Document:

ex10_6901creditagrmntwells.htm

    
EX-10.69.01

    
 

    CREDIT
      AGREEMENT

    

    THIS
      CREDIT AGREEMENT (this
      "Agreement") is entered into as of January 17, 2008, by and between EMERITUS
      CORPORATION, a Washington corporation ("Borrower"), and WELLS FARGO BANK,
      NATIONAL ASSOCIATION ("Bank").

    

    RECITALS

    

    Borrower
      has requested that Bank
      extend or continue credit to Borrower as described below, and Bank has agreed
      to
      provide such credit to Borrower on the terms and conditions contained
      herein.

    

    NOW,
      THEREFORE, for valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged,
      Bank and Borrower hereby agree as follows:

    

    ARTICLE
      I

    CREDIT
      TERMS

    

    SECTION
      1.1.                                   
LINE OF CREDIT.

    

    (a)             
      Line of
      Credit.  Subject to the terms and conditions of this Agreement,
      Bank hereby agrees to make advances to Borrower from time to time up to and
      including February 15, 2009, not to exceed at any time the aggregate principal
      amount of Twenty Five Million Dollars ($25,000,000.00) ("Line of Credit"),
      the
      proceeds of which shall be used to finance Borrower’s general corporate
      requirements.  Borrower's obligation to repay advances under the Line
      of Credit shall be evidenced by a promissory note dated as of January 17, 2008
      ("Line of Credit Note"), all terms of which are incorporated herein by this
      reference.

    

    (b)             
      Letter of Credit
      Subfeature.  As a subfeature under the Line of Credit, Bank
      agrees from time to time during the term thereof to issue or cause an affiliate
      to issue standby letters of credit for the account of Borrower to back
      performance (each, a "Letter of Credit" and collectively, "Letters of Credit");
      provided however, that the aggregate undrawn amount of all outstanding Letters
      of Credit shall not at any time exceed Twenty Five Million Dollars
      ($25,000,000.00).  The form and substance of each Letter of Credit
      shall be subject to approval by Bank, in its sole discretion.  No
      Letter of Credit shall have an expiration date subsequent to the maturity date
      of the Line of Credit.  The undrawn amount of all Letters of Credit
      shall be reserved under the Line of Credit and shall not be available for
      borrowings thereunder.  Each Letter of Credit shall be subject to the
      additional terms and conditions of the Letter of Credit agreements, applications
      and any related documents required by Bank in connection with the issuance
      thereof.  Each drawing paid under a Letter of Credit shall be deemed
      an advance under the Line of Credit and shall be repaid by Borrower in
      accordance with the terms and conditions of this Agreement applicable to such
      advances; provided however, that if advances under the Line of Credit are not
      available, for any reason, at the time any drawing is paid, then Borrower shall
      immediately pay to Bank the full amount drawn, together with interest thereon
      from the date such drawing is paid to the date such amount is fully repaid
      by
      Borrower, at the rate of interest applicable to advances under the Line of
      Credit.  In such event Borrower agrees that Bank, in its sole
      discretion, may debit any account maintained by Borrower with Bank for the
      amount of any such drawing.

    

    (c)             
      Borrowing and
      Repayment.  Borrower may from time to time during the term of
      the Line of Credit borrow, partially or wholly repay its outstanding borrowings,
      and reborrow,

    
      
        
        

      

      
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    subject
      to all of the limitations, terms and conditions contained herein or in the
      Line
      of Credit Note; provided however, that the total outstanding borrowings under
      the Line of Credit shall not at any time exceed the maximum principal amount
      available thereunder, as set forth above.  Notwithstanding the
      foregoing, Borrower shall maintain a zero balance on advances under the Line
      of
      Credit (exclusive of issued and outstanding Letters of Credit) for a period
      of
      at least thirty (30) consecutive days during each fiscal year.

    

    SECTION
      1.2.                                   
INTEREST/FEES.

    

    (a)             
      Interest.  The
      outstanding principal balance of  the Line of Credit shall bear
      interest , and the amount of each drawing paid under the Standby Letter of
      Credit shall bear interest from the date such drawing is paid to the date such
      amount is fully repaid by Borrower, at the rate of interest set forth in the
      Line of Credit Note

    

    (b)             
      Computation and
      Payment.  Interest shall be computed on the basis of a 360-day
      year, actual days elapsed.  Interest shall be payable at the times and
      place set forth in each promissory note or other instrument or document required
      hereby.

    

    (c)             
      Unused Commitment
      Fee.  Borrower shall pay to Bank a fee equal to a quarter
      percent (0.25%) per annum (computed on the basis of a 360-day year, actual
      days
      elapsed) on the average daily unused amount of the Line of Credit, which fee
      shall be calculated on a quarterly basis by Bank and shall be due and payable
      by
      Borrower in arrears within ten (10) days after each billing is sent by
      Bank.

    

    (d)             
      Letter of Credit
      Fees.  Borrower shall pay to Bank (i) fees upon the
      issuance of each Letter of Credit equal to one percent (1%) per annum (computed
      on the basis of a 360-day year, actual days elapsed) of the face amount thereof,
      and (ii) fees upon the payment or negotiation of each drawing under any
      Letter of Credit and fees upon the occurrence of any other activity with respect
      to any Letter of Credit (including without limitation, the transfer, amendment
      or cancellation of any Letter of Credit) determined in accordance with Bank's
      standard fees and charges then in effect for such activity.

    

    SECTION
      1.3.                                   
COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect all interest and
      fees due under each credit subject hereto by charging Borrower's deposit account
      number 4178524682 with Bank, or any other deposit account maintained by Borrower
      with Bank, for the full amount thereof. Should there be insufficient funds
      in
      any such deposit account to pay all such sums when due, the full amount of
      such
      deficiency shall be immediately due and payable by Borrower.

    

    ARTICLE
      II

    REPRESENTATIONS
      AND
      WARRANTIES

    

    Borrower
      makes the following
      representations and warranties to Bank, which representations and warranties
      shall survive the execution of this Agreement and shall continue in full force
      and effect until the full and final payment, and satisfaction and discharge,
      of
      all obligations of Borrower to Bank subject to this Agreement.

