Document:

ex107120amndpromisenotedoaks.htm

EX-10.71.20

    

     

    AMENDED AND RESTATED
PROMISSORY NOTE

     

     

    

     

    U.S.
$6,960,000.00 November 12, 2009

     Seattle,
Washington

    

    This
Amended and Restated Promissory Note (“Note”) reevidences, amends,
restates and supersedes in its entirety but does not in any way satisfy nor
discharge the outstanding indebtedness owed under that certain Promissory Note
dated as of October 17, 2008, in the original principal amount of $17,595,000,
made by Emeritol Dowlen Oaks LLC, Emeritol Saddleridge Lodge LLC, and Emeritol
Seville Estates LLC, and payable to the order of the Lender (as hereinafter
defined).

     

    FOR VALUE
RECEIVED, EMERITOL DOWLEN OAKS LLC, a Delaware limited liability company, (“Borrower”),
promises to pay to the order of KEYBANK NATIONAL ASSOCIATION, a national banking
association (“Lender”),
having an address at Key Healthcare Finance, 1301 Fifth Avenue, 23rd
Floor, Mailcode: WA 31-13-2313, Seattle, WA 98101, the principal sum of SIX
MILLION, NINE HUNDRED SIXTY THOUSAND and NO/100 DOLLARS ($6,960,000.00), and
interest from the date hereof on the balance of principal from time to time
outstanding, in United States currency, at the rates and at the times
hereinafter described.

     

    This Note
is issued by Borrower pursuant to that certain Loan Agreement dated October 17,
2008, as modified by the Loan Modification Agreement dated October 30, 2009 (as
amended, the “Loan
Agreement”).  This Note evidences the Loan (as defined in the
Loan Agreement).  Payment of this Note is governed by the Loan
Agreement, the terms of which are incorporated herein by express reference as if
fully set forth herein.  Capitalized terms used and not otherwise
defined herein shall have the meanings given to them in the Loan
Agreement.

     

    
      	
              1.  

            	
              Interest.  The
      principal amount hereof outstanding from time to time shall bear interest
      until paid in full at the Applicable
Rate.

            

    

     

    
      	
              2.  

            	
              Payments.  Borrower
      shall make payments of interest and principal as set forth in the Loan
      Agreement.

            

    

     

    
      	
              3.  

            	
              Maturity
      Date.  The indebtedness evidenced hereby shall mature on
      the Maturity Date.  On the Maturity Date, the entire outstanding
      principal balance hereof, together with accrued and unpaid interest and
      all other sums evidenced by this Note, shall, if not sooner paid, become
      due and payable.

            

    

     

    
      	
              4.  

            	
              General
      Provisions.

            

    

     

    
      	
              (a)  

            	
              In
      the event (i) the principal balance hereof is not paid when due whether by
      acceleration or upon the Maturity Date or (ii) an Event of Default
      exists, then the principal balance hereof shall bear interest from and
      after the date when due at the Default Rate.  In addition, for
      any monthly installment

            

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    (exclusive
of the payment due upon the Maturity Date or earlier date if due by
acceleration) which is not paid within five (5) days after the due date thereof,
a late charge equal to the greater of (a) four percent (4%) of the amount of
such installment or (b) $25 shall be due and payable to the holder of this Note
on demand to cover the extra expense involved in handling delinquent
payments.

     

    
      	
              (b)  

            	
              Borrower
      agrees that the obligation evidenced by this Note is an exempt
      transaction under the Truth-in-Lending Act, 15 U.S.C. § 1601,
      et
      seq.

