EMERITUS
CORPORATION


NON-QUALIFIED
DEFERRED COMPENSATION PLAN





(As
of January 1, 2007)
















TABLE OF
CONTENTS


ARTICLE
      I
              DEFINITIONS
              21.1
              ACCOUNT
              21.2
              BENEFICIARY
              21.3
              CHANGE
      IN CONTROL EVENT
              21.4
              CODE
              41.5
              COMPENSATION
              41.6
              COMPENSATION
              41.7
              ELECTIVE
      DEFERRALS
              51.8
              EMPLOYERCONTRIBUTIONS
              51.9
              ELIGIBLE
      EMPLOYEE
              51.1
              EMPLOYEE
              51.11
              EMPLOYER
              51.12
              ENROLLMENT
      PERIOD
              51.13
              ENTRY
      DATE
              51.14
              MEMBER
              51.15
              PLAN
              51.16
              PLAN
      YEAR
              61.17
              SALARY
      REDUCTION AGREEMENT
              61.18
              VALUATION
      DATE
              6ARTICLE
      II
              ELIGIBILITY
      FOR PARTICIPATION
              72.1
              REQUIREMENTS
      FOR PARTICIPATION
              72.2
              CESSATION
      OF ACTIVE PARTICIPATION
              72.3
              PARTICIPATION
      FOLLOWING RE-EMPLOYMENT
              72.4
              DESIGNATION
      OF BENEFICIARY
              7ARTICLE
      III
              CREDITS
      TO ACCOUNTS
              83.1
              MEMBERS'
      ELECTIVE DEFERRALS
              83.2
              EMPLOYER
      MATCHING CONTRIBUTIONS
              9ARTICLE
      IV
              ACCOUNTS
      AND EARNINGS CREDITED
              104.1
              ACCOUNTS
      OF MEMBERS
              104.2
              RATES
      OF RETURN CREDITED
              10ARTICLE
      V
              VESTING
              115.1
              ELECTIVE
      DEFERRAL ACCOUNT
              115.2
              EMPLOYER
      ACCOUNT
              115.3
              ACCELERATION
      OF VESTING
              11
  
  ARTICLE
      VI
              DISTRIBUTIONS
              126.1
              ELECTIVE
      DEFERRAL EMPLOYER ACCOUNT
              126.2
              BENEFITS
      PAYABLE TO MINORS AND INCOMPETENTS
              136.3
              WITHHOLDING
      TAXES
              14ARTICLE
      VII
              ADMINISTRATION
      OF THE PLAN
              157.1
              ADMINISTRATIVE
      COMMITTEE
              157.2
              ACCOUNTS
      NOT TRANSFERABLE
              157.3
              COSTS
      OF THE PLAN
              157.4
              INDEMNIFICATION
              15ARTICLE
      VIII
              AMENDMENT
      AND TERMINATION OF THE PLAN
              16ARTICLE
      IX
              MISCELLANEOUS
      PROVISIONS
              179.1
              NO
      CONTRACT OF EMPLOYMENT INTENDED
              179.2
              CLAIMS
      REVIEW PROCEDURE
              179.3
              GOVERNING
      LAW
              179.4
              RULES
      OF CONSTRUCTION
              179.5
              PAYMENT
      PROVIDED UNDER THE PLAN
              17














EMERITUS
CORPORATION


NON-QUALIFIED
DEFERRED COMPENSATION PLAN





This Plan, adopted effective January 1,
2007 by Emeritus Corporation, is an unfunded, non-qualified deferred
compensation plan designed to provide solely for a select group of Executives,
management and highly compensated employees of Emeritus Corporation and its
affiliates an opportunity to provide for retirement income. All amounts credited
on the books of Emeritus Corporation for the accounts of members under this Plan
at all times shall remain as unfunded, general obligations of Emeritus
Corporation to such members, it being the intention that such obligations to
members under the Plan be paid, when due, solely out of the general assets of
Emeritus Corporation available at such time.





