EMERITUS CORP\WA\
AMENDED LETTER OF CREDUT US BANK
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<DESCRIPTION>AMENDED LETTER OF CREDUT US BANK
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<DIV style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 36pt" align=center><FONT face="Times Roman" size=3><B>FIRST AMENDMENT TO CREDIT AGREEMENT</B></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>This first amendment to credit agreement (this &#147;Amendment&#148;) is made and entered into as of July&nbsp;<U>_20,</U> 2004, by and among U.S.&nbsp;BANK NATIONAL ASSOCIATION, a national banking association (&#147;U.S.&nbsp;Bank&#148;), and EMERITUS CORPORATION, a Washington corporation (&#147;Borrower&#148;).</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 36pt" align=center><FONT face="Times Roman" size=3><B>RECITALS</B></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>A.</FONT><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=3>On or about March&nbsp;16, 2004, U.S.&nbsp;Bank and Borrower entered into that certain credit agreement (together with all amendments, supplements, exhibits, and modifications thereto, the &#147;Credit Agreement&#148;) whereby U.S.&nbsp;Bank agreed to extend certain credit facilities to Borrower.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>B.</FONT><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=3>Borrower has requested U.S.&nbsp;Bank to extend the expiry and maturity date of the Loan. The purpose of this Amendment is to set forth the terms and conditions upon which U.S.&nbsp;Bank will grant Borrower&#146;s requests.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>NOW, THEREFORE, in consideration of the mutual covenants and conditions set forth herein, the parties agree as follows:</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 90pt; TEXT-INDENT: -90pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 36pt" align=left><FONT face="Times Roman" size=3><B>ARTICLE I.</B></FONT><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=3><B>AMENDMENT</B></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>The Credit Agreement, as well as all of the other Loan Documents, are hereby amended as set forth herein. Except as specifically provided for herein, all of the terms and conditions of the Credit Agreement and each of the other Loan Documents shall remain in full force and effect throughout the terms of the Loan, as well as any extensions or renewals thereof.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 90pt; TEXT-INDENT: -90pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 36pt" align=left><FONT face="Times Roman" size=3><B>ARTICLE II.</B></FONT><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=3><B>DEFINITIONS</B></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>As used herein, capitalized terms shall have the meanings given to them in the Credit Agreement, except as otherwise defined herein, or as the context otherwise requires. </FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 90pt; TEXT-INDENT: -90pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 36pt" align=left><FONT face="Times Roman" size=3><B>ARTICLE III.</B></FONT><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=3><B>MODIFICATIONS</B></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 36pt" align=left><A name=_Toc400783223></A><A name=_Toc400895238></A><A name=_Toc401031754></A><A name=_Toc401048746></A><A name=_Toc401395373></A><A name=_Toc401544155></A><A name=_Toc401733884></A><A name=_Toc401971433></A><A name=_Toc401987333><FONT face="Times Roman" size=3><B>3.1</B></FONT></A><FONT face="Times Roman" size=3><B>Loan Commitment</B></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>Section&nbsp;2.1 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 108pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 36pt" align=left><A name=_Toc378662620></A><A name=_Toc66664980><FONT face="Times Roman" size=3><B>2.1</B></FONT></A><FONT face="Times Roman" size=3><B>Loan Commitment</B></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>Subject to and upon the terms and conditions set forth herein and in reliance upon the representations, warranties, and covenants of Borrower contained herein or made pursuant hereto, U.S.&nbsp;Bank will make Fundings to Borrower from time to time during the period ending on September&nbsp;30, 2004, but such Fundings shall not exceed, in the </FONT></DIV>
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<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=1>FIRST AMENDMENT TO CREDIT AGREEMENT</FONT><BR><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=1>PAGE </FONT><BR><FONT face="Times Roman" size=1>3</FONT><BR><FONT face="Times Roman" size=1>[</FONT><BR><FONT face="Times Roman" size=1>12187-2203</FONT><BR><FONT face="Times Roman" size=1>/</FONT><BR><FONT face="Times Roman" size=1>SB041880.026</FONT><BR><FONT face="Times Roman" size=1>]</FONT><BR><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=1>07/06/04</FONT><BR></DIV><BR></TD></TR>
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<DIV style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>aggregate principal amount at any one time outstanding, the Commitment Amount (the &#147;Loan&#148;). Borrower may borrow, repay and reborrow hereunder either the full amount of the Loan or any lesser sum.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 36pt" align=left><A name=_Toc378662624></A><A name=_Toc18829272><FONT face="Times Roman" size=3><B>3.2</B></FONT></A><FONT face="Times Roman" size=3><B>Maturity Date </B></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>Section&nbsp;2.5(b) of the Credit Agreement is hereby deleted in its entirety and replaced with the following:</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>(b)</FONT><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=3>Principal is payable on September&nbsp;30, 2004 (the &#147;Maturity Date&#148;).</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 90pt; TEXT-INDENT: -90pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 36pt" align=left><FONT face="Times Roman" size=3><B>ARTICLE IV.</B></FONT><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=3><B>CONDITIONS PRECEDENT</B></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>The modifications set forth in this Amendment shall not be effective unless and until the following conditions have been fulfilled to U.S.&nbsp;Bank&#146;s satisfaction:</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>(a)</FONT><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=3>U.S.&nbsp;Bank shall have received this Amendment, duly executed and delivered by the parties hereto. </FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>(b)</FONT><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=3>U.S.&nbsp;Bank shall have received a certified resolution of the directors of Borrower and incumbency certificate, in form and substance acceptable to U.S.