Document:

Loan Purchase Agreement

 

LOAN
PURCHASE AGREEMENT

 

AMONG

 

HEALTHCARE
REALTY TRUST INCORPORATED

 

AND

 

HEALTH
CARE REIT, INC.

 

AND

 

EMERITUS
CORPORATION

 

MARCH
3, 2005

 

 

 

1093179.1 

 

TABLE
OF CONTENTS

 

ARTICLE
1: PURPOSE
AND DEFINITIONS 2

 

1.1 Purpose 2

 

1.2 Definitions 2

 

1.3 Incorporation
of Amendments 3

 

1.4 Exhibits 3

 

ARTICLE
2: SALE OF
THE LOAN AND ASSIGNMENT OF THE LOAN DOCUMENTS 3

 

2.1 Sale of
the Loan 3

 

2.2 Closing 4

 

2.3 Endorsement
of the Note and Delivery of Loan Documents 4

 

2.4 Assignments
of Mortgages 4

 

2.5 Assignment
of Additional Loan Documents 4

 

2.6 Other
Assurances 4

 

ARTICLE
3: CONDITIONS
PRECEDENT TO DISBURSEMENT 4

 

3.1 Conditions
Precedent to Purchase of the Loan 4

 

3.1.1 Amendment
of Loan 4

 

3.1.2 Completion
of Due Diligence Review 4

 

3.1.3 Intercreditor
Agreement 4

 

3.1.4 Estoppel
Certificates 5

 

3.1.5 Loan
Documents 5

 

3.1.6 Legal
Opinion 5

 

3.1.7 Organizational
Documents 5

 

3.1.8 No
Default 5

 

ARTICLE
4: REPRESENTATIONS AND WARRANTIES OF HCN 5

 

4.1 Organization
and Good Standing 5

 

4.2 Power and
Authority 5

 

4.3 No
Default 5

 

4.4 Note
Payments in Advance 6

 

4.5 Obligations
for Facility Improvements 6

 

4.6 Schedule
of Loan Documents 6

 

4.7 No Notice
of Remedial Action 6

 

4.8 Compliance 6

 

ARTICLE
5: REPRESENTATIONS AND WARRANTIES OF TENANT 6

 

5.1 Organization
and Good Standing 6

 

5.2 Power and
Authority 7

 

5.3 Claims
Against HCN 7

 

5.4 Schedule
of Loan Documents 7

 

5.5 No
Litigation 7

 

5.6 Reports,
Statements and Copies 7

 

5.7 No
Default 7

 

5.8 Note
Payments in Advance 7

 

5.9 Obligations
for Facility Improvements 7

 

5.10 No
Adverse Changes 8

 

5.11 Compliance 8

 

ARTICLE
6: AFFIRMATIVE COVENANTS 8

 

6.1 Impairment
of Lease 8

 

6.2 Notices
Under The Lease 8

 

6.3 Demolitions
of Facilities 8

 

6.4 Further
Assurances and Information 8

 

ARTICLE
7: MISCELLANEOUS 8

 

7.1 Notices 8

 

7.2 Entire
Agreement 9

 

7.3 Severability 9

 

7.4 Captions
and Headings 9

 

7.5 Governing
Law 9

 

7.6 Binding
Effect 9

 

7.7 Modification 9

 

7.8 Construction
of Agreement 9

 

7.9 Counterparts 9

 

7.10 No
Third-Party Beneficiary Rights 9

 

7.11 Remedies 10

 

7.12 Confidentiality 10

 

7.13 No
Brokers 10

 

7.14 Costs and
Expenses 10

 

7.15 Post
Closing Items 10

 

7.16 Waiver of
Jury 10

 

 

1093179.1 

 

LOAN
PURCHASE AGREEMENT

 

THIS LOAN
PURCHASE AGREEMENT (“Agreement”) is made and entered into effective as of March
3, 2005 (the “Effective Date”) among HEALTH
CARE REIT, INC., a
corporation organized under the laws of the State of Delaware (“HCN”), having an
address of One Seagate, Suite 1500, P.O. Box 1475, Toledo, Ohio 43603,
EMERITUS
CORPORATION, a
corporation organized under the laws of the State of Washington (“Tenant”),
having an address of 3131 Elliott Avenue, Suite 500, Seattle, Washington 98121,
and HEALTHCARE
REALTY TRUST INCORPORATED, a
corporation organized under the laws of the State of Maryland (“HRT”), having an
address of 3310 West End Avenue, Suite 400, Nashville, Tennessee,
37203.

 

R
E C I T A L S:

 

A. HCN
purchased four certain properties for a purchase price of $39,700,000.00 and
leased said properties to Tenant, pursuant to a Master Lease Agreement dated
March 28, 2002, and in connection therewith, HCN also provided a line of credit
to Tenant in the maximum amount of $6,800,000.00 (“Original Loan”), subject to
the terms and conditions of a Loan Agreement dated as of April 1,
2002.

 

B. HCN
subsequently purchased 19 additional properties for a purchase price of
$110,000,000.00 and leased said properties to Tenant by amending and restating
the Master Lease Agreement pursuant to that certain Amended and Restated Master
Lease Agreement dated as of September 30, 2003 between Tenant and HCN (as
amended, the “Master Lease”). HCN agreed to increase the line of credit in an
amount of $11,500,000.00 and to consolidate two additional loans made on August
28, 2003 in the amount of $3,100,000.00 and $4,400,000.00, for a total
indebtedness of $25,800,000.00 (collectively, the “Loan”) subject to the terms
of that certain Amended and Restated Loan Agreement, dated as of September 30,
2003 (the “Loan Agreement”).

 

C. The Loan
is secured by first priority leasehold mortgages or deeds of trust (each, a
“Mortgage, and collectively, the Mortgages”) from Tenant to HCN encumbering the
leasehold interest of Tenant in twenty six (26) assisted living and long term
care facilities (each a “Facility, and collectively, the “Facilities”). Twenty
three (23) of the Facilities (the “Master Lease Facilities”) are leased pursuant
to the Master Lease and each Mortgage with respect to a Master Lease Facility
are the only Mortgages being assigned under this Agreement.

 

D. HCN has
agreed to sell the Loan to HRT for the outstanding principal Loan balance and
any other amounts due under the Loan Documents, and to assign to HRT all of the
Mortgages (the “Transaction”).

 

E. The
principal balance of the Loan is currently Nineteen Million Four Hundred Sixty
Six Thousand Four Hundred Eighty Four and 86/100 Dollars ($19,466,484.86). HRT
shall advance additional funds to Tenant in the amount of One Million Eight
Hundred Twenty Two Thousand One Hundred Fifty One Dollars ($1,822,151.00) plus
funds for certain closing costs and as a result, the principal balance of the
Loan shall increase to Twenty One Million Four Hundred Twenty Six Thousand
Dollars ($21,426,000.00).

 

NOW,
THEREFORE, in consideration of the mutual covenants and the premises contained
herein, the parties agree as follows:

 

ARTICLE
1: PURPOSE AND DEFINITIONS

 

1.1 Purpose. The
purpose of this Agreement is to establish the terms and conditions of the
Transaction.

 

1.2 Definitions. Except
as otherwise expressly provided, [i] the terms defined in this section have the
meanings assigned to them in this section and include the plural as well as the
singular; [ii] all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as of the time applicable; and [iii] the words “herein”, “hereof”,
and “hereunder” and similar words refer to this Agreement as a whole and not to
any particular section.

 

“Affiliate”
means any person, corporation, partnership, limited liability company, trust, or
other legal entity that, directly or indirectly, controls, or is controlled by,
or is under common control with a referenced party. “Control” (and the
correlative meanings of the terms “controlled by” and “under common control
with”) means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such entity. 

 

“Closing”
means the closing of the purchase and sale of the Loan.

 

“Commitment”
means the non-binding letter of understanding dated January 27, 2005 between
HCN, HRT and Tenant.

 

“Effective
Date” means the effective date of Closing.

 

“Event of
Default” means any material default under this Agreement not cured within any
applicable notice and cure period, and, where the context so provides, any such
uncured default under any Loan Documents (as hereinafter defined) or Lease
Documents (as hereinafter defined).

 

“Facility”
means each skilled nursing, assisted living or retirement facility leased to
Tenant pursuant to the Master Lease.. 

 

“HCN”
means Health Care REIT, Inc., a Delaware corporation, its successors and
assigns. 

 

“HRT”
means Healthcare Realty Trust Incorporated, a Maryland corporation, its
successors and assigns.

 

“Lease”
means the Master Lease.

 

“Lease
Documents” means the Lease and all other documents executed by Tenant in
connection with the Lease, each as amended from time to time.

 

“Loan”
means the loan by HCN to Tenant with a current principal balance equal to the
Loan Amount.

