NOTE





$50,000,000.00                                                                June 30,
2008


Seattle,
Washington








FOR VALUE RECEIVED, EMERITUS CORPORATION, a
corporation organized under the laws of the State of Washington (“Borrower”),
shall pay to the order of HEALTH CARE REIT, INC., a
corporation organized under the laws of the State of Delaware (“Lender”), the
principal sum of Fifty Million and 00/100 Dollars ($50,000,000.00), or so much
thereof as shall have been advanced to Borrower, with interest on so much
thereof as shall from time to time be outstanding at the rate of interest set
forth below, until fully paid.




1.  Definitions.




“Asset Purchase Agreement” means that
certain agreement between Lender, as seller, and Borrower, as buyer, dated as of
June 9, 2008.




“Business Day” means any day which is
not a Saturday or Sunday or a public holiday under the laws of the United States
of America or the State of Ohio or a day which national banking institutions are
not open.




“Closing Date” means the date of this
note.




“Collateral Document” means the Master
Lease 1 Mortgage, the Master Lease 2 Mortgage, the Master
Lease 1, the Master Lease 2, or any other document providing security
for or guarantee of repayment of this note.




“Commencement Date” means [i] the
Closing Date if the Closing Date occurs on the first day of a month or
[ii] the first day of the month after the Closing Date if the Closing Date
occurs on any day other than the first day of the month.




“Commitment Fee” means the commitment
fee payable to Lender in an amount equal to 1% of the Loan Amount.




“Default Rate” means
18.50%.




“Event of Default” has the meaning set
forth in §8.




“Increaser” means .25%.




“Initial Rate” means a rate equal to
8%.




“Interest Rate” means [i] the
Initial Rate from after the Closing Date and for 12 months after the
Commencement Date, and [ii] commencing on the first anniversary of the
Commencement Date and each anniversary of the Commencement Date thereafter, the
Interest Rate shall increase by adding the Increaser to the then current
Interest Rate.




1


“Loan” means the loan from Lender to
Borrower in the Loan Amount.




“Loan Amount” means
$50,000,000.00.




“Master Lease 1” means that
certain Amended and Restated Master Lease Agreement between Lender and certain
affiliates of Lender, as landlord, and Borrower, as tenant, dated as of
September 30, 2003, as amended.




“Master Lease 1 Mortgage” means
the Leasehold Mortgage/Deed of Trust, Security Agreement, Assignment of Leases
and Rents, Financing Statement and Fixture Filing, which will be made by
Borrower in favor of Lender to secure repayment of this note as of the Effective
Date of the Master Lease 1 Mortgage (as such date is defined therein) and
which is secured by, among other things, the Leasehold estate of Borrower
arising under Master Lease 1.




“Master Lease 2” means that
certain Master Lease Agreement between Lender and certain affiliates of Lender,
as landlord, and Borrower, as tenant, dated as of September 30,
2004.




“Master Lease 2 Mortgage” means
the Leasehold Mortgage/Deed of Trust, Security Agreement, Assignment of Leases
and Rents, Financing Statement and Fixture Filing, which is made by Borrower in
favor of Lender to secure repayment of this note as of the Effective Date of the
Master Lease 2 Mortgage (as such date is defined therein), and which is
secured by, among other things, the leasehold interest of Borrower arising under
Master Lease 2.




“Maturity Date” means the third
anniversary of the Commencement Date.




“State” means the State of
Ohio.




“Term” means the period commencing on
the Closing Date and ending on the Maturity Date.




2.  Interest
Rate.




(a)  Initial
Rate.  Interest shall accrue on the principal amount
outstanding from time to time after the Closing Date until the Maturity Date at
the Interest Rate.




(b)  Post-Maturity
Rate.  If the outstanding balance of this note has not been
paid in full by the Maturity Date, interest on this note shall accrue at the
Default Rate.




(c)  Default
Rate.  After the occurrence and during the continuance of an
Event of Default, Borrower shall pay interest on this note, and on any judgment
on this note, at the Default Rate.




(d)  Computation
Method.  All interest rates shall be calculated based on the
actual number of days elapsed over a 360-day year
(365/360 method).




2


3.  Payments.  Borrower
shall make payments in arrears in accordance with the following:




(a)  On the
Commencement Date and on the first day of each consecutive month thereafter,
Borrower shall pay to Lender accrued interest on this note at the then current
Interest Rate.  If the Closing Date occurs on the first day of a
month, no payment of interest is due on the Closing Date.




(b)  On the
Maturity Date or upon prepayment of this note in full, Borrower shall pay the
outstanding balance of this note, including the outstanding principal balance,
all accrued and unpaid interest and all charges, expenses and other amounts
payable by Borrower to Lender hereunder or under the Master Lease 1
Mortgage or the Master Lease 2 Mortgage.