The Plan shall be administered in the
manner set forth in the following Plan, to-wit:










ARTICLE
I






Definitions







The following definitions shall be used
in this Plan unless the context of the Plan clearly indicates another
meaning:





1.1           Account.  "Account"
means the bookkeeping accounts established and maintained by the Employer to
reflect the interest of a Member under the Plan and shall include the
following:





(a)
            Elective Deferral
      Account.  Each "Elective Deferral Account" reflects
      credits to a Member's Account made on his behalf pursuant to Section 3.1,
      as adjusted to reflect designated rates of return and other credits or
      charges.





(b)
            Employer Matching
      Account.  Each “Employer Matching Account” reflects
      credits to a Member’s Account made on his behalf pursuant to Section 3.2,
      as adjusted to reflect designated rates of return and other credits or
      charges.





(c)
            Employer
      Account.  Each “Employer Account” reflects credits to a
      Member’s Account made on his behalf pursuant to Section 3.3, as adjusted
      to reflect designated rates of return and other credits or
      charges.





1.2           Beneficiary.  "Beneficiary"
means such person or persons or legal entity as may be designated by a Member to
receive benefits hereunder after his death, or, if none is so designated, the
person or entity hereinafter provided in Section 2.4.





1.3           Change in Control
Event.  “Change in Control Event” as used herein will be deemed
to have occurred when a Member’s employment with the Employer is terminated
involuntarily (except for Cause), or voluntarily if for Good Reason, during the
period beginning six (6) months prior to and ending twenty four (24) months
following a Change in the Ownership of the Employer, or a Change in the
Ownership of a Substantial Portion of the Assets of the Employer, as defined as
follows:





(a)  Change in Ownership of
the Employer shall be deemed to occur when any one person, or more than one
person acting as a group, acquires ownership of the Employer’s stock that,
together with stock held by such person or group, constitutes more than fifty
percent (50%) of the total fair market value or total voting power of the
Employer.  A Change of Ownership of the Employer will not occur when
any one person, or more than one person acting as a group, owning more than
fifty percent (50%) of the total fair market value or total voting power of the
stock of the Employer acquires additional stock.  For the purposes of
this section, an increase in the percentage of stock owned by any one person, or
more than one person if acting as a group, as a result of a transaction in which
the Employer acquires its stock in exchange for property will be treated as an
acquisition of stock.





2


(b)  Change in Ownership of a
Substantial Portion of the Assets of the Employer shall be deemed to occur on
the date that any one person, or more than one person acting as a group,
acquires (or has acquired during the twelve (12) month period ending on the date
of the most recent acquisition by such person or persons) assets from the
Employer that have total gross fair market value equal to or more than forty
percent (40%) of the total gross fair market value of all of the assets of the
Employer immediately prior to such acquisition or acquisitions.  For
the purposes of this section, “gross fair market” value means the value of the
assets of the Employer or the value of the assets being disposed of, determined
without regard to any liabilities associated with such assets.  A
change in the Ownership of a Substantial Portion of the Assets of the Employer
shall not be deemed to occur where the assets transferred by the Employer are
transferred to (1) a shareholder of the Employer (immediately before the asset
transfer) in exchange for or with respect to its stock; (2) an entity fifty
percent (50%) or more of the total value or voting power of which is owned,
directly or indirectly, by the Employer; (3) a person or more than one person
acting as a group, that owns, directly or indirectly, fifty percent (50%) or
more of the total value or voting power of all the outstanding stock or the
Employer; or (4) an entity, at least fifty percent (50%) of the total value or
voting power of which is owned, directly or indirectly, by a person or more than
one persons acting as a group, that owns, directly or indirectly, fifty percent
(50%) or more of the total value or voting power of all the outstanding stock of
the Employer.





(c)  Good Reason shall be
deemed to have occurred if, without the Member’s express written consent, the
Member experiences a material diminution of duties, responsibilities, or
benefits, including (without limitation) any of the following
circumstances:





(i)  A requirement that the
Member be based at any location not within forty (40) miles of the Members then
existing job location, providing that such new location is not closer to the
Member’s home.