 

“Loan
Amount” means $21,426,000.00

 

“Loan
Documents” means [i] the Note; [ii] the Amended and Restated Loan Agreement, of
even date therewith, between said parties; and [iii] the Mortgage, each as
amended from time to time.

 

“Master
Lease” means the Amended and Restated Master Lease Agreement dated September 30,
2003 by which HCN leased each Master Lease Facility to Tenant, as amended from
time to time.

 

“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 Tenant to HCN, dated as of September 30, 2003.

 

“Note”
means the Amended and Restated Note, dated as of September 30, 2003, made by
Tenant in favor of HCN in the original principal amount of Twenty Five Million
Eight Hundred Thousand Dollars ($25,800,000.00), and any extensions,
modifications, substitutions or renewals thereof.

 

“State”
means the State of Ohio.

 

“Tenant”
means Emeritus Corporation, a corporation organized under the laws of the State
of Washington, its successors and permitted assigns.

 

“Transaction
Documents” mean the endorsed Note, the Loan Documents, all instruments of
assignment of HCN’s rights, title and interest under the Loan Documents, and all
other documents to be executed and delivered in connection with the Closing of
the Transaction.

 

1.3 Incorporation
of Amendments. The
definition of any agreement, document, or instrument set forth in this Agreement
shall be deemed to incorporate all amendments, modifications, and renewals
thereof and all substitutions and replacements therefor.

 

1.4 Exhibits. The
following exhibits are attached hereto and incorporated herein:

 

Exhibit
A -
Schedule of Loan Documents

 

Exhibit
B - Post
Closing Deliverables

 

ARTICLE
2: SALE OF THE LOAN AND ASSIGNMENT OF THE LOAN DOCUMENTS

 

2.1 Sale
of the Loan. HCN
hereby agrees to sell, transfer, convey, and assign to HRT all of its rights,
title and interest with respect to the Loan, the Loan Documents, and otherwise
with respect to the Loan. The purchase price for the Loan shall be the principal
balance of the Loan, all accrued but unpaid interest thereon as of the Effective
Date and all other amounts due to HCN under the Loan Documents (the “Purchase
Price”). At Closing, HRT shall pay to HCN the Purchase Price by federally wired
funds, available for immediate disbursement. The Transaction shall be closed in
escrow by a title insurance company mutually selected by HRT and HCN and
pursuant to escrow instructions acceptable to HCN and HRT. The sale of the Loan
shall be subject to the terms of this Agreement.

 

2.2 Closing. The
Closing of the sale of the Loan shall occur as of the Effective Date, as agreed
by HCN and HRT, but no later than March 3, 2005.

 

2.3 Endorsement
of the Note and Delivery of Loan Documents. At
Closing, HCN shall properly endorse the original Note to the order of HRT and
shall deliver to HRT the endorsed Note, together with all original Loan
Documents, which shall all be assigned by HCN to HRT.

 

2.4 Assignments
of Mortgages. At
Closing, HCN shall execute and deliver to HRT assignments of the Mortgages in
form and substance satisfactory to HRT (collectively, the “Assignment of
Mortgage”). The Assignment of Mortgage shall be executed in multiple originals,
in forms acceptable for recording in the real estate records in the county in
which each Facility is located.

 

2.5 Assignment
of Additional Loan Documents. At
Closing, HCN shall also assign to HRT, by instrument or instruments in form and
substance acceptable to HRT, any and all and all other documents, agreements, or
rights otherwise securing, evidencing, or relating to the Loan or any Loan
Documents.

 

2.6 Other
Assurances. At
Closing, HCN shall deliver to HRT such additional documents at HRT may
reasonably require in order to consummate the sale of the Loan, the assignment
of all Loan Documents, and the other provisions of this Agreement.

 

ARTICLE
3: CONDITIONS PRECEDENT TO DISBURSEMENT

 

3.1 Conditions
Precedent to Purchase of the Loan. HRT’s
obligation to purchase the Loan shall be conditioned upon the following
conditions precedent:

 

3.1.1 Amendment
of Loan. HRT and
Tenant shall have executed agreements amending and restating the Loan in such
form and substance as are acceptable to HRT and Tenant and consented to in
writing by HCN. Each such agreement shall have been deposited in escrow pending
completion of the sale of the Loan.

 

3.1.2 Completion
of Due Diligence Review. HRT
shall have completed all Facility level and Loan due diligence review which it
deems appropriate, and must be satisfied with the results of its due diligence
review. The due diligence review shall include, without limitation, review of
the Loan Documents, the Lease, the Mortgages, and all related surveys, title
insurance policies, UCC filings, environmental assessments, engineering studies,
opinions of counsel, appraisals, operational data, financial data, and updated
information with respect to each Facility, and the Loan.

 

3.1.3 Intercreditor
Agreement. HRT and
HCN shall have entered into an Intercreditor Agreement on mutually agreed terms
(the “Intercreditor Agreement”).

 

3.1.4 Estoppel
Certificates. HRT
shall have received one or more estoppel certificates (individually and
collectively the “Estoppel Certificates”) from HCN and Emeritus in form mutually
acceptable to HRT and HCN with respect to both the Loan and the Lease confirming
that, except as otherwise disclosed to HRT therein, no Events of Default or
potential Events of Default have occurred, the date through which all rent has
been paid under the Lease, the principal balance of the Loan, any accrued but
unpaid interest thereon, the date through which all interest accrued under the
Loan has been paid, the absence of any claims, defenses, counterclaims, offsets,
or unfulfilled obligations of either party to the other, and such other matters
as HRT may reasonably request.

 

3.1.5 Loan
Documents. HCN
shall have delivered to HRT fully executed originals of the Loan Documents,
properly endorsed and properly assigned to HRT.

 

3.1.6 Legal
Opinion. Tenant
shall have delivered to HRT an opinion of its primary outside counsel, and, to
the extent reasonably required by HRT, opinions of local counsel, each in form
and substance satisfactory to HRT. Without limitation, the opinions of counsel
shall confirm the valid organization and existence of HCN, its good standing in
the states where the Facilities are located, due authorization, execution and
delivery of all Transaction Documents executed by HCN in connection with the
sale of the Loan, and the enforceability of such documents, as assigned. HRT
shall not be responsible for the cost of such opinions.

 

3.1.7 Organizational
Documents. HCN
shall have delivered to HRT a resolution authorizing the assignment of the Loan
Documents in form and substance satisfactory to HRT. HCN’s organizational
documents are available at its web site at www.hcreit.com.

 

3.1.8 No
Default. Except
as set forth in the Estoppel Certificates, no uncured Event of Default shall
have occurred under the Loan or the Lease, or any event which would, with the
giving of notice or the passage of time, or both, constitute such an Event of
Default. 

 

ARTICLE
4: REPRESENTATIONS AND WARRANTIES OF HCN

 

HCN
hereby makes to HRT the following representations and warranties, as of the date
of this Agreement and to be effective through and including the Effective Date,
and acknowledges that HRT is acquiring the Loan in reliance upon such
representations and warranties. HCN’s representations and warranties shall
survive the Closing.

 

4.1 Organization
and Good Standing. HCN is
a corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware.

 

4.2 Power
and Authority. HCN has
the power and authority to execute, deliver, and perform its obligations under
this Agreement and has taken all requisite action to authorize the execution,
delivery and performance of its obligations hereunder.

 

4.3 No
Default. As of
the Effective Date, except as set forth in the Estoppel Certificates, HCN has no
actual knowledge of an Event of Default by Tenant under the Loan Documents or
under the Lease, nor of any event that has occurred which, with the giving of
notice or the passage of time, or both, would constitute or result in such an
Event of Default under the Lease. This representation is solely for the benefit
of HRT and not for the benefit of Tenant and Tenant may not rely upon this
representation.

 

4.4 Note
Payments in Advance. Tenant
has made no payments due under the Loan Documents more than thirty (30) days in
advance. Accrued interest has been paid through March 2, 2005.

 

4.5 Obligations
for Facility Improvements. To the
actual knowledge of the undersigned without any further investigation, HCN has
not contracted with any third party to provide labor or materials at any
Facility and does not owe any third parties any amounts for labor or materials
furnished in connection with the improvement of any Facilities.

 

4.6 Schedule
of Loan Documents. The
schedule of all Loan Documents is attached hereto as Exhibit
A. True,
complete and correct copies of all Loan Documents have been furnished by Tenant
or HCN to HRT. None of such Loan Documents have been amended, modified or
terminated, except as reflected on Exhibit A.

 

4.7 No
Notice of Remedial Action. To the
actual knowledge of the undersigned without further investigation, HCN has not
received written notice from any governmental entity of any environmental
condition requiring remedial action at any Facility.