            

    

     

    
      	
              (c)  

            	
              The
      parties hereto intend and believe that each provision in this Note
      comports with all applicable local, state and federal laws and judicial
      decisions.  However, if any provision or provisions, or if any
      portion of any provision or provisions, in this Note is found by a court
      of law to be in violation of any applicable local, state or federal
      ordinance, statute, law, administrative or judicial decision, or public
      policy, and if such court should declare such portion, provision or
      provisions of this Note to be illegal, invalid, unlawful, void or
      unenforceable as written, then it is the intent of all parties hereto that
      such portion, provision or provisions shall be given force to the fullest
      possible extent that they are legal, valid and enforceable, that the
      remainder of this Note shall be construed as if such illegal, invalid,
      unlawful, void or unenforceable portion, provision or provisions were not
      contained therein, and that the rights, obligations and interest of
      Borrower and the holder or holders hereof under the remainder of this Note
      shall continue in full force and effect.  All agreements herein
      are expressly limited so that in no contingency or event whatsoever,
      whether by reason of advancement of the proceeds hereof, acceleration of
      maturity of the unpaid principal balance hereof, or otherwise, shall the
      amount paid or agreed to be paid to the holders hereof for the use,
      forbearance or detention of the money to be advanced hereunder exceed the
      highest lawful rate permissible under applicable usury
      laws.  If, from any circumstances whatsoever, the fulfillment of
      any provision hereof, at the time performance of such provision shall be
      due, shall involve transcending the limit of validity prescribed by law
      which a court of competent jurisdiction may deem applicable hereto, then,
      ipso facto, the
      obligation to be fulfilled shall be reduced to the limit of such validity
      and if from any circumstance the holder hereof shall ever receive as
      interest an amount which would exceed the highest lawful rate, such amount
      which would be excessive interest shall be applied to the reduction of the
      unpaid principal balance due hereunder and not to the payment of
      interest.

            

    

     

    
      	
              (d)  

            	
              This
      Note and all provisions hereof shall be binding upon Borrower and all
      persons claiming under or through Borrower, and shall inure to the benefit
      of Lender, together with its successors and assigns, including each owner
      and holder from time to time of this
Note.

            

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    
      	
              (e)  

            	
              Time
      is of the essence as to all dates set forth herein, provided, however, if
      a payment is due on a date that is not a Business Day, then such payment
      shall not be due until the Business Day immediately following such
      date.

            

    

     

    
      	
              (f)  

            	
              Borrower
      agrees that its liability shall not be in any manner affected by any
      indulgence, extension of time, renewal, waiver, or modification granted or
      consented to by Lender; and Borrower consents to any indulgences and all
      extensions of time, renewals, waivers, or modifications that may be
      granted by Lender with respect to the payment or other provisions of this
      Note, and to any substitution, exchange or release of the collateral, or
      any part thereof, with or without substitution, and agrees to the addition
      or release of any Borrower, endorsers, guarantors, or sureties, all
      whether primarily or secondarily liable, without notice to Borrower and
      without affecting their liability
hereunder.

            

    

     

    
      	
              (g)  

            	
              Borrower
      hereby waives and renounce for itself, its successors and assigns, all
      rights to the benefits of any statute of limitations and any moratorium,
      reinstatement, marshalling, forbearance, valuation, stay, extension,
      redemption, appraisement, or exemption and homestead laws now provided, or
      which may hereafter be provided, by the laws of the United States and of
      any state thereof against the enforcement and collection of the
      obligations evidenced by this Note.

            

    

     

    
      	
              (h)  

            	
              If
      this Note is placed in the hands of attorneys for collection or is
      collected through any legal proceedings, Borrower promises and agrees to
      pay, in addition to the principal, interest and other sums due and payable
      hereon, all reasonable out-of-pocket costs of collecting or attempting to
      collect this Note, including all reasonable attorneys’ fees and
      disbursements.

