Exhibit 10.1

Execution Copy

 

 

 

LOAN AGREEMENT

Dated as of June 14, 2007

By and Among

AL US DEVELOPMENT VENTURE, LLC, as Borrower

and

HSH NORDBANK AG, acting through its NEW YORK BRANCH, as Administrative Agent,

sole Arranger and Lender,

and each of the other financial institutions as from time to time become Lenders

 

 

 

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TABLE OF CONTENTS

 

      Page  

ARTICLE I DEFINITIONS

     2   

SECTION 1.01 Certain Defined Terms

     2   

SECTION 1.02 Other Interpretive Provisions

     18   

SECTION 1.03 Accounting Terms

     19   

SECTION 1.04 Rounding

     19   

SECTION 1.05 Times of Day

     20   

SECTION 1.06 Valuation

     20   

ARTICLE II THE LOAN

     20   

SECTION 2.01 Agreements to Lend and Borrow the Loan

     20   

SECTION 2.02 Interest on the Loan

     20   

SECTION 2.03 Repayment and Prepayment of Loan

     20   

SECTION 2.04 Procedure for Borrowing

     21   

SECTION 2.05 First Advance

     21   

SECTION 2.06 Waivers of Conditions

     21   

SECTION 2.07 Pro Rata Treatment Amongst Lenders

     21   

ARTICLE III [INTENTIONALLY OMITTED]

     21   

ARTICLE IV PAYMENT PARTICULARS

     21   

SECTION 4.01 [INTENTIONALLY OMITTED]

     21   

SECTION 4.02 Funding of Borrowings

     21   

SECTION 4.03 Interest Elections

     22   

SECTION 4.04 Place and Manner of Payment; Computation of Interest and Fees
Allocations of Certain Payments

     24   

SECTION 4.05 Increased Payments

     25   

SECTION 4.06 Recapture

     27   

SECTION 4.07 Taxes

     27   

SECTION 4.08 LIBOR Breakage

     28   

SECTION 4.09 Fees

     28   

SECTION 4.10 Evidence of Debt

     30   

SECTION 4.11 Replacement

     30   

SECTION 4.12 Loan Obligations Absolute

     30   

SECTION 4.13 Mitigation Loan Obligations; Replacement of Lenders

     31   

ARTICLE V REPRESENTATIONS AND WARRANTIES

     31   

SECTION 5.01 Existence and Power

     31   

SECTION 5.02 Facilities, Units and Services; Regulatory Permits

SECTION 5.03 Due Authorization

    
  32
32   
  

SECTION 5.04 Valid and Binding Obligations

     32   

SECTION 5.05 Noncontravention

     32   

SECTION 5.06 Federal Reserve Regulations

     32   

SECTION 5.07 Pending Litigation and Other Proceedings

     33   

SECTION 5.08 Insurance

     33   

SECTION 5.09 Adequate Assets; Franchises

     33   

 

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TABLE OF CONTENTS

(continued)

 

      Page  

SECTION 5.10 Priority Security Interest

     33   

SECTION 5.11 ERISA Plans

     34   

SECTION 5.12 Defaults

     35   

SECTION 5.13 Streets

     35   

SECTION 5.14 Utility Services

     35   

SECTION 5.15 Condemnation Etc.

     35   

SECTION 5.16 Asset Purchase Agreement

     35   

SECTION 5.17 Financial Information

     35   

SECTION 5.18 Solvency

     36   

SECTION 5.19 Anti-Terrorism Laws

     36   

SECTION 5.20 Organizational Structure

     36   

SECTION 5.21 Banking Relationships

     36   

SECTION 5.22 Single Purpose Entity

     37   

SECTION 5.23 Indebtedness

     38   

SECTION 5.24 Labor Matters

     38   

SECTION 5.25 No Material Adverse Effect; Accuracy of Information; Reliance by
the Secured Lenders

