Exhibit 10.3

Loan No. 105093

SECOND MODIFICATION AGREEMENT

Secured Loan

THIS SECOND MODIFICATION AGREEMENT (“Agreement”) dated August 31, 2010 is
entered into by and among SUNRISE PASADENA CA SENIOR LIVING, LLC, a California
limited liability company (“Pasadena Borrower”), and SUNRISE PLEASANTON CA
SENIOR LIVING, LP, a Delaware limited partnership (“Pleasanton Borrower” and
together with Pasadena Borrower, “Borrower”), jointly and severally, and WELLS
FARGO BANK, NATIONAL ASSOCIATION (“Lender”).

R E C I T A L S

 

A. Pursuant to the terms of that certain Loan Agreement dated September 28,
2007, as modified by that certain Modification Agreement (Secured Loan) (“First
Modification”) dated February 10, 2010 (collectively, “Loan Agreement”) between
Borrower and Lender, Lender made a loan to Borrower in the original principal
amount of TWENTY-ONE MILLION NINE HUNDRED SIX THOUSAND NINE HUNDRED FIFTY AND
NO/100THS DOLLARS ($21,906,950.00) (“Loan”). The Loan is evidenced by that
certain Amended and Restated Promissory Note Secured by Deed of Trust, executed
by Borrower in favor of Lender, in the original principal amount of the Loan
(“Note”), and is further evidenced by the documents described in the Loan
Agreement as “Loan Documents” and “Other Related Documents”. The Note is secured
by, among other things, that certain Deed of Trust with Absolute Assignment of
Leases and Rents, Security Agreement and Fixture Filing dated September 28,
2007, executed by Borrower, as trustor, to First American Title Insurance
Company, as trustee, in favor of Lender, as beneficiary, and recorded October 3,
2007, as Document No. 20072266447, in the Official Records of Los Angeles
County, California (the “Los Angeles Official Records”) and as Document
No. 2007349490, in the Official Records of Alameda County, California (the
“Alameda Official Records” and together with the Los Angeles Official Records,
the “Official Records”), as modified by that certain First Amendment to Deed of
Trust with Absolute Assignment of Leases and Rents, Security Agreement and
Fixture Filing by and between Lender and Borrower, dated February 10, 2010 and
recorded February 16, 2010, as Document No. 2010-041871, in the Alameda Official
Records and, as Document No. 2010-0204997, in the Los Angeles Official Records
(together, as the same have been or may be amended, modified or supplemented
from time to time, “Deed of Trust”).

 

B. As of the date hereof, ELEVEN MILLION NINE HUNDRED SIX THOUSAND NINE HUNDRED
FIFTY AND 00/100THS DOLLARS ($11,906,950.00) of Loan principal is outstanding
under the Note and there is no undisbursed Loan principal.

 

C. The Note, Deed of Trust, Loan Agreement, this Agreement, the other documents
described in the Loan Agreement as Loan Documents, together with all
modifications and amendments thereto and any document required hereunder, are
collectively referred to herein as the “Loan Documents”.

 

D. Borrower has requested, and Lender is willing to make certain modifications
to the Loan, subject to the timely fulfillment of certain conditions.

 

E. In connection with the First Modification, the Loan was placed into a pool
with that certain loan (the “Monterey Loan”) given by Lender to Sunrise Monterey
Senior Living, LP, a Delaware limited partnership and an affiliate of Borrower
(“Monterey Borrower”), evidenced by, among other things, that certain Building
Loan Agreement dated April 10, 2008 (as amended, supplemented or modified from
time to time, the “Monterey Loan Agreement”) by and among Monterey Borrower,
Lender, as Administrative Agent, and the “Lenders” (as defined in the Monterey
Loan Agreement) from time to time party to the Monterey Loan Agreement. As a
result of the pooling of these two loans, each of Borrower and Monterey
Borrower, among other things, provided certain assurances and security to Lender
for the others’ performance of their respective obligations to Lender.

 

F. By this Agreement, Borrower and Lender intend to modify and amend certain
terms and provisions of the Loan Documents.

 

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Loan No. 105093

 

NOW, THEREFORE, Borrower and Lender agree as follows:

 

1. CONDITIONS PRECEDENT. The following are conditions precedent to Lender’s
obligations under this Agreement, which conditions have been met as of or before
the date hereof:

 

  1.1 Receipt and approval by Lender of (i) a date down to Title Policy No.
NCS-307613-DC72 dated October 3, 2007, as the same has been modified or
supplemented, issued by First American Title Insurance Company (“Title
Company”); (ii) a date down to Title Policy No. NCS-307614-DC72 dated October 3,
2007, as the same has been modified or supplemented, issued by Title Company;
and (iii) assurance acceptable to Lender, without deletion or exception other
than those expressly approved by Lender in writing, that the priority and
validity of the Deed of Trust has not been and will not be impaired by this
Agreement or the transactions contemplated hereby;

 

  1.2 Receipt by Lender of the executed originals of (i) this Agreement; (ii) a
Second Amendment to the Deed of Trust (the “Second DoT Amendment”); and
(iii) any and all other documents and agreements which are required by this
Agreement or by any other Loan Document, each in form and content acceptable to
Lender;

 

  1.3 Recordation in the Official Records of (i) the Second DoT Amendment, and
(ii) any other documents which are reasonably required to be recorded in
connection with this Agreement or by any other Loan Document (if any);

 

  1.4 Reimbursement to Lender by Borrower of Lender’s actual costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby, including, without limitation, title insurance costs, recording fees,
reasonable attorneys’ fees, engineers’ and inspection fees and documentation
costs and charges, whether such services are furnished by Lender’s employees or
agents or by independent contractors;

 

  1.5 The representations and warranties contained in this Agreement are true
and correct;

 

  1.6 All payments due and owing to Lender under the Loan Documents have been
paid current as of the effective date of this Agreement;

 

  1.7 The payment to Lender of an extension fee, in an amount totaling
THIRTY-FIVE THOUSAND AND NO/100THS DOLLARS ($35,000.00), in connection with the
modification of both of (i) the Loan and (ii) the Monterey Loan;

 

  1.8 The payment to Lender of FIVE MILLION AND NO/100THS DOLLARS
($5,000,000.00), which shall be applied against the outstanding principal amount
owing in connection with the Loan, and which principal balance reduction shall
reduce Lender’s commitment by a like amount; and

 

  1.9 All the conditions in Section 1 of the Second Modification Agreement for
the Monterey Loan have been satisfied.

 

2. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and warrants that
no Default, breach or failure of condition has occurred, or would exist with
notice or the lapse of time or both, under any of the Loan Documents (as
modified by this Agreement) and that all representations and warranties herein
and in the other Loan Documents, which representations and warranties are
expressly incorporated herein by this reference as if set forth in their
entirety in this Agreement, are true and correct as of the date hereof, which
representations and warranties shall survive execution of this Agreement.

