Document:

EX 10.72.5 Promissory Note Capmark Fixed Rate for Fretus

    PROMISSORY
      NOTE

     

    
      	
              $132,000,000.00

            	
              February
                28, 2007

            
	 	 

    

     

    FOR
      VALUE
      RECEIVED, the 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
      BANK, a Utah industrial bank,
      having
      an address at 6955 Union Park Center, Suite 330, Midvale, Utah 84047, 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 One Hundred
      Thirty-two Million and No/100 Dollars ($132,000,000.00) (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 six (6) and .5475 percent (6.5475%) per annum (“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 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. 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 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.

     

    
      
        
        

      

      
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    1.4  Adjustments
      due to Calculation Errors.
      This
      Note shall bear interest at the Note Rate; 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 interest or otherwise),
      Lender shall give notice to Borrower of the corrected amount of such monthly
      payment (and the corrected amount of interest, 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.

     

    1.5  Adjustment
      for Impositions on Loan Payments.
      All
      payments made by Borrower 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
      (all such non-excluded taxes, levies, imposts, duties, charges, fees,
      deductions, withholdings and liabilities, collectively, “Applicable
      Taxes”).
      If
      Borrower 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)
      Borrower 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 1.5 shall be made within ten (10) Business Days
      after Lender makes written demand therefore.

     

    1.6  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 1.6, 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.

     

    
      
        
        

      

      
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    1.7  Acceleration.
      Notwithstanding anything to the contrary contained herein, if Borrower is
      prohibited by law from paying any amount due to Lender under Section 1.5 or
      Section 1.6 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 Fee (defined in Section 5 below)
      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 1.5 or Section 1.6
      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
      April, 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 (i) twenty-four (24) consecutive monthly payments of interest only
      at
      the Note Rate 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, and (ii) thereafter, monthly principal payments in
      an
      amount necessary to fully amortize the original principal balance of the Loan
      over a twenty five (25) year amortization period based upon the actual number
      of
      days in each month and a three hundred and sixty (360) day year, together with
      interest at the Note Rate, and any other amounts due under the Loan
      Documents. 

     

    2.2  Prepayment. 

     

    2.2.1  Open
      Date.
      Borrower acknowledges that Lender is making the Loan to it at the interest
      rate
      and upon the other terms herein set forth in reliance upon Borrower’s promise to
      pay the Loan over the full stated term of this Loan Agreement and that Lender
      may suffer loss or other detriment if Borrower were to prepay all or any portion
      of the Note prior to its stated Maturity Date. Except as provided in this
      Section 2.2,
      Borrower agrees that Borrower has no right to prepay all or any part of the
      Loan
      prior to the Maturity Date. At any time on and after the twenty-fourth
      (24th)
      Payment
      Date (the “Open Date”), Borrower may prepay the Loan in whole, but not in part,
      provided Borrower pays with such prepayment (a) all accrued interest and all
      other outstanding amounts (including, without limitation, the Exit Fee) then
      due
      and unpaid under this Note and under the other Loan Documents, and (b) if the
      prepayment is not made on a Payment Date, Borrower pays with such prepayment
      the
      full interest amount that would have accrued for the period from the date of
      prepayment through the day prior to the next Payment Date. Lender is not
      obligated to accept any prepayment unless accompanied by amounts required
      hereunder.

     

    2.2.2  Prepayment
      Yield Maintenance Premium.
      Borrower, at its option, may prepay the Loan in whole, but not in part, by
      delivery of the outstanding balance of the Loan together with the Yield
      Maintenance Premium (as defined in Section 2.2.3
      below)
      to Lender on any Payment Date following the Open Date and obtain a release
      (a
“Release”) of the Property from the lien of the Mortgage; provided that Borrower
      satisfies all of the conditions of this Section 2.2.2.

     

     

    
      
        
        

      

      
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    (i) Conditions
      to Release.
      Borrower may cause a Release upon the satisfaction of the following conditions
      (all as reasonably approved by Lender):

     

    
      	(A)  	
              no
                Event or Default shall exist under any of the Loan
                Documents.

            

    

     

    
      	(B)  	
              not
                less than forty-five (45) (but not more than ninety (90) days prior
                written notice shall be given to Lender specifying a date (such date
                being
                on a Payment Date) on which the Yield Maintenance Premium is to be
                delivered (the “Release Date”).