    

    SECTION
      2.1.                                   
LEGAL STATUS. Borrower is a corporation, duly organized and existing and in
      good
      standing under the laws of Washington, and is qualified or licensed to do
      business (and is in good standing as a foreign corporation, if applicable)
      in
      all jurisdictions in which such

    
      
        
        

      

      
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    qualification
      or licensing is required or in which the failure to so qualify or to be so
      licensed could have a material adverse effect on Borrower.

    

    SECTION
      2.2.                                   
AUTHORIZATION AND VALIDITY. This Agreement and each promissory note, contract,
      instrument and other document required hereby or at any time hereafter delivered
      to Bank in connection herewith (collectively, the "Loan Documents") have been
      duly authorized, and upon their execution and delivery in accordance with the
      provisions hereof will constitute legal, valid and binding agreements and
      obligations of Borrower or the party which executes the same, enforceable in
      accordance with their respective terms.

    

    SECTION
      2.3.                                   
NO VIOLATION. The execution, delivery and performance by Borrower of each of
      the
      Loan Documents do not violate any provision of any law or regulation, or
      contravene any provision of the Articles of Incorporation or By-Laws of
      Borrower, or result in any breach of or default under any contract, obligation,
      indenture or other instrument to which Borrower is a party or by which Borrower
      may be bound.

    

    SECTION
      2.4.                                   
LITIGATION. There are no pending, or to the best of Borrower's knowledge
      threatened, actions, claims, investigations, suits or proceedings by or before
      any governmental authority, arbitrator, court or administrative agency which
      could have a material adverse effect on the financial condition or operation
      of
      Borrower other than those disclosed by Borrower to Bank in writing prior to
      the
      date hereof.

    

    SECTION
      2.5.                                   
CORRECTNESS OF FINANCIAL STATEMENT. The annual financial statement of Borrower
      dated December 31, 2006, and all interim financial statements delivered to
      Bank
      since said date, true copies of which have been delivered by Borrower to Bank
      prior to the date hereof, (a) are complete and correct and present fairly the
      financial condition of Borrower in all material respects, (b) disclose all
      liabilities of Borrower that are required to be reflected or reserved against
      under generally accepted accounting principles, whether liquidated or
      unliquidated, fixed or contingent, and (c) have been prepared in accordance
      with
      generally accepted accounting principles consistently applied. Since the dates
      of such financial statements there has been no material adverse change in the
      financial condition of Borrower, nor has Borrower mortgaged, pledged, granted
      a
      security interest in or otherwise encumbered any of its assets or properties
      except in favor of Bank or as otherwise permitted by Bank in
      writing.

    

    SECTION
      2.6.                                   
INCOME TAX RETURNS. Borrower has no knowledge of any pending assessments or
      adjustments of its income tax payable with respect to any year.

    

    SECTION
      2.7.                                   
NO SUBORDINATION. There is no agreement, indenture, contract or instrument
      to
      which Borrower is a party or by which Borrower may be bound that requires the
      subordination in right of payment of any of Borrower's obligations subject
      to
      this Agreement to any other obligation of Borrower.

    

    SECTION
      2.8.                                   
PERMITS, FRANCHISES. Borrower possesses, and will hereafter possess, all
      permits, consents, approvals, franchises and licenses required and rights to
      all
      trademarks, trade names, patents, and fictitious names, if any, necessary to
      enable it to conduct the business in which it is now engaged in compliance
      with
      applicable law.

    

    SECTION
      2.9.                                   
ERISA. Borrower is in compliance in all material respects with all applicable
      provisions of the Employee Retirement Income Security Act of 1974, as amended
      or
      recodified from time to time ("ERISA"); Borrower has not violated any provision
      of any defined

    
      
        
        

      

      
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    employee
      pension benefit plan (as defined in ERISA) maintained or contributed to by
      Borrower (each, a "Plan"); no Reportable Event as defined in ERISA has occurred
      and is continuing with respect to any Plan initiated by Borrower; Borrower
      has
      met its minimum funding requirements under ERISA with respect to each Plan;
      and
      each Plan will be able to fulfill its benefit obligations as they come due
      in
      accordance with the Plan documents and under generally accepted accounting
      principles.

    

    SECTION
      2.10.                                   
OTHER OBLIGATIONS. Borrower is not in default on any obligation for borrowed
      money, any purchase money obligation or any other material lease, commitment,
      contract, instrument or obligation.

    

    SECTION
      2.11.                                   
ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to Bank in writing prior
      to the date hereof, Borrower is in compliance in all material respects with
      all
      applicable federal or state environmental, hazardous waste, health and safety
      statutes, and any rules or regulations adopted pursuant thereto, which govern
      or
      affect any of Borrower's operations and/or properties, including without
      limitation, the Comprehensive Environmental Response, Compensation and Liability
      Act of 1981, the Superfund Amendments and Reauthorization Act of 1986, the
      Federal Resource Conservation and Recovery Act of 1976, and the Federal Toxic
      Substances Control Act, as any of the same may be amended, modified or
      supplemented from time to time. None of the operations of Borrower is the
      subject of any federal or state investigation evaluating whether any remedial
      action involving a material expenditure is needed to respond to a release of
      any
      toxic or hazardous waste or substance into the environment. Borrower has no
      material contingent liability in connection with any release of any toxic or
      hazardous waste or substance into the environment.

    

    ARTICLE
      III

    CONDITIONS

    

    SECTION
      3.1.                                   
CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of Bank to extend
      any
      credit contemplated by this Agreement is subject to the fulfillment to Bank's
      satisfaction of all of the following conditions:

    

    (a)             
      Approval of Bank
      Counsel.  All legal matters incidental to the extension of
      credit by Bank shall be satisfactory to Bank's counsel.

    

    (b)             
      Documentation.  Bank
      shall have received, in form and substance satisfactory to Bank, each of the
      following, duly executed:

    

    
      	
               

            	
              (i)

            	
            	
              This
                Agreement and each promissory note or other instrument or document
                required hereby. 