(ii)  A material demotion, or
loss of title or loss of significant authority of the Member, excluding for this
purpose, an isolated, insubstantial or inadvertent action not taken in bad faith
which is remedied by the Employer immediately after notice thereof is given by
Member.





(iii)  A reduction in the
Member’s salary or material adverse change in the Member’s perquisites,
benefits, or vacation, other than as part of an overall program applied
uniformly and with equitable effect to all senior management of the
Employer.





(iv)  A successor company
fails or refuses to assume the Employer’s obligation under this
Plan.





3


(d) Cause shall mean termination of
employment of the Member because of the Member’s personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, insubordination, willful
violation of any law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order, or material breach of any
provision of the “Change in Control Severance Agreement”  that the
Member has with the Employer.





1.4           Code.  "Code"
means the Internal Revenue Code of 1986, as now in effect or as amended from
time to time. A reference to a specific provision of the Code shall include such
provision and any applicable regulation pertaining thereto.





1.5           Committee.  “Committee”
means the Top-Hat Committee, made up of people appointed by the Chief Executive
Officer of the Employer for purposes of the administration of this
Plan.  The Chief Executive Officer of the Employer may change the
people that make up this Committee at any time and for any reason.





1.6           Compensation.  "Compensation"
means an Employee's earned income, wages, salaries, and fees for professional
services and other amounts received for personal services actually rendered (i)
in the course of employment with the Employer maintaining the Plan (including,
but not limited to, compensation for services on the basis of a percentage of
profits and bonuses) or (ii) in the course of service on the Employer’s Board of
Directors. Any amounts that would have been includable in the Employee's
Compensation as described above if they had not received special tax treatment
because they were deferred by the Employer through a Salary Reduction Agreement
shall be added to the amount described above and included in the Employee's
Compensation for purposes of the Plan. However, Compensation shall not include
the following:





(a)
            other
      Employer contributions to a plan of deferred compensation which are not
      includable in the Employee's gross income for a taxable year in which
      contributed, or Employer contributions under simplified employee pension
      plans to the extent such contributions are deductible by the Employee, or
      any distributions from a plan of deferred
  compensation;





(b)
            amounts
      realized from the exercise of non-qualified stock options, or when
      restricted stock (or property) held by the Employee either becomes freely
      transferable or is no longer subject to a substantial risk of
      forfeiture;





(c)
            amounts
      realized from the sale, exchange or other disposition of stock acquired
      under a qualified stock option;





(d)
            other
      amounts which received special tax benefits, or contributions made by the
      Employer (whether or not under a Salary Reduction Agreement) towards the
      purchase of an annuity described in Section 403(b) of the Code (whether or
      not the amounts are actually excludable from the gross income of the
      Employee); and





4


(e)
            amounts
      received as automobile and office
allowances.





1.7           Elective
Deferrals.  "Elective Deferrals" means reductions pursuant to a
Member's Salary Reduction Agreement, in the whole percentages (permitted below
in Section 3.1) of the Member's Compensation, which amounts are credited by the
Employer to the Member's Elective Deferral Account under the Plan, as provided
below.





1.8           Employer Matching
Contributions.  “Employer Contributions” means the amounts
credited under section 3.2.





1.9           Eligible
Employee.  "Eligible Employee" shall mean an Employee who is a
Highly Compensated Employee, as defined in Internal Revenue Code Section 414(q)
and who has one or more of the following title of job descriptions:


a.  Officers


b.  Regional Director of
Quality Service


c.  Regional Director of
Sales & Marketing


d.  Regional Director of
Operations


e.  Vice President of Quality
Service


f.  Vice President of Sales
& Marketing


g.  Vice President of
Operations


h.  Corporate Employees with
the title of Director


i.   Corporate Employees
with the title of Vice President





1.10           Employee.  "Employee"
means any person employed by Employer.





1.11           Employer.  "Employer"
means Emeritus Corporation, or any corporation into which it may be merged or
consolidated, or any affiliate that may adopt the Plan with approval of the
Board of Directors of Emeritus Corporation.





