EX-10.78.03

AMENDMENT NO. 1 TO AGREEMENT OF PURCHASE AND SALE

This is Amendment No. 1 to that certain Agreement of Purchase and Sale ("PSA"),
entered into on January 15, 2010 by and between Stayton SW Assisted Living,
L.L.C. ("Stayton"), an Oregon limited liability company constituting the Unitary
Sunwest Enterprise designated in the Approval Order of the United States
District Court for the District of Oregon dated October 2, 2009, and BRE/SW
Portfolio LLC, a Delaware limited liability company (hereinafter referred to as
"Purchaser").

For good and valuable consideration, receipt and sufficiency of which are hereby
acknowledged, Stayton and Purchaser hereby agree as follows:

1.  
Alternative Expense Reimbursement.   Stayton and Purchaser agree that, in the
event the Court (i) approves a plan of reorganization which does not provide for
a sale of the Properties to Purchaser and does not authorize the payment of the
Expense Reimbursement to Purchaser in substantial accord with the provisions of
Section 10.2 of the PSA (an "Alternative Plan"), (ii) approves a transaction
involving all or substantially all of the assets of Stayton with a party other
than Purchaser (an "Alternative Transaction"), or (iii) does not approve the
Auction Order on or before March 15, 2010, then, in either such event, and upon
termination of the PSA (provided that it is agreed that the obligation to pay
the Agreed Alternative Expense Reimbursement Amount as provided herein shall
survive such termination of the PSA), and in lieu of any Expense Reimbursement
otherwise payable pursuant to the PSA, Purchaser shall be entitled to receive
$4,835,792.80 (the “Agreed Alternative Expense Reimbursement Amount”) on account
of the out-of-pocket expenses incurred by Purchaser as of the date of this
Amendment No. 1 in connection with the transactions contemplated by the
PSA.  Stayton agrees to promptly submit a motion to the Court, in form and
substance reasonably acceptable to Purchaser, seeking approval of payment of the
Agreed Alternative Expense Reimbursement Amount to Purchaser as provided in this
paragraph.  Such Agreed Alternative Expense Reimbursement Amount shall be
payable to Purchaser on the earlier of (i) ten (10) Business Days following the
Effective Date of an Alternative Plan; or (ii) the closing of an Alternative
Transaction.  Stayton and Purchaser agree that the entry of an Order of the
Court approving (i) the payment by Stayton of the Agreed Alternative Expense
Reimbursement Amount to Purchaser and (ii) all invoices and expenses comprising
such Agreed Alternative Expense Reimbursement Amount (the “Expense Reimbursement
Approval Order”) is a condition precedent to the effectiveness of the amendments
described in Section 2 of this Amendment No. 1.  In the event the Court approves
the Auction Order and thereafter approves a plan of reorganization which does
provide for a sale of the Properties to Purchaser and does authorize Expense
Reimbursement to Purchaser in substantial accord with the provisions of Section
10.2 of the PSA, this paragraph shall be of no further force or
effect.  Notwithstanding anything to the contrary contained herein, Purchaser
reserves its rights to terminate the PSA in accordance with Section 12.1(b) of
the PSA at any time prior to the entry of the Expense Reimbursement Approval
Order.

 
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2.  
Amendments:  Stayton and Purchaser agree that upon entry of the Expense
Reimbursement Approval Order, the PSA shall be amended as follows:

a)  
Section 1.1 of the PSA is amended by adding the following additional defined
terms:

"SWP" means SWP Property Holdings, LP, a Delaware limited partnership of which
the Receiver serves as general partner pursuant to the Order of the Court dated
as of July  6, 2009 in the SEC Enforcement Action.

"SWP Exchange Interest" means a fractional ownership interest in one or more of
the Properties, which fractional ownership interest shall be, or shall have
been, transferred to SWP pursuant to, and in accordance with, an Order of the
Court directing such transfer and providing that such transfer shall be
accompanied by an/a valid, binding and enforceable SWP Option Agreement for the
benefit of Stayton.

"SWP Option Agreement" means an Irrevocable Option Agreement for the benefit of
Stayton (in substantial accordance with the Irrevocable Option Agreement dated
December 31, 2009 related to the Property listed as Churchill on Exhibit 8),
entered into pursuant to Order of the Court in connection with the Court's Order
for transfer to SWP of an SWP Exchange Interest, pursuant to which SWP grants to
Stayton the irrevocable option, exercisable in the event the Court approves a
plan or reorganization providing for sale of substantially all of the Properties
prior to or in conjunction with the confirmation of the Chapter 11 Plan in the
Unitary Bankruptcy Case, to require SWP to re-convey to Stayton such SWP
Exchange Interest in consideration of the return or extinguishment of the
consideration received by Stayton in connection with the initial transfer to SWP
of such SWP Exchange Interest.