 

4.8 Compliance. To the
actual knowledge of the undersigned without further investigation, HCN has not
received written notice from any governmental entity of the non compliance of
any Facility with any requirements with respect to which non-compliance could
adversely impact the financial condition or the operation of the Facility,
provided however that this representation relates to zoning and environmental
requirements and similar matters relating to the real property, and does not
include any requirements arising from state licensure regulations.

 

 

ARTICLE
5: REPRESENTATIONS AND WARRANTIES OF TENANT

 

Tenant
hereby makes to HRT the following representations and warranties, as of the date
of this Agreement and to be effective through and including the Effective Date,
and acknowledges that HRT is acquiring the Loan in reliance upon such
representations and warranties. Tenant’s representations and warranties shall
survive the Closing and, except as specifically provided below, shall continue
in full force and effect until Tenant has repaid the Loan in full and performed
all other obligations under the Loan Documents.

 

 

5.1 Organization
and Good Standing. Tenant
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Washington.

 

 

 

5.2 Power
and Authority. Tenant
has the power and authority to execute, deliver, and perform its obligations
under this Agreement and has taken all requisite action to authorize the
execution, delivery and performance of its obligations hereunder. 

 

5.3 Claims
Against HCN. Tenant
has made no claims against HCN or any other rights of offset against the Note or
any defenses against payment obligations under the Note, and, Tenant has no
knowledge of any facts or circumstances which would give rise to or support any
such claims offset or defense.

 

5.4 Schedule
of Loan Documents. The
schedule of all Loan Documents is attached hereto as Exhibit A. True, complete
and correct copies of all Loan Documents have been furnished by Tenant to HRT.
None of such Loan Documents have been amended, modified or terminated, except as
reflected on Exhibit A.

 

5.5 No
Litigation. As of
the Effective Date, and except as set forth in the Estoppel Certificates [i] to
the best of Tenant’s knowledge there are no actions, suits, proceedings or
investigations by any governmental agency or regulatory body or any third party
pending against Tenant or any existing Facility which, if determined adversely
to Tenant, would materially and adversely affect an existing Facility or title
to a Facility (or any part thereof), the right to operate a Facility as
presently operated, or the financial condition of Tenant, except as otherwise
set forth in the Estoppel Certificates; [ii] Tenant has not received written
notice of any threatened actions, suits or proceeding or investigations against
Tenant or any existing Facility at law or in equity, or before any governmental
board, agency or authority which, if determined adversely to Tenant, would
materially and adversely affect an existing Facility or title to a Facility (or
any part thereof), the right to operate a Facility as presently operated, or the
financial condition of Tenant; [iii] there are no unsatisfied or outstanding
judgments against Tenant or any existing Facility; [iv] there is no labor
dispute materially and adversely affecting the operation or business conducted
by Tenant or any existing Facility; and [v] Tenant does not have knowledge of
any facts or circumstances which might reasonably form the basis for any such
action, suit, or proceeding.

 

5.6 Reports,
Statements and Copies. The
copies of all Loan Documents submitted by Tenant to HRT are true, correct and
complete copies and include all amendments and modifications of such
agreements.

 

5.7 No
Default. As of
the Effective Date, except as set forth in the Estoppel Certificates, Tenant has
no actual knowledge of an Event of Default by HCN under the Loan Documents or
under the Lease, and Tenant has no actual knowledge that any event has occurred
which, with the giving of notice or the passage of time, or both, would
constitute or result in such an Event of Default under the Lease.

 

5.8 Note
Payments in Advance. Tenant
has made no payments due under the Loan Documents more than thirty (30) days in
advance. Accrued interest has been paid through March 2, 2005.

 

5.9 Obligations
for Facility Improvements. Tenant
does not owe any third parties any amounts for labor or materials furnished in
connection with the improvement of any Facilities except for amounts due for
repairs made in the ordinary course of business which are not past due.

 

5.10 No
Adverse Changes. To the
best knowledge of Tenant, since September 30, 2003, there have been no adverse
changes in the environmental condition of any Facility, the title to any
Facility, matters which an ALTA/ACSM Land Title Survey of any Facility should
reflect, or any significant casualty loss or condemnation affecting any
Facility.

 

5.11 Compliance. Each
Facility is, to the best knowledge of Tenant, in compliance with all
requirements of law with respect to which non-compliance could adversely impact
the financial condition or the operation of the Facility.

 

For
purposes of this Article 5, the knowledge of Tenant shall mean the knowledge of
all officers of Tenant.

 

ARTICLE
6: AFFIRMATIVE COVENANTS

 

6.1 Impairment
of Lease. So long
as any obligations under the Loan Documents remain unsatisfied, HCN will not
amend the Lease to create a term shorter than the Maturity Date as defined in
the Note, as amended by that certain Second Amended and Restated Note, of even
date herewith, between Tenant and HRT, to materially alter the casualty and
condemnation provisions in the Lease, or to increase the rent payments without
an increase in investment by HCN.

 

6.2 Notices
Under The Lease. HCN
will promptly furnish HRT with copies of any notices of default provided to
Tenant under the Lease. HRT shall have the right to cure any defaults under the
Lease within the time provided to Tenant for notice and cure, or within such
greater time as may be provided under the Intercreditor Agreement among HRT, HCN
and Tenant. HCN will not exercise any remedies available to it for default under
the Lease until it has given HRT notice of the default and at least ten (10)
days to cure the default.

 

6.3 Demolitions
of Facilities. So long
as any obligations under the Loan Documents remain unsatisfied HCN will not make
or permit any material demolitions at any Facilities which would materially
reduce of appraised value of such Facility.

 

6.4 Further
Assurances and Information. HCN
shall, on request of HRT from time to time, execute, deliver, and furnish such
additional documents as may be reasonably necessary to fully consummate the
Transaction contemplated under this Agreement, in HCN reasonable discretion.

 

ARTICLE
7: MISCELLANEOUS

 

7.1 Notices. HCN,
Tenant and HRT hereby agree that all notices, demands, requests, and consents
(hereinafter “notices”) given pursuant to the terms of this Agreement shall be
in writing, shall be addressed to the addresses set forth in the introductory
paragraph of this Agreement and shall be served by [i] personal delivery; [ii]
certified mail, return receipt requested; [iii] nationally recognized overnight
courier; or [iv] by facsimile, provided that a copy thereof is mailed by
certified mail promptly thereafter. All notices shall be deemed to be given upon
the earlier of actual receipt (provided, that in the case of facsimiles, any
facsimile received after 5:00 p.m. local time shall be deemed received on the
next Business Day) or three days after deposit in the United States mail or one
Business Day after deposit with the overnight courier. Any notices meeting the
requirements of this Section shall be effective, regardless of whether or not
actually received. HRT and Tenant may change their notice address at any time by
giving the other party notice of such change.

 

7.2 Entire
Agreement. This
Agreement and the other Transaction Documents constitute the entire agreement
between HCN and HRT with respect to the subject matter hereof and supersede all
prior negotiations, discussions or writings with respect thereto. No
representations, warranties, and agreements have been made by HCN except as set
forth in this Agreement and the other Transaction Documents. If there is any
conflict between the terms and provisions of the Commitment and the terms of
this Agreement, this Agreement shall govern.

 

7.3 Severability. If any
term or provision of this Agreement is held or deemed by HRT to be invalid or
unenforceable, such holding shall not affect the remainder of this Agreement and
the same shall remain in full force and effect.

 

7.4 Captions
and Headings. The
captions and headings are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of this Agreement or
the intent of any provision thereof.

 

7.5 Governing
Law. This
Agreement shall be governed by and construed under the laws of the
State.

 

7.6 Binding
Effect. This
Agreement will be binding upon and inure to the benefit of the successors and
assigns of HRT and HCN.

 

7.7 Modification. This
Agreement may only be modified by a writing signed by both HRT and HCN. All
references to this Agreement, whether in this Agreement or in any other document
or instrument, shall be deemed to incorporate all amendments, modifications, and
renewals of this Agreement made after the date hereof. 

 

7.8 Construction
of Agreement. This
Agreement has been prepared by HRT and its professional advisors and reviewed by
HCN, Tenant and their professional advisors. HRT, Tenant, HCN and their advisors
believe that this Agreement is the product of all their efforts, it expresses
their agreement, and that it shall not be interpreted in favor of either HRT,
Tenant or HCN or against either HRT, HCN or Tenant merely because of their
efforts in preparing it.

 

7.9 Counterparts. This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original hereof.

 

7.10 No
Third-Party Beneficiary Rights. No
person not a party to this Agreement shall have or enjoy any rights hereunder
and all third-party beneficiary rights are expressly negated.

