EXHIBIT 10.1

Greystone Partners II LP
222 W. Las Colinas Blvd.
Suite 2100
Irving, Texas 75039

March 5, 2009

Sunrise Senior Living, Inc.
Sunrise Development, Inc.
Sunrise Senior Living Investments, Inc.
Attn.: Mr. Mark S. Ordan
Chief Executive Officer
7902 Westpark Drive
McLean, Virginia 22102

Re:    Acquisition of Greystone Communities, Inc., Greystone Development
Company,  LLC and Greystone Development Company II LP      (collectively, the
“Companies’) and certain other interests from Sunrise Senior Living, Inc.
(“SSLI”), Sunrise Development, Inc.      (“SDI”) and Sunrise Senior Living
Investments, Inc. (“SSLII”) (together with their affiliates other than the
Companies, “Sunrise”) 

     This Letter Agreement (herein so-called) sets forth the agreement between
Sunrise and Greystone Partners II LP, an entity controlled by Mike Lanahan and
Paul Steinhoff (“Buyer”), for: (i) the purchase by Buyer of all of the
outstanding stock, membership interests and partnership interests of the
Companies (collectively, the “Company Interests”) from SDI; and (ii) the
purchase by Buyer or one or more entities designated by Buyer (collectively,
“Seed Capital Investors”) of SSLII’s interests in certain seed capital
partnerships (collectively, the “Seed Capital Partnerships”) listed in Section 1
of the Seed Capital Partnerships paragraph below.

Purchase of Company Interests

1. SDI will sell to Buyer and Buyer will purchase from SDI all of the Company
Interests.

2. The purchase price for the Company Interests (“Company Interests Purchase
Price”) will be payable as follows:

a.      $1,500,000 cash;   b.      $2,000,000, non-interest bearing thirty (30)
day note (the “$2.0MM Note”);   c.      $6,000,000 seven (7) year note (the
“$6.0MM Note”) bearing interest at 10% per annum for the first five (5) years
and 12% per annum thereafter, with interest only payable on a quarterly basis
through June 30, 2010 and equal quarterly payments of principal and interest
payable over the remaining six (6) years based on a nine (9) year amortization
rate and a balloon payment at the end of the seven (7) year term; and  

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d.     $2,500,000 non-interest bearing note (the “Cash Flow Note”) payable
in installments of principal equal to fifty percent (50%)   of all cash
distributions made by Buyer to its partners in excess of distributions made to
cover their federal and state income taxes on   taxable income from Buyer. Any
principal amount remaining unpaid will be due  and payable at maturity on
March  31, 2029. The    Cash Flow Note will also contain a provision that any
related party transactions will only be made pursuant to commercially reasonable
terms.

3. Each of the Notes (hereinafter defined) will contain: (i) rights of offset in
favor of Buyer for any and all amounts definitively due (either by final
agreement or judgment or otherwise) now or in the future from Sunrise to Buyer
pursuant to this transaction or any matters related thereto; and (ii) a single
right of first refusal in favor of Buyer to purchase such Note in the event of a
sale of the Note by Sunrise (the price to be paid by Buyer being the
then-offered purchase price or, if offeror is not a third party independent of
Sunrise, its fair market value); provided, however, that in the event such Note
is sold within a package of assets, the price to be paid by Buyer shall be the
lesser of the allocated price (if there is one) or its fair market value as
determined by an independent, mutually agreed appraiser. The $2.0MM Note and the
$6.0MM Note will be secured by a security interest in the Company Interests. In
addition, payment of the $2.0MM Note will be guaranteed by Mike Lanahan and Paul
Steinhoff.

