EX-10.73.02

FIRST AMENDMENT TO MASTER LEASE AND SECURITY AGREEMENT
 
THIS FIRST AMENDMENT TO MASTER LEASE AND SECURITY AGREEMENT (“Amendment”) is
dated as of the 20th day of October, 2008 (the “Effective Date”), and is among
HCP AUR1 CALIFORNIA A PACK, LLC, a Delaware limited liability company (“HCP
California A Pack”), HCP AUR1 CALIFORNIA B PACK, LLC, a Delaware limited
liability company (“HCP California B Pack”), HCP AUR1 CONNECTICUT, LLC, a
Delaware limited liability company (“HCP Connecticut”), HCP AUR1 MARYLAND, LLC,
a Delaware limited liability company (“HCP Maryland”), HCP AUR1 MASSACHUSETTS,
LLC, a Delaware limited liability company (“HCP Massachusetts”), HCP AUR1 NEW
JERSEY, LLC, a Delaware limited liability company (“HCP New Jersey”) and HCP
AUR1 VIRGINIA, LLC, a Delaware limited liability company (“HCP Virginia,” and
together with HCP California A Pack, HCP California B Pack, HCP Connecticut, HCP
Maryland, HCP Massachusetts and HCP New Jersey, as their interests may appear,
“Lessor”) and EMERITUS CORPORATION, a Washington corporation (“Emeritus” or
“Lessee”).
 
RECITALS

  A.          Lessor is the “Lessor” and Lessee is the “Lessee” pursuant to that
certain Master Lease and Security Agreement dated as of August 22, 2008 (the
“Lease”).  The Lease covers the Leased Property of eleven (11) senior
housing/care Facilities located in the States of California, Connecticut,
Maryland, Massachusetts, New Jersey and Virginia, all as more particularly
described therein.  All capitalized terms used in this Amendment and not
otherwise defined herein shall have the meanings given to such terms in the
Lease.

B.           Lessor and Lessee desire to amend the Lease in accordance with the
terms and conditions set forth herein.

AMENDMENT

NOW THEREFORE, in consideration of the mutual covenants contained in this
Amendment and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as
follows:

           1.           Due Diligence Period.  Notwithstanding anything to the
contrary set forth in Section 48.2.1(a) of the Lease, Lessee shall have until
5:00 p.m. (California time) on October 29, 2008 to be satisfied with the results
of its review of (a) the physical condition of the Leased Property and the
Facilities, (b) the environmental condition of the Leased Property and the
Facilities, (c) the condition of title to and a review of ALTA surveys of the
Leased Property and the Facilities, (d) the insurance requirements of the
Existing Facility Mortgage Loan Documents and (e) the following operational
issues with respect to each of the Facilities: (i) September rent rolls and the
latest available occupancy information from the “answers on demand” or Merlin
system reports, (ii) September financial statements, (iii) workers compensation
loss runs and claims histories, and (iv) the dates of hire, salaries and
benefits of the employees currently employed at the Facilities (collectively,
the “Reserved Due Diligence Matters”).  Except with respect to the Reserved Due
Diligence Matters, (i) Lessee hereby advises Lessor that Lessee is

 
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satisfied with the results of its due diligence review of the Leased Property of
each Facility, the Facilities themselves and the operations thereof, including
the terms of the Existing Facility Mortgage Loan Documents and (ii) Lessee
hereby waives its right to terminate the Lease pursuant to Section 48.2.2 of the
Lease with respect to all other matters set forth in Section 48.2.1(a) of the
Lease.  With respect to the Reserved Due Diligence Matters, the provisions of
Section 48.2.2 shall continue in full force and effect, except that if Lessee
elects to terminate the Lease for any of the Reserved Due Diligence Matters
notice thereof shall be delivered to Lessor on or before 5:00 p.m. (California
time) on October 29, 2008.

           2.           Existing Facility Mortgagee Consent.  At any time after
the date hereof and prior to the date the conditions set forth in Sections
48.1.1(e) and 48.2.1(d) of the Lease, as hereby amended, are to be satisfied or
waived by Lessor and Lessee, respectively, Lessor shall have the right, in its
sole discretion, by notice to Lessee to elect to pay in full the Existing
Facility Mortgages.  In the event that Lessor exercises such right, upon such
notice from Lessor to Lessee the conditions set forth in Sections 48.1.1(e) and
48.2.1(d) of the Lease, as hereby amended, shall be deemed satisfied and Lessor
shall cause the Existing Facility Mortgages to be paid in full on or prior to
the Commencement Date.  For purposes of clarity, nothing in the Lease, as hereby
amended, shall be deemed to limit Lessor’s right to pay in full the Existing
Facility Mortgages at any time and this Section 2 shall only be deemed to grant
Lessor the right, in its sole discretion, to elect to satisfy the conditions set
forth in Sections 48.1.1(e) and 48.2.1(d) of the Lease, as hereby amended, by
delivering notice to Lessee that Lessor elects to pay in full the Existing
Facility Mortgages on or prior to the Commencement Date.