            

    

     

    
      	(C)  	
              all
                accrued and unpaid interest and all other sums due under this Note,
                the
                Loan Agreement and under the other Loan Documents up to the Release
                Date
                including, without limitation, all fees, costs and expenses incurred
                by
                Lender and its agents in connection with such Release shall be paid
                in
                full on or prior to the Release
                Date.

            

    

     

    
      	(D)  	
              Forms
                of all documents necessary to release the Property from the liens
                created
                by the Security Instrument and related UCC financing statements
                (collectively, “Release Instruments”), each in appropriate form required
                by the state in which the Property is
                located.

            

    

     

    
      	(E)  	
              Such
                other certificates, confirmations, documents or instruments as Lender
                reasonably deems necessary in connection with the
                Release.

            

    

     

    (ii) Release
      Costs and Expenses.
      Borrower shall pay all reasonable costs and expenses incurred by Lender in
      connection with a Release, which payment is required prior to Lender’s issuance
      of the Release and whether or not the Release is completed. Such expenses
      include, without limitation, the reasonable fees and disbursements of Lender’s
      legal counsel and a processing fee to cover Lender’s administrative costs to
      process Borrower’s Release request. Lender reserves the right to require that
      Borrower post a deposit to cover costs which Lender reasonably anticipates
      will
      be incurred.

     

    2.2.3  Prohibited
      Prepayment Prior to Open Date.
      Except
      as otherwise set forth in Section 2.2.2
      or
      Section 2.2.4,
      if
      payment of all or any part of the principal balance of the Loan is tendered
      by
      Borrower, a purchaser at foreclosure, a Guarantor, or any other Person prior
      to
      the Open Date, whether by reason of acceleration of the Loan or otherwise (a
      “Prohibited Prepayment”), such tender shall be deemed an attempt to circumvent
      the prohibition against prepayment set forth in Section 0
      and, at
      Lender’s option, shall be an Event of Default. If a Prohibited Prepayment occurs
      and is accepted voluntarily or otherwise by Lender, then, in addition to all
      other rights and remedies available to Lender upon an Event of Default, a
      Prohibited Prepayment Fee (as defined below) shall be due to compensate Lender
      for damages suffered as a result of the Prohibited Prepayment, such amount
      shall
      be due in addition to the outstanding principal balance, all accrued and unpaid
      interest and other outstanding amounts due under the Loan Documents. The
“Prohibited Prepayment Fee” shall be a prepayment premium equal to:

     

    
      
        
        

      

      
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      	(i)  	
              three
                percent (3%) of the outstanding principal balance of Note,
                plus

            

    

     

    
      	(ii)  	
              the
                Yield Maintenance Premium (as defined
                below).

            

    

     

    The
      “Yield Maintenance Premium” shall be equal to the greater
      of (i)
      one percent (1%) of the outstanding principal balance of the Note or (ii) the
      excess, if any, of (A) the present value (“PV”) of all scheduled interest and
      principal payments due on each Payment Date in respect of the Loan for the
      period from the date of such accepted prepayment to the Maturity Date, including
      the principal amount of the Loan scheduled to be due on the Maturity Date,
      discounted at an interest rate per annum equal to the Index (defined below),
      based on a 360-day year of twelve 30-day months, over (B) the principal amount
      of the Loan outstanding immediately before such accepted prepayment [i.e.,
      (PV
      of all future payments) - (principal balance at time of acceleration)]. The
      foregoing amount shall be calculated by Lender and shall be conclusive and
      binding on Borrower (absent manifest error).

     

    For
      purposes hereof, “Index” means the average yield for “treasury constant
      maturities” published by the Federal Reserve Board in Federal Reserve
      Statistical Release H.15 (519) (“FRB Release”), for the second full week
      preceding the date of acceleration of the Maturity Date for instruments having
      a
      maturity coterminous with the remaining term of the Loan. If the FRB Release
      is
      no longer published, Lender shall select a comparable publication to determine
      the Index. If there is no Index for instruments having a maturity coterminous
      with the remaining term of the Loan, then the weighted average yield to maturity
      of the Indices with maturities next longer and shorter than such remaining
      average life to maturity shall be used, calculated by averaging (and rounding
      upward to the nearest whole multiple of 1/100 of 1% per annum, if the average
      is
      not such a multiple) the yields of the relevant Indices (rounded, if necessary,
      to the nearest 1/100 of 1% with any figure of 1/200 of 1% or above rounded
      upward).