1.12           Enrollment
Period.  "Enrollment Period" means each period designated by
the Employer with respect to the Plan Year during which new Members may
establish, and current Members may amend, their rates of Elective Deferrals
under their Salary Reduction Agreements.





1.13           Entry
Date.  "Entry Date" shall mean the first day of the Plan Year
or such other time or times as designated by the Board of Directors of the
Employer.





1.14           Member.  "Member"
means any Eligible Employee; provided, however, that any Employee who ceases to
be an Eligible Employee shall remain an inactive Member until his benefits are
paid pursuant to Article VI below.





1.15           Plan.  "Plan"
means the savings and profit sharing plan set forth in this document and all
subsequent amendments thereto which in the aggregate are intended by the
Employer to constitute a non-qualified savings and profit sharing retirement
plan. The name of the Plan shall be the "Emeritus Corporation Non-Qualified
Deferred Compensation Plan".


5





1.16           Plan
Year.  "Plan Year" means the calendar year.





1.17           Salary Reduction
Agreement.  "Salary Reduction Agreement" means an agreement
entered into between the Member and the Employer during the Enrollment Period by
which the Member agrees to accept a reduction in his Compensation from the
Employer equal to any whole percentage, per payroll period, not to exceed the
percentages permitted under Section 3.1(A) below. The Salary Reduction Agreement
shall be irrevocable by the Member until the next Enrollment Period and shall
apply to each payroll period during such time in which the Member receives
Compensation from the Employer.





1.18           Valuation
Date.  "Valuation Date" under the Plan shall mean each business
day, unless otherwise designated by the Board of Directors.


6





ARTICLE
II


Eligibility for
Participation





2.1           Requirements for
Participation.  Any Eligible Employee may participate in the
Plan commencing as of the Entry Date coinciding with or next following the date
on which they meet the definition of Eligible Employee.





2.2           Cessation of Active
Participation.  A Member shall cease to be eligible for active
participation in the Plan as of any date communicated by the Board of Directors
of the Employer.





2.3           Participation Following
Re-Employment.  Each Employee whose service is terminated and
who subsequently is re-employed by the Employer shall be treated under the Plan
upon such re-employment as though he then first entered the employment of the
Employer, except however that an Eligible Employee who terminates their
employment and is subsequently re-employed within the same Plan Year shall be
re-enrolled for all contributions under Section III as if they had not
terminated their employment.





2.4           Designation of
Beneficiary.  Each Eligible Employee on becoming a Member
shall:





(a)           agree
to be bound by the terms and conditions of this Plan; and





(b)           designate
in writing one or more Beneficiaries to receive his benefits in the event of his
death.  If no such designation be made, or if such Beneficiary be
deceased without a successor Beneficiary being designated in writing, then the
death benefits shall be paid in a lump sum to the surviving spouse of said
Member, if any, otherwise to the Member’s estate.  Should a
Beneficiary of a deceased Member die after he has started receiving payment
under the Plan and if there is no living successor Beneficiary named by the
deceased Member, then the remaining benefits shall be paid in a lump sum to the
surviving spouse of said Beneficiary, if any, otherwise to the estate of the
Beneficiary receiving payment at the time of his death.  Each Member
shall be entitled to change his designated Beneficiaries from time to time by
filing with the Committee (as defined in Section 7.1 below) a new designation of
Beneficiary form, and each change so made shall revoke all prior designations by
the Member.





7





ARTICLE
III


Credits to
Accounts





3.1           Members' Elective
Deferrals.





(a)           Amount of Elective
Deferrals.  During any Enrollment Period, each Member may
elect, pursuant to a Salary Reduction Agreement, to direct the Employer to
reduce his Compensation, and in lieu thereof, credit to the Elective Deferral
Account of such Member an amount equal to such reduction, with such reduction
amounts to be in integral percentages, determined as follows:





(i)
            For
      Members who are not Executive Officers of the Employer, from one percent
      (1%) to ten percent (10%) of his Compensation (net of applicable
      withholdings), if any; and


(ii)
            For
      Members who are Executive Officers of the Employer, from one percent (1%)
      to twenty five percent (25%) of his Compensation (net of applicable
      withholdings),








Members may elect to have Elective
Deferrals applied either to Compensation excluding bonuses, to bonuses, or both,
subject to such rules as may be promulgated from time to time by the Board of
Directors.  Any election by a Member to make Elective Deferrals to the
Plan shall be binding on such Member for the entire Plan Year of the
election.





