Second Restated Note




 

SECOND
AMENDED AND RESTATED NOTE

 

$21,426,000.00
March 3,
2005

Seattle,
Washington

 

FOR VALUE
RECEIVED, EMERITUS CORPORATION, a corporation organized under the laws of the
State of Washington (“Borrower”), shall pay to the order of HEALTHCARE REALTY
TRUST INCORPORATED, a corporation organized under the laws of the State of
Maryland (“Lender”), the principal sum of Twenty One Million Four Hundred Twenty
Six Thousand Dollars ($21,426,000.00), with interest on so much thereof as shall
from time to time be outstanding at the rate of interest set forth below, until
fully paid. This Note is given pursuant to that certain Second Amended and
Restated Loan Agreement of even date among Borrower and Lender, as amended from
time to time (the “Loan Agreement”) and is subject to the provisions thereof.
The definitions in the Loan Agreement shall be applicable to any capitalized
terms herein that are not otherwise defined. 

 

This Note
is made by Borrower in full substitution of that certain Amended and Restated
Note dated September 30, 2003, made by Borrower in favor of Health Care REIT,
Inc., a corporation organized under the laws of the State of Delaware (“HCN”),
in the original principal amount of $25,800,000.00 (the “Amended and Restated
Note”) which Amended and Restated Note constituted a consolidation of certain
earlier indebtedness of Borrower to HCN, and an increase of such indebtedness
(all such indebtedness as amended and restated in the Amended and Restated Note
hereinafter collectively referred to as the “Original Note”). This Note
constitutes a modification and renewal of the existing indebtedness
evidenced by the
Original Note, and an additional advance thereunder, and does not cancel such
existing indebtedness, and is not intended to be a novation of the Original Note
or the indebtedness evidenced thereby. Substitution of this Note for the
Original Note shall not affect the priority of the lien of the Mortgage
(hereinafter defined).

 

1. Definitions.

 

“Business
Day” means any day which is not a Saturday or Sunday or a public holiday under
the laws of the United States of America or the State of Ohio.

 

“Closing
Date” means the date of this Note.

 

“Collateral
Document” means the Mortgage and any other document providing security for or
guarantee of repayment of this Note.

 

“Commencement
Date” means [i] the Closing Date if the Closing Date occurs on the first day of
a month or [ii] the first day of the month after the Closing Date if the Closing
Date occurs on any day other than the first day of the month.

 

“Default
Rate” means the greater of [i] 2.50% plus the then applicable interest rate or
[ii] 18.50%, subject to the provisions of §21.

 

“Event of
Default” has the meaning set forth in §8. 

 

“Lease”
has the meaning set forth in the Loan Agreement.

 

“Maturity
Date” means March 3, 2008.

 

“Mortgage”
means the Amended and Restated Leasehold Mortgage/Deed of Trust, Security
Agreement, Assignment of Leases and Rents, Financing Statement and Fixture
Filing granted by Borrower to secure the indebtedness evidenced by the Original
Note, which indebtedness is hereby further amended and restated, and which
Mortgage was dated September 30, 2003. 

 

“State”
means the State of Ohio.

 

2. Interest
Rate.

 

(a) Initial
Rate. Interest
shall accrue on the principal amount outstanding hereunder at the rate of 10%
per annum. 

 

(b) Default
Rate. After
the occurrence and during the continuance of an Event of Default, Borrower shall
pay interest on this Note, and on any judgment on this Note, at the Default
Rate.

 

(c) Computation
Method. All
interest rates shall be calculated based on the actual number of days elapsed
over a 365-day year (365/365 method).

 

3. Payments.

 

(a) On the
Closing Date, Borrower shall make a payment of all accrued interest on the
outstanding principal balance of the Loan;  

 

(b) If the
Closing Date is not on the first day of the month, on the Closing Date, Borrower
shall make a payment of interest on the outstanding principal balance of the
Loan for the period commencing on the Closing Date and ending on the day before
the Commencement Date;

 

(c) Commencing
on the first day of the first month after the Commencement Date and on the first
day of each month thereafter, Borrower shall make monthly payments of interest
only in arrears sufficient to pay all interest accrued pursuant to §2
hereof;

 

(d) On the
Maturity Date, Borrower shall make a balloon payment equal to the outstanding
balance of this Note including the outstanding principal balance, all accrued
and unpaid interest and all charges, expenses and other amounts payable by
Borrower to Lender. 