 

3. MODIFICATION OF LOAN DOCUMENTS GENERALLY. The Loan Documents are hereby
supplemented and modified to incorporate the following, which shall supersede
and prevail over any conflicting provisions of the Loan Documents:

 

  3.1 The “Maturity Date” of the Loan shall be December 1, 2011. All sums
actually owing on the Loan, including but not limited to all outstanding
principal, accrued and unpaid interest, outstanding late charges, unpaid fees,
and all other amounts and obligations outstanding under the Amended and Restated
Note (as defined below) and the other Loan Documents, shall be due and payable
no later than the Maturity Date.

 

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Loan No. 105093

 

  3.2 As a consequence of the payment described in Section 1.8 of this
Modification, the maximum principal sum Lender agrees to lend to Borrower and
Borrower agrees to borrow from Lender shall be reduced to SIX MILLION NINE
HUNDRED AND SIX THOUSAND NINE HUNDRED FIFTY AND NO/100THS DOLLARS
($6,906,950.00).

 

  3.3 Simultaneously with the execution of this Agreement, Borrower has executed
and delivered that certain Second Amended and Restated Promissory Note Secured
by Deed of Trust (“Amended and Restated Note”), in the form of Exhibit A
attached hereto and dated as of even date herewith. The Note is hereby replaced
by the Amended and Restated Note and shall be effective as of the date hereof.
The terms, covenants and conditions of the Amended and Restated Note shall
supersede the Note, and all references to the Note or Notes in the Loan
Documents are hereby amended to mean the Amended and Restated Note.

 

  3.4 Notwithstanding any language to the contrary contained herein, Lender
hereby waives all the defaults of Borrower or any of Borrower’s guarantors,
indemnitors or affiliates to the extent the same occurred prior to the date
hereof and is specifically listed on Schedule 3.4 attached hereto.

 

4. MODIFICATION OF LOAN AGREEMENT. The Loan Agreement is hereby supplemented and
modified to incorporate the following, which shall supersede and prevail over
any conflicting provisions of the Loan Agreement:

 

  4.1 Section 1.6 of the Loan Agreement is hereby deleted in its entirety.

 

5. FORMATION AND ORGANIZATIONAL DOCUMENTS. Borrower has previously delivered to
Lender all of the relevant formation and organizational documents of Borrower,
of the partners or joint venturers of Borrower (if any), and of all guarantors
of the Loan (if any), and all such formation documents remain in full force and
effect and have not been amended or modified since they were delivered to
Lender. Borrower hereby certifies that: (i) the above documents are all of the
relevant formation and organizational documents of Borrower; (ii) they remain in
full force and effect; and (iii) they have not been amended or modified since
they were previously delivered to Lender.

 

6. HAZARDOUS MATERIALS; CCP §726.5; §736. Without in any way limiting any other
provision of this Agreement, Borrower expressly reaffirms as of the date hereof,
and continuing hereafter: (i) each and every representation and warranty in the
Loan Documents (as modified herein) respecting “Hazardous Materials”; and
(ii) each and every covenant and indemnity in the Loan Documents (as modified
herein) respecting “Hazardous Materials”. In addition, Borrower and Lender agree
that: (i) this Section is intended as Lender’s written request for information
(and Borrower’s response) concerning the environmental condition of the real
property security under the terms of California Code of Civil Procedure §726.5;
and (ii) each representation and/or covenant in this Agreement or any other Loan
Document (together with any indemnity applicable to a breach of any such
representation and/or covenant) with respect to the environmental condition of
the real property security is intended by Lender and Borrower to be an
“environmental provision” for purposes of California Code of Civil Procedure
§736.

 

7. WAIVERS. In further consideration of Lender entering into this Agreement,
Borrower waives, with respect to the Loan, any and all rights to which Borrower
is or may be entitled pursuant to Section 580a (the so-called “Fair Market
Antideficiency Rule”), 580d (the so-called “Private Sale Antideficiency Rule”)
and 726 (the so-called “One Form of Action Rule”) of the California Code of
Civil Procedure, as amended or recodified from time to time, together with any
other antideficiency or similar laws which limit, qualify or reduce Borrower’s
obligations under the Loan Documents.

 

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Loan No. 105093

 

8. NON-IMPAIRMENT. Except as expressly provided herein, nothing in this
Agreement shall alter or affect any provision, condition, or covenant contained
in the Note or other Loan Document or affect or impair any rights, powers, or
remedies of Lender, it being the intent of the parties hereto that the
provisions of the Note and other Loan Documents shall continue in full force and
effect except as expressly modified hereby.

 

9. MISCELLANEOUS. This Agreement and the other Loan Documents shall be governed
by and interpreted in accordance with the laws of the State of California,
except if preempted by federal law. In any action brought or arising out of this
Agreement or the Loan Documents, Borrower, and the general partners and joint
venturers of Borrower, hereby consent to the jurisdiction of any federal or
state court having proper venue within the State of California and also consent
to the service of process by any means authorized by California or federal law.
The headings used in this Agreement are for convenience only and shall be
disregarded in interpreting the substantive provisions of this Agreement. All
capitalized terms used herein, which are not defined herein, shall have the
meanings given to them in the other Loan Documents. Time is of the essence of
each term of the Loan Documents, including this Agreement. If any provision of
this Agreement or any of the other Loan Documents shall be determined by a court
of competent jurisdiction to be invalid, illegal or unenforceable, that portion
shall be deemed severed from this Agreement and the remaining parts shall remain
in full force as though the invalid, illegal, or unenforceable portion had never
been a part thereof.

 

10. INTEGRATION; INTERPRETATION. The Loan Documents, including this Agreement,
contain or expressly incorporate by reference the entire agreement of the
parties with respect to the matters contemplated therein and supersede all prior
negotiations or agreements, written or oral. The Loan Documents shall not be
modified except by written instrument executed by all parties. Any reference to
the Loan Documents includes any amendments, renewals or extensions now or
hereafter approved by Lender in writing. Notwithstanding anything set forth
herein, Borrower and Lender acknowledge and agree that each has participated in
the negotiation and drafting of this document, and that this Agreement and all
the Loan Documents shall not be interpreted or construed against or in favor of
any party by virtue of the identity, interest or affiliation of its preparer.

 

11. EXECUTION IN COUNTERPARTS. To facilitate execution, this document may be
executed in as many counterparts as may be convenient or required. It shall not
be necessary that the signature of, or on behalf of, each party, or that the
signature of all persons required to bind any party, appear on each counterpart.
All counterparts shall collectively constitute a single document. It shall not
be necessary in making proof of this document to produce or account for more
than a single counterpart containing the respective signatures of, or on behalf
of, each of the parties hereto. Any signature page to any counterpart may be
detached from such counterpart without impairing the legal effect of the
signatures thereon and thereafter attached to another counterpart identical
thereto except having attached to it additional signature pages.

