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SECURITIES AND EXCHANGE COMMISSION</font></div>
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reported):</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;&#160;January 15,
2010</font></font></div>
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CORPORATION</font></div>
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pursuant to Rule&#160;13e-4(c) under the Exchange Act (17 CFR
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
1.01&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Entry
into a Material Definitive Agreement.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
January 15, 2010, Emeritus Corporation (&#8220;Emeritus&#8221; or the &#8220;Company&#8221;) entered
into a Limited Liability Company Agreement (the &#8220;Joint Venture Agreement&#8221;) with
BRE/SW Member LLC, an affiliate of Blackstone Real Estate Advisors VI, L.P
(&#8220;Blackstone&#8221;) and CPDF II, LLC, an entity controlled by Mr. Dan Baty, the
Chairman and Co-CEO of Emeritus (&#8220;Columbia Pacific&#8221;), pursuant to which
Emeritus, Blackstone and Columbia Pacific have formed a joint venture that will
operate under the name of&#160;&#160;BRE/SW Portfolio LLC (the &#8220;Joint
Venture&#8221;).&#160;&#160;The purpose of the Joint Venture is to acquire and operate
a portfolio of 134 communities (each a &#8220;Property,&#8221; and collectively, the
&#8220;Properties&#8221;) currently operated by Stayton SW Assisted Living, LLC, an Oregon
limited liability company constituting the Unitary Sunwest Enterprise as
designated in an Order Approving Distribution Plan of the U.S. District Court
for the District of Oregon dated October 2, 2009 (&#8220;Sunwest&#8221;).</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under the
Joint Venture&#8217;s current equity structure, Blackstone will have up to an 80%
equity interest and Emeritus and Columbia Pacific will each have a 10% equity
interest.&#160;&#160;Existing Sunwest investors will have the opportunity to
acquire equity interests in the Joint Venture by rolling over up to $25.0
million in consideration received in connection with the disposition of the
Properties.&#160;&#160;Emeritus is the administrative member of the Joint
Venture.&#160;&#160;Emeritus will fund up to an additional $26.0 million to the
Joint Venture for its equity interest, including estimated working capital and
capital expenditure reserve requirements, in addition to closing
costs.&#160;&#160;The Joint Venture Agreement provides for cash distributions
from the Joint Venture to the members in accordance with their ownership
interests; however, Emeritus is entitled to distributions at increasing levels
in excess of its ownership percentage if certain Joint Venture performance
criteria are achieved.&#160;&#160;The Joint Venture Agreement also provides
Emeritus the right of first opportunity in the event that Blackstone desires to
sell all or any of the Properties or its membership interest in the Joint
Venture.&#160;&#160;The Joint Venture Agreement prohibits Emeritus from
transferring its interest in the Joint Venture without Blackstone's
consent.&#160;&#160;Emeritus, as administrative member, is responsible for the
day-to-day operations of the Joint Venture.&#160;&#160;However, Blackstone has
final authority on certain defined major decisions affecting the Joint
Venture.&#160;&#160;Blackstone may terminate Emeritus as administrative member
for certain reasons, including gross negligence, bankruptcy and failure to meet
certain standards.&#160;&#160;The Joint Venture Agreement provides that in the
event the Joint Venture fails to acquire the Properties, Blackstone shall cause
the dissolution and orderly liquidation of the Joint Venture.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
January 15, 2010, the Joint Venture entered into a purchase and sale agreement
(the &#8220;Purchase Agreement&#8221;) with Sunwest to acquire the Properties for an
aggregate unadjusted purchase price of approximately $1.15
billion.&#160;&#160;The purchase price will include (i) approximately $235.0
million in an adjustable combination of cash and membership interests in the
Joint Venture (the &#8220;Cash/Equity Portion of the Purchase Price&#8221;) and (ii) the
assumption by the Joint Venture of secured debt, subject to adjustment, of
approximately $918.0 million (the &#8220;Debt Assumption,&#8221; and collectively with the
Cash/Equity Portion of the Purchase Price, the &#8220;Purchase Price&#8221;).&#160;&#160;The
cash component of the Cash/Equity Portion of the Purchase Price may be reduced
by the potential equity rollover of up to $25.0 million by the existing Sunwest
investors.&#160;&#160;Approximately $275.5 million of the assumed debt is
controlled by entities affiliated with Mr. Baty.&#160;&#160;The Joint Venture
has posted a $50 million letter of credit in escrow (the &#8220;Deposit&#8221;) to be held
as security for performance of the Joint Venture's obligations under the
Purchase Agreement.&#160;&#160;To the extent that a closing condition under the
Purchase Agreement is not satisfied with respect to one or more of the
Properties, the Joint Venture shall have the right, subject to certain
limitations, to either defer closing on such Properties until such condition is
satisfied or waived by the Joint Venture (the &#8220;Deferred Properties&#8221;), or
terminate the Purchase Agreement with respect to any such
Property.&#160;&#160;At the time of closing on each transaction under the
Purchase Agreement, the Deposit shall be applied to the Cash/Equity Portion of
the Purchase Price due in connection with such closing in an amount which would
result in the remaining deposit being equal to 5% of the allocated purchase
price related to the remaining Deferred Properties.&#160;&#160;If the Joint
Venture fails to close the purchase and sale of the Properties and all
conditions under the Purchase Agreement have been satisfied by Sunwest or waived
in writing by the Joint Venture, the balance of the Deposit will be paid to
Sunwest as its sole and exclusive remedy and as liquidated damages.</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Properties to be acquired by the Joint Venture pursuant to the Purchase
Agreement are comprised of approximately 11,096 units and are similar in
operating characteristics to Emeritus' existing portfolio of senior living
communities.&#160;&#160;The portfolio includes approximately 6,175 assisted
living, 1,782 memory care, 2,944 independent living, and 195 skilled nursing
units.</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
consummation of the transactions contemplated by the Purchase Agreement are
subject to a number of conditions, including final bankruptcy court approvals,
the expiration or termination of the applicable waiting period</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">under the
Hart-Scott Rodino Antitrust Improvements Act of 1976 and finalization of loan
modifications with the secured creditors.&#160;&#160;The bankruptcy court