 

4. Method
and Place of Payment. Borrower
shall make all payments on this Note at Healthcare Realty Trust Incorporated,
P.O. Box 100894, Atlanta, GA 30384-0894, or at such other place as the holder
hereof may designate in writing to Borrower in accordance with the provisions of
Section 17. The failure of Lender to provide such written notice to Borrower
will not relieve Borrower of its obligations under this Note. Borrower shall
make all payments in lawful money of the United States of America by wire
transfer of immediately available funds.

 

5. Prepayment. Borrower
shall not have the privilege of prepaying this Note in whole or in part at any
time without the prior written consent of Lender in Lender’s sole
discretion.

 

6. Late
Charge. Borrower
acknowledges that any default in any payment due under this Note will result in
loss and additional expense to Lender in handling such delinquent payments and
meeting Lender’s other financial obligations. Because such loss and additional
expense is extremely difficult and impractical to ascertain, Borrower agrees
that if any payment hereunder (other than the final payment on maturity) is not
paid within 10 days after the due date, Borrower shall pay, as a reasonable
estimate of such loss and expense, a late charge equal to the lesser of [i] 5%
of the amount of the overdue payment, or [ii] the maximum amount permitted by
applicable law.

 

7. Application
of Payments. Unless
Lender elects otherwise, in its sole discretion, all payments and other amounts
received by Lender shall be credited as follows: [i] first to any charges,
costs, expenses and fees payable by Borrower under this Note, the Loan
Agreement, the Mortgage, or incurred by Lender for the protection of any
collateral securing the payment of this Note, if not paid by Borrower by the due
date after the expiration of any applicable grace period; [ii] second to
interest on the foregoing amounts at the Default Rate from the due date or date
of payment by Lender, as the case may be; [iii] third to accrued but unpaid
interest on this Note; [iv] fourth, to the principal amount outstanding; and [v]
the balance, if any, to Borrower.

 

8. Default. The
occurrence of an Event of Default under the Loan Agreement or Mortgage shall be
an Event of Default hereunder.

 

9. Acceleration. Upon the
occurrence of any Event of Default, in addition to all other remedies under the
Loan Agreement, Mortgage, any other security for or guarantee of this Note, and
at law or in equity, at the option of Lender [i] the outstanding principal
balance of this Note and all accrued and unpaid interest thereon and all other
amounts payable by Borrower to Lender shall be immediately due and payable, and
[ii] all such amounts shall bear interest at the Default Rate from the date of
the Event of Default until paid. Lender may exercise either or both options
without notice or demand of any kind.

 

10. Governing
Law. This
Note shall be governed by and construed in accordance with the internal laws of
the State, without giving effect to the conflict of laws rules
thereof.

 

11. Time
is of the Essence. Time is
of the essence in the payment of this Note. All grace periods in the Loan
Agreement and any Collateral Document that apply to a default shall run
concurrently.

 

12. Holidays. If any
installment of this Note becomes due on a day which is not a Business Day,
Borrower may pay the installment on the next succeeding day on which banking
institutions are open.

 

13. Waivers. None of
the following shall be a course of dealing, estoppel, waiver or the like on
which Borrower, Lender or any party to any Collateral Document may rely: [i]
Lender’s acceptance of one or more late or partial payments; [ii] Lender’s
forbearance from exercising any right or remedy under this Note or any
Collateral Document; or [iii] Lender’s forbearance from exercising any right or
remedy under this Note or any Collateral Document on any one or more occasions.
Lender’s exercise of any rights or remedies or a part of a right or remedy on
one or more occasions shall not preclude Lender from exercising the right or
remedy at any other time. Lender’s rights and remedies under this Note, the
Collateral Documents, and the law and equity are cumulative to, but independent
of, each other.

 

14. Representations.
Borrower, Lender and each party to this Note and each Collateral Document: [i]
acknowledges that Lender would not have extended the credit evidenced by this
Note and will not continue to extend the credit but for the obligations of each;
[ii] warrants that each has executed this Note or Collateral Documents to induce
Lender to extend and to continue to extend the credit; [iii] warrants that each
has received good and valuable consideration for executing this Note or any
Collateral Document; and [iv] warrants that none have executed this Note or any
Collateral Document in reliance upon the existence of the security for or
guaranty or promise of the payment of this Note.

 

15. Indulgences. Without
notice, Lender may do or refrain from doing anything affecting this Note or any
Collateral Document, as many times as Lender desires, including the following:
[i] granting or not granting any indulgences to anyone liable for payment of
this Note or to anyone liable under any Collateral Document; [ii] releasing any
security or anyone or any property from liability on this Note or any Collateral
Document; [iii] amending this Note or any Collateral Document, including
extending the time for payment of this Note, in accordance with the terms of
Section 25 of this Note and as provided in the Collateral
Documents.

