Document:

ex10_6714.htm

    
      

    

    Exhibit
      10.67.14

     

    
      Laurel
        Lakes Estates

       

      MULTIFAMILY
        NOTE

      

      
        	
                US
                  $6,975,000.00

              	
                As
                  of August 15, 2007

              

      

       

      FOR
        VALUE RECEIVED,
        the undersigned ("Borrower") jointly and severally (if more
        than one) promises to pay to the order of CAPMARK BANK, a Utah
        industrial bank, the principal sum of Six Million Nine Hundred Seventy-Five
        Thousand and 00/100 Dollars (US $6,975,000.00), with interest accruing at
        the Interest Rate on the unpaid principal balance from the Disbursement Date
        until fully paid.

      

      1.           
        Defined Terms.  In addition to defined terms found
        elsewhere in this Note, as used in this Note, the following definitions shall
        apply:

      

      Amortization
        Period:  360 months.

      Business
        Day:  Any day other than a Saturday, Sunday or
        any other day on which Lender is not open for business.

      

      Debt
        Service Amounts:  Amounts payable under this Note, the
        Security Instrument or any other Loan Document.

      

      Disbursement
        Date:  The date of disbursement of Loan proceeds
        hereunder.

      

      Default
        Rate:  A rate equal to the lesser of 4 percentage points
        above the Interest Rate or the maximum interest rate which may be collected
        from
        Borrower under applicable law.

      

      First
        Interest Only Payment Date:  The first day of
        October, 2007.

      

      First
        Principal and Interest Payment Date:  The first
        day of October, 2010.

      

      Indebtedness: The
        principal of, interest on, or any other amounts due at any time under, this
        Note, the Security Instrument or any other Loan Document, including prepayment
        premiums, late charges, default interest, and advances to protect the security
        of the Security Instrument under Section 12 of the Security
        Instrument.

       

      
        Interest
          Only Term:  36 months.

         

      

      Interest
        Rate:  The annual rate of six and three hundred five
        thousandths percent (6.305%).

      

      Last
        Interest Only Payment Date:  The first day of September,
        2010.

      Lender: The
        holder of this Note.

      

      Loan: The
        loan evidenced by this Note.

      

      Loan
        Term:  120 months.

       

      
        
          	
                  Multifamily Partial Interest Only Fixed Rate

                  Note
                    – Multistate

                	
                  Form
                    4100-PIO

                	
                   

                   

                
	
                  Fannie
                    Mae

                	
                  10-05

                	
                  ©
                    2005 Fannie Mae

                

        

      

      
        
          
          

        

        
          Page
            1

          
            

          

        

        
          
          

        

      

       

      Maturity
        Date:  The first day of September, 2017, or any
        earlier date on which the unpaid principal balance of this Note becomes due
        and
        payable by acceleration or otherwise.

      

      Property
        Jurisdiction:  The jurisdiction in which the Land is
        located.

      

      Security
        Instrument:  A multifamily mortgage, deed to secure debt or
        deed of trust dated as of the date of this Note.

      

      Yield
        Maintenance Period Term:  114 months.

      

      Yield
        Maintenance Period End Date:  The last day of February,
        2017.

      

      Event
        of
        Default, Key Principal and other capitalized terms used but not defined in
        this
        Note shall have the meanings given to such terms in the Security
        Instrument.

      

      2.           Address
        for Payment.  All payments due under this Note shall be
        payable at c/o Capmark Finance Inc., 116 Welsh Road, Horsham, Pennsylvania
        19044, Attn:  Servicing - Account Manager, or such other place as may
        be designated by written notice to Borrower from or on behalf of
        Lender.

      

      3.           Payment
        of Principal and Interest.  Principal and interest shall be
        paid as follows:

      

      (a)           Short
        Month Interest.  If disbursement of principal is made by
        Lender to Borrower on any day other than the first day of the month, interest
        for the period beginning on the Disbursement Date and ending on and including
        the last day of the month in which such disbursement is made shall be payable
        simultaneously with the execution of this Note.

      
         

        (b)          
          Interest Computation.  Interest under this Note shall
          be computed on the basis of (check one only):

      

       

      o           30/360.  A
        360-day year consisting of twelve 30-day months.

      

      
        	
                 

              	
                x

              	
                Actual/360.  A
                  360-day year.  The amount of each monthly payment made by
                  Borrower pursuant to Paragraph 3(c) below that is allocated to
                  interest
                  will be based on the actual number of calendar days during such
                  month and
                  shall be calculated by multiplying the unpaid principal balance
                  of this
                  Note by the per annum Interest Rate, dividing the product by 360
                  and
                  multiplying the quotient by the actual number of days elapsed during
                  the
                  month.  Borrower understands that the amount allocated to
                  interest for each month will vary depending on the actual number
                  of
                  calendar days during such month.

              

      

      

      
        	
                 

              	
                (c)

              	
                Monthly
                  Installments:

              

      

      

      (1)           Interest
        Only Period.  Commencing on the First Interest Only Payment
        Date and on the first day of every month until and including the Last Interest
        Only Payment Date, consecutive monthly installments of interest only shall
        be
        payable and in an amount equal to one of the following (check one
        only):

      
         

        
          
            	
                    Multifamily Partial Interest Only Fixed Rate

                    Note
                      – Multistate

                  	
                    Form
                      4100-PIO

                  	
                     

                     

                  
	
                    Fannie
                      Mae

                  	
                    10-05

                  	
                    ©
                      2005 Fannie Mae

                  

        

      

      
        
          
          

        

        
          Page
            2

          
            

          

        

        
          
          

        

         

      

      
        	
                 

              	
                o

              	
                30/360.  [Select
                  only if 30/360 is selected in Paragraph 3(b) above.]  If
                  interest accrues based on a 30/360 interest computation, then consecutive
                  monthly installments of interest only, each in the amount
                  of

              

      

      
        	
                 

              	
                 

              	 	
                   
                  Dollars (US $

              	
                 ).

              

      

       

      
        	
                 

              	
                x

              	
                Actual/360.  [Select
                  only if Actual/360 is selected in Paragraph 3(b)
                  above.]  If interest accrues based on an Actual/360
                  interest computation, the amount of Thirty-Six Thousand Six Hundred
                  Forty-Seven and 81/100 Dollars (US $36,647.81) shall be payable
                  on the
                  First Interest Only Payment Date and thereafter consecutive monthly
                  installments of interest only, shall be payable as
                  follows:

              

      

      

      
        	
                 

              	
                (1)

              	
                Thirty-Four
                  Thousand Two Hundred Four and 62/100 Dollars (US $34,204.62), shall
                  be payable on the first day of each month during the term hereof
                  which
                  follows a 28-day month;

              

      

      

      
        	
                 

              	
                (2)

              	
                Thirty-Five
                  Thousand Four Hundred Twenty-Six and 22/100 Dollars (US $35,426.22),
                  shall be payable on the first day of each month during the term
                  hereof
                  which follows a 29-day month,

              

      

      

      
        	
                 

              	
                (3)

              	
                Thirty-Six
                  Thousand Six Hundred Forty-Seven and 81/100 Dollars (US $36,647.81),
                  shall
                  be payable on the first day of each month during the term hereof
                  which
                  follows a 30-day month, or

              

      

      

      
        	
                 

              	
                (4)

              	
                Thirty-Seven
                  Thousand Eight Hundred Sixty-Nine and 41/100 Dollars (US $37,869.41),
                  shall be payable on the first day of each month during the term
                  hereof
                  which follows a 31-day month,

              

      

      

      (2)    Amortizing
        Period.  Commencing on the First Principal and Interest
        Payment Date and on the first day of every month thereafter, consecutive
        monthly
        installments of principal and interest, each in the amount of Forty-Three
        Thousand One Hundred Ninety-Six and 09/100 Dollars (US $43,196.09), until
        the entire unpaid principal balance evidenced by this Note is fully
        paid.

      Any
        remaining principal and interest shall be due and payable on the Maturity
        Date.  The unpaid principal balance shall continue to bear interest
        after the Maturity Date at the Default Rate set forth in this Note until
        and
        including the date on which it is paid in full.

      

      (d)           Payments
        Before Due Date.  Any regularly scheduled monthly installment
        of interest only (during the interest-only period set forth in paragraph
        3(c)
        above) or principal and interest (during the period in which principal and
        interest is due also as set forth in paragraph 3(c) above) that is received
        by
        Lender before the date it is due shall be deemed to have been received on
        the
        due date solely for the purpose of calculating interest due.

      

      (e)           Accrued
        Interest.  Any accrued interest remaining past due for 30
        days or more shall be added to and become part of the unpaid principal balance
        and shall bear interest at the rate or rates specified in this
        Note.  Any reference herein to "accrued interest" shall refer to
        accrued interest which has not become part of the unpaid principal
        balance.  Any amount added to principal pursuant to the Loan Documents
        shall bear interest at the applicable rate or rates specified in this Note
        and
        shall be payable with such interest upon demand by Lender and absent such
        demand, as provided in this Note for the payment of principal and
        interest.

      
         

        
          
            	
                    Multifamily Partial Interest Only Fixed Rate

                    Note
                      – Multistate

                  	
                    Form
                      4100-PIO

                  	
                     

                     

                  
	
                    Fannie
                      Mae

                  	
                    10-05

                  	
                    ©
                      2005 Fannie Mae

                  

        

      

      
        
          
          

        

        
          Page
            3

          
            

          

        

        
          
          

        

         

      

      4.           Application
        of Payments.  If at any time Lender receives, from Borrower
        or otherwise, any amount applicable to the Indebtedness which is less than
        all
        amounts due and payable at such time, Lender may apply that payment to amounts
        then due and payable in any manner and in any order determined by Lender,
        in
        Lender's discretion.  Borrower agrees that neither Lender's acceptance
        of a payment from Borrower in an amount that is less than all amounts then
        due
        and payable nor Lender's application of such payment shall constitute or
        be
        deemed to constitute either a waiver of the unpaid amounts or an accord and
        satisfaction.

      

      5.           Security.  The
        Indebtedness is secured, among other things, by the Security Instrument,
        and
        reference is made to the Security Instrument for other rights of Lender
        concerning the collateral for the Indebtedness.

      

      6.           Acceleration.  If
        an Event of Default has occurred and is continuing, the entire unpaid principal
        balance, any accrued interest, the prepayment premium payable under Paragraph
        10, if any, and all other amounts payable under this Note and any other Loan
        Document shall at once become due and payable, at the option of Lender, without
        any prior notice to Borrower.  Lender may exercise this option to
        accelerate regardless of any prior forbearance.

      

      7.           Late
        Charge.  If any monthly installment due hereunder is not
        received by Lender on or before the 10th day of
        each month
        or if any other amount payable under this Note or under the Security Instrument
        or any other Loan Document is not received by Lender within 10 days after
        the
        date such amount is due, counting from and including the date such amount
        is
        due, Borrower shall pay to Lender, immediately and without demand by Lender,
        a
        late charge equal to 5 percent of such monthly installment or other amount
        due.  Borrower acknowledges that its failure to make timely payments
        will cause Lender to incur additional expenses in servicing and processing
        the
        Loan and that it is extremely difficult and impractical to determine those
        additional expenses.  Borrower agrees that the late charge payable
        pursuant to this Paragraph represents a fair and reasonable estimate, taking
        into account all circumstances existing on the date of this Note, of the
        additional expenses Lender will incur by reason of such late
        payment.  The late charge is payable in addition to, and not in lieu
        of, any interest payable at the Default Rate pursuant to Paragraph
        8.

      

      8.           Default
        Rate.  So long as any monthly installment or any other
        payment due under this Note remains past due for 30 days or more, interest
        under
        this Note shall accrue on the unpaid principal balance from the earlier of
        the
        due date of the first unpaid monthly installment or other payment due, as
        applicable, at the Default Rate.  If the unpaid principal balance and
        all accrued interest are not paid in full on the Maturity Date, the unpaid
        principal balance and all accrued interest shall bear interest from the Maturity
        Date at the Default Rate.  Borrower also acknowledges that its failure
        to make timely payments will cause Lender to incur additional expenses in
        servicing and processing the Loan, that, during the time that any monthly
        installment or payment under this Note is delinquent for more than 30 days,
        Lender will incur additional costs and expenses arising from its loss of
        the use
        of the money due and from the adverse impact on Lender's ability to meet
        its
        other obligations and to take advantage of other investment opportunities,
        and
        that it is extremely difficult and impractical to determine those additional
        costs and expenses.  Borrower also acknowledges that, during the time
        that any monthly installment or other payment due under this Note is delinquent
        for more than 30 days, Lender's risk of nonpayment of this Note will be
        materially increased and Lender is entitled to be compensated for such increased
        risk.  Borrower agrees that the increase in the rate of interest
        payable under this Note to the Default Rate represents a fair and reasonable
        estimate, taking into account all circumstances existing on the date of this
        Note, of the additional costs and expenses Lender will incur by reason of
        the
        Borrower's delinquent payment and the additional compensation Lender is entitled
        to receive for the increased risks of nonpayment associated with a delinquent
        loan.

      
         

        
          
            	
                    Multifamily Partial Interest Only Fixed Rate

                    Note
                      – Multistate

                  	
                    Form
                      4100-PIO

                  	
                     

                     

                  
	
                    Fannie
                      Mae

                  	
                    10-05

                  	
                    ©
                      2005 Fannie Mae

                  

        

      

      
        
          
          

        

        
          Page
            4

          
            

          

        

        
          
          

        

         

      

      9.           Limits
        on Personal Liability.

      

      (a)           Except
        as otherwise provided in this Paragraph 9, Borrower shall have no personal
        liability under this Note, the Security Instrument or any other Loan Document
        for the repayment of the Indebtedness or for the performance of any other
        obligations of Borrower under the Loan Documents, and Lender's only recourse
        for
        the satisfaction of the Indebtedness and the performance of such obligations
        shall be Lender's exercise of its rights and remedies with respect to the
        Mortgaged Property (as such term is defined in the Security Instrument) and
        any
        other collateral held by Lender as security for the Indebtedness. This
        limitation on Borrower's liability shall not limit or impair Lender's
        enforcement of its rights against any guarantor of the Indebtedness or any
        guarantor of any obligations of Borrower.

      

      (b)           Borrower
        shall be personally liable to Lender for the repayment of a portion of the
        Indebtedness equal to any loss or damage suffered by Lender as a result
        of:

      

      (1)           failure
        of Borrower to pay to Lender upon demand after an Event of Default, all Rents
        to
        which Lender is entitled under Section 3(a) of the Security Instrument and
        the
        amount of all security deposits collected by Borrower from tenants then in
        residence;

      

      (2)           failure
        of Borrower to apply all insurance proceeds and condemnation proceeds as
        required by the Security Instrument;

      

      (3)           failure
        of Borrower to comply with Section 14(d) or (e) of the Security Instrument
        relating to the delivery of books and records, statements, schedules and
        reports;

      

      (4)           fraud
        or written material misrepresentation by Borrower, Key Principal or any officer,
        director, partner, member or employee of Borrower in connection with the
        application for or creation of the Indebtedness or any request for any action
        or
        consent by Lender; or

      

      (5)           failure
        to apply Rents, first, to the payment of reasonable operating expenses (other
        than Property management fees that are not currently payable pursuant to
        the
        terms of an Assignment of Management Agreement or any other agreement with
        Lender executed in connection with the Loan) and then to Debt Service Amounts,
        except that Borrower will not be personally liable (i) to the extent that
        Borrower lacks the legal right to direct the disbursement of such sums because
        of a bankruptcy, receivership or similar judicial proceeding, or (ii) with
        respect to Rents that are distributed in any calendar year if Borrower has
        paid
        all operating expenses and Debt Service Amounts for that calendar
        year.

      

      (c)           Borrower
        shall become personally liable to Lender for the repayment of all of the
        Indebtedness upon the occurrence of any of the following Events of
        Default:

      

      (1)           Borrower's
        acquisition of any property or operation of any business not permitted by
        Section 33 of the Security Instrument; or

       

      
        
          	
                  Multifamily Partial Interest Only Fixed Rate

                  Note
                    – Multistate

                	
                  Form
                    4100-PIO

                	
                   

                   

                
	
                  Fannie
                    Mae

                	
                  10-05

                	
                  ©
                    2005 Fannie Mae

                

        

      

      

      
        
          
          

        

        
          Page
            5

          
            

          

        

        
          
          

        

      

       

      (2)           a
        Transfer that is an Event of Default under Section 21 of the Security
        Instrument.

      

      (d)           To
        the extent that Borrower has personal liability under this Paragraph 9, Lender
        may exercise its rights against Borrower personally without regard to whether
        Lender has exercised any rights against the Mortgaged Property or any other
        security, or pursued any rights against any guarantor, or pursued any other
        rights available to Lender under this Note, the Security Instrument, any
        other
        Loan Document or applicable law. For purposes of this Paragraph 9, the term
        "Mortgaged Property" shall not include any funds that (1) have been applied
        by
        Borrower as required or permitted by the Security Instrument prior to the
        occurrence of an Event of Default, or (2) Borrower was unable to apply as
        required or permitted by the Security Instrument because of a bankruptcy,
        receivership, or similar judicial proceeding.

      

      10.           Voluntary
        and Involuntary Prepayments.

      

      (a)           A
        prepayment premium shall be payable in connection with any prepayment made
        under
        this Note as provided below:

      

      
        	
              	
                (1)

              	
                Borrower
                  may voluntarily prepay all (but not less than all) of the unpaid
                  principal
                  balance of this Note only on the last calendar day of a calendar
                  month
                  (the "Last Day of the Month") and only if Borrower has complied
                  with all
                  of the following:

              

      

      

      
        	
                 

              	
                (i)

              	
                Borrower
                  must give Lender at least 30 days (if given via U.S. Postal Service)
                  or 20
                  days (if given via facsimile, email or overnight courier), but
                  not more
                  than 60 days, prior written notice of Borrower's intention to make
                  a
                  prepayment (the "Prepayment Notice").  The Prepayment Notice
                  shall be given in writing (via facsimile, email, U.S. Postal Service
                  or
                  overnight courier) and addressed to Lender.  The Prepayment
                  Notice shall include, at a minimum, the Business Day upon which
                  Borrower
                  intends to make the prepayment (the "Intended Prepayment
                  Date").

              

      

      

      
        	
                 

              	
                (ii)

              	
                Borrower
                  acknowledges that the Lender is not required to accept any voluntary
                  prepayment of this Note on any day other than the Last Day of the
                  Month
                  even if Borrower has given a Prepayment Notice with an Intended
                  Prepayment
                  Date other than the Last Day of the Month or if the Last Day of
                  the Month
                  is not a Business Day.  Therefore, even if Lender accepts a
                  voluntary prepayment on any day other than the Last Day of the
                  Month, for
                  all purposes (including the accrual of interest and the calculation
                  of the
                  prepayment premium), any prepayment received by Lender on any day
                  other
                  than the Last Day of the Month shall be deemed to have been received
                  by
                  Lender on the Last Day of the Month and any prepayment calculation
                  will
                  include interest to and including the Last Day of the Month in
                  which such
                  prepayment occurs.  If the Last Day of the Month is not a
                  Business Day, then the Borrower must make the payment on the Business
                  Day
                  immediately preceding the Last Day of the
                  Month.

              

      

      

      
        	
                 

              	
                (iii)

              	
                Any
                  prepayment shall be made by paying (A) the amount of principal
                  being
                  prepaid, (B) all accrued interest (calculated to the Last Day of
                  the
                  Month), (C) all other sums due Lender at the time of such prepayment,
                  and
                  (D) the prepayment premium calculated pursuant to
                  Schedule A.

              

      

       

      
        
          	
                  Multifamily Partial Interest Only Fixed Rate

                  Note
                    – Multistate

                	
                  Form
                    4100-PIO

                	
                   

                   

                
	
                  Fannie
                    Mae

                	
                  10-05

                	
                  ©
                    2005 Fannie Mae

                

        

      

      

      
        
          
          

        

        
          Page
            6

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                (iv)

              	
                If,
                  for any reason, Borrower fails to prepay this Note (A) within five
                  (5)
                  Business Days after the Intended Prepayment Date or (B) if the
                  prepayment
                  occurs in a month other than the month stated in the original Prepayment
                  Notice, then Lender shall have the right, but not the obligation,
                  to
                  recalculate the prepayment premium based upon the date that Borrower
                  actually prepays this Note and to make such calculation as described
                  in
                  Schedule A attached hereto.  For purposes of such recalculation,
                  such new prepayment date shall be deemed the "Intended Prepayment
                  Date."

              

      

      

      (2)           Upon
        Lender's exercise of any right of acceleration under this Note, Borrower
        shall
        pay to Lender, in addition to the entire unpaid principal balance of this
        Note
        outstanding at the time of the acceleration, (i) all accrued interest and
        all
        other sums due Lender under this Note and the other Loan Documents, and
        (ii) the prepayment premium calculated pursuant to Schedule A.

      

      (3)           Any
        application by Lender of any collateral or other security to the repayment
        of
        any portion of the unpaid principal balance of this Note prior to the Maturity
        Date and in the absence of acceleration shall be deemed to be a partial
        prepayment by Borrower, requiring the payment to Lender by Borrower of a
        prepayment premium.

      

      (b)           Notwithstanding
        the provisions of Paragraph 10(a), no prepayment premium shall be payable
        (1)
        with respect to any prepayment occurring as a result of the application of
        any
        insurance proceeds or condemnation award under the Security Instrument, or
        (2)
        as provided in subparagraph (c) of Schedule A.

      

      (c)           Schedule
        A is hereby incorporated by reference into this Note.

      

      (d)           Any
        required prepayment of less than the entire unpaid principal balance of this
        Note shall not extend or postpone the due date of any subsequent monthly
        installments or change the amount of such installments, unless Lender agrees
        otherwise in writing.

      

      (e)           Borrower
        recognizes that any prepayment of the unpaid principal balance of this Note,
        whether voluntary or involuntary or resulting from a default by Borrower,
        will
        result in Lender's incurring loss, including reinvestment loss, additional
        expense and frustration or impairment of Lender's ability to meet its
        commitments to third parties.  Borrower agrees to pay to Lender upon
        demand damages for the detriment caused by any prepayment, and agrees that
        it is
        extremely difficult and impractical to ascertain the extent of such
        damages.  Borrower therefore acknowledges and agrees that the formula
        for calculating prepayment premiums set forth on Schedule A represents a
        reasonable estimate of the damages Lender will incur because of a
        prepayment.

      

      (f)           Borrower
        further acknowledges that the prepayment premium provisions of this Note
        are a
        material part of the consideration for the loan evidenced by this Note, and
        acknowledges that the terms of this Note are in other respects more favorable
        to
        Borrower as a result of the Borrower's voluntary agreement to the prepayment
        premium provisions.

      
         

        
          
            	
                    Multifamily Partial Interest Only Fixed Rate

                    Note
                      – Multistate

                  	
                    Form
                      4100-PIO

                  	
                     

                     

                  
	
                    Fannie
                      Mae

                  	
                    10-05

                  	
                    ©
                      2005 Fannie Mae

                  

        

      

      
        
          
          

        

        
          Page
            7

          
            

          

        

        
          
          

        

         

      

      11.           Costs
        and Expenses.  Borrower shall pay on demand all expenses and
        costs, including fees and out-of-pocket expenses of attorneys and expert
        witnesses and costs of investigation, incurred by Lender as a result of any
        default under this Note or in connection with efforts to collect any amount
        due
        under this Note, or to enforce the provisions of any of the other Loan
        Documents, including those incurred in post-judgment collection efforts and
        in
        any bankruptcy proceeding (including any action for relief from the automatic
        stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure
        proceeding.

      

      12.           Forbearance.  Any
        forbearance by Lender in exercising any right or remedy under this Note,
        the
        Security Instrument, or any other Loan Document or otherwise afforded by
        applicable law, shall not be a waiver of or preclude the exercise of that
        or any
        other right or remedy.  The acceptance by Lender of any payment after
        the due date of such payment, or in an amount which is less than the required
        payment, shall not be a waiver of Lender's right to require prompt payment
        when
        due of all other payments or to exercise any right or remedy with respect
        to any
        failure to make prompt payment.  Enforcement by Lender of any security
        for Borrower's obligations under this Note shall not constitute an election
        by
        Lender of remedies so as to preclude the exercise of any other right or remedy
        available to Lender.

      

      13.           Waivers.  Presentment,
        demand, notice of dishonor, protest, notice of acceleration, notice of intent
        to
        demand or accelerate payment or maturity, presentment for payment, notice
        of
        nonpayment, grace, and diligence in collecting the Indebtedness are waived
        by
        Borrower, Key Principal, and all endorsers and guarantors of this Note and
        all
        other third party obligors.

      

                     
        14.           Loan
        Charges.  Borrower agrees to pay an effective rate of
        interest equal to the sum of the Interest Rate provided for in this Note
        and any
        additional rate of interest resulting from any other charges of interest
        or in
        the nature of interest paid or to be paid in connection with the loan evidenced
        by this Note and any other fees or amounts to be paid by Borrower pursuant
        to
        any of the other Loan Documents.  Neither this Note nor any of the
        other Loan Documents shall be construed to create a contract for the use,
        forbearance or detention of money requiring payment of interest at a rate
        greater than the maximum interest rate permitted to be charged under applicable
        law.  If any applicable law limiting the amount of interest or other
        charges permitted to be collected from Borrower in connection with the
        Loan  is interpreted so that any interest or other charge provided for
        in any Loan Document, whether considered separately or together with other
        charges provided for in any other Loan Document, violates that law, and Borrower
        is entitled to the benefit of that law, that interest or charge is hereby
        reduced to the extent necessary to eliminate that violation.  The
        amounts, if any, previously paid to Lender in excess of the permitted amounts
        shall be applied by Lender to reduce the unpaid principal balance of this
        Note.  For the purpose of determining whether any applicable law
        limiting the amount of interest or other charges permitted to be collected
        from
        Borrower has been violated, all Indebtedness that constitutes interest, as
        well
        as all other charges made in connection with the Indebtedness that constitute
        interest, shall be deemed to be allocated and spread ratably over the stated
        term of the Note.  Unless otherwise required by applicable law, such
        allocation and spreading shall be effected in such a manner that the rate
        of
        interest so computed is uniform throughout the stated term of the
        Note.

      

      15.           Commercial
        Purpose.  Borrower represents that the Indebtedness is being
        incurred by Borrower solely for the purpose of carrying on a business or
        commercial enterprise, and not for personal, family or household
        purposes.

      

      16.           Counting
        of Days.  Except where otherwise specifically provided, any
        reference in this Note to a period of "days" means calendar days, not Business
        Days.

       

      
        
          	
                  Multifamily Partial Interest Only Fixed Rate

                  Note
                    – Multistate

                	
                  Form
                    4100-PIO

                	
                   

                   

                
	
                  Fannie
                    Mae

                	
                  10-05

                	
                  ©
                    2005 Fannie Mae

                

        

      

      
        
          
          

        

        
          Page
            8

          
            

          

        

        
          
          

        

         

      

      17.           Governing
        Law.  This Note shall be governed by the law of the
        jurisdiction in which the Land is located.

      

      18.           Captions.  The
        captions of
        the paragraphs of this Note are for convenience only and shall be disregarded
        in
        construing this Note.

      

      19.           Notices.  All
        notices, demands and other communications required or permitted to be given
        by
        Lender to Borrower pursuant to this Note shall be given in accordance with
        Section 31 of the Security Instrument.

      

      20.           Consent
        to Jurisdiction and Venue.   Borrower and Key Principal
        each agrees that any controversy arising under or in relation to this Note
        shall
        be litigated exclusively in the Property Jurisdiction.  The state and
        federal courts and authorities with jurisdiction in the Property Jurisdiction
        shall have exclusive jurisdiction over all controversies which shall arise
        under
        or in relation to this Note.  Borrower and Key Principal each
        irrevocably consents to service, jurisdiction, and venue of such courts for
        any
        such litigation and waives any other venue to which it might be entitled
        by
        virtue of domicile, habitual residence or otherwise.

      

      21.           WAIVER
        OF TRIAL BY JURY.  BORROWER, KEY PRINCIPAL AND LENDER EACH (A) AGREES
        NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS
        NOTE
        OR THE RELATIONSHIP BETWEEN THE PARTIES, AS LENDER, KEY PRINCIPAL AND BORROWER,
        THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY
        WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR
        IN
        THE FUTURE.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN
        BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL
        COUNSEL.

      

      ATTACHED
        SCHEDULES.  The following Schedules are attached to this
        Note:

       

      
        	
                x

              	
                Schedule
                  A

              	
                Prepayment
                  Premium (required)

              
	 	 	 
	
                x

              	
                Schedule
                  B

              	
                Modifications
                  to Multifamily Note

              

      

      

      IN
        WITNESS WHEREOF,
        Borrower has signed and delivered this Note or has caused this Note to be
        signed
        and delivered by its duly authorized representative.

      

       

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK]

      
         

        
          
            	
                    Multifamily Partial Interest Only Fixed Rate

                    Note
                      – Multistate

                  	
                    Form
                      4100-PIO

                  	
                     

                     

                  
	
                    Fannie
                      Mae

                  	
                    10-05

                  	
                    ©
                      2005 Fannie Mae

                  

          

        

      

      
        
          
          

        

        
          Page
            9

          
            

          

        

        
          
          

        

         

      

      
        	 	
                BORROWER:

              
	 	 	 
	 	
                EMERICHIP
                  VOORHEES LLC, a Delaware limited liability
                  company

              
	 	 	 
	 	
                By:

              	
                Emeritus
                  Corporation, a Washington corporation, its sole member

              
	 	 	 
	 	 	 
	 	 	 
	 	 	
                By:
                  /s/ Eric Mendelsohn

              
	 	 	
                Eric
                  Mendelsohn

              
	 	 	
                Director
                  of Real Estate and Legal Affairs

              
	 	 	 
	 	  
	 	
                Borrower's
                  Social Security/Employer ID Number 

              

      

      
         

        
          
            	
                    Multifamily Partial Interest Only Fixed Rate

                    Note
                      – Multistate

                  	
                    Form
                      4100-PIO

                  	
                     

                     

                  
	
                    Fannie
                      Mae

                  	
                    10-05

                  	
                    ©
                      2005 Fannie Mae

                  

          

        

      

      
        
          
          

        

        
          Page
            10

          
            

          

        

        
          
          

        

      

      

      
        	 	
                PAY
                  TO THE ORDER OF CAPMARK FINANCE INC., WITHOUT RECOURSE. 

              
	 	 	 
	 	
                CAPMARK
                  BANK, a Utah industrial bank 

              
	 	 	 
	 	 	 
	 	 	 
	 	
                By:

              	
                /s/
                  Max W. Foore

              
	 	 	
                Max
                  W. Foore

              
	 	 	
                Limited
                  Signer

              

      

      
         

        
          
            	
                    Multifamily Partial Interest Only Fixed Rate

                    Note
                      – Multistate

                  	
                    Form
                      4100-PIO

                  	
                     

                     

                  
	
                    Fannie
                      Mae

                  	
                    10-05

                  	
                    ©
                      2005 Fannie Mae

                  

          

        

      

      
        
          
          

        

        
          Page
            11

          
            

          

        

        
          
          

        

      

       

      
        	 	
                PAY
                  TO THE ORDER OF FANNIE MAE, WITHOUT RECOURSE.

              
	 	 	 
	 	
                CAPMARK
                  FINANCE INC., a California corporation

              
	 	 	 
	 	 	 
	 	 	 
	 	
                By:

              	
                /s/
                  Max W. Foore

              
	 	 	
                Max
                  W. Foore

              
	 	 	
                Vice
                  President

              

      

      

      
        Fannie
          Mae Commitment Number:  851777

           

          
            
              	
                      Multifamily Partial Interest Only Fixed Rate

                      Note
                        – Multistate

                    	
                      Form
                        4100-PIO

                    	
                       

                       

                    
	
                      Fannie
                        Mae

                    	
                      10-05

                    	
                      ©
                        2005 Fannie Mae

                    

            

          

        

      

      
        
          
          

        

        
          Page
            12

          
            

          

        

        
          
          

        

      

       

      ACKNOWLEDGMENT
        AND AGREEMENT OF KEY PRINCIPAL TO

      PERSONAL
        LIABILITY FOR EXCEPTIONS TO NON-RECOURSE LIABILITY

      

      Key
        Principal, who has an economic
        interest in Borrower or who will otherwise obtain a material financial benefit
        from the Loan, hereby absolutely, unconditionally and irrevocably agrees
        to pay
        to Lender, or its assigns, on demand, all amounts for which Borrower is
        personally liable under Paragraph 9 of the Multifamily Note to which this
        Acknowledgment is attached (the "Note").  The
        obligations of Key Principal shall survive any foreclosure proceeding, any
        foreclosure sale, any delivery of any deed in lieu of foreclosure, and any
        release of record of the Security Instrument.  Lender may pursue its
        remedies against Key Principal without first exhausting its remedies against
        the
        Borrower or the Mortgaged Property. All capitalized terms used but not defined
        in this Acknowledgment shall have the meanings given to such terms in the
        Security Instrument.  As used in this Acknowledgment, the term "Key
        Principal" (each if more than one) shall mean only those individuals or entities
        that execute this Acknowledgment.

      

      The
        obligations of Key Principal shall
        be performed without demand by Lender and shall be unconditional irrespective
        of
        the genuineness, validity, or enforceability of the Note, or any other Loan
        Document, and without regard to any other circumstance which might otherwise
        constitute a legal or equitable discharge of a surety or a
        guarantor.  Key Principal hereby waives the benefit of all principles
        or provisions of law, which are or might be in conflict with the terms of
        this
        Acknowledgment, and agrees that Key Principal's obligations shall not be
        affected by any circumstances which might otherwise constitute a legal or
        equitable discharge of a surety or a guarantor.  Key Principal hereby
        waives the benefits of any right of discharge and all other rights under
        any and
        all statutes or other laws relating to guarantors or sureties, to the fullest
        extent permitted by law, diligence in collecting the Indebtedness, presentment,
        demand for payment, protest, all notices with respect to the Note including
        this
        Acknowledgment, which may be required by statute, rule of law or otherwise
        to
        preserve Lender's rights against Key Principal under this Acknowledgment,
        including notice of acceptance, notice of any amendment of the Loan Documents,
        notice of the occurrence of any default or Event of Default, notice of intent
        to
        accelerate, notice of acceleration, notice of dishonor, notice of foreclosure,
        notice of protest, notice of the incurring by Borrower of any obligation
        or
        indebtedness and all rights to require Lender to (a) proceed against Borrower,
        (b) proceed against any general partner of Borrower, (c) proceed against
        or
        exhaust any collateral held by Lender to secure the repayment of the
        Indebtedness, or (d) if Borrower is a partnership, pursue any other remedy
        it
        may have against Borrower, or any general partner of Borrower.

      

      At
        any time without notice to Key
        Principal, and without affecting the liability of Key Principal hereunder,
        (a)
        the time for payment of the principal of or interest on the Indebtedness
        may be
        extended or the Indebtedness may be renewed in whole or in part; (b) the
        time
        for Borrower's performance of or compliance with any covenant or agreement
        contained in the Note, or any other Loan Document, whether presently existing
        or
        hereinafter entered into, may be extended or such performance or compliance
        may
        be waived; (c) the maturity of the Indebtedness may be accelerated as provided
        in the Note or any other Loan Document; (d) the Note or any other Loan Document
        may be modified or amended by Lender and Borrower in any respect, including
        an
        increase in the principal amount; and (e) any security for the Indebtedness
        may
        be modified, exchanged, surrendered or otherwise dealt with or additional
        security may be pledged or mortgaged for the Indebtedness.

      

      Key
        Principal acknowledges that Key
        Principal has received a copy of the Note and all other Loan
        Documents.  Neither this Acknowledgment nor any of its provisions may
        be waived, modified, amended, discharged, or terminated except by an agreement
        in writing signed by the party against which the enforcement of the waiver,
        modification, amendment, discharge, or termination is sought, and then only
        to
        the extent set forth in that agreement.  Key Principal agrees to
        notify Lender (in the manner for giving notices provided in Section 31 of
        the
        Security Instrument) of any change of Key Principal's address within 10 Business
        Days after such change of address occurs.  Any notices to Key
        Principal shall be given in the manner provided in Section 31 of the Security
        Instrument.  Key Principal agrees to be bound by Paragraphs 20 and 21
        of the Note.

      
         

        
          
            	
                    Multifamily Partial Interest Only Fixed Rate

                    Note
                      – Multistate

                  	
                    Form
                      4100-PIO

                  	
                     

                     

                  
	
                    Fannie
                      Mae

                  	
                    10-05

                  	
                    ©
                      2005 Fannie Mae

                  

          

        

      

      
        
          
          

        

        
          Page
            13

          
            

          

        

        
          
          

        

         

      

      THIS
        ACKNOWLEDGMENT IS AN INSTRUMENT
        SEPARATE FROM, AND NOT A PART OF, THE NOTE.  BY SIGNING THIS
        ACKNOWLEDGMENT, KEY PRINCIPAL DOES NOT INTEND TO BECOME AN ACCOMMODATION
        PARTY
        TO, OR AN ENDORSER OF, THE NOTE.

      

      IN
        WITNESS WHEREOF,
        Key Principal has signed and delivered this Acknowledgment or has caused
        this
        Acknowledgment to be signed and delivered by its duly authorized
        representative.

      

       

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK]

      
         

        
          
            	
                    Multifamily Partial Interest Only Fixed Rate

                    Note
                      – Multistate

                  	
                    Form
                      4100-PIO

                  	
                     

                     

                  
	
                    Fannie
                      Mae

                  	
                    10-05

                  	
                    ©
                      2005 Fannie Mae

                  

          

        

      

      
        
          
          

        

        
          Page
            14

          
            

          

        

        
          
          

        

      

       

      
        	 	
                KEY
                  PRINCIPAL: 

              
	 	 	 
	 	
                EMERITUS
                  CORPORATION, a Washington corporation 

              
	 	 	 
	 	 	 
	 	 	 
	 	
                By:

              	
                /s/
                  Eric Mendelsohn

              
	 	 	
                Eric
                  Mendelsohn

              
	 	 	
                Director
                  of Real Estate and Legal Affairs

              
	 	 	 
	 	 	 
	 	
                Address:

              	
                 

              	
                3131
                  Elliott Avenue, Suite 500

              
	 	 	
                 

              	
                Seattle,
                  Washington 98121

              
	 	
                Social
                  Security/Employer ID No.: 

              

      

       

      
        
          	
                  Multifamily Partial Interest Only Fixed Rate

                  Note
                    – Multistate

                	
                  Form
                    4100-PIO

                	
                   

                   

                
	
                  Fannie
                    Mae

                	
                  10-05

                	
                  ©
                    2005 Fannie Mae

                

        

      

       

      
        
          
          

        

        
          Page
            15

          
            

          

        

        
          
          

        

      

      

      SCHEDULE
        A

      

      PREPAYMENT
        PREMIUM

      

      Any
        prepayment premium payable under Paragraph 10 of this Note shall be computed
        as
        follows:

      

      
        	
                 

              	
                (a)

              	
                If
                  the prepayment is made at any time after the date of this Note
                  and before
                  the Yield Maintenance Period End Date, the prepayment premium shall
                  be the
                  greater of:

              

      

      

      
        	
                 

              	
                (i)

              	
                1%
                  of the amount of principal being prepaid;
                  or

              

      

      

      
        	
                 

              	
                (ii)

              	
                The
                  product obtained by multiplying:

              

      

      

      
        	
                 

              	
                (A)
                  
                   

                  by

                

              	
                the
                  amount of principal being prepaid,

                 

                 

              

      

       

      
        	
                 

              	
                (B)

                 

                 

                 

              	
                the
                  difference obtained by subtracting from the Interest Rate on this
                  Note the
                  yield rate (the "Yield Rate") on the 4.500% U.S. Treasury
                  Security due May, 2017 (the "Specified U.S. Treasury
                  Security"), on the twenty-fifth Business Day preceding (x) the
                  Intended Prepayment Date, or (y) the date Lender accelerates the
                  Loan or
                  otherwise accepts a prepayment pursuant to Paragraph 10(a)(3) of
                  this
                  Note, as the Yield Rate is reported in The Wall Street
                  Journal,

              

      

      
         

        by

         

      

      
        	
                 

              	
                (C)

              	
                the
                  present value factor calculated using the following
                  formula:

              

      

      

      1
        - (1 +
        r)-n/12

      
        
          

        

      

      r

      

      [r
        =           Yield
        Rate

       n
        =           the number of
        months remaining between (1) either of the following: (x) in the case
        of a voluntary prepayment, the last calendar day of the calendar month during
        which the prepayment is made, or (y) in any other case, the date on which
        Lender accelerates the unpaid principal balance of this Note and (2) the
        Yield Maintenance Period End Date]

      

      In
        the
        event that no Yield Rate is published for the Specified U.S. Treasury Security,
        then the nearest equivalent non-callable U.S. Treasury Security having a
        maturity date closest to the Yield Maintenance Period End Date of this Note
        shall be selected at Lender's discretion.  If the publication of such
        Yield Rates in The Wall Street Journal is discontinued, Lender shall
        determine such Yield Rates from another source selected by Lender.

      
         

        
          
            	
                    Multifamily Partial Interest Only Fixed Rate

                    Note
                      – Multistate

                  	
                    Form
                      4100-PIO

                  	
                     

                     

                  
	
                    Fannie
                      Mae

                  	
                    10-05

                  	
                    ©
                      2005 Fannie Mae

                  

        

      

      
        
          
          

        

        
          Page
            A-1

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                (b)

              	
                If
                  the prepayment is made on or after the Yield Maintenance Period
                  End Date
                  but before the last calendar day of the 4th month prior to the
                  month in
                  which the Maturity Date occurs, the prepayment premium shall be
                  1% of the
                  amount of principal being prepaid.

