**Exhibit
      10.67.12**




**PROMISSORY
        NOTE**
  $49,800,000.00
              August
                  15, 2007
  FOR
        VALUE
        RECEIVED, the eight (8) undersigned limited liability companies and limited
        partnerships, having an address at 3131 Elliott Avenue, Suite 500, Seattle,
        Washington 98121 (collectively, the **“Borrower”**), hereby jointly
        and severally promise to pay to the order of **CAPMARK FINANCE
        INC.**, a California corporation, having an address at 116 Welsh Road,
        P.
        O. Box 809, Horsham, PA 19044, together with its successors and assigns or,
        if
        this Note has then been endorsed “to bearer,” to the bearer of this Note
        (collectively the **“Lender”**), at Lender’s said address or at
        such other place or to such other person as may be designated in writing
        to
        Borrower by Lender, the principal sum of Forty-Nine Million Eight Hundred
        Thousand and No/100 Dollars ($49,800,000.00) (the **“Loan”**),
        together with interest on the unpaid balance thereof at the rate hereinafter
        set
        forth. Capitalized terms used herein without definition shall have the meaning
        given to such terms in the Loan Agreement (defined herein).
  ON
        THE
        TERMS AND SUBJECT TO THE CONDITIONS which are hereinafter set
        forth:
  Section
        1.                Interest
        Rate.
  1.1           Initial
        Note Rate.  Interest shall accrue on the outstanding principal
        balance of the Loan from and after the date hereof (“**Closing
        Date**”) at the rate of 7.31% per annum (“**Initial Note
        Rate**”).  If the Loan is funded on a date other than the first
        (1st) day of a calendar month, Borrower shall pay to Lender at the time of
        funding of the Loan an interest payment calculated by multiplying (i) the
        number
        of days from and including the Closing Date to (and including) the last day
        of
        the current month or by (ii) the Initial Note Rate calculated based on a
        360 day
        year and paid for the actual number of days elapsed for any whole or partial
        month in which interest is being calculated.
  1.2           Calculation
        Basis; Interest Accrual Period.  Interest on the outstanding
        principal balance of the Loan shall be calculated utilizing a 360 day year
        and
        paid for the actual number of days elapsed for any whole or partial month
        in
        which interest is being calculated.  The interest rate on the
        outstanding principal balance hereof from time to time shall be adjusted
        on the
        dates (each being a “**Rate Adjustment Date**”) described in this
        paragraph.  The first Rate Adjustment Date shall be September 1, 2007,
        and subsequent Rate Adjustment Dates shall fall on the first day of each
        subsequent one month anniversary thereafter.  The first payment
        adjustment date shall be October 1, 2007, and subsequent payment adjustment
        dates shall fall on the first day of each calendar month thereafter during
        the
        term of the Loan.  As used herein, “**Interest Accrual
        Period**” shall mean the period beginning on the 1st
        day of a month
        through the end of such month.
  1.3           Default
        Interest Rate.  If Borrower fails to make any payment of
        principal, interest or fees on the date on which such payment becomes due
        and
        payable whether at maturity or by acceleration, or if an Event of Default
        (as
        defined below) exists, the Note Rate then payable on the Loan shall immediately
        increase to the Note Rate plus five hundred (500) basis points (the
“**Default Rate**”) and shall continue to accrue at the Default
        Rate until full payment of all amounts then due is received or such Event
        of
        Default is cured or waived in writing by Lender.  Interest at the
        Default Rate shall also accrue on any judgment obtained by Lender in connection
        with collection of the Loan or enforcement of any obligations due under the
        Loan
        Documents until such judgment is paid in full.
  1
  1.4           Note
        Rate and Note Rate Adjustment Dates.  The **“Note
        Rate”** shall mean an interest rate which is the average of London
        Interbank Offered Rates (**“LIBOR”**), in U.S. dollar deposits, for
        a term of one month determined solely by Lender on each Note Rate Adjustment
        Date (defined below) plus one hundred seventy (170) basis points
        (“**Margin**”), which combined figure shall be rounded upwards to
        the nearest one-eighth percent (.125%).  On each Note Rate Adjustment
        Date, Lender will obtain the close-of-business LIBOR from “Page 3750” on the
        Telerate Service (or such other page as may replace Page 3750 on that service)
        on the Note Rate Adjustment Date.  If Telerate Service ceases
        publication or ceases to publish LIBOR, Lender shall select a comparable
        publication to determine the LIBOR and provide notice thereof to
        Borrower.  LIBOR may or may not be the lowest rate based upon the
        market for U.S. dollar deposits in the London Interbank Eurodollar Market
        at
        which Lender prices loans on the date on which LIBOR is determined by Lender
        as
        set forth above.  Adjustments to the Note Rate in connection with
        changes in LIBOR shall be made two (2) Business Days prior to the beginning
        of
        any Interest Accrual Period (each “**Note Rate Adjustment Date**”)
        except than the Initial Note Rate shall be determined two (2) Business Days
        prior to the Closing Date.