 

12. GENERAL RELEASE. In consideration of the benefits provided to Borrower under
the terms and provisions hereof, Borrower hereby agrees as follows (“General
Release”):

 

  12.1 Borrower, for itself and on behalf of its respective successors and
assigns, does hereby release, acquit and forever discharge Lender, all of
Lender’s predecessors in interest, and all of Lender’s past and present
officers, directors, attorneys, affiliates, employees and agents, of and from
any and all claims, demands, obligations, liabilities, indebtedness, breaches of
contract, breaches of duty or of any relationship, acts, omissions, misfeasance,
malfeasance, causes of action, defenses, offsets, debts, sums of money,
accounts, compensation, contracts, controversies, promises, damages, costs,
losses and expenses, of every type, kind, nature, description or character,
whether known or unknown, suspected or unsuspected, liquidated or unliquidated,
each as though fully set forth herein at length (each, a “Released Claim” and
collectively, the “Released Claims”), that Borrower now has or may acquire as of
the later of: (i) the date this Agreement becomes effective through the
satisfaction (or waiver by Lender) of all conditions hereto; or (ii) the date
that Borrower has executed and delivered this Agreement to Lender (hereafter,
the “Release Date”), including without limitation, those Released Claims in any
way arising out of, connected with or related to any and all prior credit
accommodations, if any, provided by Lender, or any of Lender’s predecessors in
interest, to Borrower, and any agreements, notes or documents of any kind
related thereto or the transactions contemplated thereby or hereby, or any other
agreement or document referred to herein or therein.

 

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Loan No. 105093

 

  12.2 Borrower hereby acknowledges, represents and warrants to Lender as
follows:

 

  (i) Borrower understands the meaning and effect of Section 1542 of the
California Civil Code which provides:

“Section 1542. GENERAL RELEASE; EXTENT. A GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR
AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

 

  (ii) With regard to Section 1542 of the California Civil Code, Borrower agrees
to assume the risk of any and all unknown, unanticipated or misunderstood
defenses and Released Claims which are released by the provisions of this
General Release in favor of Lender, and Borrower hereby waives and releases all
rights and benefits which it might otherwise have under Section 1542 of the
California Civil Code with regard to the release of such unknown, unanticipated
or misunderstood defenses and Released Claims.

 

  12.3 Each person signing below on behalf of Borrower acknowledges that he or
she has read each of the provisions of this General Release. Each such person
fully understands that this General Release has important legal consequences,
and each such person realizes that they are releasing any and all Released
Claims that Borrower may have as of the Release Date. Borrower hereby
acknowledges that it has had an opportunity to obtain a lawyer’s advice
concerning the legal consequences of each of the provisions of this General
Release.

 

  12.4 Borrower hereby specifically acknowledges and agrees that: (i) none of
the provisions of this General Release shall be construed as or constitute an
admission of any liability on the part of Lender; (ii) the provisions of this
General Release shall constitute an absolute bar to any Released Claim of any
kind, whether any such Released Claim is based on contract, tort, warranty,
mistake or any other theory, whether legal, statutory or equitable; and
(iii) any attempt to assert a Released Claim barred by the provisions of this
General Release shall subject Borrower to the provisions of applicable law
setting forth the remedies for the bringing of groundless, frivolous or baseless
claims or causes of action.

[signature page follows]

 

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Loan No. 105093

IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be duly
executed as of the date first above written.

 

“LENDER”

WELLS FARGO BANK,

NATIONAL ASSOCIATION

By:  

/s/ Brian Moe

Name:  

Brian Moe

Its:  

Assistant Vice President

“BORROWER” SUNRISE PASADENA CA SENIOR LIVING, LLC, a California limited
liability company By:   SUNRISE SENIOR LIVING INVESTMENTS, INC., a Virginia
corporation, its Sole Member   By:   /s/ Edward W. Burnett   Name:   Edward W.
Burnett   Its:  

Vice President

SUNRISE PLEASANTON CA SENIOR LIVING, LP, a Delaware limited partnership By:  
SUNRISE PLEASANTON GP, LLC, a Delaware limited liability company, its General
Partner   By:   SUNRISE SENIOR LIVING INVESTMENTS, INC., a Virginia corporation,
its Sole Member     By:  

/s/ Edward W. Burnett

    Name:  

Edward W. Burnett

    Its:  

Vice President

 

Second Modification Agreement (Secured Loan)

[Pasadena/Pleasanton]

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Loan No. 105093

 

GUARANTOR’S/HAZARDOUS INDEMNITOR’S CONSENT AND GENERAL RELEASE

The undersigned (“Guarantor”) consents to the foregoing Second Modification
Agreement and the transactions contemplated thereby and reaffirms its
obligations under a Repayment Guaranty (Secured Loan) and a Hazardous Materials
Indemnity Agreement (Unsecured), each dated September 28, 2007 (as the same have
been amended or modified to date and may be further modified or amended from
time to time, collectively, the “Guaranty”), and its waivers, as set forth in
the Guaranty, of each and every one of the possible defenses to such
obligations. Guarantor further reaffirms that its obligations under the Guaranty
are separate and distinct from Borrower’s obligations. Capitalized terms used
but not otherwise defined herein shall have the meanings specified in the
Modification Agreement.

Guarantor understands that the Lender’s exercise of a non-judicial foreclosure
sale under the subject Deed of Trust will, by virtue of California Code of Civil
Procedure Section 580d, result in the destruction of any subrogation,
reimbursement or contribution rights which Guarantor may have against the
Borrower. Guarantor further understands that such exercise by Lender and the
consequent destruction of subrogation, reimbursement or contribution rights
would constitute a defense to the enforcement of the Guaranty by Lender. With
this explicit understanding, Guarantor nevertheless specifically waives any and
all rights and defenses arising out of an election of remedies by Lender, even
though that election of remedies, such as a nonjudicial foreclosure with respect
to security for a guaranteed obligation, has destroyed Guarantor’s rights of
subrogation and reimbursement against the principal by the operation of
Section 580d of the California Code of Civil Procedure or otherwise. Guarantor
further specifically waives any and all rights and defenses that Guarantor may
have because Borrower’s debt is secured by real property; this means, among
other things, that: (1) Lender may collect from Guarantor without first
foreclosing on any real or personal property collateral pledged by Borrower;
(2) if Lender forecloses on any real property collateral pledged by Borrower,
then (A) the amount of the debt may be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if the collateral is worth more
than the sale price, and (B) Lender may collect from Guarantor even if Lender,
by foreclosing on the real property collateral, has destroyed any right
Guarantor may have to collect from Borrower. The foregoing sentence is an
unconditional and irrevocable waiver of any rights and defenses Guarantor may
have because Borrower’s debt is secured by real property. These rights and
defenses being waived by Guarantor include, but are not limited to, any rights
or defenses based upon Section 580a, 580b, 580d or 726 of the California Code of
Civil Procedure. This understanding and waiver is made in addition to and not in
limitation of any of the existing terms and conditions of the Guaranty.