process includes an open six-week bidding period that will allow other qualified
interested parties to bid on the acquisition of the Properties.&#160;&#160;A
competing bid must be a minimum of approximately $26.0 million in excess of the
Purchase Price, and may be increased in an auction style forum upon submittal of
any qualified competing bid.&#160;&#160;A qualified buyer must demonstrate a net
worth of at least $500.0 million, total assets of at least $2.5 billion and be
regularly engaged in the business of owning or operating commercial real estate
or senior living facilities.&#160;&#160;In the event that the Joint Venture is
not chosen as the successful bidder at an auction or elects not to submit a bid
at an auction and the bankruptcy court confirms a sale of the Properties to a
third-party purchaser, Sunwest shall return the Deposit to the Joint Venture and
pay to the Joint Venture a break-up fee equal to the greater of $9.0 million or
10% of the amount by which the successful bidder's Cash/Equity Portion of the
Purchase Price exceeds $235.0 million.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Purchase Agreement contains customary representations and warranties between the
Joint Venture and Sunwest.&#160;&#160;The Purchase Agreement also contains
customary covenants and agreements, including covenants regarding the parties'
efforts to cause the closing to be completed and Sunwest's obtaining the consent
of the holders of its secured debt to the modifications set forth in the
Purchase Agreement and the amendment of the draft Plan of Reorganization of
Sunwest to provide for the transactions contemplated in the Purchase Agreement,
which includes the modification of its secured debt.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Purchase Agreement may be terminated under certain circumstances specified in
the Purchase Agreement, including by the Joint Venture or Sunwest if the closing
of the transactions contemplated by the Purchase Agreement has not occurred on
or before July 30, 2010.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
contemplated by the Purchase Agreement, Emeritus anticipates entering into
management agreements (the &#8220;Management Agreements&#8221;) with the Joint Venture to
manage the Properties for a monthly fee of 5.0% of collected gross operating
revenues.&#160;&#160;The term of the Management Agreements would be for one year
and would automatically renew for successive one-year periods unless notice of
non-renewal is given by either party 90 days prior to the expiration of the then
current term or otherwise cancelled pursuant to the Management
Agreement.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A press
release announcing the Joint Venture and the entry into the Purchase Agreement
is attached hereto as Exhibit 99.1</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
9.01&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Financial
Statements <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">and</font>
Exhibits.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Exhibits</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Exhibit
No.</font>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Description</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
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                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1</font></div>
              </td>
              <td>
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Press
      Release dated January 19, 2010, entitled<font style="DISPLAY: inline; FONT-STYLE: italic"> Emeritus Signs Joint Venture
      Agreement to Acquire 134 Senior Living Communities for $1.15
      Billion.</font></font></div>
              </td>
            </tr></table>
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      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
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                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
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              <td>&#160;</td>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SIGNATURE</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
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      21, 2010</font></div>
              </td>
              <td valign="bottom" width="17%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></td>
              <td valign="bottom" width="38%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">EMERITUS
      CORPORATION</font></div>
              </td>
            </tr><tr>
              <td valign="bottom" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></td>
              <td valign="bottom" width="17%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></td>
              <td valign="bottom" width="38%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></td>
            </tr><tr>
              <td valign="bottom" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></td>
              <td align="right" valign="bottom" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:</font></div>
              </td>
              <td align="left" valign="bottom" width="38%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;/s/
      Robert C. Bateman</font></div>
              </td>
            </tr><tr>
              <td valign="bottom" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></td>
              <td valign="bottom" width="17%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></td>
              <td align="left" valign="bottom" width="38%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Robert
      C. Bateman, Executive Vice President&#8212;</font></div>
              </td>
            </tr><tr>
              <td valign="bottom" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></td>
              <td valign="bottom" width="17%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></td>
              <td align="left" valign="bottom" width="38%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Finance
      and Chief Financial Officer</font></div>
              </td>
            </tr></table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 36pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">INDEX
TO EXHIBITS</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Exhibit
No.</font>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Description</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
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                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1</font></div>
              </td>
              <td>
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Press
      Release dated January 19, 2010, entitled<font style="DISPLAY: inline; FONT-STYLE: italic"> Emeritus Signs Joint Venture
      Agreement to Acquire 134 Senior Living Communities for $1.15
      Billion.</font></font></div>
              </td>
            </tr></table>
      </div>
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jointventuresnwst8kjan2010.htm
U.S.