  1.5           Adjustments
        due to Calculation Errors.  This Note shall bear interest at the
        Initial Note Rate and Note Rate as determined in accordance with the provisions
        hereof; provided, however, that, if Lender at any time determines, in the
        sole
        but reasonable exercise of its discretion that it has miscalculated the amount
        of the monthly payment of principal and/or interest (whether because of a
        miscalculation of the Initial Note Rate, the Note Rate or otherwise), Lender
        shall give notice to Borrower of the corrected amount of such monthly payment
        (and the corrected amount of the Note Rate, if applicable) and (a) if the
        corrected amount of such monthly payment represents an increase thereof,
        Borrower shall, within ten (10) calendar days after the date of such notice,
        pay
        to Lender any sums that Borrower would have otherwise been obligated under
        this
        Note to pay to Lender had the amount of such monthly payment not been
        miscalculated or (b) if the corrected amount of such monthly payment represents
        a decrease thereof, and Borrower is not otherwise in breach or default under
        any
        of the terms and provisions of the Note, the Loan Agreement of even date
        herewith by and between Borrower and Lender (the “Loan Agreement”) or any of the
        other Loan Documents, Borrower shall, within ten (10) calendar days thereafter
        be paid the sums that Borrower would not have otherwise been obligated to
        pay to
        Lender had the amount of such monthly payment not been
        miscalculated.
  1.6           LIBOR
        Unascertainable.  Lender’s obligation to maintain interest based
        on LIBOR shall be suspended and the Note Rate shall be based on the Interest
        Rate Index (plus Margin) upon Lender’s determination, in good faith, that
        adequate and reasonable means do not exist for ascertaining LIBOR or that
        a
        contingency has occurred which materially and adversely affects the London
        Interbank Eurodollar Market at which Lender prices loans (which determination
        by
        Lender shall be conclusive and binding on Borrower in the absence of manifest
        error).  Computation of the Note Rate based on the Interest Rate Index
        shall continue until Lender determines that the circumstances giving rise
        to
        Lender’s substitution of the Interest Rate Index for LIBOR no longer exists and
        Lender shall promptly notify Borrower of such determination.  For
        purposes hereof “**Interest Rate Index**” shall mean the weekly
        average yield on United States Treasury Securities adjusted to a constant
        maturity of one year, as made available by the Federal Reserve Board forty-five
        (45) days prior to each Note Rate Adjustment Date.
  2
  1.7           Adjustment
        for Impositions on Loan Payments.  All payments made by Borrowers
        under this Note and the other Loan Documents (described in Section 8.1.1
        below)
        shall be made free and clear of, and without deduction or withholding for
        or on
        account of, any present or future income, stamp or other taxes, levies, imposts,
        duties, charges, fees, deductions or withholdings, and all liabilities with
        respect thereto, now or hereafter imposed, levied, collected, withheld or
        assessed by any governmental authority, excluding (i) income and franchise
        taxes
        of the United States of America or any political subdivision or taxing authority
        thereof or therein, (ii) taxes on the overall net income or overall gross
        receipts of Lender imposed as a result of a present or former connection
        between
        Lender and the jurisdiction of any Governmental Authority and (iii) any
        withholding taxes imposed by the United States of America, any state,
        commonwealth, protectorate territory or any political subdivision or taxing
        authority thereof or therein, in the event that Lender or any successor and/or
        assign of Lender, or the Person treated, for United States federal income
        tax
        purposes, as the owner of the assets of Lender or of any successor and/or
        assign
        of Lender if such Lender or such successor or assign of Lender is a disregarded
        entity for United States federal income tax purposes, is not organized under
        the
        laws of the United States of America or a state thereof and fails to establish
        an exemption from such withholding taxes (all such non-excluded taxes, levies,
        imposts, duties, charges, fees, deductions, withholdings and liabilities,
        collectively, "**Applicable Taxes**").  If Borrowers
        shall be required by law to deduct any Applicable Taxes from or in respect
        of
        any sum payable hereunder to Lender, the following shall apply: (i) Borrowers
        shall make all such required deductions and shall pay the full amount deducted
        to the relevant taxing authority or other authority in accordance with
        applicable law and (ii) the sum payable to Lender shall be increased in an
        amount determined by Lender in its sole discretion, as may be necessary so
        that
        after making all required deductions (including deductions applicable to
        additional sums payable under this Section 1.7), Lender receives an amount
        equal
        to the sum Lender would have received had no such deductions been
        made.  Payments made pursuant to this Section 1.7 shall be made within
        ten (10) Business Days after Lender makes written demand therefore.
  1.8           Increased
        Costs of Maintaining Interest.  Borrower shall pay to Lender all
        Funding Losses incurred from time to time by Lender upon
        demand.  Lender shall deliver to Borrower a statement for any such
        sums to which Lender is entitled to receive pursuant to this Section 1.8,
        which
        statement shall be binding and conclusive absent manifest
        error.  Payment of Funding Losses hereunder shall be in addition to
        any obligation to pay any other fee in circumstances where such fee(s) would
        be
        due and owing under the Loan Documents.  For purposes hereof,
“**Funding Losses**” shall mean the reduction of any amounts
        received or receivable from Borrower, in either case, due to the introduction
        of, or any change in, law or applicable regulation or treaty (including the
        administration or interpretation thereof), whether or not having the force
        of
        law, or due to the compliance by Lender with any directive, whether or not
        having the force of law, or request from any central bank or domestic or
        foreign
        governmental authority.