     

    2.2.4  Prepayment
      as a Result of a Casualty or Condemnation or Charges on Lender.
      Prepayments arising from Lender’s application of insurance proceeds upon the
      occurrence of a Casualty, the application of a condemnation award upon the
      occurrence of a Condemnation, or as set forth in Section Error!
      Reference source not found.
      may be
      made prior to the Open Date without being deemed a Prohibited Prepayment and,
      whenever made, without payment of a Prohibited Prepayment Fee.

     

    2.2.5  Notice
      Irrevocable.
      Notwithstanding any provision of this Note to the contrary, Borrower’s notice of
      prepayment in accordance with Section 2.2.2
      above
      shall be irrevocable, and the principal balance to be prepaid shall be
      absolutely and unconditionally due and payable on the date specified in such
      notice.

     

    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 (as defined below), 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 

     

    
      
        
        

      

      
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    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 Note Rate, 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, 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 March 1, 2012 (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.
      

     

    Section
      5.  Exit
      Fee.
      As
      consideration of Lender’s making of the Loan to Borrower, Borrower agrees to pay
      a deferred financing fee (“Exit
      Fee”)
      to
      Lender in an amount equal to one percent (1.0%) of the original principal amount
      of the Loan. Although the Exit Fee is earned in full on the date hereof, Lender
      hereby agrees to defer payment of the Exit Fee until the earlier of (a) the
      date
      when full repayment of the Loan occurs, (b) the Maturity Date, or (c) the date
      on which the Loan has been accelerated following an Event of Default.
      Notwithstanding the sale or transfer of the Loan by Capmark Bank, in whole
      or in
      part, to a successor lender, unless 

     

    
      
        
        

      

      
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    Capmark
      Bank has transferred its interest in the Exit Fee to its successors or assigns
      as Lender, the Exit Fee shall be payable to Capmark Bank. Notwithstanding the
      foregoing, if Borrower refinances the Loan with the proceeds of a loan funded
      by, or arranged for Borrower by, Capmark Finance Inc., or Capmark Bank, and
      Capmark Finance Inc., or Capmark Bank receives a contractually agreed upon
      sum
      in connection with the financing or arrangement thereof, then no Exit Fee shall
      be due. Borrower acknowledges that neither Capmark Finance Inc., nor Capmark
      Bank, has any obligation to make such loan.

     

    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.

     

    Section
      7.  Security.

     

    The
      debt
      evidenced by this Note is to be secured by, among other things, (a) twenty-four
      (24) 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:

     

    
      
        
        

      

      
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    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 or if the Exit Fee is not paid in
      full
      when required, (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.

     

    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, 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.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    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.

     

    Section
      12.  General.

     

    12.1  Applicable
      Law.
      This
      Note shall be given effect and construed by application of the laws of the
      State
      of Washington (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 Washington, 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 the United States District Court for the Western District of
      Washington 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 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    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.

     

    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 JIM GREENFIELD, 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
      

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    DOCUMENTS
      RELATED TO ANY LEGAL PROCEEDING OR ACTION ARISING OUT OF THIS NOTE. BORROWER
      AGREES THAT SERVICE UPON SAID JIM GREENFIELD 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. 

     

    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 

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    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. 

     

    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
      

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    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.

     

    12.20  Successors
      and Assigns Bound.
      The
      obligations set forth in this Note shall be binding upon Borrower and its
      successors and assigns.

     

    

     

    [REMAINDER
      OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        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.