Seed Capital Partnerships

1. SSLII will sell to the Seed Capital Investors and the Seed Capital Investors
will purchase from SSLII all of SSLII’s interests in the following Seed Capital
Partnerships (collectively, the “Seed Capital Interests”): (i) Boise, Idaho;
(ii) Carmel, Indiana; (iii) Fort Worth, Texas; (iv) Kirkwood, Missouri; and (v)
Elmhurst, Illinois. The purchase price for the Seed Capital Interests will be
$7,250,000 and will be payable, at Closing, as follows:

a.      $500,000 cash;

b.      $3,700,000, non-interest bearing forty-five (45) day note (the “$3.7MM
Note”);

c.      $3,050,000, non-interest bearing forty-five (45) day note (the “Seed
Capital Note”), which will be paid as a cash contribution on Sunrise’s behalf
into the Seed Capital Partnerships as detailed on Exhibit “A” to satisfy
Sunrise’s legal obligations to contribute funds to such Seed Capital
Partnerships. The $3.7MM Note and the Seed Capital Note will be secured by a
security interest in the Seed Capital Interests. The $2.0MM Note, the $6.0MM
Note, the Cash Flow Note, the $3.7MM Note and the Seed Capital Note are herein
referred to, collectively, as the “Notes”.

d.      Execution of a Net Proceeds Agreement in favor of Sunrise from the Seed
Capital Investors providing for a contractual payment obligation to Sunrise as
follows:

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           (i)      for each of the Seed Capital Interests other than Fort
Worth, 35% of the net proceeds (“Net Proceeds”) received by the Seed Capital
Investors with respect to the Seed Capital Interest purchased from Sunrise;

           (ii)      with respect to the Fort Worth Seed Capital Interest, the
same 35% of Net Proceeds received, but specifically deducting from the
calculation of Net Proceeds the first $2,400,000 of amounts received by Senior
Quality Lifestyles, Inc. or its affiliates or successors-in-interest with regard
to its or their investment in the Seed Capital Investor which acquires the Fort
Worth Seed Capital Interest; and

           (iii)      payments under the Net Proceeds Agreement will be due only
if, as and when Net Proceeds are received by the Seed Capital Investors, and
Sunrise agrees that the Net Proceeds will not include any amounts received by
the Seed Capital Investors with respect to subsequent seed capital investments
in the Seed Capital Partnerships as long as the terms of such investments are no
more favorable than the terms afforded to the other partner(s) of such Seed
Capital Partnerships that are not affiliated with the Seed Capital Investors.

2. The Seed Capital Partnership Agreements will be amended at Closing to admit
the Seed Capital Investors as limited partners and to reflect the withdrawal of
Sunrise.

3. Sunrise will not be subject to any future capital calls, claims or
liabilities relating to the Malden, Massachusetts partnership and shall be
indemnified and held harmless by the general partner of the Malden partnership
from any such future liability.

Additional Matters

1. Sunrise confirms to Buyer that approval of these terms and authorization to
execute detailed agreements and close the transaction has been obtained from the
Sunrise Board.

2. Prior to Closing, the Companies will be operated in the ordinary course of
business and no distributions or other payments or liabilities will be made to
or created in favor of Sunrise.

3. All executive employment agreements (including post employment non-compete
covenants) with Sunrise will be terminated at Closing.

4. Messrs. Lanahan, Steinhoff and Schiff will receive the Sunrise shares set
forth on Exhibit “B” hereto, which shares have been earned by them but never
received.

5. All inter-company payables and receivables between the Companies and their
subsidiaries and Sunrise will be cancelled prior to Closing.

6. Sunrise will retain all responsibility for the following, with offset rights
for amounts definitively due (either by final agreement or judgment or
otherwise) against the Notes securing Sunrise’s obligations where appropriate:

 

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 a. State, local and federal taxes allocable to periods prior to Closing; 

 b. Identified lawsuits and claims accruing prior to Closing, excluding any
employee liabilities from recent layoffs;

 c. Any debts or other obligations of the Companies incurred, created or caused
by Sunrise or its employees and not known to those officers of the Companies who
are affiliated with the Buyer; and

 d. Liabilities caused by Sunrise or its employees, related to violations of
governmental laws and occurring prior to the Closing.

The parties hereto hereby affirm that all known items arising pursuant to
susections (a)-(d) of this Section 6 are listed on Exhibit “C” hereto and that
the parties have no actual awareness, after due inquiry, of any other items
arising under those subsections.