  3
  1.9           Acceleration.  Notwithstanding
        anything to the contrary contained herein, if Borrower is prohibited by law
        from
        paying any amount due to Lender under Section 1.7 or Section 1.8 hereof,
        Lender
        may elect to declare the unpaid principal balance of the Loan, together with
        all
        unpaid interest accrued thereon and any other amounts due hereunder, due
        and
        payable within one hundred twenty (120) days of Lender’s written notice to
        Borrower and no exit or other prepayment fee shall be due in such
        event.  Lender’s delay or failure in accelerating the Loan upon the
        discovery or occurrence of an event under Section 1.7 or Section 1.8 shall
        not
        be deemed a waiver or estoppel against the exercise of such right.
  
 Section
        2.                Note
        Payments and Prepayment Rights.
  2.1           Note
        Payments and Payment Dates.  Commencing on the 1st day
        of October,
        2007, and continuing on the first (1st) day of each successive month thereafter,
        provided that, if the first (1st) day of any month is not a Business Day,
        such
        payment shall be due and payable on the immediately preceding Business Day
        (each
        being a “**Payment Date**”), through and including the Payment Date
        immediately prior to the Maturity Date**,**Borrower shall make
        twenty-three (23) consecutive monthly payments of interest only at the Note
        Rate
        (determined as of the immediately preceding Note Rate Payment Adjustment
        Date)
        based upon the principal outstanding during the Interest Accrual Period in
        which
        the applicable Payment Date occurs, and any other amounts due under the Loan
        Documents.
  2.2           Prepayments.  Borrower
        has the right to prepay all or any part of the Loan prior to the Maturity
        Date
        except as otherwise provided below.  Borrower may only prepay the Loan
        in whole or in part (provided each such partial prepayment is in an amount
        not
        less than the sum of $100,000.00, unless such prepayment is the final principal
        due under this Note or related to an “Allocated Loan Amount” (as such term is
        defined in the Loan Agreement) on any date after the Closing Date so long
        as
        each of the following conditions are satisfied:
  (A)
              Borrower
                  provides written notice to Lender of its intent to prepay not more
                  than
                  sixty (60) days and not less than thirty (30) days prior to the
                  intended
                  prepayment date.
  (B)
              Borrower
                  pays with such prepayment all accrued and unpaid interest and all
                  other
                  outstanding amounts then due and unpaid under the Loan Agreement
                  and the
                  other Loan Documents.
  (C)
              Borrower
                  pays with such prepayment all costs and expenses incurred by Lender
                  in
                  connection with such prepayment and any other costs and expenses
                  due and
                  payable by Borrower under the Loan
                  Documents.
  4
 (D)
              No
                  Event of Default exists as of the date Borrower delivers notice
                  of intent
                  to prepay and as of the date such prepayment is
                  made.
  2.3           Payment
        Debit Account.  During the term of the Loan, Borrower shall
        establish and maintain a deposit account (the “Payment Debit Account”) with a
        bank or financial institution acceptable to Lender and authorize such bank
        or
        financial institution to permit Lender to debit the Payment Debit Account
        from
        time to time without limitation and without further notice, consent or
        instructions from Borrower. In the absence of an Event of Default, Lender
        shall
        make transfers from the Payment Debit Account only for payment of principal,
        interest and deposits to reserves and escrows due from Borrower on a Payment
        Date under the Note, the Loan Agreement or any of the other Loan Documents.
        Borrower solely will be responsible for maintaining funds in the Payment
        Debit
        Account which are sufficient to pay the aggregate amounts due under the Loan
        Documents on each Payment Date. If sufficient funds are not available in
        the
        Payment Debit Account to make the full payment when due, Lender shall not
        be
        required to notify Borrower or demand that Borrower pay the deficiency prior
        to
        declaring an Event of Default. Debits made by Lender from the Payment Debit
        Account for less than the full monthly payment amount will not release Borrower
        from Borrower's obligations to pay the full amount due nor be deemed a waiver
        of
        Lender's right to collect the full payment amount or to declare an Event
        of
        Default.  Debits made by Lender from the Payment Debit Account
        following the occurrence of any Event of Default under the Loan Documents
        will
        not be deemed a waiver of that default by Lender or otherwise prejudice,
        in any
        manner, Lender's rights or remedies with respect thereto. Lender will have
        the
        right, upon reasonable prior notice to Borrower, to discontinue debiting
        payments from the Payment Debit Account for the purposes set forth herein
        and,
        if at any time such debiting has been discontinued, to reinstate the requirement
        that Borrower maintain a Payment Debit Account in accordance with the terms of
        this Note.  Borrower will not be permitted to close, or permit the
        Payment Debit Account to be closed, without Lender's prior written consent
        unless the Loan has been satisfied in full.  To the extent there are
        any inconsistencies between this Section 2.3 and any lockbox, deposit account
        or
        other cash management agreement executed by Borrower in connection with the
        Loan, the terms of such lockbox, deposit account or other cash management
        agreement, as applicable, shall govern and control.
  Section
        3.               Application
        of Payments.  Payments made by Borrower on account hereof shall be
        applied, first, toward any Late Fees (defined in Section 8.3 below) or other
        fees and charges due hereunder, second, toward payment of any interest due
        at
        the Default Rate, third, toward payment of any interest due at the then
        applicable Note Rate set forth in Section 1.4 above, and fourth, toward payment
        of principal.  Notwithstanding the foregoing, if any advances made by
        Lender under the terms of any instruments securing this Note have not been
        repaid, any payments made may, at the option of Lender, be applied, first,
        to
        repay such advances and interest thereon, with the balance, if any, applied
        as
        set forth in the preceding sentence.