            

    

     

    
      	
              (i)  

            	
              Except
      as otherwise specifically provided in this Note or any other Loan
      Document, all parties now or hereafter liable with respect to this Note,
      whether Borrower, principal, surety, guarantor, endorsee or otherwise
      hereby severally waive presentment for payment, demand, notice of
      nonpayment or dishonor, protest and notice of protest.  No
      failure to accelerate the indebtedness evidenced hereby, acceptance of a
      past due installment following the expiration of any cure period provided
      by this Note, any Loan Document or applicable law, or indulgences granted
      from time to time shall be construed (i) as a novation of this Note
      or as a reinstatement of the indebtedness evidenced hereby or as a waiver
      of such right of acceleration or of the right of Lender thereafter to
      insist upon strict compliance with the terms of this Note, or (ii) to
      prevent the exercise of such right of acceleration or any other right
      granted hereunder or by the laws of the State of
      Washington.  Borrower hereby expressly waives the benefit of any
      statute or rule of law or equity now provided, or which may hereafter be
      provided, which would produce a result contrary to or in conflict with the
      foregoing.

            

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    THIS NOTE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
WASHINGTON WITHOUT REGARD TO ITS CONFLICT OF LAWS RULES AND ANY APPLICABLE LAWS
OF THE UNITED STATES OF AMERICA.  Borrower’s principal offices are
located within the State of Washington, and Lender is making the Loan to
Borrower within the State of Washington.  Accordingly, Borrower agrees
that this Note shall be construed, enforced and otherwise governed by the laws
of the State of Washington.

     

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

     

    Borrower
has delivered this Note as of the day and year first set forth
above.

    

    EMERITOL
DOWLEN OAKS LLC, a  Delaware limited liability company

    

     By:
Batus, LLC, a Delaware limited

     liability
company, its Sole Member

    

       By:           
Summerville Senior Living, Inc.,
a                                                                Delaware
corporation, its AdministrativeMember

    

    By: /s/ Eric Mendelsohn

    Name: Eric Mendelsohn

    Title:           Senior
VP Corporate Development

    

    

     

    

     

    

     

    

     

    

    
      
         

      

      
        4ex107121loanmodagmtstcrk1009.htm

EX-10.71.21

    

    LOAN MODIFICATION
AGREEMENT

    

    “Emeritol
Facilities”

     

    This LOAN
MODIFICATION AGREEMENT dated October 30, 2009, is made by and among EMERITOL
STONECREEK LODGE LLC, a Delaware limited liability company and EMERITOL
MEADOWBROOK LLC, a Delaware limited liability company (each a “Borrower”
and collectively, “Borrowers”),
KEYBANK NATIONAL ASSOCIATION, a national banking association, its successors and
assigns (“Lender”),
and EMERITUS CORPORATION, a Washington corporation (“Emeritus”
or “Guarantor”).

     

    Recitals

     

     

    A.           On
or about October 17, 2008, Lender made a loan (“Loan”) to
Borrowers in the original principal amount of $9,802,500.00. The Loan is
evidenced by Borrowers’ Promissory Note (“Note”)
and is secured by (i) a Deed of Trust, Assignment of Rents, Security Agreement
and Fixture Filing (“Meadowbrook Deed
of Trust”), recorded as Instrument No. 2008-7454, records of Malheur
County, Oregon, encumbering certain real property (“Meadowbrook
Property”) located in Malheur County, Oregon and legally described on
Exhibit A to the Meadowbrook Deed of Trust; and (ii) a Mortgage, Assignment
of Rents, Security Agreement and Fixture Filing (“Stonecreek
Mortgage”), recorded October 23, 2008 in Mortgage Book 11355, Page 0506,
in the Office of the Clerk of Jefferson County, Kentucky, encumbering certain
real property (“Stonecreek
Property”) located in Jefferson County, Kentucky, and legally described
on Exhibit A to the Stonecreek Mortgage. Disbursement of the proceeds of
the Loan is governed by a Loan Agreement (“Loan
Agreement”) between Borrowers and Lender dated October 17,
2008.  Payment of the Loan is unconditionally guaranteed by Guarantor
under an Unconditional Payment Guaranty (“Guaranty”)
dated October 17, 2008.