In consideration of the benefits provided to Borrower and Guarantor under the
terms and provisions hereof, Guarantor hereby agrees as follows (“General
Release”):

 

  (a) Guarantor, for itself and on behalf of its successors and assigns, does
hereby release, acquit and forever discharge Lender, all of Lender’s
predecessors in interest, and all of Lender’s past and present officers,
directors, attorneys, affiliates, employees and agents, of and from any and all
claims, demands, obligations, liabilities, indebtedness, breaches of contract,
breaches of duty or of any relationship, acts, omissions, misfeasance,
malfeasance, causes of action, defenses, offsets, debts, sums of money,
accounts, compensation, contracts, controversies, promises, damages, costs,
losses and expenses, of every type, kind, nature, description or character,
whether known or unknown, suspected or unsuspected, liquidated or unliquidated,
each as though fully set forth herein at length (each, a “Released Claim” and
collectively, the “Released Claims”), that Guarantor now has or may acquire as
of the later of: (i) the date this Agreement becomes effective through the
satisfaction (or waiver by Lender) of all conditions hereto; or (ii) the date
that Borrower and each guarantor hereunder have executed and delivered this
Agreement to Lender (hereafter, the “Release Date”), including without
limitation, those Released Claims in any way arising out of, connected with or
related to any and all prior credit accommodations, if any, provided by Lender,
or any of Lender’s predecessors in interest, to Borrower or Guarantor, and any
agreements, notes or documents of any kind related thereto or the transactions
contemplated thereby or hereby, or any other agreement or document referred to
herein or therein.

 

  (b) Guarantor hereby acknowledges, represents and warrants to Lender as
follows:

 

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Loan No. 105093

 

  (i) Guarantor understands the meaning and effect of Section 1542 of the
California Civil Code which provides:

“Section 1542. GENERAL RELEASE; EXTENT. A GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR
AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

 

  (ii) With regard to Section 1542 of the California Civil Code, Guarantor
agrees to assume the risk of any and all unknown, unanticipated or misunderstood
defenses and Released Claims which are released by the provisions of this
General Release in favor of Lender, and Guarantor hereby waives and releases all
rights and benefits which it might otherwise have under Section 1542 of the
California Civil Code with regard to the release of such unknown, unanticipated
or misunderstood defenses and Released Claims.

 

  (c) Each person signing below on behalf of Guarantor acknowledges that he or
she has read each of the provisions of this General Release. Each such person
fully understands that this General Release has important legal consequences,
and each such person realizes that they are releasing any and all Released
Claims that Guarantor may have as of the Release Date. Guarantor hereby
acknowledges that it has had an opportunity to obtain a lawyer’s advice
concerning the legal consequences of each of the provisions of this General
Release.

 

  (d) Guarantor hereby specifically acknowledges and agrees that: (i) none of
the provisions of this General Release shall be construed as or constitute an
admission of any liability on the part of Lender; (ii) the provisions of this
General Release shall constitute an absolute bar to any Released Claim of any
kind, whether any such Released Claim is based on contract, tort, warranty,
mistake or any other theory, whether legal, statutory or equitable; and
(iii) any attempt to assert a Released Claim barred by the provisions of this
General Release shall subject Guarantor to the provisions of applicable law
setting forth the remedies for the bringing of groundless, frivolous or baseless
claims or causes of action.

Dated as of: August 31, 2010

“GUARANTOR”

 

SUNRISE SENIOR LIVING, INC.,

a Delaware corporation

By:  

/s/ Julie Pangelinan

Name:  

Julie A. Pangelinan

Its:  

Chief Financial Officer

 

Signature Page for Second Modification Agreement (Secured Loan) – Guarantor’s
Consent (Sunrise Senior Living, Inc.)

[Pasadena/Pleasanton Modification Agreement]

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Loan No. 105093

 

GUARANTOR’S CONSENT AND GENERAL RELEASE

The undersigned (“Guarantor”) consents to the foregoing Second Modification
Agreement and the transactions contemplated thereby and reaffirms its
obligations under a Secured Repayment and Performance Guaranty dated
February 10, 2010 (as the same has been amended or modified to date and may be
further amended or modified from time to time, the “Guaranty”), and its waivers,
as set forth in the Guaranty, of each and every one of the possible defenses to
such obligations. Guarantor further reaffirms that its obligations under the
Guaranty are separate and distinct from Borrower’s obligations. Capitalized
terms used but not otherwise defined herein shall have the meanings specified in
the Modification Agreement.

Guarantor understands that the Lender’s exercise of a non-judicial foreclosure
sale under the subject Deed of Trust will, by virtue of California Code of Civil
Procedure Section 580d, result in the destruction of any subrogation,
reimbursement or contribution rights which Guarantor may have against the
Borrower. Guarantor further understands that such exercise by Lender and the
consequent destruction of subrogation, reimbursement or contribution rights
would constitute a defense to the enforcement of the Guaranty by Lender. With
this explicit understanding, Guarantor nevertheless specifically waives any and
all rights and defenses arising out of an election of remedies by Lender, even
though that election of remedies, such as a nonjudicial foreclosure with respect
to security for a guaranteed obligation, has destroyed Guarantor’s rights of
subrogation and reimbursement against the principal by the operation of
Section 580d of the California Code of Civil Procedure or otherwise. Guarantor
further specifically waives any and all rights and defenses that Guarantor may
have because Borrower’s debt is secured by real property; this means, among
other things, that: (1) Lender may collect from Guarantor without first
foreclosing on any real or personal property collateral pledged by Borrower;
(2) if Lender forecloses on any real property collateral pledged by Borrower,
then (A) the amount of the debt may be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if the collateral is worth more
than the sale price, and (B) Lender may collect from Guarantor even if Lender,
by foreclosing on the real property collateral, has destroyed any right
Guarantor may have to collect from Borrower. The foregoing sentence is an
unconditional and irrevocable waiver of any rights and defenses Guarantor may
have because Borrower’s debt is secured by real property. These rights and
defenses being waived by Guarantor include, but are not limited to, any rights
or defenses based upon Section 580a, 580b, 580d or 726 of the California Code of
Civil Procedure. This understanding and waiver is made in addition to and not in
limitation of any of the existing terms and conditions of the Guaranty.

