THIRD
AMENDMENT TO LOAN AGREEMENT




THIS THIRD AMENDMENT TO LOAN
AGREEMENT(this “Agreement”) is made as of
October 22, 2008 by and between EMERITUS CORPORATION, a
Washington corporation (“Borrower”), and NATIONWIDE HEALTH PROPERTIES,
INC., a Maryland corporation (“Lender”), with respect to the
following:




RECITALS:




A.  Borrower
and Lender (as successor to Healthcare Realty Trust Incorporated, a Maryland
corporation (“HRT”)) are
parties to that certain Second Amended and Restated Loan Agreement dated as of
March 3, 2005, as amended by that certain Amendment to Loan Agreement dated as
of August 6, 2007 and that certain Second Amendment to Loan Agreement dated as
of March 3, 2008 (as amended, the “Loan Agreement”), pursuant to
the terms and conditions of which a loan in the principal amount of Twenty-One
Million Four Hundred Twenty-Six Thousand Dollars ($21,426,000) is due from
Borrower to Lender (the “Loan”).  Unless
otherwise defined herein, all initially-capitalized terms herein shall have the
same meanings given to such terms in the Loan Agreement.




B.  The Loan
is evidenced by that certain Second Amended and Restated Note dated March 3,
2005, in the original principal amount of the Loan, executed by Borrower in
favor of HRT (the “Note”), which Note has been
assigned from HRT to Lender pursuant to that certain Allonge dated as of April
26, 2007.




C.  Borrower
has requested that Lender extend the Maturity Date of the Note and modify
certain other terms of the Loan.  Lender is willing to grant
Borrower’s request upon the terms and subject to the conditions set forth in
this Agreement.




NOW, THEREFORE, in
consideration of the foregoing Recitals, the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Lender and Borrower hereto agree
as follows:




1.  Modification
to Loan Documents.  Effective as of the Third Amendment
Effective Date (as defined below), the Loan Documents shall be deemed amended as
follows:




(a)  The term
“Maturity Date” as
defined in Section
1 of the Note shall mean March 31, 2012.




(b)  Section 2(a) of the
Note shall be deleted in its entirety and the following substituted
therefor:




“Interest
shall accrue on the principal amount outstanding hereunder at the rate of eight
and one-half percent (8.5%) per annum through March 3, 2009.  From and
after March 4, 2009, Interest shall accrue on the principal amount outstanding
hereunder at the rate of nine percent (9%) per annum.”




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(c)  The
following shall be added immediately following Section 5 of the
Note:




“Notwithstanding
the foregoing, Borrower shall have the right to prepay the Loan in whole, but
not in part, provided, however, that to prepay the Loan, Borrower must give
Lender written notice of Borrower’s election to prepay the Loan by no later than
December 1st of the
calendar year immediately preceding the year in which the prepayment is to occur
(e.g. by December 1, 2009 in the event Borrower elects to prepay the
Loan  in 2010) and therein specifying the calendar quarter within
which the prepayment shall occur. Further, Borrower must give Lender not less
than thirty (30) days prior written notice specifying the date within the
calendar quarter identified by Borrower on which such prepayment will occur. If
Borrower elects to prepay the Loan but fails to do so on the required date,
Borrower shall have no further right to prepay the Loan prior to the Maturity
Date.”




(d)  All of
the other Loan Documents not specifically described in this Section 1 shall
be deemed amended to reflect the amendments described herein.




2.  Amendment
Conditions.  Notwithstanding Lender’s negotiation, preparation
or execution of this Agreement or any of the instruments or documents required
herein and notwithstanding anything else to the contrary, no modification or
amendment to the Loan, the Note or the Loan Documents shall be deemed to have
occurred unless and until all of the following conditions (the “Amendment Conditions”) have
been satisfied (the date of such satisfaction, the “Third Amendment Effective Date”):




(a)  Borrower
shall execute and acknowledge, where applicable, and deliver to Lender each of
the following:




(i)  this
Agreement in form and substance satisfactory to Lender;




(ii)  amendments
to the Mortgages in form and substance satisfactory to Lender (the “Mortgage Amendments”);
and




(iii)  any
instructions to Fidelity National Title Insurance Company (the “Title Company”) as may be
requested by the Title Company as necessary to carry out the terms of this
Agreement.