            

    

    
      	
               

            	
              (ii)

            	
            	
              Corporate
                Resolution: Borrowing. 

            

    

    
      	
               

            	
              (iii)

            	
            	
              Certificate
                of Incumbency. 

            

    

    
      	
               

            	
              (iv)

            	
            	
              Such
                other documents as Bank may require under any other Section of this
                Agreement. 

            

    

    

    (c)             
      Financial
      Condition.  There shall have been no material adverse change,
      as determined by Bank, in the financial condition or business of Borrower,
      nor
      any material decline, as determined by Bank, in the market value of any
      collateral required hereunder or a substantial or material portion of the assets
      of Borrower.

    
      
        
        

      

      
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    (d)             
      Insurance.  Borrower
      shall have delivered to Bank evidence of insurance coverage on all Borrower's
      property, in form, substance, amounts, covering risks and issued by companies
      satisfactory to Bank, and where required by Bank, with loss payable endorsements
      in favor of Bank.

    

    SECTION
      3.2.                                   
CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank to make each
      extension of credit requested by Borrower hereunder shall be subject to the
      fulfillment to Bank's satisfaction of each of the following
      conditions:

    

    (a)             
      Compliance.  The
      representations and warranties contained herein and in each of the other Loan
      Documents shall be true on and as of the date of the signing of this Agreement
      and on the date of each extension of credit by Bank pursuant hereto, with the
      same effect as though such representations and warranties had been made on
      and
      as of each such date, and on each such date, no Event of Default as defined
      herein, and no condition, event or act which with the giving of notice or the
      passage of time or both would constitute such an Event of Default, shall have
      occurred and be continuing or shall exist.

    

    (b)             
      Documentation.  Bank
      shall have received all additional documents which may be required in connection
      with such extension of credit.

    

    (c)             
      Additional Letter
      of
      Credit Documentation.  Prior to the issuance of each Letter of
      Credit, Bank shall have received a Letter of Credit Agreement properly completed
      and duly executed by Borrower.

    

    ARTICLE
      IV

    AFFIRMATIVE
      COVENANTS

    

    Borrower
      covenants that so long as
      Bank remains committed to extend credit to Borrower pursuant hereto, or any
      liabilities (whether direct or contingent, liquidated or unliquidated) of
      Borrower to Bank under any of the Loan Documents remain outstanding, and until
      payment in full of all obligations of Borrower subject hereto, Borrower shall,
      unless Bank otherwise consents in writing:

    

    SECTION
      4.1.                                   
PUNCTUAL PAYMENTS. Punctually pay all principal, interest, fees or other
      liabilities due under any of the Loan Documents at the times and place and
      in
      the manner specified therein.

    

    SECTION
      4.2.                                   
ACCOUNTING RECORDS. Maintain adequate books and records in accordance with
      generally accepted accounting principles consistently applied, and permit any
      representative of Bank, at any reasonable time, to inspect, audit and examine
      such books and records, to make copies of the same, and to inspect the
      properties of Borrower.

    

    SECTION
      4.3.                                   
FINANCIAL STATEMENTS. Provide to Bank all of the following, in form and detail
      satisfactory to Bank:

    

    (a)             
      not later than 120 days after and as of the end of each fiscal year, a 10K
      report filed with the Securities and Exchange Commission;

    

    (b)             
      not later than 45 days after and as of the end of each fiscal quarter, a 10Q
      report filed with the Securities and Exchange Commission;

    
      
        
        

      

      
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    (c)             
      not later than 90 days after and as of the end of each fiscal year, an annual
      budget and projections report;;

    

    (d)             
      contemporaneously with each annual and quarterly financial statement of Borrower
      required hereby, a certificate of the Senior VP of Financial Services &
Controller or chief financial officer of Borrower that said financial statements
      are accurate and that there exists no Event of Default nor any condition, act
      or
      event which with the giving of notice or the passage of time or both would
      constitute an Event of Default;

    

    (e)             
      from time to time such other information as Bank may reasonably
      request.

    

    SECTION
      4.4.                                   
COMPLIANCE. Preserve and maintain all material licenses, permits, governmental
      approvals, rights, privileges and franchises necessary for the conduct of its
      business; and comply with the provisions of all documents pursuant to which
      Borrower is organized and/or which govern Borrower's continued existence and
      with the requirements of all laws, rules, regulations and orders of any
      governmental authority applicable to Borrower and/or its business.

    

    SECTION
      4.5.                                   
INSURANCE. Maintain and keep in force, for each business in which Borrower
      is
      engaged, insurance of the types and in amounts customarily carried in similar
      lines of business, including but not limited to fire, extended coverage, public
      liability, flood, property damage and workers' compensation, with all such
      insurance carried with companies and in amounts satisfactory to Bank, and
      deliver to Bank from time to time at Bank's request schedules setting forth
      all
      insurance then in effect.

    

    SECTION
      4.6.                                   
FACILITIES. Keep all properties useful or necessary to Borrower's business
      in
      good repair and condition, and from time to time make necessary repairs,
      renewals and replacements thereto so that such properties shall be fully and
      efficiently preserved and maintained.

    

    SECTION
      4.7.                                   
TAXES AND OTHER LIABILITIES. Pay and discharge when due any and all
      indebtedness, obligations, assessments and taxes, both real or personal,
      including without limitation federal and state income taxes and state and local
      property taxes and assessments, except (a) such as Borrower may in good faith
      contest or as to which a bona fide dispute may arise, and (b) for which Borrower
      has made provision, to Bank's reasonable satisfaction, for eventual payment
      thereof in the event Borrower is obligated to make such payment.

    

    SECTION
      4.8.                                   
LITIGATION. Promptly give notice in writing to Bank of any litigation pending
      or
      threatened against Borrower seeking damages in excess of
      $1,000,000.00.