              

      

      

      
        	
                 

              	
                (c)

              	
                Notwithstanding
                  the provisions of Paragraph 10(a) of this Note, no prepayment premium
                  shall be payable with respect to any prepayment made on or after
                  the last
                  calendar day of the 4th month prior to the month in which the Maturity
                  Date occurs.

              

      

      
         

        
          
            	
                    Multifamily Partial Interest Only Fixed Rate

                    Note
                      – Multistate

                  	
                    Form
                      4100-PIO

                  	
                     

                     

                  
	
                    Fannie
                      Mae

                  	
                    10-05

                  	
                    ©
                      2005 Fannie Mae

                  

          

        

      

      
        
          
          

        

        
          Page
            A-2

          
            

          

        

        
          
          

        

      

       

      SCHEDULE
        B

      

      MODIFICATIONS
        TO NOTE

      (Seniors
        Housing)

      

      

      The
        following modifications are made to the text of the Note that precedes this
        Schedule:

       

      
        	
                 

              	
                1.

              	
                Section
                  9(b)(3) of the Note is hereby amended to read as
                  follows:

              

      

       

      "Failure
        of Borrower to comply with Sections 14(d), 14(e), or 14(g) of the Instrument
        relating to the delivery of books and records, statements, schedules, and
        reports."

       

      
        	
                 

              	
                2.

              	
                Section
                  9(b) of the Note is hereby amended to delete the word "or" immediately
                  preceding paragraph (5) thereof and to insert a semi-colon in lieu
                  of the
                  period and the word "or", and add the following paragraph (6) at
                  the end
                  thereof:

              

      

       

      "or
        (6)
        Borrower's failure to cause the renewal, continuation, extension or maintenance
        of all Licenses required to legally operate the Mortgaged Property as a Seniors
        Housing Facility, as defined in the Instrument."

       

      
        	
                 

              	
                3.

              	
                All
                  capitalized terms used in this Schedule not specifically defined
                  herein
                  shall have the meanings set forth in the text of the Note that
                  precedes
                  this Schedule.

              

      

       

      
         

        
          
            	
                    Senior Housing Modifications to Note

                  	
                    Form
                      4186

                  	
                     

                  
	
                     

                  	
                    10-04

                  	
                    ©
                      2000-2004 Fannie Mae

                  

          

           

           

          Page
            B-1ex106801loanagreement.htm

    
      

      

    

    Loan
      No. 07-0004315

    
      

       

      

       

      

    

     

    $19,640,000

     

     

    CREDIT
      AGREEMENT

     

    Dated
      as
      of August 6, 2007

     

    among

     

    HC3
      FT.
      MYERS LLC, HC3 ORLANDO LLC

    and
      HC3
      SUNRISE LLC

    as
      Borrowers

     

    

     

    THE
      LENDERS PARTY HERETO

     

    and

     

    GENERAL
      ELECTRIC CAPITAL CORPORATION,

     

    as
      Administrative Agent and Collateral Agent

     

     

    ♦
♦
      ♦

     

    GE
      CAPITAL MARKETS, INC.,

     

    as
      Sole
      Lead Arranger

     

    
      

       

      

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	 	 	
              TABLE
                OF CONTENTS

            	 
	 	 	 	
              Page

            
	
              ARTICLE
                I Definitions, Interpretation and Accounting Terms

            	
              1

            
	 	
              Section
                1.1

            	
              Defined
                Terms

            	
              1

            
	 	
              Section
                1.2

            	
              UCC
                Terms

            	
              24

            
	 	
              Section
                1.3

            	
              Accounting
                Terms and Principles

            	
              24

            
	 	
              Section
                1.4

            	
              Payments.

            	
              24

            
	 	
              Section
                1.5

            	
              Interpretation.

            	
              25

            
	
              ARTICLE
                II The Facilities

            	
              25

            
	 	
              Section
                2.1

            	
              Term
                Loan Commitment, Borrowing Procedures and Escrow
                Requirement.

            	
              25

            
	 	
              Section
                2.2

            	
              Maturity
                Date and Repayment of Loans.

            	
              29

            
	 	
              Section
                2.3

            	
              Optional
                Prepayments.

            	
              29

            
	 	
              Section
                2.4

            	
              Mandatory
                Payments.

            	
              29

            
	 	
              Section
                2.5

            	
              Interest.

            	
              30

            
	 	
              Section
                2.6

            	
              Application
                of Payments.

            	
              30

            
	 	
              Section
                2.7

            	
              Payments
                and Computations.

            	
              31

            
	 	
              Section
                2.8

            	
              Evidence
                of Debt.

            	
              32

            
	 	
              Section
                2.9

            	
              Suspension
                of Eurodollar Rate.

            	
              34

            
	 	
              Section
                2.10

            	
              Breakage
                Costs; Increased Costs; Capital Requirements.

            	
              34

            
	 	
              Section
                2.11

            	
              Taxes.

            	
              35

            
	 	
              Section
                2.12

            	
              Substitution
                of Lenders.

            	
              37

            
	
              ARTICLE
                III Conditions To Loans

            	
              38

            
	 	
              Section
                3.1

            	
              Conditions
                Precedent to Funding.

            	
              38

            
	 	
              Section
                3.2

            	
              Determinations
                of Initial Borrowing Conditions.

            	
              42

            
	
              ARTICLE
                IV Representations and Warranties

            	
              42

            
	 	
              Section
                4.1

            	
              Corporate
                Existence; Compliance with Law.

            	
              42

            
	 	
              Section
                4.2

            	
              Loan
                and Related Documents.

            	
              44

            
	 	
              Section
                4.3

            	
              Ownership
                of the Borrowers

            	
              45

            
	 	
              Section
                4.4

            	
              Financial
                Statements

            	
              45

            
	 	
              Section
                4.5

            	
              Material
                Adverse Effect.

            	
              46

            

    

    
      
         

      

      
        i

        
          

        

      

      
         

      

    

    
      	 	 	
              TABLE
                OF CONTENTS

            	 
	 	 	
              (continued)

            	
              Page

            
	 	
              Section
                4.6

            	
              Solvency.

            	
              46

            
	 	
              Section
                4.7

            	
              Litigation.

            	
              46

            
	 	
              Section
                4.8

            	
              Taxes.

            	
              46

            
	 	
              Section
                4.9

            	
              Margin
                Regulations

            	
              47

            
	 	
              Section
                4.10

            	
              No
                Burdensome Obligations; No Defaults

            	
              47

            
	 	
              Section
                4.11

            	
              Single
                Purpose Entity

            	
              47

            
	 	
              Section
                4.12

            	
              Labor
                Matters

            	
              47

            
	 	
              Section
                4.13

            	
              ERISA

            	
              47

            
	 	
              Section
                4.14

            	
              Environmental
                Matters

            	
              48

            
	 	
              Section
                4.15

            	
              Intellectual
                Property

            	
              48

            
	 	
              Section
                4.16

            	
              Title;
                Real Property

            	
              48

            
	 	
              Section
                4.17

            	
              Full
                Disclosure

            	
              50

            
	 	
              Section
                4.18

            	
              Operation

            	
              50

            
	 	
              Section
                4.19

            	
              Estoppel
                Certificates

            	
              50

            
	
              ARTICLE
                V Financial Covenants

            	
              51

            
	 	
              Section
                5.1

            	
              Minimum
                Occupancy

            	
              51

            
	 	
              Section
                5.2

            	
              Minimum
                Consolidated Project Yield

            	
              51

            
	 	
              Section
                5.3

            	
              Debt
                Service Coverage Ratio.

            	
              51

            
	
              ARTICLE
                VI Reporting Covenants

            	
              51

            
	 	
              Section
                6.1

            	
              Financial
                Statements

            	
              51

            
	 	
              Section
                6.2

            	
              Other
                Events

            	
              54

            
	 	
              Section
                6.3

            	
              Copies
                of Notices and Reports

            	
              54

            
	 	
              Section
                6.4

            	
              Taxes

            	
              54

            
	 	
              Section
                6.5

            	
              Labor
                Matters

            	
              54

            
	 	
              Section
                6.6

            	
              ERISA
                Matters

            	
              55

            
	 	
              Section
                6.7

            	
              Environmental
                Matters

            	
              55

            
	 	
              Section
                6.8

            	
              Other
                Information

            	
              55

            
	
              ARTICLE
                VII Affirmative Covenants

            	
              55

            
	 	
              Section
                7.1

            	
              Maintenance
                of Corporate Existence

            	
              56

            
	 	
              Section
                7.2

            	
              Compliance
                with Laws and Healthcare Matters, Etc.

            	
              56

            
	 	
              Section
                7.3

            	
              Payment
                of Obligations

            	
              57

            
	 	
              Section
                7.4

            	
              Maintenance
                of Property

            	
              57

            

    

    
      
         

      

      
        ii

        
          

        

      

      
         

      

    

    
      	 	 	
              TABLE
                OF CONTENTS

            	 
	 	 	
              (continued)

            	
              Page

            
	 	
              Section
                7.5

            	
              Maintenance
                of Insurance

            	
              57

            
	 	
              Section
                7.6

            	
              Keeping
                of Books

            	
              59

            
	 	
              Section
                7.7

            	
              Access
                to Books and Property

            	
              59

            
	 	
              Section
                7.8

            	
              Environmental

            	
              59

            
	 	
              Section
                7.9

            	
              Use
                of Proceeds

            	
              60

            
	 	
              Section
                7.10

            	
              Additional
                Collateral, Subsidiaries and Further Assurances

            	
              60

            
	 	
              Section
                7.11

            	
              Reserved

            	
              61

            
	 	
              Section
                7.12

            	
              Interest
                Rate Contracts

            	
              61

            
	
              ARTICLE
                VIII Negative Covenants

            	
              61

            
	 	
              Section
                8.1

            	
              Indebtedness

            	
              61

            
	 	
              Section
                8.2

            	
              Liens

            	
              62

            
	 	
              Section
                8.3

            	
              Investments

            	
              62

            
	 	
              Section
                8.4

            	
              Transfers

            	
              62

            
	 	
              Section
                8.5

            	
              Restricted
                Payments

            	
              63

            
	 	
              Section
                8.6

            	
              Prepayment
                of Indebtedness

            	
              63

            
	 	
              Section
                8.7

            	
              Fundamental
                Changes

            	
              63

            
	 	
              Section
                8.8

            	
              Change
                in Nature of Business

            	
              64

            
	 	
              Section
                8.9

            	
              Transactions
                with Affiliates

            	
              64

            
	 	
              Section
                8.10

            	
              Third-Party
                Restrictions on Indebtedness, Liens, Investments or Restricted
                Payments

            	
              64

            
	 	
              Section
                8.11

            	
              Modification
                of Certain Documents

            	
              64

            
	 	
              Section
                8.12

            	
              Accounting
                Changes; Fiscal Year

            	
              65

            
	 	
              Section
                8.13

            	
              Margin
                Regulations

            	
              65

            
	 	
              Section
                8.14

            	
              Compliance
                with ERISA

            	
              65

            
	 	
              Section
                8.15

            	
              Hazardous
                Materials

            	
              65

            
	
              ARTICLE
                IX Events Of Default

            	
              65

            
	 	
              Section
                9.1

            	
              Definition

            	
              65

            
	 	
              Section
                9.2

            	
              Remedies

            	
              67

            
	
              ARTICLE
                X The Administrative Agent

            	
              68

            
	 	
              Section
                10.1

            	
              Appointment
                and Duties

            	
              68

            
	 	
              Section
                10.2

            	
              Binding
                Effect

            	
              69

            
	 	
              Section
                10.3

            	
              Use
                of Discretion

            	
              69

            

    

    
      
         

      

      
        iii

        
          

        

      

      
         

      

    

    
      	 	 	
              TABLE
                OF CONTENTS

            	 
	 	 	
              (continued)

            	
              Page

            
	 	
              Section
                10.4

            	
              Delegation
                of Rights and Duties

            	
              69

            
	 	
              Section
                10.5

            	
              Reliance
                and Liability

            	
              69

            
	 	
              Section
                10.6

            	
              Administrative
                Agent Individually

            	
              71

            
	 	
              Section
                10.7

            	
              Lender
                Credit Decision

            	
              71

            
	 	
              Section
                10.8

            	
              Expenses;
                Indemnities

            	
              71

            
	 	
              Section
                10.9

            	
              Resignation
                of Administrative Agent

            	
              72

            
	 	
              Section
                10.10

            	
              Release
                of Collateral

            	
              72

            
	 	
              Section
                10.11

            	
              Additional
                Secured Parties

            	
              73

            
	
              ARTICLE
                XI Miscellaneous

            	
              73

            
	 	
              Section
                11.1

            	
              Amendments,
                Waivers, Etc.

            	
              73

            
	 	
              Section
                11.2

            	
              Assignments
                and Participations; Binding Effect

            	
              75

            
	 	
              Section
                11.3

            	
              Costs
                and Expenses

            	
              78

            
	 	
              Section
                11.4

            	
              Indemnities

            	
              78

            
	 	
              Section
                11.5

            	
              Survival

            	
              79

            
	 	
              Section
                11.6

            	
              Limitation
                of Liability for Certain Damages

            	
              79

            
	 	
              Section
                11.7

            	
              Lender-Creditor
                Relationship

            	
              80

            
	 	
              Section
                11.8

            	
              Right
                of Setoff

            	
              80

            
	 	
              Section
                11.9

            	
              Sharing
                of Payments, Reinstatement Etc.

            	
              80

            
	 	
              Section
                11.10

            	
              Marshaling;
                Payments Set Aside

            	
              81

            
	 	
              Section
                11.11

            	
              Notices

            	
              81

            
	 	
              Section
                11.12

            	
              Electronic
                Transmissions

            	
              82

            
	 	
              Section
                11.13

            	
              Governing
                Law

            	
              83

            
	 	
              Section
                11.14

            	
              Jurisdiction

            	
              83

            
	 	
              Section
                11.15

            	
              Waiver
                of Jury Trial

            	
              84

            
	 	
              Section
                11.16

            	
              Severability

            	
              84

            
	 	
              Section
                11.17

            	
              Execution
                in Counterparts

            	
              84

            
	 	
              Section
                11.18

            	
              Entire
                Agreement

            	
              84

            
	 	
              Section
                11.19

            	
              Use
                of Name

            	
              85

            
	 	
              Section
                11.20

            	
              Non-Public
                Information; Confidentiality

            	
              85

            
	 	
              Section
                11.21

            	
              Patriot
                Act Notice

            	
              85

            
	 	
              Section
                11.22

            	
              Limitation
                of Liability

            	
              85

            

    

    
      
         

      

      
        iv

        
          

        

      

      
         

      

    

    
      	 	 	
              TABLE
                OF CONTENTS

            	 
	 	 	
              (continued)

            	
              Page

            
	
              ARTICLE
                XII post closing agreements

            	
              86

            
	 	
              Section
                12.1

            	
              Immediate
                Repairs

            	
              86

            
	 	
              Section
                12.2

            	
              Asbestos

            	
              86

            
	 	
              Section
                12.3

            	
              Radon

            	
              86

            
	 	
              Section
                12.4

            	
              Zoning.

            	
              86

            
	 	
              Section
                12.5

            	
              Opinion.

            	
              86

            
	 	
              Section
                12.6

            	
              Provider
                Agreements..

            	
              86

            

    

    
      
         

      

      
        v

        
          

        

      

      
         

      

    

    

      
        	 	 	
                SCHEDULES

              
	
                Schedule I

              	
                –

              	
                Commitments

              
	
                Schedule 2.1

              	
                –

              	
                Repairs,
                  Replacements and Improvements

              
	
                Schedule 4.2

              	
                –

              	
                Consents

              
	
                Schedule 4.3

              	
                –

              	
                Ownership
                  of the Borrowers

              
	
                Schedule 4.7

              	
                –

              	
                Litigation

              
	
                Schedule 4.12

              	
                –

              	
                Labor
                  Matters

              
	
                Schedule 4.13

              	
                –

              	
                List
                  of Plans

              
	
                Schedule 4.14

              	
                –

              	
                Environmental
                  Matters

              
	
                Schedule 4.16

              	
                –

              	
                Real
                  Property, Allocated Loan Amount and Beds

              
	
                Schedule 7.2

              	
                –

              	
                Provider
                  Agreements and Licenses

              
	
                Schedule 8.1

              	
                –

              	
                Existing
                  Indebtedness

              
	
                Schedule 8.2

              	
                –

              	
                Existing
                  Liens

              
	
                Schedule 8.3

              	
                –

              	
                Existing
                  Investments

              
	 	 	 
	 	 	 
	 	 	
                EXHIBITS

              
	
                Exhibit A

              	
                –

              	
                [Reserved]

              
	
                Exhibit B

              	
                –

              	
                Form
                  of Assignment

              
	
                Exhibit C

              	
                –

              	
                Form
                  of Compliance Certificate

              
	
                Exhibit D

              	
                –

              	
                Corporate
                  Chart

              
	
                Exhibit E

              	
                –

              	
                Form
                  of Note

              

      

      
        
           

        

        
          vi

          
            

          

        

        
           

        

      

     

    This
      CREDIT AGREEMENT, dated as of August 6, 2007, is entered into among HC3 FT.
      MYERS LLC, a Delaware limited liability company (“HC3 Ft. Myers”), HC3
      ORLANDO LLC, a Delaware limited liability company (“HC3 Orlando”) and HC3
      SUNRISE LLC, a Delaware limited liability company (“HC3 Sunrise”, and HC3
      Ft. Myers, HC3 Orlando and HC3 Sunrise collectively referred to herein as the
      “Borrowers”), the Lenders (as defined below), GENERAL ELECTRIC CAPITAL
      CORPORATION (“GE Capital”), as administrative agent and collateral agent
      for the Lenders (in such capacity, and together with its successors and
      permitted assigns, the
“Administrative
      Agent”) and GE CAPITAL MARKETS, INC., as sole lead
      arranger.

     

    WHEREAS,
      the Borrowers intend to purchase certain Real Property (as hereinafter defined)
      for the purpose of expanding their business;

     

    WHEREAS,
      the Borrowers desire to borrow funds from the Lenders to finance a portion
      of
      the purchase price of such Real Property; and

     

    WHEREAS,
      the Lenders have agreed to make such loans to the Borrowers pursuant to the
      terms and conditions herein.

     

    NOW,
      THEREFORE, in consideration of the promises and covenants
      contained in this Agreement, and for other good and valuable consideration,
      the
      receipt and sufficiency of which are hereby acknowledged, the parties covenant
      and agree as follows:

     

     

    ARTICLE
      I                                

     

     

    

     

     

    DEFINITIONS,
      INTERPRETATION AND ACCOUNTING TERMS

     

     

    Section
      1.1  Defined
      Terms

     

    As
      used
      in this Agreement, the following terms have the following meanings:

     

    “Acquisition”
      means the acquisition of each Facility and the assets related thereto of the
      Seller and its Subsidiaries to the extent such Facility is acquired pursuant
      to
      the terms of the Acquisition Agreement.

     

    “Acquisition
      Agreements” means collectively, that certain Option Exercise Letter revised
      August 2, 2007 from Seller to Emeritus concerning Pavilion at Crossing Point,
      that certain Option Exercise Letter revised August 2, 2007 from Seller to
      Emeritus concerning Springtree and that certain Option Exercise Letter revised
      August 2, 2007 from Seller to Emeritus concerning Park Club of Ft. Meyers
      together with the Amendments of Master Lease and Terminations of Master Lease
      and all other documents executed in connection therewith.

     

    “Administrative
      Agent” has the meaning specified in the preamble hereto.

     

    “Affected
      Lender” has the meaning specified in Section 2.12.

     

    “Affiliate”
      means, with respect to any Person, each officer, director, general partner
      or
      joint-venturer of such Person and any other Person that directly or indirectly
      controls, is controlled by, or is under common control with, such Person;
provided, however, that no Secured Party shall be an Affiliate of
      any Borrower.  For purpose of this definition, “control” means
      the

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    possession
      of either (a) the power to vote, or the beneficial ownership of, 10% or more
      of
      the Voting Interests of such Person or (b) the power to direct or cause the
      direction of the management and policies of such Person, whether by contract
      or
      otherwise.

     

    “Agreement”
      means this Credit Agreement.

     

    “Allocated
      Principal Amount” means, with respect to any Facility as of any date, the
      amount equal to the portion of the outstanding principal balance of the
      aggregate Term Loans allocated to such Facility.

     

    “Allocated
      Principal Amount Net Proceeds” has the meaning specified in Section
      8.4(e).

     

    “Applicable
      Margin” means
      1.5%.

    

    “Approved
      Fund” means, with respect to any Lender, any Person (other than a natural
      Person) that (a) is or will be engaged in making, purchasing, holding or
      otherwise investing in commercial loans and similar extensions of credit in
      the
      ordinary course of its business and (b) is advised or managed by (i) such
      Lender, (ii) any Affiliate of such Lender or (iii) any Person (other than an
      individual) or any Affiliate of any Person (other than an individual) that
      administers or manages such Lender.

     

    “Assignment”
      means an assignment agreement entered into by a Lender, as assignor, and any
      prospective assignee thereof and accepted by the Administrative Agent, in
      substantially the form of Exhibit B.

     

    “Assignment
      of Membership Interests” means that certain Assignment of Membership
      Interests (Security Agreement) dated as of the date hereof executed by Emeritus
      whereby Emeritus assigns and pledges all of the Equity Interests of the
      Borrowers to the Agent.

     

    “As-Built
      Survey” shall mean each of the following “as-built” surveys of the Real
      Property:

     

    (a)           that
      certain ALTA/ACSM Land Title Survey of the Park Club at Fort Myers Facility
      dated March 16, 1995 and last revised on April 12, 1999, showing all of the
      Improvements situated thereon, prepared by American Engineering Consultants,
      Inc. under International Land Services, Inc. Job Order No. 99-02-23.003, and
      bearing the certification of T. Alan Neal, Florida Professional Surveyor and
      Mapper No. 4656;

     

    (b)           that
      certain ALTA/ACSM Land Title Survey of the Pavilion at Crossing Pointe Facility
      dated November 18, 1998 and last revised February 1, 1999, showing all of the
      Improvements situated thereon, prepared by and bearing the certification of
      Earl
      N. Strom, Florida Professional Surveyor and Mapper No. 4462, under International
      Land Services, Inc. Job Order No. 98-10-50:007; and

     

    (c)           that
      certain survey of the Sunrise Facility dated April 18, 1995 and updated April
      10, 1996, showing all of the Improvements situated thereon, prepared by Miguel
      Espinosa Land Surveying, Inc. under Drawing No. 95-112, and bearing the
      certification of Miguel Espinosa, Florida Professional Land Surveyor No.
      5101.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    “Base
      Rate” means, at any time, a rate per annum equal to the higher of (a) the
      rate last quoted by The Wall Street Journal as the “base rate on corporate loans
      posted by at least 75% of the nation’s largest banks” in the United States or,
      if The Wall Street Journal ceases to quote such rate, the highest per annum
      interest rate published by the Federal Reserve Board in Federal Reserve
      Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime
      loan” rate or, if such rate is no longer quoted therein, any similar rate quoted
      therein (as determined by the Administrative Agent) or any similar release
      by
      the Federal Reserve Board (as determined by the Administrative Agent) and (b)
      the sum of 0.5% per annum and the Federal Funds Rate.

     

    “Benefit
      Plan” means any employee benefit plan as defined in Section 3(3) of ERISA
      (whether governed by the laws of the United States or otherwise) to which any
      Borrower incurs or reasonably could incur, or otherwise has or reasonably could
      have, any obligation or liability.

     

    “Borrowers”
      has the meaning specified in the preamble hereto.

     

    “Borrowers’
      Accountants” means KPMG LLP or other nationally-recognized independent
      registered certified public accountants acceptable to the Administrative
      Agent.

     

    “Business
      Day” means any day of the year that is not a Saturday, Sunday or a day on
      which banks are required or authorized to close in New York City and, when
      determined in connection with determinations in respect of any Eurodollar Rate
      or Eurodollar Rate Loan or any funding, Interest Period or payment of any
      Eurodollar Rate Loan, that is also a day on which dealings in Dollar deposits
      are carried on in the London interbank market.

     

    “Capital
      Expenditures” means, for any Person for any period, the aggregate of all
      expenditures, whether or not made through the incurrence of Indebtedness, by
      such Person and its Subsidiaries during such period for the acquisition, leasing
      (pursuant to a Capital Lease), construction, replacement, repair, substitution
      or improvement of fixed or capital assets or additions to equipment, in each
      case required to be capitalized under GAAP on a Consolidated balance sheet
      of
      such Person, excluding interest capitalized during construction.

     

    “Capital
      Improvement Holdback” has the meaning given such term in Section
      2.1(b)(i).

     

    “Capital
      Lease” means, with respect to any Person, any lease of, or other arrangement
      conveying the right to use, any property (whether real, personal or mixed)
      by
      such Person as lessee that has been or should be accounted for as a capital
      lease on a balance sheet of such Person prepared in accordance with
      GAAP.

     

    “Cash
      Equivalents” means (a) any readily-marketable securities (i) issued by,
      or directly, unconditionally and fully guaranteed or insured by the United
      States federal government or (ii) issued by any agency of the United States
      federal government the obligations of which are fully backed by the full faith
      and credit of the United States federal government, (b) any readily-marketable
      direct obligations issued by any other agency of the United States federal
      government, any state of the United States or any political subdivision of
      any
      such state or any public instrumentality thereof, in each case having a rating
      of at least “A-1” from S&P or at least “P-1” from Moody’s, (c) any
      commercial paper rated at least “A-1” by S&P or “P-1” by
      Moody’s and issued by any Person organized under the laws of any state of the
      United States, (d) any Dollar-denominated time deposit, insured certificate
      of
      deposit, overnight bank deposit or bankers’ acceptance issued or accepted by (i)
      any Lender or (ii) any commercial bank that is (A) organized

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    under
      the
      laws of the United States, any state thereof or the District of Columbia, (B)
      “adequately capitalized” (as defined in the regulations of its primary federal
      banking regulators) and (C) has Tier 1 capital (as defined in such regulations)
      in excess of $250,000,000 and (e) shares of any United States money market
      fund
      that (i) has substantially all of its assets invested continuously in the types
      of investments referred to in clause (a), (b), (c) or
(d) above with maturities as set forth in the
      proviso below, (ii) has net
      assets in excess of $500,000,000 and (iii) has obtained from either S&P or
      Moody’s the highest rating obtainable for money market funds in the United
      States; provided, however, that the maturities of all obligations
      specified in any of clauses (a), (b), (c) and (d)
      above shall not exceed 365 days.

     

    “CERCLA”
      means the United States Comprehensive Environmental Response, Compensation,
      and
      Liability Act (42 U.S.C. §§ 9601 et seq.).

     

    “Change
      of Control” means the occurrence of any of the following:  (a)
      Emeritus shall cease to own at least 51% and control legally and beneficially
      all of the economic and voting rights of each Borrower or (b) any Facility
      ceases to be managed or operated by a Qualified Manager.

     

    “Closing
      Date” means August 6, 2007.

     

    “Code”
      means the U.S. Internal Revenue Code of 1986.

     

    “Collateral”
      means all property and interests in property and proceeds thereof now owned
      or
      hereafter acquired by any Borrower and all Equity Interests of the Borrowers
      owned by Emeritus in or upon which a Lien is granted or purported to be granted
      or pledged or purported to be pledged pursuant to any Loan
      Document.

     

    “Commitment”
      means, with respect to each Lender, the commitment of such Lender to make Term
      Loans to the Borrowers on the Closing Date, which commitment is in the amount
      set forth opposite such Lender’s name on Schedule I under the
      caption “Commitment”, as amended to reflect Assignments and as such
      amount may be reduced pursuant to this Agreement.  The aggregate
      amount of the Commitments on the date hereof equals $19,640,000.

     

    “Compliance
      Certificate” means a certificate substantially in the form of
Exhibit C.

     

    “Consolidated”
      means, with respect to any Person, the accounts of such Person and its
      Subsidiaries consolidated in accordance with GAAP.

     

    “Consolidated
      Current Assets” means, at any date, the total Consolidated current assets of
      the Borrowers at such date other than cash, Cash Equivalents and any
      Indebtedness owing to the Borrowers.

     

    “Consolidated
      Current Liabilities” means, at any date, all liabilities of the Borrowers at
      such date that should be classified as current liabilities on a Consolidated
      balance sheet of the Borrowers; provided, however, that
“Consolidated Current Liabilities” shall exclude the principal amount of
      the Loans then outstanding.

     

    “Consolidated
      EBITDA” means, for any period, (a) the Consolidated Net Income of the
      Borrowers for such period plus (b) the sum of, in each case to the extent
      included in the

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    calculation
      of such Consolidated Net Income but without duplication, (i) any provision
      for United States federal income taxes or other taxes measured by net income,
      (ii) Consolidated Interest Expense,
      amortization of debt discount and
      commissions and other fees and charges associated with Indebtedness (except
      amortization and expenses related to the consummation of Term Loan on the
      Closing Date and the Related Transactions and the payment of all fees, costs
      and
      expenses associated with the foregoing), (iii) Consolidated Rent Expense, (iv)
      an amount equal to any Management Fee actually paid, (v) any loss from
      extraordinary items, (vi) any depreciation, depletion and amortization expense,
      (vii) any aggregate net loss on the Transfer of property (other than accounts
      (as defined under the applicable UCC) and inventory) outside the ordinary course
      of business and (viii) any other non-cash expenditure, charge or loss for
      such period (other than any non-cash expenditure, charge or loss relating to
      write-offs, write-downs or reserves with respect to accounts and inventory),
      including the amount of any compensation deduction as the result of any grant
      of
      Equity Interests or Equity Equivalents to employees, officers, directors or
      consultants and minus (c) the sum of, in each case to the extent included
      in the calculation of such Consolidated Net Income and without duplication,
      (i)
      any credit for United States federal income taxes or other taxes measured by
      net
      income, (ii) any interest income, (iii) a capital replacement reserve in an
      amount per annum equal to $350 per bed, (iv) management fees, which for the
      purposes of this definition shall be deemed to be an amount per annum equal
      to
      five percent (5%) of the aggregate total operating revenue generated from the
      Facilities, for the full twelve (12) month period immediately preceding the
      date
      of determination, (v) the value of any impact of definitive Medicare/Medicaid
      changes imposed by any Governmental Authority, as reasonably determined by
      the
      Administrative Agent, (vi) any gain from extraordinary items and any other
      non-recurring gain, (vii) any aggregate net gain from the Transfer of property
      (other than accounts (as defined in the applicable UCC) and inventory) out
      of
      the ordinary course of business by the Borrowers, (viii) any other non-cash
      gain, including any reversal of a charge referred to in clause (b)(viii)
      above by reason of a decrease in the value of any Equity Interest or Equity
      Equivalent, and (vi) any other cash payment in respect of expenditures, charges
      and losses that have been added to Consolidated EBITDA pursuant to clause
      (b)(viii) above in any prior period; provided, however, if the
      actual occupancy of all of the Facilities, taken as a whole, exceeds 95%,
      Consolidated EBITDA shall be proportionately reduced assuming an occupancy
      of
      95%.

     

    “Consolidated
      Interest Coverage Ratio” means, for any period, the ratio of (a)
      Consolidated EBITDA for such period to (b) Consolidated Interest Expense for
      such period.

     

    “Consolidated
      Interest Expense” means, for any period, (a) Consolidated total interest
      expense of the Borrowers for such period and including, in any event, (i)
      interest capitalized during such period and net costs under Interest Rate
      Contracts for such period and (ii) all fees, charges, commissions, discounts
      and
      other similar obligations (other than reimbursement obligations) with respect
      to
      letters of credit, bank guarantees, banker’s acceptances, surety bonds and
      performance bonds (whether or not matured) payable by such Person and its
      Subsidiaries during such period minus (b) the sum of (i) Consolidated net
      gains of the Borrowers under Interest Rate Contracts for such period and
      (ii) Consolidated interest income of the Borrowers for such
      period.

     

    “Consolidated
      Project Yield” means, for any period, the ratio of (a) Consolidated EBITDA
      for such period to (b) the Consolidated Total Debt for such period.

     

    
      
         

      

      
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    “Consolidated
      Net Income” means, for any period, the Consolidated net income (or loss) of
      the Borrowers for such period; provided, however, that the
      following shall be excluded:  (a) the net income of any other Person
      in which any Borrower has a joint interest with a third-party (which interest
      does not cause the net income of such other Person to be Consolidated into
      the
      net income of such Borrower), except to the extent of the amount of dividends
      or
      distributions paid to such Person, and (b) the net income of any other Person
      arising prior to such other Person becoming a Subsidiary of any Borrower or
      merging or consolidating into any Borrower.

     

    “Consolidated
      Rent Expense” means the Consolidated rent expense of the Borrowers for such
      period.

     

    “Consolidated
      Total Debt” of any Person means all Indebtedness of a type described in
clause(a), (b), (c)(i), (d) or (f) of
      the definition thereof and all Guaranty Obligations with respect to any such
      Indebtedness, in each case of such Person and its Subsidiaries on a Consolidated
      basis.

     

    “Constituent
      Documents” means, with respect to any Person, collectively and, in each
      case, together with any modification of any term thereof, (a) the articles
      of
      incorporation, certificate of incorporation, constitution or certificate of
      formation of such Person, (b) the bylaws, operating agreement or joint venture
      agreement of such Person, (c) any other constitutive, organizational or
      governing document of such Person, whether or not equivalent, and (d) any other
      document setting forth the manner of election or duties of the directors,
      officers or managing members of such Person or the designation, amount or
      relative rights, limitations and preferences of any Equity Interest of such
      Person.

     

    “Contractual
      Obligation” means with respect to any Person, any provision of any Security
      issued by such Person or of any document or undertaking to which such Person
      is
      a party or by which it or any of its property is bound or to which any of its
      property is subject, in each case, other than a Loan Document.

     

    “Copyrights”
      means all rights, title and interests (and all related IP Ancillary Rights)
      arising under any Requirement of Law in or relating to copyrights and all mask
      work, database and design rights, whether or not registered or published, all
      registrations and recordations thereof and all applications in connection
      therewith.

     

    “Corporate
      Chart” means a document in form reasonably acceptable to the Administrative
      Agent, and the form delivered to Administrative Agent prior to the date hereof
      and attached as Exhibit D hereto, setting forth, as of a date set forth therein,
      for each Person that is a Borrower, any Subsidiary of a Borrower, Emeritus
      and
      any direct or indirect Subsidiary of Emeritus that owns or holds any Equity
      Interest in any Borrower, (a) the full legal name of such Person, (b) the
      jurisdiction of organization and any organizational number and tax
      identification number of such Person, and (c) the number of shares or
      percentage, as the case may be, of each class of Equity Interests of such
      Person, and the authorized, number outstanding and number and percentage of
      such
      outstanding shares for each such class owned, directly or indirectly, by any
      Borrower, any Subsidiary of any Borrower, Emeritus or any direct or indirect
      Subsidiaries of Emeritus.

     

    “Customary
      Permitted Liens” means, with respect to any Person, any of the
      following:

     

    
      
         

      

      
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    (a)           Liens
      (i) with respect to the payment of taxes, assessments or other governmental
      charges or (ii) of suppliers, carriers, materialmen, warehousemen, workmen
      or
      mechanics and other similar Liens, in each case imposed by law or arising in
      the
      ordinary course of business, and, for each of the Liens in clauses (i)
      and (ii) above for amounts that are not yet due or that are being
      contested in good faith by appropriate proceedings diligently conducted and
      with
      respect to which, if being contested, adequate reserves or other appropriate
      provisions are maintained on the books of such Person in accordance with
      GAAP;

     

    (b)           Liens
      of a collection bank on items in the course of collection arising under Section
      4-208 of the UCC as in effect in the State of New York or any similar section
      under any applicable UCC or any similar Requirement of Law of any foreign
      jurisdiction;

     

    (c)           pledges
      or cash deposits made in the ordinary course of business (i) in connection
      with workers’ compensation, unemployment insurance or other types of social
      security benefits (other than any Lien imposed by ERISA), (ii) to secure
      the performance of bids, tenders, leases (other than Capital Leases) sales
      or
      other trade contracts (other than for the repayment of borrowed money) or
      (iii) made in lieu of, or to secure the performance of, surety, customs,
      reclamation or performance bonds (in each case not related to judgments or
      litigation);

     

    (d)           judgment
      liens (other than for the payment of taxes, assessments or other governmental
      charges) securing judgments and other proceedings not constituting an Event
      of
      Default under Section 9.1(e) and pledges or cash deposits made in
      lieu of, or to secure the performance of, judgment or appeal bonds in respect
      of
      such judgments and proceedings;

     

    (e)           Liens
      (i) arising by reason of zoning restrictions, easements, licenses, reservations,
      restrictions, covenants, rights-of-way, encroachments, minor defects or
      irregularities in title (including leasehold title) and other similar
      encumbrances on the use of real property or (ii) consisting of leases, licenses
      or subleases granted by a lessor, licensor or sublessor on its property (in
      each
      case other than Capital Leases) otherwise permitted under
Section 8.4(b) that, for each such Liens, do not, in the aggregate,
      materially (x) impair the value or marketability of such real property or (y)
      interfere with the ordinary conduct of the business conducted and proposed
      to be
      conducted at such real property; and

     

    (f)           the
      title and interest of a lessor or sublessor in and to personal property leased
      or subleased (other than through a Capital Lease), in each case extending only
      to such personal property.

     

    “Debt
      Service” means for any fiscal period of any Person and its Subsidiaries on a
      Consolidated basis, an amount equal to the sum of (a) Consolidated Interest
      Expense for such period and (b) the scheduled amortization of any outstanding
      Indebtedness during such period.

     

    “Debt
      Service Coverage Ratio” means for any period, the ratio of Consolidated
      EBITDA to Debt Service.

     

    “Default”
      means any Event of Default and any event that, with the passing of time or
      the
      giving of notice or both, would become an Event of Default.

     

    
      
         

      

      
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    “Disclosure
      Documents” means, collectively, (a) all confidential information memoranda
      and related materials prepared in connection with the syndication of the
      Facilities and (b) all other documents filed by any Borrower with the United
      States Securities and Exchange Commission.

     

    “Dollars”
      and the sign “$” each mean the lawful money of the United States of
      America.

     

    “Domestic
      Person” means any “United States person” under and as defined in
      Section 770l(a)(30) of the Code.

     

    “Electronic
      Fax” means any system used to receive or transmit faxes
      electronically.

     

    “Electronic
      Signature” means the process of attaching to or logically associating with
      an Electronic Transmission an electronic symbol, encryption, digital signature
      or process (including the name or an abbreviation of the name of the party
      transmitting the Electronic Transmission) with the intent to sign, authenticate
      or accept such Electronic Transmission.

     

    “Electronic
      System” means any electronic system, including Intralinks® and
      any other
      Internet or extranet-based site, whether such electronic system is owned,
      operated or hosted by the Administrative Agent, any of its Related Persons
      or
      any other Person, providing for access to data protected by passcodes or other
      security system.

     

    “Electronic
      Transmission” means each document, instruction, authorization, file,
      information and any other communication transmitted, posted or otherwise made
      or
      communicated by electronic mail or Electronic Fax, or otherwise to or from
      an
      Electronic System or other equivalent service.

     

    “Emeritus”
      means Emeritus Corporation, a Washington corporation.

     

    “Environmental
      Indemnity” means one or more agreements pursuant to which Emeritus and the
      Borrowers provide an environmental indemnity, (i) recourse to Emeritus with
      such
      recourse limited to the top 10% of the Loan Amount ($1,964,000) and (ii) which
      indemnity is fully recourse to the Borrowers.

     

    “Environmental
      Laws” means all Requirements of Law and Permits imposing liability or
      standards of conduct for or relating to the regulation and protection of human
      health, safety, the environment and natural resources, including CERCLA, the
      SWDA, the Hazardous Materials Transportation Act (49 U.S.C. §§ 5101 et seq.),
      the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §§ 136 et
      seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.), the Clean
      Air Act (42 U.S.C. §§ 7401 et seq.), the Federal Water Pollution Control Act (33
      U.S.C. §§ 1251 et seq.), the Occupational Safety and Health Act (29 U.S.C. §§
651 et seq.), the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et seq.),
      all regulations promulgated under any of the foregoing, all analogous
      Requirements of Law and Permits and any environmental transfer of ownership
      notification or approval statutes, including the Industrial Site Recovery Act
      (N.J. Stat. Ann. §§ 13:1K-6 et seq.).

     

    “Environmental
      Liabilities” means all Liabilities (including costs of Remedial Actions,
      natural resource damages and costs and expenses of investigation and feasibility
      studies) that may be imposed on, incurred by or asserted against any Borrower
      as
      a result of, or related to, any claim, suit, action, investigation, proceeding
      or demand by any Person, whether based in contract,

     

    
      
         

      

      
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    tort,
      implied or express warranty, strict liability, criminal or civil statute or
      common law or otherwise, arising under any Environmental Law or in connection
      with any Release and resulting from the ownership, lease, sublease or other
      operation or occupation of property by any Borrower, whether on, prior or after
      the date hereof.

     

    “Equity
      Equivalents” means all securities convertible into or exchangeable for any
      Equity Interest or any other Equity Equivalent and all warrants, options or
      other rights to purchase, subscribe for or otherwise acquire any Equity Interest
      or any other Equity Equivalent, whether or not presently convertible,
      exchangeable or exercisable.

     

    “Equity
      Interest” means all shares of capital stock (whether denominated as common
      stock or preferred stock), equity interests, beneficial, partnership or
      membership interests, joint venture interests, participations or other ownership
      or profit interests in or equivalents (regardless of how designated) of or
      in a
      Person (other than an individual), whether voting or non-voting.

     

    “ERISA”
      means the United States Employee Retirement Income Security Act of
      1974.