 

16. No
Release of Liability. No
obligations of Borrower or Lender or any party to this Note shall be affected by
[i] any default in this Note or any Collateral Document when accepted by Lender
or arising any time thereafter; [ii] the unenforceability of or defect in this
Note or in any Collateral Document or any interest conveyed by any Collateral
Document; [iii] any decline in the value of any interest in any property
conveyed by any Collateral Document; or, [iv] the death, incompetence,
insolvency, dissolution, liquidation or winding up of affairs of Borrower,
Lender or any party to this Note or any Collateral Document or the start of
insolvency proceedings by or against any such party. BORROWER
WAIVES ALL SURETYSHIP AND
OTHER
SIMILAR DEFENSES. Neither
Borrower nor any party to any Collateral Document may enforce any right of
subrogation or contribution unless and until this Note is paid in full and
waives all rights of subrogation against any party that is subject to insolvency
proceedings unless and until this Note is paid in full.

 

17. Notices. All
notices, demands, requests and consents (hereinafter “notices”) given pursuant
to this Note shall be in writing, and shall be served by [i] personal delivery,
[ii] United States Mail, certified mail, return receipt requested; or [iii]
nationally recognized overnight courier to the following addresses:

 

To
Borrower: Emeritus
Corporation

 

3131
Elliott Avenue, Suite 500

 

Seattle,
Washington 98121

Attention:
William M. Shorten

 

To
Lender: Healthcare
Realty Trust Incorporated

3310 West
End Avenue, Suite 700

Nashville,
Tennessee 37203

Attention:
John M. Bryant, Jr.

 

All
notices shall be deemed to be given upon the earlier of actual receipt or three
days after deposit in the United States mail or one business day after deposit
with the overnight courier. Lender and Borrower may change their notice address
at any time by giving the other party written notice of such change in
accordance with the foregoing provisions.

 

18. Representation
and Warranty Regarding Business Purpose. Borrower
represents and warrants that the loan evidenced by this Note is for business
purposes only and not for personal, family, household, or agricultural
purposes.

 

19. Security. This
Note is secured by the Mortgage and all other collateral for the
Loan.

 

20. Protest. Except
as otherwise expressly provided in the Loan Agreement, Borrower waives protest,
notice of protest, demand, dishonor or default, presentment for payment, notice
of intent to declare this Note immediately due and payable, notice of
declaration that this Note is immediately due and payable in full, all other
notices, and all demands.

 

21. Savings
Clause. The
intention of Lender and Borrower is to comply with the laws of the State
concerning the rate of interest on this Note. Notwithstanding any other
provision in this Note or in any other document given in connection with this
Note, Borrower shall not be required to pay interest in excess of the maximum
lawful rate under applicable law. If a court of competent jurisdiction should
determine that applicable law concerning the maximum lawful rate of interest on
this Note is not that of the State, it is the intention of the parties to comply
with the law of the state whose law is, in fact, applicable concerning the
maximum lawful rate of interest on this Note. To the extent the amount of
interest provided in this Note ever exceeds the maximum lawful rate (the “Excess
Interest”), [i] the provisions of this paragraph shall govern and control; [ii]
Borrower shall not be obligated to pay any Excess Interest; [iii] any Excess
Interest that Lender may have received shall be credited against the then
outstanding balance due under this Note and, if the Excess Interest exceeds the
outstanding balance, the excess amount shall be refunded to Borrower; [iv] the
rate of interest under this Note or the Default Rate, as applicable, shall be
automatically reduced to the maximum lawful rate and this Note and any other
documents given in connection therewith shall be deemed reformed and modified to
reflect such reduction; and [v] subject to the foregoing provisions of this
paragraph, Borrower shall have no action or remedy against Lender for any
damages whatsoever or any defense to enforcement of the note or any other
documents given in connection therewith arising out of the payment or collection
of any Excess Interest. In determining whether interest paid or payable on this
Note exceeds the maximum lawful rate, Borrower agrees to exclude voluntary
prepayment fees from the calculation of interest and to spread the total amount
of interest throughout the entire contemplated term of this Note.