(c)  On the
Closing Date, Borrower shall pay to Lender the Commitment Fee.




(d)  In the
event that the Lender sells, assigns, transfers, negotiates, or grants
participations in all or any part of, or any interest in the Loan to any person
or entity (a “Lender Transferee”) and [i] such Lender Transferee (or, if
such Lender Transferee is a disregarded entity for United States federal income
tax purposes, the Person treated, for United States federal income tax purposes,
as the owner of the assets of such Lender Transferee) is not organized under the
laws of the United States or a state thereof and [ii] such Lender
Transferee fails to establish to the reasonable satisfaction of Borrower that
payments to such Lender Transferee are exempt from United Stated withholding
taxes, Borrower shall not be required to “gross-up” payments made to such Lender
Transferee for United States withholding taxes withheld by
Borrower.  Any amounts withheld shall be remitted to the applicable
taxing authority and treated, for purposes of this note and any Collateral
Document, as if they were paid to such Lender Transferee




4.  Method and Place of
Payment.  Borrower shall make all payments on this note by
electronic wire transfer in accordance with wiring instructions set forth in
Exhibit A attached hereto subject to change in accordance with other
written instructions provided by Lender from time to time.




5.  Prepayment.  Borrower,
at its sole discretion, may prepay all or any portion of the outstanding
principal balance of this note, all accrued and unpaid interest, and all
charges, expenses and other amounts payable by Borrower to Lender at any time
without payment of any prepayment fee.




6.  Late
Charge.  Borrower acknowledges that any default in any payment
due under this note, other than the outstanding principal balance of this note
due on the Maturity Date, will result in loss and additional expense to Lender
in handling such delinquent payments and meeting Lender’s other financial
obligations.  Because such loss and additional expense are extremely
difficult and impractical to ascertain, Borrower agrees that if any payment
hereunder, other than the outstanding principal balance of this note due on the
Maturity Date, is not paid within 10 days after the due date, Borrower
shall pay, as a reasonable estimate of such loss and




3


expense,
a late charge equal to the lesser of [i] 5% of the amount of the overdue
payment, or [ii] the maximum amount permitted by applicable
law.




7.  Application of
Payments.  Unless Lender elects otherwise, in its sole
discretion, all payments and other amounts received by Lender shall be credited
as follows:  [i] first to any charges, costs, expenses and fees
payable by Borrower under this note or the Mortgage, or incurred by Lender for
the protection of any collateral securing the payment of this note, if not paid
by Borrower by the due date; [ii] second to interest on the foregoing
amounts at the Default Rate from the due date or date of payment by Lender, as
the case may be; [iii] third to accrued but unpaid interest on this note;
[iv] fourth, to the principal amount outstanding; and [v] fifth, the
balance, if any, to Borrower.




8.  Default.  The
occurrence of an “Event of Default” under the Master Lease 1 Mortgage, the
Master Lease 2 Mortgage, Master Lease 1 as long as Lender or any
affiliate of Lender is a landlord thereunder, Master Lease 2 as long as
Lender or any affiliate of Lender is a landlord thereunder, or any other
document providing security for or guarantee of repayment of this note shall be
an Event of Default hereunder.




9.  Acceleration.  Upon
the occurrence of any Event of Default, in addition to all other remedies under
the Mortgage, any other security for this note, and at law or in equity, at the
option of Lender [i] the outstanding principal balance of this note and all
accrued and unpaid interest thereon and all other amounts payable by Borrower to
Lender shall be immediately due and payable, and [ii] all such amounts
shall bear interest at the Default Rate from the date of the Event of Default
until paid.  Lender may exercise either or both options without notice
or demand of any kind.




10.  Governing
Law.  This note shall be governed by and construed in
accordance with the internal laws of the State, without giving effect to the
conflict of laws rules thereof.




11.  Time is of the
Essence.  Time is of the essence in the payment of this
note.  All grace periods in any Collateral Document that apply to a
default shall run concurrently.




12.  Holidays.  If
any installment of this note becomes due on a day which is not a Business Day,
Borrower may pay the installment on the next succeeding Business Day on which
banking institutions are open.




13.  Waivers.  None
of the following shall be a course of dealing, estoppel, waiver or the like on
which any party to this note or any Collateral Document may
rely:  [i] Lender’s acceptance of one or more late or partial
payments; [ii] Lender’s forbearance from exercising any right or remedy
under this note or any Collateral Document; or [iii] Lender’s forbearance
from exercising any right or remedy under this note or any Collateral Document
on any one or more occasions.  Lender’s exercise of any rights or
remedies or a part of a right or remedy on one or more occasions shall not
preclude Lender from exercising the right or remedy at any other
time.  Lender’s rights and remedies under this note, the Collateral
Documents, and the law and equity are cumulative to, but independent of, each
other.




