of the Facilities solely in the
ordinary course of business consistent with past practice.
 
7.2 Negative Covenant of Seller.  After the execution of this Agreement and
until each Closing or termination of this Agreement, Seller shall not, without
the prior written approval of Buyer, enter into any agreement with respect to
any Facility or the Assets except as specifically contemplated by this
Agreement.
 
7.3 Affirmative Covenants. Between the Effective Date and each Closing, Buyer
shall maintain and operate the applicable Facilities in accordance with the
terms of the applicable Master Lease.
 
ARTICLE 8:
INITIAL CONDITIONS

 
8.1 Initial Conditions Precedent.  Buyer’s obligation to purchase the Assets is
subject to the fulfillment during the Due Diligence Period, ending on the date
that is 30 days after the Effective Date (“Inspection Completion Date”), of the
conditions set forth in Section 8.2 through Section 8.4 below (“Buyer’s Initial
Conditions”).
 

 
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8.2 Title Insurance.  Within 5 days after the Effective Date, Buyer shall order
a separate Commitment for Title Insurance (the “Commitments”) from Chicago Title
Insurance Company, 171 North Clark Street, Chicago, Illinois 60601,
Attention:  Cindy J. Malone (the “Title Company”) for an Owner’s Policy of Title
Insurance (the “Title Policies”), with respect to each parcel of real estate
which constitutes the Real Property, insuring that, upon Closing, Buyer shall
have good and marketable fee simple title to the Real Property, free and clear
of all liens, assessments, restrictions, encumbrances, leases, tenancies, claims
or rights of use or possession and other title objections, except for [i]
easements, agreements and restrictions of record as of the Effective Date that
do not, in Buyer’s reasonable discretion, materially and adversely affect the
existing use of the Facilities or the value of the Facilities; [ii] taxes and
installments of assessments, whether past due or not yet due and payable; and
[iii] any lien, encumbrance or claim granted by Buyer (other than with respect
to the Master Leases), arising from  any action of Buyer or pursuant to any
contract made by Buyer or relating to any materials or labor supplied to Buyer
(“Permitted Exceptions”).  Buyer acknowledges that the Commitments may show the
rights of Buyer as tenant under each Master Lease, to which Buyer shall not
object, subject to release of each Facility from its respective Master Lease at
the applicable Closing.  The Master Leases shall not be Permitted
Exceptions.  Seller shall provide affidavits to the Title Company, limited to
Seller’s actual and current knowledge, and take such other actions as are
reasonably necessary to enable the Title Company to remove any exceptions other
than the Permitted Exceptions and issue the Title Policies in the form required
by this Agreement.
 
8.3 Inspections.  Buyer shall have obtained and completed such additional
investigations, inspections and reports and made such additional inquiries
regarding the condition of the Assets as Buyer may deem necessary or desirable.
 
8.4 Failure of Conditions; Objections.  If Buyer objects to any title, survey,
environmental,  structural, mechanical or other condition of the Assets as a
result of information disclosed by the due diligence inquiry conducted by Buyer
(“Objection”), Buyer shall notify Seller of the Objection no later than the
Inspection Completion Date. Seller shall have a period of 15 days after the date
of such notice in which to cure the Objection to the reasonable satisfaction of
the Buyer. If Seller is not able to cure or is not willing to cure, in Seller’s
sole discretion, the Objection, then Buyer may, in Buyer’s sole discretion:  [i]
terminate this Agreement, in which case the Deposit shall be immediately
returned to Buyer and neither Buyer nor Seller shall have any further liability
or obligations hereunder; [ii] extend the time for the cure of the Objection, in
which case the Tranche 1 Closing Deadline shall be extended by the same number
of days; or [iii] waive the Objection.   Notwithstanding the foregoing, Seller
shall be required to pay off any liens or encumbrances against the Assets
created or assumed by Seller.
 