    

    SECTION
      4.9.                                   
FINANCIAL CONDITION. Maintain Borrower's financial condition, on a consolidated
      basis, as follows using generally accepted accounting principles consistently
      applied and used consistently with prior practices (except to the extent
      modified by the definitions herein), with compliance determined commencing
      with
      Borrower's financial statements for the period ending December 31,
      2007:

    

    (a)             
      Fixed Charge Coverage Ratio not less than 1.10 to 1.0 determined on a current
      quarter basis for the quarter ending December 31, 2007, and as of each fiscal
      quarter end thereafter, with “Fixed Charge Coverage Ratio” defined as Adjusted
      EBITDAR divided by the sum of Fixed Charges.  "Adjusted EBITDAR" is
      defined as net income after taxes plus interest

    
      
        
        

      

      
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    expense,
      tax expense, depreciation expense, amortization expense, and rent expense and
      plus or minus mutually agreed upon adjustments for non-cash items such as lease
      expense adjustments and amortization of deferred fees less the greater of
      maintenance capital expenditures as detailed on management's compliance
      certificate or $400 per owned unit, per year.  "Fixed Charges" is
      defined as the sum of current maturities of long term debt plus current portion
      of capital leases plus interest expense and rent expense.  For
      purposes of computing fixed charge coverage ratio, adjusted EBITDAR and fixed
      charges will be normalized on a pro-forma basis for any acquisitions and/or
      divestitures occurring during each quarter.

    

    (b)             
      Liquidity. Maintain unencumbered liquid assets (defined as cash, cash
      equivalents and/or publicly traded/quoted marketable securities acceptable
      to
      Bank in its sole discretion) with an aggregate fair market value not at any
      time
      less than Twenty Million Dollars ($20,000,000.00) and (b) Borrower shall provide
      to Bank, within 15 days after, and as of the end of each calendar month copies
      of all Borrower’s current account statements for deposit, brokerage and other
      accounts containing unencumbered liquid assets, together with such other
      information as Bank may reasonably require to determine compliance with this
      covenant.

    

    SECTION
      4.10.                                   
NOTICE TO BANK. Promptly (but in no event more than five (5) days after the
      occurrence of each such event or matter) give written notice to Bank in
      reasonable detail of: (a) the occurrence of any Event of Default, or any
      condition, event or act which with the giving of notice or the passage of time
      or both would constitute an Event of Default; (b) any change in the name or
      the organizational structure of Borrower; (c) the occurrence and nature of
      any Reportable Event or Prohibited Transaction, each as defined in ERISA, or
      any
      funding deficiency with respect to any Plan; or (d) any termination or
      cancellation of any insurance policy which Borrower is required to maintain,
      or
      any material uninsured or partially uninsured loss through liability or property
      damage, or through fire, theft or any other cause affecting Borrower's
      property.

    

    ARTICLE
      V

    NEGATIVE
      COVENANTS

    

    Borrower
      further covenants that so
      long as Bank remains committed to extend credit to Borrower pursuant hereto,
      or
      any liabilities (whether direct or contingent, liquidated or unliquidated)
      of
      Borrower to Bank under any of the Loan Documents remain outstanding, and until
      payment in full of all obligations of Borrower subject hereto, Borrower will
      not
      without Bank's prior written consent:

    

    SECTION
      5.1.                                   
USE OF FUNDS. Use any of the proceeds of any credit extended hereunder except
      for the purposes stated in Article I hereof.

    

    SECTION
      5.2.                                   
OTHER INDEBTEDNESS. Create, incur, assume or permit to exist any indebtedness
      or
      liabilities resulting from borrowings, loans or advances, whether, secured
      or
      unsecured, matured or unmatured, liquidated or unliquidated, joint or several,
      except (a) the liabilities of Borrower to Bank, (b) any other liabilities
      of Borrower existing as of, and disclosed to Bank prior to, the date hereof,
      and
      (c) other indebtedness in an aggregate amount not to exceed
      $1,000,000.00.

    

    SECTION
      5.3.                                   
MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or consolidate with any
      other entity; make any substantial change in the nature of Borrower's business
      as conducted as of the date hereof; acquire all or substantially all of the
      assets of any

    
      
        
        

      

      
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    other
      entity; nor sell, lease, transfer or otherwise dispose of all or a substantial
      or material portion of Borrower's assets except in the ordinary course of its
      business.

    

    SECTION
      5.4.                                   
GUARANTIES. Guarantee or become liable in any way as surety, endorser (other
      than as endorser of negotiable instruments for deposit or collection in the
      ordinary course of business), accommodation endorser or otherwise for, nor
      pledge or hypothecate any assets of Borrower as security for, any liabilities
      or
      obligations of any other person or entity, except (a) any of the foregoing
      in
      favor of Bank and (b) any guarantees existing as of, and disclosed to Bank
      prior
      to, the date hereof.

    

    SECTION
      5.5.                                   
LOANS, ADVANCES, INVESTMENTS. Make any loans or advances to or investments
      in
      any person or entity, except any of the foregoing existing as of, and disclosed
      to Bank prior to, the date hereof.

    

    SECTION
      5.6.                                   
DIVIDENDS, DISTRIBUTIONS. Declare or pay any dividend or distribution either
      in
      cash, stock or any other property on Borrower’s stock now or hereafter
      outstanding; nor to redeem, retire, repurchase or otherwise acquire any shares
      of any class of Borrower’s stock now or hereafter outstanding.

    

    SECTION
      5.7.                                   
PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to exist a security interest
      in, or lien upon, all or any portion of Borrower's assets now owned or hereafter
      acquired, except (a) any of the foregoing in favor of Bank, (b) those which
      exist as of, and are disclosed to Bank in writing prior to the date hereof,
      and
      (c) purchase money security interests granted in connection with indebtedness
      permitted under Section 5.2(c).

    

    ARTICLE
      VI

    EVENTS
      OF
      DEFAULT

    

    SECTION
      6.1.                                   
The occurrence of any of the following shall constitute an "Event of Default"
      under this Agreement:

    

    (a)             
      Borrower shall fail to pay when due any principal, or within three days of
      when
      due any interest, fees or other amounts payable under any of the Loan
      Documents.