 

7.11 Remedies. Each
party shall be entitled to all remedies available at law or in equity for any
breach of this Agreement or any other Transaction Documents. The prevailing
party in any action to enforce any Transaction Document shall be entitled to
recover, in addition to any other remedies available at law or in equity, its
reasonable attorneys’ fees and other costs associated with the enforcement of
its rights under any Transaction Document.

 

7.12 Confidentiality. HRT,
HCN and Tenant agree that the terms of the Transaction shall remain
confidential, and that no press or other publicity release or communication to
the general public in connection with the Transaction shall be made without the
other party’s prior written consent, except as required by law, with such
consent not to be unreasonably withheld.

 

7.13 No
Brokers. HCN,
HRT and Tenant each represents and warrants that it has not engaged, employed or
otherwise dealt with any broker, salesperson, consultant or finder in connection
with the Transaction. 

 

7.14 Costs
and Expenses. HRT
will pay its own legal fees incurred in connection with the Transaction and the
costs and expenses related to its examination of due diligence information
furnished by HCN or Tenant for its review. HRT shall not be responsible for any
costs incurred by HCN in connection with the Transaction. Tenant shall pay all
cost of HCN arising from this transaction.

 

7.15 Post
Closing Items. The
parties hereto agree that to the extent any item required to be provided under
the terms of this Agreement has not been produced at closing, each party shall
complete such requirements within ten (10) days after funding of the purchase of
the Note, or within such additional time as may be reasonably required, not to
exceed twenty (20) days after receipt of notice from HRT.

 

7.16 Waiver
of Jury. TO THE
FULLEST EXTENT PERMITTED BY LAW, HCN AND HRT, HEREBY KNOWINGLY AND VOLUNTARILY
WAIVE THE RIGHT TO A JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTER CLAIMS
ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY TRANSACTION
DOCUMENT.

 

IN
WITNESS WHEREOF, HRT and Tenant have executed and delivered this Agreement
effective as of the Effective Date.

HEALTHCARE
REALTY TRUST INCORPORATED, a Maryland corporation

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

Print:
John M. Bryant, Jr.

Title:
Senior Vice President and General Counsel

Date:
March
3, 2005

	
       

      EMERITUS
      CORPORATION, a Washington corporation

       

      By:
      /s/
      William M. Shorten 

      Print: William
      M. Shorten

       

      Title: Director
      of Real Estate Finance

       

       

      Date:
      March
      3, 2005 
	
       

      HEALTH
      CARE REIT, INC., a Delaware corporation

       

      By:
      /s/
      Erin C. Ibele 

      Print: Erin
      C. Ibele

       

      Title: Vice
      President and Corporate Secretary

       

      Date:
      March
      3, 2005 

 

 

1093179.1 

 

EXHIBIT
A

 

THE
LOAN DOCUMENTS

 

(Schedule
of Loan Documents)

 

	
      1.
	
      Amended
      and Restated Loan Agreement dated September 30, 2003 between Health Care
      REIT, Inc. and Emeritus Corporation

 

	
      2.
	
      Amended
      and Restated Note dated September 30, 2003 made by Emeritus Corporation in
      favor of Health Care REIT, Inc. in the original principal amount of
      $25,800,000

 

	
      3.
	
      Amended
      and Restated Leasehold Mortgage/Deed of Trust, Security Agreement,
      Assignment of Leases and Rents, Financing Statement and Fixture Filing
      dated effective on and as of September 30, 2003 made by Emeritus
      Corporation, as trustor, for the benefit of Health Care REIT, Inc., as
      beneficiary

 

 

 

1093179.1 

 

EXHIBIT
B

 

 

POST
CLOSING DELIVERABLES

 

 

 

Revised
3 Mar 2005

 

Post-Closing
Requirements (General)

 

	1.  	
      Updated
      Insurance Certificates for each location under the Master Lease
      (Fairfield, CA; Paso Robles, CA; Champaign, IL; Hattiesburg, MS;
      Flagstaff, AZ; Phoenix, AZ; Brandon, FL; Ft. Myers, FL; Lakeland, FL;
      Sarasota, FL; Chubbuck, ID; Coeur D’Alene, ID; Pocatello, ID; Hagerstown,
      MD; Tewksbury, MA; Lakewood, NY; Ontario, OR; Anderson, SC; Lubbock, TX;
      Staunton, VA; Bellingham, WA; Federal Way, WA; Moses Lake,
    WA)

 

 

	2.  	
      Copies
      of Licenses for each location under the Master Lease (Fairfield, CA; Paso
      Robles, CA; Champaign, IL; Hattiesburg, MS; Flagstaff, AZ; Phoenix, AZ;
      Brandon, FL; Ft. Myers, FL; Lakeland, FL; Sarasota, FL; Chubbuck, ID;
      Coeur D’Alene, ID; Pocatello, ID; Hagerstown, MD; Tewksbury, MA; Lakewood,
      NY; Ontario, OR; Anderson, SC; Lubbock, TX; Staunton, VA; Bellingham, WA;
      Federal Way, WA; Moses Lake, WA)

 

 

	3.  	
      Legal
      Opinion from counsel for Emeritus Corporation

 

 

	4.  	
      Legal
      Opinion from counsel for Health Care REIT, Inc.

 

 

	5.  	
      UCC-1
      Financing Statements from Emeritus Corporation and each subtenant under
      the Master Lease to be filed in each entity’s state of
      formation

 

 

	6.  	
      Assignments
      of Mortgage for each location under the Master Lease (Fairfield, CA; Paso
      Robles, CA; Champaign, IL; Hattiesburg, MS; Flagstaff, AZ; Phoenix, AZ;
      Brandon, FL; Ft. Myers, FL; Lakeland, FL; Sarasota, FL; Chubbuck, ID;
      Coeur D’Alene, ID; Pocatello, ID; Hagerstown, MD; Tewksbury, MA; Lakewood,
      NY; Ontario, OR; Anderson, SC; Lubbock, TX; Staunton, VA; Bellingham, WA;
      Federal Way, WA; Moses Lake, WA)

 

 

	7.  	
      Leasehold
      Mortgagee’s Title Insurance Policy for each location under the Master
      Lease (Fairfield, CA; Paso Robles, CA; Champaign, IL; Hattiesburg, MS;
      Flagstaff, AZ; Phoenix, AZ; Brandon, FL; Ft. Myers, FL; Lakeland, FL;
      Sarasota, FL; Chubbuck, ID; Coeur D’Alene, ID; Pocatello, ID; Hagerstown,
      MD; Tewksbury, MA; Lakewood, NY; Ontario, OR; Anderson, SC; Lubbock, TX;
      Staunton, VA; Bellingham, WA; Federal Way, WA; Moses Lake,
    WA)

 

 

	8.  	
      Schedule
      of Personal Property for each Master Leased
location.

 

 

	9.  	
      Payment
      of Invoice for $1,764.75 to Paranet for UCC-11
searches.

 

 

	10.  	
      Opinion
      of Waller Lansden Dortch and Davis that the Intercreditor Agreement is
      duly authorized, executed and delivered.

 

 

 

1093179.1 

 

 

 

Post-Closing
Requirements (Title Company Requirements)

 

 

	1.  	
      Owner’s
      Affidavit, in form satisfactory to Fidelity National Title Insurance
      Company

 

 

	2.  	
      Gap
      Indemnity, in form satisfactory to Fidelity National Title Insurance
      Company

 

 

	3.  	
      Corporate
      Resolution of Emeritus Corporation

 

 

	4.  	
      Corporate
      Resolution of Health Care REIT, Inc.

 

 

	5.  	
      Washington
      Certificate of Good Standing for Emeritus Corporation (2
      originals)

 

 

	6.  	
      Certified
      copy of the Articles of Incorporation of Emeritus Corporation from the
      Washington Secretary of State

 

 

	7.  	
      Copy
      of the By-Laws of Emeritus Corporation, certified by the corporate
      secretary

 

 

	8.  	
      Certificates
      of Authority for Emeritus Corporation for the following states: Florida,
      Maryland, Virginia, New York

 

 

	9.  	
      Delaware
      Certificate of Good Standing for Health Care REIT,
Inc.

 

 

	10.  	
      Massachusetts
      Certificate of Registration (equivalent of good standing certificate) for
      Health Care REIT, Inc.