8.5 Commitment for Acquisition Loans.  It is an initial condition precedent for
Seller’s obligation to close on the sale of the Assets that Buyer deliver to
Seller a written confirmation, including such lending contingencies and
conditions that are standard in such written commitments, issued to Buyer for
the Acquisition Loan for Tranche 1 no later than May 31, 2008 and for Tranche 2,
subject to extension as provided in Section 3.1 above, no later than September
30, 2008 (each a “Confirmation Deadline”).  If Buyer fails to meet either
Confirmation Deadline, then Seller may, in Seller’s sole discretion:  [i]
terminate this Agreement, in which case the Deposit shall be retained by Seller
and neither Buyer nor Seller
 

 
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shall have any further liability or obligations hereunder; or [ii] extend the
time for the applicable Confirmation Deadline.
 
 
ARTICLE 9:CLOSING CONDITIONS PRECEDENT TO BUYER’S OBLIGATIONS

 
9.1 Closing Conditions.  Buyer’s obligation to purchase the Assets (either the
Tranche 1 Facilities or the Tranche 2 Facilities, as applicable) is subject to
the fulfillment, prior to or at each Closing, of each of the conditions set
forth in this Article 9 (“Buyer’s Closing Conditions”).
 
9.2 Deed.  Seller shall have delivered to Buyer a special warranty deed, or
applicable State equivalent (e.g., a Grant Deed in California), for the
respective Real Property conveying good and marketable fee simple title thereto,
subject only to the Permitted Exceptions, in the form reasonably agreed to by
Buyer and Seller.
 
9.3 Bill of Sale and Assignment.  Seller shall have delivered to Buyer a
quitclaim bill of sale and assignment of interest for the respective Personal
Property and Intangible Property, in the form of Exhibit D attached hereto.
 
9.4 Amendment of Master Lease.  A counterpart Amendment to Master Lease duly
executed and acknowledged by Seller, as Landlord, in the form reasonably agreed
to by Buyer and Seller, along with a release in recordable form with respect to
the Tranche 1 Facilities and the Tranche 2 Facilities, as applicable.
 
9.5 Board Approval.  Within ten business days after the Effective Date, the
Board of Directors of Buyer shall have approved the Acquisition by Buyer and the
Seller Loan to Emeritus Corporation.
 
9.6 Other Documents.  Seller shall have furnished Buyer with all other
documents, schedules and other instruments reasonably required to be furnished
to Buyer by Seller pursuant to the terms hereof or necessary for such Closing in
accordance with the terms of this Agreement.
 
9.7 Title Policies.  The Title Company, subject to payment of its fees, costs
and title insurance premiums, shall be willing to issue the Title Policies,
insuring that Buyer shall have good and marketable fee simple title to the
applicable portion of the Real Estate, subject only to the Permitted Exceptions;
except that Title Company’s failure to insure over a defect that Lawyer’s Title
Corporation of America has noted in writing that it would insure will not
constitute a closing condition precedent to Buyer’s obligations.
 
9.8 Seller Loan Documents.  Lender shall have executed and delivered any Seller
Loan Documents to be executed by Lender, in the form agreed to by Buyer and
Lender.
 
9.9 State Specific Documents.  Seller shall have delivered, and executed as
applicable, any State specific documents customarily used in connection with the
transfer of real property and delivered by the seller thereof, including any
transfer tax affidavits or bulk sales releases, in forms reasonably agreed to by
Buyer and Seller.
 

 
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9.10 Performance by Seller.  The due performance by Seller of each and every
undertaking and agreement to be performed by it hereunder in all material
respects, and the truth of each representation and warranty made by Seller in
this Agreement in all material respects at the time as of which the same is made
and as of the Closing Date as if made on and as of the Closing Date.
 
ARTICLE 10:                                     CLOSING CONDITIONS PRECEDENT TO
SELLER’S OBLIGATIONS
 
10.1 Closing Conditions.  Seller’s obligation to sell the Assets (either the
Tranche 1 Facilities or the Tranche 2 Facilities, as applicable) is subject to
the fulfillment, prior to or at each Closing, of each of the conditions set
forth in this Article 10 (“Seller’s Closing Conditions”).
 
10.2 No Material Change.  Since the Effective Date there shall not have been any
material adverse change in the financial condition of Buyer.
 
10.3 Board Approval.  Within five business days after the Effective Date, Seller
shall provide Buyer with evidence that the Acquisition by Buyer and the Seller
Loan from Lender to Buyer have been approved.
 