     38   

ARTICLE VI AFFIRMATIVE COVENANTS

     39   

SECTION 6.01 Reporting Requirements

     39   

SECTION 6.02 Notices

     41   

SECTION 6.03 Interest Rate Agreements

     42   

SECTION 6.04 Maintenance of Facilities

     42   

SECTION 6.05 Preservation of Lien; Recordation of Interest

     43   

SECTION 6.06 Payment of Taxes; Removal of Liens

     43   

SECTION 6.07 Insurance

     43   

SECTION 6.08 Right of Entry

     44   

SECTION 6.09 Licensure

     44   

SECTION 6.10 Preservation of Corporate Existence

     45   

SECTION 6.11 Insurance and Condemnation Proceeds

     45   

SECTION 6.12 Residency Documents

     46   

SECTION 6.13 ERISA Compliance

     47   

SECTION 6.14 Compliance with Laws

     47   

SECTION 6.15 Compliance with Other Agreements

     47   

SECTION 6.16 Environmental Report Update

     47   

SECTION 6.17 Single Purpose

     47   

SECTION 6.18 Compliance with Anti-Money Laundering and OFAC Laws

SECTION 6.19 Collections

    
  47
48   
  

SECTION 6.20 Annual Budget

     48   

SECTION 6.21 Accounts

     49   

SECTION 6.22 Management

     49   

SECTION 6.23 Liquidity

     50   

SECTION 6.24 Debt Service Coverage Ratio

     50   

SECTION 6.25 Lock-Box

     51   

 

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TABLE OF CONTENTS

(continued)

 

      Page  

SECTION 6.26 Environmental

     52   

ARTICLE VII NEGATIVE COVENANTS

     53   

SECTION 7.01 Incurrence of Additional Indebtedness

     53   

SECTION 7.02 Consolidation or Merger

     53   

SECTION 7.03 Disposal of Assets, Dividends and Distributions

     53   

SECTION 7.04 Mortgage, Security Interests and Encumbrances

     55   

SECTION 7.05 Amendments

     55   

SECTION 7.06 Compliance With ERISA

     55   

SECTION 7.07 Accounting Methods and Fiscal Year

     55   

SECTION 7.08 Change in Control

     56   

SECTION 7.09 No Other Business

     56   

SECTION 7.10 New Management Agreements; Amendments and Termination

SECTION 7.11 Residency Documents

    
  56
56   
  

SECTION 7.12 Use of Proceeds

     56   

SECTION 7.13 Capital Expenditures

     56   

ARTICLE VIII CONDITIONS PRECEDENT TO CLOSING

     57   

SECTION 8.01 Documentary Requirements for Closing

     57   

SECTION 8.02 Additional Conditions Precedent for the Closing

     63   

ARTICLE IX [INTENTIONALLY OMITTED]

     64   

ARTICLE X THE ADMINISTRATIVE AGENT

     64   

SECTION 10.01 Appointment

     64   

SECTION 10.02 Duties and Immunities

     64   

SECTION 10.03 Defaults and Notices; Exercise of Remedies

SECTION 10.04 Non-Reliance

    
  65
66   
  

SECTION 10.05 Indemnification

     66   

SECTION 10.06 Individual Capacity

     66   

SECTION 10.07 Distributions

     66   

SECTION 10.08 Successors

     67   

SECTION 10.09 Certain Consents Required

     67   

SECTION 10.10 Status of Collections

     68   

SECTION 10.11 Information

     69   

SECTION 10.12 Borrower’s Default and Material Events

     69   

SECTION 10.13 Administrative Agency Provisions Solely for the Benefit of the
Lenders

     69   

ARTICLE XI EVENTS OF DEFAULT

     69   

SECTION 11.01 Events of Default

     69   

SECTION 11.02 Consequences of an Event of Default

     72   

SECTION 11.03 Remedies Cumulative; Solely for the Benefit of the Secured Lenders

     73   

SECTION 11.04 Waivers or Omissions

     73   

SECTION 11.05 Continuance of Proceedings

     73   

 

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TABLE OF CONTENTS

(continued)