 

 

	11.  	
      Estoppel
      of Health Care REIT, Inc. and Emeritus Corporation as to no defaults in
      the Master Lease and in the Note

 

 

	12.  	
      Surveys
      for the following locations: Flagstaff, AZ; Phoenix, AZ; Brandon, FL; Ft.
      Myers, FL; Lakeland, FL; Sarasota, FL; Hagerstown, MD; Tewksbury, MA;
      Lakewood, NY; Lubbock, TX; Bellingham, WA; Federal Way, WA; Moses Lake,
      WA

 

 

	13.  	
      No-Change
      Affidavits for each of the following locations: Fairfield, CA; Paso
      Robles, CA; Champaign, IL; Hattiesburg, MS; Flagstaff, AZ; Phoenix, AZ;
      Brandon, FL; Ft. Myers, FL; Lakeland, FL; Sarasota, FL; Chubbuck, ID;
      Coeur D’Alene, ID; Pocatello, ID; Hagerstown, MD; Tewksbury, MA; Lakewood,
      NY; Ontario, OR; Anderson, SC; Lubbock, TX; Staunton, VA; Bellingham, WA;
      Federal Way, WA; Moses Lake, WA

 

 

	14.  	
      Copies
      of Phase I Environmental Assessment for each of the following locations:
      Fairfield, CA; Paso Robles, CA; Champaign, IL; Hattiesburg,
    MSIntercreditor Agreement

 

INTERCREDITOR
AGREEMENT

 

THIS
INTERCREDITOR
AGREEMENT (“Agreement”)
is entered into effective as of the 3rd day of March, 2005 by and between
HEALTH
CARE REIT, INC., a
Delaware corporation (“HCN”), and HEALTHCARE
REALTY TRUST INCORPORATED, a
Maryland corporation (“HRT”).

 

RECITALS

 

A. HCN and
certain HCN Affiliates, as hereinafter defined, lease to Emeritus Corporation, a
Washington corporation, (“Emeritus”) the real property identified on Exhibit “A”
attached hereto and made a part hereof (“ML Leased Property”) pursuant to an
Amended and Restated Master Lease Agreement dated September 30, 2003 (“Master
Lease”).

 

B. HCN has
made a loan to Emeritus in the principal amount of $25,800,000 (“Loan”) pursuant
to an Amended and Restated Loan Agreement dated September 30, 2003 (“Loan
Agreement”) as evidenced by an Amended and Restated Note dated September 30,
2003 (“Note”). The Loan is secured by an Amended and Restated Leasehold
Mortgage/Deed of Trust, Security Agreement, Assignment of Lease and Rents,
Financing Statement and Fixture Filing granted by Emeritus to HCN dated
effective as of September 30, 2003 with respect to the ML Leased Property (“ML
Leasehold Mortgage”) granting HCN an interest in the leasehold estate of
Emeritus arising under the Master Lease.

 

C. HCN has
agreed to sell and HRT has agreed to purchase the Note and take an assignment of
the Loan Documents, as defined below.

 

D. In
connection with the sale of the Note, HCN and HRT have agreed to enter into this
Agreement to clarify their respective rights.

 

NOW
THEREFORE, to induce HCN to sell the Note and assign the Loan Documents to HRT,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

 

1. Definitions. As used
in this Intercreditor Agreement (this “Agreement”), the following terms shall
have the following meanings (with terms defined above having the meanings
indicated):

 

“Affiliate” means
HCRI Mississippi Properties, Inc., a Mississippi corporation; HCRI Massachusetts
Properties Trust II, a Massachusetts business trust; and HCRI Texas Properties,
Ltd., a Texas limited partnership.

 

“Bankruptcy
Code” means
the United States Bankruptcy Code set forth in 11 U.S.C. §101, et
seq., as
amended from time to time.

 

“HRT
Collateral” means
the leasehold estate of Emeritus arising under the Lease in the Leased Property,
and any other property of Emeritus located upon or held in connection with the
Leased Property in which HRT has a security interest, however created as of the
date hereof.

 

“HRT
Debt” means
those obligations, liabilities and indebtedness arising under the Loan
Documents, as amended from time to time.

 

“Indefeasibly
Satisfied” means
receipt of payment in full in cash followed by the passage of a period of 91
days from such payment in which no challenge to such payment as a preference or
other impermissible payment has been made by any person, or upon the dismissal,
withdrawal or final ruling against such a challenge, together with the
termination of all further commitments of Landlord or HRT, as the case may be,
to lend money to Emeritus in connection with the Leased Property.

 

“Insolvency
Event” means
the following:

 

[1] Emeritus
commences any case, proceeding or other action (i) under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, conservatorship or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to adjudicate it
as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (ii) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or Emeritus making a general assignment for the
benefit of its creditors; or

 

[2] there is
commenced against Emeritus any case, proceeding or other action of a nature
referred to in clause [1] above that (i) results in the entry of an order for
relief or any such adjudication or appointment or (ii) remains undismissed,
undischarged or unbonded for a period of 60 days; or

 

[3] there is
commenced against Emeritus any case, proceeding or other action seeking issuance
of a warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of an order for
any such relief and which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 days from the entry of such order;
or

 

[a] Emeritus
takes any action in furtherance of, or indicating its consent to, approval of,
or acquiescence in, any of the acts set forth in any of clauses [1], [2] or [3]
above; or

 

[b] Emeritus
generally is not paying, or is unable to pay, or admits in writing its inability
to pay, its debts as they become due.

 

“Landlord” means
HCN and each Affiliate, jointly and severally.

 

“Landlord
Collateral” means
the following described property located at a Leased Property, or arising in
connection with the operation of the Leased Property, whether now owned or
hereafter acquired by Tenant or Subtenant to secure the payment and performance
of the Landlord Obligations:

 

[1] All
machinery, furniture, equipment, trade fixtures, appliances, inventory and all
other goods (as “equipment”, “inventory” and “goods” are defined for purposes of
Article 9 (“Article 9”) of the Uniform Commercial Code as adopted in Ohio) and
any leasehold interest of Tenant or any Subtenant in any of the foregoing,
including, without limitation, those items which are to become fixtures or which
are building supplies and materials to be incorporated into any improvement or
fixture.

 

[2] All
accounts, contract rights, general intangibles, instruments, documents, and
chattel paper [as “accounts”, “contract rights”, “general intangibles”,
“instruments”, “documents”, and “chattel paper”, are defined for purposes of
Article 9] now or hereafter arising.

 

[3] All
franchises, permits, licenses, operating rights, certifications, approvals,
consents, authorizations and other general intangibles, including, without
limitation, certificates of need, state health care facility licenses, and
Medicare and Medicaid provider agreements, to the extent permitted by
law.

 

[4] Unless
expressly prohibited by the terms thereof, all contracts, agreements, contract
rights and materials relating to the design, construction, operation or
management of any improvements, including, but not limited to, plans,
specifications, drawings, blueprints, models, mock ups, brochures, flyers,
advertising and promotional materials and mailing lists.

 

[5] All
subleases, occupancy agreements, license agreements and concession agreements,
written or unwritten, of any nature, now or hereafter entered into, and all
right, title and interest of Tenant there under, including, without limitation,
those certain Subleases dated as of the Effective Date, by and between Tenant,
as Sublandlord, and each Subtenant, as Subtenant; and including, without
limitation, Tenant’s right, if any, to cash or securities deposited there under
whether or not the same was deposited to secure performance by the subtenants,
occupants, licensees and concessionaires of their obligations there under,
including the right to receive and collect the rents, revenues, and other
charges there under.

 

[6] All
ledger sheets, files, records, computer programs, tapes, other electronic data
processing materials, and other documentation.

 

[7] The
products and proceeds of the preceding listed property, including, without
limitation, cash and non cash proceeds, proceeds of proceeds, and insurance
proceeds.

 

“Landlord
Obligations” means
all obligations, liabilities and indebtedness of every nature of Emeritus from
time to time owed to Landlord under the Lease, whether now existing or hereafter
incurred or created, and all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and from time
to time hereafter owing, due or payable, whether before or after the
commencement of an Insolvency Event (including, without limitation, interest or
rent accruing thereon after the commencement of an Insolvency Event, without
regard to whether or not such interest is an allowed claim.

 

“Lease” means
the Master Lease, as the same may be hereafter modified, supplemented, amended,
restated, extended, renewed or increased.

 

“Leased
Property” means
individually and collectively each ML Leased Property.

 

“Loan
Documents” means
collectively the Note, the ML Leasehold Mortgage, and the Loan Agreement, as the
same may be hereafter modified, supplemented, amended, restated, extended,
renewed or increased.

 

“Subtenant” means
each of Texas ESC Lubbock, L.P., a Washington limited partnership; and Painted
Post Properties, Inc., a Washington corporation.

 

“Tenant” means
Emeritus Corporation, a Washington corporation.

 

	
      2.
	
      Subordination
      of Payments.

 

(a) HRT
hereby agrees that the HRT Debt shall be subordinated to the Landlord
Obligations. Except as provided in 2(b), no payment shall be made by or on
behalf of Emeritus for or on account of the HRT Debt, and HRT shall not take or
receive from Emeritus, directly or indirectly, in cash or other property or by
setoff or in any other manner, payment of all or any of the HRT Debt, if any, so
long as any sums in respect to the Landlord Obligations shall then be due and
payable. If there is any conflict between the Lease and the Loan Documents, the
terms of the Lease shall govern.