           3.           Other Conditions to the Continued Effectiveness of the
Lease.

Section 48.1.1(a) of the Lease is hereby amended and restated in its entirety to
read as follows:

“(a)           On or before 5:00 p.m. (California time) on October 17, 2008,
Lessee shall have submitted evidence reasonably satisfactory to Lessor that
Lessee has applied for all licenses, permits, accreditations, authorizations and
certifications from all governmental or quasi-governmental authorities,
agencies, departments or otherwise which are material to or required for the
operation of each Facility for its Primary Intended Use, including, without
limitation, any state facility license, certificate of need and any
accreditations or certifications from Medicare and/or Medicaid (collectively,
the ‘Required Governmental Approvals’), provided, however, that Lessee shall
have until 5:00 p.m. (California time) on October 31, 2008 to submit evidence
reasonably satisfactory to Lessor that Lessee, or the SNF Operator, has applied
for all Required Governmental Approvals relating to the SNF Beds;”.

Section 48.1.1(b) of the Lease is hereby amended and restated in its entirety to
read as follows:

 
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“(b)           On or before 5:00 p.m. (California time) on December 1, 2008,
Lessee shall have submitted evidence reasonably satisfactory to Lessor that
Lessee and, in the case of the SNF Beds, the SNF Operator, the applicable
Current Lessee and the Current Manager have entered into one or more transfer
agreements in form and substance acceptable to Lessee and, in the case of the
SNF Beds, the approved SNF Operator, the applicable Current Lessee and the
Current Manager (the ‘Operations Transfer Agreement(s)’) to arrange for a
transition of full operational responsibility for each of the Facilities to
Lessee and, in the case of the SNF Beds, to the approved SNF Operator, which
Operations Transfer Agreement(s) may include, or as to which the Current Lessee
and the SNF Operator may negotiate separate documents containing, customary
interim management and/or interim sublease provisions with respect to the SNF
Beds to the extent that Lessee reasonably anticipates that Lessee will not have
obtained all Required Governmental Approvals relating to the SNF Beds on or
prior to the Commencement Date; provided, however, that any such interim
management and/or interim sublease provisions/documents shall be subject to
Lessor’s prior written consent, which consent shall not be unreasonably
withheld, but may be conditioned upon Lessee, Current Lessee and Current Manager
executing and delivering to Lessor a consent agreement relating thereto in
Lessor’s customary form for such arrangements;”.

The references to “October 31, 2008” contained in Section 48.1.1(c) and Section
48.2.1 (c) of the Lease are hereby replaced with references to “November 14,
2008.”

The reference to “October 30, 2008” contained in Section 48.1.1(d) of the Lease
is hereby replaced with a reference to “November 21, 2008.”

The references to “November 14, 2008” contained in Sections 48.1.1(e) and
48.2.1(d) of the Lease are hereby replaced with references to “November 28,
2008.”

The reference to “October 31, 2008” contained in Section 48.2.1(b) of the Lease
is hereby replaced with a reference to “December 1, 2008.”

           4.           Full Force and Effect.  Except as specifically set forth
herein, the Lease shall remain in full force and effect as originally executed
by Lessor and Lessee.

           5.           Entire Agreement.  The Lease, as hereby amended,
constitutes the entire agreement of the parties with respect to the subject
matter hereof, and may not be changed or modified except by an agreement in
writing signed by the parties.

           6.           Counterparts; Facsimile Signatures.  This Amendment may
be executed in counterparts, each of which shall be deemed to be an original,
but all of which taken together shall constitute but one and the same
instrument.  Telecopied signatures may be used in place of

 
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original signatures on this Amendment, and Lessor and Lessee both intend to be
bound by the signatures of the telecopied document.

[Signature pages follow]

 

 
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IN WITNESS WHEREOF, the parties have caused this Lease to be executed and
attested by their respective officers thereunto duly authorized.
 

 
LESSOR:
HCP AUR1 CALIFORNIA A PACK, LLC,

 
 
a Delaware limited liability company

 

 
 
HCP AUR1 CALIFORNIA B PACK, LLC,

 
 
a Delaware limited liability company

 

 
 
HCP AUR1 CONNECTICUT, LLC,

 
 
a Delaware limited liability company

 

 
 
HCP AUR1 MARYLAND, LLC,

 
 
a Delaware limited liability company

 

 
 
HCP AUR1 MASSACHUSETTS, LLC,

 
 
a Delaware limited liability company

 

 
 
HCP AUR1 NEW JERSEY, LLC,

 
 
a Delaware limited liability company

 

 
 
HCP AUR1 VIRGINIA, LLC,

 
 
a Delaware limited liability company

 

 
By:
HCP Partners, LP, a Delaware limited partnership,

 
 
their member

 

 
 
By:
HCP GP Corp., a Delaware corporation,

 
 
its general partner

 
                      By: /s/ Thomas D. KirbyName: Thomas D. KirbyTitle:  SVP
 

 

 
[Signatures continue on the following page]
 

 
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LESSEE:
EMERITUS CORPORATION,

 
 
a Washington corporation

 

 
By:/s/ Eric Mendelsohn
 
Name: Eric Mendelsohn
 
Title: SVP Corporate Development
 

 

 

 
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