4


14.  Representations.  Each
party to this note and each Collateral Document: [i] acknowledges that
Lender would not have extended the credit evidenced by this note and will not
continue to extend the credit but for the obligations of each;
[ii] warrants that each has executed this note or the Collateral Documents
to induce Lender to extend and to continue to extend the credit;
[iii] warrants that each has received good and valuable consideration for
executing this note or any Collateral Document; and [iv] warrants that
neither has executed this note or any Collateral Document in reliance upon the
existence of the security for or guaranty or promise of the payment of this
note.




15.  Indulgences.  Without
notice, Lender may do or refrain from doing anything affecting this Note or any
Collateral Document, as many times as Lender desires, including the
following:  [i] granting or not granting any indulgences to
anyone liable for payment of this note or to anyone liable under any Collateral
Document; [ii] releasing any security or anyone or any property from
liability on this note or any Collateral Document; or [iii] amending this
note or any Collateral Document, with the consent of Borrower, including
extending the time for payment of this note, in accordance the terms of such
Collateral Documents.




16.  No Release of
Liability.  No obligations of any party to this Note shall be
affected by [i] any default in this note or any Collateral Document when
accepted by Lender or arising any time thereafter; [ii] the
unenforceability of or defect in this note or in any Collateral Document or any
interest conveyed by any Collateral Document; [iii] any decline in the
value of any interest in any property conveyed by any Collateral Document; or,
[iv] the death, incompetence, insolvency, dissolution, liquidation or
winding up of affairs of any party to this note or any Collateral Document or
the start of insolvency proceedings by or against any such
party.  EACH PARTY TO
THIS NOTE WAIVES ALL SURETYSHIP AND OTHER SIMILAR DEFENSES.  No
party to this note or any Collateral Document may enforce any right of
subrogation or contribution unless and until this note is paid in full and
waives all rights of subrogation against any party that is subject to insolvency
proceedings unless and until this note is paid in full.




17.  Notices.  All
notices, demands, requests and consents (hereinafter “notices”) given pursuant
to this note shall be in writing, and shall be served by [i] personal
delivery; [ii] United States Mail, postage prepaid; or
[iii] nationally recognized overnight courier to the following
addresses:




To
Borrower:                                Emeritus
Corporation


3131 Elliott Avenue,
Suite 500


Seattle,
Washington  98121


Attn:                 Eric Mendelsohn


Senior
      Vice President, Corporate
Development


To
Lender:                           Health
Care REIT, Inc.


One SeaGate,
Suite 1500


P.O. Box 1475


Toledo,
Ohio  43603-1475


Attn:                 Jeffrey H.
Miller


Executive
      Vice President and General
Counsel


5








All
notices shall be deemed to be given upon the earlier of actual receipt or three
Business Days after deposit in the United States mail or one Business Day after
deposit with the overnight courier.  Lender and Borrower may change
their notice address at any time by giving the other party written notice of
such change.




18.  Representation and Warranty
Regarding Business Purpose.  Borrower represents and warrants
that the Loan evidenced by this note is for business purposes only and not for
personal, family, household, or agricultural purposes.




19.  Security.  This
note is secured by any and all collateral at any time granted to Lender to
secure any obligations of Borrower to Lender related to the Loan, including, but
not limited to, the Master Lease 1 Mortgage and the Master Lease 2
Mortgage.




20.  Protest.  Except
as otherwise expressly provided in the Mortgage, each party to this note jointly
and severally waives protest, notice of protest, demand, dishonor or default,
presentment for payment, notice of intent to declare this note immediately due
and payable, notice of declaration that this note is immediately due and payable
in full, all other notices, and all demands.




21.  Savings
Clause.  The intention of Lender and Borrower is to comply with
the laws of the State concerning the rate of interest on this
note.  Notwithstanding any other provision in this note or in any
other document given in connection with this note, Borrower shall not be
required to pay interest in excess of the maximum lawful rate.  To the
extent the amount of interest provided in this note ever exceeds the maximum
lawful rate (the “Excess Interest”):  [i] the provisions of this
paragraph shall govern and control; [ii] Borrower shall not be obligated to
pay any Excess Interest; [iii] any Excess Interest that Lender may have
received shall be credited against the then outstanding balance due under this
note and, if the Excess Interest exceeds the outstanding balance, the excess
amount shall be refunded to Borrower; [iv] the rate of interest under this
note or the Default Rate, as and if applicable, shall be automatically reduced
to the maximum lawful rate and this note and any other documents given in
connection therewith shall be deemed reformed and modified to reflect such
reduction; and [v] subject to the foregoing provisions of this paragraph,
Borrower shall have no action or remedy against Lender for any damages
whatsoever or any defense to enforcement of the note or any other documents
given in connection therewith arising out of the payment or collection of any
Excess Interest.  In determining whether interest paid or payable on
this note exceeds the maximum lawful rate, Borrower agrees to exclude voluntary
prepayment fees from the calculation of interest and to spread the total amount
of interest throughout the entire contemplated term of this note.