  Section
        4.               Maturity
        Date.  Anything in this Note to the contrary notwithstanding
        (excluding Section 4.1 below), the entire unpaid balance of the principal
        amount
        hereof and all interest accrued thereon through the end of the current Interest
        Accrual Period and including interest accruing at the Default Rate, to and
        including the Maturity Date (as defined below) together with all fees, costs
        and
        amounts due and payable under the Loan Documents shall, unless sooner paid,
        and
        except to the extent that payment thereof is sooner accelerated, be and become
        due and payable on September 1, 2009 (the **“Maturity Date”**);
        provided that if the first (1st) day of that month is not a Business Day,
        such
        payment shall be due and payable on the immediately preceding Business
        Day.
  5
  4.1           Extension
        of Maturity Date.  Upon Borrower’s written request, the Maturity
        Date of this Note may be extended to September 1, 2010 (the “Extended Maturity
        Date”), upon satisfaction of the conditions set forth herein, and in such event,
        all references to the Maturity Date in this Note and the other Loan Documents
        shall be deemed to mean the Extended Maturity Date.  Lender shall
        grant the extension, provided that as of August 15, 2009 (a) no Default (as
        defined below) or Event of Default has occurred and is continuing, (b) the
        Management Agreement is in full force and effect, and (c) the Debt Service
        Coverage Ratio (as defined in the Loan Agreement) is at least 1.0 to
        1.0.  If the Debt Service Coverage Ratio is less than 1.0 to 1.0,
        Borrower, in order to extend the Maturity Date, shall be required to make
        a
        principal payment on this Note in an amount that would cause the Debt Service
        Coverage Ratio to be met.  For purposes of this Note, “Default” shall
        mean the occurrence or existence of any event which, but for the giving of
        notice or expiration of time or both, would constitute an Event of
        Default.  If the Maturity Date is extended as provided herein, the
        entire unpaid principal balance hereof and all interest accrued thereon
        (including interest accruing at the Default Rate), and all Late Fees shall,
        unless sooner paid, and except to the extent that payment thereof is sooner
        accelerated, be and become due and payable on the Extended Maturity
        Date.  If the Maturity Date is extended until the Extended Maturity
        Date, interest shall continue to be paid monthly at the Note Rate, commencing
        on
        the Maturity Date through August 1, 2010, and no payments of principal shall
        be
        due and payable until the Extended Maturity Date except to the extent payment
        thereof is sooner accelerated.
 
 Section
        5.                Intentionally
        Deleted.
  Section
        6.               Delivery
        of Payments.  All payments due to Lender under the Loan Documents
        are to be paid in lawful tender of the United States of America, in immediately
        available funds, directly to Lender at Lender’s office located at 116 Welsh
        Road, P.O. Box 809, Horsham, Pennsylvania 19044, Attn: Servicing - Accounting
        Manager, or at such other place as Lender may designate to Borrower in writing
        from time to time.  All amounts due under the Loan Documents shall be
        paid without setoff, counterclaim or any other deduction
        whatsoever.  No payment due under this Note or any of the other Loan
        Documents shall be deemed paid to Lender until received by Lender at its
        designated office on a Business Day prior to 2:00 p.m. Eastern Standard Time.
        Any payment received after the time established by the preceding sentence
        shall
        be deemed to have been paid on the immediately following Business
        Day.  Each payment that is paid to Lender within ten (10) days prior
        to the date on which such payment is due, and prior to its scheduled Payment
        Date, shall not be deemed a prepayment and shall be deemed to have been received
        on the Payment Date solely for the purpose of calculating interest
        due.  If any payment received by Lender is deemed by a court of
        competent jurisdiction to be a voidable preference or fraudulent conveyance
        under any bankruptcy, insolvency or other debtor relief law, and is required
        to
        be returned by Lender, then the obligation to make such payment shall be
        reinstated, notwithstanding that the Note may have been marked satisfied
        and
        returned to Borrower or otherwise canceled, and such payment shall be
        immediately due and payable upon demand.
  6
  Section
        7.                Security.
  The
        debt
        evidenced by this Note is to be secured by, among other things, (a) eight
        (8) separate mortgages and deeds of trusts (collectively, the
**“Mortgage”**) by each Borrower, for the benefit of Lender, and
        (b) a Payment and Performance Guaranty Agreement****of
        even date herewith (the**“Guaranty Agreement”**), given by Emeritus
        Corporation (the **“Guarantor”**), for the benefit of
        Lender.
  Section
        8.                Default.
  8.1           Events
        of Default.  Anything in this Note to the contrary
        notwithstanding, on the occurrence of any of the following events (each of
        which
        is referred to herein, together with each of the Events of Default defined
        and
        described in the Loan Agreement and the Mortgage as an **“Event of
        Default”**), Lender may, in the exercise of its sole and absolute
        discretion, accelerate the debt evidenced by this Note, in which event the
        entire outstanding principal balance and all interest and fees accrued thereon
        shall immediately be and become due and payable without further
        notice:
  8.1.1                 Failure
        to Pay or Perform.  If (a) any payment of principal and interest
        is not paid in full on or before the Payment Date on which such payment is
        due,
        (b) if unpaid principal, accrued but unpaid interest and all other amounts
        outstanding under the Loan Documents are not paid in full on or before the
        Maturity Date or (c) there exists an uncured default under any of the Loan
        Documents which has been executed by Borrower and/or Guarantor and/or Manager,
        and such default is not cured within the grace or cure period, if any, provided
        in any of such Loan Documents.