     

    “ERISA
      Affiliate” means, collectively, any Borrower, and any Person under common
      control, or treated as a single employer, with any Borrower, within the meaning
      of Section 414(b), (c), (m) or (o) of the Code.

     

    “ERISA
      Event” means any of the following:  (a) a reportable event
      described in Section 4043(b) of ERISA (or, unless the 30-day notice
      requirement has been duly waived under the applicable regulations, Section
      4043(c) of ERISA) with respect to a Title IV Plan, (b) the withdrawal of
      any ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA during
      a plan year in which it was a substantial employer, as defined in Section
      4001(a)(2) of ERISA, (c) the complete or partial withdrawal of any ERISA
      Affiliate from any Multiemployer Plan, (d) with respect to any
      Multiemployer Plan, the filing of a notice of reorganization, insolvency or
      termination (or treatment of a plan amendment as termination) under Section
      4041A of ERISA, (e) the filing of a notice of intent to terminate a Title IV
      Plan (or treatment of a plan amendment as termination) under Section 4041 of
      ERISA, (f) the institution of proceedings to terminate a Title IV Plan or
      Multiemployer Plan by the PBGC, (g) the failure to make any required
      contribution to any Title IV Plan or Multiemployer Plan when due, (h) the
      imposition of a lien under Section 412 of the Code or Section 302 or 4068 of
      ERISA on any property (or rights to property, whether real or personal) of
      any
      ERISA Affiliate, (i) the failure of a Benefit Plan or any trust thereunder
      intended to qualify for tax exempt status under Section 401 or 501 of the Code
      or other Requirements of Law to qualify thereunder and (j) any other event
      or
      condition that might reasonably be expected to constitute grounds under Section
      4042 of ERISA for the termination of, or the appointment of a trustee to
      administer, any Title IV Plan or Multiemployer Plan or for the imposition of
      any
      liability upon any ERISA Affiliate under Title IV of ERISA other than for PBGC
      premiums due but not delinquent.

     

    “Eurodollar
      Base Rate” means, for any Interest Period, a fluctuating rate of interest
      equal to the rate per annum equal to the British Bankers Association LIBOR
      Rate
      with a one month term, published by Reuters for each banking day at
      approximately 11:00 a.m. London time two (2) Business Days prior to the first
      day of such Interest Period, for Dollar deposits (for delivery on the first
      day
      of such interest period).  If such rate is not available at such time
      for any reason, then the rate for that interest period will be determined by
      such alternate method as reasonably selected by the Administrative
      Agent.  In the event that such rate is not published by Reuters
      at

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    such
      time, the “Eurodollar Base Rate” shall be determined by reference to such
      other comparable publicly available service for displaying the such rate and,
      in
      the absence of availability, such other method to determine such offered rate
      as
      may be selected by the Administrative Agent in its sole discretion.

     

    “Eurodollar
      Rate” means, with respect to any Interest Period for any Eurodollar Rate
      Loan, an interest rate per annum determined as the ratio of (a) the Eurodollar
      Base Rate with respect to such Interest Period for such Eurodollar Rate Loan
      to
      (b) the difference between the number one and the Eurodollar Reserve
      Requirements with respect to such Interest Period and for such Eurodollar Rate
      Loan.

     

    “Eurodollar
      Rate Loan” means any Loan that bears interest based on the Eurodollar
      Rate.

     

    “Eurodollar
      Reserve Requirements” means, with respect to any Interest Period and for any
      Eurodollar Rate Loan, a rate per annum equal to the aggregate, without
      duplication, of the maximum rates (expressed as a decimal number) of reserve
      requirements in effect 2 Business Days prior to the first day of such Interest
      Period (including basic, supplemental, marginal and emergency reserves) under
      any regulations of the Federal Reserve Board or other Governmental Authority
      having jurisdiction with respect thereto dealing with reserve requirements
      prescribed for eurocurrency funding (currently referred to as “eurocurrency
      liabilities” in Regulation D of the Federal Reserve Board) maintained by a
      member bank of the United States Federal Reserve System.

     

    “Event
      of Default” has the meaning specified in
Section 9.1.

     

    “Facilities”
      means, collectively, all long term care facilities, nursing homes,
      rehabilitation facilities, assisted living facilities, independent living
      facilities, hospice facilities or other healthcare facilities owned and operated
      by any Borrower, as listed on Schedule 4.16 hereto.

     

    “Federal
      Funds Rate” means, for any period, a fluctuating interest rate per annum
      equal for each day during such period to the weighted average of the rates
      on
      overnight federal funds transactions with members of the Federal Reserve System
      arranged by federal funds brokers, as determined by the Administrative Agent
      in
      its sole discretion.

     

    “Federal
      Reserve Board” means the Board of Governors of the United States Federal
      Reserve System and any successor thereto.

     

    “Financial
      Statement” means each financial statement delivered pursuant to
Section 4.4 or 6.1.

     

    “Fiscal
      Quarter” means each 3 calendar month period ending on March 31, June 30,
      September 30 or December 31.

     

    “Fiscal
      Year” means the twelve month period ending on December 31.

     

    “GAAP”
      means generally accepted accounting principles in the United States of America,
      as in effect from time to time, set forth in the opinions and pronouncements
      of
      the Accounting Principles Board and the American Institute of Certified Public
      Accountants, in the statements and pronouncements of the Financial Accounting
      Standards Board and in such other

     

    
      
         

      

      
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    statements
      by such other entity as may be in general use by significant segments of the
      accounting profession that are applicable to the circumstances as of the date
      of
      determination.  Subject to Section 1.3, all references to
“GAAP” shall be to GAAP applied consistently with the principles used
      in
      the preparation of the Financial Statements described in
Section 4.4(a).

     

    “GE
      Capital” has the meaning specified in the preamble hereto.

     

    “Governmental
      Authority” means any nation, sovereign or government, any state or other
      political subdivision thereof, any agency, authority or instrumentality thereof
      and any entity or authority lawfully exercising executive, legislative, taxing,
      judicial, regulatory or administrative functions of or pertaining to government,
      including any central bank, stock exchange, regulatory body, arbitrator, public
      sector entity, supra-national entity (including the European Union and the
      European Central Bank) and any self-regulatory organization (including the
      National Association of Insurance Commissioners).

     

    “Guaranty”
      means that certain Guaranty Agreement, dated as of August 6, 2007, between
      Emeritus and Administrative Agent, as it may be amended, restated or modified
      from time to time.

     

    “Guaranty
      Obligation” means, as applied to any Person, any direct or indirect
      liability, contingent or otherwise, of such Person for any Indebtedness, lease,
      dividend or other obligation (the “primary obligation”) of another Person
      (the “primary obligor”), if the purpose or intent of such Person in
      incurring such liability, or the economic effect thereof, is to guarantee such
      primary obligation or provide support, assurance or comfort to the holder of
      such primary obligation or to protect or indemnify such holder against loss
      with
      respect to such primary obligation, including (a) the direct or indirect
      guaranty, endorsement (other than for collection or deposit in the ordinary
      course of business), co-making, discounting with recourse or sale with recourse
      by such Person of any primary obligation, (b) the incurrence of reimbursement
      obligations with respect to any letter of credit or bank guarantee in support
      of
      any primary obligation, (c) the existence of any Lien, or any right, contingent
      or otherwise, to receive a Lien, on the property of such Person securing any
      part of any primary obligation and (d) any liability of such Person for a
      primary obligation through any Contractual Obligation (contingent or otherwise)
      or other arrangement (i) to purchase, repurchase or otherwise acquire such
      primary obligation or any security therefor or to provide funds for the payment
      or discharge of such primary obligation (whether in the form of a loan, advance,
      stock purchase, capital contribution or otherwise), (ii) to maintain the
      solvency, working capital, equity capital or any balance sheet item, level
      of
      income or cash flow, liquidity or financial condition of any primary obligor,
      (iii) to make take-or-pay or similar payments, if required, regardless of
      non-performance by any other party to any Contractual Obligation, (iv) to
      purchase, sell or lease (as lessor or lessee) any property, or to purchase
      or
      sell services, primarily for the purpose of enabling the primary obligor to
      satisfy such primary obligation or to protect the holder of such primary
      obligation against loss or (v) to supply funds to or in any other manner invest
      in, such primary obligor (including to pay for property or services irrespective
      of whether such property is received or such services are rendered);
provided, however, that “Guaranty Obligations” shall not
      include (x) endorsements for collection or deposit in the ordinary course of
      business and (y) product warranties given in the ordinary course of
      business.  The outstanding amount of any Guaranty Obligation shall
      equal the outstanding amount of the primary obligation so guaranteed or
      otherwise supported or, if lower, the stated maximum amount for which such
      Person may be liable under such Guaranty Obligation.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    “Hazardous
      Material” means any substance, material or waste that is classified,
      regulated or otherwise characterized under any Environmental Law as hazardous,
      toxic, a contaminant or a pollutant or by other words of similar meaning or
      regulatory effect, including petroleum or any fraction thereof, asbestos,
      polychlorinated biphenyls and radioactive substances.

     

    “HC3
      Ft. Myers” has the meaning specified in the preamble hereto.

     

    “HC3
      Orlando” has the meaning specified in the preamble hereto.

     

    “HC3
      Sunrise” has the meaning specified in the preamble hereto.

     

    “Healthcare
      Laws” has the meaning specified in Section 7.2.

     

    “Hedging
      Agreement” means any Interest Rate Contract, foreign exchange, swap, option
      or forward contract, spot, cap, floor or collar transaction, any other
      derivative instrument and any other similar speculative transaction and any
      other similar agreement or arrangement designed to alter the risks of any Person
      arising from fluctuations in any underlying variable.

     

    “HIPAA”
      has the meaning specified in Section 7.2.

     

    “HIPAA
      Compliance Date” has the meaning specified in Section
      7.2.

     

    “HIPAA
      Compliance Plan” has the meaning specified in Section
      7.2.

     

    “HIPAA
      Compliant” has the meaning specified in Section 7.2.

     

    “Income
      Threshold Date” means the first date after the Closing Date ending any
      Fiscal Quarter on which the Consolidated Net Income for the four Fiscal Quarter
      period then ended equals or exceeds $1,800,000.

     

    “Indebtedness”
      of any Person means, without duplication, any of the following, whether or
      not
      matured:  (a) all indebtedness for borrowed money, (b) all obligations
      evidenced by notes, bonds, debentures or similar instruments, (c) all
      reimbursement and all obligations with respect to (i) letters of credit, bank
      guarantees or bankers’ acceptances or (ii) surety, customs, reclamation or
      performance bonds (in each case not related to judgments or litigation) other
      than those entered into in the ordinary course of business, (d) all obligations
      to pay the deferred purchase price of property or services, other than trade
      payables incurred in the ordinary course of business, (e) all obligations
      created or arising under any conditional sale or other title retention
      agreement, regardless of whether the rights and remedies of the seller or lender
      under such agreement in the event of default are limited to repossession or
      sale
      of such property, (f) all obligations, whether or not contingent, to purchase,
      redeem, retire, defease or otherwise acquire for value any of its own Equity
      Interests or Equity Equivalents (or any Equity Interest or Equity Equivalent
      of
      a direct or indirect parent entity thereof) prior to the date that is 180 days
      after the Scheduled Maturity Date, valued at, in the case of redeemable
      preferred Equity Interest, the greater of the voluntary liquidation preference
      and the involuntary liquidation preference of such Equity Interest plus accrued
      and unpaid dividends, (g) all payments that would be required to be made in
      respect of any Hedging Agreement in the event of a termination (including an
      early termination) on the date of determination and (h) all Guaranty Obligations
      for obligations of any other Person constituting Indebtedness of such other
      Person; provided, however, that the items in each of clauses
      (a)

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    through
      (h) above shall constitute “Indebtedness” of such Person solely to
      the extent, directly or indirectly, (x) such Person is liable for any part
      of
      any such item, (y) any such item is secured by a Lien on such Person’s property
      or (z) any other Person has a right, contingent or otherwise, to cause such
      Person to become liable for any part of any such item or to grant such a
      Lien.

     

    “Indemnified
      Matter” has the meaning specified in Section 11.4.

     

    “Indemnitee”
      has the meaning specified in Section 11.4.

     

    “Independent
      Manager”, or “Independent Member” shall mean a Person who is not and
      will not be while serving and has never been (i) a member, Partner, Equity
      Interest holder, manager, director, employee, attorney, or counsel of any
      Borrower or its Affiliates, (ii) a customer, supplier or other Person who
      derives more than 1% of its purchases or revenues from its activities with
      any
      Borrower or its Affiliates, (iii) a direct or indirect legal or beneficial
      owner in such entity or any of its Affiliates, (iv) a member of the
      immediate family of any member, manager, employee, attorney, customer, supplier
      or other Person referred to above, or (v) a person Controlling or under the
      Common Control of anyone listed in (i) through
      (iv) above.  A Person that otherwise satisfies the foregoing
      shall not be disqualified from serving as an Independent Manager or Independent
      Member if such individual is at the time of initial appointment, or at any
      time
      while serving as such, is an Independent Manager or Independent Member, as
      applicable, of a Single Purpose Entity affiliated with any
      Borrower.  Additionally, a natural person who satisfies the foregoing
      definition other than clause (ii) above shall not be disqualified from serving
      as an Independent Manager or Independent Manager if such individual is an
      independent director, manager or member provided by a nationally-recognized
      company that provides professional independent directors, managers and members
      and that also provides other corporate services in the ordinary course of its
      business.  For the purpose of this definition, “Control” shall
      mean (i) the possession, directly or indirectly, of the power to direct or
      cause
      the direction of the management and policies of a Person, whether through
      ownership of voting interests, by contract or otherwise and (ii) the ownership,
      direct or indirect, of no less than 51% of the voting interests of such Person,
      and the terms Controlled, Controlling and Common Control shall have correlative
      meanings.

     

    “Initial
      Projections” means those financial Projections, dated June 1, 2007, covering
      the Fiscal Years ending in 2007 through 2010 and delivered to the Administrative
      Agent by the Borrowers prior to the date hereof.

     

    “Intellectual
      Property” means all rights, title and interests in or relating to
      intellectual property and industrial property arising under any Requirement
      of
      Law and all IP Ancillary Rights relating thereto, including all Copyrights,
      Patents, Trademarks, Internet Domain Names, Trade Secrets and IP
      Licenses.

     

    “Interest
      Period” means, any of (a) the period commencing on the Closing Date and
      ending the last day of such month, (b) the period commencing on the first day
      of
      the month of the Scheduled Maturity Date and ending on the Scheduled Maturity
      Date, and (c) except for the periods described in clauses (a) and (b) above,
      any
      period prior to the Scheduled Maturity Date commencing on the first day of
      each
      month and ending on the last day of each month.  There shall be no
      Interest Periods following the Scheduled Maturity Date.

     

    
      
         

      

      
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    “Interest
      Rate Contracts” means all interest rate swap agreements, interest rate cap
      agreements, interest rate collar agreements and interest rate
      insurance.

     

    “Internet
      Domain Names” means all rights, title and interests (and all related IP
      Ancillary Rights) arising under any Requirement of Law in or relating to
      Internet domain names.

     

    “Investment”
      means, with respect to any Person, directly or indirectly, (a) to own, purchase
      or otherwise acquire, in each case whether beneficially or otherwise, any
      investment in, including any interest in, any Security of any other Person
      (other than any evidence of any Obligation), (b) to purchase or otherwise
      acquire, whether in one transaction or in a series of transactions, all or
      a
      significant part of the property of any other Person or a business conducted
      by
      any other Person or all or substantially all of the assets constituting the
      business of a division, branch, brand or other unit operation of any other
      Person, (c) to incur, or to remain liable under, any Guaranty Obligation for
      Indebtedness of any other Person, to assume the Indebtedness of any other Person
      or to make, hold, purchase or otherwise acquire, in each case directly or
      indirectly, any deposit, loan, advance, commitment to lend or advance, or other
      extension of credit (including by deferring or extending the date of, in each
      case outside the ordinary course of business, the payment of the purchase price
      for Transfers of property or services to any other Person, to the extent such
      payment obligation constitutes Indebtedness of such other Person), excluding
      deposits with financial institutions available for withdrawal on demand, prepaid
      expenses, accounts receivable and similar items created in the ordinary course
      of business, (d) to make, directly or indirectly, any contribution to the
      capital of any other Person or (e) to Transfer any property for less than fair
      market value (including a disposition of cash or Cash Equivalents in exchange
      for consideration of lesser value); provided, however, that such
      Investment shall be valued at the difference between the value of the
      consideration for such Transfer and the fair market value of the property
      Transferred.

     

    “IP
      Ancillary Rights” means, with respect to any other Intellectual Property, as
      applicable, all foreign counterparts to, and all divisionals, reversions,
      continuations, continuations-in-part, reissues, reexaminations, renewals and
      extensions of, such Intellectual Property and all income, royalties, proceeds
      and Liabilities at any time due or payable or asserted under or with respect
      to
      any of the foregoing or otherwise with respect to such Intellectual Property,
      including all rights to sue or recover at law or in equity for any past, present
      or future infringement, misappropriation, dilution, violation or other
      impairment thereof, and, in each case, all rights to obtain any other IP
      Ancillary Right.

     

    “IP
      License” means all Contractual Obligations (and all related IP Ancillary
      Rights), whether written or oral, granting any right title and interest in
      or
      relating to any Intellectual Property.

     

    “IRS”
      means the Internal Revenue Service of the United States and any successor
      thereto.

     

    “Leases”
      means all leases and subleases or similar document affecting the use, enjoyment
      or occupancy of the Real Property, including without limitation, resident care
      agreements and service agreements that include an occupancy agreement, whether
      now existing or hereafter arising.

     

    
      
         

      

      
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    “Lender”
      means any financial institution or other Person that (a) is listed on the
      signature pages hereof as a “Lender” or (b) from time to time becomes a
      party hereto by execution of an Assignment, in each case together with its
      successors.

     

    “Liabilities”
      means all claims, actions, suits, judgments, actual damages (not consequential
      damages), actual losses, liability, obligations, responsibilities, fines,
      penalties, sanctions, costs, fees, taxes, commissions, charges, disbursements
      and expenses, in each case of any kind or nature (including interest accrued
      thereon or as a result thereto and fees, charges and disbursements of financial,
      legal and other advisors and consultants), whether joint or several, whether
      or
      not indirect, contingent, consequential, actual, punitive, treble or
      otherwise.

     

    “Licenses”
      has the meaning specified in Section 7.2.

     

    “Lien”
      means any mortgage, deed of trust, pledge, hypothecation, assignment, charge,
      deposit arrangement, encumbrance, easement (or other Agreement granting rights
      or restricting the use of any Real Property or Facility), lien (statutory or
      other), security interest or other security arrangement and any other
      preference, priority or preferential arrangement of any kind or nature
      whatsoever, including any conditional sale contract or other title retention
      agreement, the interest of a lessor under a Capital Lease and any synthetic
      or
      other financing lease having substantially the same economic effect as any
      of
      the foregoing.

     

    “Loan”
      means any loan made or deemed made by any Lender hereunder.

     

    “Loan
      Documents” means, collectively, this Agreement, any Notes, the Security
      Agreement, the Assignment of Membership Interests, the Mortgages, the Secured
      Hedging Agreements, the Guaranty, Environmental Indemnities and, when executed,
      each document executed by a Borrower and delivered to the Administrative Agent,
      any Lender in connection with or pursuant to any of the foregoing or the
      Obligations, together with any modification of any term, or any waiver with
      respect to, any of the foregoing.

     

    “Management
      Agreement” means each property management agreement, dated on or before the
      date hereof, between the applicable Borrower, as owner, and Emeritus or a
      replacement Qualified Manager (or an interim manager with respect to any
      Facility acquired pursuant to a sale/leaseback or similar temporary
      arrangement), as manager, in form and substance reasonably acceptable to the
      Administrative Agent, as it may be amended, supplemented, restated or otherwise
      modified from time to time with the prior consent of the Administrative
      Agent.

     

    “Management
      Fee” means any and all fees, expenses and other monies due and payable
      (other than reimbursement of reasonable out-of-pocket third party expenses
      as
      contemplated by the applicable Management Agreement), from time to time, by
      any
      Borrower to the manager under the applicable Management Agreement, which shall
      not, in the aggregate, exceed 5% of the gross operating revenue of the
      Facilities per Fiscal Year.

     

    “Material
      Adverse Effect” means an effect that results in or causes, or could
      reasonably be expected to result in or cause, a material adverse change in
      any
      of (a) the condition (financial or otherwise), business, performance, prospects,
      operations or property of the Borrowers, taken as a whole, (b) the ability
      of
      any Borrower to perform its obligations in any material respect under any Loan
      Document and (c) the validity or enforceability of any Loan Document or the
      rights and

     

    
      
         

      

      
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    remedies
      of the Administrative Agent, the Lenders and the other Secured Parties under
      any
      Loan Document.

     

    “Material
      Environmental Liabilities” means Environmental Liabilities exceeding $12,500
      in the aggregate.

     

    “Maturity
      Date” means, subject to certain extension options set forth in Section
      2.2(b), the earlier to occur of (i) Scheduled Maturity Date, (ii) the date
      on which the Obligations otherwise become due as a result of acceleration of
      the
      Obligations as provided for under this Agreement or any other Loan Document,
      and
      (iii) the effective date of any earlier termination of this Agreement in
      accordance with its terms.

     

    “Moody’s”
      means Moody’s Investors Service, Inc.

     

    “Mortgage”
      means any mortgage, deed of trust or other document executed or required herein
      to be executed by any Borrower and granting a security interest over real
      property in favor of the Administrative Agent as security for the
      Obligations.

     

    “Mortgage
      Supporting Documents” means, with respect to any Mortgage for a parcel of
      real property, each document (including assignments of leases and rents,
      subordination agreements, title policies or marked-up unconditional insurance
      binders (in each case, together with copies of all documents referred to
      therein), maps, ALTA (or TLTA, if applicable), environmental assessments,
      As-Built Surveys, and evidence regarding recording and payment of fees,
      insurance premium and taxes) that the Administrative Agent may reasonably
      request, to create, register, perfect, maintain, evidence the existence,
      substance, form or validity of or enforce a valid lien on such parcel of real
      property in favor of the Administrative Agent for the benefit of the Secured
      Parties, subject only to such Liens as the Administrative Agent may
      approve.

     

    “Multiemployer
      Plan” means any multiemployer plan, as defined in Section 400l(a)(3) of
      ERISA, to which any ERISA Affiliate incurs or otherwise has any obligation
      or
      liability.

     

    “Net
      Cash Proceeds” means proceeds received in cash from any Transfer of, or
      Property Loss Event with respect to, any real or personal property, net of
      (a)
      actual third-party out-of-pocket costs, fees and expenses paid or required
      to be
      paid in connection therewith and (b) taxes paid or reasonably estimated to
      be
      payable as a result thereof .

     

    “Non-Funding
      Lender” has the meaning specified in
Section 2.1(a).

     

    “Non-U.S.
      Lender Party” means each of the Administrative Agent, each Lender, each SPV
      and each participant, in each case that is not a Domestic Person.

     

    “Note”
      means a promissory note of the Borrowers, in substantially the form of
Exhibit E, payable to the order of a Lender in a
      principal amount equal to the amount of such Lender’s Commitment.

     

    “Obligations”
      means, with respect to any Borrower, all amounts, obligations, liabilities,
      covenants and duties of every type and description owing by such Borrower to
      the
      Administrative Agent, any Lender, any other Indemnitee, any participant, any
      SPV
      or any Secured Hedging

     

    
      
         

      

      
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    Counterparty,
      arising out of, under, or in connection with, any Loan Document, whether direct
      or indirect (regardless of whether acquired by assignment), absolute or
      contingent, due or to become due, whether liquidated or not, now existing or
      hereafter arising and however acquired, and whether or not evidenced by any
      instrument or for the payment of money, including, without duplication, (a)
      if
      such Borrower is the Borrower, all Loans, (b) all interest, whether or not
      accruing after the filing of any petition in bankruptcy or after the
      commencement of any insolvency, reorganization or similar proceeding, and
      whether or not a claim for post-filing or post-petition interest is allowed
      in
      any such proceeding, and (c) all other fees, expenses (including fees, charges
      and disbursement of counsel), interest, commissions, charges, costs,
      disbursements, indemnities and reimbursement of amounts paid and other sums
      chargeable to such Borrower under any Loan Document.

     

    “Other
      Taxes” has the meaning specified in
Section 2.11(c).

     

    “Patents”
      means all rights, title and interests (and all related IP Ancillary Rights)
      arising under any Requirement of Law in or relating to letters patent and
      applications therefor.

     

    “PBGC”
      means the United States Pension Benefit Guaranty Corporation and any successor
      thereto.

     

    “Permit”
      means, with respect to any Person, any permit, approval, authorization, license,
      registration, certificate (including certificates of need and certificates
      of
      occupancy), concession, grant, franchise, variance or permission from, and
      any
      other Contractual Obligations with, any Governmental Authority, in each case
      whether or not having the force of law and applicable to or binding upon such
      Person or any of its property or to which such Person or any of its property
      is
      subject.

     

    “Permitted
      Investors” means Emeritus or any of its direct or indirect
      Subsidiaries.

     

    “Permitted
      Indebtedness” means any Indebtedness of any Borrower that is not prohibited
      by Section 8.1 or any other provision of any Loan
      Document.

     

    “Permitted
      Investment” means any Investment of any Borrower that is not prohibited by
Section 8.3 or any other provision of any Loan
      Document.

     

    “Permitted
      Lien” means any Lien on or with respect to the property of any Borrower that
      is not prohibited by Section 8.2 or any other provision of any Loan
      Document.

     

    “Permitted
      Refinancing” means Indebtedness constituting a refinancing or extension of
      Permitted Indebtedness that (a) has an aggregate outstanding principal amount
      not greater than the aggregate principal amount of such Permitted Indebtedness
      outstanding at the time of such refinancing or extension, (b) has a weighted
      average maturity (measured as of the date of such refinancing or extension)
      and
      maturity no shorter than that of such Permitted Indebtedness, (c) is not secured
      by any property or any Lien other than those securing such Permitted
      Indebtedness and (d) is otherwise on terms no less favorable to the Borrowers,
      taken as a whole, than those of such Permitted Indebtedness; provided,
however, that, notwithstanding the foregoing, (x) the terms of such
      Permitted Indebtedness may be modified as part of such Permitted Refinancing
      if
      such modification would have been permitted pursuant to Section 8.11
      and (y) no Guaranty Obligation for such Indebtedness shall constitute part
      of
      such Permitted Refinancing unless

     

    
      
         

      

      
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    similar
      Guaranty Obligations with respect to such Permitted Indebtedness existed and
      constituted Permitted Indebtedness prior to such refinancing or
      extension.

     

    “Permitted
      Reinvestment” means, with respect to the Net Cash Proceeds of any Transfer
      or Property Loss Event, to acquire (or make Capital Expenditures to finance
      the
      acquisition, repair, improvement or construction of), to the extent otherwise
      permitted hereunder, property useful in the business of any Borrower or, if
      such
      Property Loss Event involves loss or damage to property, to repair such loss
      or
      damage.

     

    “Person”
      means any individual, partnership, corporation (including a business trust
      and a
      public benefit corporation), joint stock company, estate, association, firm,
      enterprise, trust, limited liability company, unincorporated association, joint
      venture and any other entity or Governmental Authority.

     

    “Pro
      Forma Basis” means, with respect to any determination for any period and any
      Pro Forma Transaction, that such determination shall be made by giving pro
      forma effect to each such Pro Forma Transaction, as if each such Pro Forma
      Transaction had been consummated on the first day of such period, based on
      historical results accounted for in accordance with GAAP and, to the extent
      applicable, reasonable assumptions that are specified in detail in the relevant
      Compliance Certificate, Financial Statement or other document provided to the
      Administrative Agent or any Lender in connection herewith in accordance with
      Regulation S-X of the Securities Act of 1933.

     

    “Pro
      Forma Transaction” means any transaction consummated as part of the
      Acquisition, together with each other transaction relating thereto and
      consummated in connection therewith, including any incurrence or repayment
      of
      Indebtedness.

     

    “Projections”
      means, collectively, the Initial Projections and any document delivered pursuant
      to Section 6.1(f).

     

    “Property
      Loss Event” means, with respect to any property, any loss of or damage to
      such property or any taking of such property or condemnation
      thereof.

     

    “Pro
      Rata Outstandings”, of any Lender at any time, means the outstanding
      principal amount of the Term Loans owing to such Lender.

     

    “Pro
      Rata Share” means, with respect to any Lender at any time, the percentage
      obtained by dividing (a) the sum of the Commitments (or, if such Commitments
      are
      terminated, the Pro Rata Outstandings therein) of such Lender then in effect
      by
      (b) the sum of the Commitments (or, if such Commitments are terminated, the
      Pro
      Rata Outstandings therein) of all Lenders then in effect; provided,
however, that, if there are no Commitments and no Pro Rata Outstandings,
      such Lender’s Pro Rata Share shall be determined based on the Pro Rata Share
      most recently in effect, after giving effect to any subsequent assignment and
      any subsequent non-pro rata payments of any Lender pursuant to
Section 2.12.

     

    “Qualified
      Manager” means a reputable and experienced professional management
      organization that (a) manages, together with its affiliates, at least ten (10)
      senior housing facilities and with no less than an aggregate of 1500 units
      in
      such senior housing facilities of similar quality to the applicable Facility
      in
      the State in which the applicable Facility is located and (b) is approved by
      the
      Lenders in accordance with their reasonable standards with respect to
      (i)

     

    
      
         

      

      
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    previous
      relationships between such Lender and the proposed manager and its principals,
      (ii) the reputation for integrity, honesty and veracity of the proposed manager
      and its principals, owners, officers and directors, and (ii) OFAC,
      money-laundering, anti-terrorism, SEC, healthcare laws and regulations, and
      other similar regulations and activities, which approval shall not be
      unreasonably withheld, conditioned or delayed (provided that the Borrowers
      provide timely information reasonably requested by Lenders with respect to
      such
      proposed manager), it being understood that Emeritus shall be deemed to be
      a
      Qualified Manager.

     

    “Real
      Property” means any “property” (including improvements thereon) subject to,
      and described in, a Mortgage from any Borrower in favor of the Administrative
      Agent.

     

    “Register”
      has the meaning specified in Section 2.8(b).

     

    “Reinvestment
      Prepayment Amount” means, with respect to any Net Cash Proceeds on the
      Reinvestment Prepayment Date therefor, the amount of such Net Cash Proceeds
      less any amount paid or required to be paid by any Borrower to make
      Permitted Reinvestments with such Net Cash Proceeds pursuant to a Contractual
      Obligation entered into prior to such Reinvestment Prepayment Date with any
      Person that is not an Affiliate of any Borrower.

     

    “Reinvestment
      Prepayment Date” means, with respect to any portion of any Net Cash Proceeds
      of any Transfer or Property Loss Event, the earliest of (a) the 180th day after
      the
      completion of the portion of such Transfer or Property Loss Event corresponding
      to such Net Cash Proceeds, (b) the date that is 5 Business Days after the date
      on which any Borrower shall have notified the Administrative Agent of such
      Borrower’s determination not to make Permitted Reinvestments with such Net Cash
      Proceeds, (c) the occurrence of any Event of Default set forth in
Section 9.1(e)(ii) and (d) 5 Business Days after the delivery of a
      notice by the Administrative Agent to the Borrowers during the continuance
      of
      any other Event of Default.

     

    “Related
      Documents” means, collectively, the Acquisition Agreement, each document
      executed in connection with the Required Investors’ Equity Investment and each
      other document executed with respect to the foregoing.

     

    “Related
      Person” means, with respect to any Person, each Affiliate of such Person and
      each director, officer, employee, agent, trustee, representative, attorney,
      accountant and each insurance, environmental, legal, financial and other advisor
      (including those retained in connection with the satisfaction or attempted
      satisfaction of any condition set forth in Article III) and other
      consultants and agents of or to such Person or any of its Affiliates, together
      with, if such Person is the Administrative Agent, each other Person or
      individual designated, nominated or otherwise mandated by or helping the
      Administrative Agent pursuant to and in accordance with Section 10.4
      or any comparable provision of any Loan Document.

     

    “Related
      Transactions” means, collectively, the consummation of the Acquisition, the
      consummation of the Required Investors’ Equity Investment, the execution and
      delivery of all Related Documents and the payment of all related fees, costs
      and
      expenses.

     

    “Release”
      means any release, threatened release, spill, emission, leaking, pumping,
      pouring, emitting, emptying, escape, injection, deposit, disposal, discharge,
      dispersal, dumping, leaching or migration of Hazardous Material into or through
      the environment.

     

    
      
         

      

      
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    “Remedial
      Action” means all actions required to (a) clean up, remove, treat or in any
      other way address any Hazardous Material in the indoor or outdoor environment,
      (b) prevent or minimize any Release so that a Hazardous Material does not
      migrate or endanger or threaten to endanger public health or welfare or the
      indoor or outdoor environment or (c) perform pre-remedial studies and
      investigations and post-remedial monitoring and care with respect to any
      Hazardous Material.

     

    “Required
      Investors’ Equity Investment” means the cash equity contribution from the
      Permitted Investors and certain co-investors disclosed to the Administrative
      Agent and the Lenders to the Borrowers in Dollars in an aggregate amount equal
      to $5,157,347.

     

    “Required
      Lenders” means, at any time, Lenders having at such time in excess of
      66 2/3% of the aggregate Term Loan Commitments (or, if such Commitments are
      terminated, the Pro Rata Outstandings) then in effect, ignoring, in such
      calculation, the Commitments and Pro Rata Outstandings of any Non-Funding
      Lender.

     

    “Requirements
      of Law” means, with respect to any Person, collectively, the common law and
      all federal, state, local, foreign, multinational or international laws,
      statutes, codes, treaties, standards, rules and regulations, guidelines,
      ordinances, orders, judgments, writs, injunctions, decrees (including
      administrative or judicial precedents or authorities) and the interpretation
      or
      administration thereof by, and other determinations, directives, requirements
      or
      requests of, any Governmental Authority published or otherwise
      publicly-announced or of which Borrowers have received notice or have actual
      knowledge, in each case whether or not having the force of law and that are
      applicable to or binding upon such Person or any of its property or to which
      such Person or any of its property is subject.

     

    “Responsible
      Officer” means, with respect to any Person, any of the president, chief
      executive officer, treasurer, assistant treasurer, controller, managing member
      or general partner of such Person, or its member or general partner, or its
      member’s or general partner’s member or general partner, as the case may be,
      but, in any event, with respect to financial matters, any such natural person
      that is responsible for preparing and approving the Financial Statements
      delivered hereunder and, with respect to the Corporate Chart and other documents
      delivered pursuant to Section 6.1(e), documents delivered on the
      Closing Date and documents delivered pursuant to Section 7.10, the
      secretary or assistant secretary of such Person or any other such natural person
      responsible for maintaining the corporate and similar records of such
      Person.

     

    “Restricted
      Payment” means (a) any dividend, return of capital, distribution or any
      other payment or Transfer of property for less than fair market value, whether
      direct or indirect (including through the use of Hedging Agreements, the making,
      repayment, cancellation or forgiveness of Indebtedness and similar Contractual
      Obligations) and whether in cash, securities or other property, on account
      of
      any Equity Interest or Equity Equivalent of any Borrower, in each case now
      or
      hereafter outstanding, including with respect to a claim for rescission of
      a
      Transfer of such Equity Interest or Equity Equivalent and (b) any redemption,
      retirement, termination, defeasance, cancellation, purchase or other acquisition
      for value, whether direct or indirect (including through the use of Hedging
      Agreements, the making, repayment, cancellation or forgiveness of Indebtedness
      and similar Contractual Obligations), of any Equity Interest or Equity
      Equivalent of any Borrower, now or hereafter outstanding, and any payment or
      other transfer setting aside funds for any such redemption, retirement,
      termination, cancellation,

     

    
      
         

      

      
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    purchase
      or other acquisition, whether directly or indirectly and whether to a sinking
      fund, a similar fund or otherwise.

     

    “S&P”
      means Standard & Poor’s Rating Services.

     

    “Scheduled
      Maturity Date” means the 5th anniversary
      of the
      Closing Date.

     

    “Secondary
      Market Transactions” has the meaning specified in
Section 11.2(g).

     

    “Secured
      Hedging Agreement” means any Hedging Agreement that (a) has been entered
      into with a Secured Hedging Counterparty, (b) in the case of a Hedging Agreement
      not entered into with or provided or arranged by the Administrative Agent or
      an
      Affiliate of the Administrative Agent, is expressly identified as being a
“Secured Hedging Agreement” hereunder in a joint notice from any Borrower or
      Emeritus and such Person delivered to the Administrative Agent reasonably
      promptly after the execution of such Hedging Agreement and (c) meets the
      requirements of Section 8.1(d).

     

    “Secured
      Hedging Counterparty” means (a) a Person who has entered into a Hedging
      Agreement with any Borrower or Emeritus if such Hedging Agreement was provided
      or arranged by the Administrative Agent or an Affiliate of the Administrative
      Agent, and any assignee of such Person or (b) a Lender or an Affiliate of a
      Lender who has entered into a Hedging Agreement with any Borrower or Emeritus
      (or a Person who was a Lender or an Affiliate of a Lender at the time of
      execution and delivery of the Hedging Agreement).

     

    “Secured
      Parties” means the Lenders, the Administrative Agent, any Secured Hedging
      Party, each other Indemnitee and any other holder of any Obligation of any
      Borrower.

     

    “Security”
      means all Equity Interests, Equity Equivalents, voting trust certificates,
      bonds, debentures, instruments and other evidence of Indebtedness, whether
      or
      not secured, convertible or subordinated, all certificates of interest, share
      or
      participation in, all certificates for the acquisition of, and all warrants,
      options and other rights to acquire, any Security.

     

    “Security
      Agreement” means that certain Security Agreement, dated as of August 6,
      2007, among the Administrative Agent and each Borrower from time to time party
      thereto as it may be amended, restated or otherwise modified from time to
      time.

     

    “Security
      Documents” means, collectively, the Security Agreement, the Mortgages, the
      Assignment of Membership Interests and any other documents now or hereafter
      entered into securing the Obligations.

     

    “Seller”
      means, collectively, Health Care REIT, Inc., a Delaware corporation, and its
      Affiliates.

     

    “Single
      Purpose Entity” shall mean a Person, other than an individual, which
      (i) is formed or organized solely for the purpose of owning, holding,
      developing, using, operating and financing, directly a Facility, (ii) does
      not engage in any business unrelated to such Facility, (iii) has not and
      will not have any assets other than those related to its interest in such
      Facility, (iv) except if Consolidated with other Borrowers, maintains its
      own separate books and records and its own accounts, in each case, which are
      separate and apart from the books and records and

     

    
      
         

      

      
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    accounts
      of any other Person, (v) holds itself out as being a Person, separate and
      apart from any other Person, (vi) does not and will not commingle its funds
      or assets with those of any other Person, (vii) conducts its own business
      in its own name, (viii) except if Consolidated with other Borrowers,
      maintains separate financial statements, (ix) pays its own liabilities out
      of its own funds, (x) observes all limited liability company formalities,
      (xi) pays the salaries of its own employees, if any, and maintains a
      sufficient number of employees, if any, in light of its contemplated business
      operations, (xii) except as expressly permitted under the Loan Documents,
      or to the other Borrowers with respect to the Loan, does not guarantee or
      otherwise obligate itself with respect to the debts of any other Person (other
      than by endorsements of negotiable instruments for deposit or collection in
      the
      ordinary course of business) or hold out its credit as being available to
      satisfy the obligations of any other Person, (xiii) does not acquire
      obligations or securities of its partners, members or shareholders,
      (xiv) allocates fairly and reasonably shared expenses, including, without
      limitation, any overhead for shared office space, if any, (xv) uses
      separate stationery, invoices, and checks, (xvi) maintains an arm’s length
      relationship with its Affiliates, (xvii) other than pursuant to the Loan
      Documents does not and will not pledge its assets for the benefit of any other
      Person or make any loans or advances to any other Person, (xviii) does and
      will continue to use commercially reasonable efforts to correct any known
      misunderstanding regarding its separate identity, (xix) maintains adequate
      capital in light of its contemplated business operations; provided,
however, this provision shall not require any member of any Borrower,
      or
      any other party, to make any capital contributions to any Borrower, and
      (xx) has not and will not engage in, seek, or consent to the dissolution,
      winding up, liquidation, consolidation or merger and except as otherwise
      permitted in this Agreement, has not and will not engage in, seek or consent
      to
      any asset sale, transfer or partnership, membership or shareholder interests,
      or
      amendments of its Constituent Documents.  In addition, if such Person
      is a partnership, (1) all general partners of such Person shall be Single
      Purpose Entities (owning nothing other than its general partnership interests);
      and (2) if such Person has more than one general partner, then the
      Constituent Documents shall provide that such Person shall continue (and not
      dissolve) for so long as a solvent general partner exists.  In
      addition, the Constituent Documents of such Person shall provide that such
      Person without the unanimous consent of all of the partners, managers, directors
      or members, as applicable, shall not with respect to itself or to any other
      Person in which it has a direct or indirect legal or beneficial interest
      (A) seek or consent to the appointment of a receiver, liquidator, assignee,
      trustee, sequestrator, custodian or other similar official for the benefit
      of
      the creditors of such Person or all or any portion of such Person’s properties,
      (B) take any action that could reasonably be expected to cause such Person
      to become insolvent, petition or otherwise institute insolvency proceedings
      or
      otherwise seek any relief under any laws relating to the relief from debts
      or
      the protection of debtors generally, “or” (C) take any action that would cause
      such Person not to satisfy the requirements set forth herein for a Single
      Purpose Entity.