     

    B.           Borrowers
have requested that the Loan Documents be modified to allow the release of the
Meadowbrook Property.  Lender is willing to do so subject to the terms
and conditions of this Agreement.

     

    Agreement

     

    NOW
THEREFORE, the parties agree as follows:

     

    
      	
              1.  

            	
              Definitions.  Capitalized
      terms used but not defined in this Agreement are defined in the Loan
      Agreement.

            

    

     

    
      	
              2.  

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

            

    

     

    
      	
              2.1  

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

            

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    
      	
              2.2  

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

            

    

     

    
      	
              2.3  

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

            

    

     

    
      	
              2.4  

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

            

    

     

    
      	
              2.5  

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

            

    

     

    
      	
              2.6  

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

            

    

     

    
      	
              3.  

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

            

    

     

    
      	
              3.1  

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

            

    

     

    Borrower:  Emeritol
Stonecreek Lodge LLC, a Delaware limited liability company.

     

    Debt
Service:  (a) For each quarterly period (based on calendar
quarters) commencing October 1, 2008, and continuing through September 30, 2010,
interest-only payments on the Loan (assuming that the Loan was outstanding
commencing October 1, 2008) during such period at the greater of the Applicable
Rate or 6.85% per annum, and (b) for each calendar quarter thereafter, the total
payments of principal and interest which would be required during such period in
order to fully amortize the stated principal amount of the Loan ($7,207,500.00)
over a 25 year amortization period at an interest rate equal to the greater of
the Applicable Rate or 6.85% per annum.

     

    Debt
Service Coverage:  For each calendar quarter commencing with
the calendar quarter ending December 31, 2008, the ratio of the aggregate Net
Operating Income of the Stonecreek Lodge Facility during such period, to the
Debt Service during such period.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    Facilities:  All
references to the Facilities shall be deemed to refer to the Stonecreek Lodge
Facility located at 9251 Stonestreet Rd, Louisville,
KY  40272.

     

    Loan
Amount:  Seven Million, Two Hundred Seven Thousand, Five
Hundred and No/100 Dollars ($7,207,500.00), as reduced by principal payments
made from time to time.

     

    Note:  The
Amended and Restated Promissory Note in the Loan Amount, executed by Borrower
and payable to the order of Lender, evidencing the Loan.

     

    
      	
              3.2  

            	
              Compliance
      Certificate. The form of Compliance Certificate attached as Exhibit B to
      the Loan Agreement is hereby replaced with the Compliance Certificate
      attached as Exhibit B
      hereto:

            

    

     

    
      	
              4.  

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

            

    

     

    
      	
              4.1  

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

            

    

     

    
      	
              4.2  

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

            

    

     

    
      	
              5.  

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

            

    

     

    
      	
              6.  

            	
              Representations.  Borrower
      and Guarantor represent to Lender as
follows:

            

    

     

    
      	
              6.1  

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

            

    

     

    
      	
              6.2  

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

            

    

     

    
      	
              6.3  

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

            

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    
      	
              6.4  

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

            

    

     

    
      	
              7.  

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

            

    

     

    
      	
              8.  

            	
              General.

            

    

     

    
      	
              8.1  

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

            

    

     

    
      	
              8.2  

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

            

    

     

    
      	
              8.3  

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

            

    

     

    
      	
              8.4  

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

            

    

     

    
      	
              8.5  

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

            

    

     

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

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the parties execute this Agreement as of the day and year first
above written.