In consideration of the benefits provided to Borrower and Guarantor under the
terms and provisions hereof, Guarantor hereby agrees as follows (“General
Release”):

 

  (a) Guarantor, for itself and on behalf of its successors and assigns, does
hereby release, acquit and forever discharge Lender, all of Lender’s
predecessors in interest, and all of Lender’s past and present officers,
directors, attorneys, affiliates, employees and agents, of and from any and all
claims, demands, obligations, liabilities, indebtedness, breaches of contract,
breaches of duty or of any relationship, acts, omissions, misfeasance,
malfeasance, causes of action, defenses, offsets, debts, sums of money,
accounts, compensation, contracts, controversies, promises, damages, costs,
losses and expenses, of every type, kind, nature, description or character,
whether known or unknown, suspected or unsuspected, liquidated or unliquidated,
each as though fully set forth herein at length (each, a “Released Claim” and
collectively, the “Released Claims”), that Guarantor now has or may acquire as
of the later of: (i) the date this Agreement becomes effective through the
satisfaction (or waiver by Lender) of all conditions hereto; or (ii) the date
that Borrower and each guarantor hereunder have executed and delivered this
Agreement to Lender (hereafter, the “Release Date”), including without
limitation, those Released Claims in any way arising out of, connected with or
related to any and all prior credit accommodations, if any, provided by Lender,
or any of Lender’s predecessors in interest, to Borrower or Guarantor, and any
agreements, notes or documents of any kind related thereto or the transactions
contemplated thereby or hereby, or any other agreement or document referred to
herein or therein.

 

  (b) Guarantor hereby acknowledges, represents and warrants to Lender as
follows:

 

  (i) Guarantor understands the meaning and effect of Section 1542 of the
California Civil Code which provides:

“Section 1542. GENERAL RELEASE; EXTENT. A GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR
AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

 

Page 9 of 20

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Loan No. 105093

 

  (ii) With regard to Section 1542 of the California Civil Code, Guarantor
agrees to assume the risk of any and all unknown, unanticipated or misunderstood
defenses and Released Claims which are released by the provisions of this
General Release in favor of Lender, and Guarantor hereby waives and releases all
rights and benefits which it might otherwise have under Section 1542 of the
California Civil Code with regard to the release of such unknown, unanticipated
or misunderstood defenses and Released Claims.

 

  (c) Each person signing below on behalf of Guarantor acknowledges that he or
she has read each of the provisions of this General Release. Each such person
fully understands that this General Release has important legal consequences,
and each such person realizes that they are releasing any and all Released
Claims that Guarantor may have as of the Release Date. Guarantor hereby
acknowledges that it has had an opportunity to obtain a lawyer’s advice
concerning the legal consequences of each of the provisions of this General
Release.

 

  (d) Guarantor hereby specifically acknowledges and agrees that: (i) none of
the provisions of this General Release shall be construed as or constitute an
admission of any liability on the part of Lender; (ii) the provisions of this
General Release shall constitute an absolute bar to any Released Claim of any
kind, whether any such Released Claim is based on contract, tort, warranty,
mistake or any other theory, whether legal, statutory or equitable; and
(iii) any attempt to assert a Released Claim barred by the provisions of this
General Release shall subject Guarantor to the provisions of applicable law
setting forth the remedies for the bringing of groundless, frivolous or baseless
claims or causes of action.

Dated as of: August 31, 2010

“GUARANTOR”

 

SUNRISE MONTEREY SENIOR LIVING, LP,

a Delaware limited partnership

By:   SUNRISE SENIOR LIVING INVESTMENTS, INC., a Virginia corporation, its
General Partner   By:  

/s/ Edward W. Burnett

  Name:  

Edward W. Burnett

  Its:  

Vice President

 

Signature Page for Second Modification Agreement (Secured Loan) – Guarantor’s
Consent (Sunrise Monterey Borrower)

[Pasadena/Pleasanton Modification Agreement]

--------------------------------------------------------------------------------

EXHIBIT A

Loan No. 105093

 

FORM OF SECOND AMENDED AND RESTATED PROMISSORY NOTE SECURED BY DEED OF TRUST

 

$6,906,950.00   Date: August 31, 2010

THIS SECOND AMENDED AND RESTATED PROMISSORY NOTE SECURED BY DEED OF TRUST, dated
as of August 31, 2010 (this “Note”), is made by SUNRISE PASADENA CA SENIOR
LIVING, LLC, a California limited liability company (“Pasadena Borrower”), and
SUNRISE PLEASANTON CA SENIOR LIVING, LP, a Delaware limited partnership
(“Pleasanton Borrower” and together with Pasadena Borrower “Borrower”), in favor
of WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”).

WHEREAS, Lender has previously made a loan in the original principal sum of
$21,906,950.00 (the “Loan”) to Borrower;

WHEREAS, the Loan is evidenced by a certain Amended and Restated Promissory Note
Secured by Deed of Trust dated as of February 10, 2010, given by Borrower to
Lender (the “Original Note”);

WHEREAS, at the request of Borrower, Lender and Borrower entered into that
certain Second Modification Agreement dated as of the date hereof (the
“Modification Agreement”) whereby, among other things, Lender has agreed to
extend the Maturity Date of the Loan, and, as a consequence of a pay down of
loan principal by Borrower as set forth in the Modification Agreement, Lender
and Borrower have agreed that the maximum amount of Lender’s commitment to lend
under the Loan Agreement (defined below) shall be reduced to SIX MILLION NINE
HUNDRED AND SIX THOUSAND NINE HUNDRED FIFTY AND NO/100THS DOLLARS
($6,906,950.00);

WHEREAS, Lender is willing to enter into the Modification Agreement subject to,
among other things, Borrower’s execution and delivery of this Note;

NOW, THEREFORE, by Borrower’s execution and delivery, and Lender’s acceptance of
delivery from Borrower, of this Note, this Note is deemed to amend and restate
the Original Note in its entirety and the Original Note is hereby amended and
restated in its entirety so that the terms, covenants, agreements, rights,
obligations and conditions contained in this Note shall supersede and control
the terms, covenants, agreements, rights, obligations and conditions of the
Original Note, as follows:

 

1. PROMISE TO PAY. FOR VALUE RECEIVED, each of Pasadena Borrower and Pleasanton
Borrower jointly and severally promise to pay to the order of Lender, at the Los
Angeles Loan Center, 2120 East Park Place, Suite 100, El Segundo, CA 90245, or
at such other place as may be designated in writing by Lender, the principal sum
of SIX MILLION NINE HUNDRED AND SIX THOUSAND NINE HUNDRED FIFTY AND NO/100THS
DOLLARS ($6,906,950.00) or so much thereof as may from time to time be owing
hereunder by reason of advances by Lender to or for the benefit or account of
Borrower, with interest thereon, per annum, at one or more of the Effective
Rates calculated in accordance with the terms and provisions of the Fixed Rate
Agreement attached hereto as Exhibit A (based on a 360-day year and charged on
the basis of actual days elapsed); provided, however, that in no event shall the
interest rate on the outstanding principal balance of this Note, or any portion
thereof, be less than 4.5% per annum (based on a 360-day year and charged on the
basis of actual days elapsed). All sums owing hereunder are payable in lawful
money of the United States of America, in immediately available funds without
offset, deduction or counterclaim of any kind. This Note is executed pursuant to
that certain Loan Agreement dated September 28, 2007 between Borrower and Lender
(as the same has been amended or modified to date and may be further amended or
modified from time to time, the “Loan Agreement”). Unless otherwise defined
herein, capitalized terms used in this Note and in any Exhibit hereto have the
meanings given to them in the Loan Agreement.