     

    “Solvent”
      means, with respect to any Person as of any date of determination, that, as
      of
      such date, (a) the value of the assets of such Person (both at fair value and
      present fair saleable value) is greater than the total amount of liabilities
      (including contingent and unliquidated liabilities) of such Person, (b) such
      Person is able to pay its aggregate liabilities of such Person, as such
      liabilities mature and (c) such Person does not have unreasonably small capital
      in light of its intended operations.  In computing the amount of
      contingent or unliquidated liabilities at any time, such liabilities shall
      be
      computed at the amount that, in light of all the facts and circumstances
      existing at such time, represents the amount that can reasonably be expected
      to
      become an actual or matured liability.

     

    
      
         

      

      
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    “SPV”
      means any special purpose funding vehicle identified as such in a writing by
      any
      Lender to the Administrative Agent.

     

    “Subordinated
      Debt” means any Indebtedness that is subordinated to the payment in full of
      the Obligations on terms and conditions satisfactory to the Administrative
      Agent.

     

    “Subsidiary”
      means, with respect to any Person, any corporation, partnership, joint venture,
      limited liability company, association or other entity, the management of which
      is, directly or indirectly, controlled by, or of which an aggregate of more
      than
      50% of the outstanding Voting Interest is, at the time, owned or controlled
      directly or indirectly by, such Person or one or more Subsidiaries of such
      Person.

     

    “Substitute
      Lender” has the meaning specified in
Section 2.12(a).

     

    “SWDA”
      means the Solid Waste Disposal Act (42 U.S.C. §§ 6901 et seq.).

     

    “Tax
      Affiliate” means, (a) any Borrower and (b) any Affiliate of any Borrower
      with which any Borrower files or is eligible to file consolidated, combined
      or
      unitary tax returns.

     

    “Tax
      Return” has the meaning specified in Section 4.8.

     

    “Taxes”
      has the meaning specified in Section 2.11(a).

     

    “Term
      Loan” has the meaning specified in Section 2.1(a).

     

    “Terrorism”
      has the meaning specified in Section 7.5(b).

     

    “Third-Party
      Payor Program” has the meaning specified in
Section 4.1(b).

     

    “Title
      IV Plan” means a pension plan subject to Title IV of ERISA, other than a
      Multiemployer Plan, to which any ERISA Affiliate incurs or otherwise has any
      obligation or liability.

     

    “Trademarks”
      means all rights, title and interests (and all related IP Ancillary Rights)
      arising under any Requirement of Law in or relating to trademarks, trade names,
      corporate names, company names, business names, fictitious business names,
      trade
      styles, service marks, logos and other source or business identifiers and,
      in
      each case, all goodwill associated therewith, all registrations and recordations
      thereof and all applications in connection therewith.

     

    “Trade
      Secrets” means all right, title and interest (and all related IP Ancillary
      Rights) arising under any Requirement of Law in or relating to trade
      secrets.

     

    “Transfer”
      means, with respect to any property, to sell, convey, transfer, assign, license,
      lease or otherwise dispose of, any interest therein or to permit any Person
      to
      acquire any such interest, including, in each case, through a sale, factoring
      at
      maturity, collection of or other disposal, with or without recourse, of any
      notes or accounts receivable.  Conjugated forms thereof and the noun
“Transfer” have correlative meanings.

     

    
      
         

      

      
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    “UCC”
      means the Uniform Commercial Code of any applicable jurisdiction and, if the
      applicable jurisdiction shall not have any Uniform Commercial Code, the Uniform
      Commercial Code as in effect in the State of New York.

     

    “United
      States” means the United States of America.

     

    “U.S.
      Lender Party” means each of the Administrative Agent, each Lender, each SPV
      and each participant, in each case that is a Domestic Person.

     

    “Voting
      Interest” means Equity Interests of any Person having ordinary power to vote
      in the election of members of the board of directors, managers, trustees or
      other controlling Persons, of such Person (irrespective of whether, at the
      time,
      Equity Interests of any other class or classes of such entity shall have or
      might have voting power by reason of the occurrence of any
      contingency).

     

    “Withdrawal
      Liability” means, at any time, any liability incurred (whether or not
      assessed) by any ERISA Affiliate and not yet satisfied or paid in full at such
      time with respect to any Multiemployer Plan pursuant to Section 4201 of
      ERISA.

     

    “Working
      Capital” means, for any Person at any date, its Consolidated Current Assets
      at such date minus its Consolidated Current Liabilities at such
      date.

     

     

    Section
      1.2  UCC
      Terms

     

    .  The
      following terms have the meanings given to them in the applicable
      UCC:  “commodity account”, “commodity contract”,
“commodity intermediary”, “deposit account”, “entitlement
      holder”, “entitlement order”, “equipment”, “financial
      asset”, “general intangible”, “goods”, “instruments”,
“inventory”, “securities account”, “securities
      intermediary” and “security entitlement”.

     

     

    Section
      1.3  Accounting
      Terms and Principles

     

    .  (a)
      GAAP.  All accounting determinations required to be made
      pursuant hereto shall, unless expressly otherwise provided herein, be made
      in
      accordance with GAAP.  No change in the accounting principles used in
      the preparation of any Financial Statement hereafter adopted by the Borrowers
      shall be given effect if such change would affect a calculation that measures
      compliance with any provision of Article V or VIII unless the
      Borrowers, the Administrative Agent and the Required Lenders agree to modify
      such provisions to reflect such changes in GAAP and, unless such provisions
      are
      modified, all Financial Statements, Compliance Certificates and similar
      documents provided hereunder shall be provided together with a reconciliation
      between the calculations and amounts set forth therein before and after giving
      effect to such change in GAAP.

     

     

    Section
      1.4  Payments.

     

      The
      Administrative Agent may set up standards and procedures to determine or
      redetermine the equivalent in Dollars of any amount expressed in any currency
      other than Dollars and otherwise may, but shall not be obligated to, rely on
      any
      determination made by any Borrower.  Any such determination or
      redetermination by the Administrative Agent shall be conclusive and binding
      for
      all purposes, absent manifest error.  No determination or
      redetermination by any Secured Party or Borrower and no other currency
      conversion shall change or release any obligation of any Borrower or of any
      Secured Party (other than the Administrative Agent and its Related Persons)
      under any Loan Document, each of which agrees to pay separately for any
      shortfall remaining after any conversion and payment of the

     

    
      
         

      

      
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    amount
      as
      converted.  The Administrative Agent may round up or down to the
      nearest 1,000th, and may
      set up
      appropriate mechanisms to round up or down to the nearest 1,000th.

     

     

    Section
      1.5  Interpretation.

     

      (a)
      Certain Terms.  Except as set forth in any Loan Document, all
      accounting terms not specifically defined herein shall be construed in
      accordance with GAAP (except for the term “property”, which shall be
      interpreted as broadly as possible, including, in any case, cash, securities,
      other assets, rights under Contractual Obligations and Permits and any right
      or
      interest in any property).  The terms “herein”, “hereof”
and similar terms refer to this Agreement as a whole.  In the
      computation of periods of time from a specified date to a later specified date
      in any Loan Document, the terms “from” means “from and including” and the
      words “to” and “until” each mean “to but excluding” and the word
“through” means “to and including.”  In any other case, the
      term “including” when used in any Loan Document means “including without
      limitation.”  The term “documents” means all writings, however
      evidenced and whether in physical or electronic form, including all documents,
      instruments, agreements, notices, demands, certificates, forms, financial
      statements, opinions and reports.  The term “incur” means
      incur, create, make, issue, assume or otherwise become directly or indirectly
      liable in respect of or responsible for, in each case whether directly or
      indirectly, and the terms “incurrence” and “incurred” and similar
      derivatives shall have correlative meanings.  The word “will”
shall be construed to have the same meaning and effect as the word
      “shall”.  The definitions in this Agreement shall apply equally
      to singular and plural forms of the defined terms and, whenever the context
      may
      require, any pronoun shall include the corresponding masculine feminine and
      neuter forms.

     

    (b)           Certain
      References.  Unless otherwise expressly indicated, references
      (i) in this Agreement to an Exhibit, Schedule, Article, Section or clause
      refer to the appropriate Exhibit or Schedule to, or Article, Section or clause
      in, this Agreement and (ii) in any Loan Document, to (A) any agreement shall
      include, without limitation, all exhibits, schedules, appendixes and annexes
      to
      such agreement and, unless the prior consent of any Secured Party required
      therefor is not obtained, any modification to any term of such agreement, (B)
      any statute shall be to such statute as modified from time to time and to any
      successor legislation thereto, in each case as in effect at the time any such
      reference is operative and (C) any time of day shall be a reference to New
      York time.  Titles of articles, sections, clauses, exhibits, schedules
      and annexes contained in any Loan Document are without substantive meaning
      or
      content of any kind whatsoever and are not a part of the agreement between
      the
      parties hereto.  Unless otherwise expressly indicated, the meaning of
      any term defined (including by reference) in any Loan Document shall be equally
      applicable to both the singular and plural forms of such term.

     

     

    ARTICLE
      II                                

     

     

    

     

     

    THE
      FACILITIES

     

     

    Section
      2.1  Term
      Loan Commitment, Borrowing Procedures and Escrow Requirement.

     

    

    (a)           Term
      Loans.

    

    

    

    (i)            On
      the terms and subject to the conditions contained in this Agreement, on the
      Closing Date each Lender severally, but not jointly, agrees to make loans (each
      a “Term Loan”) in Dollars to the Borrowers in a maximum amount not to
      exceed such Lender’s Term Loan Commitment, and the aggregate of all Commitments
      in a maximum

     

    
      
         

      

      
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    aggregate
      amount not to exceed $19,640,000.  Advances related to the Capital
      Improvement Holdback shall be made pursuant to Section
      2.1(b)(i).  Amounts of Term Loans repaid may not be
      reborrowed.

     

    (ii)           Each
      Lender shall, before 11:00 a.m. on the Closing Date, make available to the
      Administrative Agent in same day funds by wire transfer, such Lender’s Pro Rata
      Share of the Term Loans.  Upon fulfillment or due waiver on the
      Closing Date, of the applicable conditions set forth in Section 3.1,
      the Administrative Agent shall make such funds available to the
      Borrower.

     

    (iii)           The
      Administrative Agent may assume that each Lender has made such payment available
      to the Administrative Agent on the Closing Date such payment is required to
      be
      made in accordance with this Article II and the Administrative Agent
      may, in reliance upon such assumption, make available to the Borrower on such
      date its Pro Rata Share of the Term Loans.  Any Lender that shall not
      have made available to the Administrative Agent any portion of its Pro Rata
      Share of the Term Loans described above (any such Lender, a “Non-Funding
      Lender”) agrees to pay such amount to the Administrative Agent on demand
      together with interest thereon (such amount plus such interest, the
“Non-Funded Amount”), for each day from the date such amount is made
      available to the Borrower until the date such amount is repaid to the
      Administrative Agent (either by such Non-Funding Lender or by a Substitute
      Lender under Section 2.12), at the Federal Funds Rate for the first
      Business Day and thereafter at the interest rate applicable at the time to
      such
      Term Loan.  Such repayment shall then constitute the funding of the
      corresponding Term Loan (including any Loan deemed to have been made hereunder
      with such payment) or participation.  In the event a Non-Funding
      Lender fails to pay the Non-Funded Amount, the Administrative Agent shall have
      the right, but not the obligation, to become a Substitute Lender pursuant to
      Section 2.12 and increase its Commitment by the Non-Funded Amount, in
      which case such Non-Funded Amount shall constitute a funding by Administrative
      Agent of the corresponding Term Loan.  If Administrative Agent chooses
      not to become a Substitute Lender for the Non-Funded Amount, it shall notify
      Borrowers of such Lender’s failure to make payment
      hereunder.  Borrower agrees to repay to the Administrative Agent the
      Non-Funded Amount together with interest thereon for each day from the date
      such
      amount is made available to the Borrower until the date such amount is repaid
      to
      the Administrative Agent, at the interest rate applicable to the Obligation
      that
      would have been created when the Administrative Agent made available such amount
      to the Borrower had such Lender made a corresponding payment available;
provided, however, that such payment shall not relieve such Lender
      of any obligation it may have to the Borrower.Such repayment by Borrower shall
      be made not later than 30 days following the receipt of such
      notice.  The existence of any Non-Funding Lender shall not relieve any
      other Lender of its obligations under any Loan Document, but no other Lender
      shall be responsible for the failure of any Non-Funding Lender to make any
      payment required under any Loan Document.

     

    (b)           Holdbacks,
      Reserves and Escrows.

     

    (i)  Holdbacks.  A
      portion of the proceeds of the Term Loan in an amount equal to One Hundred
      Thirty Five Thousand Seven Hundred Sixty-Two Dollars and No/100 Dollars
      ($135,762) (the “Capital Improvement Holdback”) shall be retained by the
      Administrative Agent, which amount shall be advanced by Administrative Agent
      to
      pay costs and expenses related to the repair and replacement of the roof of
      the
      Pavilion at Crossing Pointe Facility as identified on Schedule
      2.1.  Absent the existence of any

     

    
      
         

      

      
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    (ii)  Event
      of
      Default hereunder or under any of the other Loan Documents, upon evidence of
      the
      completion of, and verification of the cost associated with, such repair and
      replacement (whether authorized for payment or actually paid by Borrowers),
      Administrative Agent shall make disbursements under the Term Loans in an amount
      not to exceed 100% of such cost to reimburse Borrowers for such repair and
      replacement.  To the extent any payment is authorized for payment or
      actually paid by Borrowers prior to completion of such repair and replacement,
      upon submittal of invoices associated with such partial payments and absent
      the
      existence of any Event of Default hereunder, Administrative Agent shall
      reimburse Borrowers no more frequently than on time per month, in an amount
      not
      to exceed 100% (less customary holdbacks to ensure completion) of such partial
      cost to reimburse Borrowers for such repair and
      replacement.  Disbursements under the Capital Improvement Holdback
      shall not exceed, in the aggregate, the amount of the Capital Improvement
      Holdback set forth above and shall be deemed to be a Term Loan made
      hereunder.  To the extent funds are advanced for invoices not already
      paid by Borrowers, (i) Borrowers shall provide Administrative Agent with
      evidence that each such invoice was paid in full and (ii) until such time as
      the
      paid invoices are received by Administrative Agent, Administrative Agent shall
      only, upon Borrowers’ request, reimburse Borrowers for invoices actually
      paid.  Upon completion of such repair and replacement, the balance of
      the Capital Improvement Holdback shall be refunded to
      Borrowers.  Borrowers shall be obligated to make each of the repairs,
      improvements and replacements identified on Schedule 2.1, including
      without limitation the repair and replacement described in the foregoing
      sentences, within 180 days of the Closing Date.

     

    Replacement
      Reserve.  At the time of and in addition to the monthly
      installments of interest and, if applicable, principal, due under the Note,
      Borrower shall pay to Agent for the benefit of Agent and Lender an amount equal
      to THIRTY DOLLARS ($30) per bed (the “Monthly Replacement Reserve
      Deposit”), and shall thereafter make a deposit equal to the Monthly
      Replacement Reserve Deposit each month, contemporaneously with its payment
      of
      interest due hereunder, provided, however, at such time as the
      amount in such replacement reserve is equal to or greater than 12 times the
      Monthly Replacement Reserve Deposit (the “Maximum Reserve Amount”), the
      Borrowers shall not be obligated to make any further Monthly Replacement Reserve
      Deposits until such time as the amount in such reserve is less than the Maximum
      Reserve Amount.  Administrative Agent shall release funds from this
      reserve to reimburse the Borrowers, or pay directly if a request is made for
      an
      amount in excess of $20,000, for capital expenditures for, and replacement
      of
      furniture, fixtures and equipment used in connection with, the Facilities,
      promptly following the Borrowers’ request therefore, which request shall be
      accompanied by invoices or other reasonable evidence of the payment or
      obligations for which a release is being requested.

     

    Tax
      Escrow.  The Borrowers shall deposit monthly with the
      Administrative Agent or the Administrative Agent’s designee, a sum of money
      equal to equal to one-twelfth (1/12th) of the annual charges for real estate
      taxes, assessments and impositions relating to the Facilities as reasonably
      estimated by Administrative Agent.  On the Closing Date, the Borrowers
      shall deposit with the Administrative Agent a sum of money which together with
      such monthly installments will be sufficient to make such tax payments thirty
      (30) days prior to the date any delinquency or penalty becomes due.

     

    
      
         

      

      
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    Provided
      sufficient funds are available in the foregoing tax reserve, Administrative
      Agent shall use such funds to pay real estate taxes, assessments and impositions
      relating to the Facilities prior to the date same are due, and any obligations
      of the Borrowers hereunder to pay same shall be deemed satisfied if sufficient
      funds to pay same are in such reserve.

     

    Insurance
      Escrow.  To the extent non-captive insurance is utilized and a
      third party collects a premium for such insurance coverage, the Borrowers shall
      deposit monthly with the Administrative Agent or Administrative Agent’s
      designee, a sum of money equal to equal to one-twelfth (1/12th) of the annual
      charges for insurance premiums relating to the insurance coverages required
      by
      this Agreement as reasonably estimated by Administrative Agent.  On
      the Closing Date, the Borrowers shall deposit with the Administrative Agent
      a
      sum of money which together with such monthly installments will be sufficient
      to
      make such insurance payments thirty (30) days prior to the date any delinquency
      or penalty becomes due.  Provided sufficient funds are available in
      the foregoing insurance reserve, Administrative Agent shall use such funds
      to
      pay insurance premiums relating to the Facilities prior to the date same are
      due, and any obligations of the Borrowers hereunder to pay same shall be deemed
      satisfied if sufficient funds to pay same are in such
      reserve.  Notwithstanding the foregoing, provided that
      Borrowers have (i) provided evidence of payment of the insurance premiums for
      twelve (12) months in advance, (ii) no Default or Event of Default exists and
      is
      continuing and (iii) Borrowers are otherwise in compliance with Section
      7.5, the Administrative Agent will waive the requirement for the insurance
      escrow set forth in this Section 2.1(b)(iv).

     

    Disbursement.  After
      the Closing Date, deposits in respect of the escrows described in clauses
      (iii) – (iv) above shall be made on the basis of the Administrative Agent’s
      reasonable estimate from time to time of the charges for the current year (or
      other applicable period).  All funds deposited pursuant to clause
      (iii) – (iv) shall be held by the Administrative Agent.  These
      sums may be commingled with the general funds of the Administrative Agent and
      shall not be deemed to be held in trust for the benefit of the
      Borrowers.  The Borrowers hereby grant to the Administrative Agent for
      the benefit of Lender and the Administrative Agent a security interest in all
      funds so deposited with the Administrative Agent for the purpose of securing
      the
      Obligations.  While an Event of Default exists, the funds deposited
      may be applied in payment of the charges for which such funds have been
      deposited, or to the payment of the Obligations or any other charges affecting
      the security of the Administrative Agent, as the Administrative Agent may elect,
      but no such application shall be deemed to have been made by operation of law
      or
      otherwise until actually made by the Administrative Agent.  The
      Borrowers shall furnish the Administrative Agent with bills for the charges
      for
      which such escrows are required promptly upon the Borrowers’ receipt
      thereof.  If at any time the amount in escrow with the Administrative
      Agent, together with amounts to be deposited by the Borrowers before such
      charges are payable, is insufficient to pay such charges, the Borrowers shall
      deposit any deficiency with the Administrative Agent immediately upon
      demand.  The Administrative Agent shall promptly pay such charges,
      when the amount in escrow with the Administrative Agent is sufficient to pay
      such charges and the Administrative Agent has received a bill for such charges,
      if applicable.

     

    
      
         

      

      
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    Maturity
      Date and Repayment of Loans.  

     

    

     

    (a)           Interest
      Payments; Interest-Only Period.  Commencing September 1, 2007 and
      continuing through the regularly scheduled payment due on August 1, 2010 (the
      “Interest-Only Period”), the Borrowers shall be required to make
      interest-only payments on the Loan on the first (1st) day of
      each month
      during such period.  Thereafter, the Borrowers shall continue to pay
      interest in arrears on the first (1st) day of
      each month
      until all amounts due under the Loan Documents are paid in full.

     

    (b)           Principal
      Amortization Payments.  Following the expiration of the
      Interest-Only Period and commencing on September 1, 2010 and on the first
      (1st) day of
      each month thereafter until the Scheduled Maturity Date, the Borrowers shall
      make monthly principal payments in the amount of $24,206.63 in addition to
      the
      interest payments required under Section 2.2.(a) above.

     

    (c)           Payment
      in Full of Outstanding Principal and Interest and Other
      Obligations.  On the Scheduled Maturity Date, the Borrowers shall
      pay all outstanding principal, accrued and unpaid interest, default interest,
      other Obligations and any and all other amounts due under any Loan
      Document.

     

    (d)           Payment
      Dates When First (1st)
      is not
      a Business Day.  If the first day of the month is not a Business
      Day, then the applicable payment due hereunder shall be made on the first
      Business Day of such month.  All payments described in this Section
      2.2 shall be made to the Administrative Agent in accordance with Section
      2.7.

     

    

     

    Section
      2.3  Optional
      Prepayments.

     

      The
      Borrowers may prepay the outstanding principal amount of the Term Loans and
      other Obligations in whole or in part at any time, without premium or penalty,
      other than as set forth in Section 2.10(a).

     

     

    Section
      2.4  Mandatory
      Payments.

     

     

    

     

               (a)           Asset
      Sales and Property Loss Events. Upon receipt on or after the
      Closing Date by any Borrower of (i) Net Cash Proceeds arising from any Transfer
      by any Borrower of any of its property other than Transfers of its own Equity
      Interests and Transfers of property permitted hereunder in reliance upon any
      of
clauses (a) through (c) of Section 8.4, (ii) Net Cash
      Proceeds or Allocated Principal Amount Proceeds arising from any Transfer of
      all
      of the assets of any Facility permitted pursuant to Section 8.4(e), or
      (iii) Net Cash Proceeds arising from any Property Loss Event with respect to
      any
      property of any Borrower to the extent resulting, in the aggregate with all
      other such Property Loss Events, in the receipt by any of them of Net Cash
      Proceeds in excess of $10,000, such Borrower shall immediately pay or cause
      to
      be paid to the Administrative Agent an amount equal to 100% of such Net Cash
      Proceeds or Allocated Principal Amount Proceeds as applicable; provided,
however, that, in the case of clause (iii) above, upon any such
      receipt, as long as no Event of Default shall be continuing, any Borrower may
      make Permitted Reinvestments with such Net Cash Proceeds and such Borrower
      shall
      not be required to make or cause such payment to the extent (x) such Net Cash
      Proceeds are intended to be or are actually used to make Permitted Reinvestments
      and (y) on each Reinvestment Prepayment Date for such Net Cash Proceeds, such
      Borrower shall pay or cause to be paid to the Administrative Agent an amount
      equal to the Reinvestment Prepayment Amount applicable to such Reinvestment
      Prepayment Date.

     

    
      
         

      

      
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    (b)           Application
      of Payments.  Any payments made to the Administrative Agent
      pursuant to this Section 2.4 shall be applied to the Obligations in
      accordance with Section 2.6(b).

     

     

    Section
      2.5  Interest.

     

    

     

    (a)        Rate.                      The
      Term Loans and the outstanding amount of all other Obligations (other than
      pursuant to Secured Hedging Agreements) shall bear interest, in the case of
      the
      Term Loans, on the unpaid principal amount thereof from the Closing Date and,
      in
      the case of such other Obligations, from the date such other Obligations are
      due
      and payable until, in each case, paid in full, except as otherwise provided
      in
clause (c) below, as follows:  (i) in the case of Eurodollar
      Rate Loans, at a rate per annum equal to the sum of the Eurodollar Rate plus
      the
      Applicable Margin, each as in effect for the applicable Interest Period, and
      (ii) in the case of other Obligations, at a rate per annum equal to the Base
      Rate as in effect from time to time.

     

    (b)  Default
      Interest.  Notwithstanding the rates of interest specified in
clause (a) above or elsewhere in any Loan Document, effective
      immediately upon (A) the occurrence of any Event of Default under
Section 9.1(e)(ii) or (B) the delivery of a notice by the
      Administrative Agent at the direction of the Required Lenders to any Borrower
      during the continuance of any other Event of Default and, in each case, for
      as
      long as such Event of Default shall be continuing, the principal balance of
      all
      Obligations (including any Obligation that bears interest by reference to the
      rate applicable to any other Obligation) then due and payable shall bear
      interest at a rate that is 4% per annum in excess of the interest rate
      applicable to such Obligations from time to time, payable on demand or, in
      the
      absence of demand, on the date that would otherwise be applicable.

     

    Additional
      Fees.  The Borrowers shall pay to the Administrative Agent and its
      Related Persons the following fees:

     

    (a)  its
      reasonable and customary fees and expenses in connection with any payments
      made
      pursuant to Section 2.10(a) (Breakage Costs);

     

    (b)  a
      collateral monitoring fee of $150 per Facility per month; and

     

    (c)  a
      loan
      origination fee of $147,300, due and payable on or before the Closing
      Date.

     

    The
      fees
      set forth in subparagraphs (ii) and (iii) above are fully earned when due and
      non-refundable when paid.

     

     

    Section
      2.6  Application
      of Payments.

     

      (a)
      Application of Voluntary Prepayments.  Unless otherwise
      provided in this Section 2.6 or elsewhere in any Loan Document, all
      payments and any other amounts received by the Administrative Agent from or
      for
      the benefit of the Borrowers shall be applied to repay the Obligations the
      Borrowers designate, and shall be paid pro rata by the Administrative Agent
      to
      the Lenders.

     

    (b)  Application
      of Mandatory Prepayments.  Subject to the provisions of clause
      (c) below with respect to the application of payments during the continuance
      of an Event

     

    
      
         

      

      
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    (c)  of
      Default, any payment made by any Borrower to the Administrative Agent pursuant
      to Section 2.4 or any other prepayment of the Obligations required
      to be applied in accordance with this clause (b) shall be applied to
      repay the outstanding principal balance of the Term Loans; provided, that
      in the case of payments made pursuant to clause (ii) of Section 2.4, any
      amount of Allocated Principal Amount Proceeds remaining after the payment of
      the
      Allocated Principal Amount of such Facility shall be applied by the
      Administrative Agent, in its sole discretion, to other expenses and fees,
      including without limitation the interest due and payable on the Term
      Loan.

     

    Application
      of Payments During an Event of Default.  Each Borrower hereby
      irrevocably waives, and agrees to cause each other Borrower and each other
      Borrower to waive, the right to direct the application during the continuance
      of
      an Event of Default of any and all payments in respect of any Obligation and
      any
      proceeds of Collateral and agrees that, during the continuance of an Event
      of
      Default, notwithstanding the provisions of clause (a) above, the
      Administrative Agent may, and, upon either (A) the direction of the Required
      Lenders or (B) the termination of any Commitment or the acceleration of any
      Obligation pursuant to Section 9.2 as a result of such Event of
      Default, shall, apply all payments in respect of any Obligation, all funds
      on
      deposit in any escrow established pursuant to Section 2.1(b) and all
      other proceeds of Collateral (i) first, to pay Obligations in respect of
      any cost or expense reimbursements, fees or indemnities then due to the
      Administrative Agent, (ii) second, to pay Obligations in respect of any
      cost or expense reimbursements, fees or indemnities then due to the Lenders,
      (iii) third, to pay interest then due and payable in respect of the
      Loans, and (iv) fourth, ratably to repay the outstanding principal
      amounts of the Loans, and to pay amounts owing with respect to Secured Hedging
      Agreements and (v) fifth, to the ratable payment of all other
      Obligations.

     

    Application
      of Payments Generally.  All repayments of Term Loans shall be
      applied to repay such Loans outstanding as Eurodollar Rate Loans.  All
      repayments of Term Loans shall be applied to reduce the remaining installments
      of such outstanding principal amounts of the Term Loans in the inverse order
      of
      their maturities.  Any priority level set forth in this
Section 2.6 that includes interest shall include all such interest,
      whether or not accruing after the filing of any petition in bankruptcy or the
      commencement of any insolvency, reorganization or similar proceeding, and
      whether or not a claim for post-filing or post-petition interest is allowed
      in
      any such proceeding.

     

     

    Section
      2.7  Payments
      and Computations.

     

      (a)
      Procedure.  The Borrowers shall make each payment under any
      Loan Document not later than 2:00 p.m. on the day when due to the
      Administrative Agent by wire transfer to the following account (or at such
      other
      account or by such other means to such other address as the Administrative
      Agent
      shall have notified the Borrowers in writing within a reasonable time prior
      to
      such payment) in immediately available Dollars and without setoff or
      counterclaim:

     

    ABA
      No.
      021-001-033

     

    Account
      Number 50-256-477

     

    Deutsche
      Bank Trust Company Americas, New York, New York

     

    Account
      Name:  GECC Healthcare

     

    Reference:  Emeritus
      07-0004315

     

    
      
         

      

      
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    The
      Administrative Agent shall promptly thereafter cause to be distributed
      immediately available funds relating to the payment of principal, interest
      or
      fees to the Lenders, in accordance with the application of payments set forth
      in
Section 2.6.  The Lenders shall make any payment under any
      Loan Document in immediately available Dollars and without setoff or
      counterclaim.

     

    (b)  Computations
      of Interests and Fees.  All computations of interest and of fees
      shall be made by the Administrative Agent  on the basis of a year of
      360 days (or, in the case of Base Rate Loans whose interest rate is calculated
      based on the rate set forth in clause (a) of the definition of “Base
      Rate”, 365/366 days), in each case for the actual number of days (including the
      first day but excluding the last day) occurring in the period for which such
      interest and fees are payable.  Each determination of an interest rate
      or the amount of a fee hereunder shall be made by the Administrative Agent
      (including determinations of a Eurodollar Rate or Base Rate in accordance with
      the definitions of “Eurodollar Rate” and “Base Rate”, respectively) and shall be
      conclusive, binding and final for all purposes, absent manifest
      error.

     

    Payment
      Dates.  Whenever any payment hereunder shall be stated to be due
      on a day other than a Business Day, the due date for such payment shall be
      extended to the next succeeding Business Day without any increase in such
      payment as a result of additional interest or fees; provided,
however, that such interest and fees shall continue accruing as a
      result
      of such extension of time as provided for herein.

     

    Advancing
      Payments.  Unless the Administrative Agent shall have received
      notice from the Borrowers to the Lenders prior to the date on which any payment
      is due hereunder that such Borrower will not make such payment in full, the
      Administrative Agent may assume that the Borrowers have made such payment in
      full to the Administrative Agent on such date and the Administrative Agent
      may,
      in reliance upon such assumption, cause to be distributed to each Lender on
      such
      due date an amount equal to the amount then due such Lender.  If and
      to the extent that the Borrowers shall not have made such payment in full to
      the
      Administrative Agent, each Lender shall repay to the Administrative Agent on
      demand such amount distributed to such Lender together with interest thereon
      (at
      the Federal Funds Rate for the first Business Day and thereafter, at the rate
      applicable to Base Rate Loans) for each day from the date such amount is
      distributed to such Lender until the date such Lender repays such amount to
      the
      Administrative Agent.

     

     

    Section
      2.8  Evidence
      of Debt.

     

      (a)
      Records of Lenders.  Each Lender shall maintain in accordance
      with its usual practice accounts evidencing Indebtedness of the Borrowers to
      such Lender resulting from each Loan of such Lender from time to time, including
      the amounts of principal and interest payable and paid to such Lender from
      time
      to time under this Agreement.  In addition, each Lender having sold a
      participation in any of its Obligations or having identified an SPV as such
      to
      the Administrative Agent, acting as agent of the Borrowers solely for this
      purpose and solely for tax purposes, shall establish and maintain at its address
      referred to in Section 11.11 (or at such other address as such
      Lender shall notify the Borrowers) a record of ownership, in which such Lender
      shall register by book entry (A) the name and address of each such participant
      and SPV (and each change thereto, whether by assignment or otherwise) and
      (B) the rights, interest or obligation of each such participant and SPV in
      any Obligation, in any Commitment and in any right to receive any payment
      hereunder.

     

    
      
         

      

      
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    Records
      of Administrative Agent.  The Administrative Agent, acting as
      agent of the Borrowers solely for tax purposes and solely with respect to the
      actions described in this Section 2.8, shall establish and maintain
      at its address referred to in Section 11.11 (or at such other
      address as the Administrative Agent may notify the Borrowers) (A) a record
      of
      ownership (the “Register”) in which the Administrative Agent agrees to
      register by book entry the interests (including any rights to receive payment
      hereunder) of the Administrative Agent, each Lender and any assignment of any
      such interest, obligation or right and (B) accounts in the Register in
      accordance with its usual practice in which it shall record (1) the names and
      addresses of the Lenders (and each change thereto pursuant to
Section 2.12 (Substitution of Lenders) and
Section 11.2 (Assignments and Participations; Binding
      Effect)), (2) the Commitments of each Lender, (3) the amount of each Loan
      and each funding of any participation described in clause (A) above, (4)
      the amount of any principal or interest due and payable or paid, and (5) any
      other payment received by the Administrative Agent from the Borrowers and its
      application to the Obligations.

     

    Registered
      Obligations.  Notwithstanding anything to the contrary contained
      in this Agreement, the Loans (including any Notes evidencing such Loans) are
      registered obligations, the right, title and interest of the Lenders and their
      assignees in and to such Loans shall be transferable only upon notation of
      such
      transfer in the Register and no assignment thereof shall be effective until
      recorded therein.  This Section 2.8 and
Section 11.2 shall be construed so that the Loans are at all times
      maintained in “registered form” within the meaning of
      Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and any related
      regulations (and any successor provisions).

     

    Prima
      Facie Evidence.  The entries made in the Register and in the
      accounts maintained pursuant to clauses (a) and (b) above shall,
      to the extent permitted by applicable Requirements of Law, be prima facie
      evidence of the existence and amounts of the obligations recorded therein;
      provided, however, that no error in such account and no failure of
      any Lender or the Administrative Agent to maintain any such account shall affect
      the obligations of any Borrower to repay the Loans in accordance with their
      terms.  In addition, the Borrowers, the Administrative Agent and the
      Lenders shall treat each Person whose name is recorded in the Register as a
      Lender, as applicable, for all purposes of this
      Agreement.  Information contained in the Register with respect to any
      Lender shall be available for access by each Borrower, the Administrative Agent,
      and such Lender at any reasonable time and from time to time upon reasonable
      prior notice.  No Lender shall, in such capacity, have access to or be
      otherwise permitted to review any information in the Register other than
      information with respect to such Lender unless otherwise agreed by the
      Administrative Agent.

     

    Notes.  Upon
      any Lender’s request, made through the Administrative Agent, the Borrowers shall
      promptly execute and deliver Notes to such Lender evidencing the Loans of such
      Lender and substantially in the form of Exhibit E; provided,
however, that only one Note shall be issued to each Lender,
      except (i) to
      an existing Lender exchanging existing Notes to reflect changes in the Register
      relating to such Lender, in which case the new Notes delivered to such Lender
      shall be dated the date of the original Notes and the Note being replaced shall
      be voided and returned to the Borrowers, and (ii) in the case of loss,
      destruction or mutilation of existing Notes and similar circumstances, provided
      that such Lender provides Borrowers with a lost note affidavit and indemnity
      related thereto.  Each Note, if issued, shall only be issued as means
      to evidence the right, title or interest of a Lender or a registered assignee
      in
      and to the related Loan, as set forth in the Register, and in no event shall
      any
      Note be considered a bearer instrument or obligation.

     

    
      
         

      

      
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    Suspension
      of Eurodollar Rate.

     

      Notwithstanding
      any provision to the contrary in this Article II, the following
      shall apply:

     

    (a)  Interest
      Rate Unascertainable, Inadequate or Unfair.  In the event that (A)
      the Administrative Agent determines that adequate and fair means do not exist
      for ascertaining the applicable interest rates by reference to which the
      Eurodollar Rate is determined or (B) the Required Lenders notify the
      Administrative Agent that the Eurodollar Rate for any Interest Period will
      not
      adequately reflect the cost to the Lenders of making or maintaining such Loans
      for such Interest Period, the Administrative Agent shall promptly so notify
      the
      Borrowers and the Lenders, whereupon the obligation of each Lender to make
      or to
      continue Eurodollar Rate Loans shall be suspended as provided in clause
      (c) below until the Administrative Agent shall notify the Borrowers that the
      Required Lenders have reasonably determined that the circumstances causing
      such
      suspension no longer exist.

     

    Illegality.  If
      any Lender determines that the introduction of, or any change in or in the
      interpretation of, any Requirement of Law after the date of this Agreement
      shall
      make it unlawful, or any Governmental Authority shall assert that it is
      unlawful, for any Lender or its applicable lending office to make Eurodollar
      Rate Loans or to continue to fund or maintain Eurodollar Rate Loans, then,
      on
      notice thereof and demand therefor by such Lender to the Borrowers through
      the
      Administrative Agent, the obligation of such Lender to make or to continue
      Eurodollar Rate Loans shall be suspended as provided in clause (c) below
      until such Lender shall, through the Administrative Agent, notify the Borrowers
      that it has determined that it may lawfully make Eurodollar Rate
      Loans.

     

    Effect
      of Suspension.  If the obligation of any Lender to make or to
      continue Eurodollar Rate Loans is suspended, (A) such Lender shall make a Base
      Rate Loan at any time such Lender would otherwise be obligated to make a
      Eurodollar Rate Loan and (B) each existing Eurodollar Rate Loan of such Lender
      shall automatically and immediately (or, in the case of any suspension pursuant
      to clause (a) above, on the last day of the current Interest Period
      thereof) be converted into a Base Rate Loan.

     

     

    Section
      2.9  Breakage
      Costs; Increased Costs; Capital Requirements.

     

      (a)  Breakage
      Costs.  The Borrowers shall compensate each Lender, upon demand
      from such Lender to the Borrowers (with copy to the Administrative Agent),
      for
      all Liabilities (including, in each case, those incurred by reason of the
      liquidation or reemployment of deposits or other funds acquired by such Lender
      to prepare to fund, to fund or to maintain the Eurodollar Rate Loans of such
      Lender to the Borrowers but excluding any loss of the Applicable Margin on
      the
      relevant Loans) that such Lender may incur (A) to the extent any Eurodollar
      Rate
      Loan is paid (whether through a scheduled, optional or mandatory prepayment)
      or
      converted to a Base Rate Loan (including because of Section 2.09) on
      a date that is not the last day of the applicable Interest Period or (B) as
      a consequence of any failure by the Borrowers to repay Eurodollar Rate Loans
      when required by the terms hereof.  For purposes of this clause
      (a), each Lender shall be deemed to have funded each Eurodollar Rate Loan
      made by it using a matching deposit or other borrowing in the London interbank
      market.

     

    (b)           Increased
      Costs.  If at any time any Lender reasonably determines that,
      after the date hereof, the adoption of, or any change in or in the
      interpretation, application or administration of, or compliance with, any
      Requirement of Law (other than any imposition or increase of Eurodollar Reserve
      Requirements) from any Governmental Authority shall have the

     

    
      
         

      

      
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    effect
      of
      (i) increasing the cost to such Lender of making, funding or maintaining any
      Eurodollar Rate Loan or to agree to do so or of participating, or agreeing
      to
      participate, in extensions of credit or (ii) imposing any other cost to such
      Lender with respect to compliance with its obligations under any Loan Document,
      then, upon demand by such Lender (with copy to the Administrative Agent), the
      Borrowers shall pay to the Administrative Agent for the account of such Lender
      amounts sufficient to compensate such Lender for such increased
      cost.

     

    (c)           Increased
      Capital Requirements.  If at any time any Lender determines
      that, after the date hereof, the adoption of, or any change in or in the
      interpretation, application or administration of, or compliance with, any
      Requirement of Law (other than any imposition or increase of Eurodollar Reserve
      Requirements) from any Governmental Authority, regarding capital adequacy,
      reserves, special deposits, compulsory loans, insurance charges against property
      of, deposits with or for the account of, Obligations owing to, or other credit
      extended or participated in by, any Lender or any similar requirement (in each
      case other than any imposition or increase of Eurodollar Reserve Requirements)
      shall have the effect of reducing the rate of return on the capital of such
      Lender as a consequence of its obligations under or with respect to any Loan
      Document to a level below that which, taking into account the capital adequacy
      policies of such Lender, such Lender could have reasonably achieved but for
      such
      adoption or change, then, upon demand from time to time by such Lender (with
      a
      copy of such demand to the Administrative Agent), the Borrowers shall pay to
      the
      Administrative Agent for the account of such Lender amounts sufficient to
      compensate such Lender for such reduction.

     

    Compensation
      Certificate.  Each demand for compensation under this
Section 2.10 shall be accompanied by a certificate of the Lender
      claiming such compensation, setting forth the amounts to be paid hereunder,
      which certificate shall be conclusive, binding and final for all purposes,
      absent manifest error.  In determining such amount, such Lender may
      use any reasonable averaging and attribution methods.

     

     

    Section
      2.10  Taxes.

     

      (a)
      Payments Free and Clear of Taxes.  Except as otherwise provided
      in this Section 2.11, each payment by any Borrower under any Loan
      Document shall be made free and clear of all present or future taxes, levies,
      imposts, deductions, charges or withholdings and all liabilities with respect
      thereto (and without deduction for any of them) (collectively, but excluding
      the
      taxes set forth in clauses (i) and (ii) below, the “Taxes”)
      other than for (i) taxes measured by net income (including branch profits taxes)
      and franchise taxes imposed in lieu of net income taxes, in each case imposed
      on
      any Secured Party as a result of a present or former connection between such
      Secured Party and the jurisdiction of the Governmental Authority imposing such
      tax or any political subdivision or taxing authority thereof or therein (other
      than such connection arising solely from any Secured Party having executed,
      delivered or performed its obligations or received a payment under, or enforced,
      any Loan Document) or (ii) taxes that are directly attributable to either (a)
      the failure (other than as a result of a change in any Requirement of Law that
      occurs after the date a Secured Party becomes a “Secured Party” under this
      Agreement) by any Secured Party to deliver the documentation required to be
      delivered by a Non-U.S. Lending Party claiming to be exempt from, or subject
      to
      a reduced rate for, United States withholding tax, pursuant to clause (f)
      below or (b) if the Non-U.S. Lender indicates in the documentation that they
      are
      only claiming a reduced rate for United States withholding, taxes up to the
      claimed rate of withholding with respect to the type of income for which the
      reduced rate is claimed.  