 

22. Attorney’s
Fees and Expenses. Borrower
shall pay to Lender all reasonable costs and expenses incurred by Lender in
administering the Loan and the security for the Loan, enforcing or preserving
Lender’s rights under this Note, the Loan Agreement, the Mortgage, or any other
Collateral Document, and in all matters of collection, whether or not an Event
of Default has actually occurred or has been declared and thereafter cured,
including but not limited to, [i] attorneys’ and paralegals’ fees and
disbursements; [ii] the fees and expenses of any litigation, administrative,
bankruptcy, insolvency, receivership and any other similar proceeding; [iii]
court costs; [iv] the expenses of Lender, its employees, agents, attorneys and
witnesses in preparing for litigation, administrative, bankruptcy, insolvency
and other proceedings and for lodging, travel, and attendance at meetings,
hearings, depositions, and trials; and [v] consulting and witness fees incurred
by Lender in connection with any litigation or other proceeding.

 

23. Severability. If any
clause, provision, section or article of this Note is ruled invalid by any court
of competent jurisdiction, the invalidity of such clause, provision, section, or
article shall not affect any of the remaining provisions hereof.

 

24. Assignment. Borrower
shall not assign its rights nor delegate its obligations under this
Note.

 

25. Amendment. This
Note may not be amended except in writing signed by Borrower and Lender. All
references to this Note, whether in this Note or in any other document or
instrument, shall be deemed to incorporate all amendments, modifications, and
renewals of this Note and all substitutions made therefor after the date
hereof.

 

26. Intercreditor
Agreement. Lender
and HCN have entered into that certain Intercreditor Agreement of even date
herewith. This Note is subject to the Intercreditor Agreement. In the event of
inconsistencies between the Intercreditor Agreement and this Agreement, the
terms of the Intercreditor Agreement will govern.

 

27. CONSENT
TO JURISDICTION. BORROWER
HEREBY IRREVOCABLY SUBMITS AND CONSENTS TO THE NON-EXCLUSIVE JURISDICTION AND
VENUE OF ANY STATE OR FEDERAL COURT HAVING JURISDICTION OVER DAVIDSON COUNTY,
TENNESSEE FOR ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY MATTER ARISING
FROM OR RELATED TO [I] THIS NOTE; OR [II] ANY LOAN DOCUMENT EXECUTED IN
CONNECTION WITH THIS NOTE. BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT BORROWER MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO
THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING. BORROWER AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW. 

 

BORROWER
AND ANY GUARANTOR AGREE NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST
LENDER OR ANY DIRECTOR, OFFICER, EMPLOYEE, AGENT OR PROPERTY OF LENDER,
CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THE COMMITMENT OR ANY LOAN
DOCUMENT IN ANY COURT OTHER THAN A STATE OR FEDERAL COURT HAVING JURISDICTION
OVER DAVIDSON COUNTY, TENNESSEE UNLESS SUCH COURTS LACK SUBJECT MATTER OR IN
PERSONAM JURISDICTION IN WHICH CASE SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
ANY COURT WHICH HAS SUCH JURISDICTION.

 

BORROWER
HEREBY CONSENTS TO SERVICE OF PROCESS BY LENDER IN ANY MANNER AND IN ANY
JURISDICTION PERMITTED BY LAW. NOTHING HEREIN SHALL AFFECT OR IMPAIR LENDER’S
RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW, OR LENDER’S RIGHT
TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR THE PROPERTY OF BORROWER
OR ANY GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION.

 

28. WAIVER
OF JURY TRIAL. TO THE
FULLEST EXTENT PERMITTED BY LAW, LENDER, BY ITS ACCEPTANCE OF THIS NOTE, AND
BORROWER AND ANY GUARANTOR HEREBY KNOWINGLY AND VOLUNTARILY WAIVE THE RIGHT TO A
JURY TRIAL IN ANY ACTION, PROCEEDING OR COUNTERCLAIMS ARISING OUT OF OR RELATING
TO THIS NOTE.

 

29. ORAL
AGREEMENTS. ORAL
AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER THE LAWS OF THE STATE OF
WASHINGTON.

 

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REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 





 

1085135.9 




















 

IN
WITNESS WHEREOF, the undersigned has executed this Note effective as of the date
first set forth above.







EMERITUS
CORPORATION, a Washington corporation




By: /s/
William M. Shorten

William
M. Shorten

Director
of Real Estate Finance

 





 

1085135.9 




















ACCEPTANCE
BY LENDER

 

The
foregoing Second Amended and Restated Note is hereby accepted by Lender in full
substitution for the Original Note (as defined herein). The Original Note (but
not the indebtedness evidenced by the Original Note) is hereby
cancelled.

 

Executed
as of March 3, 2005.










HEALTHCARE
REALTY TRUST INCORPORATED, a Maryland corporation




By:
/s/ John M. Bryant, Jr.

John M.
Bryant, Jr.

Senior
Vice President and General 

Counsel