 

2. INTEREST. Interest accrued on this note (“Note”) shall be due and payable on
the first day of each month commencing with the first month after the date of
this Note.

 

3.

MATURITY DATE. The outstanding principal balance of this Note, together with all
accrued and unpaid interest, shall be due and payable in full on the Maturity
Date. Principal amounts outstanding hereunder,

 

Page 11 of 20

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EXHIBIT A

Loan No. 105093

 

 

upon which repayment obligations exist and interest accrues, shall be determined
by the records of the Lender, which shall be deemed to be conclusive in the
absence of clear and convincing evidence to the contrary presented by Borrower.

 

4. SECURED BY DEED OF TRUST. This Note is secured by, among other things, that
certain Deed of Trust with Absolute Assignment of Leases and Rents, Security
Agreement and Fixture Filing (as the same has been amended or modified to date
and may be further amended or modified from time to time, “Deed of Trust”) dated
as of September 28, 2007, executed by Borrower, as trustor, to a trustee for the
benefit of Lender and the other Loan Documents as defined in the Loan Agreement.
Reference is made to the Loan Agreement for a description of the terms and
conditions upon which advances may be made under this Note and repayment of the
indebtedness evidenced by this Note may be accelerated.

 

5. INTENTIONALLY LEFT BLANK.

 

6. LATE CHARGE. If any interest or principal payment required hereunder is not
received by Lender (whether by direct debit or otherwise) on or before the 15th
calendar day of the month (regardless of whether the 15th day falls on a
Saturday, Sunday or legal holiday) in which it becomes due, Borrower shall pay,
at Lender’s option, a late or collection charge equal to 5% of the amount of
such unpaid payment.

 

7. DEFAULT RATE. From and after the Maturity Date, or such earlier date as all
sums owing on this Note become due and payable by acceleration or otherwise, all
sums owing on this Note shall bear interest until paid in full (based on a
360-day year and charged on the basis of actual days elapsed) at a rate equal to
5% per annum in excess of the interest rate otherwise accruing under this Note.

 

8. ACCELERATION. If: (a) Borrower shall fail to pay when due any sums payable
hereunder; or (b) a Default (as defined in the Deed of Trust) occurs under the
Deed of Trust; THEN Lender may, at its sole option, declare all sums owing under
this Note immediately due and payable; provided, however, that if any document
related to this Note provides for automatic acceleration of payment of sums
owing hereunder, all sums owing hereunder shall be automatically due and payable
in accordance with the terms of that document.

 

9. JOINT AND SEVERAL LIABILITY. If this Note is executed by more than one person
or entity as Borrower, the obligations of each such person or entity shall be
joint and, several. No person or entity shall be a mere accommodation maker, but
each shall be primarily and directly liable hereunder.

 

10. WAIVER. Except as otherwise provided, Borrower waives: presentment; demand;
notice of dishonor; notice of default or delinquency; notice of acceleration;
notice of protest and nonpayment; notice of costs, expenses or losses and
interest thereon; notice of late charges; and diligence in taking any action to
collect any sums owing under this Note or in proceeding against any of the
rights or interests in or to properties securing payment of this Note.

 

11. TIME OF THE ESSENCE. Time is of the essence with respect to every provision
hereof.

 

12. GOVERNING LAW. This Note shall be governed by, and construed and enforced in
accordance with the laws of the state where the Property is located, except to
the extent preempted by federal laws.

 

13. COMMERCIAL USE MAXIMUM RATE PERMITTED BY LAW. Borrower hereby represents
that this loan is for commercial use and not for personal, family or household
purposes. It is the specific intent of the Borrower and Lender that this Note
bear a lawful rate of interest, and if any court of competent jurisdiction
should determine that the rate herein provided for exceeds that which is
statutorily permitted for the type of transaction evidenced hereby, the interest
rate shall be reduced to the highest rate permitted by applicable law, with any
excess interest heretofore collected being applied against principal or, if such
principal has been fully repaid, returned to Borrower on demand.

 

Page 12 of 20

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EXHIBIT A

Loan No. 105093

 

14. INCONSISTENCIES. In the event of any inconsistencies between the terms of
this Note and the terms of any other Loan Document, the terms of this Note shall
prevail.

 

15. LENDER’S DAMAGES. Borrower recognizes that its default in making any payment
as provided herein or in any other Loan Document as agreed to be paid when due,
or the occurrence of any other Default hereunder or under any other Loan
Document, will require Lender to incur additional expense in servicing and
administering the Loan, in loss to Lender of the use of the money due and in
frustration to Lender in meeting its other financial and loan commitments and
that the damages caused thereby would be extremely difficult and impractical to
ascertain. Borrower agrees (a) that an amount equal to the late charge plus the
accrual of interest at the default rate is a reasonable estimate of the damage
to Lender in the event of a late payment, and (b) that the accrual of interest
at the default rate following any other Default is a reasonable estimate of the
damage to Lender in the event of such other Default, regardless of whether there
has been an acceleration of the loan evidenced hereby. Nothing in this Note
shall be construed as an obligation on the part of Lender to accept, at any
time, less than the full amount then due hereunder, or as a waiver or limitation
of Lender’s right to compel prompt performance.

 

16. WAIVER OF RIGHT TO TRIAL BY JURY. BORROWER HEREBY EXPRESSLY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING
UNDER THIS NOTE OR ANY OTHER LOAN DOCUMENT, INCLUDING, WITHOUT LIMITATION, ANY
PRESENT OR FUTURE MODIFICATION HEREOF OR THEREOF OR (b) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF BORROWER AND LENDER OR ANY OF
THEM WITH RESPECT TO THIS NOTE OR ANY OTHER LOAN DOCUMENT (AS NOW OR HEREAFTER
MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH
CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND
BORROWER HEREBY AGREES AND CONSENTS THAT LENDER MAY FILE AN ORIGINAL COUNTERPART
OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
BORROWER TO THE WAIVER OF ANY RIGHT BORROWER MIGHT OTHERWISE HAVE TO TRIAL BY
JURY.

 

17. EXHIBITS. All exhibits, schedules or other items attached hereto are
incorporated into this Note by such attachment for all purposes.

[signature page follows]

 

Page 13 of 20

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Exhibit A

Loan No. 105093

IN WITNESS WHEREOF, Borrower has executed this Note as of the day and year set
forth above.