 

(b) Notwithstanding
any provision contained herein, as long as no monetary Event of Default has
occurred and is continuing under the Lease, HRT may (i) receive all payments as
and when due on the HRT Debt pursuant to the HRT Documents, including without
limitation, the final payment due at maturity, (ii) allow Emeritus to prepay the
Note in full provided the funds for the prepayment are not Landlord Collateral,
and (iii) may bring legal proceedings against Emeritus under the Note, but shall
not pursue or prosecute any right or remedy which HRT may have as a secured
party or otherwise under the ML Leasehold Mortgage.

 

3. Subordination
of Liens on Landlord Collateral. HRT
hereby agrees that all of its rights with respect to the Landlord Collateral
shall be in all respects subject and subordinate to the rights of Landlord with
respect to such Landlord Collateral in connection with and on account of the
Landlord Obligations. HRT agrees to refrain from challenging the validity,
enforceability, priority or perfection of Landlord’s security interests and
liens in the Landlord Collateral. The foregoing subordination shall be effective
irrespective of: (a) the time, order, manner or method of creation, attachment
or perfection of the respective security interests, liens and/or other rights
granted to HRT or Landlord, or any lapse of perfection or attachment; (b) the
time or manner of the filing of their respective financing statements; (c)
whether HRT or Landlord or any bailee or agent of either party holds possession
of any or all of the property or assets of Emeritus; (d) the dating, execution
or delivery of any agreement, document or instrument granting HRT or Landlord
security interests and/or liens in or on any or all of the property or assets of
Emeritus; (e) any amendment, modification, restatement, extension, renewal or
increase to the Landlord Obligations or Lease or the creation of any new
indebtedness which becomes a part of the Landlord Obligations or secured or
evidenced by the Lease; and (f) any provision of the UCC or any other applicable
law to the contrary.

 

4. Adding
and Removing Facilities from the Master Lease.
Landlord may amend the Master Lease to include additional facilities without
HRT’s consent, provided that Landlord has consented to Tenant amending the ML
Leasehold Mortgage to include such additional facilities. Additionally, in the
event Landlord desires to amend the Lease to remove a facility from the Master
Lease, HRT shall release such facility upon payment by Emeritus of an amount
mutually agreed to by HRT and Emeritus or a prorated amount of the then
outstanding HRT Debt on a site by site basis, i.e. the release amount shall be
equal to then outstanding HRT Debt divided by the number of facilities then in
the Master Lease. Landlord shall provide HRT with a copy of any amendment to the
Master Lease within five days of execution.

 

5. Default
Under Loan Documents. In the
event of a default under the Loan Documents, HRT shall not have the right to
accelerate the Loan and demand payment in full unless HRT has given Landlord
notice of the default and Landlord has failed to cure such default as set forth
in §8 hereof. If there is a conflict between the terms of the Lease and of the
Loan Documents, the Lease shall prevail. Furthermore, provided Emeritus is
paying all sums due under the Note, no Event of Default shall be deemed to exist
under the Loan Documents so long as HCN has not provided notice of an Event of
Default under the Lease.

 

6. Default
Under Lease. If an
Event of Default, as defined in the Lease, exists under the Lease, Landlord
shall have all remedies available in accordance with and under the terms of the
Lease, but only after Landlord has given HRT notice of the default and HRT has
failed to cure such default as set forth in §8 hereof.

 

	
      7.
	
      Default
      Notices.

 

(a) HRT will
furnish Landlord with a copy of any default notice sent to Emeritus in respect
of the HRT Debt simultaneously with giving such notice to Emeritus.

 

(b) Landlord
will furnish HRT with a copy of any default notice sent to Tenant in respect of
the Landlord Obligations simultaneously with giving such notice to
Emeritus.

 

(c) The
failure of either HRT or Landlord to deliver any notice of default to the other
party shall not impair the notices given to Emeritus/Tenant, however, each party
retains all rights under this Agreement including its respective right to cure
an event of default upon receipt of notice.

 

8. Right
to Cure and Assumption of Lease. Upon
receipt of a notice pursuant to §7, each party shall have 10 days to cure a
monetary default after any applicable cure or grace period has expired and 30
days to cure any other default on behalf of Emeritus, provided such default is
curable. HRT and Landlord shall not exercise any right or remedy under the Loan
Documents or Lease, respectively, and shall not foreclose on the interest of
Emeritus in the Lease or exercise Landlord remedies under the Lease,
respectively, until written notice of default has been given by the party
declaring the default to the other party hereto and the cure period has expired
without such default having been cured. Without limitation, in the event of a
monetary default by Tenant under the Lease which does not require written notice
of default from Landlord to Tenant under the terms of the Lease, Landlord must
still give HRT written notice of such default and at least 10 days within which
to cure such monetary default before Landlord may exercise any right or remedy
under the Lease for such monetary default.

 

If HRT
cures an Emeritus monetary default under the Lease in accordance with this §8,
HRT shall have the right to assume the Lease provided that (i) HRT remains
primarily liable under the Lease, and (ii) HRT’s credit rating at the time of
the assumption has not deteriorated from the effective date of this Agreement.
If HRT elects to assume the Lease, HRT must notify HCN in writing of the
election within 15 business days of receipt of notice of a default from HCN.
Failure to so notify HCN shall be deemed to be a waiver of the right to assume
the Lease, but only with respect to the specific default set forth in the
notice.

 

If no
default exists under the Lease, but HRT declares an event of default under the
Note, HRT shall also have the right to assume the Lease provided (i) HRT
complies with the above provisions (ii) the term of the assumption shall
terminate on the date that all monetary obligations under the Second Amended and
Restated Note made by Emeritus payable to the order of HRT of even date herewith
(“2nd A &
R Note”) have been satisfied in full, at which time HRT shall assign the Lease
back to Emeritus provided Emeritus is then the subtenant or manager of the
Leased Property, and (iii) unless otherwise consented to by HCN, HRT subleases
each of the facilities to Emeritus or an Emeritus affiliate or enters into a
management agreement with Emeritus or an Emeritus affiliate for each of the
facilities as long as EBITDARM coverage is not less than 1.0 to 1.0 at the time
of the assumption. If EBITDARM coverage is less than 1.0 to 1.0 for a period of
three consecutive months following the assumption, then HRT shall have the right
to terminate the Emeritus subleases or management agreements and sublease to or
enter into a management agreement with a new qualified operator, acceptable to
HCN. HCN’s evaluation of the new qualified operator may include, but is not
limited to, an evaluation of the financial history and quality control issues,
whether the operator negatively impacts on concentration issues applicable to
HCN or other matters that impact on HCN’s capital market
activities.

 

In no
event shall HRT’s assumption of the Lease release Emeritus or any of its
affiliates from any liability or obligation under the Lease to HCN.

 

Notwithstanding
anything to the contrary herein, if HRT has the right to assume the Lease, but
an Insolvency Event has occurred, then HRT’s notice of the election to assume
the Lease must be provided to HCN in writing at least 15 days after receipt of
written notice of the Insolvency Event from HCN. Failure to so notify HCN shall
be deemed to be a waiver of the right to assume the Lease.

 

9. Standstill. Until
such time as all Landlord Obligations are Indefeasibly Satisfied, HRT will not
ask, demand, sue for, pursue, take, accept or receive from Emeritus any of the
Landlord Collateral, or pursue or prosecute any right or remedy which HRT may
have against any property included in the Landlord Collateral or as a secured
party or otherwise under the ML Leasehold Mortgage. Notwithstanding the
foregoing, HRT shall have the right to file an action against Emeritus under the
Note, but only to the extent permitted under §2 hereof.

 

10. Modification
of Lease.
Landlord shall have the right, without the consent of HRT, to amend the Lease,
provided that no amendment shall be permitted to create a term which terminates
prior to the Maturity Date, as defined in the 2nd A &R
Note, to materially alter the casualty or condemnation provisions in the Lease,
or to increase the rent payments without any increase in the investment by HCN.
HCN shall provide HRT with copies of all amendments to the Lease within five
days of execution.

 

11. Modification
of Loan Documents/Sale of Loan. HRT
shall not increase the amount of the Loan, increase the scheduled payments due
under the Loan or the maturity date of the Loan without the prior written
consent of HCN, which consent may be withheld in its reasonable discretion.
Notwithstanding anything above to the contrary, HCN consents to an additional
advance by HRT to Emeritus in the amount of One Million Eight Hundred Twenty Two
Thousand One Hundred Fifty-one Dollars ($1,822,151.00), plus all closing costs
incurred by Emeritus in connection with the sale of the Loan to HRT as evidenced
by the 2nd A&R
Note. HRT shall provide HCN with copies of all amendments to the Loan within
five days of execution. Additionally, HRT may not assign, transfer, pledge or
sell the Loan or any Loan Document without the prior written consent of HCN,
which consent may be withheld in HCN’s reasonable discretion.