10.4 Closing Funds.  Buyer shall have delivered to Title Company’s escrow
account sufficient funds to pay the applicable Purchase Price to Seller, subject
to all adjustments, debits and credits with respect to each party’s payment of
closing costs and the funding of the Seller Loan applicable to such Closing.
 
10.5 Amendment of Master Lease.  A counterpart Amendment to Master Lease duly
executed and acknowledged by Buyer, as tenant, in the form reasonably agreed to
by Buyer and Seller, along with a release in recordable form with respect to the
Tranche 1 Facilities and the Tranche 2 Facilities, as applicable.
 
10.6 Payment of Rent.  Buyer shall have paid to HCN all rent and all other
charges due and payable under each Master Lease through the date of each
Closing.
 
10.7 Seller Loan Documents.  Buyer shall have executed and delivered any Seller
Loan Documents to be executed by Buyer, in the form agreed to by Buyer and
Lender.
 
10.8 State Specific Documents.  Buyer shall have delivered, and executed as
applicable, any State specific documents customarily used in connection with the
transfer of real property and delivered by the buyer thereof, including any
transfer tax affidavits or bulk sales releases, in forms reasonably agreed to by
Buyer and Seller.
 
10.9 Performance by Buyer.  The due performance by Buyer of each and every
undertaking and agreement to be performed by it hereunder in all material
respects, and the truth of each representation and warranty made by Seller in
this Agreement in all material respects at the time as of which the same is made
and as of the Closing Date as if made on and as of the Closing Date.
 

 
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ARTICLE 11:
CASUALTY, RISK OF LOSS

 
11.1 Casualty, Risk of Loss.  Buyer shall bear the risk of all loss or damage to
the Assets through each Closing.  If any of the Assets are damaged or destroyed,
in whole or in part, as a result of any cause at any time before a Closing Date,
Buyer shall nonetheless purchase the Assets and proceed to the applicable
Closing.  All insurance proceeds payable on account of any such casualty shall
belong to Buyer.  In the event of any condemnation or taking related to any
portion of the Real Property, Seller shall assign to Buyer its rights to any
condemnation proceeds resulting from such condemnation or taking at the
applicable Closing.
 
ARTICLE 12:
MISCELLANEOUS PROVISIONS

 
12.1 Survival of Representations and Warranties.  The representations,
warranties, covenants and agreements by Buyer and Seller contained in this
Agreement will survive for a period of six months after each Closing.  After
such time, the conveyance of certain Assets to Buyer shall constitute full
performance and discharge of every representation, warranty, covenant and
agreement of Seller and Buyer to be performed hereunder, notwithstanding
anything herein to the contrary.
 
12.2 Public Announcements.  Each party shall hold in strict confidence all
information received from the other party concerning this transaction and shall
not release any such information to third parties (other than attorneys,
accountants or other professional consultants, and lenders of Buyer) without the
prior written consent of the other party unless otherwise required by
law.  Buyer and Seller will jointly prepare and issue any and all releases of
information to the public relating to the sale of the Assets.  Each party will
undertake to consult with the other prior to responding to any inquiries made by
any third party respecting the transactions contemplated by this Agreement.
 
12.3 Costs and Expenses.  Except as expressly otherwise provided in this
Agreement, each party hereto shall bear its own costs and expenses in connection
with this Agreement and the transactions contemplated hereby.
 
12.4 Performance.  In the event of a breach or default by any party of its
obligations hereunder, the prevailing party shall be entitled to its reasonable
attorney’s fees.
 
12.5 Benefit and Assignment.  This Agreement binds and inures to the benefit of
each party hereto and its successors and assigns.  Buyer may assign its interest
under this Agreement to any other person or entity, or designate one or more
nominees to take title to all or any portion of the Assets, without the prior
written consent of Seller.  Seller shall not assign its rights under this
Agreement to any person or entity without the prior written consent of Buyer.
 

 
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12.6 Effect and Construction of this Agreement.  This Agreement is the entire
agreement of the parties and supersedes any and all prior agreements,
arrangements and understandings relating to matters provided for herein.  The
captions used herein are for convenience only and shall not control or affect
the meaning or construction of the provisions of this Agreement.  This Agreement
may be executed in one or more counterparts, and all such counterparts shall
constitute one and the same instrument.
 