  8.1.2                 Bankruptcy.
  (a)           If
        Borrower or Guarantor or Manager**** (i) applies for or
        consents to the appointment of a receiver, trustee or liquidator of Borrower
        or
        Guarantor or Manager, as the case may be, or of all or a substantial part
        of its
        assets, (ii) files a voluntary petition in bankruptcy, or admits in writing
        its
        inability to pay its debts as they come due, (iii) makes an assignment for
        the
        benefit of creditors, (iv) files a petition or an answer seeking a
        reorganization or an arrangement with creditors or seeking to take advantage
        of
        any insolvency law, (v) performs any other act of bankruptcy, or (vi) files
        an
        answer admitting the material allegations of a petition filed against Borrower
        or Guarantor****or Manager in any bankruptcy, reorganization
        or insolvency proceeding; or
  (b)           if
        (i) an order, judgment or decree is entered by any court of competent
        jurisdiction adjudicating Borrower or Guarantor or Manager a bankrupt or
        an
        insolvent, or approving a receiver, trustee or liquidator of Borrower or
        Guarantor or Manager or of all or a substantial part of its assets, or (ii)
        there otherwise commences with respect to Borrower or Guarantor or Manager
        or
        any of its assets any proceeding under any bankruptcy, reorganization,
        arrangement, insolvency, readjustment, receivership or like law or statute,
        and
        if such order, judgment, decree or proceeding continues unstayed for any
        period
        of sixty (60) consecutive days after the expiration of any stay
        thereof.
  7
  8.1.3                 Judgments.  If
        any judgment for the payment of money in excess of $250,000.00 hereafter
        awarded
        against Borrower or Guarantor or Manager by any court of competent jurisdiction
        remains unsatisfied or otherwise in force and effect for a period of thirty
        (30)
        days after the date of such award.
  8.2           No
        Impairment of Rights.  Nothing in this Section shall be deemed in
        any way to alter or impair any right which Lender has under this Note or
        the
        Mortgage, or any other Loan Documents, or at law or in equity, to accelerate
        such debt on the occurrence of any other Event of Default provided herein
        or
        therein, whether or not relating to this Note.
  8.3           Late
        Fees.  Without limiting the generality of the foregoing provisions
        of this Section, if any payment due on a Payment Date is not received in
        full on
        or before the Payment Date, other than the payment of the outstanding principal
        payment of the Loan due on the Maturity Date, Borrower shall pay to Lender,
        immediately and without demand, a late payment charge, for each month during
        which such payment delinquency exists, equal to five percent (5%) of such
        amount
        (**“Late Fees”**) to defray the expenses incurred by Lender in
        handling and processing such delinquent payment and to compensate Lender
        for the
        loss of use of such delinquent payment.
  Section
        9.               Costs
        of Enforcement.  Borrower shall pay to Lender on demand the amount
        of any and all expenses incurred by Lender (a) in enforcing its rights hereunder
        or under the Mortgage and/or the Loan Documents, (b) as the result of the
        occurrence of an Event of Default by Borrower in performing its obligations
        under this Note, including but not limited to the expense of collecting any
        amount owed hereunder, and of any and all attorneys’ fees incurred by Lender in
        connection with such default, whether suit be brought or not, and (c) in
        protecting the security for the Loan and Borrower’s obligations under the Loan
        Documents.  Such expenses shall be added to the principal amount
        hereof, shall be secured by the Mortgage and shall accrue interest at the
        Default Rate.
  Section
        10.             Borrower’s
        Waiver of Certain Rights.  Borrower and any endorser, guarantor or
        surety hereby waives the exercise of any and all exemption rights which it
        holds
        at law or in equity with respect to the debt evidenced by this Note, and
        of any
        and all rights which it holds at law or in equity to require any valuation,
        appraisal or marshalling, or to have or receive any presentment, protest,
        demand
        and notice of dishonor, protest, demand and nonpayment as a condition to
        Lender’s exercise of any of its rights under this Note or the Loan
        Documents.
  Section
        11.             Extensions.  The
        Maturity Date and/or any other date by which any payment is required to be
        made
        hereunder may be extended by Lender, in writing, from time to time in the
        exercise of its sole discretion, without in any way altering or impairing
        Borrower’s or Guarantor’s liability hereunder.
  8
  Section
        12.              General.
  12.1           Applicable
        Law.  This Note shall be given effect and construed by application
        of the laws of the State of Illinois (without regard to the principles thereof
        governing conflicts of laws), and any action or proceeding arising hereunder,
        and each of Lender and Borrower submits (and waives all rights to object)
        to
        non-exclusive personal jurisdiction in the State of Illinois, for the
        enforcement of any and all obligations under the Loan Documents except that
        if
        any such action or proceeding arises under the Constitution, laws or treaties
        of
        the United States of America, or if there is a diversity of citizenship between
        the parties thereto, so that it is to be brought in a United States District
        Court, it shall be brought in Cook County, Illinois, in the United States
        District Court for the Northern District of Illinois or any successor federal
        court having original jurisdiction.
  12.2           Headings.  The
        headings of the Sections, subsections, paragraphs and subparagraphs hereof
        are
        provided herein for and only for convenience of reference, and shall not
        be
        considered in construing their contents.