 

12. Payments
Held in Trust. Until
such time as the Landlord Obligations are Indefeasibly Satisfied, if HRT
receives any proceeds that are included within the meaning of “Landlord
Collateral” or if HRT receives any payments contrary to the terms of this
Agreement, HRT agrees to segregate and hold such payment in trust for the
benefit of Landlord and agrees to immediately deliver the payment to Landlord in
precisely the same form received (but with the endorsement of HRT receiving the
same where necessary) for application on account of the Landlord Obligations,
and HRT agrees that until so delivered, the payment shall be held as the
property of Landlord.

 

13. Exchange
of Collateral. Subject
to the terms of this Agreement and without affecting the rights of Landlord
under this Agreement, HRT agrees and consents that any collateral for the
Landlord Obligations, in whole or in part, may be exchanged, sold or surrendered
by Landlord for other collateral as it may deem advisable, and that any balance
or balances of funds with Landlord at any time outstanding to the credit of
Emeritus may, from time to time, in whole or in part, be surrendered or released
by Landlord as it may deem advisable, subject, however, to the terms of the
Landlord Obligations, HRT’s subordinated security interest in the Landlord
Collateral and the terms of this Agreement.

 

14. Insolvency
Event. The
provisions of this Agreement shall continue in full force and effect
notwithstanding the occurrence of any Insolvency Event. Without limiting the
foregoing, following the commencement of an Insolvency Event involving Emeritus,
the provisions of this Agreement shall continue to govern the relative rights
and priorities of Landlord and HRT even if all or part of their respective liens
or security interests are subordinated, set aside, avoided, invalidated or
disallowed in connection with any such Insolvency Event.

 

15. Liquidation. In the
event of the liquidation or sale of the assets of Emeritus, by reason of
dissolution or bankruptcy, or by appointment of a receiver, or by other legal
proceeding, all amounts received by any person from the liquidation of the
Landlord Collateral shall first be paid to Landlord to be applied to the
Landlord Obligations.

 

16. Waivers. HRT
hereby waives any rights it may have under applicable law to assert the doctrine
of marshaling or to otherwise require Landlord to marshal any property of
Emeritus for the benefit of HRT. HRT also hereby waives, to the extent permitted
by applicable law, any rights which it may have to enjoin or otherwise obtain a
judicial or administrative order preventing Landlord from taking, or refraining
from taking, any action with respect to all or any part of the Landlord
Collateral. Without limiting the foregoing, HRT hereby agrees (a) that it has no
right to direct or object to the manner in which Landlord applies the proceeds
of the Landlord Collateral resulting from the exercise by Landlord of rights and
remedies under the Lease to the Landlord Obligations and (b) that Landlord has
not assumed any obligation to act as the agent for HRT with respect to the
Landlord Collateral. 

 

17. Subrogation. To the
extent HRT pays any of the Landlord Obligations, upon such obligation being
Indefeasibly Satisfied, HRT shall be subrogated to the fullest extent allowable
at law or equity to the claims under the Lease formerly held by HCN with respect
to such obligations and may enforce such claims against Emeritus to the fullest
extent allowed. To the extent HCN pays any of the HRT Debt, upon such obligation
being Indefeasibly Satisfied, HCN shall be subrogated to the fullest extent
allowable at law or equity to the claims under the Loan Documents formerly held
by HRT with respect to such obligations and may enforce such claims against
Emeritus to the fullest extent allowed. These rights of subrogation shall
survive the bankruptcy of Emeritus.

 

18. Amendments
in Writing. No
waiver shall be deemed to have been made by any party to this Agreement of any
of its rights under this Agreement unless the same shall be in writing and duly
signed by its duly authorized officers, and each waiver, if any, shall be a
waiver only with respect to the specific instance involved and shall in no way
impair the rights of any party to this Agreement in any other respect at any
time.

 

19. Binding
Effect. This
Agreement shall be binding upon and inure to the benefit of the parties hereto,
and their respective successors and assigns, provided that each permitted assign
agrees to assume the obligations set forth herein.

 

20. Authority. HCN,
Tenant and HRT each represent and warrant that they have full authority to
execute this Agreement and that this Agreement is binding upon each of them in
accordance with its terms. Each person signing on behalf of a party to this
Agreement represents and warrants that he/she has full authority to execute this
Agreement on behalf of such party.

 

21. Enforceability. If any
provision of this Agreement or the application thereof shall be adjudged invalid
or unenforceable to any extent, the application of the remainder of the
provision, the application of the provision to other parties or circumstances,
and the application of the remainder of this Agreement shall not be affected.
Each provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.

 

22. Amendment. This
Agreement may not be amended except in a writing signed by HRT and Landlord. All
references to this Agreement, whether in this Agreement or any other document or
instrument, shall be deemed to incorporate all amendments, modifications,
renewals and extensions of this Agreement and all substitutions therefor made
after the date hereof.

 

23. Notices. Any
notice or other communication required or permitted under this Agreement shall
be in writing and personally delivered, mailed by registered or certified mail
(return receipt requested and postage prepaid), sent by facsimile (with a
confirming copy sent by regular mail), or sent by prepaid overnight courier
service, and addressed to the relevant party at its address set forth below, or
at such other address as such party may, by written notice, designate as its
address for purposes of such notice:

 

If to
HRT, at:  Healthcare
Realty Trust Incorporated

Attention:
John M. Bryant, Jr., 

Senior
Vice President and General Counsel

3310 West
End Avenue, Suite 700

Nashville,
TN 37201

Telephone:
615/269-8175

Telecopier:
615/463-7739

If to
Emeritus, at: Emeritus
Corporation

Attention:
William M. Shorten

3131
Elliott Avenue, Suite 500

Seattle,
WA 98121

Telephone:
800/429-4828

Telecopier:
206/301-4500

If to
Landlord, at: Heath
Care REIT, Inc.

Attention:
Erin C. Ibele, Vice President and Corporate Secretary

One
SeaGate, Suite 1500

P.O. Box
1475

Toledo,
OH 43603-1475

Telephone:
419/247-2800

Telecopier:
419/247-2826

 

If
mailed, notice shall be deemed to be given five days after being sent, and if
sent by personal delivery, telecopier or prepaid courier, notice shall be deemed
to be given when delivered.

 

24. HCN
as Agent. Each
Affiliate appoints HCN as the agent and lawful attorney in fact of such
Affiliate to act for such Affiliate for all purposes and actions of Affiliate
under this Agreement. All notices, consents, waivers and all other documents and
instruments executed by HCN pursuant to this Agreement from time to time and all
other actions of HCN as Landlord under the Lease Documents and under this
Agreement shall be binding upon such Affiliate. Each Affiliate is joining in
this Agreement to evidence this appointment of HCN as agent and lawful attorney
in fact of each Affiliate.

 

25. Miscellaneous. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Ohio, and shall be binding upon the undersigned and the respective
successors and assigns of the undersigned. The parties hereto hereby consent to
the jurisdiction of the state and federal courts located within the State of
Ohio and for any dispute arising out of this Agreement. There are no third party
beneficiaries to this Agreement. Each of the parties to this Agreement hereby
waives any right to have a jury participate in resolving any dispute, whether
sounding in contract, tort or otherwise arising out of, connected with, related
to or in connection with this Agreement. Instead, any dispute resolved in court
will be resolved in a bench trial without a jury. No finding of invalidity of
any provision of this Agreement shall affect the continuing validity of all
other provisions of this Agreement. This Agreement may be executed in one or
more counterparts, each of which for all purposes shall be deemed an original.
This Agreement shall not be construed against any party by reason of such party
having drafted this Agreement.

 

26. Permitted
Indebtedness. The
Loan and the Loan Documents as assigned to HRT and as subsequently amended,
restated or modified with HCN’s written consent shall not constitute any breach
or default under the Lease.

 

27. Personal
Property. In the
event HRT exercises its right in accordance with the terms of this Agreement to
assume the Lease, then HRT shall have the right to continue using all personal
property then located at the facility constituting Landlord Collateral so long
as HRT satisfies all obligations as tenant under the Lease.

 

28. Other
Agreements with Emeritus. The
parties hereto acknowledge that the terms of this Agreement shall be binding
only upon the rights and obligations of HCN, HRT and Emeritus arising under the
Master Lease and the Loan Documents and applicable only to the ML Leased
Properties. To the extent that HCN or HRT have other agreements with Emeritus
which are not related to the ML Leased Properties, those agreements shall not be
limited by the terms hereof.