(b)           Initial Authorization for
Elective Deferrals.  All Salary Reduction Agreements shall be
in writing or in such other form permitted by the Committee and shall be filed
with the Employer in advance of the date they are to become effective in
accordance with the normal administrative procedures established by the
Committee. Any such Salary Reduction Agreement shall continue in effect for a
Plan Year for as long as the Member remains an Eligible Employee.





(c)           Right of Member to Suspend
or Change His Rate of Elective Deferrals.  Except as set forth
below, a Member may not suspend or change his rate of Elective Deferrals except
during the Plan’s Enrollment Periods.  The provisions of this Section
3.1(C) are subject to the further rules ofSection 3.1(E) below
with respect to certain required suspensions.





A Member whose Elective Deferrals are
suspended during a period of leave of absence or who is reemployed following a
termination of service may elect, upon his return to active employment with the
Employer, assuming the Member is otherwise then eligible to participate under
Article III, to have the Employer resume Elective Deferrals on
his


8


behalf to
the Plan. Any such election shall be in writing filed with the Employer and
shall specify the percentage of Elective Deferrals to be deducted from his
Compensation.





(d)           Crediting Elective
Deferrals.  Elective Deferrals under the Plan shall be credited
by the Employer to the Member's Elective Deferral Account no later than as of
the end of the month in which the deferral amounts were deducted from the
Member's Compensation.





(e)           Mandatory Suspension of
Elective Deferrals.  If the Member obtains an in-service
hardship withdrawal under any Employer-sponsored tax-qualified cash or deferred
arrangement, then any suspension of deferrals required by such plan shall
include the making of Elective Deferrals hereunder.








3.2
            Employer Matching
      Contributions





(a)           Amount of Employer Matching
Contributions.  For Members that are Officers of the Employer,
the Employer shall make a minimum matching contribution of 25% of the Members
Elective Deferrals, as defined in Section 3.1 above.  The Employer
may, in its sole discretion, make matching contributions on behalf of its
Members who are non-Officers and/or additional contributions to non-Officer
Members.





(b)           Crediting Employer Matching
Contributions.  Employer Matching Contributions under the Plan
shall be credited by the Employer to the Member's Employer Matching Contribution
Account no later than as of the end of the month in which the Employer Matching
Contribution was made.





9





ARTICLE
IV


Accounts and Earnings
Credited





4.1           Accounts of
Members.  The Employer shall establish and maintain for each
Member separate Accounts, to be called the "Elective Deferral Account" and the
“Employer Matching Account”.  Each Account and subaccount shall be
credited as required in Article III above and Section 4.2 below.





4.2           Rates of Return
Credited.  No later than as of the last day of each calendar
month, each Member's Account (other than any Member who has received a
distribution of his Account prior to that Valuation Date) or portions thereof
shall be credited with a designated rate or rates of return, as applicable, as
selected by the Member from the investment options offered by the Employer,
based upon the amount credited to the Member's Account as of the immediately
preceding Valuation Date.  A Member's Account may be credited with
such rate or rates of return in accordance with the most recent investment
election properly and timely filed by the Member in accordance with such rules
and procedures designated by the Employer. If no election has been
properly or timely filed with the Employer or if the Employer suspends the
election of rates of return by a Member, the Member's Account shall be credited
with a designated rate of return selected by the Employer.





10





ARTICLE
V


Vesting





5.1           Elective Deferral
Account.  Members shall be 100% vested in their Elective
Deferral Account at all times.





5.2           Employer Matching
Account.  Each contribution and subsequent earnings that are
made to a Members Employer Account, shall vest at the rate of 33.33% per year,
beginning when the Member first joins the Plan.  A Member will receive
credit for a year of service for vesting purposes for each year in which he
works at least 1,000 hours for the Employer.   Participants will
become 100% vested in all of their Employer Account upon reaching age 65 or in
the event of death, disability or Change in Control Event.