     

    
      
         

      

      
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    Gross-Up.  If
      any Taxes shall be required by law to be deducted from or in respect of any
      amount payable under any Loan Document (other than any Secured Hedging
      Agreement) to any Secured Party (i) such amount shall be increased as necessary
      to ensure that, after all required deductions for Taxes are made (including
      deductions applicable to any increases to any amount under this
Section 2.11), such Secured Party receives the amount it would have
      received had no such deductions been made, (ii) the Borrowers shall make such
      deductions, (iii) the Borrowers shall timely pay the full amount deducted to
      the
      relevant taxing authority or other authority in accordance with applicable
      Requirements of Law and (iv) within thirty (30) days after such payment is
      made, the Borrowers shall deliver to the Administrative Agent an original or
      certified copy of a receipt evidencing such payment; provided,
however, that no such increase shall be made with respect to, and
      no
      Borrower shall be required to indemnify any such Secured Party pursuant to
      clause (d) below for, withholding taxes to the
      extent that the obligation to withhold amounts existed on the date that such
      Secured Party became a “Secured Party” under this Agreement in the capacity
      under which such Secured Party makes a claim under this clause (b),
      except in each case to the extent such Secured Party is a direct or indirect
      assignee (other than pursuant to Section 2.12 (Substitution of
      Lenders)) of any other Secured Party that was entitled, at the time the
      assignment of such other Secured Party became effective, to receive additional
      amounts under this clause (b).

     

    Other
      Taxes.  In addition, the Borrowers agree to pay, and authorize the
      Administrative Agent to pay in their names, any stamp, documentary, excise
      or
      property tax, transfer, mortgage, recording charges or similar levies imposed
      by
      any applicable Requirement of Law or Governmental Authority and all Liabilities
      with respect thereto (including by reason of any delay in payment thereof),
      in
      each case arising from the execution, delivery or registration of, or otherwise
      with respect to, any Loan Document or any transaction contemplated therein
      (collectively, “Other Taxes”).  Within 30 days after the date
      of any payment of Taxes or Other Taxes by any Borrower, such Borrower shall
      furnish to the Administrative Agent, at its address referred to in
Section 11.11, the original or a certified copy of a receipt
      evidencing payment thereof.

     

    Indemnification.  The
      Borrowers shall reimburse and indemnify, within thirty (30) days after receipt
      of demand therefor from the Administrative Agent, each Secured Party for all
      Taxes and Other Taxes (including any Taxes and Other Taxes imposed by any
      jurisdiction on amounts payable under this Section 2.11) actually
      paid by such Secured Party and any Liabilities arising therefrom or with respect
      thereto.  A certificate of the Secured Party (or of the Administrative
      Agent on behalf of such Secured Party) claiming any compensation under this
      clause (d), setting forth the amounts to be paid thereunder and delivered
      to the Borrowers with copy to the Administrative Agent, shall be conclusive,
      binding and final for all purposes, absent manifest
      error.  

     

    Mitigation.  Any
      Lender claiming any additional amounts payable pursuant to this
Section 2.11 shall use its reasonable efforts (consistent with its
      internal policies and Requirements of Law) to change the jurisdiction of its
      lending office if such a change would reduce any such additional amounts (or
      any
      similar amount that may thereafter accrue) and would not, in the reasonable
      determination of such Lender, be otherwise disadvantageous to such
      Lender.

     

    Tax
      Forms.  (i) Each Non-U.S. Lender Party shall (w) on or prior to
      the date such Non-U.S. Lender Party becomes a “Non-U.S. Lender Party” hereunder,
      (x) on or

     

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

    prior
      to
      the date on which any such form or certification expires or becomes obsolete,
      (y) after the occurrence of any event requiring a change in the most recent
      form
      or certification previously delivered by it pursuant to this
clause (i) and (z) from time to time if requested by any
      Borrower or the Administrative Agent (or, in the case of a participant or SPV,
      the relevant Lender), provide the Administrative Agent and the Borrowers (or,
      in
      the case of a participant or SPV, the relevant Lender) with two completed
      originals of each of the following, as applicable:  (A) Forms W-8ECI
      (claiming exemption from U.S. withholding tax because the income is effectively
      connected with a U.S. trade or business), W-8BEN (claiming exemption from U.S.
      withholding tax under an income tax treaty) and/or W-8IMY (claiming exemption
      from U.S. withholding tax for any portion of any sums paid or payable to such
      Non-U.S. Lender Party under any of the Loan Documents for which it does not
      act
      or ceases to act for its own account with respect to thereto) or any successor
      forms, (B) in the case of a Non-U.S. Lender Party claiming exemption under
      Sections 871(h) or 881(c) of the Code, Form W-8BEN (claiming exemption from
      U.S.
      withholding tax under the portfolio interest exemption) or any successor form
      and a certificate in form and substance acceptable to the Administrative Agent
      and the Borrowers that such Non-U.S. Lender Party is not (1) a “bank” within the
      meaning of Section 881(c)(3)(A) of the Code, (2) a “10 percent shareholder” of
      any Borrower within the meaning of Section 881(c)(3)(B) of the Code or (3)
      a
“controlled foreign corporation” described in Section 881(c)(3)(C) of the Code
      or (C) any other applicable document prescribed by the IRS certifying as to
      the
      entitlement of such Non-U.S. Lender Party to such exemption from United States
      withholding tax with respect to all payments to be made to such Non-U.S. Lender
      Party under the Loan Documents.  Unless the Borrowers and the
      Administrative Agent have received forms or other documents satisfactory to
      them
      indicating that payments under any Loan Document to or for a Non-U.S. Lender
      Party are not subject to United States withholding tax, the Borrowers and the
      Administrative Agent shall withhold amounts required to be withheld by
      applicable Requirements of Law from such payments at the applicable statutory
      rate.

     

    Each
      U.S.
      Lender Party shall (A) on or prior to the date such U.S. Lender Party becomes
      a
“U.S. Lender Party” hereunder, (B) on or prior to the date on which any such
      form or certification expires or becomes obsolete, (C) after the occurrence
      of
      any event requiring a change in the most recent form or certification previously
      delivered by it pursuant to this clause (f) and (D) from time to time if
      requested by any Borrower or the Administrative Agent (or, in the case of a
      participant or SPV, the relevant Lender), provide the Administrative Agent
      and
      the Borrowers (or, in the case of a participant or SPV, the relevant Lender)
      with two completed originals of Form W-9 (certifying that such U.S. Lender
      Party
      is entitled to an exemption from U.S. backup withholding tax) or any successor
      form.

     

    Each
      Lender having sold a participation in any of its Obligations or identified
      an
      SPV as such to the Administrative Agent shall collect from such participant
      or
      SPV the documents described in this clause (f) and provide them to the
      Administrative Agent.

     

     

    Section
      2.11  Substitution
      of Lenders.

     

      (a)
      Substitution Right.  In the event that any Lender that is not
      an Affiliate of the Administrative Agent (an “Affected Lender”) (i) makes
      a claim under clause (b) (Increased Costs) or (c)
      (Increased Capital Requirements) of Section 2.10, (ii)
      notifies the Borrowers pursuant to Section 2.9(b)
      (Illegality) that it becomes illegal for such

     

    
      
         

      

      
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    Lender
      to
      continue to fund or make any Eurodollar Rate Loan, (iii) makes a claim for
      payment pursuant to Section 2.11(b) (Taxes), (iv) becomes a
      Non-Funding Lender or (v) does not consent to any amendment, waiver or consent
      to any Loan Document for which the consent of the Required Lenders is obtained
      but that requires the consent of other Lenders, the Borrowers may either pay
      in
      full such Affected Lender without premium or penalty with respect to amounts
      due
      with the consent of the Administrative Agent or substitute for such Affected
      Lender any Lender or any Affiliate or Approved Fund of any Lender or any other
      Person acceptable (which acceptance shall not be unreasonably withheld or
      delayed) to the Administrative Agent (in each case, a “Substitute
      Lender”).  Upon Borrowers’ request, the Administrative Agent shall
      solicit and obtain a Substitute Lender.

     

    (b)  Procedure.  To
      substitute such Affected Lender or pay in full the Obligations owed to such
      Affected Lender, the Borrowers shall deliver a notice to the Administrative
      Agent and such Affected Lender.  The effectiveness of such payment or
      substitution shall be subject to the delivery to the Administrative Agent by
      the
      Borrowers (or, as may be applicable in the case of a substitution, by the
      Substitute Lender) of (i) payment for the account of such Affected Lender,
      of,
      to the extent accrued through, and outstanding on, the effective date for such
      payment or substitution, all Obligations owing to such Affected Lender
      (including interest through the end of the applicable Interest Period that
      will
      be owed because of such payment), and (ii) in the case of a substitution, (A)
      except in the event the Affected Lender is a Non-Funding Lender, payment of
      the
      assignment fee set forth in Section 11.2(c) and (B) an assumption
      agreement in form and substance reasonably satisfactory to the Administrative
      Agent whereby the Substitute Lender shall, among other things, agree to be
      bound
      by the terms of the Loan Documents and assume the Commitment of the Affected
      Lender.

     

    Effectiveness.  Upon
      satisfaction of the conditions set forth in clause (b) above, the
      Administrative Agent shall record such substitution or payment in the Register,
      whereupon (i) in the case of any payment in full, such Affected Lender’s
      Commitments shall be terminated and (ii) in the case of any substitution, (A)
      the Affected Lender shall sell and be relieved of, and the Substitute Lender
      shall purchase and assume, all rights and claims of such Affected Lender under
      the Loan Documents, except that the Affected Lender shall retain such rights
      expressly providing that they survive the repayment of the Obligations and
      the
      termination of the Commitments, (B) the Substitute Lender shall become a
“Lender” hereunder having a Commitment in the amount of such Affected
      Lender’s Commitment and (C) the Affected Lender shall execute and deliver to the
      Administrative Agent an Assignment to evidence such substitution and deliver
      any
      Note in its possession; provided, however, that the failure of any
      Affected Lender to execute any such Assignment or deliver any such Note shall
      not render such sale and purchase (or the corresponding assignment)
      invalid.

     

     

    ARTICLE
      III                                

     

     

    

     

     

    CONDITIONS
      TO LOANS

     

     

    Section
      3.1  Conditions
      Precedent to Funding.

     

      The
      obligation of each Lender to  fund its Pro Rata Share of the Term
      Loans is subject to the satisfaction or due waiver by Administrative Agent
      and
      each Lender of each of the following conditions precedent on or before the
      Closing Date:

     

    
      
         

      

      
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    Certain
      Documents.  The Administrative Agent shall have received on or
      prior to the Closing Date (unless otherwise specified below), each of the
      following, each dated the Closing Date, unless otherwise agreed by the
      Administrative Agent, in form and substance satisfactory to the Administrative
      Agent and each Lender:

     

    this
      Agreement duly executed by each Borrower and, for the account of each Lender
      having requested the same by notice to the Administrative Agent and the
      Borrowers received by each at least 1 Business Day prior to the Closing Date
      (or
      such later date as may be agreed to by the Borrowers), Notes conforming to
      the
      requirements set forth in Section 2.8(e);

     

    the
      Security Documents, duly executed by each Borrower, together with (A) copies
      of
      UCC, Intellectual Property and other appropriate search reports and of all
      effective prior filings listed therein, together with evidence of the
      termination of such prior filings and other documents with respect to the
      priority of the security interest of the Administrative Agent in the Collateral,
      in each case as may be reasonably requested by the Administrative Agent and
      (B)
      all documents representing all Equity Interests being pledged pursuant to such
      Security Agreement and related undated powers or endorsements duly executed
      in
      blank, each duly executed by, in addition to the applicable Borrower, the
      applicable financial institution

     

    the
      Assignment of Membership Interests, duly executed by Emeritus, together with
      all
      documents representing all Equity Interests being pledged pursuant to such
      Assignment of Membership Interests and related undated powers or endorsements
      duly executed in blank, each duly executed by each Borrower as
      issuer;

     

    Mortgages,
      duly executed by each respective Borrower, for each Facility (except as may
      be
      otherwise agreed to by the Administrative Agent), together with all Mortgage
      Supporting Documents relating thereto;

     

    The
      Guaranty, duly executed by Emeritus;

     

    One
      or
      more Environmental Indemnities, duly executed by Emeritus and the
      Borrowers;

     

    The
      state
      of title to the Real Property shall be satisfactory to the Administrative Agent
      and the Mortgages shall be insured by a mortgagee title insurance policy (or
      binding commitment therefor) in form and substance and from a title insurer,
      all
      reasonably acceptable to the Administrative Agent.  Except for
      variances approved by the Administrative Agent prior to the Closing Date (which
      approval shall be evidenced by the Administrative Agent’s execution and delivery
      of this Agreement), on or before the Closing Date, such title insurance policy
      shall be on an American Land Title Association (“ALTA”) form designated
      by the Administrative Agent, but subject to the local customs in the
      jurisdiction in which such Real Property exists, shall specifically contain
      no
      exception as to survey matters or creditors rights, must contain affirmative
      coverage against mechanics’, contractors’, suppliers’ and/or materialmen’s
      liens, filed or unfiled, must affirmatively insure

     

    
      
         

      

      
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    that
      the
      security instrument is a valid first lien against the fee simple, marketable
      estate, insuring the Administrative Agent for the benefit of Lenders for a
      sum
      not less than the maximum principal amount of all financing hereunder and must
      contain such endorsements as may be required by the Administrative Agent
      (including, but not limited to and subject to availability in the jurisdiction
      in which the Real Property is located, endorsements covering zoning (ALTA 3.1
      with parking), variable interest rates, no violations of covenants, conditions
      and restrictions of record, street address, no usury violation, environmental
      liens, tie-in, access, contiguity, encroachment, tax parcel, doing business,
      mortgage tax, first loss and last dollar).  Fee simple title to the
      Real Property and to the fixtures, equipment, furniture and personal property
      encumbered by the Loan Documents shall be marketable, and free and clear of
      all
      defects, liens, encumbrances, security interests, assessments, restrictions
      and
      easements which are not acceptable to the Administrative Agent, in the
      Administrative Agent’s reasonable discretion.  If access to the Real
      Property is by means of easements or leases, said easements or leases shall
      be
      reasonably satisfactory in form and substance to the Administrative Agent,
      shall
      be insured under the mortgagee’s title insurance policy issued to the
      Administrative Agent as part of the insured estate and shall not be subject
      to
      any prior liens or encumbrances.  A search of the state and local
      public records shall disclose no conditional sales contracts, chattel mortgages,
      leases of personalty, financing statements or title retention agreements filed
      and/or recorded against any Borrower or the property other than liens which
      are
      expressly permitted under this Agreement.

     

    The
      Administrative Agent shall have received the following, all in form and
      substance reasonably satisfactory to the Administrative Agent in its sole and
      absolute discretion:

     

    such
      property appraisals, property As-Built Surveys, environmental reports, physical
      and structural inspection reports and other third party reports as the
      Administrative Agent shall deem necessary or appropriate;

     

    

    evidence,
      in the form of letters from municipalities, if available, As-Built Surveys,
      or
      other reasonable evidence, that the Real Property and all improvements thereon
      comply in all material respects with applicable codes, regulations and
      ordinances, are zoned for their current use, are adequately served by public
      utilities, are completed free of mechanics and materialmen’s liens, are not the
      subject to any pending litigation, are not the subject of any pending
      condemnation proceeding and have not been materially damaged by fire or other
      casualty;

     

    copies
      of
      all Leases pertaining to the Real Property;

     

    copies
      of
      all recent real estate tax bills, with proof of payment if due, together with
      evidence that each parcel of Real Property is a separately identifiable tax
      lot;
      and

     

    evidence,
      which evidence may be provided in the form of surveys required under clause
      (A) above, reasonably satisfactory to the Administrative Agent that the
      improvements on the Real Property, other than with

     

    
      
         

      

      
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    respect
      to the Springfield Facility, are not within a special flood hazard area and
      is
      not eligible for flood insurance under the U. S. Flood Disaster Protection
      Act
      of 1973, as amended.

     

    duly
      executed favorable opinions of counsel to the Borrowers including local counsel
      in each state in which a Facility being acquired is located, each addressed
      to
      the Administrative Agent and the Lenders and addressing such matters as the
      Administrative Agent may reasonably request;

     

    a
      copy of
      each Constituent Document of each Borrower that is on file with any Governmental
      Authority in any jurisdiction, certified as of a recent date by such
      Governmental Authority or a Responsible Officer, together with, if applicable,
      certificates from such Governmental Authority attesting to the good standing
      of
      such Borrower in such jurisdiction and each other jurisdiction where such
      Borrower is qualified to do business as a foreign entity or where such
      qualification is necessary (and, if appropriate in any such jurisdiction,
      related tax certificates);

     

    a
      certificate of a Responsible Officer of each Borrower in charge of maintaining
      books and records of such Borrower certifying as to (A) the names and signatures
      of each Responsible Officer of such Borrower authorized to execute and deliver
      any Loan Document, (B) the Constituent Documents of such Borrower attached
      to
      such certificate are complete and correct copies of such Constituent Documents
      as in effect on the date of such certification (or, for any such Constituent
      Document delivered pursuant to clause (v) above, that there have been no
      changes from such Constituent Document so delivered) and (C) if applicable,
      the
      resolutions of such Borrower’s board of directors or other appropriate governing
      body approving and authorizing the execution, delivery and performance of each
      Loan Document to which such Borrower is a party;

     

    a
      certificate of a Responsible Officer of each Borrower to the effect that (A)
      after giving effect to the Term Loan, (1) the representations and warranties
      set
      forth in any Loan Document are true and correct in all material respects as
      of
      the Closing Date, and (2) no Event of Default shall be continuing, and
      (B) the Borrowers taken as a whole are Solvent after giving effect to the
      Term Loans, the application of the proceeds thereof in accordance with
Section 7.9 and the payment of all estimated legal, accounting and
      other fees and expenses related hereto and thereto;

     

    insurance
      certificates in form and substance satisfactory to the Administrative Agent
      demonstrating that the insurance policies required by Section 7.5
      are in full force and effect and have all endorsements required by such
Section 7.5; and

     

    such
      other documents and information with respect to the Facilities or the Borrowers
      as any Lender through the Administrative Agent may reasonably
      request.

     

    Minimum
      Consolidated Net Income.  The Consolidated Net Income for the
      Facilities being acquired shall be equal to or greater than $1,450,000 in the
      aggregate

     

    
      
         

      

      
        41

        
          

        

      

      
         

      

    

    subject
      to reasonable adjustments in form and substance satisfactory to the
      Administrative Agent.  For the purposes of this Section 3.1(b)
      only, Consolidated Net Income shall be calculated using the aggregate net income
      of the Facilities as of the Closing Date.

     

    Escrows,
      Reserves, Fees and Expenses.  Borrowers shall have funded all
      escrows and reserves and paid to the Administrative Agent, for the account
      of
      the Administrative Agent, its Related Persons or any Lender, as the case may
      be,
      all fees and all reimbursements of costs or expenses, in each case due and
      payable under any Loan Document.

     

    Consents.  Each
      Borrower shall have received all consents and authorizations required pursuant
      to any material Contractual Obligation with any other Person and shall have
      obtained all Permits of, and effected all notices to and filings with, any
      Governmental Authority, in each case, as may be necessary in connection with
      the
      consummation of the transactions contemplated in any Loan Document or Related
      Document.

     

    Related
      Transactions.  The Administrative Agent shall be satisfied that,
      (i) subject only the funding of the Term Loans hereunder and the use of proceeds
      thereof, (A) as certified to the Administrative Agent, all conditions precedent
      to the consummation of the applicable Acquisition will have been satisfied
      or
      duly waived with the consent of the Administrative Agent and such Acquisition
      will have been consummated in accordance with the Acquisition Agreement and
      (B)
      the applicable Collateral shall be free and clear of all Liens other than Liens
      permitted pursuant to Section 8.2, and (ii) the Required Investors’
Equity Investment will have been made.

     

     

    Section
      3.2  Determinations
      of Initial Borrowing Conditions.

     

      For
      purposes of determining compliance with the conditions specified in
Section 3.1, each Lender shall be deemed to be satisfied with each
      document and each other matter required to be satisfactory to such Lender
      unless, prior to the Closing Date, the Administrative Agent receives notice
      from
      such Lender specifying such Lender’s objections and such Lender has not made
      available its Pro Rata Share of the Term Loan to be made on such
      date.

     

     

    ARTICLE
      IV                                

     

     

    

     

     

    REPRESENTATIONS
      AND WARRANTIES

     

    To
      induce
      the Lenders and the Administrative Agent to enter into the Loan Documents,
      each
      Borrower represents and warrants to each of them each of the following on and
      as
      of the Closing Date, the following:

     

     

    Section
      4.1  Corporate
      Existence; Compliance with Law.

     

      (a)  Each
      of Emeritus and the Borrowers (i) is duly organized, validly existing and in
      good standing under the laws of the jurisdiction of its organization, (ii)
      is
      duly qualified to do business as a foreign entity and in good standing under
      the
      laws of each jurisdiction where such qualification is necessary, except where
      the failure to be so qualified or in good standing would not, in the aggregate,
      have a Material Adverse Effect, (iii) has all requisite power and authority
      and the legal right to own, pledge, mortgage and operate its property, to lease
      or sublease any property it operates under lease or sublease and to conduct
      its
      business as now or currently proposed to be conducted, (iv) is in compliance
      with its Constituent Documents, (v) is in compliance with all
      applicable

     

    
      
         

      

      
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    Requirements
      of Law, except, in each case, where the failure to be in compliance would not
      have a Material Adverse Effect, (vi) with respect to any Facility then being
      acquired, has, or upon completion of the Acquisition and completion of any
      required post closing procedures which are preconditions thereto shall have,
      all
      necessary Permits from or by, has made all necessary filings with, and has
      given
      all necessary notices to, each Governmental Authority having jurisdiction,
      to
      the extent required for such ownership, lease, sublease, operation, occupation
      or conduct of business, except where the failure to obtain such Permits, make
      such filings or give such notices would not, in the aggregate, have a Material
      Adverse Effect, and (vii) is not a foreign person within the meaning of
§ 1445(f)(3) of the Code.

     

    (b)  With
      respect to any Facility then being acquired, each Facility (i) is being operated
      as an assisted living, skilled nursing, independent senior housing or
      Alzheimer’s facility, having the number of licensed beds/units as set forth on
Schedule 4.16, attached hereto (as modified from time to time with
      Administrative Agent’s consent), (ii) is in conformance in all material respects
      with all insurance, reimbursement and cost reporting requirements, and, if
      applicable, has a current provider agreement that is in full force and effect
      under Medicare and Medicaid, and (iii) is in compliance with all applicable
      Requirements of Law, except, in each case, where the failure to be in compliance
      would not materially (x) impair the value or marketability of such Facility
      or
      (y) interfere with the ordinary conduct of the business conducted and proposed
      to be conducted at such Facility.  There is no threatened in writing,
      existing or pending revocation, suspension, termination, probation, restriction,
      limitation, or nonrenewal proceeding by any third-party payor, including
      Medicare, Medicaid, Blue Cross, Blue Shield or any other private commercial
      insurance managed care and employee assistance program (such programs, the
      “Third-Party Payor Programs”), to which any Borrower may presently be
      subject with respect to any Facility.

     

    (c)  With
      respect to any Facility then being acquired, all Licenses necessary or desirable
      for using and operating the Facilities for the uses described in clause
      (a), above, are held by, or will be held by, Borrowers, in the name of the
      applicable Borrower, as required under applicable law, and are in full force
      and
      effect, or upon completion of the Acquisition and completion of any required
      post closing procedures which are preconditions to the issuance of such
      Licenses, provided, however, that if such Facility is being
      acquired pursuant to a sale/leaseback or similar arrangement, such Licenses
      may
      be held in the names of the prior owners or operators of the Facility and used
      by the Borrowers pursuant to such sale/leaseback or similar
      arrangement.

     

    (d)  To
      the
      Borrowers’ knowledge, with respect to any Facility then being acquired, there
      are no proceedings by any Governmental Authority or notices thereof that would,
      directly or indirectly, or with the passage of time (i)
      have a material adverse impact on
      Borrowers’ ability to accept and/or retain patients or
      residents or operate such Facility for its current use or result in the
      imposition of a fine, a sanction, a lower rate certification or a lower
      reimbursement rate for services rendered to eligible patients or residents,
      (ii)
      modify, limit or result in the transfer, suspension, revocation or imposition
      of
      probationary use of any of the Licenses, other than a transfer of such License
      to the Borrowers if such License is not already held by such Borrowers; or
      (iii)
      affect any Borrower’s continued participation in the Medicaid or Medicare
      programs or any other Third-Party Payors Programs, or any successor programs
      thereto.

     

    
      
         

      

      
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    (e)  With
      respect to any Facility then being acquired, except as reviewed and approved
      by
      Administrative Agent, no Facility has received a violation, and no statement
      of
      charges or deficiencies has been made or penalty enforcement action has been
      undertaken against any Facility, Borrower or against any officer, director,
      partner, member or stockholder of any Borrower, by any Governmental Authority
      during the last five calendar years, and there have been no violations over
      the
      past five years which have threatened any Facility’s, or any Borrower’s
      certification for participation in Medicare or Medicaid or the other Third-Party
      Payor Programs.

     

    (f)  With
      respect to any Facility then being acquired, there are no current, pending
      or
      outstanding Third-Party Payor Programs reimbursement audits, appeals or
      recoupment efforts pending at any Facility, and there are no years that are
      subject to audit in respect of any Third-Party Payor Program that would, in
      each
      case, adversely affect any Borrower, other than audit rights pursuant to
      Medicare and Medicaid programs.

     

    (g)  No
      Borrower is a participant in any federal program whereby any Governmental
      Authority may have the right to recover funds by reason of the advance of
      federal funds, including those authorized under the Hill-Burton Act (42 U.S.C.
      291, et seq.), as it may be amended.

     

    (h)  With
      respect to any Facility then being acquired, substantially all of the patient
      and resident care agreements conform in all material respects with the form
      patient or resident care agreements that have been delivered to Administrative
      Agent

     

    (i)  Emeritus’
      principal place of business is at 3131 Elliot Avenue, Suite 500, Seattle,
      Washington 98121.  Emeritus is the manager and sole member of each
      Borrower and owns one hundred percent (100%) of the membership interests in
      Borrower free and clear of all liens, claims and
      encumbrances.  Emeritus has the authority to make all material
      decisions for each of the Borrowers.

     

     

    Section
      4.2  Loan
      and Related Documents.

     

      (a)
      Power and Authority.  The execution, delivery and performance
      by Emeritus and each Borrower of the Loan Documents and Related Documents to
      which it is a party (i) are within the corporate or similar powers of Emeritus
      and each Borrower and, at the time of execution thereof, have been duly
      authorized by all necessary corporate and similar action (including, if
      applicable, consent of holders of its Equity Interests), (ii) do not (A)
      contravene the Constituent Documents of any Borrower or Emeritus, (B) violate
      any applicable Requirement of Law, (C) conflict with, contravene,
      constitute a default or breach under, or result in or permit the termination
      or
      acceleration of, any material Contractual Obligation of Emeritus or any Borrower
      (including other Related Documents or Loan Documents) other than those that
      would not, in the aggregate, have a Material Adverse Effect and are not created
      or caused by, or constitute a conflict, breach, default or termination or
      acceleration event under, any Loan Document or (D) result in the imposition
      of any Lien (other than a Permitted Lien) upon any property of any Borrower
      or
      any of its Subsidiaries or any other Collateral and (iii) to any Borrower’s
      knowledge, do not require any Permit of, or filing with, any Governmental
      Authority or any consent of, or notice to, any Person, other than (A) with
      respect to the Loan Documents, the filings required to perfect the Liens created
      by the Loan Documents, (B) those listed on Schedule 4.2 and that
      have been, or will be prior to the Closing Date, obtained or made, copies of
      which have been, or will be prior to the Closing Date, delivered to the
      Administrative Agent, and each of which on the Closing Date will be in full
      force and effect and

     

    
      
         

      

      
        44

        
          

        

      

      
         

      

    

    (C)
      with
      respect to the Acquisition, those that, (1) if not obtained, would not, in
      the aggregate, have a Material Adverse Effect, or (2) will be obtained upon
      completion of the Acquisition and completion of any required post closing
      procedures or undertakings that are preconditions thereto.

     

    (b)           Due
      Execution, Delivery and Enforceability.  From and after its
      delivery to the Administrative Agent, each Loan Document and Related Document
      has been duly executed and delivered to the other parties thereto by Emeritus
      and each Borrower party thereto, as applicable, and is the legal, valid and
      binding obligation of Emeritus and each Borrower as applicable and is
      enforceable against such Person in accordance with its terms.

     

    (c)           Related
      Documents.  Each representation and warranty in each Related
      Document is true and correct in all material respects and no default, or event
      that, with the giving of notice or lapse of time or both, would constitute
      a
      default, has occurred thereunder.  As of the Closing Date, all
      applicable waiting periods in connection with the Acquisition have expired
      or
      have been terminated without any action being taken by any Governmental
      Authority (including any requisite waiting period (and any extension thereof)
      under the Hart-Scott-Rodino Antitrust Improvements Act of 1976).

     

    (d)           Emeritus.  Emeritus
      has full right, power and authority to execute the Loan Documents on its own
      behalf and on behalf of each Borrower.

     

     

    Section
      4.3  Ownership
      of the Borrowers

     

    .  The
      information set forth on the Corporate Chart is complete and accurate as of
      the
      Closing Date.  All outstanding Equity Interests of each Person listed
      thereon have been validly issued, are fully paid and non-assessable (to the
      extent applicable).  The Equity Interests of each Borrower are free
      and clear of all Liens other than the security interests created by the Loan
      Documents and, in the case of joint ventures, Permitted Liens.  There
      are no Equity Equivalents with respect to the Equity Interests of any Borrower
      as of the Closing Date, except as set forth on
Schedule 4.3.  There are no Contractual Obligations or
      other understandings to which any Borrower is a party with respect to (including
      any restriction on) the issuance, voting, Transfer or pledge of any Equity
      Interest or Equity Equivalent of any Borrower.

     

     

    Section
      4.4  Financial
      Statements

     

    .  (a)
      To Borrowers’ knowledge each of (i) the audited Consolidated balance sheet of
      the Seller as at December 31, 2006 and the related Consolidated statements
      of
      income, retained earnings and cash flows of the Seller for the Fiscal Year
      then
      ended and (ii) subject to the absence of footnote disclosure and normal
      recurring year end audit adjustments, the unaudited Consolidated balance sheets
      of the Seller as at June 30, 2007 and the related Consolidated statements of
      income, retained earnings and cash flows of the Seller for the 3 months then
      ended, copies of each of which have been furnished to the Administrative Agent,
      fairly present in all material respects the Consolidated financial position,
      results of operations and cash flow of the Seller as at the dates indicated
      and
      for the periods indicated in accordance with GAAP.

    

    (b)  Prior
      to
      the Closing Date, the Borrowers had no property, liabilities or Contractual
      Obligations other than the Loan Documents and the Related Documents and no
      Borrower had any Subsidiary.

     

    The
      Initial Projections have been prepared by the Borrowers in light of the past
      operations of the business of the Seller and its Subsidiaries and reflect
      Projections for

     

    
      
         

      

      
        45

        
          

        

      

      
         

      

    

    the
      3
      year period beginning July, 2007 on a quarterly basis for the first year and
      on
      a year by year basis thereafter.  As of the Closing Date, the Initial
      Projections are based upon estimates and assumptions stated therein, all of
      which the Borrowers believe to be reasonable and fair in light of conditions
      and
      facts known to the Borrowers as of the Closing Date and reflect the good faith,
      reasonable and fair estimates by the Borrowers of the future Consolidated
      financial performance of the Borrowers and the other information Projections
      therein for the periods set forth therein.

     

     

    Section
      4.5  Material
      Adverse Effect.

     

      Since
      the Closing Date, to any Borrower’s knowledge, there have been no events,
      circumstances, developments or other changes in facts with respect to the
      Facilities, Emeritus or the Borrowers that would, in the aggregate, have a
      Material Adverse Effect.

     

     

    Section
      4.6  Solvency.

     

      Both
      before and after giving effect to (a) the Term Loan made on or prior to the
      date
      this representation and warranty is made, (b) the disbursement of the proceeds
      of such Term Loan, (c) the consummation of the Related Transactions, and (d)
      the
      payment and accrual of all transaction costs in connection with the foregoing,
      the Borrowers, taken as a whole, are Solvent.

     

     

    Section
      4.7  Litigation.

     

      There
      are no pending (or, to the knowledge of any Borrower, threatened) actions,
      investigations, suits, proceedings, audits, claims, demands, orders or disputes
      affecting Emeritus or any Borrower with, by or before any Governmental Authority
      other than those that cannot reasonably be expected to affect the Obligations,
      the Loan Documents, the Related Documents and would not, in the aggregate,
      have
      a Material Adverse Effect.

     

     

    Section
      4.8  Taxes.

     

      All
      federal, state, local and foreign income and franchise and other material tax
      returns, reports and statements (collectively, the “Tax Returns”)
      required to be filed by any Tax Affiliate have been filed with the appropriate
      Governmental Authorities in all jurisdictions in which such Tax Returns are
      required to be filed, all such Tax Returns are true and correct in all material
      respects, and all taxes, charges and other impositions reflected therein or
      otherwise due and payable have been paid prior to the date on which any
      Liability may be added thereto for non-payment thereof except for those
      contested in good faith by appropriate proceedings diligently conducted and
      for
      which adequate reserves are maintained on the books of the appropriate Tax
      Affiliate in accordance with GAAP.  No Tax Return is under audit or
      examination by any Governmental Authority and no notice of such an audit or
      examination or any assertion of any claim for Taxes has been given or made
      by
      any Governmental Authority.  Proper and accurate amounts have been
      withheld by each Tax Affiliate from their respective employees for all periods
      in full and complete compliance with the tax, social security and unemployment
      withholding provisions of applicable Requirements of Law and such withholdings
      have been timely paid to the respective Governmental Authorities.  No
      Tax Affiliate has participated in a “reportable transaction” within the meaning
      of Treasury Regulation Section 1.6011-4(b) or has been a member of an
      affiliated, combined or unitary group other than the group of which a Tax
      Affiliate is the common parent.

     

    All
      Other
      Taxes required to be paid in connection with the transfer of the Real Property
      to Borrower and the granting of the security interest under the Loan Documents
      (including recording of the Mortgage, Mortgage Supporting Documents, and other
      Loan Documents required to be filed in connection with the Loan) have been
      paid
      or will be paid on the Closing Date, as applicable.

     

    
      
         

      

      
        46

        
          

        

      

      
         

      

    

    Margin
      Regulations

     

    .  No
      Borrower is engaged in the business of extending credit for the purpose of,
      and
      no proceeds of any Loan or other extensions of credit hereunder will be used
      for
      the purpose of, buying or carrying margin stock (within the meaning of
      Regulation U of the Federal Reserve Board) or extending credit to others for
      the
      purpose of purchasing or carrying any such margin stock, in each case in
      contravention of Regulation T, U or X of the Federal Reserve Board.

     

     

    Section
      4.9  No
      Burdensome Obligations; No Defaults

     

    .  Neither
      Emeritus or any  Borrower is a party to any Contractual Obligation,
      neither Emeritus nor any Borrower has Constituent Documents containing
      obligations, and, to the knowledge of any Borrower, there are no applicable
      Requirements of Law, in each case the compliance with which would have, in
      the
      aggregate, a Material Adverse Effect.  Neither Emeritus nor Borrower
      (and, to the knowledge of each Borrower, no other party thereto) is in default
      under or with respect to any Contractual Obligation of any Borrower, other
      than
      those that would not, in the aggregate, have a Material Adverse
      Effect.

     

     

    Section
      4.10  Single
      Purpose Entity

     

    . Each
      Borrower is and has at all times since its formation been a Single Purpose
      Entity.  All of the assumptions made in the opinion delivered on the
      Closing Date, including, but not limited to, any exhibits attached thereto,
      are
      true and correct in all respects.  Each Borrower has complied with all
      of the assumptions made with respect to it in such opinion.

     

     

    Section
      4.11  Labor
      Matters

     

    .  There
      are no strikes, work stoppages, slowdowns or lockouts existing, pending (or,
      to
      the knowledge of any Borrower, threatened) against or involving any Borrower,
      except, for those that would not, in the aggregate, have a Material Adverse
      Effect.  Except as set forth on Schedule 4.12, as of the
      Closing Date, (a) there is no collective bargaining or similar agreement with
      any union, labor organization, works council or similar representative covering
      any employee of any Borrower, (b) no petition for certification or election
      of
      any such representative is existing or pending with respect to any employee
      of
      any Borrower and (c) no such representative has sought certification or
      recognition with respect to any employee of any Borrower.

     

     

    Section
      4.12  ERISA

     

    .  Except
      for those that would not, in the aggregate, have a Material Adverse Effect,
      each
      Benefit Plan, and each trust thereunder, intended to qualify for tax exempt
      status under Section 401 or 501 of the Code has been
      maintained in compliance with the requirements thereof.  Except for
      those that would not, in the aggregate, have a Material Adverse Effect, (x)
      each
      Benefit Plan is in compliance with applicable provisions of ERISA, the Code
      and
      other Requirements of Law, (y) there are no existing or pending (or to the
      knowledge of any Borrower, threatened) claims (other than routine claims for
      benefits in the normal course), sanctions, actions, lawsuits or other
      proceedings or investigation involving any Benefit Plan to which any Borrower
      incurs or otherwise has or could have an obligation or any Liability and (z)
      no
      ERISA Event is reasonably expected to occur.  On the Closing Date, no
      ERISA Event has occurred in connection with which obligations and liabilities
      remain outstanding that could reasonably be expected to have a Material Adverse
      Effect.  No ERISA Affiliate would have any Withdrawal Liability as a
      result of a complete withdrawal from any Multiemployer Plan on the date this
      representation is made that could reasonably be expected to have a Material
      Adverse Effect.

     

    
      
         

      

      
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    Environmental
      Matters

     

    .  Except
      as set forth on Schedule 4.14, (a) the operations of each
      Facility and each Borrower are and have been in compliance with all applicable
      Environmental Laws, including obtaining, maintaining and complying with all
      Permits required by any applicable Environmental Law, other than non-compliances
      that, in the aggregate, would not have a reasonable likelihood of resulting
      in
      Material Environmental Liabilities, (b) no Borrower is party to, and no Borrower
      and no real property currently (or to the knowledge of any Borrower previously)
      owned, leased, subleased, operated or otherwise occupied by or for any Borrower
      is subject to or the subject of, any pending (or, to the knowledge of any
      Borrower, threatened) order, action, investigation, suit, proceeding, audit,
      claim, demand, dispute or notice of violation or of potential liability or
      similar notice under or pursuant to any Environmental Law other than those
      that,
      in the aggregate, are not reasonably likely to result in Material Environmental
      Liabilities, (c) no Lien in favor of any Governmental Authority securing, in
      whole or in part, Environmental Liabilities has attached to any property of
      any
      Borrower and, to the knowledge of any Borrower, no facts, circumstances or
      conditions exist that could reasonably be expected to result in any such Lien
      attaching to any such property, (d) no Borrower has caused or suffered to occur
      a Release of Hazardous Materials at, to or from any real property of any
      Borrower and, to the knowledge of any Borrower, each such real property is
      free
      of contamination by any Hazardous Materials except for such Release or
      contamination that could not reasonably be expected to result, in the aggregate,
      in Material Environmental Liabilities, (e) no Borrower (i) is or has been
      engaged in, or has permitted any current or former tenant to engage in,
      operations, or (ii) knows of any facts, circumstances or conditions, including
      receipt of any information request or notice of potential responsibility under
      CERCLA or similar Environmental Laws, that, in the aggregate, would have a
      reasonable likelihood of resulting in Material Environmental Liabilities and
      (f)
      each Borrower has made available to the Administrative Agent copies of all
      existing environmental reports, reviews and audits and all documents pertaining
      to actual or potential Environmental Liabilities, in each case to the extent
      such reports, reviews, audits and documents are in their possession, custody
      or
      control.

     

     

    Section
      4.13  Intellectual
      Property

     

    .  Each
      Borrower owns or licenses, or uses pursuant to a Management Agreement, all
      Intellectual Property that is necessary for the operations of its
      businesses.  To the knowledge of each Borrower, (a) the conduct and
      operations of the businesses of each Borrower does not infringe, misappropriate,
      dilute, violate or otherwise impair any Intellectual Property owned by any
      other
      Person and (b) no other Person has contested any right, title or interest of
      any
      Borrower in, or relating to, any Intellectual Property, other than, in each
      case, as cannot reasonably be expected to affect the Loan Documents and the
      transactions contemplated therein and would not, in the aggregate, have a
      Material Adverse Effect.  In addition, (x) there are no pending
      (or, to the knowledge of any Borrower, threatened) actions, investigations,
      suits, proceedings, audits, claims, demands, orders or disputes affecting any
      Borrower with respect to, (y) no judgment or order regarding any such claim
      has
      been rendered by any competent Governmental Authority, no settlement agreement
      or similar Contractual Obligation has been entered into by any Borrower, with
      respect to and (z) no Borrower knows or has any reason to know of any valid
      basis for any claim based on, any such infringement, misappropriation, dilution,
      violation or impairment or contest, other than, in each case, as cannot
      reasonably be expected to affect the Loan Documents and the transactions
      contemplated therein and would not, in the aggregate, have a Material Adverse
      Effect.