    

    (b)             
      Any financial statement or certificate furnished to Bank in connection with,
      or
      any representation or warranty made by Borrower or any other party under this
      Agreement or any other Loan Document shall prove to be incorrect, false or
      misleading in any material respect when furnished or made.

    

    (c)             
      Any default in the performance of or compliance with any obligation, agreement
      or other provision contained herein or in any other Loan Document (other than
      those referred to in subsections (a) and (b) above), and with respect to any
      such default which by its nature can be cured, such default shall continue
      for a
      period of twenty (20) days from its occurrence.

    

    (d)             
      Any default in the payment or performance of any obligation, or any defined
      event of default, under the terms of any contract or instrument (other than
      any
      of the Loan Documents) pursuant to which Borrower, any guarantor hereunder
      or
      any general partner or joint venturer in Borrower if a partnership or joint
      venture (with each such guarantor, general partner and/or joint venturer
      referred to herein as a "Third Party Obligor") has incurred any debt or other
      liability to any person or entity, including Bank, and, other than with respect
      to any debt

    
      
        
        

      

      
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    or
      other
      liability to Bank, and such default has not been cured or waived within the
      cure
      period applicable to such default, if any.

    

    (e)             
      The filing of a notice of judgment lien against Borrower or any Third Party
      Obligor; or the recording of any abstract of judgment against Borrower or any
      Third Party Obligor in any county in which Borrower or such Third Party Obligor
      has an interest in real property; or the service of a notice of levy and/or
      of a
      writ of attachment or execution, or other like process, against the assets
      of
      Borrower or any Third Party Obligor; or the entry of a judgment against Borrower
      or any Third Party Obligor, in each case under this clause (e) where such lien,
      writ or judgment is not insured by an insurance carrier which has acknowledged
      coverage in the amount of the claim without any reservation of rights or which
      has been ordered by a court of competent jurisdiction to pay such claim, and
      the
      judgment is not satisfied, released, discharged, vacated, fully bonded or stayed
      within 60 days after such judgment, writ, attachment or similar proceeding
      is
      entered.

    

    (f)             
      Borrower or any Third Party Obligor shall become insolvent, or shall suffer
      or
      consent to or apply for the appointment of a receiver, trustee, custodian or
      liquidator of itself or any of its property, or shall generally fail to pay
      its
      debts as they become due, or shall make a general assignment for the benefit
      of
      creditors; Borrower or any Third Party Obligor shall file a voluntary petition
      in bankruptcy, or seeking reorganization, in order to effect a plan or other
      arrangement with creditors or any other relief under the Bankruptcy Reform
      Act,
      Title 11 of the United States Code, as amended or recodified from time to time
      ("Bankruptcy Code"), or under any state or federal law granting relief to
      debtors, whether now or hereafter in effect; or any involuntary petition or
      proceeding pursuant to the Bankruptcy Code or any other applicable state or
      federal law relating to bankruptcy, reorganization or other relief for debtors
      is filed or commenced against Borrower or any Third Party Obligor, or Borrower
      or any Third Party Obligor shall file an answer admitting the jurisdiction
      of
      the court and the material allegations of any involuntary petition and either
      (i) such proceeding or petition shall continue undismissed for sixty (60) days
      or (ii) an order for relief or decree approving or ordering any of the foregoing
      shall be entered; or Borrower or any Third Party Obligor shall be adjudicated
      a
      bankrupt, or an order for relief shall be entered against Borrower or any Third
      Party Obligor by any court of competent jurisdiction under the Bankruptcy Code
      or any other applicable state or federal law relating to bankruptcy,
      reorganization or other relief for debtors.

    

    (g)             
      The dissolution or liquidation of Borrower or any Third Party Obligor if a
      corporation, partnership, joint venture or other type of entity; or Borrower
      or
      any such Third Party Obligor, or any of its directors, stockholders or members,
      shall take action seeking to effect the dissolution or liquidation of Borrower
      or such Third Party Obligor.

    

    (h)             
      The occurrence of any of the following:

    

    (i)           
      an acquisition by any individual, entity or group (within the meaning of Section
      13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) of
      beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
      Securities Exchange Act of 1934, as amended) of 30% or more of either (i) the
      then outstanding shares of common stock of Borrower (the “Outstanding Borrower
      Common Shares”), or (ii) the combined voting power of the then outstanding
      voting securities of Borrower entitled to vote generally in the election of
      directors (the “Outstanding Borrower Voting Securities”); or

    

    (ii)           
      individuals who, as of the date of this Agreement, constitute the Board of
      Directors of Borrower (the “Incumbent Board”) cease for any reason to constitute
      at least a

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    majority
      of such Incumbent Board; provided, however, that any individual who becomes
      a
      member of such Incumbent Board subsequent to the effective date of this
      agreement, whose election, or nomination for election by Borrower’s
      shareholders, was approved by a vote of at least a majority of the directors
      then comprising the Incumbent Board shall be considered as though such
      individual were a member of the Incumbent Board; but provided further, that
      any
      such individual whose initial assumption of office occurs as a result of either
      an actual or threatened election contest (as such terms are used in Rule 14a-11
      of Regulation 14A promulgated under the Securities Exchange Act of 1934, as
      amended) or other actual or threatened solicitation of proxies or consents
      by or
      on behalf of a Person other than the Incumbent Board shall not be so considered
      as a member of the Incumbent Board.

    

    SECTION
      6.2.                                   
REMEDIES. Upon the occurrence of any Event of Default: (a) all indebtedness
      of Borrower under each of the Loan Documents, any term thereof to the contrary
      notwithstanding, shall at Bank's option and without notice become immediately
      due and payable without presentment, demand, protest or notice of dishonor,
      all
      of which are hereby expressly waived by Borrower; (b) the obligation, if
      any, of Bank to extend any further credit under any of the Loan Documents shall
      immediately cease and terminate; and (c) Bank shall have all rights, powers
      and remedies available under each of the Loan Documents, or accorded by law,
      including without limitation the right to resort to any or all security for
      any
      credit subject hereto and to exercise any or all of the rights of a beneficiary
      or secured party pursuant to applicable law.  All rights, powers and
      remedies of Bank may be exercised at any time by Bank and from time to time
      after the occurrence of an Event of Default, are cumulative and not exclusive,
      and shall be in addition to any other rights, powers or remedies provided by
      law
      or equity.