5.3           Acceleration of
Vesting.  The Committee, in its sole discretion, may accelerate
the vesting of any Member, in whole or part.


11





ARTICLE
VI


Distributions





6.1           Elective Deferral and
Employer Accounts.  Amounts credited to a Member's Accounts
shall be distributed to the Member or his Beneficiaries in such form and at such
times as set forth below:





(a)
            Normal Distribution
      Rules.  The following distribution rules apply to all
      Members in regards to contributions and earnings on such contributions
      posted after December 31, 2004 (hereinafter “Post-2004
      Accounts).





(i)
            If
      the aggregate sum of a Member's Post-2004 Accounts total $100,000 or less
      as of the first Valuation Date immediately following the Member’s
      termination of service for any reason, the Accounts shall be distributed
      to the Member in cash in a lump sum as soon as practicable on the later of
      the January following or six (6) months following the termination of
      service.





(ii)
            If
      the aggregate sum of a Member’s Post-2004 Accounts totals more than
      $100,000 as of the first Valuation Date immediately following the Member’s
      termination of service for any reason, the Accounts will be paid as
      follows:





(1)
            The
      Member’s Accounts shall be paid in annual installments over five (5)
      years, with the first installment to be paid the later of the January
      following or six (6) months following the Member’s termination of service;





For
purposes of this Section 6.1(A)(ii), the amount of any installment payment shall
be determined by multiplying the Account balance determined as of the date for
processing the distribution by a fraction, the numerator of which is one and the
denominator of which is the number of remaining installment payments to be made
to the Member.





(iii)           In
the event of an unforeseeable emergency, defined as a severe financial hardship
resulting from an illness or accident of the Member, Beneficiary, or their
family, a Member or Beneficiary, whether or not the Member is then in the
service of the Employer, may petition the Committee for the immediate payout of
all or a portion of the Member’s Accounts prior to the Member’s elected payment
timing.  All such requests must be approved the
Committee.








(b)
Pre-2005 Accounts.  Contributions, and earnings on such contributions,
that were credited prior to December 31, 2004 shall distributed under the rules
and procedures of the Plan as it existed on December 31, 2004


12








6.2           Benefits Payable to Minors
and Incompetents.





(a)
            Whenever
      any person entitled to payments under the Plan shall be a minor or under
      other legal disability or in the sole judgment of the Employer otherwise
      shall be unable to apply such payments to his own best interest and
      advantage (as in the case of illness, whether mental or physical or where
      the person not under legal disability is unable to preserve his estate for
      his own best interest), the Employer may in the exercise of its discretion
      direct all or any portion of such payments to be made in any one or more
      of the following ways unless claim shall have been made therefor by an
      existing and duly appointed guardian, tutor, conservator, committee or
      other duly appointed legal representative, in which event payment shall be
      made to such representative:





(i)
            directly
      to such person unless such person shall be an infant or shall have been
      legally adjudicated incompetent at the time of the
  payment;





(ii)
            to
      the spouse, child, parent or other blood relative to be expended on behalf
      of the person entitled or on behalf of those dependents as to whom the
      person entitled has the duty of support;
or





(iii)
            to
      a recognized charity or governmental institution to be expended for the
      benefit of a person entitled or for the benefit of those dependents as to
      whom the person entitled has the duty of
  support.





(b)
            The
      decision of the Employer will, in each case, be final and binding upon all
      persons and the Employer shall not be obliged to see to the proper
      application or expenditure of any payments so made. Any payment made
      pursuant to the power herein conferred upon the Employer shall operate as
      a complete discharge of the obligation of the
  Employer.





6.3           Withholding
Taxes.  The Employer shall have the right ­to withhold from
any amounts due or to become due from the Employer pursuant to this Plan to a
Member or his Beneficiary any taxes required by any government to be withheld or
otherwise deducted and paid by the Employer in respect of such amounts paid or
to be paid.