22.  Attorney’s Fees and
Expenses.  Borrower shall pay to Lender all reasonable
out-of-pocket costs and expenses incurred by Lender in administering the Loan
and the security for the Loan, enforcing or preserving Lender’s rights under
this note or any Collateral Document, and in all matters of collection, whether
or not an Event of Default has actually occurred or has been declared and
thereafter cured, including, but not limited to, [i] reasonable attorney’s
and paralegal’s fees and disbursements; [ii] the fees and expenses of
any




6


litigation,
administrative, bankruptcy, insolvency, receivership and any other similar
proceeding; [iii] court costs; [iv] the expenses of Lender, its
employees, agents, attorneys and witnesses in preparing for litigation,
administrative, bankruptcy, insolvency and other proceedings and for lodging,
travel, and attendance at meetings, hearings, depositions, and trials; and
[v] consulting and witness fees incurred by Lender in connection with any
litigation or other proceeding.




23.  Severability.  If
any clause, provision, section or article of this note is ruled invalid by any
court of competent jurisdiction, the invalidity of such clause, provision,
section, or article shall not affect any of the remaining provisions
hereof.




24.  Assignment.  Borrower
shall not assign its rights nor delegate its obligations under this
note.




25.  Amendment.  This
Note may not be amended except in writing signed by Borrower and
Lender.  All references to this Note, whether in this note or in any
other document or instrument, shall be deemed to incorporate all amendments,
modifications, and renewals of this Note and all substitutions made therefor
after the date hereof.




26.  CONSENT TO
JURISDICTION.  BORROWER HEREBY IRREVOCABLY SUBMITS AND CONSENTS
TO THE NONEXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT HAVING
JURISDICTION OVER LUCAS COUNTY, OHIO FOR ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY MATTER ARISING FROM OR RELATED TO [I] THE TERM SHEET FOR THE
LOAN EVIDENCED BY THIS NOTE; [II] THIS NOTE; OR [III] ANY COLLATERAL
DOCUMENT EXECUTED IN CONNECTION WITH THIS NOTE.  BORROWER HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT BORROWER MAY EFFECTIVELY DO SO, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR
PROCEEDING.  BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION
OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION
BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.




BORROWER AGREES NOT TO INSTITUTE ANY
LEGAL ACTION OR PROCEEDING AGAINST LENDER OR ANY DIRECTOR, OFFICER, EMPLOYEE,
AGENT OR PROPERTY OF LENDER, CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO
THE TERM SHEET, THIS NOTE, OR ANY COLLATERAL DOCUMENT IN ANY COURT OTHER THAN A
STATE OR FEDERAL COURT HAVING JURISDICTION OVER LUCAS COUNTY, OHIO UNLESS SUCH
COURTS LACK SUBJECT MATTER OR IN PERSONAM JURISDICTION IN WHICH CASE SUCH ACTION
OR PROCEEDING MAY BE BROUGHT IN ANY COURT WHICH HAS SUCH
JURISDICTION.




BORROWER HEREBY CONSENTS TO SERVICE OF
PROCESS BY LENDER IN ANY MANNER AND IN ANY JURISDICTION PERMITTED BY
LAW.  NOTHING HEREIN SHALL AFFECT OR IMPAIR LENDER’S RIGHT TO SERVE
LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW, OR LENDER’S RIGHT TO
BRING




7


ANY
ACTION OR PROCEEDING AGAINST BORROWER OR THE PROPERTY OF BORROWER IN THE COURTS
OF ANY OTHER JURISDICTION.




27.  WAIVER OF JURY
TRIAL.  TO THE FULLEST EXTENT PERMITTED BY LAW, LENDER, BY ITS
ACCEPTANCE OF THIS NOTE, BORROWER HEREBY KNOWINGLY AND VOLUNTARILY WAIVES THE
RIGHT TO A JURY TRIAL IN ANY ACTION, PROCEEDING OR COUNTERCLAIMS ARISING OUT OF
OR RELATING TO THIS NOTE.




[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]




8


IN WITNESS WHEREOF, the undersigned has
executed this note effective as of the date first set forth above.




EMERITUS
      CORPORATION
              
              By:/s/Eric Mendelsohn
              Eric Mendelsohn, Senior
      Vice President, Corporate
Development


S
- 1