    

    ARTICLE
      VII

    MISCELLANEOUS

    

    SECTION
      7.1.                                   
NO WAIVER. No delay, failure or discontinuance of Bank in exercising any right,
      power or remedy under any of the Loan Documents shall affect or operate as
      a
      waiver of such right, power or remedy; nor shall any single or partial exercise
      of any such right, power or remedy preclude, waive or otherwise affect any
      other
      or further exercise thereof or the exercise of any other right, power or remedy.
      Any waiver, permit, consent or approval of any kind by Bank of any breach of
      or
      default under any of the Loan Documents must be in writing and shall be
      effective only to the extent set forth in such writing.

    

    SECTION
      7.2.                                   
NOTICES. All notices, requests and demands which any party is required or may
      desire to give to any other party under any provision of this Agreement must
      be
      in writing delivered to each party at the following address:

    

    BORROWER:                                      
      Emeritus Corporation

    3131
      Elliott Avenue, Suite
      500

    Seattle,
      WA 98121

    Attn:
      Chief Financial Officer or
      Controller

    

    BANK:                         
      WELLS FARGO BANK, NATIONAL ASSOCIATION

    205
      108th
      AVE NE,
      6th
      Floor, Suite 600

    Bellevue,
      WA 98004-5770

    

    

    or
      to
      such other address as any party may designate by written notice to all other
      parties.  Each such notice, request and demand shall be deemed given
      or made as follows:  (a) if sent by hand

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    delivery,
      upon delivery; (b) if sent by mail, upon the earlier of the date of receipt
      or three (3) days after deposit in the U.S. mail, first class and postage
      prepaid; and (c) if sent by telecopy, upon receipt.

    

    SECTION
      7.3.                                   
COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to Bank immediately
      upon
      demand the full amount of all payments, advances, charges, costs and expenses,
      including reasonable attorneys' fees (to include outside counsel fees and all
      allocated costs of Bank's in-house counsel), expended or incurred by Bank in
      connection with (a) the negotiation and preparation of this Agreement and
      the other Loan Documents, Bank's continued administration hereof and thereof,
      and the preparation of any amendments and waivers hereto and thereto,
      (b) the enforcement of Bank's rights and/or the collection of any amounts
      which become due to Bank under any of the Loan Documents, and (c) the
      prosecution or defense of any action in any way related to any of the Loan
      Documents, including without limitation, any action for declaratory relief,
      whether incurred at the trial or appellate level, in an arbitration proceeding
      or otherwise, and including any of the foregoing incurred in connection with
      any
      bankruptcy proceeding (including without limitation, any adversary proceeding,
      contested matter or motion brought by Bank or any other person) relating to
      Borrower or any other person or entity.

    

    SECTION
      7.4.                                   
SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon and inure to the
      benefit of the heirs, executors, administrators, legal representatives,
      successors and assigns of the parties; provided however, that Borrower may
      not
      assign or transfer its interests or rights hereunder without Bank's prior
      written consent. Bank reserves the right to sell, assign, transfer, negotiate
      or
      grant participations in all or any part of, or any interest in, Bank's rights
      and benefits under each of the Loan Documents. In connection therewith, Bank
      may
      disclose all documents and information which Bank now has or may hereafter
      acquire relating to any credit subject hereto, Borrower or its business, or
      any
      collateral required hereunder.

    

    SECTION
      7.5.                                   
ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other Loan Documents
      constitute the entire agreement between Borrower and Bank with respect to each
      credit subject hereto and supersede all prior negotiations, communications,
      discussions and correspondence concerning the subject matter hereof. This
      Agreement may be amended or modified only in writing signed by each party
      hereto.

    

    SECTION
      7.6.                                   
NO THIRD PARTY BENEFICIARIES. This Agreement is made and entered into for the
      sole protection and benefit of the parties hereto and their respective permitted
      successors and assigns, and no other person or entity shall be a third party
      beneficiary of, or have any direct or indirect cause of action or claim in
      connection with, this Agreement or any other of the Loan Documents to which
      it
      is not a party.

    

    SECTION
      7.7.                                   
TIME. Time is of the essence of each and every provision of this Agreement
      and
      each other of the Loan Documents.

    

    SECTION
      7.8.                                   
SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be
      prohibited by or invalid under applicable law, such provision shall be
      ineffective only to the extent of such prohibition or invalidity without
      invalidating the remainder of such provision or any remaining provisions of
      this
      Agreement.

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    SECTION
      7.9.                                   
COUNTERPARTS. This Agreement may be executed in any number of counterparts,
      each
      of which when executed and delivered shall be deemed to be an original, and
      all
      of which when taken together shall constitute one and the same
      Agreement.

    

    SECTION
      7.10.                                   
GOVERNING LAW. This Agreement shall be governed by and construed in accordance
      with the laws of the State of Washington.

    

    SECTION
      7.11.                                   
ARBITRATION.

    

    (a)             
      Arbitration.  The
      parties hereto agree, upon demand by any party, to submit to binding arbitration
      all claims, disputes and controversies between or among them (and their
      respective employees, officers, directors, attorneys, and other agents), whether
      in tort, contract or otherwise in any way arising out of or relating to (i)
      any
      credit subject hereto, or any of the Loan Documents, and their negotiation,
      execution, collateralization, administration, repayment, modification,
      extension, substitution, formation, inducement, enforcement, default or
      termination; or (ii) requests for additional credit.