 

“BORROWER”  

SUNRISE PASADENA CA SENIOR LIVING, LLC,

a California limited liability company

    By:  

SUNRISE SENIOR LIVING INVESTMENTS, INC.,

a Virginia corporation, its Sole Member

    By:  

 

    Name:  

 

    Its:  

 

 

SUNRISE PLEASANTON CA SENIOR LIVING, LP,

a Delaware limited partnership

    By:  

SUNRISE PLEASANTON GP, LLC,

a Delaware limited liability company, its General Partner

      By:  

SUNRISE SENIOR LIVING INVESTMENTS, INC.,

a Virginia corporation, its Sole Member

      By:  

 

      Name:  

 

      Its:  

 

 

 

Page 14 of 20

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EXHIBIT A of Second Amended and Restated Promissory Note

Loan No. 105093

 

EXHIBIT A

FIXED RATE AGREEMENT

This Exhibit A to Second Amended and Restated Promissory Note Secured by Deed of
Trust (this “Agreement”), dated August 31, 2010, is made by SUNRISE PASADENA CA
SENIOR LIVING, LLC, a California limited liability company, and SUNRISE
PLEASANTON CA SENIOR LIVING, LP, a Delaware limited partnership, jointly and
severally, both as Borrower, to the order of WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Lender.

RECITALS

Borrower has requested and Lender has agreed to provide the option to fix the
rate of interest for specified periods on specified portions of the outstanding
principal balance as a basis for calculating the Effective Rate on such portions
of the principal amounts owing under this Note (the “Fixed Option”). Borrower
acknowledges the following: (i) it understands the process of exercising the
Fixed Rate Option as provided herein; (ii) as a result of the Fixed Rate Option,
various principal amounts owing under this Note may bear interest at different
rates and for different time periods; and (iii) by reason of certain variable
factors applicable to the Fixed Rate Option, it would be extremely difficult to
calculate Lender’s additional costs, expenses, and damages in the event of a
Default or prepayment by Borrower hereunder. Given the above, Borrower agrees
that the provisions herein (including, without limitation, the Fixed Rate Price
Adjustment defined below) provide for a reasonable and fair method for Lender to
recover its additional costs, expenses and damages in the event of a Default or
prepayment by Borrower.

 

1. RATES AND TERMS DEFINED. Various rates and terms not otherwise defined herein
are defined and described as follows:

“Alternate Rate” is a rate of interest per annum five percent (5%) in excess of
the applicable Effective Rate in effect from time to time.

“Applicable LIBO Rate” is the rate of interest, rounded upward to the nearest
whole multiple of one-hundredth of one percent (.01%), equal to the sum of:
(a) four percent (4.00%) plus (b) the LIBO Rate, which rate is divided by
one (1.00) minus the Reserve Percentage:

 

Applicable LIBO Rate = 4.00 %   +  

LIBO Rate

      (1 - Reserve Percentage)  

“Business Day(s)” means a day of the week (but not a Saturday, Sunday or
holiday) on which the offices of Lender are open to the public for carrying on
substantially all of Lender’s business functions.

“Fixed Rate Commencement Date” means the date upon which the Fixed Rate Period
commences on a Fixed Rate Portion other than a New Disbursement Portion.

“Fixed Rate Period” means the period of one (1) month; provided that no Fixed
Rate Period shall extend beyond the Maturity Date.

“Fixed Rate Portion” is the then outstanding principal balance of this Note
(excluding any New Disbursement Portions) which is subject to a One-Month LIBO
Rate. In the event Borrower is subject to a principal amortization schedule
under the terms and conditions of the Loan Documents, the Fixed Rate Portion
shall in no event exceed the maximum outstanding principal balance which will be
permissible on the last day of the Fixed Rate Period.

“LIBO Rate” is the rate of interest, rounded upward to the nearest whole
multiple of one-sixteenth of one percent (.0625%), quoted by Lender as the
London Inter-Bank Offered Rate for deposits in U.S. Dollars at approximately
9:00 a.m. California time, for a Fixed Rate Commencement Date or a Price
Adjustment Date, as appropriate, for purposes of calculating effective rates of
interest for loans or obligations making reference thereto for an amount
approximately equal to a Fixed Rate Portion and for a period of time
approximately equal to a Fixed Rate Period or the time remaining in a Fixed Rate
Period after a Price Adjustment Date, as appropriate.

 

Page 15 of 20

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EXHIBIT A of Second Amended and Restated Promissory Note

Loan No. 105093

 

“Loan Agreement” is that certain Loan Agreement of even date herewith between
Borrower and Lender. “Loan Documents” are the documents defined as such in the
Loan Agreement.

“New Disbursement Portion” is the portion or portions of the principal balance
of this Note disbursed by Lender to or for the benefit of Borrower since the
commencement of the most immediately preceding Fixed Rate Period.

“One-Month LIBO Rate” is the Applicable LIBO Rate for a period of one month, as
adjusted monthly by Lender on or about the first Business Day of each calendar
month, and which serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto.

“Prime Rate” is a base rate of interest which Lender establishes from time to
time and which serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto. Any change in an Effective
Rate due to a change in the Prime Rate shall become effective on the day each
such change is announced within Lender.

“Regulatory Costs” are, collectively, future, supplemental, emergency or other
changes in Reserve Percentages, assessment rates imposed by the FDIC, or similar
requirements or costs imposed by any domestic or foreign governmental authority
and related in any manner to a One-Month LIBO Rate.

“Reserve Percentage” is at any time the percentage announced within Lender as
the reserve percentage under Regulation D for loans and obligations making
reference to an Applicable LIBO Rate for a Fixed Rate Period or time remaining
in a Fixed Rate Period on a Price Adjustment Date, as appropriate. The Reserve
Percentage shall be based on Regulation D or other regulations from time to time
in effect concerning reserves for Eurocurrency Liabilities as defined in
Regulation D from related institutions as though Lender were in a net borrowing
position, as promulgated by the Board of Governors of the Federal Reserve
System, or its successor.

“Taxes” are, collectively, all withholdings, interest equalization taxes, stamp
taxes or other taxes (except income and franchise taxes) imposed by any domestic
or foreign governmental authority and related in any manner to a One-Month LIBO
Rate.

“Variable Rate” is a floating rate of interest per annum zero percent (0%) in
excess of the Prime Rate.

 

2. Effective Rate. The “Effective Rate” upon which interest shall be calculated
for this Note shall be one or more of the following:

 

  2.1 Provided no Default, Potential Default, breach, or failure of condition
exists under the Loan Agreement or any of the Loan Documents described therein
(this Note is one of the Loan Documents):

 

  (a) the initial disbursement of loan proceeds shall be the initial Fixed Rate
Portion and shall bear interest at the One-Month LIBO Rate, as determined by
Lender prior to the Effective Date.