     

    

    WITNESS:     BORROWER:

    

    

    

    By:      

    

    Name:      

    [Print
      name]

    Title:      

    

    

    

    ACKNOWLEDGED
      BY GUARANTOR THIS

    __________
      DAY OF __________, _____:

    

     

    

    By:      

    

    Name:      

    

    Title:      

    

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

        
        

      

    

    

    
      	
              FRETUS
                Investors Birmingham LLC

            
	
              FRETUS
                Investors Chandler LLC

            
	
              FRETUS
                Investors Glendale LLC

            
	
              FRETUS
                Investors Mesa LLC

            
	
              FRETUS
                Investors Orange Park LLC

            
	
              FRETUS
                Investors Jacksonville LLC

            
	
              FRETUS
                Investors Melbourne LLC

            
	
              FRETUS
                Investors Orlando LLC

            
	
              FRETUS
                Investors Winter Springs LLC

            
	
              FRETUS
                Investors Fort Wayne LLC

            
	
              FRETUS
                Investors Indianapolis LLC

            
	
              FRETUS
                Investors Greenwood LLC

            
	
              FRETUS
                Investors Las Vegas LLC

            

    

    each
      a
      Delaware limited liability company

    

    By: FRETUS
      Investors LLC, a Washington limited liability company

    Its: Manager

     

    By:
      Emeritus Corporation, a Washington corporation

    Its:
      Administrative Member

    

    /s/
      Eric
      Mendelsohn

    By: Eric
      Mendelsohn

    Its: Director
      of Real Estate and Legal Affairs

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    

      

      
        	
                FRETUS
                  Investors Austin LP, a
                  Delaware limited partnership

                By: Duval
                  Oaks Investors LLC, a Delaware limited liability company

                Its: General
                  Partner

              
	
                FRETUS
                  Investors Dallas LP, a
                  Delaware limited partnership

                By: Kingsley
                  Oaks Investors LLC, a Delaware limited liability company

                Its: General
                  Partner

              
	
                FRETUS
                  Investors El Paso LP, a
                  Delaware limited partnership

                By: Village
                  Oaks Cielo Vista Investors LLC, a Delaware limited liability
                  company

                Its: General
                  Partner

              
	
                FRETUS
                  Investors Farmers Branch LP, a
                  Delaware limited partnership

                By: Village
                  Oaks Farmers
                  Branch
                  Investors LLC, a Delaware limited liability company

                Its: General
                  Partner

              
	
                FRETUS
                  Investors Fort Worth LP, a
                  Delaware limited partnership

                By: Tanglewood
                  Oaks Investors LLC, a Delaware limited liability company

                Its: General
                  Partner

              
	
                FRETUS
                  Investors Hollywood Park LP, a
                  Delaware limited partnership

                By: Village
                  Oaks Hollywood
                  Park Investors
                  LLC, a Delaware limited liability company

                Its: General
                  Partner

              
	
                FRETUS
                  Investors Houston LP, a
                  Delaware limited partnership

                By: Champion
                  Oaks Investors LLC, a Delaware limited liability company

                Its: General
                  Partner

              
	
                FRETUS
                  Investors Memorial Oaks Houston LP, a
                  Delaware limited partnership

                By: Memorial
                  Oaks Investors LLC, a Delaware limited liability company

                Its: General
                  Partner

              
	
                FRETUS
                  Investors Plano LP, a
                  Delaware limited partnership

                By: Collin
                  Oaks Investors LLC, a Delaware limited liability company

                Its: General
                  Partner

              
	
                FRETUS
                  Investors San Antonio LP, a
                  Delaware limited partnership

                By: Northwest
                  Oaks Investors LLC, a Delaware limited liability company

                Its: General
                  Partner

              
	
                FRETUS
                  Investors Sugar Land LP, a
                  Delaware limited partnership

                By: Sugar
                  Land Investors
                  LLC, a Delaware limited liability company

                Its: General
                  Partner

              

      

      

      By: FRETUS
        Investors LLC, a Washington limited liability company

      Its: Managing
        Manager

       

      By:
        Emeritus Corporation, a Washington corporation

      Its:
        Administrative Member

      

      /s/
        Eric
        Mendelsohn

      By: Eric
        Mendelsohn

      Its: Director
        of Real Estate and Legal Affairs

    

     

    
 

     

    
      
        
        

      

      
        16EX 10.72.6 Promissory Note Capmark Variable Rate for Fretus

    PROMISSORY
      NOTE

     

    
      	
              $8,000,000.00

            	
              February
                28, 2007

            
	 	 

    

     

    FOR
      VALUE
      RECEIVED, the 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
      BANK, a Utah industrial bank,
      having
      an address at 6955 Union Park Center, Suite 330, Midvale, Utah 84047, 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 Eight Million
      and No/100 Dollars ($8,000,000.00) (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 7.12% 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 March 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 April 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 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 

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    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.