     

     “Borrowers”

     

    EMERITOL
STONECREEK LODGE LLC,

     

    a  Delaware
limited liability company

     

    
      	
               
      

            	
              By:

            	
              Summerville
      Senior Living, Inc., a Delaware corporation, its Sole
    Member

            

    

    

    
      	
               
      

            	
              By:

            	
              /s/
      Eric Mendelsohn _

            

    

    
      	
               
      

            	
              Eric
      Mendelsohn, Senior VP Corporate
Development

            

    

     

    EMERITOL
MEADOWBROOK LLC,

     

    a
Delaware limited liability company

     

    
      	
               
      

            	
              By:

            	
              Summerville
      Senior Living, Inc., a Delaware corporation, its Sole
    Member

            

    

    

    
      	
               
      

            	
              By:

            	
              /s/
      Eric Mendelsohn ___

            

    

    
      	
               
      

            	
              Eric
      Mendelsohn, Senior VP Corporate
Development

            

    

     

     “Lender”

     

    KEYBANK
NATIONAL ASSOCIATION, a national banking association

     

    

    By:           /s/
Bellini Lacey ____

    Name:                      Bellini
Lacey _________________

    Title:           AVP
Closing Officer ___________________

     

     “Guarantor”

     

    EMERITUS
CORPORATION, a Washington corporation

    

       By:           /s/
Eric Mendelsohn ____________

       Name:  Eric
Mendelsohn

       Title:                      Senior
VP Corporate Development

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    EXHIBIT
B

    to

    Loan
Agreement

    Certificate
of Compliance

     

    KeyBank
National Association

    KeyBank
Real Estate Capital

    Healthcare
Finance

    1301 5th
Ave, 23rd Floor

    Seattle,
WA 98101

    Attn:
____________________

     

    
      	
              Re:

            	
              Loan
      Agreement dated as of October 17, 2008 (as amended, modified,
      supplemented, restated, or renewed, from time to time, the “Agreement”),
      between EMERITOL STONECREEK LODGE LLC, a Delaware limited liability
      company, (“Borrower”),
      and KEYBANK NATIONAL ASSOCIATION (“Lender”).

            

    

     

    Reference
is made to the Agreement.  Capitalized terms used in this Certificate
(including schedules and other attachments hereto, this “Certificate”)
without definition have the meanings specified in the Agreement.

     

    Pursuant
to applicable provisions of the Agreement, Borrower and Emeritus Corporation
hereby certifies to Lender that all information furnished in this Certificate
and in the attachments hereto and in the financial statements (such statements
the “Financial
Statements” and each periods covered thereby the “reporting
period”) submitted herewith is true, correct and complete in all material
respects.

     

    Emeritus
Corporation further certifies to Lender that:

     

    1.           Compliance with Financial
Covenants.

     

    
      	
               
      

            	
              A.

            	
              Covenant:  Minimum
      Facility Occupancy.  As of the end of each calendar
      quarter commencing with the calendar quarter ending December 31, 2008, the
      Occupancy of the Facility shall no time be less than 90% of the Occupancy
      for the Facility as of September 30,
2008.

            

    

    

    
      	
              Facility

            	
              Occupancy
      as of 9/30/08

            	
              Occupancy
      at end of reporting period

            	
              Compliance?

            
	
              Stonecreek
      Lodge

            	
              _______%

            	
              ________%

            	
              ________

            

    

     

    See attached rent rolls and
operating statements for calendar quarter ending _______________,
20__

     

    
      	
               
      

            	
              B.

            	
              Covenant: Minimum
      Debt Service Coverage. For each calendar
      quarter commencing with the calendar quarter ending December 31, 2008,
      the

            

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    Debt
Service Coverage shall be no less than the required Debt Service Coverage set
out below:

    
      	
              Quarter End

            	
              Required Debt Service
    Coverage

            
	
              12/31/2008

            	
              1.00

            
	
              3/31/2009

            	
              1.00

            
	
              6/30/2009

            	
              1.00

            
	
              9/30/2009

            	
              1.00

            
	
              12/31/2009

            	
              1.10

            
	
              3/31/2010

            	
              1.10

            
	
              6/30/2010

            	
              1.10

            
	
              9/30/2010

            	
              1.10

            
	
              12/31/2010

            	
              1.10

            
	
              3/31/2011

            	
              1.15

            
	