      Page  

SECTION 11.06 Injunctive Relief

     74   

SECTION 11.07 Power of Attorney

     74   

ARTICLE XII INDEMNIFICATION AND LIABILITY

     74   

SECTION 12.01 Indemnification

     74   

SECTION 12.02 Liability of the Secured Lenders

     75   

SECTION 12 03 Payment

     75   

SECTION 12.04 Survival

     75   

SECTION 12.05 Absolute and Unconditional Agreement

     75   

ARTICLE XIII PURCHASER LENDERS PARTICIPATIONS

     76   

SECTION 13.01 Assignments

     76   

SECTION 13.02 Participations

     79   

ARTICLE XIV GENERAL CONDITIONS

     80   

SECTION 14.01 No Broker

     80   

SECTION 14.02 Further Assurances

     80   

SECTION 14.03 Amendments and Waivers

     80   

SECTION 14.04 No Implied Waivers

     80   

SECTION 14.05 Notices

     80   

SECTION 14.06 Right of Setoff

     83   

SECTION 14.07 No Third Party Rights

     83   

SECTION 14.08 Severability

     83   

SECTION 14.09 Secured Lenders Only Beneficiaries

     83   

SECTION 14.10 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial

SECTION 14.11 Prior Understandings

    
  84
85   
  

SECTION 14.12 Duration

     85   

SECTION 14.13 Preferences

     85   

SECTION 14.14 Counterparts

     85   

SECTION 14.15 Successors and Assigns

     85   

SECTION 14.16 Rights Cumulative

     85   

SECTION 14.17 Signs and Advertising

     85   

SECTION 14.18 Schedules and Exhibits

     86   

SECTION 14.19 Captions and Headings

     86   

SECTION 14.20 Extent of Covenants; No Personal Liability

     86   

 

-iv-

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Schedules

  

Schedule 1

  

Lenders and the Loan Commitment of each Lender

Exhibits

  

4.03(b)

  

Form of Interest Election Request

5.02(a)

  

Facilities, Units and Services

5.02(b)

  

Regulatory Permits

5.11

  

ERISA Plans

5.20

  

Organizational Structure

5.21

  

Banking Arrangements

5.23(b)

  

Indebtedness

5.24

  

Labor Matters

6.01 (d)

  

Form of Compliance Certificate

6.07

  

Insurance Requirements

7.03(b)

  

Minimum Release Payments

8.01(d)

  

Title Insurance Amounts

8.01(e)

  

Mortgage Recording Information

8.01(f)

  

UCC Filing Information

13.01

  

Form of Transfer Supplement

 

-v-

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LOAN AGREEMENT

THIS LOAN AGREEMENT (this “Agreement”) is made as of June 14, 2007 by and among
HSH NORDBANK AG, acting through its NEW YORK BRANCH, as Administrative Agent (in
such capacity, the “Administrative Agent”), sole Arranger and Lender (in such
capacity, a “Lender”), and each of the other financial institutions as from time
to time become Lenders, and AL US DEVELOPMENT VENTURE, LLC (the “Borrower”).

RECITALS:

WHEREAS, Borrower, through the Intermediate Tier Companies and Property
Companies (as hereinafter defined), owns 15 senior housing communities;

WHEREAS, the Borrower has requested that the Lenders advance funds to the
Borrower in an amount of up to $370,500,000 of financing (the “Loan”) in
connection with the recapitalization of Borrower;

WHEREAS, to induce the Lenders to provide such financing, the Intermediate Tier
Companies and Property Companies have agreed to unconditionally jointly and
severally guaranty the obligations of the Borrower under this Agreement and the
other instruments evidencing the Loan;

WHEREAS, the Loan will be further secured as provided in the Security Documents
(as hereinafter defined);

WHEREAS, the Lenders have agreed to make the Loan and the Administrative Agent
has agreed to administer the Loan Documents (as hereinafter defined) upon the
terms and conditions herein set forth;

WHEREAS, the Lenders’ rights and obligations with respect to the Loan, and the
rights of the Lenders under this Agreement and the other Loan Documents may
hereafter be assigned to Additional Lenders (as hereinafter defined) or
participated to Bank Participants (as hereinafter defined) as provided herein;

WHEREAS, the Borrower’s obligations to the Secured Lenders (as hereinafter
defined) are secured by this Agreement upon the terms and conditions herein set
forth and by the other Loan Documents.

NOW, THEREFORE, in consideration of the premises and to induce the Lenders to
make the Loan and the Administrative Agent to administer the Loan Documents, and
for other valuable consideration, the receipt and sufficiency of which are
acknowledged, and intending to be legally bound hereby, the Borrower, HSH
Nordbank AG, acting through its New York Branch (as Lender and Administrative
Agent) and the other Lenders identified on Schedule 1 hereto hereby agree as
follows:

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ARTICLE I

DEFINITIONS

SECTION 1.01 Certain Defined Terms. In addition to the terms defined in the
Recitals and elsewhere in this Agreement, each of the following terms shall have
the following meanings specified.

“Account Control Agreement” means an account control agreement by and among the
Borrower the Management Company, the Guarantors, the Administrative Agent and a
financial institution, perfecting the security interest of the Administrative
Agent on behalf of the Lenders in the operating accounts of such Person.

“Acquisition Adjustment Closing Statement” means the statement of adjustments to
the Purchase Agreement between the parties thereto dated as of the Closing Date.