 

IN
WITNESS WHEREOF, the parties have executed or caused this Agreement to be
executed as an instrument under seal by their respective officers, thereunto
duly authorized, as of the day and year first above written.

HRT:

HEALTHCARE
REALTY TRUST INCORPORATED, a
Maryland corporation

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

Name:
John M. Bryant, Jr.

Title:
Senior Vice President and General C

Counsel

HCN:

HEALTH
CARE REIT, INC., a
Delaware corporation

By:
/s/
Erin C. Ibele

Name:
Erin C. Ibele

Title:
Vice President and Corporate Secretary

 

APPROVED
AND CONSENTED TO: EMERITUS:

EMERITUS
CORPORATION, a
Washington corporation

By:
/s
William M. Shorten

Name:
William M. Shorten

Title:
Director of Real Estate Finance

 

 

 

1092317.5

 

JOINDER
AGREEMENT

 

The
undersigned Affiliates are signing this Joinder Agreement for the purpose of
evidencing their agreement to the Appointment of Health Care REIT, Inc. to act
as their agent and attorney in fact as set forth in this Intercreditor
Agreement.

HCRI
MISSISSIPPI PROPERTIES, INC.

By:
/s/
Erin C. Ibele

Title:
Vice President 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 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:
Vice President and Corporate Secretary

HCRI
TEXAS PROPERTIES, LTD.

By: Health
Care REIT, Inc., General Partner

By:
/s/
Erin C. Ibele

Title:
Vice President and Corporate Secretary

 

 

 

1092317.5

 

EXHIBIT
A: LIST OF MASTER LEASE FACILITIES

	
      Facility
      Name

      Licensed
      Operator
	
      Street
      Address

      County
	
      Facility
      Type (per license)

      Beds/Units

	
      Loyalton
      at Rancho Solano

       

      (“Fairfield
      Facility”)Fairfield 

       

      Retirement
      Center, LLC
	
      3350
      Cherry Hills Street

      Fairfield,
      CA 94533

      County:
      Solano
	
      Residential
      Care Facility for the Elderly

      250
      licensed beds

      172
      units

	
      Creston
      Village

       

      (“Paso
      Robles Facility”)

       

      Emeritus
      Corporation
	
      1919
      Creston Road

      Paso
      Robles, CA 93446

      County:
      San Louis Obispo
	
      Residential
      Care Facility for the Elderly/Dementia

      115
      licensed beds

      100
      units

	
      Canterbury
      Ridge

       

      (“Urbana
      Facility”)

       

      Emeritus
      Corporation
	
      1706
      East Amber Lane

      Urbana,
      IL 61802

      County:
      Champaign
	
      Retirement

      89
      units

	
      Loyalton
      of Hattiesburg

       

      (“Hattiesburg
      Facility”)

       

      Emeritus
      Corporation
	
      103
      Fox Chase Street

      Hattiesburg,
      MS 39402

      County:
      Forrest
	
      Institution
      for the Aged or Infirmed

      83
      licensed beds

      82
      units

	
      Loyalton
      of Flagstaff

       

      (“Flagstaff
      Facility”)

       

      Emeritus
      Corporation
	
      2100
      N. Woodlands Village Blvd.

      Flagstaff,
      AZ 86001

      County:
      Coconino
	
      Assisted
      Living

      67
      licensed beds

      61
      units

	
      Loyalton
      of Phoenix

       

      (“Phoenix
      Facility”)

       

      Emeritus
      Corporation
	
      4050
      Bluefield Ave.

      Phoenix,
      AZ 85032

      County:
      Maricopa
	
      Assisted
      Living

      101
      licensed beds

      101
      units

	
      Park
      Club of Brandon

       

      (“Brandon
      Facility”)

       

      Emeritus
      Corporation
	
      700
      S. Kings Ave.

      Brandon,
      FL 33511

      County:
      Hillsborough
	
      Assisted
      Living

      100
      licensed beds

      89
      units

	
      Park
      Club of Fort Myers

       

      (“Fort
      Myers Facility”)

       

      Emeritus
      Corporation
	
      1896
      Park Meadows Dr.

      Fort
      Myers, FL 33907

      County:
      Lee
	
      Assisted
      Living

      116
      beds

      74
      units

	
      Park
      Club of Oakbridge

       

      (“Lakeland
      Facility”)

       

      Emeritus
      Corporation
	
      3110
      Oakbridge Blvd. East

      Lakeland,
      FL 33803

      County:
      Polk
	
      Assisted
      Living

      110
      licensed beds

      87
      units

	
      Colonial
      Park Club

       

      (“Sarasota
      Facility”)

       

      Emeritus
      Corporation
	
      4730
      Bee Ridge Rd.

      Sarasota,
      FL 34231

      County:
      Sarasota
	
      Assisted
      Living

      110
      licensed beds

      86
      units

	
      Ridgewind

       

      (“Chubbuck
      Facility”)

       

      Emeritus
      Corporation
	
      4080
      Hawthorne Rd.

      Chubbuck,
      ID 83202

      County:
      Bannock
	
      Assisted
      Living

      109
      licensed beds

      79
      units

	
      Loyalton
      of Coeur D’Alene

       

      (“Coeur
      D’Alene Facility”)

       

      Emeritus
      Corporation
	
      205
      E. Anton

      Coeur
      D’Alene, ID 83815

      County:
      Kootenai
	
      Assisted
      Living

      96
      licensed beds

      50
      units

	
      Highland
      Hills

       

      Pocatello
      Facility”)

       

      Emeritus
      Corporation
	
      1501
      Baldy

      Pocatello,
      ID 83201

      County:
      Bannock
	
      Assisted
      Living

      57
      licensed beds

      47
      units

	
      Loyalton
      of Hagerstown

       

      “Hagerstown
      Facility”)

       

      Emeritus
      Corporation
	
      20009
      Rosebank Way

      Hagerstown,
      MD 

      21742County:
      Washington
	
      Assisted
      Living

      110
      licensed beds

      100
      units

	
      Pines
      of Tewksbury

       

      “Tewksbury
      Facility”)

       

      Emeritus
      Corporation
	
      2580
      Main St.

      Tewksbury,
      MA 01876

      County:
      Middlesex
	
      Assisted
      Living

      69
      licensed beds

      49
      units

	
      Loyalton
      of Lakewood

       

      “Lakewood
      Facility”)

       

      Emeritus
      Corporation
	
      220
      Southwestern Dr.

      Lakewood,
      NY 14750

      County:
      Chautauqua
	
      Enriched
      Housing Program

      100
      licensed beds

      78
      units

	
      Meadowbrook

       

      (“Ontario
      Facility”)

       

      Emeritus
      Corporation
	
      1372
      Southwest 8th Ave.

      Ontario,
      OR 97914

      County:
      Malheur
	
      Assisted
      Living

      82
      beds

      53
      units

	
      Anderson
      Place

       

      (“Anderson
      Facility”)

       

      Emeritus
      Corporation
	
      311
      Simpson Rd.

      Anderson,
      SC 29621

      County:
      Anderson
	
      Assisted
      Living and Nursing Home

      84
      beds

      127
      units

      75
      independent cottages

	
      Elmbrook
      Estates

       

      (“Lubbock
      Facility”)

       

      Texas-ESC-Lubbock,
      L.P.
	
      5301
      66th
      St.

      Lubbock,
      TX 79424

      County:
      Lubbock
	
      Assisted
      Living

      100
      licensed beds

      80
      units

	
      Loyalton
      of Staunton

       

      (“Staunton
      Facility”)

       

      Emeritus
      Corporation
	
      1900
      Hillsmere Lane

      Staunton,
      VA 24401

      County:
      Augusta
	
      Assisted
      Living

      144
      licensed beds

      101
      units

	
      Fairhaven
      Estates

       

      (“Bellingham
      Facility”)

       

      Emeritus
      Corporation
	
      2600
      Old Fairhaven Pkwy.

      Bellingham,
      WA 98225

      County:
      Whatcom
	
      Boarding
      Home

      60
      licensed beds

      50
      units

	
      Evergreen
      Lodge

       

      (“Federal
      Way Facility”)

       

      Emeritus
      Corporation
	
      31002
      14th Avenue South

      Federal
      Way, WA 98003

      County:
      King
	
      Boarding
      Home

      105
      beds

      98
      units

	
      Hearthstone
      Inn

       

      (“Moses
      Lake Facility”)

       

      Emeritus
      Corporation
	
      905
      S. Pioneer Way

      Moses
      Lake, WA 98837

      County:
      Grant
	
      Boarding
      Home

      92
      licensed beds

      83
      units

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00079-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00079-of-00352.parquet"}]]