     

     

    Section
      4.14  Title;
      Real Property

     

    .  (a)
      Set forth on Schedule 4.16 is, as of the Closing Date, (i) a
      complete and accurate list of all real property owned in fee simple by any
      Borrower or in which any Borrower owns a leasehold interest setting forth,
      for
      each such real property, the

     

    
      
         

      

      
        48

        
          

        

      

      
         

      

    

    current
      street address (including, where applicable, county, state and other relevant
      jurisdictions), the record owner thereof and, where applicable, each lessee
      and
      sublessee thereof, (ii) any lease, sublease, license or sublicense of such
      real
      property by any Borrower and (iii) for each such real property that the
      Administrative Agent has requested be subject to a Mortgage or that is otherwise
      material to the business of any Borrower, each Contractual Obligation by any
      Borrower, whether contingent or otherwise, to Transfer such real
      property.

     

    (b)           Each
      Borrower has good and marketable fee simple title to all owned real property
      and
      valid leasehold interests in all leased real property, and owns all personal
      property, in each case that is purported to be owned or leased by it, including
      those reflected on the most recent Financial Statements delivered by the
      Borrower, and none of such property is subject to any Lien except Permitted
      Liens.  All such real and personal property represents all of the
      property used in the operation of the business located on the Real
      Property.

     

    (c)           No
      condemnation has been commenced or, to the Borrowers’ knowledge, is contemplated
      with respect to all or any portion of any Facility or for the relocation of
      roadways providing access to any Facility.

     

    (d)           Each
      Facility has adequate rights of access to public ways and is served by adequate
      water, sewer sanitary sewer and storm drain facilities.  All public
      utilities necessary or convenient to the full use and enjoyment of each Facility
      is located in the public right-of-way abutting each Facility or in a duly
      recorded easement, and all such utilities are connected so as to serve such
      Facility without passing over other property, except to the extent such other
      property is subject to a recorded easement for such utility.  Except
      as shown on the As-Built Surveys, all roads necessary for the full utilization
      of each Facility for its current purpose have been completed and dedicated
      to
      public use and accepted by all government authorities.

     

    (e)           All
      real estate taxes and assessments, special or otherwise, which are due and
      payable with respect to each parcel of Real Property has been paid in full
      and
      there are no pending or, to Borrowers’ knowledge, proposed special or other
      assessments for public improvements or otherwise affecting the Real Property,
      nor are there any contemplated improvements to the Real Property that may result
      in such special or other assessments.

     

    (f)           No
      improvements on any parcel of Real Property is within a special flood hazard
      area nor is eligible for flood insurance under the U. S. Flood Disaster
      Protection Act of 1973, as amended or as a wetlands area by any governmental
      entity having jurisdiction over any Real Property.

     

    (g)           The
      Real Property for each Facility is comprised of one (1) or more contiguous
      parcels that constitute a separate tax lot or lots and does not constitute
      or
      include a portion of any other tax lot not a part of such Real
      Property.

     

    (h)           To
      Borrower’s knowledge and except as expressly disclosed in any report addressing
      the physical condition of the Real Property, such Real Property, including,
      without limitation, all buildings, improvements, parking facilities, sidewalks,
      storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection
      systems, electrical systems, equipment, elevators, exterior sidings and doors,
      landscaping, irrigation systems and all structural components, are in good
      condition, order and repair in all material respects; to Borrower’s knowledge
      and except as disclosed in such report, there exists no structural or other
      material

     

    
      
         

      

      
        49

        
          

        

      

      
         

      

    

    defects
      or damages in or to the Real Property, whether latent or otherwise, and Borrower
      has not received any written notice from any insurance company or bonding
      company of any defects or inadequacies in the Property, or any part thereof,
      which would adversely affect the insurability of the same or cause the
      imposition of extraordinary premiums or charges thereon or of any termination
      or
      threatened termination of any policy of insurance or bond.

     

    (i)           Each
      Lease associated with a Facility, other than any resident care agreement or
      any
      Lease pursuant to which the Facility is leased back to its prior owner after
      purchase by the Borrower, is terminable upon 30 days’ notice by Borrower to the
      tenant thereunder.

     

     

    Section
      4.15  Full
      Disclosure

     

    .  The
      information prepared or furnished by or on behalf of any Borrower in connection
      with any Loan Document or Related Document (including the information contained
      in any Financial Statement or Disclosure Document), does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make
      the statements contained therein, in light of the circumstances when made,
      not
      misleading; provided, however, that Projections contained therein
      are not to be viewed as factual and that actual results during the periods
      covered thereby may differ from the results set forth in such Projections by
      a
      material amount.  All Projections that are part of such information
      (including those set forth in any Projections delivered subsequent to the
      Closing Date) are based upon good faith estimates and stated assumptions
      believed to be reasonable and fair as of the date made in light of conditions
      and facts then known and, as of such date, reflect good faith, reasonable and
      fair estimates of the information projected for the periods set forth
      therein.  All facts known to any Borrower and material to an
      understanding of the financial condition, business, property or prospects of
      the
      Borrower taken as one enterprise have been disclosed to the
      Lenders.  The foregoing representation shall be limited to the
      Borrowers’ knowledge with respect to any reports or information furnished by a
      third party unless such third party has been engaged by the Borrowers to prepare
      such information for or on behalf of the Borrowers.

     

     

    Section
      4.16  Operation

     

    .  Each
      Borrower shall, and shall cause the manager under any Management Agreement
      to,
      (i) promptly perform and/or observe all of the covenants and agreements required
      to be performed and observed by it under the applicable Management Agreement
      in
      all material respects and do all things necessary to preserve and to keep
      unimpaired its material rights thereunder; (ii) promptly notify the
      Administrative Agent of any “event of default” under the applicable Management
      Agreement of which it is aware; (iii) promptly deliver to the Administrative
      Agent a copy of each financial statement, capital expenditures plan, property
      improvement plan and any other accounting report received by it under the
      applicable Management Agreement; and (iv) enforce in a commercially reasonable
      manner the performance and observance of all of the material covenants and
      agreements required to be performed and/or observed by such Manager under the
      applicable Management Agreement.

     

     

    Section
      4.17  Estoppel
      Certificates

     

    .  Borrowers
      shall, from time to time, upon thirty (30) days’ prior written request from the
      Administrative Agent, execute, acknowledge and deliver to the Administrative
      Agent, an Officer’s Certificate, stating that this Agreement and the other Loan
      Documents are unmodified and in full force and effect (or, if there have been
      modifications, that this Agreement and the other Loan Documents are in full
      force and effect as modified and setting forth such modifications), stating
      the
      amount of accrued and unpaid interest and the outstanding principal amount
      of
      the Note and containing such other information with respect to the Borrowers,
      the Property and the Loan as the Administrative Agent shall reasonably
      request.

     

    
      
         

      

      
        50

        
          

        

      

      
         

      

    

    The
      estoppel certificate shall also state either that to any Borrower’s knowledge no
      Default exists hereunder or, if any Default shall exist hereunder, specify
      such
      Default and the steps being taken to cure such Default.

     

     

    ARTICLE
      V                                

     

     

    

     

     

    FINANCIAL
      COVENANTS

     

    Each
      Borrower agrees with the Lenders and the Administrative Agent to the following,
      as long as any Obligation or any Commitment remains outstanding:

     

     

    Section
      5.1  Minimum
      Occupancy

     

    .  Commencing
      on December 31, 2007, and as of the last day of each Fiscal Quarter thereafter
      the average daily occupancy for the Facilities taken as whole for the
      immediately preceding three (3) month period shall be greater than ninety
      percent (90%) of the average daily occupancy at the Facilities taken as whole
      for the three month period immediately preceding the Closing Date.
“Occupancy” under this Section 5.1 shall mean beds occupied by
      resident at any Facility and paying at least applicable Medicare, Medicaid
      or
      insurance reimbursable dates.

     

     

    Section
      5.2  Minimum
      Consolidated Project Yield

     

    .  Commencing
      on the Income Threshold Date and continuing thereafter, the Borrowers shall
      have
      as of the last day of each Fiscal Quarter for the four Fiscal Quarter period
      then ended during each period set forth below a Consolidated Project Yield
      of
      not less than the percentage set forth opposite such period:

     

    
      	
              PERIOD

            	
              MINIMUM
                FACILITY YIELD

            
	
              From
                the Closing Date to

              June
                30, 2010

            	
              9%

            
	
              From
                July 1, 2010 to

              June
                30, 2011

            	
              10%

            
	
              From
                July 1, 2011

              and
                thereafter

            	
              11%

            

    

     

    Section
      5.3  Debt
      Service Coverage Ratio. Commencing on the Income Threshold Date and
      continuing thereafter, the Borrowers shall have as of the last day of each
      Fiscal Quarter for the four Fiscal Quarter period then ended a Debt Service
      Coverage Ratio of not less than 1.20 to 1.00.

     

     

    ARTICLE
      VI                                

     

     

    

     

     

    REPORTING
      COVENANTS

     

    Each
      Borrower agrees with the Lenders and the Administrative Agent to each of the
      following, as long as any Obligation or any Commitment remains
      outstanding:

     

     

    Section
      6.1  Financial
      Statements

     

    .  The
      Borrowers shall deliver to the Administrative Agent each of the
      following:

     

    
      
         

      

      
        51

        
          

        

      

      
         

      

    

    Monthly
      Reports.  (i) As soon as available, and in any event within 30
      days after the end of each of the first two fiscal months in each Fiscal
      Quarter, the Consolidated  and consolidating unaudited balance sheet
      of the Borrowers as of the close of such fiscal month and related Consolidated
      and consolidating statements of income and cash flow for such fiscal month
      and
      that portion of the Fiscal Year ending as of the close of such fiscal month,
      setting forth in comparative form the figures for the corresponding period
      in
      the prior Fiscal Year, in each case certified by a Responsible Officer of the
      Borrowers as fairly presenting in all material respects the Consolidated
      financial position, results of operations and cash flow of the Borrowers as
      at
      the dates indicated and for the periods indicated in accordance with GAAP
      (subject to the absence of footnote disclosure and normal year-end audit
      adjustments).

     

    (ii)
      As
      soon as available, and in any event within 30 days after the end of each
      calendar month, for such calendar month, statements of the operations of each
      Facility (including a current occupancy report, operating statement) as of
      the
      last day of such calendar month; and aged accounts receivable.

     

    Quarterly
      Reports.  As soon as available, and in any event within 45 days
      after the end of each of the first three Fiscal Quarters of each Fiscal Year,
      (i) the Consolidated and consolidating unaudited balance sheet of the Borrowers
      as of the close of such Fiscal Quarter and related Consolidated and
      consolidating statements of income and cash flow for such Fiscal Quarter and
      that portion of the Fiscal Year ending as of the close of such Fiscal Quarter,
      setting forth in comparative form the figures for the corresponding period
      in
      the prior Fiscal Year and the figures contained in the latest Projections,
      in
      each case certified by a Responsible Officer of the Borrowers as fairly
      presenting in all material respects the Consolidated financial position, results
      of operations and cash flow of the Borrowers as at the dates indicated and
      for
      the periods indicated in accordance with GAAP (subject to the absence of
      footnote disclosure and normal year-end audit adjustments).

     

    Annual
      Reports.  As soon as available, and in any event within 90 days
      after the end of each Fiscal Year, the Consolidated and consolidating balance
      sheet of the Borrowers as of the end of such year and related Consolidated
      and
      consolidating statements of income, stockholders’ equity and cash flow for such
      Fiscal Year, each prepared in accordance with GAAP, together with a
      certification by the Borrowers’ Accountants that (i) such Consolidated Financial
      Statements fairly present in all material respects the Consolidated financial
      position, results of operations and cash flow of the Borrowers as the dates
      indicated and for the periods indicated therein in accordance with GAAP without
      qualification as to the scope of the audit or as to going concern and without
      any other similar qualification and (ii) in the course of the regular audit
      of
      the businesses of the Borrowers, which audit was conducted in accordance with
      the standards of the United States’ Public Company Accounting Oversight Board
      (or any successor entity), such Borrowers’ Accountants have obtained no
      knowledge that a Default in respect of any financial covenant contained in
      Article V is continuing or, if in the opinion of the Borrowers’
Accountants such a Default is continuing, a statement as to the nature
      thereof.

     

    Compliance
      Certificate.  Together with each delivery of any Financial
      Statement pursuant to clause (b) or (c) above, a Compliance
      Certificate duly executed by a Responsible Officer of the Borrowers that, among
      other things, (i) shows in reasonable detail the calculations used in
      determining the Consolidated Project Yield, (ii) demonstrates compliance, or
      failure to comply, if applicable, with each financial covenant contained
      in

     

    
      
         

      

      
        52

        
          

        

      

      
         

      

    

    Article V
      that is tested at least on a quarterly basis and (iii) states that no Event
      of
      Default is continuing as of the date of delivery of such Compliance Certificate
      or, if a Event of Default is continuing, states the nature thereof and the
      action that the relevant Borrower proposes to take with respect
      thereto.

     

    Corporate
      Chart and Other Collateral Updates.  As part of the Compliance
      Certificate delivered pursuant to clause (d) above, each in form and
      substance reasonably satisfactory to the Administrative Agent, a certificate
      by
      a Responsible Officer of the Borrowers that (i) the Corporate Chart attached
      thereto (or the last Corporate Chart delivered pursuant to this clause
      (e)) is correct and complete as of the date of such Compliance Certificate,
      (ii) the Borrowers have delivered all documents (including updated schedules
      as
      to locations of Collateral and acquisition of Intellectual Property or real
      property) they are required to deliver pursuant to any Loan Document on or
      prior
      to the date of delivery of such Compliance Certificate and (iii) complete
      and correct copies of all documents modifying any term of any Constituent
      Document of any Borrower or any Subsidiary or joint venture thereof on or prior
      to the date of delivery of such Compliance Certificate have been delivered
      to
      the Administrative Agent or are attached to such certificate.

     

    Additional
      Projections.  As soon as available and in any event not later than
      30 days after the end of each Fiscal Year, any significant revisions to, (i)
      the
      annual business plan of the Borrowers for the Fiscal Year next succeeding such
      Fiscal Year and (ii) forecasts prepared by management of the Borrowers (A)
      for each Fiscal Quarter in such next succeeding Fiscal Year and (B) for each
      other succeeding Fiscal Year through the Fiscal Year containing the Scheduled
      Maturity Date, in each case including in such forecasts (x) a projected year-end
      Consolidated balance sheet, income statement and statement of cash flows, (y)
      a
      statement of all of the material assumptions on which such forecasts are based
      and (z) substantially the same type of financial information as that
      contained in the Initial Projections.

     

    Intercompany
      Loan Balances.  Together with each delivery of any Compliance
      Certificate pursuant to clause (d) above, a summary of the outstanding
      balances of all significant intercompany Indebtedness as of the last day of
      the
      Fiscal Quarter covered by such Financial Statement, certified as complete and
      correct by a Responsible Officer of the Borrowers as part of the Compliance
      Certificate delivered in connection with such Financial Statements.

     

    Audit
      Reports, Management Letters, Etc.  Together with each delivery of
      any Financial Statement for any Fiscal Year pursuant to clause (c) above,
      copies of each management letter, audit report or similar letter or report
      received by any Borrower from any independent registered certified public
      accountant (including the Borrowers’ Accountants) in connection with such
      Financial Statements or any audit thereof, each certified to be complete and
      correct copies by a Responsible Officer of the Borrowers as part of the
      Compliance Certificate delivered in connection with such Financial
      Statements.

     

    Insurance.  Together
      with each delivery of any Financial Statement for any Fiscal Year pursuant
      to
clause (c) above, each in form and substance satisfactory to the
      Administrative Agent and certified as complete and correct by a Responsible
      Officer of the Borrowers as part of the Compliance Certificate delivered in
      connection with such Financial Statements, to the extent that there have been
      changes in any such material insurance coverage

     

    
      
         

      

      
        53

        
          

        

      

      
         

      

    

    since
      last delivered to the Administrative Agent, a summary of all changes to any
      material insurance coverage maintained as of the date thereof by any Borrower,
      together with such other related documents and information as the Administrative
      Agent may reasonably require.

     

     

    Section
      6.2  Other
      Events

     

    .  The
      Borrowers shall give the Administrative Agent notice of each of the following
      (which may be made by telephone if promptly confirmed in writing) promptly
      after
      any Responsible Officer of any Borrower knows or has reason to know of
      it:  (a)(i) any Default and (ii) any event that would have a
      material adverse impact on any Borrower or any Facility, specifying, in each
      case, the nature and anticipated effect thereof and any action proposed to
      be
      taken in connection therewith, (b) any event (other than any event involving
      loss or damage to property) and any material Property Loss Event reasonably
      expected to result in a mandatory payment of the Obligations pursuant to
Section 2.4, stating the material terms and conditions of such
      transaction and estimating the Net Cash Proceeds thereof, (c) the commencement
      of, or any material developments in, any action, investigation, suit,
      proceeding, audit, claim, demand, order or dispute with, by or before any
      Governmental Authority affecting any Borrower or any property of any Borrower
      that (i) seeks injunctive or similar relief, (ii) in the reasonable
      judgment of such Borrower, exposes any Borrower to liability in an aggregate
      amount in excess of $100,000 or (iii) if adversely determined would have a
      material adverse impact on any Borrower or any Facility, and (d) the acquisition
      of any material real property or the entering into any material lease (and
      for
      purposes hereof, resident care agreements shall not be deemed to be material
      leases).

     

     

    Section
      6.3  Copies
      of Notices and Reports

     

    .  The
      Borrowers shall promptly deliver to the Administrative Agent copies of each
      of
      the following:  (a) all reports that any Borrower transmits to its
      security holders generally, (b) all documents that any Borrower files with
      the
      Securities and Exchange Commission, the National Association of Securities
      Dealers, Inc., any securities exchange or any Governmental Authority exercising
      similar functions, (c) all press releases not made available directly to the
      general public, and (d) any material document transmitted or received pursuant
      to, or in connection with, the Related Transaction or any Contractual Obligation
      governing Indebtedness of any Borrower.

     

     

    Section
      6.4  Taxes

     

    .  The
      Borrowers shall give the Administrative Agent notice of each of the following
      (which may be made by telephone if promptly confirmed in writing) promptly
      after
      any Responsible Officer of any Borrower knows or has reason to know of
      it:  (a) the creation, or filing with the IRS or any other
      Governmental Authority, of any Contractual Obligation or other document
      extending, or having the effect of extending, the period for assessment or
      collection of any taxes with respect to any Tax Affiliate and (b) the creation
      of any Contractual Obligation of any Tax Affiliate, or the receipt of any
      request directed to any Tax Affiliate, to make any adjustment under Section
      481(a) of the Code, by reason of a change in accounting method or otherwise,
      which would have a Material Adverse Effect.

     

     

    Section
      6.5  Labor
      Matters

     

    .  The
      Borrowers shall give the Administrative Agent notice of each of the following
      (which may be made by telephone if promptly confirmed in writing), promptly
      after, and in any event within 30 days after any Responsible Officer of any
      Borrower knows or has reason to know of it:  (a) the commencement of
      any material labor dispute to which any Borrower is or may become a party,
      including any strikes, lockouts or other disputes relating to any of such
      Person’s plants and other facilities and (b) the incurrence by any Borrower of
      any Worker Adjustment and Retraining Notification Act or related or
      similar

     

    
      
         

      

      
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    liability
      incurred with respect to the closing of any plant or other facility of any
      such
      Borrower (other than, in the case of this clause (b), those that would
      not, in the aggregate, have a material adverse impact on any Borrower or any
      Facility).

     

     

    Section
      6.6  ERISA
      Matters

     

    .  In
      the event a Borrower knows or has reason to know thereof, such Borrower shall
      give the Administrative Agent (a) on or prior to any filing by any ERISA
      Affiliate of any notice of intent to terminate any Title IV Plan, a copy of
      such notice and (b) promptly, and in any event within 30 days, after any
      Responsible Officer of any ERISA Affiliate knows or has reason to know that
      a
      request for a minimum funding waiver under Section 412 of the Code has been
      filed with respect to any Title IV Plan or Multiemployer Plan, a notice
      (which may be made by telephone if promptly confirmed in writing) describing
      such waiver request and any action that any ERISA Affiliate proposes to take
      with respect thereto, together with a copy of any notice filed with the PBGC
      or
      the IRS pertaining thereto.

     

     

    Section
      6.7  Environmental
      Matters

     

    .  (a)           The
      Borrowers shall provide the Administrative Agent notice of each of the following
      (which may be made by telephone if promptly confirmed by the Administrative
      Agent in writing) promptly after any Responsible Officer of any Borrower knows
      or has reason to know of it (and, upon reasonable request of the Administrative
      Agent, documents and information in connection
      therewith):  (i)(A) unpermitted Releases, (B) the receipt by any
      Borrower of any notice of violation of or potential liability or similar notice
      under, or the existence of any condition that could reasonably be expected
      to
      result in violations of or liabilities under, any
      Environmental Law or (C) the commencement of, or any material change to, any
      action, investigation, suit, proceeding, audit, claim, demand, dispute alleging
      a violation of or liability under any Environmental Law, that, for each of
      clauses (A), (B) and (C) above (and, in the case of
clause (C), if adversely determined), could reasonably
      be expected
      to result in Material Environmental Liabilities, and (ii) the receipt by any
      Borrower of notification that any property of any Borrower
      is subject to any Lien in favor of any Governmental Authority securing, in
      whole
      or in part, Environmental Liabilities.

     

    (b)           Upon
      request of the Administrative Agent, each Borrower, as applicable, shall provide
      the Administrative Agent a report containing an update as to the status of
      any
      environmental, health or safety compliance, hazard or liability issue identified
      in any document, in each case, delivered to any Secured Party pursuant to any
      Loan Document or as to any condition reasonably believed by the Administrative
      Agent to result in Material Environmental
      Liabilities.

     

     

    Section
      6.8  Other
      Information

     

    .  Each
      Borrower, as applicable, shall provide the Administrative Agent with such other
      documents and information with respect to the business, property, condition
      (financial or otherwise), financial or corporate or similar affairs or
      operations of such Borrower as the Administrative Agent or such Lender through
      the Administrative Agent may from time to time reasonably request.

     

     

    ARTICLE
      VII                                

     

     

    

     

     

    AFFIRMATIVE
      COVENANTS

     

    Each
      Borrower agrees with the Lenders and the Administrative Agent to each of the
      following, as long as any Obligation or any Commitment remains
      outstanding:

     

    
      
         

      

      
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    Maintenance
      of Corporate Existence

     

    .  Each
      Borrower shall (a) preserve and maintain its legal
      existence as a Single Purpose Entity, except in the consummation of transactions
      expressly permitted by Sections 8.4 and 8.7, and (b) preserve and
      maintain it rights (charter and statutory), privileges, franchises and Permits
      necessary or desirable in the conduct of its business, except, in the case
      of
      this clause (b), where the failure to do so would not have a Material
      Adverse Effect on any Borrower or any Facility.

     

     

    Section
      7.1  Compliance
      with Laws and Healthcare Matters, Etc.

     

      (a)
      Each Borrower shall comply with all applicable Requirements of Law, Contractual
      Obligations and Permits, except for such failures to comply that would not
      have
      a material adverse impact on any Borrower or any Facility.

     

    (b)           Without
      limiting the generality of the forgoing or any other provision of this
      Agreement, each Borrower and their employees and contractors (other than
      contracted agencies) in the exercise of their duties on behalf of any Borrower
      (with respect to its operation of the Facilities) shall be in compliance with
      all applicable Requirements of Law relating to patient healthcare and/or patient
      healthcare information, including without limitation (to the extent that any
      Borrower is a “covered entity” as defined therein) the Health Insurance
      Portability and Accountability Act of 1996, as amended, and the rules and
      regulations promulgated thereunder (“HIPAA”) (collectively,
“Healthcare Laws”)).  Each Borrower shall maintain in all
      material respects all records required to be maintained by any Governmental
      Authority or otherwise under the Healthcare Laws.  Each Borrower shall
      maintain all Governmental Approvals necessary under applicable Requirements
      of
      Law to own and/or operate the Facilities, as applicable (including such
      Governmental Approvals as are required under such the Healthcare
      Laws).

     

    (c)           Intentionally
      Omitted.

     

    (d)           If
      required under applicable Requirements of Law, each Borrower shall maintain
      in
      full force and effect a valid certificate of need or similar certificate,
      license, or approval issued by the State Regulator for the requisite number
      of
      licensed beds and units in the Facilities (as shown on Schedule 4.16,
      attached hereto), and a provider agreement or other required documentation
      of
      approved provider status for each provider payment or reimbursement program
      listed in Schedule 7.2, attached hereto.  All required
      Government Approvals necessary for operation of the Facilities are listed on
      Schedule 7.2 hereto (collectively with all certificates of need, if
      applicable, the “Licenses”).  Each Borrower shall operate the
      Facilities in accordance with and shall maintain in full force and effect,
      all
      Licenses.  True and complete copies of the Licenses have been
      delivered to Administrative Agent.

     

    (e)           Each
      Facility has in full force and effect all necessary Medicare and Medicaid
      provider agreements and similar agreements with other third party payors and
      shall be operated in compliance with all requirements for participation in
      all
      Medicare, Medicaid, Blue Cross and/or Blue Shield, and any other private
      commercial insurance managed care and employee assistance program (such
      programs, the “Third-Party Payor Programs”) Third-Party Payor
      Programs.

     

    (f)           No
      Borrower, other than in the normal course of business, shall change the terms
      of
      any Third-Party Payor Program now or hereinafter in effect or their normal
      billing payment or reimbursement policies and procedures with respect thereto
      (including the amount and timing of finance charges, fees and
      write-offs).  All cost reports and financial reports

     

    
      
         

      

      
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    submitted
      by any Borrower to any third party payor will be materially accurate and
      complete and have not been and will not be misleading in any material respects
      and all patient or resident records, including patient or resident trust fund
      accounts, will remain true and correct in all material respects.

     

    (g)           Intentionally
      Omitted.

     

    (h)           No
      patient or resident care agreements entered into after the Closing Date for
      such
      Facility, shall deviate in any material adverse respect from the form patient
      or
      resident care agreements which have been delivered to Administrative Agent,
      except to the extent necessary to comply with applicable law.

     

     

    Section
      7.2  Payment
      of Obligations

     

    .  Each
      Borrower shall pay or discharge before they become delinquent (a) all material
      claims, taxes, assessments, charges and levies imposed by any Governmental
      Authority and (b) all other lawful claims that if unpaid would, by the operation
      of applicable Requirements of Law, become a Lien upon any property of any
      Borrower, except, in each case, for those whose amount or validity is being
      contested in good faith by proper proceedings diligently conducted and for
      which
      adequate reserves are maintained by the appropriate Borrower.

     

     

    Section
      7.3  Maintenance
      of Property

     

    .  Each
      Borrower shall maintain and preserve, in compliance with all Requirements of
      Law, (a) in good working order and condition all of its property necessary
      in
      the conduct of its business and (b) all rights, permits, licenses, approvals
      and
      privileges (including all Permits) necessary, used or useful, whether because
      of
      its ownership, lease, sublease or other operation or occupation of property
      or
      other conduct of its business, and shall make all necessary or appropriate
      filings with, and give all required notices to, Government Authorities, except
      for such failures to maintain and preserve the items set forth in clauses
      (a) and (b) above for each Facility, that would not materially (x)
      impair the value or marketability of such Facility or (y) interfere with the
      ordinary conduct of the business conducted and proposed to be conducted at
      such
      Facility.

     

     

    Section
      7.4  Maintenance
      of Insurance

     

    .  (a)
      Property.  The Borrowers shall keep the Real Properties insured
      against damage by fire and the other hazards covered by a standard extended
      coverage and “special perils” insurance policy (including a separate policy for
      broad form boiler and machinery coverage (without exclusion for explosion))
      for
      the full insurable value thereof, the term “full insurable value” to mean the
      actual replacement cost of the improvements and the personal property (without
      taking into account depreciation or co-insurance), and shall maintain such
      other
      casualty insurance as reasonably required by the Administrative Agent,
      including, without limitation, ordinance or law coverage, in amounts and in
      form
      approved by the Administrative Agent as of the Closing Date which amounts and
      form shall not be changed without the prior written consent of the
      Administrative Agent.  The Borrowers shall keep the Facilities insured
      against loss by flood if any Facility is located in an area identified by the
      Federal Emergency Management Agency as an area having special flood hazards
      and
      in which flood insurance has been made available under the National Flood
      Insurance Act of 1968, the Flood Disaster Protection Act of 1973 and the
      National Flood Insurance Reform Act of 1994 (and any successor acts thereto)
      in
      an amount at least equal to the amount approved by the Administrative Agent
      as
      of the Closing Date.  The proceeds of insurance paid on account of any
      damage or destruction to any Facility shall be paid to the Administrative Agent
      to be applied as provided in Section 2.6(b).

     

    
      
         

      

      
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    (b)           Liability.  The
      Borrowers shall maintain (i) commercial general liability insurance with
      respect to the Facilities; (ii) worker’s compensation insurance and
      employer’s liability insurance covering employees at the Facilities employed by
      the Borrowers (to the extent required, and in the amounts required by applicable
      laws); (iii) business interruption insurance, including use and occupancy,
      rental income loss and extra expense, against all periods covered by the
      Borrowers’ property insurance; (iv) umbrella liability, (v) builder’s
      risk insurance, as applicable, and (vi) Terrorism insurance (subject to the
      requirements of this Section 7.5).  All of the above shall be
      maintained at all times during the term of the Loan with coverages, in the
      amounts and forms and with limits approved by the Administrative Agent as of
      the
      Closing Date, which amounts, limits and form shall not be changed or reduced
      without the prior written consent of the Administrative
      Agent.  Without limiting the foregoing and notwithstanding anything to
      the contrary contained in this Agreement, if on the Closing Date, Terrorism
      is
      an exclusion from coverage in any such insurance policy with respect to any
      Facility, then the Borrowers shall, upon the Administrative Agent’s request,
      obtain a separate policy insuring specifically against Terrorism; provided,
      that
      such coverage is (A) customarily obtained by owners of property of similar
      size
      and quality of such Facility and (B) readily available at a cost that, in
      Administrative Agent’s reasonable opinion, is commercially
      reasonable.

     

    (c)           Intentionally
      Omitted.

     

    (d)           Form
      and Quality.  All insurance policies shall be endorsed in form and
      substance acceptable to the Administrative Agent to name the Administrative
      Agent as an additional insured, loss payee or mortgagee thereunder, as its
      interest may appear, with loss payable to the Administrative Agent, without
      contribution, under a standard New York (or local equivalent) mortgagee
      clause.  All such insurance policies and endorsements shall be fully
      paid for and contain such provisions and expiration dates and be in such form
      and issued by such insurance companies licensed to do business in the State
      where each Facility is located, with a rating of “A-IX” or better as established
      by Best’s Rating Guide (or an equivalent rating approved in writing by the
      Administrative Agent).  Each policy shall provide that such policy may
      not be cancelled or materially changed except upon thirty (30) days’ prior
      written notice (or ten (10) days’ prior written notice if for non-payment) of
      intention of non-renewal, cancellation or material change to the Administrative
      Agent and that no act or thing done by the Borrowers shall invalidate any policy
      as against the Administrative Agent.  The Borrowers shall deliver
      copies of all original policies certified to the Administrative Agent by the
      insurance company or authorized agent as being true copies, together with the
      endorsements required hereunder.  The proceeds of insurance policies
      coming into the possession of the Administrative Agent shall be deemed trust
      funds, and the Administrative Agent shall be entitled to apply such proceeds
      as
      herein provided.  The Borrowers shall not maintain any separate or
      additional property insurance which is contributing in the event of loss unless
      it is properly endorsed and otherwise satisfactory to the Administrative Agent
      in all respects.

     

    (e)           Adjustments.  The
      Borrowers shall give immediate written notice of any loss to the insurance
      carrier and to the Administrative Agent.  During any Event of Default,
      the Borrowers hereby irrevocably authorize and empower the Administrative Agent,
      as attorney-in-fact for the Borrowers coupled with an interest, to make proof
      of
      loss, to adjust and compromise any claim under insurance policies, to appear
      in
      and prosecute any action arising from such insurance policies, to collect and
      receive insurance proceeds, and to deduct therefrom the Administrative Agent’s
      reasonable expenses incurred in the collection of such
      proceeds.  Nothing contained in this Section 7.5, however,
      shall require the Administrative Agent to incur any

     

    
      
         

      

      
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    expense
      or take any action hereunder, provided if the Administrative Agent commences
      to
      make proof of loss, adjust or compromise any such claim, then it shall be
      obligated to complete same.

     

    (f)           The
      Administrative Agent’s Right to Purchase Insurance.  In the event
      the Borrowers fail to provide the Administrative Agent with evidence of the
      insurance coverage required by this Agreement, upon notice to Borrowers, the
      Administrative Agent may purchase insurance at the Borrowers’ expense to protect
      the Administrative Agent’s interests in the Facilities.  This
      insurance may, but need not, protect the Borrowers’ interests.  The
      coverage purchased by the Administrative Agent may not pay any claim made by
      any
      Borrower or any claim that is made against any Borrower in connection with
      the
      Facilities.  The Borrowers may later cancel, or request the
      Administrative Agent to cancel, which the Administrative Agent shall promptly
      do, any insurance purchased by the Administrative Agent, but only after
      providing the Administrative Agent with evidence that the Borrowers have
      obtained insurance as required by this Agreement.  If the
      Administrative Agent purchases insurance for the Facilities, the Borrowers
      will
      be responsible for all out-of-pocket costs of such insurance (regardless of
      whether or not Borrower is able to procure insurance at a lower cost), including
      interest and other charges imposed by the Administrative Agent in connection
      with the placement of the insurance, until the effective date of the
      cancellation or expiration of the insurance.  The costs of the
      insurance may be added to the Loan, and the Administrative Agent shall provide
      a
      copy of the policy to the Borrowers.

     

     

    Section
      7.5  Keeping
      of Books

     

    .  The
      Borrowers shall keep proper books of record and account, in which full, true
      and
      correct entries shall be made in accordance with GAAP and all other applicable
      Requirements of Law of all financial transactions and the assets and business
      of
      each Borrower.

     

     

    Section
      7.6  Access
      to Books and Property

     

    .  Each
      Borrower shall permit the Administrative Agent, at any reasonable time during
      normal business hours and with reasonable advance notice (except that, during
      the continuance of an Event of Default, no such notice shall be required) to
      (a)
      visit and, subject to the rights of the tenants under the Leases, inspect the
      property of each Borrower including, without limitation, each Facility, and
      examine and make copies of and abstracts from, the corporate (and similar),
      financial, operating and other books and records of each Borrower, and (b)
      discuss the affairs, finances and accounts of each Borrower with any officer
      or
      director of any Borrower; provided, however, so long as no Default
      then exists, the combined total of such visits and inspections by Administrative
      Agent shall not exceed more than two (2) such visits or inspections in any
      12
      month period.

     

     

    Section
      7.7  Environmental

     

    .  Each
      Borrower shall comply with, and maintain its real
      property, whether owned, leased, subleased or otherwise operated or occupied,
      in
      compliance with, all applicable Environmental Laws (including by implementing
      any Remedial Action necessary to achieve such compliance or that is required
      by
      orders and directives of any Governmental Authority) except for failures to
      comply that would not, in the aggregate, have a material adverse impact on
      any
      Borrower or any Facility.  Without limiting the foregoing, if an Event
      of Default is continuing or if the Administrative Agent at any time has a
      reasonable basis to believe that there exist violations of Environmental Laws
      by
      any Borrower or that there exist any Environmental Liabilities, in each case,
      that would have a material adverse impact on any Borrower or any Facility,
      then
      such Borrower shall, promptly upon receipt of request from the Administrative
      Agent, cause the performance of, and allow the Administrative Agent and
      its

     

    
      
         

      

      
        59

        
          

        

      

      
         

      

    

    Related
      Persons access to such Real Property for the purpose of conducting, by reputable
      environmental consulting firms, such environmental audits and assessments,
      including, if recommended by a phase I environmental assessment, subsurface
      sampling of soil and groundwater, and cause the preparation of such reports,
      in
      each case as the Administrative Agent may from time to time reasonably
      request.  Such audits, assessments and reports shall be conducted and
      prepared only by reputable environmental consulting firms reasonably acceptable
      to the Administrative Agent and shall be in form and substance reasonably
      acceptable to the Administrative Agent.

     

     

    Section
      7.8  Use
      of
      Proceeds

     

    .  The
      proceeds of the Loans shall be used by the Borrowers solely (a) to consummate
      the Acquisitions and for the payment of related transaction costs, fees and
      expenses, (b) for the payment of transaction costs, fees and expenses incurred
      in connection with the Loan Documents and the transactions contemplated therein,
      and (c) for the reserves and distribution thereof as contemplated by Section
      2.1(b).

     

     

    Section
      7.9  Additional
      Collateral, Subsidiaries and Further Assurances

     

    .  To
      the extent not delivered to the Administrative Agent on or before the Closing
      Date (including in respect of any after-acquired property and Persons that
      become Subsidiaries of any Borrower after the Closing Date), each Borrower
      shall, promptly, do each of the following, unless otherwise agreed by the
      Administrative Agent:

     

    (a)  deliver
      to the Administrative Agent such modifications to the terms of the Loan
      Documents (or, to the extent applicable as determined by the Administrative
      Agent, such other documents), in each case in form and substance reasonably
      satisfactory to the Administrative Agent and as the Administrative Agent deems
      necessary or advisable in order to ensure the following:

     

    each
      Subsidiary of any Borrower shall become a Borrower under this Agreement and
      shall assume all of the Obligations hereunder and be bound as if it had been
      an
      original signatory hereto; and

     

    each
      Borrower (including any Person required to become a Borrower pursuant to
clause (i) above) shall effectively grant to the Administrative Agent,
      for the benefit of the Secured Parties, a valid and enforceable security
      interest in all of its real and personal property, including all of its Equity
      Interests and Equity Equivalents and other securities, as security for the
      Obligations of such Borrower.

     

    deliver
      to the Administrative Agent all documents, if any, representing all Equity
      Interests, Equity Equivalents and other securities pledged pursuant to the
      documents delivered pursuant to clause (a) above, together with undated
      powers or endorsements duly executed in blank;

     

    deliver
      to the Administrative Agent a Mortgage on any real property owned or leased
      by
      any Borrower, together with all Mortgage Supporting Documents relating thereto
      and shall comply with the conditions set forth in Sections 3.1(a) with
      respect thereto;

     

    to
      take
      all other actions, or cause the Permitted Investors to take all actions,
      reasonably necessary or advisable to ensure the validity or continuing validity
      of any

     

    
      
         

      

      
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    guaranty
      for any Obligation or any Lien securing any Obligation, to perfect, maintain,
      evidence or enforce any Lien securing any Obligation or to ensure such Liens
      have the same priority as that of the Liens on similar Collateral set forth
      in
      the Loan Documents executed on the Closing Date, including the filing of UCC
      financing statements in such jurisdictions as may be required by the Loan
      Documents or applicable Requirements of Law or as the Administrative Agent
      may
      otherwise reasonably request; and

     

    deliver
      to the Administrative Agent legal opinions similar to those delivered to the
      Administrative Agent on the Closing Date.

     

     

    Section
      7.10  Reserved

     

    .

     

     

    Section
      7.11  Interest
      Rate Contracts

     

    .  Each
      Borrower shall, within 30 days after the Closing Date, enter into and thereafter
      maintain Interest Rate Contracts on terms and with counterparties reasonably
      satisfactory to the Administrative Agent, to provide protection against
      fluctuation of interest rates until the Scheduled Maturity Date.

     

     

    ARTICLE
      VIII                                

     

     

    

     

     

    NEGATIVE
      COVENANTS

     

    Each
      Borrower agrees with the Lenders and the Administrative Agent to each of the
      following, as long as any Obligation or any Commitment remains
      outstanding:

     

     

    Section
      8.1  Indebtedness

     

    .  No
      Borrower shall, directly or indirectly, incur or otherwise remain liable with
      respect to or responsible for, any Indebtedness except for the
      following:

     

    (a)  the
      Obligations;

     

    Indebtedness
      existing on the date hereof and set forth on Schedule 8.1, together
      with any Permitted Refinancing of any Indebtedness permitted hereunder in
      reliance upon this clause (b);

     

    intercompany
      loans owing to any Borrower and constituting Permitted Investments of such
      Borrower;

     

    obligations
      under Interest Rate Contracts entered into to comply with
Section 7.12;

     

    unsecured
      trade payables and operational debt not evidenced by a note, and equipment
      and
      vehicle lease obligations, and in an aggregate amount per Borrower not exceeding
      $100,000; and

     

    Guaranty
      Obligations of any Borrower with respect to Indebtedness of any other Borrower
      (other than Indebtedness permitted hereunder in reliance upon clause (b)
      above, for which Guaranty Obligations may be permitted to the extent set forth
      in such clauses).

     

    
      
         

      

      
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    Liens

     

    .  No
      Borrower shall incur, maintain or otherwise suffer to exist any Lien upon or
      with respect to any of its real or personal property including all Licenses,
      whether now owned or hereafter acquired, or assign any right to receive income
      or profits, except for the following:

     

    (a)  Liens
      created pursuant to any Loan Document;

     

    Customary
      Permitted Liens of the Borrowers;

     

    Liens
      existing on the date hereof and set forth on Schedule 8.2;
      and

     

    Liens
      on
      the property of any Borrower securing the Permitted Refinancing of any
      Indebtedness secured by any Lien on such property permitted hereunder in
      reliance upon clause (c) or this clause (d) without any change in
      the property subject to such Liens.

     

     

    Section
      8.2  Investments

     

    .  No
      Borrower shall make or maintain, directly or indirectly, any Investment except
      for the following:

     

    (a)  Investments
      existing on the date hereof and set forth on
Schedule 8.3;

     

    Investments
      in cash and Cash Equivalents; and

     

    endorsements
      for collection or deposit in the ordinary course of business.