“Additional Lender” means a financial institution which purchases, or to which a
Lender assigns, any portion (subject to Section 13.01) of the rights and
obligations under the Loan Documents with respect to the Loan, by executing a
Transfer Supplement.

“Administrative Agent” means HSH Nordbank AG, acting through its New York
Branch, or a successor administrative agent appointed pursuant to Section 10.08
of this Agreement.

“Advance” means a disbursement of Loan proceeds.

“Affiliate” means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified.

“Annual Budget” means the operating and capital budget with respect to the
Facilities furnished to the Adminstrative Agent pursuant to Section 6.20.

“Anti-Money Laundering Laws” means any laws or regulations relating to money
laundering or terrorist financing, including, without limitation, the Bank
Secrecy Act, 31 U.S.C. Sections 5301 et seq.; the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001, Pub. L. 107-56 (a/k/a the USA Patriot Act); Laundering of
Monetary Instruments, 18 U.S.C. Section 1956; Engaging in Monetary Transactions
in Property Derived from Specified Unlawful Activity, 18 U.S.C. Section 1957;
the Financial Recordkeeping and Reporting of Currency and Foreign Transactions
Regulations, 31 C.F.R. Part 103; and any similar laws or regulations currently
in force or hereafter enacted.

“Anti-Terrorism Laws” means any laws relating to terrorism or money laundering,
including without limitation Executive Order 13224; the International Emergency
Economic Powers Act, 50 U.S.C. Sections 1701-06; the United and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001, Pub. L. 107-56

 

2

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(a/k/a the USA Patriot Act); the Iraqi Sanctions Act, Pub. L. 101-513, 104 Stat.
2047-55; the United Nations Participation Act, 22 U.S.C. Section 287c; the
Antiterrorism and Effective Death Penalty Act, (enacting 8 U.S.C. Section 1189,
18 U.S.C. Section 2332d, and 18 U.S.C. Section 2339B); the International
Security and Development Cooperation Act, 22 U.S.C. Section 2349aa-9; the
Terrorism Sanctions Regulations, 31 C.F.R. Part 595; the Terrorism List
Governments Sanctions Regulations, 31 C.F.R. Part 596; and the Foreign Terrorist
Organizations Sanctions Regulations, 31 C.F.R. Part 597 and any similar laws or
regulations currently in force or hereafter enacted.

“Applicable Law” means all applicable provisions of all present and future laws,
ordinances, constitutions, statutes, rules, regulations, requirements, orders,
judgments, injunctions and decrees of any Governmental Authority.

“Applicable Margin” means (a) with respect to Base Rate Advances, an amount
equal to One Hundred (100) basis points (1.00%) per annum and (b) with respect
to LIBOR Advances, an amount equal to One Hundred Fifty (150) basis points
(1.50%) per annum.

“Assignments of Residency Documents” means, collectively, each of the Assignment
of Residency Documents, each dated as of the date hereof, from the Property
Companies to the Administrative Agent for the benefit of the Lenders.

“Bank Participant” means any Person to whom any Lender has sold a participation
in rights under this Agreement and the other Loan Documents pursuant to Section
13.02.

“Bank Prime Rate” means the fluctuating per annum rate of interest equal to the
“Prime Rate” announced daily by the New York Branch of HSH Nordbank AG, each
change in such prime or base lending rate to become effective on the date such
change is announced. The Administrative Agent’s determination and designation
from time to time of the prime rate shall not in any way preclude any of the
Lenders from making loans to other borrowers at rates that are higher or lower
than or different from the referenced rate.

“Bankruptcy Action” shall mean with respect to any Person (a) such Person filing
a voluntary petition under the United States Bankruptcy Code (Title 11, U.S.
Code) as amended from to time and any successor statute or rule promulgated
thereto or any other Federal or state law relating to bankruptcy, insolvency,
reorganization, dissolution, winding up, liquidation, seeking a composition or
arrangement with creditors, a readjustment of debts, the appointment of a
trustee, receiver, liquidator or custodian or the like (a “Bankruptcy Law”);
(b) institution against such Person without the application or consent of such
Person in any court of competent jurisdiction under any Bankruptcy Law or
against all or any substantial part of any such Person’s Property, or other like
relief in respect thereof under any Bankruptcy Law, and the same results in the
entry of an order for relief or any such adjudication or appointment, or
continues undismissed, or pending and unstayed, for any period of sixty
(60) consecutive days; (c) such Person filing an answer consenting to or
otherwise acquiescing in or joining in any involuntary petition filed against
it, by any other Person under a Bankruptcy Law, or soliciting or causing to be
solicited petitioning creditors for any involuntary petition from any Person;
(d) such Person consenting to or acquiescing in or joining in an application for
the appointment of a custodian,

 

3

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receiver, trustee, or examiner for such Person or any portion of Property;
(e) such Person making an assignment for the benefit of creditors, or admitting,
in writing or in any legal proceeding, its insolvency or inability to pay its
debts as they become due or its or (f) such Person taking any action in
furtherance of the foregoing.