 

  (b) for each New Disbursement Portion of the principal balance of this Note,
disbursed on a date other than a Fixed Rate Commencement Date, the Effective
Rate shall be the Variable Rate. Each New Disbursement Portion of the principal
balance of this Note disbursed on or outstanding on a Fixed Rate Commencement
Date shall be made part of the Fixed Rate Portion and shall bear interest at the
One-Month LIBO Rate. Thereafter, at each Fixed Rate Commencement Date, the then
outstanding Fixed Rate Portion (including all then outstanding New Disbursement
Portions) shall bear interest at the One-Month LIBO Rate for such Fixed Rate
Portion, as determined by Lender in accordance with the terms of this Note.
Lender shall determine the One-Month LIBO Rate for such Fixed Rate Portion on
the effective date of such Fixed Rate Period.

 

Page 16 of 20

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EXHIBIT A of Second Amended and Restated Promissory Note

Loan No. 105093

 

  (c) for those portions of the principal balance of this Note which are Fixed
Rate Portions, the Effective Rate for the Fixed Rate Period thereof shall be the
One-Month LIBO Rate set in accordance with the provisions hereof, provided,
however, if any of the transactions necessary for the calculation of interest at
any One-Month LIBO Rate should be or become prohibited or unavailable to Lender,
or, if in Lender’s good faith judgment, it is not possible or practical for
Lender to set a One-Month LIBO Rate for a Fixed Rate Portion, the Effective Rate
for such Fixed Rate Portion shall remain at or revert to the Variable Rate.

 

  2.2 During such time as a Default, breach or failure of condition exists under
the Loan Agreement or any of the Loan Documents; or from and after the date on
which all sums owing under this Note become due and payable by acceleration or
otherwise; or from and after the date on which the property encumbered by the
Deed of Trust or any portion thereof or interest therein, is sold, transferred,
mortgaged, assigned, or encumbered, whether voluntarily or involuntarily, or by
operation of law or otherwise, without Lender’s prior written consent (whether
or not the sums owing under this Note become due and payable by acceleration);
or from and after the Maturity Date, then at the option of Lender, the interest
rate applicable to the then outstanding principal balance of this Note shall be
the Alternate Rate.

 

3. Taxes, Regulatory Costs and Reserve Percentages. Upon Lender’s demand,
Borrower shall pay to Lender, in addition to all other amounts which may be, or
become, due and payable under this Note and Loan Documents, any and all actual
Taxes and Regulatory Costs, to the extent they are not internalized by
calculation of a One-Month LIBO Rate. Further, at Lender’s option, the One-Month
LIBO Rate shall be automatically adjusted by adjusting the Reserve Percentage,
as determined by Lender in its prudent banking judgment, from the date of
imposition (or subsequent date selected by Lender) of any such Regulatory Costs.
Lender shall give Borrower notice of any Taxes and Regulatory Costs as soon as
practicable after their occurrence, but Borrower shall be liable for any actual
Taxes and Regulatory Costs regardless of whether or when notice is so given.

 

4. Fixed Rate Price Adjustment. Borrower acknowledges that prepayment or
acceleration of a Fixed Rate Portion during a Fixed Rate Period shall result in
Lender’s incurring additional actual costs, expenses and/or liabilities and that
it is extremely difficult and impractical to ascertain the extent of such costs,
expenses and/or liabilities. Therefore, on the date a Fixed Rate Portion is
prepaid or the date all sums payable hereunder become due and payable, by
acceleration or otherwise (“Price Adjustment Date”), Borrower will pay Lender
(in addition to all other actual sums then owing to Lender) an amount (“Fixed
Rate Price Adjustment”) equal to the then present value of (a) the amount of
interest that would have accrued on the Fixed Rate Portion for the remainder of
the Fixed Rate Period at the One-Month LIBO Rate set on the Fixed Rate
Commencement Date, less (b) the amount of interest that would accrue on the same
Fixed Rate Portion for the same period if the One-Month LIBO Rate were set on
the Price Adjustment Date at the Applicable LIBO Rate in effect on the Price
Adjustment Date. The present value shall be calculated by using as a discount
rate the LIBO Rate quoted on the Price Adjustment Date.

By initialing this provision where indicated below, Borrower confirms that
Lender’s agreement to make the loan evidenced by this Note at the interest rates
and on the other terms set forth herein and in the other Loan Documents
constitutes adequate and valuable consideration, given individual weight by
Borrower, for this agreement.

 

 

 

   

 

   

Pasadena Borrower’s

Initials

   

Pleasanton Borrower’s

Initials

 

 

Page 17 of 20

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EXHIBIT A of Second Amended and Restated Promissory Note

Loan No. 105093

 

5. Purchase, Sale and Matching of Funds. Borrower understands, agrees and
acknowledges the following: (a) Lender has no obligation to purchase, sell
and/or match funds in connection with the use of a LIBO Rate as a basis for
calculating a One-Month LIBO Rate or Fixed Rate Price Adjustment; (b) a LIBO
Rate is used merely as a reference in determining a One-Month LIBO Rate and
Fixed Rate Price Adjustment; and (c) Borrower has accepted a LIBO Rate as a
reasonable and fair basis for calculating a One-Month LIBO Rate and a Fixed Rate
Price Adjustment. Borrower further agrees to pay the Fixed Rate Price
Adjustment, actual Taxes and Regulatory Costs, if any, whether or not Lender
elects to purchase, sell and/or match funds.

 

6. Miscellaneous. As used in this Agreement, the plural shall mean the singular
and the singular shall mean the plural as the context requires.

[signature page follows]

 

Page 18 of 20

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EXHIBIT A of Second Amended and Restated Promissory Note

Loan No. 105093

 

This Agreement is executed concurrently with and as part of this Note referred
to and described first above.

 

“BORROWER”  

SUNRISE PASADENA CA SENIOR LIVING, LLC,

a California limited liability company

    By:  

SUNRISE SENIOR LIVING INVESTMENTS, INC.,

a Virginia corporation, its Sole Member

    By:  

 

    Name:  

 

    Its:  

 

 

SUNRISE PLEASANTON CA SENIOR LIVING, LP,

a Delaware limited partnership

    By:  

SUNRISE PLEASANTON GP, LLC,

a Delaware limited liability company, its General Partner

      By:  

SUNRISE SENIOR LIVING INVESTMENTS, INC.,

a Virginia corporation, its Sole Member

      By:  

 

      Name:  

 

      Its:  

 

 

 

Page 19 of 20

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Schedule 3.4

Loan No. 105093

SCHEDULE 3.4

KNOWN DEFAULTS AND REPORTING INACCURACIES

OF BORROWER AND BORROWER’S GUARANTORS AND AFFILIATES

Loan Agreement:

Section 4.7 (Utilities): Any failure to make all utility services (including
gas, water, sewage, electrical and telephone) available at Property II (i.e.,
the Pleasanton Property).

 

Page 20 of 20