SECURED
PROMISSORY NOTE




$10,000,000.00 December
19, 2008




Chicago,
Illinois









FOR VALUE RECEIVED, the
undersigned, EMERITUS
CORPORATION,
a Washington corporation; SUMMERVILLE SENIOR LIVING, INC., a Delaware
corporation;SW ASSISTED LIVING, LLC, a Delaware limited liability
company; SUMMERVILLE AT HERITAGE PLACE, LLC, a Delaware limited liability
company; SUMMERVILLE AT BARRINGTON COURT LLC, a Delaware limited liability
company; SUMMERVILLE AT ROSEVILLE GARDENS LLC, a Delaware limited liability
company; SUMMERVILLE 5 LLC, a Delaware limited liability company; SUMMERVILLE 14
LLC, a Delaware limited liability company; SUMMERVILLE 15 LLC, a Delaware
limited liability company; SUMMERVILLE 16 LLC, a Delaware limited liability
company; and SUMMERVILLE 17 LLC, a Delaware limited liability company (on a
joint and several basis, collectively “Borrower” or individually each
a “Borrower” as the
context may require, as determined by Lender), promise to pay to the order of
VENTAS REALTY, LIMITED PARTNERSHIP, a Delaware limited partnership, or the
holder hereof from time to time (“Lender”), at such place as may
be designated in writing by Lender, the principal sum of TEN MILLION AND
NO/100THS DOLLARS ($10,000,000.00), with interest thereon as hereinafter
provided.  This note (as amended, supplemented, restated or replaced
from time to time, this “Note”) is issued pursuant to
the terms of a Loan Agreement of even date herewith by and between Borrower and
Lender (said Loan Agreement, as same may be amended, restated or modified from
time to time, is referred to hereinafter as the “Loan
Agreement”).  All capitalized terms used but not defined herein
shall have the respective meanings ascribed to them in the Loan
Agreement.  NOTWITHSTANDING ANYTHING CONTAINED HEREIN OR IN THE LOAN
AGREEMENT WHICH MIGHT BE CONSTRUED TO THE CONTRARY, BORROWER ACKNOWLEDGES AND
AGREES THAT LENDER IS UNDER NO OBLIGATION TO MAKE ANY ADDITIONAL ADVANCES
HEREUNDER FOLLOWING THE INITIAL ADVANCE.




Interest
shall accrue on all sums as advanced and outstanding from time to time under
this Note and Loan Agreement as set forth in the Loan Agreement, and such
interest shall be due and payable as set forth in the Loan Agreement. All sums
owing hereunder are payable in lawful money of the United States of America, in
immediately available funds.




The
outstanding principal balance of this Note, together with all accrued and unpaid
interest, shall be due and payable on the Maturity Date.  Additional
principal payments shall be made in accordance with the provisions of the Loan
Agreement.




This Note
is issued pursuant to the terms of a Loan Agreement and is secured by and
entitled to the benefits of, among other things, the Collateral
Documents.  In case an Event of  Default (as defined under
any of the Loan Agreement, the Collateral Documents, or any other Loan Document
or Other Related Document) shall occur and be continuing (any of the foregoing
being an “Event of
Default” hereunder), the principal of this Note together with all accrued
interest thereon may, at the option of the holder hereof, immediately become due
and payable on demand; provided, however, that if any document related to this
Note provides for automatic




1


acceleration
of payment of sums owing hereunder, all sums owing hereunder shall be
automatically due and payable in accordance with the terms of that
document.




Unless
otherwise provided in the Loan Agreement, all payments on account of the
indebtedness evidenced by this Note shall be first applied to the payment of
costs and expenses of Lender which are due and payable pursuant to the Loan
Agreement or any other Loan Document or Other Related Document, then to past-due
interest on the unpaid principal balance and the remainder to
principal.




This Note
may be prepaid upon those terms and conditions set forth in the Loan
Agreement.




If any
payment of interest required hereunder or under any other Loan Document or Other
Related Document is not received by Lender on or before the fifth (5th) day
following the date such payment becomes due, Borrower shall pay to Lender a late
charge equal to five percent (5%)of the amount of such
unpaid payment to defray part of the increased cost of collecting late payments
and the opportunity costs incurred by Lender because of the unavailability of
the funds.  If such interest payment is not received by Lender on or
before the fifth (5th) day
following the date when it becomes due, Borrower shall pay interest on the
entire outstanding principal balance of this Note at the Default Rate from and
after the date when the payment was due.