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C.  20549
____________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date of report (Date of earliest event
reported):
January 15,
2010
EMERITUS
CORPORATION
(Exact
name of registrant as specified in charter)
Washington
1-14012
91-1605464
(State
      or other jurisdiction of incorporation)
(Commission
      File Number)
(IRS
      Employer Identification No.)
3131
Elliott Avenue, Suite 500
Seattle,
Washington 98121
(Address
of principal executive offices) (Zip Code)
(206)
298-2909
(Registrant's
telephone number, including area code)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01                      Entry
into a Material Definitive Agreement.
On
January 15, 2010, Emeritus Corporation ("Emeritus" or the "Company") entered
into a Limited Liability Company Agreement (the "Joint Venture Agreement") with
BRE/SW Member LLC, an affiliate of Blackstone Real Estate Advisors VI, L.P
("Blackstone") and CPDF II, LLC, an entity controlled by Mr. Dan Baty, the
Chairman and Co-CEO of Emeritus ("Columbia Pacific"), pursuant to which
Emeritus, Blackstone and Columbia Pacific have formed a joint venture that will
operate under the name of  BRE/SW Portfolio LLC (the "Joint
Venture").  The purpose of the Joint Venture is to acquire and operate
a portfolio of 134 communities (each a "Property," and collectively, the
"Properties") currently operated by Stayton SW Assisted Living, LLC, an Oregon
limited liability company constituting the Unitary Sunwest Enterprise as
designated in an Order Approving Distribution Plan of the U.S. District Court
for the District of Oregon dated October 2, 2009 ("Sunwest").
Under the
Joint Venture's current equity structure, Blackstone will have up to an 80%
equity interest and Emeritus and Columbia Pacific will each have a 10% equity
interest.  Existing Sunwest investors will have the opportunity to
acquire equity interests in the Joint Venture by rolling over up to $25.0
million in consideration received in connection with the disposition of the
Properties.  Emeritus is the administrative member of the Joint
Venture.  Emeritus will fund up to an additional $26.0 million to the
Joint Venture for its equity interest, including estimated working capital and
capital expenditure reserve requirements, in addition to closing
costs.  The Joint Venture Agreement provides for cash distributions
from the Joint Venture to the members in accordance with their ownership
interests; however, Emeritus is entitled to distributions at increasing levels
in excess of its ownership percentage if certain Joint Venture performance
criteria are achieved.  The Joint Venture Agreement also provides
Emeritus the right of first opportunity in the event that Blackstone desires to
sell all or any of the Properties or its membership interest in the Joint
Venture.  The Joint Venture Agreement prohibits Emeritus from
transferring its interest in the Joint Venture without Blackstone's
consent.  Emeritus, as administrative member, is responsible for the
day-to-day operations of the Joint Venture.  However, Blackstone has
final authority on certain defined major decisions affecting the Joint
Venture.  Blackstone may terminate Emeritus as administrative member
for certain reasons, including gross negligence, bankruptcy and failure to meet
certain standards.  The Joint Venture Agreement provides that in the
event the Joint Venture fails to acquire the Properties, Blackstone shall cause
the dissolution and orderly liquidation of the Joint Venture.