    

    (b)           
      Governing
      Rules.  Any arbitration proceeding will (i) proceed in a
      location in Washington selected by the American Arbitration Association (“AAA”);
      (ii) be governed by the Federal Arbitration Act (Title 9 of the United States
      Code), notwithstanding any conflicting choice of law provision in any of the
      documents between the parties; and (iii) be conducted by the AAA, or such other
      administrator as the parties shall mutually agree upon, in accordance with
      the
      AAA’s commercial dispute resolution procedures, unless the claim or counterclaim
      is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
      costs in which case the arbitration shall be conducted in accordance with the
      AAA’s optional procedures for large, complex commercial disputes (the commercial
      dispute resolution procedures or the optional procedures for large, complex
      commercial disputes to be referred to herein as applicable, as the
“Rules”).  If there is any inconsistency between the terms hereof and
      the Rules, the terms and procedures set forth herein shall
      control.  Any party who fails or refuses to submit to arbitration
      following a demand by any other party shall bear all costs and expenses incurred
      by such other party in compelling arbitration of any dispute.  Nothing
      contained herein shall be deemed to be a waiver by any party that is a bank
      of
      the protections afforded to it under 12 U.S.C. §91 or any similar applicable
      state law.

    

    (c)           
      No Waiver of
      Provisional Remedies, Self-Help and Foreclosure.  The
      arbitration requirement does not limit the right of any party to (i) foreclose
      against real or personal property collateral; (ii) exercise self-help remedies
      relating to collateral or proceeds of collateral such as setoff or repossession;
      or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
      relief, attachment or the appointment of a receiver, before during or after
      the
      pendency of any arbitration proceeding.  This exclusion does not
      constitute a waiver of the right or obligation of any party to submit any
      dispute to arbitration or reference hereunder, including those arising from
      the
      exercise of the actions detailed in sections (i), (ii) and (iii) of this
      paragraph.

    

    (d)           
      Arbitrator
      Qualifications and Powers.  Any arbitration proceeding in which
      the amount in controversy is $5,000,000.00 or less will be decided by a single
      arbitrator selected according to the Rules, and who shall not render an award
      of
      greater than $5,000,000.00.  Any dispute in which the amount in
      controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel
      of three arbitrators; provided however, that all three arbitrators must actively
      participate in all hearings and deliberations.  The arbitrator will be
      a neutral attorney licensed in

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    the
      State
      of Washington or a neutral retired judge of the state or federal judiciary
      of
      Washington, in either case with a minimum of ten years experience in the
      substantive law applicable to the subject matter of the dispute to be
      arbitrated.  The arbitrator will determine whether or not an issue is
      arbitratable and will give effect to the statutes of limitation in determining
      any claim.  In

    any
      arbitration proceeding the arbitrator will decide (by documents only or with
      a
      hearing at the arbitrator's discretion) any pre-hearing motions which are
      similar to motions to dismiss for failure to state a claim or motions for
      summary adjudication.  The arbitrator shall resolve all disputes in
      accordance with the substantive law of Washington and may grant any remedy
      or
      relief that a court of such state could order or grant within the scope hereof
      and such ancillary relief as is necessary to make effective any
      award.  The arbitrator shall also have the power to award recovery of
      all costs and fees, to impose sanctions and to take such other action as the
      arbitrator deems necessary to the same extent a judge could pursuant to the
      Federal Rules of Civil Procedure, the Washington Rules of Civil Procedure or
      other applicable law.  Judgment upon the award rendered by the
      arbitrator may be entered in any court having jurisdiction.  The
      institution and maintenance of an action for judicial relief or pursuit of
      a
      provisional or ancillary remedy shall not constitute a waiver of the right
      of
      any party, including the plaintiff, to submit the controversy or claim to
      arbitration if any other party contests such action for judicial
      relief.

    

    (e)           
      Discovery.  In
      any arbitration proceeding, discovery will be permitted in accordance with
      the
      Rules.  All discovery shall be expressly limited to matters directly
      relevant to the dispute being arbitrated and must be completed no later than
      20
      days before the hearing date.  Any requests for an extension of the
      discovery periods, or any discovery disputes, will be subject to final
      determination by the arbitrator upon a showing that the request for discovery
      is
      essential for the party's presentation and that no alternative means for
      obtaining information is available.

    

    (f)           
      Class Proceedings
      and
      Consolidations.  No party hereto shall be entitled to join or
      consolidate disputes by or against others in any arbitration, except parties
      who
      have executed any Loan Document, or to include in any arbitration any dispute
      as
      a representative or member of a class, or to act in any arbitration in the
      interest of the general public or in a private attorney general
      capacity.

    

    (g)           
      Payment Of Arbitration
      Costs And Fees.  The arbitrator shall award all costs and
      expenses of the arbitration proceeding.

    

    (h)           
      Miscellaneous.  To
      the maximum extent
      practicable, the AAA, the arbitrators and the parties shall take all action
      required to conclude any arbitration proceeding within 180 days of the filing
      of
      the dispute with the AAA.  No arbitrator or other party to an
      arbitration proceeding may disclose the existence, content or results thereof,
      except for disclosures of information by a party required in the ordinary course
      of its business or by applicable law or regulation.  If more than one
      agreement for arbitration by or between the parties potentially applies to
      a
      dispute, the arbitration provision most directly related to the Loan Documents
      or the subject matter of the dispute shall control.  This arbitration
      provision shall survive termination, amendment or expiration of any of the
      Loan
      Documents or any relationshipbetween the
      parties.

    

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

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties
      hereto have caused this Agreement to be executed as of the day and year first
      written above.