b)  
The first sentence of Section 5.1(k) of the PSA is amended in its entirety to
read as follows:

"(k)  No later than five (5) Business Days after entry of the Auction Order,
Stayton shall amend the Reorganization Plan of Unitary Sunwest Enterprise to
provide for the transactions contemplated in this Agreement (including the
Auction) and no other alternative transactions with respect to all or any
portion of the Property."

c)  
Section 5.1(q) of the PSA is amended in its entirety to read as follows:

"(q)  Stayton shall use commercially reasonable efforts to cause any SWP
Exchange Interest to be reconveyed to Stayton prior to the Closing and
 

 
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conveyed to Purchaser at the Closing, including exercising and enforcing its
purchase option under the applicable SWP Option Agreement."
 
d)  
Section 5.2(a) of the PSA is amended in its entirety to read as follows:

"(a)   Stayton shall not materially modify, sell (or market for sale, other than
pursuant to the Auction), assign, convey, transfer, pledge, mortgage, lease,
license, or otherwise dispose of or encumber any of the Properties (or interests
therein, other than an SWP Exchange Interest), whether in the ordinary course or
otherwise, or take any action inconsistent with this Agreement.  Notwithstanding
the previous sentence, Stayton may, in consultation with Purchaser, negotiate
with holders of Assumed Loans for modification of the terms of such indebtedness
consistent with the Modification Schedule.  Stayton shall promptly notify
Purchaser upon any transfer of Properties in connection with an SWP Exchange
Interest."
 
e)  
Section 8.3(h) of the PSA is amended in its entirety to read as follows:

"(h)  an affidavit attesting to the representation made in Section 4.1(r),
substantially in the form attached hereto as Exhibit H; "
 
f)  
Sections 12.1(b), (c) and (d) of the PSA are amended in their entirety to read
as follows:

"12.1                      Termination
 
Subject to Section 8.6, Article 11 and Article 13 and, with respect to any
termination by Stayton, subject to approval of the Court, this Agreement may be
terminated in its entirety, or, in the limited circumstances provided herein, as
to some, but not all of the Properties, prior to the Closing only:
 
*                      *                      *                      *                      *
 
(b)  
by Purchaser if the Auction Order is not entered by the Court on or before March
15, 2010;

 
(c)  
by Purchaser if the Closing has not occurred by June 15, 2010 but only if the
conditions to Purchaser's obligations set forth in Section 7.1 shall not have
been satisfied or waived;

 
(d)  
by Stayton or Purchaser if the Closing has not occurred on or before August 31,
2010 (the 'Outside Closing Date');"

 
3.  
Except as modified by this Amendment No. 1, the PSA remains in full force and
effect and is unmodified.

4.  
This Amendment No. 1 may be executed in two or more identical counterparts
which,

 
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5.  
when taken together, shall constitute one and the same instrument.  Facsimile
copies of signature pages shall be deemed originals for the purposes of the
creation of a fully executed, delivered and enforceable counterpart Amendment
No. 1 to the PSA.

IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to Agreement
of Purchase and Sale as of February 12, 2010.

Purchaser:
Sellers:
  BRE/SW PORTFOLIO LLC,
    a Delaware limited liability company
 
    By:   /s/ David Roth
    Name: David Roth ___________
   Title:                      Managing
Director                                           
On Behalf of Stayton:
    STAYTON SW ASSISTED LIVING, L.L.C.
    an Oregon limited liability company
 
 
    By: /s/ Clyde A. Hamstreet
    Clyde A. Hamstreet, in his capacity
             as Chief Restructuring Officer for
             Debtor and the Receivership Entities
 
    By: /s/ Michael A. Grassmueck ____
           Michael A. Grassmueck, in his
           capacity as Receiver for Debtor and
           the Receivership Entities
 

CONSENTS
 
Each of the undersigned hereby consents to the within Amendment No. 1 to the
Agreement of Purchase and Sale dated January 15, 2010 between Stayton and
Purchaser:
 

 
EMERITUS CORPORATION
 
 
By: _/s/ Eric Mendelsohn___________
             Eric Mendelsohn
Its: SVP Corporate Development
 
SUNWEST MANAGEMENT, INC.
 
 
By: /s/ Clyde A. Hamstreet _____
       Clyde Hamstreet
       Chief Restructuring Officer
CPDF II, LLC,
a Washington limited liability company
 
            By: Columbia Pacific Advisors LLC
            a Washington limited liability company, its Manager
 By: /s/ Alexander Washburn
Name: Alexander Washburn
             Title: Manager
ESCROW AGENT:
 
CHICAGO TITLE INSURANCE COMPANY
 
By:           /s/ Neal J. Miranda                                
Neal J. Miranda, VP/Senior Counsel
CTIC #1209-3105 --- (212) 880-1237
 

034845/00001/2013040v1

 
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