  12.3           Construction.  As
        used herein, (a) the term **“person”** means a natural person, a
        trustee, a corporation, a limited liability company, a partnership and any
        other
        form of legal entity, and (b) all references made (i) in the neuter, masculine
        or feminine gender shall be deemed to have been made in all such genders,
        (ii)
        in the singular or plural number shall be deemed to have been made,
        respectively, in the plural or singular number as well, and (iii) to any
        Section, subsection, paragraph or subparagraph shall, unless therein expressly
        indicated to the contrary, be deemed to have been made to such Section,
        subsection, paragraph or subparagraph of this Note.
  12.4           Severability.  No
        determination by any court, governmental body or otherwise that any provision
        of
        this Note or any amendment hereof is invalid or unenforceable in any instance
        shall affect the validity or enforceability of (a) any other such provision
        or
        (b) such provision in any circumstance not controlled by such
        determination.  Each such provision shall be valid and enforceable to
        the fullest extent allowed by, and shall be construed wherever possible as
        being
        consistent with, applicable law.
  12.5           No
        Waiver.  Lender shall not be deemed to have waived the exercise of
        any right which it holds hereunder unless such waiver is made expressly and
        in
        writing.  No delay or omission by Lender in exercising any such right
        (and no allowance by Lender to Borrower of an opportunity to cure a default
        in
        performing its obligations hereunder) shall be deemed a waiver of its future
        exercise.  No such waiver made as to any instance involving the
        exercise of any such right shall be deemed a waiver as to any other such
        instance, or any other such right.  Further, acceptance by Lender of
        all or any portion of any sum payable under, or partial performance of any
        covenant of, this Note, the Mortgage or any of the other Loan Documents,
        whether
        before, on, or after the due date of such payment or performance, shall not
        be a
        waiver of Lender’s right either to require prompt and full payment and
        performance when due of all other sums payable or obligations due thereunder
        or
        hereunder or to exercise any of Lender’s rights and remedies hereunder or
        thereunder.
  9
  12.6           Waiver
        of Jury Trial; Service of Process; Court Costs.  **BORROWER
        HEREBY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH BORROWER
        AND
        LENDER MAY BE PARTIES ARISING OUT OF, IN CONNECTION WITH, OR IN ANY WAY
        PERTAINING TO, THIS NOTE AND/OR ANY OF THE OTHER LOAN DOCUMENTS.  IT
        IS AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY
        JURY
        OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING
        CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS NOTE.  THIS WAIVER
        IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY BORROWER, UPON CONSULTATION
        WITH
        COUNSEL OF BORROWER’S CHOICE, AND BORROWER HEREBY REPRESENTS THAT NO
        REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE
        THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS
        EFFECT.  BORROWER FURTHER REPRESENTS AND WARRANTS THAT IT HAS BEEN
        REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS WAIVER
        BY
        INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED BY
        INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS
        HAD THE
        OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.  BORROWER HEREBY
        IRREVOCABLY DESIGNATES ERIC MENDELSOHN, AND HIS/HER SUCCESSORS IN OFFICE,
        AS THE
        TRUE AND LAWFUL ATTORNEY OF BORROWER FOR THE PURPOSE OF RECEIVING SERVICE
        OF ALL
        LEGAL NOTICES AND PROCESS ISSUED BY ANY COURT IN THE STATE OF WASHINGTON
        AS WELL
        AS SERVICE OF ALL PLEADINGS AND OTHER DOCUMENTS RELATED TO ANY LEGAL PROCEEDING
        OR ACTION ARISING OUT OF THIS NOTE. BORROWER AGREES THAT SERVICE UPON SAID
        ERIC
        MENDELSOHN SHALL BE VALID REGARDLESS OF BORROWER’S WHEREABOUTS AT THE TIME OF
        SUCH SERVICE AND REGARDLESS OF WHETHER BORROWER RECEIVES A COPY OF SUCH SERVICE,
        PROVIDED THAT LENDER SHALL HAVE MAILED A COPY TO BORROWER IN ACCORDANCE WITH
        THE
        NOTICE PROVISIONS HEREIN.  BORROWER AGREES TO PAY ALL COURT COSTS AND
        REASONABLE ATTORNEY’S FEES INCURRED BY LENDER IN CONNECTION WITH ENFORCING ANY
        PROVISION OF THIS NOTE.  NOTWITHSTANDING THE FOREGOING, LENDER AGREES
        TO USE REASONABLE EFFORTS TO PROVIDE BORROWER WITH NOTICE OF THE FILING OF
        ANY
        LAWSUIT BY LENDER AGAINST BORROWER.**
  12.7           Offset.  Upon
        the occurrence of an Event of Default, Lender may set-off against any principal
        and interest owing hereunder, any and all credits, money, stocks, bonds or
        other
        security or property of any nature whatsoever on deposit with, or held by,
        or in
        the possession of, Lender, to the credit of or for the account of Borrower,
        without notice to or consent of Borrower or Guarantor.
  12.8           Non-Exclusivity
        of Rights and Remedies.  None of the rights and remedies herein
        conferred upon or reserved to Lender is intended to be exclusive of any other
        right or remedy contained herein or in any of the other Loan Documents and
        each
        and every such right and remedy shall be cumulative and concurrent, and may
        be
        enforced separately, successively or together, and may be exercised from
        time to
        time as often as may be deemed necessary or desirable by Lender.