12.7 Cooperation; Further Assistance.  Subject to the terms and conditions
herein provided, each of the parties hereto shall use its best efforts to take
such action and execute and deliver such additional documents and instruments as
may be necessary to consummate and make effective the transactions contemplated
by this Agreement.
 
12.8 Notices.  All notices, consents and approvals required or permitted
hereunder shall be in writing and shall be deemed to be properly given when [i]
personally delivered; [ii] sent by first class U.S. mail, postage prepaid; [iii]
sent by overnight courier, or [iv] sent by facsimile or electronic transmittal
(provided a copy is promptly sent pursuant to clause [i], [ii], or [iii] above)
in each case at the address stated below:
 
 
If to Seller:
Health Care REIT, Inc.

 
 
One SeaGate, Suite 1500

 
 
Toledo, Ohio  43604

 
 
Attn:
Erin C. Ibele

 
 
Telephone: (419) 247-2800

 
 
Facsimile: (419) 247-2826

 
 
with a Copy to:
Shumaker, Loop & Kendrick, LLP

 
 
1000 Jackson Street

 
 
Toledo, Ohio   43604

 
 
Attn:
Mary Ellen Pisanelli, Esq.

 
 
Telephone: (419) 321-1313

 
 
Facsimile: (419) 241-6894

 
 
If to Buyer:
Emeritus Corporation

 
 
3131 Elliott Avenue, #500

 
 
Seattle, Washington 98121

 
 
Attn:
Eric Mendelsohn

 
 
Telephone: (206) 301-4493

 
 
Facsimile: (206) 357-7388

 
 
with a Copy to:
Pircher, Nichols & Meeks

 
 
900 North Michigan Avenue, Suite 1050

 
 
Chicago, Illinois 60611

 
 
Attn:  Real Estate Notices (JDL/MJK)

 
 
Telephone: (312) 915-3112

 
 
Facsimile:  (312) 915-3348

 

 
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All notices, consents and approvals that are required or permitted to be given
by either party to the other under this Agreement may be given by such party or
its legal counsel, who are hereby authorized to do so on the party’s behalf.
 
12.9 Waiver and Discharge.  This Agreement shall not be released or modified in
any manner except by an instrument in writing executed by or on behalf of each
of the parties.  The failure of any party to enforce at any time any of the
provisions of this Agreement shall in no way be construed to be a waiver of any
such provision, nor in any way to affect the validity of this Agreement or any
part hereof or the right of any party thereafter to enforce each and every such
provision.  No waiver of any breach of this Agreement shall be held to be a
waiver of any other or subsequent breach.
 
12.10 Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
 
12.11 Severability.  Any provision of this Agreement that is determined by a
court of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.  To the extent permitted by applicable law, the parties
waive any provision of law which renders a provision hereof prohibited or
unenforceable in any respect.
 
12.12 Time of Essence.  Time is of the essence with respect to all provisions of
this Agreement.
 
12.13 No Third Party Beneficiaries.  Except as otherwise expressly provided
herein, the provisions of this Agreement are intended to be solely for the
benefit of the parties hereto, and the execution and delivery of this Agreement
shall not be deemed to confer any rights upon, nor obligate any of the parties
hereunder, to any person or entity other than the parties to this Agreement.
 
12.14 No Brokers.  Seller represents and warrants to Buyer, and Buyer represents
and warrants to Seller, that no broker or finder has been engaged by it,
respectively, in connection with any of the transactions contemplated by this
Agreement or to its knowledge is in any way connected with any of such
transactions.  In the event of a claim for broker’s or finder’s fee or
commissions in connection herewith, then Seller shall indemnify, protect, defend
and hold Buyer harmless from and against the same if it shall be based upon any
statement or agreement alleged to have been made by Seller, and Buyer shall
indemnify, protect, defend and hold Seller harmless from and against the same if
it shall be based upon any statement or agreement alleged to have been made by
Buyer.
 
12.15 Further Instruments.  Each party will, whenever and as often as it shall
be requested so to do by the other, cause to be executed, acknowledged or
delivered any and all such further instruments and documents as may be necessary
or proper, in the reasonable opinion of the requesting party, in order to carry
out the intent and purpose of this Agreement.
 