    

    WELLS
      FARGO BANK,

    EMERITUS
      CORPORATION                                                                    
NATIONAL ASSOCIATION

    

    By:
      _/s/
      Jim L. Hanson
      __________________                                                                                                
By: _/s/ _Gloria Nemechek________________________

          Jim
      L. Hanson, Sr. VP of
      Financial                                                                                                  Gloria
      Nemechek, Vice
      President

          Services,
      Controller

    

    
      
        
        

      

      
        14ex10_6902lineofcreditnote.htm

     

    EX 10.69.02

    REVOLVING
      LINE OF CREDIT NOTE

     

    $25,000,000.00 

    Bellevue,
      Washington

    January
      17, 2008

    

    FOR
      VALUE RECEIVED, the undersigned
      EMERITUS CORPORATION ("Borrower") promises to pay to the order of WELLS FARGO
      BANK, NATIONAL ASSOCIATION ("Bank") at its office at Govt & Ed Banking
      Bellevue, MAC P6478-060 205 108th
      Ave.
      NE, Bellevue, Washington 98004, or at such other place as the holder hereof
      may
      designate, in lawful money of the United States of America and in immediately
      available funds, the principal sum of Twenty Five Million Dollars
      ($25,000,000.00), or so much thereof as may be advanced and be outstanding,
      with
      interest thereon, to be computed on each advance from the date of its
      disbursement as set forth herein.

    

    INTEREST:

    

    (a)           
      Interest.  The
      outstanding principal balance of this Note shall bear interest (computed on
      the
      basis of a 360-day year, actual days elapsed) at a rate per annum five tenths
      percent (.50%) below the Prime Rate in effect from time to time.  The
      term "Prime Rate" means at any time the rate of interest most recently announced
      within Bank at its principal office as its Prime Rate, with the understanding
      that the Prime Rate is one of Bank's base rates and serves as the basis upon
      which effective rates of interest are calculated for those loans making
      reference thereto, and is evidenced by the recording thereof after its
      announcement in such internal publication or publications as Bank may
      designate.  Each change in the rate of interest hereunder shall become
      effective on the date each Prime Rate change is announced within
      Bank.

    

    (b)           
      Payment of
      Interest.  Interest accrued on this Note shall be payable on
      the 15th day of each month, commencing February 15, 2008.

    

    (c)           
      Default
      Interest.  From and after the maturity date of this Note, or
      such earlier date as all principal owing hereunder becomes due and payable
      by
      acceleration or otherwise, the outstanding principal balance of this Note shall
      bear interest until paid in full at an increased rate per annum (computed on
      the
      basis of a 360-day year, actual days elapsed) equal to four percent (4%) above
      the rate of interest from time to time applicable to this Note.

    

    BORROWING
      AND REPAYMENT:

    

    (a)           
      Borrowing and
      Repayment.  Borrower may from time to time during the term of
      this Note borrow, partially or wholly repay its outstanding borrowings, and
      reborrow, subject to all of the limitations, terms and conditions of this Note
      and of any document executed in connection with or governing this Note; provided
      however, that the total outstanding borrowings under this Note shall not at
      any
      time exceed the principal amount stated above.  The unpaid principal
      balance of this obligation at any time shall be the total amounts advanced
      hereunder by the holder hereof less the amount of principal payments made hereon
      by or for Borrower, which balance may be endorsed hereon from time to time
      by
      the holder.  The outstanding principal balance of this Note shall be
      due and payable in full on February 15, 2009.

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    (b)           
      Advances.  Advances
      hereunder, to the total amount of the principal sum stated above, may be made
      by
      the holder at the oral or written request of (i) Jon Baldwin or Jim L. Hanson
      or
      Leo Watterson or Raymond R. Brandstrom or Richard DeGagne, any one acting alone,
      who are authorized to request advances and direct the disposition of any
      advances until written notice of the revocation of such authority is received
      by
      the holder at the office designated above, or (ii) any person, with respect
      to
      advances deposited to the credit of any deposit account of Borrower, which
      advances, when so deposited, shall be conclusively presumed to have been made
      to
      or for the benefit of Borrower regardless of the fact that persons other than
      those authorized to request advances may have authority to draw against such
      account.  The holder shall have no obligation to determine whether any
      person requesting an advance is or has been authorized by Borrower.

    

    (c)           
      Application of
      Payments.  Each payment made on this Note shall be credited
      first, to any interest then due and second, to the outstanding principal balance
      hereof.

    

    EVENTS
      OF
      DEFAULT:

    

    This
      Note is made pursuant to and is
      subject to the terms and conditions of that certain Credit Agreement between
      Borrower and Bank dated as of January 17, 2008, as amended from time to time
      (the "Credit Agreement").  Any default in the payment or performance
      of any obligation under this Note, or any defined event of default under the
      Credit Agreement, shall constitute an "Event of Default" under this
      Note.

    

    MISCELLANEOUS:

    

    (a)           
      Remedies.  Upon
      the occurrence of any Event of Default, the holder of this Note, at the holder's
      option, may declare all sums of principal and interest outstanding hereunder
      to
      be immediately due and payable without presentment, demand, notice of
      nonperformance, notice of protest, protest or notice of dishonor, all of which
      are expressly waived by Borrower, and the obligation, if any, of the holder
      to
      extend any further credit hereunder shall immediately cease and
      terminate.  Borrower shall pay to the holder immediately upon demand
      the full amount of all payments, advances, charges, costs and expenses,
      including reasonable attorneys' fees (to include outside counsel fees and all
      allocated costs of the holder's in-house counsel), expended or incurred by
      the
      holder in connection with the enforcement of the holder's rights and/or the
      collection of any amounts which become due to the holder under this Note, and
      the prosecution or defense of any action in any way related to this Note,
      including without limitation, any action for declaratory relief, whether
      incurred at the trial or appellate level, in an arbitration proceeding or
      otherwise, and including any of the foregoing incurred in connection with any
      bankruptcy proceeding (including without limitation, any adversary proceeding,
      contested matter or motion brought by Bank or any other person) relating to
      Borrower or any other person or entity.

    

    (b)           
      Obligations Joint
      and
      Several.  Should more than one person or entity sign this Note
      as a Borrower, the obligations of each such Borrower shall be joint and
      several.

    

    (c)           
      Governing
      Law.  This Note shall be governed by and construed in
      accordance with the laws of the State of Washington.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

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

    

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

    

    EMERITUS
      CORPORATION

    

    By:
      _/s/
      _Jim L. Hanson__________________

          Jim
      L. Hanson, Sr. VP or Financial Services,

          Controller

    

    
      
        
        

      

      
        3

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