  10
  12.9           Incorporation
        by Reference.  All of the agreements, conditions, covenants and
        provisions contained in each of the Loan Documents are hereby made a part
        of
        this Note to the same extent and with the same force and effect as if they
        were
        fully set forth herein.  Borrower covenants and agrees to keep and
        perform, or cause to be kept and performed, all such agreements, conditions,
        covenants and provisions strictly in accordance with their terms.
  12.10         Joint
        and Several Liability.  If Borrower consists of more than one
        person and/or entity, each such person and/or entity agrees that its liability
        hereunder is joint and several.
  12.11         Business
        Purpose.  Borrower represents and warrants that the Loan evidenced
        by this Note is being obtained solely for the purpose of acquiring or carrying
        on a business, professional or commercial activity and is not for personal,
        agricultural, family or household purposes.
  12.12         Interest
        Limitation.  Notwithstanding anything to the contrary contained
        herein or in the Mortgage or in any other of the Loan Documents, the effective
        rate of interest on the obligation evidenced by this Note shall not exceed
        the
        lawful maximum rate of interest permitted to be paid.  Without
        limiting the generality of the foregoing, in the event that the interest
        charged
        hereunder results in an effective rate of interest higher than that lawfully
        permitted to be paid, then such charges shall be reduced by the sum sufficient
        to result in an effective rate of interest permitted and any amount which
        would
        exceed the highest lawful rate already received and held by Lender shall
        be
        applied to a reduction of principal and not to the payment of
        interest.  Borrower agrees that for the purpose of determining highest
        rate permitted by law, any non-principal payment (including, without limitation,
        Late Fees and other fees) shall be deemed, to the extent permitted by law,
        to be
        an expense, fee or premium rather than interest.
  12.13         Modification.  This
        Note may be modified, amended, discharged or waived only by an agreement
        in
        writing signed by the party against whom enforcement of such modification,
        amendment, discharge or waiver is sought.
  12.14         Time
        of the Essence.  Time is strictly of the essence of this
        Note.
  12.15         Negotiable
        Instrument.  Borrower agrees that this Note shall be deemed a
        negotiable instrument, even though this Note may not otherwise qualify, under
        applicable law, absent this paragraph, as a negotiable instrument.
  12.16         Interest
        Rate after Judgment.  If judgment is entered against Borrower on
        this Note, the amount of the judgment entered (which may include principal,
        interest, fees, Late Fees and costs) shall bear interest at the Default Rate,
        to
        be determined on the date of the entry of the judgment.
  12.17         Relationship.  Borrower
        and Lender intend that the relationship between them shall be solely that
        of
        creditor and debtor.  Nothing contained in this Note or in any of the
        other Loan Documents shall be deemed or construed to create a partnership,
        tenancy-in-common, joint tenancy, joint venture or co-ownership by or between
        Borrower and Lender.
  11
  12.18         **Waiver
        of Automatic Stay****.  BORROWER HEREBY AGREES THAT,
        IN CONSIDERATION OF LENDER’S AGREEMENT TO MAKE THE LOAN AND IN RECOGNITION THAT
        THE FOLLOWING COVENANT IS A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN,
        IN
        THE EVENT THAT  BORROWER SHALL (A) FILE WITH ANY BANKRUPTCY COURT OF
        COMPETENT JURISDICTION OR BE THE SUBJECT OF ANY PETITION UNDER ANY SECTION
        OR
        CHAPTER OF TITLE 11 OF THE UNITED STATES CODE, AS AMENDED (THE
“****BANKRUPTCY CODE****”), OR SIMILAR LAW OR
        STATUTE; (B) BE THE SUBJECT OF ANY ORDER FOR RELIEF ISSUED UNDER THE BANKRUPTCY
        CODE OR SIMILAR LAW OR STATUTE; (C) FILE OR BE THE SUBJECT OF ANY PETITION
        SEEKING ANY REORGANIZATION, ARRANGEMENT, COMPOSITION, READJUSTMENT, LIQUIDATION,
        DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR FUTURE FEDERAL OR STATE
        ACT
        OR LAW RELATING TO BANKRUPTCY, INSOLVENCY, OR OTHER RELIEF FOR DEBTORS; (D)
        HAVE
        SOUGHT OR CONSENTED TO OR ACQUIESCED IN THE APPOINTMENT OF ANY TRUSTEE,
        RECEIVER, CONSERVATOR, OR LIQUIDATOR; OR (E) BE THE SUBJECT OF AN ORDER,
        JUDGMENT OR DECREE ENTERED BY ANY COURT OF COMPETENT JURISDICTION APPROVING
        A
        PETITION FILED AGAINST ANY BORROWER FOR ANY REORGANIZATION, ARRANGEMENT,
        COMPOSITION, READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF UNDER
        ANY
        PRESENT OR FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO BANKRUPTCY, INSOLVENCY
        OR RELIEF FOR DEBTORS, THEN, TO THE EXTENT PERMITTED BY APPLICABLE LAW AND
        SUBJECT TO COURT APPROVAL, LENDER SHALL THEREUPON BE ENTITLED, AND BORROWER
        HEREBY IRREVOCABLY CONSENTS TO, AND WILL NOT CONTEST, AND AGREES TO STIPULATE
        TO, RELIEF FROM ANY AUTOMATIC STAY OR OTHER INJUNCTION IMPOSED BY SECTION
        362 OF
        THE BANKRUPTCY CODE OR SIMILAR LAW OR STATUTE (INCLUDING, WITHOUT LIMITATION,
        RELIEF FROM ANY EXCLUSIVE PERIOD SET FORTH IN SECTION 1121 OF THE BANKRUPTCY
        CODE) OR OTHERWISE, ON OR AGAINST THE EXERCISE OF THE RIGHTS AND REMEDIES
        OTHERWISE AVAILABLE TO LENDER AS PROVIDED IN THE LOAN DOCUMENTS, AND AS
        OTHERWISE PROVIDED BY LAW, AND BORROWER HEREBY IRREVOCABLY WAIVES ITS RIGHTS
        TO
        OBJECT TO SUCH RELIEF.**
  12.19        
        “Business Day”.  Any reference to the term Business Day
        in this Note shall mean any day other than a Saturday, a Sunday, or days
        when
        Federal Banks located in the State of New York or Commonwealth of Pennsylvania
        are closed for a legal holiday or by government directive. When used with
        respect to the Note Rate Adjustment Date, “Business Day” shall mean a day upon
        which United States dollar deposits may be dealt in on the London and New
        York
        City interbank markets and commercial banks and foreign exchange markets
        are
        open in London and New York City.