     

    1.4  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 eighty (180) 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

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    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.

     

    1.7  Adjustment
      for Impositions on Loan Payments.
      All
      payments made by Borrower 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
      (all such non-excluded taxes, levies, imposts, duties, charges, fees,
      deductions, withholdings and liabilities, collectively, “Applicable
      Taxes”).
      If
      Borrower 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)
      Borrower 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.

     

    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 Fee (defined in Section 5 below)
      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.

     

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    Section
      2.  Note
      Payments and Prepayment Rights.

     

    2.1  Note
      Payments and Payment Dates.
      Commencing on the 1st
      day of
      April, 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 (i) twenty-four (24) 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, and (ii) thereafter, consecutive monthly
      principal payments in an amount necessary to fully amortize the original
      principal balance of the Loan over a twenty five (25) year amortization period
      based upon the actual number of days in each month and a three hundred and
      sixty
      (360) day year, together with interest at the Note Rate, 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) on any Payment 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 interest through the end of
                the
                current Interest Accrual Period and all other outstanding amounts
                then due
                and unpaid under the Loan Agreement and the other Loan
                Documents.

            

    

     

    
      	(C)  	
              Borrower
                pays with such prepayment the Exit Fee except as otherwise set forth
                in
                Section 5.

            

    

     

    
      	(D)  	
              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.

            

    

     

    
      	(E)  	
              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 (as defined 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    below),
      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, 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 March 1, 2010 (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.
      

     

    Section
      5.  Exit
      Fee.
      As
      consideration of Lender’s making of the Loan to Borrower, Borrower agrees to pay
      a deferred financing fee (“Exit
      Fee”)
      to
      Lender in an amount equal to one percent (1.0%) of the original principal amount
      of the Loan. Although the Exit Fee is earned in full on the date hereof, Lender
      hereby agrees to defer payment of the Exit Fee until the earlier of (a) the
      date
      when full repayment of the Loan occurs, (b) the Maturity Date, or (c) the date
      on 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    which
      the
      Loan has been accelerated following an Event of Default. Notwithstanding the
      sale or transfer of the Loan by Capmark Bank, in whole or in part, to a
      successor lender, unless Capmark Bank has transferred its interest in the Exit
      Fee to its successors or assigns as Lender, the Exit Fee shall be payable to
      Capmark Bank. Notwithstanding the foregoing, if Borrower refinances the Loan
      with the proceeds of a loan funded by, or arranged for Borrower by, Capmark
      Finance Inc. or Capmark Bank, and Capmark Finance Inc. or Capmark Bank receives
      a contractually agreed upon sum in connection with the financing or arrangement
      thereof, then no Exit Fee shall be due. Borrower acknowledges that neither
      Capmark Finance Inc., nor Capmark Bank, has any obligation to make such
      loan.

     

    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.

     

    Section
      7.  Security.

     

    The
      debt
      evidenced by this Note is to be secured by, among other things, (a) twenty-four
      (24) 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:

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    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 or if the Exit Fee is not paid in
      full
      when required, (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.

     

    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, 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.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    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.

     

    Section
      12.  General.

     

    12.1  Applicable
      Law.
      This
      Note shall be given effect and construed by application of the laws of the
      State
      of Washington (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 Washington, 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 the United States District Court for the Western District of
      Washington 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 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    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.

     

    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 JIM GREENFIELD, 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
      

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    DOCUMENTS
      RELATED TO ANY LEGAL PROCEEDING OR ACTION ARISING OUT OF THIS NOTE. BORROWER
      AGREES THAT SERVICE UPON SAID JIM GREENFIELD 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. 

     

    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 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    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. 

     

    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
      

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    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.

     

    12.20  Successors
      and Assigns Bound.
      The
      obligations set forth in this Note shall be binding upon Borrower and its
      successors and assigns.

     

    

     

    [REMAINDER
      OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    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.