If any
payment of principal required hereunder or under any other Loan Document or
Other Related Document, other than the repayment of the Loan Amount due on the
Maturity Date, is not received by Lender on or before the date such payment
becomes due, Borrower shall pay to Lender a late charge equal to five percent
(5%) of the amount of such unpaid payment to defray part of the increased cost
of collecting late payments and the opportunity costs incurred by Lender because
of the unavailability of the funds.  In addition to the late charge,
Borrower shall pay interest on the entire outstanding principal balance of this
Note at the Default Rate from and after the date when the payment was
due.




Effective
immediately upon the occurrence of any Event of Default other than default in
the payment of interest or principal as described in the preceding two
paragraphs, the balance of this Note then outstanding shall bear interest at the
Default Rate (based on a 360-day year and charged on the basis of actual days
elapsed).  In addition, all other amounts due Lender (whether directly
or for reimbursement) under this Note, the Loan Agreement or any of the other
Loan Documents or Other Related Documents, if not paid when due or, in the event
no time period is expressed, if not paid within five (5) days after written
notice from Lender that the same has become due, shall also bear interest
thereafter at the Default Rate.




If any
attorney is engaged by Lender to enforce or defend any provision of this Note or
any of the other Loan Documents or Other Related Documents as a consequence of
any Event of Default or any default, event or condition that, with notice or the
passage of time or both, could become an Event of Default or is engaged by
Lender in connection with any request by Borrower for any consent or approval by
Lender that is required under this Note or any other Loan Document or Other
Related Document, with or without the filing of any legal action or proceeding,
then Borrower shall pay to Lender immediately upon demand all third
party




2


attorneys’
fees and expenses actually incurred, together with interest thereon from the
date of such demand until paid at the rate of interest applicable to the
principal balance owing hereunder as if such attorneys’ fees and expenses had
been added to the principal.




No
previous waiver and no failure or delay by Lender in acting with respect to the
terms of this Note or any of the other Loan Documents or Other Related Documents
shall constitute a waiver of any other breach, default or failure of condition
under this Note, the Loan Agreement or any of the other Loan Documents or Other
Related Documents or the obligations secured thereby.  A waiver of any
term of this Note or any of the other Loan Documents or Other Related Documents
or of any of the obligations secured thereby must be made in writing and shall
be limited to the express written terms of such waiver.  In the event
of any inconsistencies between the terms of this Note and the terms of any other
document related to the loan evidenced by this Note, the terms of this Note
shall prevail.




Except as
otherwise provided in the Loan Agreement, Borrower expressly waives
present­ment, demand, notice of dishonor, notice of default or delinquency,
notice of acceleration, notice of protest and nonpayment, notice of costs,
expenses or losses and interest thereon, notice of late charges, and diligence
in taking any action to collect any sums owing under this Note or in proceeding
against any of the rights or interests in or to properties securing payment of
this Note.  In addition, Borrower expressly agrees that this Note and
any payment coming due hereunder may be extended from time to time without in
any way affecting the liability of any party hereunder.




Time is
of the essence with respect to every provision hereof.  This Note
shall be construed and enforced in accordance with the laws of the State of
Illinois, except to the extent that federal laws preempt the laws of the State
of Illinois, and all persons and entities in any manner obligated under this
Note consent to the jurisdiction of any federal or State court within the State
of Illinois having proper venue and also consent to service of process by any
means authorized by Illinois or federal law.  Any reference contained
herein to attorneys’ fees and expenses shall be deemed to be to reasonable
out-of-pocket fees and expenses and to include all reasonable fees and expenses
of any other experts or consultants, but not of in-house or staff
attorneys.




All
agreements between Borrower and Lender (including, without limitation, this Note
and the Loan Agreement, and any other documents securing all or any part of the
indebtedness evidenced hereby) are expressly limited so that in no event
whatsoever shall the amount paid or agreed to be paid to Lender exceed the
highest lawful rate of interest permissible under applicable law.  If,
from any circumstances whatsoever, fulfillment of any provision hereof, the Loan
Agreement or any other documents securing all or any part of the indebtedness
evidenced hereby at the time performance of such provisions shall be due, shall
involve exceeding the limit of validity prescribed by law which a court of
competent jurisdiction may deem applicable hereto, then, ipso facto, the
obligation to be fulfilled shall be reduced to the highest lawful rate of
interest permissible under such applicable laws, and if, for any reason
whatsoever, Lender shall ever receive as interest an amount which would be
deemed unlawful under such applicable law, such interest shall be automatically
applied to the payment of the principal of this Note (whether or not then due
and payable) and not to the payment of interest or refunded to Borrower if such
principal has been paid in full.