  12
  12.20         Successors
        and Assigns Bound. The obligations set forth in this Note shall be binding
        upon each Borrower and its successors and assigns.
  IN
        WITNESS WHEREOF, each Borrower has duly executed and delivered this Note,
        or
        caused it to be duly executed and delivered on its behalf by its duly authorized
        representatives, on the day and year first above written.
 
 [REMAINDER
        OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
  (SIGNATURE
        PAGES ARE ATTACHED)
  13
  In
        Witness Whereof, each Borrower has duly executed and delivered this note,
        or
        caused it to be duly executed and delivered on its behalf by its duly authorized
        representatives, on the day and year first above written.
  BORROWER:EMERICHIP
                  STOCKTON  LLC,a
                  Delaware limited liability companyBy:
              EMERITUS
                  CORPORATION,a
                  Washington corporationits
                  Sole MemberBy:
              /s/
                  Eric MendelsohnEric
                  Mendelsohn,Director
                  of Real Estate and Legal Affairs
  14
  In
        Witness Whereof, each Borrower has duly executed and delivered this note,
        or
        caused it to be duly executed and delivered on its behalf by its duly authorized
        representatives, on the day and year first above written.
  BORROWER:EMERICHIP
                  DOVER  LLC,a
                  Delaware limited liability companyBy:
              EMERITUS
                  CORPORATION,a
                  Washington corporationits
                  Sole MemberBy:
              /s/
                  Eric MendelsohnEric
                  Mendelsohn,Director
                  of Real Estate and Legal Affairs
  15
  In
        Witness Whereof, each Borrower has duly executed and delivered this note,
        or
        caused it to be duly executed and delivered on its behalf by its duly authorized
        representatives, on the day and year first above written.
  BORROWER:EMERICHIP
                  NEW PORT RICHEY  LLC,a
                  Delaware limited liability companyBy:
              EMERITUS
                  CORPORATION,a
                  Washington corporationits
                  Sole MemberBy:
              /s/
                  Eric MendelsohnEric
                  Mendelsohn,Director
                  of Real Estate and Legal Affairs
  16
  In
        Witness Whereof, each Borrower has duly executed and delivered this note,
        or
        caused it to be duly executed and delivered on its behalf by its duly authorized
        representatives, on the day and year first above written.
  BORROWER:EMERICHIP
                  VENICE  LLC,a
                  Delaware limited liability companyBy:
              EMERITUS
                  CORPORATION,a
                  Washington corporationits
                  Sole MemberBy:
              /s/
                  Eric MendelsohnEric
                  Mendelsohn,Director
                  of Real Estate and Legal Affairs
  17
 BORROWER:EMERICHIP
                  ALTAMONTE  LLC,a
                  Delaware limited liability companyBy:
              EMERITUS
                  CORPORATION,a
                  Washington corporationits
                  Sole MemberBy:
              /s/
                  Eric MendelsohnEric
                  Mendelsohn,Director
                  of Real Estate and Legal Affairs
 
 18
 
 BORROWER:EMERICHIP
                  DALLAS  LP,a
                  Delaware limited partnershipBy:
              Emerichip
                  Texas LLC,,a
                  Delaware limited liability companyits
                  General PartnerBy:
              ESC
                  GP II Inc.,a
                  Washington corporationits
                  Sole MemberBy:
              /s/
                  Eric MendelsohnEric
                  Mendelsohn,Director
                  of Real Estate and Legal Affairs
  19
  BORROWER:EMERICHIP
                  EL PASO  LP,a
                  Delaware limited partnershipBy:
              Emerichip
                  Texas LLC,,a
                  Delaware limited liability companyits
                  General PartnerBy:
              ESC
                  GP II Inc.,a
                  Washington corporationits
                  Sole MemberBy:
              /s/
                  Eric MendelsohnEric
                  Mendelsohn,Director
                  of Real Estate and Legal Affairs
  20
  BORROWER:EMERICHIP
                  CAMBRIA  LP,a
                  Delaware limited partnershipBy:
              Emerichip
                  Texas LLC,,a
                  Delaware limited liability companyits
                  General PartnerESC
                  GP II Inc.,By:
              a
                  Washington corporationits
                  Sole MemberBy:
              /s/
                  Eric MendelsohnEric
                  Mendelsohn,Director
                  of Real Estate and Legal Affairs
  21