12.16 Non Business Days.  Whenever action must be taken (including the giving of
notice or the delivery of documents) under this Agreement during a certain
period of time (or by a
 

 
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particular date) that ends (or occurs) on a non business day, then such period
(or date) shall be extended until the immediately following business day.  As
used herein, “business day” means any day other than a Saturday, Sunday or
federal or Ohio State holiday.
 
12.17 Amendments.  This Agreement may be amended by written agreement of
amendment executed by all parties, but not otherwise.
 
12.18 Waiver of Trial by Jury.  The parties hereby irrevocably waive their
respective rights to a jury trial of any claim or cause of action based upon or
arising out of this Agreement.  This waiver shall apply to any subsequent
amendments, renewals, supplements or modifications to this Agreement.  In the
event of litigation, this Agreement may be filed as a written consent to a trial
by the court.
 
12.19 Incorporation by Reference.  All recitals and all schedules attached
hereto are incorporated by reference into this Agreement as if the same were
fully set forth herein, regardless of when the same are finally attached to this
Agreement.  The following is a complete list of the schedules and exhibits
attached or to be attached hereto:
 
                      Schedule 1:                                         Seller
Entities
                      Schedule 2-A:                                    Tranche 1
Facilities
                      Schedule 2-B:                                     Tranche
2 Facilities

                      Exhibit A:                                           Legal
Descriptions
                      Exhibit B:                                           Form
of Earnest Money Escrow Agreement
                      Exhibit C:                                           Term
Sheet for Seller Loan
                      Exhibit D:                                           Form
of Quitclaim Bill of Sale

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
 

 
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                      IN WITNESS WHEREOF, each of the parties hereto have
executed this Agreement as of the Effective Date.
 
Seller:
HEALTH CARE REIT, INC.
 
 
By: /s/ Erin C.
Ibele                                                                
Title: Senior Vice President
Administration and Corporate Secretary
 
     
HCRI MISSISSIPPI PROPERTIES, INC.
 
By: /s/ Erin C.
Ibele                                                                
Title: Senior Vice President
Administration and Corporate Secretary
 
     
HCRI MASSACHUSETTS PROPERTIES TRUST II
 
By:HCRI Massachusetts Properties, Inc., as Trustee, and not individually and
subject to the provisions of the Declaration of Trust of HCRI Massachusetts
Properties Trust II filed with the Secretary of the Commonwealth of
Massachusetts and the City Clerk of Boston
 
By: /s/ Erin C. Ibele
        Title: Senior Vice President
                    Administration and Corporate Secretary
 
     
HCRI TEXAS PROPERTIES, LTD.
 
By:Health Care REIT, Inc., General Partner
 
By: /s/ Erin C. Ibele
         Title: Senior Vice President
                    Administration and Corporate Secretary
 
   

 
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HCRI EDDY POND PROPERTIES TRUST
 
By:HCRI Massachusetts Properties, Inc., as Trustee, and not individually and
subject to the provisions of the Declaration of Trust of HCRI Eddy Pond
Properties Trust filed with the Secretary of the Commonwealth of Massachusetts
and the City Clerk of Boston
 
By: /s/ Erin C. Ibele
                     Title: Senior Vice President
                     Administration and Corporate Secretary
 
     
HCRI NEVADA PROPERTIES, INC.
 
By: /s/ Erin C. Ibele
                      Title: Senior Vice President
                      Administration and Corporate Secretary
 
     
HCRI KANSAS PROPERTIES, LLC
 
By: Health Care REIT, Inc., Sole Member
 
By: /s/ Erin C. Ibele
                      Title: Senior Vice President
                      Administration and Corporate Secretary
 
     
HCRI STONECREEK PROPERTIES, LLC
 
By:  Health Care REIT, Inc., Sole Member
 
By: /s/ Erin C. Ibele
                      Title: Senior Vice President
                      Administration and Corporate Secretary
   
Buyer:
EMERITUS CORPORATION
 
By: /s/ Eric Mendelsohn
                        Title: SVP Corporate Development
 
 

 

 
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