(b)  The Title
Company shall be unconditionally and irrevocably committed to issue to Lender,
at Borrower’s sole cost and expense, such endorsements to the existing lender’s
title insurance policies covering the facilities known as (i) Anderson Place, in
Anderson, South Carolina, and (ii) Creston Village, in Paso
Robles, California (collectively, the “Title Policies”), as Lender
may reasonable require, including a CLTA 110.5 endorsement or its
equivalent.




(c)  Borrower
shall deposit with the Title Company an amount sufficient to pay for the cost of
all endorsements to the Title Policies required pursuant to Section2(b) above and
all other fees and expenses, including recording fees, incurred by the Title
Company in connection with this transaction.




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(d)  The
Mortgage Amendments shall have been properly recorded in the applicable counties
and states.




3.  Reaffirmation
of Obligations.




(a)  Borrower
hereby acknowledges and reaffirms its obligations under the Note and the other
Loan Documents, as such documents have been amended by this Agreement, and
agrees that all references to a particular Loan Document in the Loan Documents
shall be deemed to refer to such Loan Document as amended by this
Agreement.




(b)  Borrower
hereby acknowledges and agrees that the execution and delivery of this Agreement
by Lender shall not be deemed or construed to constitute a waiver by Lender of
any default existing under any of the Loan Documents or a commitment by Lender
to otherwise modify the Loan Documents.




4.  Representations
and Warranties.  As a material inducement for Lender to enter
into this Agreement, Borrower represents and warrants to Lender that the
following matters are true and correct as of the execution of this Agreement and
also will be true and correct as of the Third Amendment Effective
Date:




(a)  To the
best of Borrower’s knowledge and after giving effect to all of the amendments
reflected in this Agreement, no Event of Default by Borrower exists under the
Loan Agreement, the Note, or any of the other Loan Documents, and no event
exists which, with the giving of notice or the passage of time, or both, would
give rise to an Event of Default by Borrower hereunder or under any of the Loan
Documents; and




(b)  To the
best of Borrower’s knowledge, Lender is not in default and has performed all of
its obligations under the Loan Agreement and the other Loan Documents, and
Borrower does not have any claim against Lender or defense against the
enforcement of the Note, the Loan Agreement or any of the other Loan
Documents.




5.  Effect on
Loan Documents.  Except as specifically amended pursuant to the
terms of this Agreement, the terms and conditions of the Loan Documents shall
remain unmodified and in full force and effect.  In the event of any
inconsistencies between the terms of this Agreement and any terms of any of the
Loan Documents, the terms of this Agreement shall govern and
prevail.




6.  Governing
Law.  This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Ohio without giving effect
to the conflicts-of-law rules and principles of such state.




7.  Counterparts.  This
Agreement may be executed and acknowledged in any number of counterparts, all of
which executed and acknowledged counterparts shall together constitute a single
document.  Signature and acknowledgment pages may be detached from the
counterparts and attached to a single copy of this document to physically form
one document, which may be recorded.




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8.  Further
Assurances.  At any time or from time to time upon the
reasonable request of Lender, Borrower shall, at its expense, promptly execute,
acknowledge and deliver, or cause to be executed, acknowledged, or delivered,
such further instruments and documents and perform such other acts as may be
necessary or advisable, in the reasonable discretion of Lender, for carrying out
the intention or facilitating the performance of the terms of this Agreement, or
for assuring the validity of, perfecting, or preserving the lien of any other
Loan Documents, as modified by this Agreement.




9.  Attorneys’
Fees.  In the event of any dispute or litigation concerning the
enforcement, validity or interpretation of this Agreement, or any part thereof,
the losing party shall pay all costs, charges, fees and expenses (including
reasonable attorneys’ fees) paid or incurred by the prevailing party, regardless
of whether any action or proceeding is initiated relative to such dispute and
regardless of whether any such litigation is prosecuted to
judgment.




10.  Entire
Agreement.  This Agreement contains the entire agreement
between the parties relating to the subject matters contained
herein.  Any oral representations or statements concerning the subject
matters herein shall be of no force or effect.









[Signatures
on next page]




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IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first above
written.









“BORROWER”




EMERITUS
CORPORATION,




a
Washington corporation




By:           /s/ Eric
Mendelsohn


Name:            Eric
Mendelsohn


Title:              SVP Corporate
Development









“LENDER”




NATIONWIDE HEALTH PROPERTIES,
INC.,




a Maryland
corporation




By:           /s/ Brent P.
Chappell


Name:                      Brent P.
Chappell


Title:                      VP Portfolio
Management




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