     

     

    Section
      8.3  Transfers

     

    .  No
      Borrower shall Transfer any of its real or personal property or issue or cause
      or permit a direct or indirect Transfer or Lien upon its own direct or indirect
      Equity Interests, except for the following:

     

    (a)  In
      each
      case to the extent entered into in the ordinary course of business and made
      to a
      Person that is not an Affiliate of any Borrower, (i) Transfers of Cash
      Equivalents for property or services of equivalent value, (ii) inventory or
      property that has become obsolete or worn out and (iii) non-exclusive licenses
      of Intellectual Property;

     

    (i)
      any
      Transfer of any personal property (other than their own Equity Interests or
      Equity Equivalents) by any Borrower to any other Borrower to the extent any
      resulting Investment constitutes a Permitted Investment, (ii) any Restricted
      Payment by any Borrower permitted pursuant to Section 8.5, and (iii)
      any transaction permitted pursuant to Section 8.9;

     

    entering
      into, modifying, amending, renewing, terminating in the ordinary course of
      business any resident care agreement or service agreement for ancillary
      services;

     

    entering
      into, modifying or amending any Lease (other than resident care agreements
      and
      service agreements for ancillary services) in the ordinary course on market
      terms; provided, however, the total square footage of all such
      leases shall not exceed 2,500 square feet at any Facility without Lender’s
      consent; and

     

    
      
         

      

      
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    a
      Transfer of all of the assets of any Facility, so long as (i) no monetary
      Default or other Event of Default exists both before and after giving effect
      to
      such Transfer, (ii) such Borrower provides at least thirty (30) days’ prior
      written notice to the Administrative Agent of such Transfer and (iii) such
      Borrower makes a payment in accordance with Section 2.4(a) for such
      Transfers made (A) prior to the Income Threshold Date, in an amount equal to
      the
      greater of (x) 100% of the Net Cash Proceeds of such Transfer and (y) 120%
      of
      the Allocated Principal Amount of such Facility and (B) on or after the Income
      Threshold Date, in an amount equal to 120% of the Allocated Principal Amount
      of
      such Facility (such amounts in (A)(y) and (B) above to be referred to as the
      “Allocated Principal Amount Net Proceeds”).

     

    Notwithstanding
      anything in any Loan Document to the contrary, the following Transfers are
      permitted: (i) the trading or issuance of Equity Interests of Emeritus in the
      public or private markets, (ii) issuance, transfer or sale of Equity Interests
      of Emeritus in connection with the merger, reorganization or consolidation
      of
      Emeritus, and (iii) any merger or consolidation of Emeritus into or with, or
      a
      sale of substantially all of the asset of Emeritus to any Person;
provided, however, the managing member or manager, as the case may
      be, shall not be transferred.

     

     

    Section
      8.4  Restricted
      Payments

     

    .  No
      Borrower shall directly or indirectly, declare, order, pay, make or set apart
      any sum for any Restricted Payment except for the following:

     

    (a)  Restricted
      Payments by any Borrower to any other Borrower; and

     

    (b)  dividends
      and distributions declared and paid on the common (or common equivalent) Equity
      Interests of the Borrowers ratably to the holders of such common (or common
      equivalent) Equity Interests and payable only in common (or common equivalent)
      Equity Interests of the Borrowers.

     

     

    Section
      8.5  Prepayment
      of Indebtedness

     

    .  Subject
      to Section 2.3, no Borrower shall (x) prepay, redeem, purchase, defease
      or otherwise satisfy prior to the scheduled maturity thereof any Indebtedness,
      (y) set apart any property for such purpose, whether directly or indirectly
      and
      whether to a sinking fund, a similar fund or otherwise, or (z) make any payment
      in violation of any subordination terms of any Indebtedness; provided,
however, that each Borrower may, to the extent otherwise permitted
      by the
      Loan Documents, do each of the following:

     

    (a)  (i)
      prepay the Obligations, and (ii) consummate a Permitted
      Refinancing;

     

    prepay,
      redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity
      thereof (or set apart any property for such purpose) any Indebtedness owing
      to
      any other Borrower; and

     

    make
      regularly scheduled or otherwise required repayments or redemptions of
      Indebtedness but only, in the case of Subordinated Debt, to the extent permitted
      by the subordination provisions thereof.

     

     

    Section
      8.6  Fundamental
      Changes

     

    .  No
      Borrower shall (a) merge, consolidate or amalgamate with any Person, (b) acquire
      all or substantially all of the Equity Interests or Equity

     

    
      
         

      

      
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    Equivalents
      of any Person or (c) acquire any brand or all or substantially all of the assets
      of any Person or all or substantially all of the assets constituting any line
      of
      business, division, branch, operating division or other unit operation of any
      Person, in each case, except for the following:  (i)  the merger,
      consolidation or amalgamation of any Borrower into any other Borrower and (ii)
      the merger, consolidation or amalgamation of any Borrower for the sole purpose,
      and with the sole material effect, of changing its State of organization within
      the United States; provided, however, that in the case of any
      merger, consolidation or amalgamation involving any Borrower for the purpose
      of
      changing its State of organization, all actions required to maintain the
      perfection of the Lien of the Administrative Agent on the Equity Interests,
      or
      other real or personal property of such Borrower shall have been
      made.

     

     

    Section
      8.7  Change
      in Nature of Business

     

    .  No
      Borrower shall carry on any business, operations or activities (whether
      directly, through a joint venture) substantially different from those carried
      on, or intended to be carried on, by such Borrowers as of the date hereof and
      business, operations and activities reasonably related thereto.

     

     

    Section
      8.8  Transactions
      with Affiliates

     

    .  No
      Borrower shall, except as otherwise expressly permitted herein, enter into
      any
      other transaction directly or indirectly with, or for the benefit of, any
      Affiliate of any Borrower that is not a Borrower (including Guaranty Obligations
      with respect to any obligation of any such Affiliate), except for
      (a) transactions in the ordinary course of business on a basis no less
      favorable to such Borrower as would be obtained in a comparable arm’s length
      transaction with a Person not an Affiliate of any Borrower, (b) Restricted
      Payments, the proceeds of which, if received by any Person other than any
      Borrower, are used as required by Section 8.5, (c) reasonable
      salaries and other reasonable director or employee compensation to officers
      and
      directors of any Borrower, and (d) Management Fees, provided that, in the case
      of this clause (d), such Management Fees shall be paid last in priority
      and only after the payment of all other current operating expenses of the
      Borrowers and the Facilities (including, all current debt service and other
      interest payments on any Indebtedness permitted hereunder and the funding of
      all
      escrows and reserved required hereunder).

     

     

    Section
      8.9  Third-Party
      Restrictions on Indebtedness, Liens, Investments or Restricted
      Payments

     

    .  No
      Borrower shall incur or otherwise suffer to exist or become effective or remain
      liable on or responsible for any Contractual Obligation limiting the ability
      of
      (a) any Borrower to make Restricted Payments to, or Investments in, or repay
      Indebtedness to or otherwise Transfer property to, any other Borrower or
      (b) any Borrower to incur or suffer to exist any Lien upon
      any property of any Borrower, whether now owned or hereafter acquired, securing
      any of its Obligations (including any “equal and ratable” clause and any similar
      Contractual Obligation requiring, when a Lien is granted on any property,
      another Lien to be granted on such property or any other property), except,
      in
      each case (x) pursuant to the Loan Documents and (y) limitations on Liens (other
      than those securing any Obligation) on any property whose acquisition or repair
      is financed by purchase money Indebtedness or Permitted Refinancings permitted
      hereunder in reliance upon Section (b) set forth in the Contractual
      Obligations governing such Indebtedness or Permitted Refinancing or Guaranty
      Obligations with respect thereto.

     

     

    Section
      8.10  Modification
      of Certain Documents

     

    .  No
      Borrower shall do any of the following:

     

    (a)  waive
      or
      otherwise modify any term of any Related Document (other than the terms of
      any
      Subordinated Debt) or any Constituent Document of, or otherwise
      change

     

    
      
         

      

      
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    (b)  the
      capital structure of, any Borrower (including the terms of any of their
      outstanding Equity Interests or Equity Equivalents), in each case except for
      those modifications and waivers that (x) do not elect, or permit the election,
      to treat the Equity Interests or Equity Equivalents of any limited liability
      company (or similar entity) as certificated, (y) do not materially affect the
      rights and privileges of any Borrower and (z) do not materially affect the
      interests of any Secured Party under the Loan Documents or in the
      Collateral;

     

    waive
      or
      otherwise modify any term of any Subordinated Debt if the effect thereof on
      such
      Subordinated Debt is to (i) increase the interest rate, (ii) change the due
      dates for principal or interest, other than to extend such dates, (iii) modify
      any default or event of default, other than to delete it or make it less
      restrictive, (iv) add any covenant with respect thereto, (v) modify any
      subordination provision, (vi) modify any redemption or prepayment provision,
      other than to extend the dates therefor or to reduce the premiums payable in
      connection therewith or (vii) materially increase any obligation of any Borrower
      or confer additional material rights to the holder of such Subordinated Debt
      in
      a manner adverse to any Borrower or any Secured Party.

     

     

    Section
      8.11  Accounting
      Changes; Fiscal Year

     

    .  No
      Borrower shall change its (a) accounting treatment or reporting practices,
      except as required by GAAP or any Requirement of Law, or (b) its fiscal year
      or
      its method for determining fiscal quarters or fiscal months.

     

     

    Section
      8.12  Margin
      Regulations

     

    .  No
      Borrower shall use all or any portion of the proceeds of any credit extended
      hereunder to purchase or carry margin stock (within the meaning of Regulation
      U
      of the Federal Reserve Board) in contravention of Regulation U of the Federal
      Reserve Board.

     

     

    Section
      8.13  Compliance
      with ERISA

     

    .  No
      ERISA Affiliate shall cause or suffer to exist (a) any event that could result
      in the imposition of a Lien on any asset of any Borrower with respect to any
      Title IV Plan or Multiemployer Plan or (b) any other ERISA
      Event, that would, in the aggregate, have a Material Adverse
      Effect.  

     

     

    Section
      8.14  Hazardous
      Materials

     

    .  No
      Borrower shall cause or suffer to exist any Release of any Hazardous Material
      at, to or from any real property owned, leased, subleased or otherwise operated
      or occupied by any Borrower that would violate any Environmental Law, form
      the
      basis for any Environmental Liabilities or otherwise adversely affect the value
      or marketability of any real property (whether or not owned by any Borrower),
      other than such violations, Environmental Liabilities and effects that would
      not, in the aggregate, have a material adverse impact on any Borrower or any
      Facility.

     

     

    ARTICLE
      IX                                

     

     

    

     

     

    EVENTS
      OF
      DEFAULT

     

     

    Section
      9.1  Definition

     

    .  Each
      of the following shall be an “Event of Default”:

     

    (a)  The
      Borrowers shall fail to pay (i) any principal of any Loan when the same becomes
      due and payable or (ii) any interest on any Loan, any fee under any Loan
      Document or any other Obligation (other than those set forth in clause
      (i) above) and, in the

     

    
      
         

      

      
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    (b)  case
      of
      this clause (ii), such non-payment continues for a period of
      5 Business Days after the due date therefor; or

     

    any
      representation, warranty or certification made or deemed made by or on behalf
      of
      any Borrower (or any Responsible Officer thereof) in, or in connection with,
      any
      Loan Document (including in any document delivered in connection with any Loan
      Document) shall prove to have been incorrect in any material respect when made
      or deemed made; or

     

    any
      Borrower shall fail to comply with (i) Section 5.2 (Debt Service
      Coverage Ratio), (ii) any provision of Article VI,
Sections 7.1 (Maintenance of Corporate Existence), 7.5
      (Insurance), 7.7 (Access to Books and Property), 7.9
      (Use of Proceeds), 7.11 (Deposit Accounts) or
Article VIII (Negative Covenants) or (iii) any other
      provision of any Loan Document (other than Section 5.1(Minimum
      Consolidated Project Yield)) if, in the case of this clause (ii),
      such failure shall remain unremedied for thirty (30) days after the earlier
      of
      (A) the date on which a Responsible Officer of such Borrower becomes aware
      of
      such failure and (B) the date on which notice thereof shall have been given
      to
      such Borrower by the Administrative Agent, provided, that in the case of
clause (ii), if such failure cannot be cured within such 30 day period
      but during such 30 day period Borrowers have commenced to cure such failure
      and
      thereafter have demonstrated to Administrative Agent that they have diligently
      pursued same to completion, such 30 day period shall be extended for an
      additional 30 days; or

     

    (i)
      any
      Borrower shall fail to make any payment when due (whether due because of
      scheduled maturity, required prepayment provisions, acceleration, demand or
      otherwise) on any Indebtedness of any Borrower (other than the Obligations
      or
      any Hedging Agreement) and, in each case, such failure relates to Indebtedness
      having a principal amount of $12,500 or more, (ii) any other event shall occur
      or condition shall exist under any Contractual Obligation relating to any such
      Indebtedness, if the effect of such event or condition is to accelerate, or
      to
      permit the acceleration of, the maturity of such Indebtedness or (iii) any
      such
      Indebtedness shall become or be declared to be due and payable, or be required
      to be prepaid, redeemed, defeased or repurchased (other than by a regularly
      scheduled required prepayment), prior to the stated maturity thereof;
      or

     

    (i)
      any
      Borrower shall generally not pay its debts as such debts become due, shall
      admit
      in writing its inability to pay its debts generally or shall make a general
      assignment for the benefit of creditors, (ii) any proceeding shall be instituted
      by or against (without contest) any Borrower seeking to adjudicate it a bankrupt
      or insolvent or seeking liquidation, winding up, reorganization, arrangement,
      adjustment, protection, relief, composition of it or its debts or any similar
      order, in each case under any Requirement of Law relating to bankruptcy,
      insolvency or reorganization or relief of debtors or seeking the entry of an
      order for relief or the appointment of a custodian, receiver, trustee,
      conservator, liquidating agent, liquidator, other similar official or other
      official with similar powers, in each case for it or for any substantial part
      of
      its property and, in the case of any such proceedings instituted against (but
      not by or with the consent of) any Borrower, either such proceedings shall
      remain undismissed or unstayed for a period of 60 days or more or any
      action sought in such proceedings shall occur or (iii) any Borrower shall take
      any corporate or similar action or any other action to authorize any action
      described in clause (i) or (ii) above; or

     

    
      
         

      

      
        66

        
          

        

      

      
         

      

    

    one
      or
      more judgments, orders or decrees (or other similar process) shall be rendered
      against any Borrower (i)(A) in the case of money judgments, orders and decrees,
      involving an aggregate amount (excluding amounts adequately covered by insurance
      payable to any Borrower, to the extent the relevant insurer has not denied
      coverage therefore or for with Borrowers have set aside adequate reserves)
      in
      excess of $30,000 or (B) otherwise, that would have, in the aggregate, a
      Material Adverse Effect and (ii)(A) enforcement proceedings shall have been
      commenced by any creditor upon any such judgment, order or decree or (B) such
      judgment, order or decree shall not have been vacated or discharged for a period
      of 60 consecutive days and there shall not be in effect (by reason of a pending
      appeal or otherwise) any stay of enforcement thereof; or

     

    except
      pursuant to a valid, binding and enforceable termination or release permitted
      under the Loan Documents and executed by the Administrative Agent or as
      otherwise expressly permitted under any Loan Document, (i) any provision of
      any
      Loan Document shall, at any time after the delivery of such Loan Document,
      fail
      to be valid and binding on, or enforceable against, any Borrower party thereto
      or (ii) any Loan Document purporting to grant a Lien to secure any Obligation
      shall, at any time after the delivery of such Loan Document, fail to create
      a
      valid and enforceable Lien on any Collateral purported to be covered thereby
      or
      such Lien shall fail or cease to be a perfected Lien with the priority required
      in the relevant Loan Document, or any Borrower shall state in writing that
      any
      of the events described in clause (i) or (ii) above shall have
      occurred; or

     

    there
      shall occur any Change of Control; or

     

    there
      shall occur any uninsured damage to or loss, theft or destruction of any
      Facility or portion of the Collateral that exceeds $30,000 in the aggregate;
      or

     

    intentionally
      omitted

     

    with
      respect to three (3) or more Facilities, any state or federal regulatory agency
      shall have either revoked the licenses or, in the case of any skilled nursing
      facility, has issued a denial of payment for new admissions, at such Facilities
      and all applicable appeal periods related to such revocation shall have
      expired.

     

     

    Section
      9.2  Remedies

     

    .  During
      the continuance of any Event of Default, the Administrative Agent may, and,
      at
      the request of the Required Lenders, shall, in each case by notice to the
      Borrowers and in addition to any other right or remedy provided under any Loan
      Document or by any applicable Requirement of Law, do each of the
      following:  (a) declare all or any portion of the Commitments
      terminated, whereupon the Commitments shall immediately be reduced by such
      portion or, in the case of a termination in whole, shall terminate together
      with
      any obligation any Lender may have hereunder to make any Loan or (b) declare
      immediately due and payable all or part of any Obligation (including any accrued
      but unpaid interest thereon), whereupon the same shall become immediately due
      and payable, without presentment, demand, protest or further notice or other
      requirements of any kind, all of which are hereby expressly waived by the
      Borrowers; provided, however, that, effective immediately upon the
      occurrence of the Events of Default specified in Section 9.1(e)(ii),
      (x) the Commitments of each Lender to make Loans shall each automatically be
      terminated and (y) each Obligation (including in each case any accrued all
      accrued but unpaid interest thereon) shall automatically become and be due
      and

     

    
      
         

      

      
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    payable,
      without presentment, demand, protest or further notice or other requirement
      of
      any kind, all of which are hereby expressly waived by the
      Borrowers.

     

     

    ARTICLE
      X                                

     

     

    

     

     

    THE
      ADMINISTRATIVE AGENT

     

     

    Section
      10.1  Appointment
      and Duties

     

    .  (a)
      Appointment of Administrative Agent.  Each Lender hereby
      appoints GE Capital (together with any successor Administrative Agent pursuant
      to Section 10.9) as the Administrative Agent hereunder and
      authorizes the Administrative Agent to (i) accept delivery thereof on its
      behalf from any Borrower, (ii) take such action on its behalf and to exercise
      all rights, powers and remedies and perform the duties as are expressly
      delegated to the Administrative Agent under such Loan Documents and (iii)
      exercise such powers as are reasonably incidental thereto.

     

    (b)           Duties
      as Collateral and Disbursing Agent.  Without limiting the
      generality of clause (a) above, the Administrative Agent shall have the
      sole and exclusive right and authority (to the exclusion of the Lenders), and
      is
      hereby authorized on behalf of the Lenders, to (i) act as the disbursing
      and collecting agent for the Lenders with respect to all payments and
      collections arising in connection with the Loan Documents (including in any
      proceeding described in Section 9.1(e)(ii) or any other bankruptcy,
      insolvency or similar proceeding), and each Person making any payment in
      connection with any Loan Document to any Secured Party is hereby authorized
      to
      make such payment to the Administrative Agent, (ii) file and prove claims and
      file other documents necessary or desirable to allow the claims of the Secured
      Parties with respect to any Obligation in any proceeding described in
Section 9.1(e)(ii) or any other bankruptcy, insolvency or similar
      proceeding (but not to vote, consent or otherwise act on behalf of such Secured
      Party), (iii) act as collateral agent for each Secured Party for purposes of
      the
      perfection of all Liens created by such agreements and all other purposes stated
      therein, (iv) manage, supervise and otherwise deal with the Collateral, (v)
      take such other action as is necessary or desirable to maintain the perfection
      and priority of the Liens created or purported to be created by the Loan
      Documents, (vi) except as may be otherwise specified in any Loan Document,
      exercise all remedies given to the Administrative Agent and the other Secured
      Parties with respect to the Collateral, whether under the Loan Documents,
      applicable Requirements of Law or otherwise and (vii) execute any amendment,
      consent or waiver under the Loan Documents on behalf of any Lender that has
      consented in writing to such amendment, consent or waiver; provided,
however, that the Administrative Agent hereby appoints, authorizes
      and
      directs each Lender to act as collateral sub-agent for the Administrative Agent
      and the Lenders for purposes of the perfection of all Liens with respect to
      the
      Collateral, including any deposit account maintained by a Borrower with, and
      cash and Cash Equivalents held by, such Lender, and may further authorize and
      direct the Lenders to take further actions as collateral sub-agents for purposes
      of enforcing such Liens or otherwise to transfer the Collateral subject thereto
      to the Administrative Agent, and each Lender hereby agrees to take such further
      actions to the extent, and only to the extent, so authorized and
      directed.

     

    (c)           Limited
      Duties.  Under the Loan Documents, the Administrative Agent (i) is
      acting solely on behalf of the Lenders (except to the limited extent provided
      in
Section 2.8(b) with respect to the Register and in
Section 10.11), with duties that are entirely administrative in
      nature, notwithstanding the use of the defined term “Administrative Agent”, the
      terms “agent”, “administrative agent” and “collateral agent” and similar terms
      in any Loan

     

    
      
         

      

      
        68

        
          

        

      

      
         

      

    

    Document
      to refer to the Administrative Agent, which terms are used for title purposes
      only, (ii) is not assuming any obligation under any Loan Document other
      than as expressly set forth therein or any role as agent, fiduciary or trustee
      of or for any Lender or any other Secured Party and (iii) shall have no implied
      functions, responsibilities, duties, obligations or other liabilities under
      any
      Loan Document, and each Lender hereby waives and agrees not to assert any claim
      against the Administrative Agent based on the roles, duties and legal
      relationships expressly disclaimed in clauses (i) through (iii)
      above.

     

     

    Section
      10.2  Binding
      Effect

     

    .  Each
      Lender agrees that (i) any action taken by the Administrative Agent or the
      Required Lenders (or, if expressly required hereby, a greater proportion of
      the
      Lenders) in accordance with the provisions of the Loan Documents, (ii) any
      action taken by the Administrative Agent in reliance upon the instructions
      of
      Required Lenders (or, where so required, such greater proportion) and (iii)
      the
      exercise by the Administrative Agent or the Required Lenders (or, where so
      required, such greater proportion) of the powers set forth herein or therein,
      together with such other powers as are reasonably incidental thereto, shall
      be
      authorized and binding upon all of the Secured Parties.

     

     

    Section
      10.3  Use
      of
      Discretion

     

    .  (a)
      No Action without Instructions.  The Administrative Agent shall
      not be required to exercise any discretion or take, or to omit to take, any
      action, including with respect to enforcement or collection, except any action
      it is required to take or omit to take (i) under any Loan Document or (ii)
      pursuant to instructions from the Required Lenders (or, where expressly required
      by the terms of this Agreement, a greater proportion of the
      Lenders).

     

    (b)           Right
      Not to Follow Certain Instructions.  Notwithstanding clause
      (a) above, the Administrative Agent shall not be required to take, or to
      omit to take, any action (i) unless, upon demand, the Administrative Agent
      receives an indemnification satisfactory to it from the Lenders (or, to the
      extent applicable and acceptable to the Administrative Agent, any other Secured
      Party) against all Liabilities that, by reason of such action or omission,
      may
      be imposed on, incurred by or asserted against the Administrative Agent or
      any
      Related Person thereof or (ii) that is, in the opinion of the Administrative
      Agent or its counsel, contrary to any Loan Document or applicable Requirement
      of
      Law.

     

     

    Section
      10.4  Delegation
      of Rights and Duties

     

    .  The
      Administrative Agent may, upon any term or condition it specifies, delegate
      or
      exercise any of its rights, powers and remedies under, and delegate or perform
      any of its duties or any other action with respect to, any Loan Document by
      or
      through any trustee, co-agent, employee, attorney-in-fact and any other Person
      (including any Secured Party).  Any such Person shall benefit from
      this Article X to the extent provided by the Administrative
      Agent.

     

     

    Section
      10.5  Reliance
      and Liability

     

    .  (a)
      The Administrative Agent may, without incurring any liability hereunder to
      Lenders, (i) treat the payee of any Note as its holder until such Note has
      been
      assigned in accordance with Section 11.2(e), (ii) rely on the
      Register to the extent set forth in Section 2.8, (iii) consult with
      any of its Related Persons and, whether or not selected by it, any other
      advisors, accountants and other experts (including advisors to, and accountants
      and experts engaged by, any Borrower) and (iv) rely and act upon any document
      and information (including those transmitted by Electronic Transmission) and
      any
      telephone message or conversation, in each case believed by it to be genuine
      and
      transmitted, signed or otherwise authenticated by the appropriate
      parties.

     

    
      
         

      

      
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    (b)           None
      of the Administrative Agent and its Related Persons shall be liable to Lenders
      for any action taken or omitted to be taken by any of them under or in
      connection with any Loan Document, and each Lender and each Borrower, hereby
      waives and shall not assert any right, claim or cause of action based thereon,
      except to the extent of liabilities resulting primarily from the gross
      negligence or willful misconduct of the Administrative Agent or, as the case
      may
      be, such Related Person (each as determined in a final, non-appealable judgment
      by a court of competent jurisdiction) in connection with the duties expressly
      set forth herein.  Without limiting the foregoing, the Administrative
      Agent:

     

    shall
      not
      be responsible or otherwise incur liability to Lenders for any action or
      omission taken in reliance upon the instructions of the Required Lenders or
      for
      the actions or omissions of any of its Related Persons selected with reasonable
      care (other than employees, officers and directors of the Administrative Agent,
      when acting on behalf of the Administrative Agent);

     

    shall
      not
      be responsible to any Secured Party for the due execution, legality, validity,
      enforceability, effectiveness, genuineness, sufficiency or value of, or the
      attachment or priority of any Lien created or purported to be created under
      or
      in connection with, any Loan Document;

     

    makes
      no
      warranty or representation, and shall not be responsible, to any Secured Party
      for any statement, document, information, representation or warranty made or
      furnished by or on behalf of any Related Person or any Borrower in connection
      with any Loan Document or any transaction contemplated therein or any other
      document or information with respect to any Borrower, whether or not transmitted
      or (except for documents expressly required under any Loan Document to be
      transmitted to the Lenders) omitted to be transmitted by the Administrative
      Agent, including as to completeness, accuracy, scope or adequacy thereof, or
      for
      the scope, nature or results of any due diligence performed by the
      Administrative Agent in connection with the Loan Documents; and

     

    shall
      not
      have any duty to ascertain or to inquire as to the performance or observance
      of
      any provision of any Loan Document, whether any condition set forth in any
      Loan
      Document is satisfied or waived, as to the financial condition of any Borrower
      or as to the existence or continuation or possible occurrence or continuation
      of
      any Default or Event of Default and shall not be deemed to have notice or
      knowledge of such occurrence or continuation unless it has received a notice
      from any Borrower, any Lender describing such Default or Event of Default
      clearly labeled “notice of default” (in which case the Administrative Agent
      shall promptly give notice of such receipt to all Lenders);

     

    and,
      for
      each of the items set forth in clauses (i) through (iv) above,
      each Lender and each Borrower hereby waives and agrees not to assert (and each
      Borrower shall cause each other Borrower to waive and agree not to assert)
      any
      right, claim or cause of action it might have against the Administrative Agent
      based thereon, except with respect to the gross negligence or willful misconduct
      of the Administrative Agent or any Lender.

     

    
      
         

      

      
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    Administrative
      Agent Individually

     

    .  The
      Administrative Agent and its Affiliates may make loans and other extensions
      of
      credit to, acquire Equity Interests and Equity Equivalents of, engage in any
      kind of business with, any Borrower or Affiliate thereof as though it were
      not
      acting as the Administrative Agent and may receive separate fees and other
      payments therefor.  To the extent the Administrative Agent or any of
      its Affiliates makes any Loan or otherwise becomes a Lender hereunder, it shall
      have and may exercise the same rights and powers hereunder and shall be subject
      to the same obligations and liabilities as any other Lender and the terms
“Lender”, “Required Lender” and any similar terms shall, except where otherwise
      expressly provided in any Loan Document, include, without limitation, the
      Administrative Agent or such Affiliate, as the case may be, in its individual
      capacity as Lender or as one of the Required Lenders.

     

     

    Section
      10.6  Lender
      Credit Decision

     

    .  Each
      Lender acknowledges that it shall, independently and without reliance upon
      the
      Administrative Agent, any Lender or any of their Related Persons or upon any
      document (including the Disclosure Documents) solely or in part because such
      document was transmitted by the Administrative Agent or any of its Related
      Persons, conduct its own independent investigation of the financial condition
      and affairs of each Borrower and make and continue to make its own credit
      decisions in connection with entering into, and taking or not taking any action
      under, any Loan Document or with respect to any transaction contemplated in
      any
      Loan Document, in each case based on such documents and information as it shall
      deem appropriate.  Except for documents expressly required by any Loan
      Document to be transmitted by the Administrative Agent to the Lenders, the
      Administrative Agent shall not have any duty or responsibility to provide any
      Lender with any credit or other information concerning the business, prospects,
      operations, property, financial and other condition or creditworthiness of
      any
      Borrower or any Affiliate of any Borrower that may come in to the possession
      of
      the Administrative Agent or any of its Related Persons.

     

     

    Section
      10.7  Expenses;
      Indemnities

     

    .  (a)
      Each Lender agrees to reimburse the Administrative Agent and each of its Related
      Persons (to the extent not reimbursed by any Borrower) promptly upon demand
      for
      such Lender’s Pro Rata Share with respect to the Facilities of any costs and
      expenses (including fees, charges and disbursements of financial, legal and
      other advisors and Other Taxes paid in the name of, or on behalf of, any
      Borrower) that may be incurred by the Administrative Agent or any of its Related
      Persons in connection with the preparation, execution, delivery, administration,
      modification, consent, waiver or enforcement (whether through negotiations,
      through any work-out, bankruptcy, restructuring or other legal or other
      proceeding or otherwise) of, or legal advice in respect of its rights or
      responsibilities under, any Loan Document.

     

    (b)           Each
      Lender further agrees to indemnify the Administrative Agent and each of its
      Related Persons (to the extent not reimbursed by any Borrower), from and against
      such Lender’s aggregate Pro Rata Share with respect to the Facilities of the
      Liabilities (including taxes, interests and penalties imposed for not properly
      withholding or backup withholding on payments made to on or for the account
      of
      any Lender) that may be imposed on, incurred by or asserted against the
      Administrative Agent or any of its Related Persons in any matter relating to
      or
      arising out of, in connection with or as a result of any Loan Document, any
      Related Document or any other act, event or transaction related, contemplated
      in
      or attendant to any such document, or, in each case, any action taken or omitted
      to be taken by the Administrative Agent or any of its Related Persons under
      or
      with respect to any of the foregoing; provided, however, that no
      Lender shall be liable to the Administrative Agent or any of its Related Persons
      to the extent such liability has resulted primarily from the gross negligence
      or
      willful misconduct of the

     

    
      
         

      

      
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    Administrative
      Agent or, as the case may be, such Related Person, as determined by a court
      of
      competent jurisdiction in a final non-appealable judgment or order.

     

     

    Section
      10.8  Resignation
      of Administrative Agent

     

    .  (a)
      The Administrative Agent may resign at any time by delivering notice of such
      resignation to the Lenders and the Borrowers, effective on the date set forth
      in
      such notice or, if not such date is set forth therein, upon the date such notice
      shall be effective.  If the Administrative Agent delivers any such
      notice, the Required Lenders shall have the right to appoint a successor
      Administrative Agent.  If, within 30 days after the retiring
      Administrative Agent having given notice of resignation, no successor
      Administrative Agent has been appointed by the Required Lenders that has
      accepted such appointment, then the retiring Administrative Agent shall, on
      behalf of the Lenders, appoint a successor Administrative Agent from among
      the
      Lenders.  Each appointment under this clause (a) shall be
      subject to the prior consent of the Borrowers, which may not be unreasonably
      withheld but shall not be required during the continuance of a
      Default.

     

    (b)           Effective
      immediately upon its resignation, (i) the retiring Administrative Agent shall
      be
      discharged from its duties and obligations under the Loan Documents, (ii) the
      Lenders shall assume and perform all of the duties of the Administrative Agent
      until a successor Administrative Agent shall have accepted a valid appointment
      hereunder, (iii) the retiring Administrative Agent and its Related Persons
      shall
      no longer have the benefit of any provision of any Loan Document other than
      with
      respect to any actions taken or omitted to be taken while such retiring the
      Administrative Agent was, or because such Administrative Agent had been, validly
      acting as the Administrative Agent under the Loan Documents and (iv) subject
      to
      its rights under Section 10.3, the retiring Administrative Agent
      shall take such action as may be reasonably necessary to assign to the successor
      Administrative Agent its rights as Administrative Agent under the Loan
      Documents.  Effective immediately upon its acceptance of a valid
      appointment as Administrative Agent, a successor Administrative Agent shall
      succeed to, and become vested with, all the rights, powers, privileges and
      duties of the retiring Administrative Agent under the Loan
      Documents.

     

     

    Section
      10.9  Release
      of Collateral

     

    .  Each
      Lender hereby consents to the release and hereby directs the Administrative
      Agent to release (or, in the case of clause (b)(ii) below, release or
      subordinate) the following:

     

    (a)  any
      Borrower from its Obligations hereunder if (i) all of the Equity Interests
      of
      such Borrower are disposed of in a Transfer permitted under the Loan Documents
      (including pursuant to a waiver or consent), provided, after giving effect
      to
      such Transfer, Borrowers have complied with the requirements of
Section 7.10, or (ii) all of the assets of a Facility of such
      Borrower are disposed of in a Transfer permitted under the Loan Documents
      (including pursuant to a waiver or consent), provided, after giving effect
      to
      such Transfer, Borrowers have complied with the requirements of
Section 8.4(e); and

     

    any
      Lien
      held by the Administrative Agent for the benefit of the Secured Parties against
      (i) any Collateral that is disposed of by a Borrower in a Transfer permitted
      by
      the Loan Documents (including pursuant to a valid waiver or consent), to the
      extent all Liens required to be granted in such Collateral pursuant to
Section 7.10 after giving effect to such Transfer have been granted,
      (ii) any property subject to a Lien permitted hereunder in reliance upon
Section 8.2(c) or (d),  (iii) all of the Collateral and
      all the Borrowers, upon (A) payment and satisfaction in full of all Loans and
      all other Obligations that

     

    
      
         

      

      
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    the
      Administrative Agent has been notified in writing are then due and payable,
      (B)
      deposit of cash collateral with respect to all contingent Obligations, in
      amounts and on terms and conditions and with parties satisfactory to the
      Administrative Agent and each Indemnitee that is owed such Obligations and
      (C)
      to the extent requested by the Administrative Agent, receipt by the Secured
      Parties of liability releases from the Borrowers each in form and substance
      acceptable to the Administrative Agent.

     

    Each
      Lender hereby directs the Administrative Agent, and the Administrative Agent
      hereby agrees, upon receipt of reasonable advance notice from any Borrower,
      to
      execute and deliver or file such documents and to perform other actions
      reasonably necessary to release the guaranties and Liens when and as directed
      in
      this Section 10.10.

     

     

    Section
      10.10  Additional
      Secured Parties

     

    .  The
      benefit of the provisions of the Loan Documents directly relating to the
      Collateral or any Lien granted thereunder shall extend to and be available
      to
      any Secured Party that is not a Lender as long as, by accepting such benefits,
      such Secured Party agrees, as among the Administrative Agent and all other
      Secured Parties, that such Secured Party is bound by (and, if requested by
      the
      Administrative Agent, shall confirm such agreement in a writing in form and
      substance acceptable to the Administrative Agent) this Article X,
Section 11.8 (Right of Setoff), Section 11.9
      (Sharing of Payments) and Section 11.20
      (Confidentiality) and the decisions and actions of the Administrative
      Agent and the Required Lenders (or, where expressly required by the terms of
      this Agreement, a greater proportion of the Lenders) to the same extent a Lender
      is bound; provided, however, that, notwithstanding the foregoing,
      (a) such Secured Party shall be bound by Section 10.8 only to the
      extent of Liabilities, costs and expenses with respect to or otherwise relating
      to the Collateral held for the benefit of such Secured Party, in which case
      the
      obligations of such Secured Party thereunder shall not be limited by any concept
      of Pro Rata Share or similar concept, (b) each of the Administrative Agent
      and
      the Lenders shall be entitled to act at its sole discretion, without regard
      to
      the interest of such Secured Party, regardless of whether any Obligation to
      such
      Secured Party thereafter remains outstanding, is deprived of the benefit of
      the
      Collateral, becomes unsecured or is otherwise affected or put in jeopardy
      thereby, and without any duty or liability to such Secured Party or any such
      Obligation and (c) such Secured Party shall not have any right to be notified
      of, consent to, direct, require or be heard with respect to, any action taken
      or
      omitted in respect of the Collateral or under any Loan Document.

     

     

    ARTICLE
      XI                                

     

     

    

     

     

    MISCELLANEOUS

     

     

    Section
      11.1  Amendments,
      Waivers, Etc.

     

      (a)
      No amendment or waiver of any provision of any Loan Document (other than the
      Secured Hedging Agreements) and no consent to any departure by any Borrower
      therefrom shall be effective unless the same shall be in writing and signed
      (1)
      in the case of an amendment, consent or waiver to cure any ambiguity, omission,
      defect or inconsistency, by the Administrative Agent and the Borrowers, (2)
      in
      the case of an amendment granting a new Lien for the benefit of the Secured
      Parties or extending an existing Lien over additional property, by the
      Administrative Agent and each Borrower directly affected thereby, (3) in the
      case of any other waiver or consent, by the Required Lenders (or by the
      Administrative Agent with the consent of the Required Lenders), and (4) in
      the
      case of any other amendment, by the Required Lenders (or by the Administrative
      Agent with the consent of the Required Lenders) and the Borrowers;
provided, however, that no amendment, consent or
      waiver

     

    
      
         

      

      
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    described
      in clause (3) or (4) above shall, unless in writing and
      signed by each Lender directly affected thereby (or by the Administrative Agent
      with the consent of such Lender), in addition to any other Person the signature
      of which is otherwise required pursuant to any Loan Document, do any of the
      following:

     

    waive
      any
      condition specified in Section 3.1, except any condition referring
      to any other provision of any Loan Document;

     

    increase
      the Commitment of such Lender or subject such Lender to any additional
      obligation;

     

    reduce
      (including through release, forgiveness, assignment or otherwise) (A) the
      principal amount of, the interest rate on, or any obligation of any Borrower
      to
      repay (whether or not on a fixed date), any outstanding Loan owing to such
      Lender, or (B) any fee or accrued interest payable to such Lender;
provided, however, that this clause (iii) does not
      apply to (x) any change to any provision increasing any interest rate or
      fee during the continuance of an Event of Default or to any payment of any
      such
      increase or (y) any modification to any financial covenant set forth in
Article V or in any definition set forth therein or principally used
      therein;

     

    waive
      or
      postpone any scheduled maturity date or other scheduled date fixed for the
      payment, in whole or in part, of principal of or interest on any Loan or fee
      owing to such Lender or for the reduction of such Lender’s Commitment;
provided, however, that this clause (iv) does not
      apply to any change to mandatory prepayments, including those required under
      Section 2.4, or to the application of any payment, including as set
      forth in Section 2.6;

     

    except
      as
      provided in Section 10.10, release any material portion of the
      Collateral (it being acknowledged and understood that any Facility shall be
      deemed a material portion of the Collateral);

     

    reduce
      or
      increase the proportion of Lenders required for the Lenders (or any subset
      thereof) to take any action hereunder or change the definition of the terms
      “Required Lenders”, “Pro Rata Share” or “Pro Rata Outstandings”; or

     

    amend
      Section 10.10 (Release of Collateral),
Section 11.9 (Sharing of Payments) or this
Section 11.1;

     

    and
      provided, further, that (x)(A) any waiver of any payment applied
      pursuant to Section 2.6(b) (Application of Mandatory
      Prepayments) to, and any modification of the application of any such payment
      to, the Term Loans shall require the consent of the Required Lenders,
      (B) any change to the definition of the term “Required Lender” shall
      require the consent of the Required Lenders and (y) no amendment, waiver or
      consent shall affect the rights or duties under any Loan Document of, or any
      payment to, the Administrative Agent (or otherwise modify any provision of
      Article X or the application thereof), any SPV that has been granted
      an option pursuant to Section 11.2(f) unless in writing and signed
      by the Administrative Agent, such SPV in addition to

     

    
      
         

      

      
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    any
      signature otherwise required and (z) the consent of the Borrowers shall not
      be
      required to change any order of priority set forth in
Section 2.6.  No amendment, modification or waiver of this
      Agreement or any Loan Document altering the ratable treatment of Obligations
      arising under Secured Hedging Agreement resulting in such Obligations being
      junior in right of payment to principal of the Loans or resulting in Obligations
      owing to any Secured Hedging Counterparty being unsecured (other than releases
      of Liens in accordance with the terms hereof), in each case in a manner adverse
      to any Secured Hedging Counterparty, shall be effective without the written
      consent of such Secured Hedging Counterparty or, in the case of a Secured
      Hedging Agreement provided or arranged by the Administrative Agent or an
      Affiliate thereof, the Administrative Agent.

     

    (b)  Each
      waiver or consent under any Loan Document shall be effective only in the
      specific instance and for the specific purpose for which it was
      given.  No notice to or demand on any Borrower shall entitle any
      Borrower to any notice or demand in the same, similar or other
      circumstances.  No failure on the part of any Secured Party to
      exercise, and no delay in exercising, any right hereunder shall operate as
      a
      waiver thereof, nor shall any single or partial exercise of any such right
      preclude any other or further exercise thereof or the exercise of any other
      right.