              6/30/2011

            	
              1.20

            
	
              9/30/2011

            	
              1.25

            

    

     

    
      	
               
      

            	
              Quarter
      Ending ________________, 20___

            

    

     

    
      	
               
      

            	
              Required
      Debt Service
Coverage:  1.___

            

    

     

    
      	
               
      

            	
              Actual
      Debt Service
Coverage:  1.___

            

    

     

    Compliance?
(Yes or
No)                                                      ____________________

     

    See attached Financial
Statements

     

    2.           Compliance with Emeritus
Covenants.

     

    
      	
               
      

            	
              A.

            	
              Covenant: Minimum
      Liquid Assets.  Emeritus
      shall maintain minimum Liquid Assets of Twenty Million Dollars
      ($20,000,000.00)

            

    

     

    Emeritus
Liquid
Assets:                                                      $_________  as
of period ending ___________

     

    See attached Financial
Statements

     

    Compliance?
(Yes or
No)                                                      ____________________

     

    
      	
               
      

            	
              B.

            	
              Covenant: Minimum
      Fixed Charge Coverage. Emeritus agrees to
      maintain a minimum Fixed Charge Coverage Ratio of 1.10 to 1.00 (measured
      at the end of each calendar quarter beginning with the calendar quarter
      ending December 31, 2008, and building to the previous four calendar
      quarters).

            

    

     

    
      	
               
      

            	
              Quarter
      Ending ________________, 20___

            

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

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

     

    

     

    See
calculations of EBITAR and Fixed Charges attached to this
Certificate

     

    Compliance:   __________
yes  _________________ no

     

    See attached Financial
Statements

     

    
      	
               
      

            	
              C.

            	
              Covenant: Emeritus
      agrees to permit no Change of Control without the prior written consent of
      Lender.

            

    

     

    Compliance?
(Yes or
No)                                                      ____________________

     

    More Restrictive Financial
Covenants

     

    If
Emeritus has entered into an agreement with any other entity providing financing
to Emeritus or to any Affiliate of Emeritus to comply with any more restrictive
covenants than the Emeritus Covenants set out above, those more restrictive
covenants and Emeritus’ compliance or non-compliance therewith are described on
Schedule B to this Certificate.  If Schedule B indicates “none,” this
Certificate shall constitute Emeritus’ representation to Lender that no such
more restrictive covenants have been agreed to.

     

    3.           Review of
Condition.  Emeritus has reviewed the terms of the Agreement,
including, but not limited to, the representations, warranties and covenants of
Borrower set forth in the Agreement and has made a review in reasonable detail
of the transactions and condition of Borrower and Emeritus through the reporting
periods.

     

    4.           Representations and
Warranties. To the actual knowledge of Emeritus, the representations and
warranties of Borrower and Emeritus contained in the Loan Documents, including
those contained in the Agreement, are true and accurate in all material respects
as of the date hereof and were true and accurate in all material respects at all
times during the reporting period except as expressly noted on Schedule A
hereto.

     

    5.           Covenants.  To
the actual knowledge of Emeritus, during the reporting period, Borrower and
Emeritus observed and performed all of their respective covenants and other
agreements under the Agreement and the Loan Documents in all material respects,
except as expressly noted on Schedule A hereto.

    

      

    

     

      

       

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

    

     

      

       

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

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    6.           No Event of
Default.  To the actual knowledge of Emeritus, no Default or
Event of Default exists as of the date hereof or existed at any time during the
reporting period, except as expressly noted on Schedule A hereto.

     

    IN
WITNESS WHEREOF, this Certificate is executed by this ____ day of __________,
20__.

     

    EMERITUS
CORPORATION, a Washington corporation

     

    

    By:           _________________________________

    Name:                      _________________________________

    Title:           _________________________________

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    Exhibit
1

    

    Amended
and Restated Promissory Note

    

    
      
         

      

      
        10

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