“Base Rate” means, for any day, the higher of (a) the Federal Funds Rate for
such day plus an amount equal to fifty (50) basis points per annum (.50%) and
(b) the Bank Prime Rate for such day. Each change in any interest rate provided
for herein resulting from a change in the Federal Funds Rate or the Bank Prime
Rate shall take effect at the time of such change in the Federal Funds Rate or
the Bank Prime Rate, as applicable.

“Base Rate Advance” and “Base Rate Borrowing” mean any portion of Outstanding
Advances designated or deemed designated as such by the Borrower at the time of
incurrence or conversion to bear interest at the Base Rate plus the Applicable
Margin.

“Borrower’s Fund” means the fund with that name established pursuant to the
Funds Pledge Agreement.

“Borrower’s Members” means SSLII and MS Senior.

“Borrower’s Representative” means James S. Pope or such other Person designated
in writing by the Borrower to the Administrative Agent which Person shall be
satisfactory to the Administrative Agent.

“Borrowing” means Advances of the same Type made, converted or continued on the
same day and, in the case of LIBOR Advances as to which a single LIBOR Period is
in effect.

“Business Day” means a day other than a Saturday, Sunday or a legal holiday in
the State of New York or any other day on which the New York lending office of
the Administrative Agent is authorized or required by law to close, or a day on
which the Federal Reserve System is closed; provided that, when used with
respect to a LIBOR Borrowing, “Business Day” shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London Interbank
Market.

“Capital Expenditures” means all expenditures with respect to the Facilities
capitalized or required to be capitalized in accordance with Generally Accepted
Accounting Principles.

“Capitalized Leases” means any leases that are capitalized or required to be
capitalized in accordance with Generally Accepted Accounting Principles.

“Cash Sweep Requirements” means (a) with respect to the Borrower, the
requirements set forth in Section 6.24(b) and (b) with respect to the
Guarantors, the requirements set forth in Section 5(f) of the Payment Guaranty.

“Cash Sweep Start Date” means (a) any date on which a report or certificate
furnished to the Administrative Agent pursuant to Sections 6.01(b), (c) or
(d) indicates that the Required

 

4

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Debt Service Coverage Ratio was not met as of any Testing Date or (b) the
thirtieth (30) day following a day on which the Borrower or Guarantors were
required to calculate and certify compliance with the Required Debt Service
Coverage Ratio pursuant to Sections 6.01(b), (c) or (d) and failed to furnish
the required report or certification within such thirty (30) day grace period,
and in either such event, the Administrative Agent provides written notice to
the Borrower that the Borrower is required to meet the Cash Sweep Requirements.

“Cash Sweep Stop Date” means the date, as certified pursuant to Sections
6.01(b), (c) and (d), on which the Borrower was in compliance with the Required
Debt Service Coverage Ratio for two (2) consecutive Testing Dates.

“Certificate of Occupancy” means a certificate of occupancy issued by a
Governmental Authority for a Facility.

“Change in Law” has the meaning ascribed to such term in Section 4.05.

“Closing Date” means the date of this Agreement.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Collateral Assignment of Project Documents” means the Collateral Assignment of
Project Documents, dated as of the date hereof, from the Borrower and the
Guarantors to the Administrative Agent for the benefit of the Lenders, and
consented to by the Management Company.

“Commitment Letter” means the Commitment Letter dated May 30, 2007 constituting
the commitment of HSH Nordbank AG with respect to the Loan.

“Conditional Default” means any event or condition which with notice, passage of
time or any combination of the foregoing, would constitute a Default or an Event
of Default.

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” or “Controlled” having meanings correlative thereto.

“Debt Service Coverage Ratio” means for any period of calculation, the ratio of
(a) the Revenues Available for Debt Service for such period to (b) the Debt
Service Requirements for such period.

