EMERITUS CORPORATION AMENDED AND RESTATED AGREEMENT REGARDING 6.25% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2006

EMERITUS CORPORATION

AMENDED AND RESTATED AGREEMENT REGARDING 6.25% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2006

This Agreement entered into as of October 14, 2005 is between Emeritus Corporation (the "Company"), Saratoga Partners IV, L.P., Saratoga Management Company LLC, Saratoga Coinvestment IV LLC (collectively, the "Saratoga Entities"), Columbia Select, L.P. and Catalina General, L.P. (collectively, the "Baty Entities").

RECITALS

A.   The Company has outstanding $32 million 6.25% Convertible Subordinated Debentures due 2006 (the "Debentures"). The Debentures are governed by an Indenture dated as of February 15, 1996 between the Company and Fleet National Bank, as Trustee (the "Indenture").

B.   The Saratoga Entities own an aggregate of $5,000,000 principal amount of the Debentures as set forth on Exhibit A to this Agreement (the "Saratoga Holdings").

C.   The Baty Entities own an aggregate of $15,790,179 principal amount of the Debentures as set forth on Exhibit A to this Agreement (the "Baty Holdings").

D.   The Company intends to offer to exchange New Debentures (as defined below) for all of the outstanding Debentures, whether they are owned by the Saratoga Entities or the Baty Entities or otherwise, in a formal Exchange Offer (as defined below).

E.   This Agreement amends and restates in its entirety that Agreement Regarding 6.25% Convertible Subordinated Debentures due 2006 dated June 30, 2005.

F.   The Saratoga Entities and Baty Entities are prepared, on the terms and conditions of this Agreement, to provide debt financing to the Company on the terms and conditions set forth herein to the extent that they do not participate in the Exchange Offer.

AGREEMENT

As parties hereto, the Company, each of the Saratoga Entities and each of the Baty Entities agree:

1.   Terms of the New Debentures and the Exchange Offer

(a)   The New Debentures.   The convertible subordinated debentures that the Company intends to offer in the Exchange Offer (as defined below) for the Debentures (the "New Debentures") shall have the same terms as the Debentures and be governed by an

indenture (the "New Indenture") containing the same terms as the Indenture, except for the following changes:

(i)   the principal amount and all accrued interest of New Debentures shall be paid on July 1, 2008, and all other dates that are determined by or relate to the maturity date of the Debentures shall be adjusted accordingly;

(ii)   the Company shall have no right of redemption as provided under Section 3 of the Indenture.

(b)   Exchange Offer.   The Company intends to exchange New Debentures for Debentures (the "Exchange Offer") on the following terms and conditions:

(i)   the principal amount of New Debentures issued in the Exchange Offer shall be the same as the principal amount of Debentures exchanged;

(ii)   the Exchange Offer shall be outstanding for a minimum of 20 business days;

2.   Agreement to Lend

If the Company completes the Exchange Offer and any of the Saratoga Entities or Baty Entities continue to own Debentures following the expiration of the Exchange Offer, such Saratoga Entity or Baty Entity shall on December 30, 2005 lend to the Company an amount equal to the principal amount of Debentures so retained and such loan shall be on the terms contained in and shall be evidenced by a promissory note in the form of the Note attached hereto as Exhibit B.

3.   General Provisions

(a)   Amendment and Waiver. No waiver of or consent to any departure by any of the parties from any provision of this Agreement shall be effective unless in writing and signed by the party entitled to the benefit thereof. No amendment, modification or termination of any provision of this Agreement shall be effective unless in writing and signed by or on behalf of the parties.

(b)   Notices. All notices and demands provided for hereunder shall be in writing, and shall be given by registered or certified mail, return receipt requested, telecopy, courier service or personal delivery, and, if to one of the Saratoga Entities, addressed to Saratoga Management Company LLC at:

or to such other address as a Saratoga Entity may designate in writing and, if to a Baty Entity, addressed to Columbia Pacific Management, Inc. at:

or to such other address as a Baty Entity may designate in writing and, if to the Company, addressed to the Company at:

or to such other address as the Company may designate in writing. All such notices and demands shall be deemed given when received.

(c)   Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which counterparts, when so e