     

    

    WITNESS:     BORROWER:

    

    

    

    By:      

    

    Name:      

    [Print
      name]

    Title:      

    

    

    

    ACKNOWLEDGED
      BY GUARANTOR THIS

    __________
      DAY OF __________, _____:

    

     

    

    By:      

    

    Name:      

    

    Title:      

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

    
      	
              FRETUS
                Investors Birmingham LLC

            
	
              FRETUS
                Investors Chandler LLC

            
	
              FRETUS
                Investors Glendale LLC

            
	
              FRETUS
                Investors Mesa LLC

            
	
              FRETUS
                Investors Orange Park LLC

            
	
              FRETUS
                Investors Jacksonville LLC

            
	
              FRETUS
                Investors Melbourne LLC

            
	
              FRETUS
                Investors Orlando LLC

            
	
              FRETUS
                Investors Winter Springs LLC

            
	
              FRETUS
                Investors Fort Wayne LLC

            
	
              FRETUS
                Investors Indianapolis LLC

            
	
              FRETUS
                Investors Greenwood LLC

            
	
              FRETUS
                Investors Las Vegas LLC

            

    

    each
      a
      Delaware limited liability company

    

    By: FRETUS
      Investors LLC, a Washington limited liability company

    Its: Manager

     

    By:
      Emeritus Corporation, a Washington corporation

    Its:
      Administrative Member

    

    /s/
      Eric
      Mendelsohn

    By: Eric
      Mendelsohn

    Its: Director
      of Real Estate and Legal Affairs

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

      

      
        	
                FRETUS
                  Investors Austin LP, a
                  Delaware limited partnership

                By: Duval
                  Oaks Investors LLC, a Delaware limited liability company

                Its: General
                  Partner

              
	
                FRETUS
                  Investors Dallas LP, a
                  Delaware limited partnership

                By: Kingsley
                  Oaks Investors LLC, a Delaware limited liability company

                Its: General
                  Partner

              
	
                FRETUS
                  Investors El Paso LP, a
                  Delaware limited partnership

                By: Village
                  Oaks Cielo Vista Investors LLC, a Delaware limited liability
                  company

                Its: General
                  Partner

              
	
                FRETUS
                  Investors Farmers Branch LP, a
                  Delaware limited partnership

                By: Village
                  Oaks Farmers
                  Branch
                  Investors LLC, a Delaware limited liability company

                Its: General
                  Partner

              
	
                FRETUS
                  Investors Fort Worth LP, a
                  Delaware limited partnership

                By: Tanglewood
                  Oaks Investors LLC, a Delaware limited liability company

                Its: General
                  Partner

              
	
                FRETUS
                  Investors Hollywood Park LP, a
                  Delaware limited partnership

                By: Village
                  Oaks Hollywood
                  Park Investors
                  LLC, a Delaware limited liability company

                Its: General
                  Partner

              
	
                FRETUS
                  Investors Houston LP, a
                  Delaware limited partnership

                By: Champion
                  Oaks Investors LLC, a Delaware limited liability company

                Its: General
                  Partner

              
	
                FRETUS
                  Investors Memorial Oaks Houston LP, a
                  Delaware limited partnership

                By: Memorial
                  Oaks Investors LLC, a Delaware limited liability company

                Its: General
                  Partner

              
	
                FRETUS
                  Investors Plano LP, a
                  Delaware limited partnership

                By: Collin
                  Oaks Investors LLC, a Delaware limited liability company

                Its: General
                  Partner

              
	
                FRETUS
                  Investors San Antonio LP, a
                  Delaware limited partnership

                By: Northwest
                  Oaks Investors LLC, a Delaware limited liability company

                Its: General
                  Partner

              
	
                FRETUS
                  Investors Sugar Land LP, a
                  Delaware limited partnership

                By: Sugar
                  Land Investors
                  LLC, a Delaware limited liability company

                Its: General
                  Partner

              

      

      

      By: FRETUS
        Investors LLC, a Washington limited liability company

      Its: Managing
        Manager

       

      By:
        Emeritus Corporation, a Washington corporation

      Its:
        Administrative Member

      

      /s/
        Eric
        Mendelsohn

      By: Eric
        Mendelsohn

      Its: Director
        of Real Estate and Legal Affairs

    

     

    
 

     

    
      
        
        

      

      
        15

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