On
January 15, 2010, the Joint Venture entered into a purchase and sale agreement
(the "Purchase Agreement") with Sunwest to acquire the Properties for an
aggregate unadjusted purchase price of approximately $1.15
billion.  The purchase price will include (i) approximately $235.0
million in an adjustable combination of cash and membership interests in the
Joint Venture (the "Cash/Equity Portion of the Purchase Price") and (ii) the
assumption by the Joint Venture of secured debt, subject to adjustment, of
approximately $918.0 million (the "Debt Assumption," and collectively with the
Cash/Equity Portion of the Purchase Price, the "Purchase Price").  The
cash component of the Cash/Equity Portion of the Purchase Price may be reduced
by the potential equity rollover of up to $25.0 million by the existing Sunwest
investors.  Approximately $275.5 million of the assumed debt is
controlled by entities affiliated with Mr. Baty.  The Joint Venture
has posted a $50 million letter of credit in escrow (the "Deposit") to be held
as security for performance of the Joint Venture's obligations under the
Purchase Agreement.  To the extent that a closing condition under the
Purchase Agreement is not satisfied with respect to one or more of the
Properties, the Joint Venture shall have the right, subject to certain
limitations, to either defer closing on such Properties until such condition is
satisfied or waived by the Joint Venture (the "Deferred Properties"), or
terminate the Purchase Agreement with respect to any such
Property.  At the time of closing on each transaction under the
Purchase Agreement, the Deposit shall be applied to the Cash/Equity Portion of
the Purchase Price due in connection with such closing in an amount which would
result in the remaining deposit being equal to 5% of the allocated purchase
price related to the remaining Deferred Properties.  If the Joint
Venture fails to close the purchase and sale of the Properties and all
conditions under the Purchase Agreement have been satisfied by Sunwest or waived
in writing by the Joint Venture, the balance of the Deposit will be paid to
Sunwest as its sole and exclusive remedy and as liquidated damages.
The
Properties to be acquired by the Joint Venture pursuant to the Purchase
Agreement are comprised of approximately 11,096 units and are similar in
operating characteristics to Emeritus' existing portfolio of senior living
communities.  The portfolio includes approximately 6,175 assisted
living, 1,782 memory care, 2,944 independent living, and 195 skilled nursing
units.
The
consummation of the transactions contemplated by the Purchase Agreement are
subject to a number of conditions, including final bankruptcy court approvals,
the expiration or termination of the applicable waiting period
under the
Hart-Scott Rodino Antitrust Improvements Act of 1976 and finalization of loan
modifications with the secured creditors.  The bankruptcy court
process includes an open six-week bidding period that will allow other qualified
interested parties to bid on the acquisition of the Properties.  A
competing bid must be a minimum of approximately $26.0 million in excess of the
Purchase Price, and may be increased in an auction style forum upon submittal of
any qualified competing bid.  A qualified buyer must demonstrate a net
worth of at least $500.0 million, total assets of at least $2.5 billion and be
regularly engaged in the business of owning or operating commercial real estate
or senior living facilities.  In the event that the Joint Venture is
not chosen as the successful bidder at an auction or elects not to submit a bid
at an auction and the bankruptcy court confirms a sale of the Properties to a
third-party purchaser, Sunwest shall return the Deposit to the Joint Venture and
pay to the Joint Venture a break-up fee equal to the greater of $9.0 million or
10% of the amount by which the successful bidder's Cash/Equity Portion of the
Purchase Price exceeds $235.0 million.
The
Purchase Agreement contains customary representations and warranties between the
Joint Venture and Sunwest.  The Purchase Agreement also contains
customary covenants and agreements, including covenants regarding the parties'
efforts to cause the closing to be completed and Sunwest's obtaining the consent
of the holders of its secured debt to the modifications set forth in the
Purchase Agreement and the amendment of the draft Plan of Reorganization of
Sunwest to provide for the transactions contemplated in the Purchase Agreement,
which includes the modification of its secured debt.
The
Purchase Agreement may be terminated under certain circumstances specified in
the Purchase Agreement, including by the Joint Venture or Sunwest if the closing
of the transactions contemplated by the Purchase Agreement has not occurred on
or before July 30, 2010.
As
contemplated by the Purchase Agreement, Emeritus anticipates entering into
management agreements (the "Management Agreements") with the Joint Venture to
manage the Properties for a monthly fee of 5.0% of collected gross operating
revenues.  The term of the Management Agreements would be for one year
and would automatically renew for successive one-year periods unless notice of
non-renewal is given by either party 90 days prior to the expiration of the then
current term or otherwise cancelled pursuant to the Management
Agreement.
A press
release announcing the Joint Venture and the entry into the Purchase Agreement
is attached hereto as Exhibit 99.1
Item
9.01                      Financial
Statements
and
Exhibits.
(d)
Exhibits
Exhibit
No.
Description
99.1
Press
      Release dated January 19, 2010, entitled
Emeritus Signs Joint Venture
      Agreement to Acquire 134 Senior Living Communities for $1.15
      Billion.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
January
      21, 2010
EMERITUS
      CORPORATION
By:
/s/
      Robert C. Bateman
Robert
      C. Bateman, Executive Vice President—
Finance
      and Chief Financial Officer
INDEX
TO EXHIBITS
Exhibit
No.
Description
99.1
Press
      Release dated January 19, 2010, entitled
Emeritus Signs Joint Venture
      Agreement to Acquire 134 Senior Living Communities for $1.15
      Billion.