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Lender is
authorized to make, from time to time and based upon Lender’s records, notations
on its records as to the date and amount of each payment of principal and
interest received by Lender, the principal balance of this Note, and the date to
which interest has been paid.  In the absence of evidence established
by Borrower to the contrary or manifest error, all such notations shall be
conclusively presumed to be accurate.




Unenforceability
of any provision or any application of any provision of this Note in any
jurisdiction shall not affect the enforceability of such provision or such
application in any other jurisdiction or of any other provision or any other
application of any provision of this Note.




Borrower
acknowledges and agrees that the Borrower shall be personally liable, on a joint
and several basis, for any and all of the obligations arising under this
Note.  No person or entity shall be a mere accommoda­tion maker,
but each shall be primarily and directly liable hereunder.




Any
notice, demand, request, consent, approval and other communication which either
party hereto may be required or may desire to give hereunder shall be governed
by Section 10.8 of the Loan Agreement.




BORROWER
AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THAT
THEY MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN
CONNECTION WITH THIS NOTE OR ANY OF THE OTHER LOAN DOCUMENTS OR OTHER RELATED
DOCUMENTS, OR ANY OTHER STATEMENTS OR ACTIONS OF BORROWER OR
LENDER.   EACH OF BORROWER AND LENDER ACKNOWLEDGES THAT IT HAS
BEEN REPRESENTED IN THE NEGOTIATION AND SIGNING OF THIS NOTE AND IN THE MAKING
OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND
THAT IT HAS DISCUSSED THIS WAIVER WITH SUCH LEGAL COUNSEL.  EACH OF
BORROWER AND LENDER FURTHER ACKNOWLEDGES THAT (i) IT HAS READ AND UNDERSTANDS
THE MEANING AND RAMIFICATIONS OF THIS WAIVER, (ii) THIS WAIVER HAS BEEN REVIEWED
BY IT AND ITS COUNSEL AND IS A MATERIAL INDUCEMENT FOR THE OTHER PARTY(IES)
HERETO TO ENTER INTO THE LOAN DOCUMENTS OR OTHER RELATED DOCUMENTS, AND (iii)
THIS WAIVER SHALL BE EFFECTIVE AS TO EACH OF THE LOAN DOCUMENTS AND OTHER
RELATED DOCUMENTS AS IF FULLY INCORPORATED THEREIN.









[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]









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IN WITNESS WHEREOF, each of
the undersigned has executed this Note, or caused this Note to be executed by
its duly authorized representative, as of the date first above
written.









EMERITUS
CORPORATION,


a
Washington corporation











By: /s/Eric
Mendelsohn


Name:                      Eric
Mendelsohn


Its:           Senior
Vice President Corporate


Development











SUMMERVILLE SENIOR LIVING,
INC.,


a
Delaware corporation











By: /s/Eric
Mendelsohn


Name:                      Eric
Mendelsohn


Its:           Senior
Vice President Corporate


Development











SW ASSISTED LIVING, LLC


SUMMERVILLE
AT BARRINGTON COURT LLC


SUMMERVILLE AT ROSEVILLE GARDENS
LLC





Each of which entities is a Delaware
limited liabilitycompany





By:           Summerville
Senior Living, Inc., a Delaware


corporation, its Sole
Member











By: /s/Eric
Mendelsohn


Name:                      Eric
Mendelsohn


Its:           Senior
Vice President Corporate


Development





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SUMMERVILLE
5 LLC


SUMMERVILLE
14 LLC


SUMMERVILLE
15 LLC


SUMMERVILLE
16 LLC


SUMMERVILLE 17 LLC





Each of which entities is a Delaware
limited liabilitycompany





By:           Summerville
Investors, LLC, a Delaware limited


liability company, each of their Sole
Member





By:           Summerville
Senior Living, Inc.,


a Delaware corporation,


its Sole Member











By: /s/Eric
Mendelsohn


Name:                      Eric
Mendelsohn


Its:           Senior
Vice President Corporate


Development











SUMMERVILLE AT HERITAGE PLACE,
LLC,


a
Delaware limited liability company





By:           Summerville
at Cobbco, Inc.,


a California corporation,


its Sole Member











By: /s/ Eric Mendelsohn
______________


Name: Eric Mendelsohn


Title:
            Senior
      Vice President Corporate
Development




















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