&nbsp;Bank.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>(c)</FONT><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=3>There shall not exist any Default or Event of Default under the Credit Agreement or any other Loan Document.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>(d)</FONT><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=3>All representations and warranties of Borrower contained in the Credit Agreement or otherwise made in writing in connection therewith or herewith shall be true and correct and in all material respects have the same effect as though such representations and warranties had been made on and as of the date of this Amendment.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 90pt; TEXT-INDENT: -90pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 36pt" align=left><FONT face="Times Roman" size=3><B>ARTICLE V.</B></FONT><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=3><B>GENERAL PROVISIONS</B></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 36pt" align=left><FONT face="Times Roman" size=3><B>5.1</B></FONT><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=3><B>Representations and Warranties</B></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>Borrower hereby represents and warrants to U.S.&nbsp;Bank that as of the date of this Amendment, there exists no Default or Event of Default. All representations and warranties of Borrower contained in the Credit Agreement and the Loan Documents, or otherwise made in writing in connection therewith, are true and correct as of the date of this Amendment. Borrower acknowledges and agrees that all of Borrower&#146;s Indebtedness to U.S.&nbsp;Bank is payable without offset, defense, or counterclaim.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 36pt" align=left><FONT face="Times Roman" size=3><B>5.2</B></FONT><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=3><B>Security</B></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>All Loan Documents evidencing U.S.&nbsp;Bank&#146;s security interest in the Collateral shall remain in full force and effect without change in priority, and shall secure the payment and performance of the Loan, as amended herein, and any other Indebtedness owing from Borrower to U.S.&nbsp;Bank.</FONT></DIV>
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<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=1>FIRST AMENDMENT TO CREDIT AGREEMENT</FONT><BR><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=1>PAGE </FONT><BR><FONT face="Times Roman" size=1>3</FONT><BR><FONT face="Times Roman" size=1>[</FONT><BR><FONT face="Times Roman" size=1>12187-2203</FONT><BR><FONT face="Times Roman" size=1>/</FONT><BR><FONT face="Times Roman" size=1>SB041880.026</FONT><BR><FONT face="Times Roman" size=1>]</FONT><BR><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=1>07/06/04</FONT><BR></DIV><BR></TD></TR>
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<DIV style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 36pt" align=left><FONT face="Times Roman" size=3><B>5.3</B></FONT><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=3><B>Payment of Expenses</B></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>Borrower shall pay on demand all costs and expenses of U.S.&nbsp;Bank incurred in connection with the preparation, negotiation, execution, and delivery of this Amendment, including, without limitation, reasonable attorneys&#146; fees incurred by U.S.&nbsp;Bank.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 36pt" align=left><FONT face="Times Roman" size=3><B>5.4</B></FONT><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=3><B>Survival of Credit Agreement</B></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>The terms and conditions of the Credit Agreement and each of the other Loan Documents shall survive until all of Borrower&#146;s obligations under the Credit Agreement are satisfied in full.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 36pt" align=left><FONT face="Times Roman" size=3><B>5.5</B></FONT><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=3><B>Counterparts</B></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>This Amendment may be executed in one or more counterparts, each of which shall constitute an original agreement, but all of which together shall constitute one and the same agreement.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 36pt" align=left><FONT face="Times Roman" size=3><B>5.6</B></FONT><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=3><B>Statutory Notice</B></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>IN WITNESS WHEREOF, U.S.&nbsp;Bank and Borrower have caused this Amendment to be duly executed by their respective duly authorized signatories as of the date first above written.</FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>EMERITUS CORPORATION</FONT><BR><FONT face="Times Roman" size=3>By</FONT><BR><FONT face="Times Roman" size=3><U>/s/William M. Shorten</U></FONT><BR><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp;</FONT><FONT face="Times Roman" size=3>Name:&nbsp; </FONT><FONT face="Times Roman" size=3><U>William M. Shorten</U></FONT><BR><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp;</FONT><FONT face="Times Roman" size=3>Title:</FONT><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp;</FONT><FONT face="Times Roman" size=3><U>Director of Real Estate Finance</U></FONT><BR></DIV><BR>
<DIV style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>U.S.&nbsp;BANK NATIONAL ASSOCIATION</FONT><BR><FONT face="Times Roman" size=3>By</FONT><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp;</FONT><FONT face="Times Roman" size=3><U>/s/ Ken Refvem</U></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>Name:&nbsp; </FONT><FONT face="Times Roman" size=3><U>Ken Refvem</U></FONT></DIV>
<DIV style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=3>Title:&nbsp;&nbsp; </FONT><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp;</FONT><FONT face="Times Roman" size=3><U>Vice President</U></FONT><BR><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT></DIV><BR>
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<DIV style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align=left><FONT face="Times Roman" size=1>FIRST AMENDMENT TO CREDIT AGREEMENT</FONT><BR><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=1>PAGE </FONT><BR><FONT face="Times Roman" size=1>3</FONT><BR><FONT face="Times Roman" size=1>[</FONT><BR><FONT face="Times Roman" size=1>12187-2203</FONT><BR><FONT face="Times Roman" size=1>/</FONT><BR><FONT face="Times Roman" size=1>SB041880.026</FONT><BR><FONT face="Times Roman" size=1>]</FONT><BR><FONT id=TAB1 style="LETTER-SPACING: 9pt">&nbsp; &nbsp;</FONT><FONT face="Times Roman" size=1>07/06/04</FONT><BR></DIV><BR></TD></TR>
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