     

     

    Section
      11.2  Assignments
      and Participations; Binding Effect

     

    .  (a)
      Binding Effect.  This Agreement shall become effective when it
      shall have been executed by the Borrowers and the Administrative Agent and
      when
      the Administrative Agent shall have been notified by each Lender that such
      Lender has executed it.  Thereafter, it shall be binding upon and
      inure to the benefit of, but only to the benefit of, the Borrowers (in each
      case
      except for Article X), the Administrative Agent, each Lender and, to
      the extent provided in Section 10.11, each other Indemnitee and
      Secured Party and, in each case, their respective successors and permitted
      assigns.  Except as expressly provided in any Loan Document (including
      in Section 10.9), none of the Borrowers or the Administrative Agent
      shall have the right to assign any rights or obligations hereunder or any
      interest herein.

     

    (b)           Right
      to Assign.  Each Lender may sell, transfer, negotiate or assign
      all or a portion of its rights and obligations hereunder (including all or
      a
      portion of its Commitments and its rights and obligations with respect to Loans)
      to (i) any existing Lender, (ii) any Affiliate or Approved Fund of any existing
      Lender or (iii) any other Person acceptable (which acceptance shall not be
      unreasonably withheld or delayed) to the Administrative Agent and, as long
      as no
      Event of Default is continuing, the Borrowers; provided, however,
      that (x) such Transfers do not have to be ratable between the Facilities but
      must be ratable among the obligations owing to and owed by such Lender and
      (y)
      the aggregate outstanding principal amount (determined as of the effective
      date
      of the applicable Assignment) of the Loans subject to any such Transfer shall
      be
      an integral multiple of $1,000,000, unless such Transfer is made to an existing
      Lender or an Affiliate or Approved Fund of any existing Lender, is of the
      assignor’s (together with its Affiliates and Approved Funds) entire interest or
      is made with the prior consent of the Borrowers and the Administrative
      Agent.

     

    (c)           Procedure.  The
      parties to each Transfer made in reliance on clause (b) above (other than
      those described in clause (e) or (f) below) shall execute and
      deliver to the Administrative Agent (which shall keep a copy thereof) an
      Assignment, together with any existing Note subject to such Transfer (or any
      affidavit of loss therefor acceptable to the Administrative Agent), any tax
      forms required to be delivered pursuant to Section 2.11(f)
      and

     

    
      
         

      

      
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    payment
      by the assignee to the Administrative Agent of an assignment fee in the amount
      of $3,500.  Upon receipt of all the foregoing, and conditioned upon
      such receipt and upon the Administrative Agent consenting to such Assignment,
      from and after the effective date specified in such Assignment, the
      Administrative Agent shall record or cause to be recorded in the Register the
      information contained in such Assignment.

     

    (d)           Effectiveness.  Effective
      upon the entry of such record in the Register, (i) such assignee shall
      become a party hereto and, to the extent that rights and obligations under
      the
      Loan Documents have been assigned to such assignee pursuant to such Assignment,
      shall have the rights and obligations of a Lender, (ii) any applicable Note
      shall be transferred to such assignee through such entry and (iii) the assignor
      thereunder shall, to the extent that rights and obligations under this Agreement
      have been assigned by it pursuant to such Assignment, relinquish its rights
      (except for those surviving the termination of the Commitments and the payment
      in full of the Obligations) and be released from its obligations under the
      Loan
      Documents, other than those relating to events or circumstances occurring prior
      to such assignment (and, in the case of an Assignment covering all or the
      remaining portion of an assigning Lender’s rights and obligations under the Loan
      Documents, such Lender shall cease to be a party hereto except that each Lender
      agrees to remain bound by Article X, Section 11.8
      (Right of Setoff) and Section 11.9 (Sharing of
      Payments) to the extent provided in Section 10.11 (Additional
      Secured Parties)).

     

    (e)           Grant
      of Security Interests.  In addition to the other rights provided
      in this Section 11.2, each Lender may grant a security interest in,
      or otherwise assign as collateral, any of its rights under this Agreement,
      whether now owned or hereafter acquired (including rights to payments of
      principal or interest on the Loans), to (A) any federal reserve bank (pursuant
      to Regulation A of the Federal Reserve Board), without notice to the
      Administrative Agent or (B) any holder of, or trustee for the benefit of
      the holders of, such Lender’s securities by notice to the Administrative Agent;
provided, however, that no such holder or trustee, whether because
      of such grant or assignment or any foreclosure thereon (unless such foreclosure
      is made through an assignment in accordance with clause (b) above), shall
      be entitled to any rights of such Lender hereunder and no such Lender shall
      be
      relieved of any of its obligations hereunder.

     

    (f)           Participants
      and SPVs.  In addition to the other rights provided in this
Section 11.2, each Lender may, at no cost to the Borrowers (unless
      such assignment or participation is undertaken at the request of Borrowers),
      (x)
      with notice to the Administrative Agent, grant to an SPV the option to make
      all
      or any part of any Loan that such Lender would otherwise be required to make
      hereunder (and the exercise of such option by such SPV and the making of Loans
      pursuant thereto shall satisfy the obligation of such Lender to make such Loans
      hereunder) and such SPV may assign to such Lender the right to receive payment
      with respect to any Obligation and (y) without notice to or consent from
      the Administrative Agent or the Borrowers, sell participations to one or more
      Persons in or to all or a portion of its rights and obligations under the Loan
      Documents (including all its rights and obligations with respect to the Term
      Loans); provided, however, that, whether as a result of any term
      of any Loan Document or of such grant or participation, (i) no such SPV or
      participant shall have a commitment, or be deemed to have made an offer to
      commit, to make Loans hereunder, and, except as provided in the applicable
      option agreement, none shall be liable for any obligation of such Lender
      hereunder, (ii) such Lender’s rights and obligations, and the rights and
      obligations of the Borrowers and the Secured Parties towards such Lender, under
      any Loan Document shall remain unchanged and each other party hereto shall
      continue to deal solely with such Lender, which shall remain the

     

    
      
         

      

      
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    holder
      of
      the Obligations in the Register, except that (A) each such participant and
      SPV
      shall be entitled to the benefit of Sections 2.10 (Breakage
      Costs; Increased Costs; Capital Requirements) and 2.11
      (Taxes), but only to the extent such participant or SPV delivers the tax
      forms such Lender is required to collect pursuant to Section 2.11(f)
      and then only to the extent of any amount to which such Lender would be entitled
      in the absence of any such grant or participation and (B) each such SPV may
      receive other payments that would otherwise be made to such Lender with respect
      to Loans funded by such SPV to the extent provided in the applicable option
      agreement and set forth in a notice provided to the Administrative Agent by
      such
      SPV and such Lender, provided, however, that in no case (including
      pursuant to clause (A) or (B) above) shall an SPV or participant
      have the right to enforce any of the terms of any Loan Document, and (iii)
      the
      consent of such SPV or participant shall not be required (either directly,
      as a
      restraint on such Lender’s ability to consent hereunder or otherwise) for any
      amendments, waivers or consents with respect to any Loan Document or to exercise
      or refrain from exercising any powers or rights such Lender may have under
      or in
      respect of the Loan Documents (including the right to enforce or direct
      enforcement of the Obligations), except for those described in
clauses (iii) and (iv) of Section 11.1(a) with
      respect to amounts, or dates fixed for payment of amounts, to which such
      participant or SPV would otherwise be entitled and, in the case of participants,
      except for those described in Section 11.1(a)(v) (or amendments,
      consents and waivers with respect to Section 10.10 to release all or
      substantially all of the Collateral).  No party hereto shall institute
      (and each Borrower shall cause each other Borrower not to institute) against
      any
      SPV grantee of an option pursuant to this clause (f) any bankruptcy,
      reorganization, insolvency, liquidation or similar proceeding, prior to the
      date
      that is one year and one day after the payment in full of all outstanding
      commercial paper of such SPV; provided, however, that each Lender
      having designated an SPV as such agrees to indemnify each Indemnitee against
      any
      Liability that may be incurred by, or asserted against, such Indemnitee as
      a
      result of failing to institute such proceeding (including a failure to get
      reimbursed by such SPV for any such Liability).  The agreement in the
      preceding sentence shall survive the termination of the Commitments and the
      payment in full of the Obligations.

     

    (g)           Cooperation.  Each
      Borrower acknowledges that subject to the terms and conditions of this
Section 11.2, each Lender and its successors and assigns may (a) sell,
      transfer or assign this Agreement, the Note and the other Loan Documents to
      one
      or more investors as whole loan, in rated or unrated public offering or private
      placement, (b) participate the Loan to one or more investors in rated or unrated
      public offering or private placement, (c) deposit the Loan Documents with trust
      which trust may sell certificates to investors evidencing an ownership interest
      in the trust assets in rated or unrated public offering or private placement,
      or
      (d) otherwise sell the Loan or interest therein to investors in rated or unrated
      public offering or private placement (the transactions referred to in clauses
      (a) through (d) are hereinafter referred to as “Secondary Market
      Transactions”). Each Borrower shall cooperate in good faith with
      Administrative Agent and Lender in effecting any such Secondary Market
      Transactions and shall cooperate in good faith to implement all requirements
      reasonably imposed by the participants involved in any Secondary Market
      Transaction (including, without limitation, an institutional purchaser
      participant or investor) including, without limitation, (A) all structural
      or
      other changes to the Loan, (B) all modifications to any documents evidencing
      or
      securing the Loan, (C) within 30 days of request by Agent or Lender, (x) the
      appointment of an Independent Manager for each Borrower and (y) the delivery
      of
      opinions of counsel, including with respect to non-consolidation, reasonably
      acceptable to such other purchasers, participants, or investors may reasonably
      require; provided, however, that Borrowers shall not be required
      to modify any documents evidencing or securing the Loan which would (i) modify
      the interest rate payable under the Note, (ii) modify the

    
      
         

      

      
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    stated
      maturity of the Note, (iii) modify the amortization of principal of the Note,
      (iv) modify or conflict with any other material terms or covenants of the Loan,
      (v) increase the Borrowers or Emeritus’ liability or obligations under the Loan
      Documents or (vii) reduce the Borrowers or Emeritus’ rights under the Loan
      Documents. The Borrowers shall provide such information and documents relating
      to the Borrowers, Emeritus and the Facilities. Borrower acknowledges that
      certain information regarding the Loan, Emeritus and the Facilities may be
      included in private placement memorandum prospectus or other disclosure
      documents.

     

    Section
      11.3  Costs
      and Expenses

     

    .  Any
      action taken by any Borrower under or with respect to any Loan Document, even
      if
      required under any Loan Document or at the request of any Secured Party, shall
      be at the expense of such Borrower, and no Secured Party shall be required
      under
      any Loan Document to reimburse any Borrower therefor except as expressly
      provided therein.  In addition, each Borrower agrees to pay or
      reimburse upon demand (a) the Administrative Agent for all reasonable
      out-of-pocket costs and expenses incurred by it or any of its Related Persons
      in
      connection with the investigation, development, preparation, negotiation,
      execution (but not, unless undertaken at the request of Borrowers, syndication,
      interpretation, administration or servicing fees unless specifically set forth
      in this Agreement or the other Loan Documents) of, any modification of any
      term
      of or termination of, any Loan Document, any commitment or proposal letter
      therefor, any other document prepared in connection therewith or the
      consummation of any transaction contemplated therein (including periodic audits
      in connection therewith and environmental audits and assessments), in each
      case
      including the reasonable fees, charges and disbursements of legal counsel to
      the
      Administrative Agent or such Related Persons, fees, costs and expenses incurred
      in connection with Intralinks® or any
      other
      Electronic System and allocated to the Facilities by the Administrative Agent
      in
      its sole discretion and fees, charges and disbursements of the auditors,
      appraisers, printers and other of their Related Persons retained by or on behalf
      of any of them or any of their Related Persons, (b) the Administrative Agent
      for
      all reasonable costs and expenses incurred by it or any of its Related Persons
      in connection with internal audit reviews, field examinations and Collateral
      examinations (which shall be reimbursed, in addition to the out-of-pocket costs
      and expenses of such examiners, at the per diem rate per individual charged
      by
      the Administrative Agent for its examiners) and (c) each of the Administrative
      Agent, its Related Persons, and each Lender for all costs and expenses incurred
      in connection with (i) any refinancing or restructuring of the credit
      arrangements provided hereunder in the nature of a “work-out”, (ii) the
      enforcement or preservation of any right or remedy under any Loan Document,
      any
      Obligation, with respect to the Collateral or any other related right or remedy
      or (iii) the commencement, defense, conduct of, intervention in, or the taking
      of any other action with respect to, any proceeding (including any bankruptcy
      or
      insolvency proceeding) related to any Borrower, Loan Document, Obligation (or
      the response to and preparation for any subpoena or request for document
      production relating thereto), including fees and disbursements of counsel
      (including allocated costs of internal counsel).

     

     

    Section
      11.4  Indemnities

     

    .  (a)
      Each Borrower agrees to indemnify, hold harmless and defend the Administrative
      Agent, each Lender, each Person (other than the Borrowers) that is a party
      to a
      Secured Hedging Agreement, and each of their respective Related Persons (each
      such Person being an “Indemnitee”) from and against all Liabilities
      (including brokerage commissions, fees and other compensation) that may be
      imposed on, incurred by or asserted against any such Indemnitee in any matter
      relating to or arising out of, in connection with or as a result of (i) any
      Loan
      Document, any Related Document, any Disclosure Document, any Obligation (or
      the
      repayment thereof), the use or intended use of the proceeds of any Loan, any
      Related Transaction,

     

    
      
         

      

      
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    or
      any
      securities filing of, or with respect to, any Borrower, (ii) any commitment
      letter, proposal letter or term sheet with any Person or any Contractual
      Obligation, arrangement or understanding with any broker, finder or consultant,
      in each case entered into by or on behalf of the Seller, any Borrower or any
      Affiliate of any of them in connection with any of the foregoing and any
      Contractual Obligation entered into in connection with any Electronic Systems
      or
      other Electronic Transmissions, (iii) any actual or prospective investigation,
      litigation or other proceeding, whether or not brought by any such Indemnitee
      or
      any of its Related Persons, any holders of securities or creditors (and
      including attorneys’ fees in any case), whether or not any such Indemnitee,
      Related Person, holder or creditor is a party thereto, and whether or not based
      on any securities or commercial law or regulation or any other Requirement
      of
      Law or theory thereof, including common law, equity, contract, tort or
      otherwise, or (iv) any other act, event or transaction related, contemplated
      in
      or attendant to any of the foregoing (collectively, the “Indemnified
      Matters”); provided, however, that each Borrower shall not
      have any liability under this Section 11.4 to any Indemnitee with
      respect to any Indemnified Matter, and no Indemnitee shall have any liability
      with respect to any Indemnified Matter other than (to the extent otherwise
      liable), to the extent such liability has resulted primarily from the gross
      negligence or willful misconduct of any Indemnitee.  Furthermore, each
      Borrower waives and agrees not to assert against any Indemnitee, and shall
      cause
      each other Borrower to waive and not assert against any Indemnitee, any right
      of
      contribution with respect to any Liabilities that may be imposed on, incurred
      by
      or asserted against any Related Person.

     

    (b)           Without
      limiting the foregoing, “Indemnified Matters” includes all Environmental
      Liabilities, including those arising from, or otherwise involving, or any
      actual, alleged or prospective damage to property or natural resources or harm
      or injury alleged to have resulted from any Release of Hazardous Materials
      on,
      upon or into such property or natural resource or any property on or contiguous
      to any real property of any Borrower, whether or not, with respect to any such
      Environmental Liabilities, any Indemnitee is a mortgagee pursuant to any
      leasehold mortgage, a mortgagee in possession, or the successor-in-interest
      to
      any Related Person, in each case except to the extent such Environmental
      Liabilities (i) are incurred solely following foreclosure by any Secured Party
      or following any Secured Party having become the successor-in-interest to any
      Borrower and (ii) are attributable solely to acts of such
      Indemnitee.

     

     

    Section
      11.5  Survival

     

    .  Any
      indemnification or other protection provided to any Indemnitee pursuant to
      any
      Loan Document (including pursuant to Section 2.11 (Taxes),
Section 2.10(Breakage Costs; Increased Costs; Capital
      Requirements), Article X (The Administrative Agent),
Section 11.3 (Costs and Expenses), Section 11.4
      (Indemnities) or this Section 11.5 and also including
      Guaranty Obligations for which Lender has recourse to the party obligated
      thereunder) and all representations and warranties made in any Loan Document
      shall (A) survive the termination of the Commitments and the payment in
      full of other Obligations and (B) inure to the benefit of any Person that at
      any
      time held a right thereunder (as an Indemnitee or otherwise) and, thereafter,
      its successors and permitted assigns, other than any person who has taken an
      interest herein or in the Facilities through foreclosure, deed-in-lieu or
      similar transaction, unless such person taking such interest through
      foreclosure, deed-in-lieu or similar transaction is a Lender, the Administrative
      Agent or any of their Affiliates.

     

     

    Section
      11.6  Limitation
      of Liability for Certain Damages

     

    .  In
      no event shall any Indemnitee be liable on any theory of liability for any
      special, indirect, consequential or punitive damages (including any loss of
      profits, business or anticipated savings).  Each Borrower hereby
      waives, releases and agrees (and shall cause each other Borrower to waive,
      release and agree) not

     

    
      
         

      

      
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    to
      sue
      upon any such claim for any special, indirect, consequential or punitive
      damages, whether or not accrued and whether or not known or suspected to exist
      in its favor.

     

     

    Section
      11.7  Lender-Creditor
      Relationship

     

    .  The
      relationship between the Lenders and the Administrative Agent, on the one hand,
      and the Borrowers, on the other hand, is solely that of lender and
      creditor.  No Secured Party has any fiduciary relationship or duty to
      any Borrower arising out of or in connection with, and there is no agency,
      tenancy or joint venture relationship between the Secured Parties and the
      Borrowers by virtue of, any Loan Document or any transaction contemplated
      therein.

     

     

    Section
      11.8  Right
      of Setoff

     

    .  Each
      of the Administrative Agent, each Lender and each Affiliate (including each
      branch office thereof) of any of them is hereby authorized, without notice
      or
      demand (each of which is hereby waived by each Borrower), at any time and from
      time to time during the continuance of any Event of Default and to the fullest
      extent permitted by applicable Requirements of Law, to set off and apply any
      and
      all deposits (whether general or special, time or demand, provisional or final)
      at any time held and other Indebtedness, claims or other obligations at any
      time
      owing by the Administrative Agent, such Lender or any of their respective
      Affiliates to or for the credit or the account of any Borrower against any
      Obligation of any Borrower now or hereafter existing, whether or not any demand
      was made under any Loan Document with respect to such Obligation and even though
      such Obligation may be unmatured.  Each of the Administrative Agent,
      each Lender agrees promptly to notify the Borrowers and the Administrative
      Agent
      after any such setoff and application made by such Lender or its Affiliates;
      provided, however, that the failure to give such notice shall not
      affect the validity of such setoff and application.  The rights under
      this Section 11.8 are in addition to any other rights and remedies
      (including other rights of setoff) that the Administrative Agent, the Lenders
      and their Affiliates and other Secured Parties may have.

     

     

    Section
      11.9  Sharing
      of Payments, Reinstatement Etc.

     

      If
      any Lender, directly or through an Affiliate or branch office thereof, obtains
      any payment of any Obligation of any Borrower (whether voluntary, involuntary
      or
      through the exercise of any right of setoff or the receipt of any Collateral
      or
“proceeds” (as defined under the applicable UCC) of Collateral) other
      than pursuant to Sections 2.10 (Breakage Costs; Increased Costs;
      Capital Requirements), 2.11 (Taxes) and 2.12
      (Substitution of Lenders) and such payment exceeds the amount such Lender
      would have been entitled to receive if all payments had gone to, and been
      distributed by, the Administrative Agent in accordance with the provisions
      of
      the Loan Documents, such Lender shall purchase for cash from other Secured
      Parties such participations in their Obligations as necessary for such Lender
      to
      share such excess payment with such Secured Parties to ensure such payment
      is
      applied as though it had been received by the Administrative Agent and applied
      in accordance with this Agreement (or, if such application would then be at
      the
      discretion of the Borrowers, applied to repay the Obligations in accordance
      herewith); provided, however, that (a) if such payment is
      rescinded or otherwise recovered from such Lender in whole or in part, such
      purchase shall be rescinded and the purchase price therefor shall be returned
      to
      such Lender without interest and (b) such Lender shall, to the fullest extent
      permitted by applicable Requirements of Law, be able to exercise all its rights
      of payment (including the right of setoff) with respect to such participation
      as
      fully as if such Lender were the direct creditor of such Borrower in the amount
      of such participation.

     

    If
      any
      payments of money or transfers of property made to Administrative Agent (for
      the
      benefit of Lenders) by any Borrower should for any reason subsequently be
      declared to

     

    
      
         

      

      
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    be,
      or in
      Administrative Agent’s counsel’s good faith opinion be determined to be,
      fraudulent (within the meaning of any state or federal law relating to
      fraudulent conveyances), preferential or otherwise voidable or recoverable
      in
      whole or in part for any reason (hereinafter collectively called “voidable
      transfers”) under the Bankruptcy Code or any other federal or state law and
      Administrative Agent or any Lender is required to repay or restore, or in
      Administrative Agent’s counsel’s opinion may be so liable to repay or restore,
      any such voidable transfer, or the amount or any portion thereof, then as to
      any
      such voidable transfer or the amount repaid or restored and all reasonable
      costs
      and expenses (including reasonable attorneys’ fees) of Administrative Agent and
      Lenders related thereto, such Borrower’s liability hereunder shall automatically
      be revived, reinstated and restored and shall exist as though such voidable
      transfer had never been made.

     

     

    Section
      11.10  Marshaling;
      Payments Set Aside

     

    .  No
      Secured Party shall be under any obligation to marshal any property in favor
      of
      any Borrower or any other party or against or in payment of any
      Obligation.  To the extent that any Secured Party receives a payment
      from any Borrower, from the proceeds of the Collateral, from the exercise of
      its
      rights of setoff, any enforcement action or otherwise, and such payment is
      subsequently, in whole or in part, invalidated, declared to be fraudulent or
      preferential, set aside or required to be repaid to a trustee, receiver or
      any
      other party, then to the extent of such recovery, the obligation or part thereof
      originally intended to be satisfied, and all Liens, rights and remedies
      therefor, shall be revived and continued in full force and effect as if such
      payment had not occurred.

     

     

    Section
      11.11  Notices

     

    .  (a)
      Addresses.  All notices, demands, requests, approvals,
      consents, directions and other communications required or expressly authorized
      to be made by this Agreement shall, whether or not specified to be in writing
      but unless otherwise expressly specified to be given by any other means, be
      given in writing and (i) addressed to:

     

    if
      to the
      Borrowers:                                           c/o
      Emeritus Assisted Living

    3131
      Elliott Avenue, Suite 500

    Seattle,
      Washington 98121

    Attention:  Eric
      Mendelsohn

    Tel:  (206)
      301-4493

    Fax:  (206)
      357-7388

    with
      copy
      to:

    Riddell
      Williams P.S.

    1001
      Fourth Avenue

    Suite
      4500

    Seattle,
      Washington  98154

    Attention:  Scott
      S. Yasui

    Tel:  (206)
      389-1621

    Fax:  (206)
      389-1708

    

    if
      to
      the

    Administrative
      Agent:                                           General
      Electric Capital Corporation

    Loan
      No. 07-0004315

    2
      Bethesda Metro Center, Suite
      600

    Bethesda,
      Maryland 20814

    Attention:
      Manager, Portfolio
      Management Group

    Facsimile:                      (301)
      347-3150

    
      
         

      

      
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    GE
      Capital

    500
      West
      Monroe Street

    Chicago,
      IL 60661

    Attention:  John
      Cobb, Senior Managing Director

    Tel:  (312)
      441-7421

    Fax:  (866)
      252-2015

    

     

    with
      copy
      to:                                 5804
      Trailridge Drive

    Austin,
      TX 78731

    
      	
               

            	
              Attention:  Diana
                Pennington, Senior Vice President & Chief
                Counsel

            

    

    Tel:  (512)
      458-8625

    Fax:  (866)
      221-0433

    

     

    or
      (ii)
      addressed to such other address as shall be notified in writing (A) in the
      case
      of any Borrower, the Administrative Agent, to the other parties hereto and
      (B)
      in the case of all other parties, to the Borrowers and the Administrative
      Agent.  

     

    (b)           Effectiveness.  All
      communications described in clause (a) above and all other notices,
      demands, requests and other communications made in connection with this
      Agreement shall be effective and be deemed to have been received (i) if
      delivered by hand, upon personal delivery, (ii) if delivered by overnight
      courier service, one Business Day after delivery to such courier service, (iii)
      if delivered by United States mail, 5 days after being deposited in the mails,
      and (iv) if delivered by facsimile, upon sender’s receipt of confirmation of
      proper transmission,; provided, however, that no communications to
      the Administrative Agent pursuant to Article II or
Article X shall be effective until received by the Administrative
      Agent, and any communications delivered pursuant to clause (iv) shall be
      immediately followed by a hard copy sent pursuant to clauses (i), (ii) or
      (iii).

     

     

    Section
      11.12  Electronic
      Transmissions

     

    .  (a)
      Authorization.  Subject to the provisions of
Section 11.11(a), each of the Administrative Agent, the Borrowers,
      the Lenders and each of their Related Persons is authorized (but not required)
      to transmit, post or otherwise make or communicate, in its sole discretion,
      Electronic Transmissions in connection with any Loan Document and the
      transactions contemplated therein.  Each Borrower and each Secured
      Party hereby acknowledges and agrees, and each Borrower shall cause each other
      Borrower to acknowledge and agree, that the use of Electronic Transmissions
      is
      not necessarily secure and that there are risks associated with such use,
      including risks of interception, disclosure and abuse and each indicates it
      assumes and accepts such risks by hereby authorizing the transmission of
      Electronic Transmissions.

     

    (b)           Signatures.  Subject
      to the provisions of Section 11.11(a), (i)(A) no posting to any
      Electronic System shall be denied legal effect merely because it is made
      electronically, (B) each Electronic Signature on any such posting shall be
      deemed sufficient to satisfy any requirement for a “signature” and (C) each
      such posting shall be deemed sufficient to satisfy any requirement for a
“writing”, in each case including pursuant to any Loan Document, any applicable
      provision of any UCC, the federal Uniform Electronic Transactions Act,
      the

     

    
      
         

      

      
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    Electronic
      Signatures in Global and National Commerce Act and any substantive or procedural
      Requirement of Law governing such subject matter, (ii) each such posting that
      is
      not readily capable of bearing either a signature or a reproduction of a
      signature may be signed, and shall be deemed signed, by attaching to, or
      logically associating with such posting, an Electronic Signature, upon which
      each Secured Party and each Borrower may rely and assume the authenticity
      thereof, (iii) each such posting containing a signature, a reproduction of
      a
      signature or an Electronic Signature shall, for all intents and purposes, have
      the same effect and weight as a signed paper original and (iv) each party hereto
      or beneficiary hereto agrees not to contest the validity or enforceability
      of
      any posting on any Electronic System or Electronic Signature on any such posting
      under the provisions of any applicable Requirement of Law requiring certain
      documents to be in writing or signed; provided, however, that
      nothing herein shall limit such party’s or beneficiary’s right to contest
      whether any posting to any Electronic System or Electronic Signature has been
      altered after transmission.

     

    (c)           Separate
      Agreements.  All uses of an Electronic System shall be governed by
      and subject to, in addition to Section 11.11 and this
Section 11.12, separate terms and conditions posted or referenced in
      such Electronic System and related Contractual Obligations executed by Secured
      Parties and Borrowers in connection with the use of such Electronic
      System.

     

    (d)           Limitation
      of Liability.  All Electronic Systems and Electronic Transmissions
      shall be provided “as is” and “as available”.  None of Administrative
      Agent or any of its Related Persons warrants the accuracy, adequacy or
      completeness of any Electronic Systems or Electronic Transmission, and each
      disclaims all liability for errors or omissions therein.  No Warranty
      of any kind is made by the Administrative Agent or any of its Related Persons
      in
      connection with any Electronic Systems or Electronic Communication, including
      any warranty of merchantability, fitness for a particular purpose,
      non-infringement of third-party rights or freedom from viruses or other code
      defects.  Each Borrower and each Secured Party agrees (and
      each Borrower shall cause each other Borrower to agree) that the Administrative
      Agent has no responsibility for maintaining or providing any equipment,
      software, services or any testing required in connection with any Electronic
      Transmission or otherwise required for any Electronic System.

     

     

    Section
      11.13  Governing
      Law

     

    .  This
      Agreement, each other Loan Document that does not expressly set forth its
      applicable law, and the rights and obligations of the parties hereto and thereto
      shall be governed by, and construed and interpreted in accordance with, the
      law
      of the State of New York.

     

     

    Section
      11.14  Jurisdiction

     

    .  (a)
      Submission to Jurisdiction.  Any legal action or proceeding
      with respect to any Loan Document may be brought in the courts of the State
      of
      New York located in the City of New York, Borough of Manhattan, or of the United
      States of America for the Southern District of New York and, by execution and
      delivery of this Agreement, each Borrower hereby accepts for itself and in
      respect of its property, generally and unconditionally, the jurisdiction of
      the
      aforesaid courts.  The parties hereto (and, to the extent set forth in
      any other Loan Document, each other Borrower) hereby irrevocably waive any
      objection, including any objection to the laying of venue or based on the
      grounds of forum non conveniens, that any of them may now or hereafter
      have to the bringing of any such action or proceeding in such
      jurisdictions.

     

    
      
         

      

      
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    (b)           Service
      of Process.  Each Borrower (and, to the extent set forth in any
      other Loan Document, each other Borrower) hereby irrevocably waives personal
      service of any and all legal process, summons, notices and other documents
      and
      other service of process of any kind and consents to such service in any suit,
      action or proceeding brought in the United States of America with respect to
      or
      otherwise arising out of or in connection with any Loan Document by any means
      permitted by applicable Requirements of Law, including by the mailing thereof
      (by registered or certified mail, postage prepaid) to the address of the
      Borrowers specified in Section 11.11 (and shall be effective when
      such mailing shall be effective, as provided therein).  Each Borrower
      (and, to the extent set forth in any other Loan Document, each other Borrower)
      agrees that a final judgment in any such action or proceeding shall be
      conclusive and may be enforced in other jurisdictions by suit on the judgment
      or
      in any other manner provided by law.

     

    (c)           Non-Exclusive
      Jurisdiction.  Nothing contained in this Section 11.14
      shall affect the right of the Administrative Agent or any Lender to serve
      process in any other manner permitted by applicable Requirements of
      Law.

     

     

    Section
      11.15  Waiver
      of Jury Trial

     

    .  Each
      party hereto hereby irrevocably waives trial by jury in any suit, action or
      proceeding with respect to, or directly or indirectly arising out of, under
      or
      in connection with, any Loan Document or the transactions contemplated therein
      or related thereto (whether founded in contract, tort or any other
      theory).  Each party hereto (A) certifies that no other party and no
      Related Person of any other party has represented, expressly or otherwise,
      that
      such other party would not, in the event of litigation, seek to enforce the
      foregoing waiver and (B) acknowledges that it and the other parties hereto
      have been induced to enter into the Loan Documents, as applicable, by the mutual
      waivers and certifications in this Section 11.15.

     

     

    Section
      11.16  Severability

     

    .  Any
      provision of any Loan Document being held illegal, invalid or unenforceable
      in
      any jurisdiction shall not affect any part of such provision not held illegal,
      invalid or unenforceable, any other provision of any Loan Document or any part
      of such provision in any other jurisdiction.

     

     

    Section
      11.17  Execution
      in Counterparts

     

    .  This
      Agreement may be executed in any number of counterparts and by different parties
      in separate counterparts, each of which when so executed shall be deemed to
      be
      an original and all of which taken together shall constitute one and the same
      agreement.  Signature pages may be detached from multiple separate
      counterparts and attached to a single counterpart.  Delivery of an
      executed signature page of this Agreement by facsimile transmission or
      Electronic Transmission shall be as effective as delivery of a manually executed
      counterpart hereof.

     

     

    Section
      11.18  Entire
      Agreement

     

    .  The
      Loan Documents embody the entire agreement of the parties and supersede all
      prior agreements and understandings relating to the subject matter thereof
      and
      any prior letter of interest, commitment letter, confidentiality and similar
      agreements involving any Borrower and any of the Administrative Agent, any
      Lender or any of their respective Affiliates relating to a financing of
      substantially similar form, purpose or effect.  In the event of any
      conflict between the terms of this Agreement and any other Loan Document, the
      terms of this Agreement shall govern (unless such terms of such other Loan
      Documents are necessary to comply with applicable Requirements of Law, in which
      case such terms shall govern to the extent necessary to comply
      therewith).

     

    
      
         

      

      
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    Use
      of
      Name

     

    .  Each
      Borrower agrees, and shall cause each other Borrower to agree, that it shall
      not, and none of its Affiliates shall, issue any press release or other public
      disclosure (other than any document filed with any Governmental Authority
      relating to a public offering of the Equity Interests of any Borrower) using
      the
      name, logo or otherwise referring to GE Capital or of any of its Affiliates,
      the
      Loan Documents or any transaction contemplated therein to which the Secured
      Parties are party without at least 2 Business Days’ prior notice to GE
      Capital and without the prior consent of GE Capital except to the extent
      required to do so under applicable Requirements of Law and then, only after
      consulting with GE Capital prior thereto.

     

     

    Section
      11.19  Non-Public
      Information; Confidentiality

     

    .  (a)
      Each Lender acknowledges and agrees that it may receive material non-public
      information hereunder concerning the Borrowers and their Affiliates and
      securities and agrees to use such information in compliance with all relevant
      policies, procedures and Contractual Obligations and applicable Requirements
      of
      Laws (including United States federal and state security laws and
      regulations).

     

    (b)           Each
      Lender and the Administrative Agent agrees to use all reasonable efforts to
      maintain, in accordance with its customary practices, the confidentiality of
      information obtained by it pursuant to any Loan Document and designated in
      writing by any Borrower as confidential, except that such information may be
      disclosed (i) with such Borrower’s consent, (ii) to Related Persons of such
      Lender or the Administrative Agent, as the case may be, that are advised of the
      confidential nature of such information and are instructed to keep such
      information confidential, (iii) to the extent such information presently is
      or
      hereafter becomes available to such Lender or the Administrative Agent, as
      the
      case may be, on a non-confidential basis from a source other than any Borrower,
      (iv) to the extent disclosure is required by applicable Requirements of Law
      or
      other legal process or requested or demanded by any Governmental Authority,
      (v) to the National Association of Insurance Commissioners or any similar
      organization, any examiner or any nationally recognized rating agency or
      otherwise to the extent consisting of general portfolio information that does
      not identify Borrowers, (vi) to current or prospective assignees, SPVs grantees
      of any option described in Section 11.2(f) or participants, direct
      or contractual counterparties to any Hedging Agreement permitted hereunder
      and
      to their respective Related Persons, in each case to the extent such assignees,
      participants, counterparties or Related Persons agree to be bound by provisions
      substantially similar to the provisions of this Section 11.20 and
      (vii) in connection with the exercise of any remedy under any Loan
      Document.  In the event of any conflict between the terms of this
Section 11.20 and those of any other Contractual Obligation entered
      into with any Borrower (whether or not a Loan Document), the terms of this
      Section 11.20 shall govern.

     

     

    Section
      11.20  Patriot
      Act Notice

     

    .  Each
      Lender subject to the USA Patriot Act of 2001 (31 U.S.C. 5318 et seq.) hereby
      notifies each Borrower that, pursuant to Section 326 thereof, it is required
      to
      obtain, verify and record information that identifies each Borrower, including
      the name and address of such Borrower and other information allowing such Lender
      to identify such Borrower in accordance with such act.

     

     

    Section
      11.21  Limitation
      of Liability

     

    .  Notwithstanding
      anything to the contrary contained in this Agreement, except as expressly set
      forth in the Guaranty or the Environmental Indemnity, no present or future
      “Constituent Partner” in or of any Borrower and no present or future advisor,
      trustee, director, officer, employee, beneficiary, member, shareholder,
      participant, advisor, principal or agent in or of any Borrower shall have any
      personal liability, directly or indirectly, under or in connection with this
      Agreement, and Lenders and their successors and

     

    
      
         

      

      
        85

        
          

        

      

      
         

      

    

    assigns
      and, without limitation, all other persons and entities, hereby waive any and
      all such personal liability.  “Constituent Partner” means any person
      or entity that is a partner in, member or shareholder of any Borrower, or any
      person or entity that directly or indirectly through one or more limited
      liability companies, partnership or other entities, is a partner in, member
      or
      shareholder of any Borrower”.

     

    

     

     

    ARTICLE
      XII

     

     

    

     

     

    POST
      CLOSING AGREEMENTS

     

    Each
      Borrower agrees to deliver to the
      Administrative Agent, as soon as practicable, but in any event no later than
      the
      date or time period specified as applicable to each Section below, the following
      items each in form and substance satisfactory to the Administrative
      Agent:

     

    Section
      12.1  Immediate
      Repairs

     

    .                          Within
      180 days of the Closing Date, evidence of the completion of each of the repairs,
      replacements and improvements set forth in Schedule 2.1.

     

     

    Section
      12.2  Asbestos

     

        Within
      90 days of the Closing Date, a copy of an existing operation and maintenance
      (“O&M”) plan for Asbestos containing materials (“ACM's”) at
      the Park Club of Ft. Meyers Facility, or satisfactory written confirmation
      of
      the development and implementation of an ACM O&M plan at such
      Facility.

     

     

    Section
      12.3  Radon

     

    .  Within
      90 days of the Closing Date, a copy of radon sampling results at the Springtree
      Facility in accordance with Florida Statute 404.056(4).

     

     

    Section
      12.4  Zoning.  Within
      30 days of the Closing Date, a zoning report or letter from the appropriate
      Governmental Authority confirming the designation and compliance of subject
      property with zoning regulations, together with copies of the relevant portions
      of zoning ordinances (including parking) for Pavilion at Crossing Pointe and
      Springtree. Furthermore, each Borrower shall promptly perform any actions
      required to be performed under any exceptions listed in such zoning report
      or
      letter.

     

     

    Section
      12.5  Opinion.  Within
      10 days of the Closing Date, duly executed favorable opinions of counsel to
      the
      Borrowers including local counsel in each state in which a Facility being
      acquired is located, addressed to the Administrative Agent and the Lenders
      and
      addressing the authorization, due execution and delivery and enforceability
      of
      the Loan Documents delivered by Emeritus Properties NGH, LLC.

     

     

    Section
      12.6  Provider
      Agreements.  Within 30 days of the Closing Date, copies of all
      Medicare and Medicaid provider agreements and related documents for the Pavilion
      at Crossing Pointe and Springtree Facilities.

     

     

    

     

    
      
         

      

      
        86

        
          

        

      

      
         

      

    

     

    [Signature
      Pages Follow]

     

    
      
         

      

      
        87

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
      by
      their respective officers thereunto duly authorized, as of the date first above
      written.

     

    BORROWERS:

     

    

    HC3
      FT. MYERS LLC, a Delaware

    limited
      liability company

    

    By:  Emeritus
      Corporation, a Washington

            corporation,
      its Manager

    

        By:  _/s/
      Eric Mendelsohn _____

    Eric
      Mendelsohn, Director of

    Real
      Estate and Legal Affairs

    

    

    HC3
      ORLANDO LLC, a Delaware limited

    liability
      company

    

    By:  Emeritus
      Corporation, a Washington

            corporation,
      its Manager

    

        By:  _/s/
      Eric Mendelsohn _________

    Eric
      Mendelsohn, Director of

    Real
      Estate and Legal Affairs

    

    

    HC3
      SUNRISE LLC, as Delaware limited

    liability
      company

    

    By:  Emeritus
      Corporation, a Washington

            corporation,
      its Manager

    

        By:  __/s/
      Eric Mendelsohn _______

    Eric
      Mendelsohn, Director of

    Real
      Estate and Legal Affairs

    

    
      
         

      

      
        S
          -
          1

        
          

        

      

      
         

      

    

    GENERAL
      ELECTRIC CAPITAL CORPORATION, a Delaware corporation,

    as
      Administrative Agent and Lender

    

    

    By:
      /s/
      Jim
      McMahon                                                                 

     

    Name:
      Jim
      McMahon

     

    Title:  Its
      Duly Authorized Signatory

     

    

    

    
      	
               

            	
              GE
                CAPITAL MARKETS, INC., a

            

    

    
      	
               

            	
              Delaware
                corporation, as Lead Arranger

            

    

    

     

    

     

    

     

    By:
      /s/
      Jim
      McMahon                                                                 

     

    Name:
      Jim
      McMahon

     

    Title:  Its
      Duly Authorized Signatory

     

    

     

    
      
         

      

      
        S
          -
          2

        
          

        

      

      
         

      

    

    

    SCHEDULE
      I

    Commitments

    

    

    
      	
              Lender

            	
              Commitment

            
	
              GE
                Capital

            	
              $19,640,000

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
      2.1

    Repairs,
      Replacements and Improvements

     

    [TBD]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE 4.2

    Consents

    

    

    [TBD]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    

    

    SCHEDULE 4.3

    Ownership
      of the Borrowers

    

    

    [TBD]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule 4.7

    Litigation

    

    

    [TBD]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule 4.12

    Labor
      Matters

    

    

    [TBD]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule 4.13

    List
      of Plans

    

    

    [TBD]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule 4.14

    Environmental
      Matters

    

    [TBD]

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule 4.16

    Real
      Property, Allocated Loan Amount and Beds

    

    [TBD]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule 7.2

    Provider
      Agreements and Licenses

    

    [TBD]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule 8.1

    Existing
      Indebtedness

    

    

    [TBD]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule 8.2

    Existing
      Liens

    

    

    [TBD]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule 8.3

    Existing
      Investments

    

    

    [TBD]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00132-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00132-of-00352.parquet"}]]