13





ARTICLE
VII


Administration of the
Plan





7.1           Administrative
Committee.  The Compensation Committee of the Board of
Directors of Emeritus Corporation (the "Committee") shall administer the Plan.
An individual member of the Committee may not participate in any decision
exclusively affecting his own participation in the Plan. The Committee shall
have the sole authority, in its absolute discretion, to adopt, amend and rescind
such rules and regulations as, in its opinion, may be advisable in the
administration of the Plan; and to construe and interpret the Plan, the rules
and regulations, and to make all other determinations deemed necessary or
advisable for the administration of the Plan. All decisions, determinations, and
interpretations of the Committee shall be binding on all Members. The Committee
may employ such legal counsel, consultants and agents as it may deem desirable
for the administration of the Plan and may rely upon any opinion received from
any such counsel or consultant and any computation received for any such
consultant or agent. Expenses incurred by the Board of Directors or the
Committee in the engagement of such counsel, consultant or agent shall be paid
by the Employer. No member or former member of the Committee or of the Board of
Directors shall be liable for any action or determination made in good faith
with respect to the Plan or any awards granted hereunder.





7.2           Accounts Not
Transferable.  A Member's undivided interest in the amounts
credited to his Accounts under the Plan may not be assigned, sold, pledged or
alienated except by testate or intestate succession.  In addition,
such undivided interest may not be encumbered by lien or security interest of
any kind and shall not be liable for the debts of the Member or subject to
attachment, or to any judgment rendered against the Member or to the process of
any court in aid or execution of any judgment so rendered.





7.3           Costs of the
Plan.  The costs of maintaining records and executing transfers
under the Plan shall be paid by Emeritus Corporation.





7.4           Indemnification.  Emeritus
Corporation shall indemnify and hold harmless any officer, employee, agent, or
representative who incurs damage or loss, including the expense of defense
thereof, in connection with the performance of the duties specified herein,
other than losses resulting from any such person's fraud or willful
misconduct.








14


ARTICLE
VIII


Amendment and Termination of
the Plan





The Board of Directors of Emeritus
Corporation may, at any time and in its discretion, alter, amend, suspend or
terminate the Plan or any part thereof.  Notice of any amendment,
suspension or termination of the Plan, in whole or in part, shall be given to
each Member as soon as practicable after such action is taken.  No
alteration, amendment, suspension or termination of the Plan, in whole or in
part, may decrease the value of any Member’s Account; provided, however, that
upon any termination of the Plan as to any class or classes of Members, the
Board of Directors or its delegate may provide for the payment of Account
balances in a lump sum.


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ARTICLE
IX


Miscellaneous
Provisions





9.1           No Contract of Employment
Intended.  The granting of any right to an Employee, pursuant
to this Plan, shall not constitute an agreement or understanding, express or
implied, on the part of Emeritus Corporation or any affiliate, to employ such
employee for any specified period.





9.2           Claims Review
Procedure.





(a)           Notice of
Denial.  If a Member or a Beneficiary is denied a claim for
benefits under the Plan, the Committee shall provide to the claimant written
notice of the denial within ninety (90) days after the Committee receives the
claim, unless special circumstances require an extension of time for processing
the claim.  If such an extension of time is required, written notice
of the extension shall be furnished to the claimant prior to the termination of
the initial 90-day period.  In no event shall the extension exceed a
period of ninety (90) days from the end of such initial period.  Any
extension notice shall indicate the special circumstances requiring the
extension of time, the date by which the Committee expects to render the final
decision, the standards on which entitlement to benefits are based, the
unresolved issues that prevent a decision on the claim and the additional
information needed to resolve those issues.





(b)           Contents of Notice of
Denial.  If a Member or Beneficiary is denied a claim for
benefits under a Plan, the Committee shall provide to such claimant written
notice of the denial which shall set forth:





(i)           the
specific reasons for the denial;





(ii)
            specific
      references to the pertinent provisions of the Plan on which the denial is
      based;





(iii)
            a
      description of any additional material or information necessary for the
      claimant to perfect the claim and an explanation of why such material or
      information is necessary; and





(iv)
            an
      explanation of the Plan’s claim review procedures, and the time limits
      applicable to such procedures, including a statement of the claimant’s
      right to bring a civil action under Sections 502(a) of ERISA following an
      adverse benefit determination on
review.