In addition to liabilities specifically retained or assumed by the Buyer above
or elsewhere herein, the Buyer shall be responsible for all liabilities accruing
post-Closing, including, without limitation, all severance and other employee
related liabilities and liabilities relating to the Greystone headquarters
office lease. Greystone Communities, Inc. shall indemnify and hold harmless
Sunrise for the office lease and Buyer shall indemnify and hold harmless Sunrise
for all other such liabilities.

7. Greystone will draft the announcement of the transaction and coordinate
timing and release of same. Sunrise will have the right to approve the text and
timing of any announcement or disclosure.

8. All Sunrise executives will resign their positions with the Companies at
Closing.

9. The parties will take all actions necessary or appropriate to close the
transaction contemplated hereby (“Closing”) as soon as reasonably possible, but
no later than Monday, March 16, 2009.

10. Sunrise will file all tax returns for the Companies and pay all taxes
accruing for periods prior to the Closing, Returns for calendar year 2009 will
be filed by the Companies when due. Federal income for calendar year 2009 will
be allocated between Sunrise and Buyer based on the number of calendar days that
elapse before and after the Closing. State and local income, franchise and other
taxes will be prorated for 2009, with a post-closing adjustment to be made to
the Company Interests Purchase Price and paid by Sunrise to the Companies as
such taxes become due.

11. Sunrise will continue to provide the employment and payroll support services
that it is currently providing for the Edgehill community. Buyer agrees to
transition employment of the Edgehill community employees to Buyer or its
designee within sixty (60) days after the Closing, and to transition all
insurance responsibility for the Edgehill community within ninety (90) days
after the Closing.

12. Before and after Closing, Sunrise will provide Buyer with access to and
copies of all books, records and other information relating to the Companies and
in the possession, custody or control of Sunrise, and will take all actions and
execute all documents reasonably necessary to effect the transaction.

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After Closing, Buyer will provide Sunrise with similar access for purposes of
preparing tax returns and other required filings.

13. The parties will make customary representations and warranties to each other
concerning existence, authorization, non-contravention, title, no brokers’ fees
and similar matters.

14. This Letter Agreement, all agreements executed in connection herewith and
all other matters arising out of or relating hereto or thereto will be governed
by and construed in accordance with laws of the State of Texas. All disputes
arising in connection herewith and in connection with the transactions and
documents arising herefrom will be resolved by mediation and arbitration in
Dallas, Texas, in accordance with the procedures outlined in Exhibit “D”
attached hereto.

15. Each party executing this Letter Agreement hereby represents and warrants
that: (i) he has been duly authorized and empowered to execute the same on
behalf of the entity for which he signs; and (ii) the execution, delivery and
performance of this Letter Agreement by each party hereto has been duly and
validly authorized by all necessary action under such party’s constituent
documents.

16. SSLI will unconditionally guarantee the full and timely payment and
performance by SDI and SSLII of their respective obligations under the
agreements and transactions arising in connection with the subject matter of
this Letter Agreement.

17. This Letter Agreement is intended to be a binding agreement among the
parties hereto, and the parties agree to execute definitive documentation
consistent with the terms hereof. The definitive documentation will include, as
a closing condition, the approval of this transaction by the Sunrise lender
group that is led by Bank of America.

[Signatures on following page.]

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Should the above terms be acceptable to Sunrise, please execute where indicated
below.

Greystone Partners II LP,  a Texas limited partnership    By:  Greystone
Partners II GP, LLC  
       its general partner           By:  By: /s/ Paul F.
Steinhoff                                Paul F. Steinhoff, Jr., President 

AGREED TO AND ACCEPTED BY:    Sunrise Senior Living, Inc.,  a Delaware
corporation    By:  /s/ Richard J, Nadeua                          Name: 
Richard J. Nadeua                          Its:   Chief Financial
Officer                           Sunrise Development, Inc.,  a Virginia
corporation  By:  /s/ Julie Pangelinan                                Name:
 Julie A. Pangelinan                            Its:  Chef Accounting Officer &
Treasurer         Sunrise Senior Living Investments, Inc.,  a Virginia
corporation    By:  /s/ Julie Pangelinan                               Name: 
Julie A. Pangelinan                          Its: Chef Accounting Officer &
Treasurer 

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