(c)           Right to
Review.  After receiving written notice of the denial of a
claim, a claimant or his representative shall be entitled to:





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(i)
            request
      a full and fair review of the denial of the claim by written application
      to the Committee;





(ii)
            request,
      free of charge, reasonable access to, and copies of, all documents,
      records, and other information relevant to the
  claim;





(iii)
            submit
      written comments, documents, records, and other information relating to
      the denied claim to the Committee;
and





(iv)
            a
      review that takes into account all comments, documents, records, and other
      information submitted by the claimant relating to the claim, without
      regard to whether such information was submitted or considered in the
      initial benefit determination.





(d)           Application for
Review.  If a claimant wishes a review of the decision denying
his claim to benefits under the Plan, he must submit the written application to
the Committee within sixty (60) days after receiving written notice of the
denial.





(e)           Hearing.  Upon
receiving such written application for review, the Committee may schedule a
hearing for purposes of reviewing the claimant’s claim, which hearing shall take
place not more than thirty (30) days from the date on which the Committee
received such written application for review.





(f)           Notice of
Hearing.  At least ten (10) days prior to the scheduled
hearing, the claimant and his representative designated in writing by him, if
any, shall receive written notice of the date, time, and place of such scheduled
hearing.  The claimant or his representative, if any, may request that
the hearing be rescheduled, for his convenience, on another reasonable date or
at another reasonable time or place.





(g)           Counsel.  All
claimants requesting a review of the decision denying their claim for benefits
may employ counsel for purposes of the hearing.





(h)           Decision on
Review.  No later than sixty (60) days following the receipt of
the written application for review, the Committee shall submit its decision on
the review in writing to the claimant involved and to his representative, if
any, unless the Committee determines that special circumstances (such as the
need to hold a hearing) require an extension of time, to a day no later than one
hundred twenty (120) days after the date of receipt of the written application
for review.  If the Committee determines that the extension of time is
required, the Committee shall furnish to the claimant written notice of the
extension before the expiration of the initial sixty (60) day
period.  The extension notice shall indicate the special circumstances
requiring an extension of time and the date by which the Committee expects to
render its decision on review.  In the case of a decision adverse to
the claimant, the Committee shall provide to the claimant written notice of the
denial which shall include:


17





(i)           the
specific reasons for the decision;





(ii)
            specific
      references to the pertinent provisions of the Plan on which the decision
      is based;





(iii)
            a
      statement that the claimant is entitled to receive, upon request and free
      of charge, reasonable access to, and copies of, all documents, records,
      and other information relevant to the claimant’s claim for benefits;
      and





(iv)
            an
      explanation of the Plan’s claim review procedures, and the time limits
      applicable to such procedures, including a statement of the claimant’s
      right to bring an action under Section 502(a) of ERISA following the
      denial of the claim upon review.





9.3           Governing
Law.  The construction, validity, and operation of this Plan
shall be governed by the laws of the State of Washington, to the extent not
preempted by applicable federal law.





9.4           Rules of
Construction.  Throughout this Plan, the masculine includes the
feminine, and the singular and the plural, and vice versa, where
applicable.





9.5           Payment provided under the
Plan.  All payments provided under the Plan shall be paid from
the general assets of the Employer and no separate fund shall be established to
secure payment.  Notwithstanding the foregoing, the Employer may
establish a grantor trust to assist it and any affiliate in funding Plan
obligations, and any payment made to a Member or a Beneficiary from such trust
shall relieve the Employer and affiliate from any further obligations under the
Plan only to the extent of such payment.








IN WITNESS WHEREOF, Emeritus
Corporation has caused this indenture to be executed as of the date set forth
below.





EMERITUS CORPORATION








By:








Date:  ______________________________











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