“Debt Service Requirements” means, for any calculation period, the net aggregate
amounts payable (on an accrual basis) by the Borrower and the Guarantors on a
consolidated basis (a) to the Lenders in respect of payment of the principal (if
any, but excluding payments under Sections 6.11 and 7.03) of and interest on the
Loan calculated on the basis of Imputed Debt Service; (b) as lease rentals under
Capitalized Leases; and (c) with respect to interest and principal paid on any
other Indebtedness.

 

5

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“Default” shall have the meaning assigned in Section 11.01 of this Agreement.

“Default Rate” means (a) with respect to Outstanding Base Rate Advances a rate
equal to the Base Rate plus the Applicable Margin plus an amount equal to Five
Hundred (500) basis points (5.00%), (b) with respect to Outstanding LIBOR
Advances, the highest LIBOR Rate then in effect plus the Applicable Margin plus
an amount equal to Five Hundred (500) basis points (5.00%) per annum, and
(c) with respect to any other amounts payable under the Loan Documents (except
as provided in clause (a) or (b)), a rate equal to the Base Rate plus the
Applicable Margin plus an amount equal to Five Hundred (500) basis points
(5.00%) per annum.

“Determination Date” means the date on which financial results are reported or
required to be reported to the Administrative Agent pursuant to Section 6.01(b)
or (c).

“Distribution” means a distribution, dividend, return of capital or other amount
paid in respect thereof payable to the Members of a Person.

“DSCR Release Test Amount” means with respect to any proposed sale, transfer or
other disposition of a Facility or a Property Company under Section 7.03(c), the
Debt Service Coverage Ratio of the Borrower on the Testing Date immediately
preceding the date of the proposed sale, transfer or other disposition of a
Facility or a Property Company.

“Eligible Assignee” means any of (i) a commercial bank organized under the laws
of the United States, or any State thereof, and having (x) total assets in
excess of $5,000,000,000 and (y) a combined capital and surplus of at least
$500,000,000, (ii) a commercial bank organized under the laws of any other
country which is a member of the Organization of Economic Cooperation and
Development (“OECD”), or a political subdivision of any such country, and having
(x) total assets in excess of $5,000,000,000 and (y) a combined capital and
surplus of at least $500,000,000; provided that such bank is acting through a
branch or agency located in the country in which it is organized or another
country which is also a member of OECD, (iii) a life insurance company organized
under the laws of any State of the United States, or organized under the laws of
any country and licensed as a life insurer by any State within the United States
and having admitted assets of at least $5,000,000,000, (iv) a nationally
recognized investment banking company or other financial institution in the
business of making loans, or an affiliate thereof organized under the laws of
any State of the United States, and licensed or qualified to conduct such
business under the laws of any such State and having (1) total assets of at
least $5,000,000,000 and (2) a net worth of at least $500,000,000, (v) a Lender
or Affiliate of a Lender; (vi) the Administrative Agent or an Affiliate of the
Administrative Agent or (vii) any Affiliate of any of the foregoing which is
controlled by any of the foregoing.

“Environmental Indemnity Agreement” means the Environmental Compliance and
Indemnification Agreement, dated as of the date hereof, from the Borrower and
the Guarantors to the Administrative Agent for the benefit of the Lenders.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute of similar import, and regulations thereunder, in each
case as in effect

 

6

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from time to time. References to sections of ERISA shall be construed also to
refer to any successor sections.

“ERISA Affiliate” means any Person who for purposes of Title IV of ERISA is a
member of a controlled group, of which the Borrower or a Guarantor is a member,
is under common control with the Borrower or a Guarantor, or is a member of an
affiliated service group of which the Borrower or a Guarantor is a member in
accordance with the provision of Section 414(b), (c), (m) or (o) of the Code;
provided, however, ERISA Affiliate does not include Affiliates of Morgan Stanley
other than MS Senior, the Borrower or any Guarantor.

“ERISA Event” means (a) a “Reportable Event” described in Section 4043 of ERISA
and the regulations issued thereunder, excluding, however, such events as to
which the PBGC by regulation has waived the requirement of Section 4043(a) of
ERISA that the PBGC be notified within 30 days of the occurrence of such event,
(b) the withdrawal of the Borrower or any ERISA Affiliate from a Plan during a
plan year in which it was a “substantial employer” as defined in
Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a
Plan or the treatment of a Plan amendment as a termination under Section 4041 of
ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC or
(e) any other event or condition which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan.

“Event of Default” shall have the meaning assigned in Section 11.01.

“Excess Cash Flow of the Borrower” means, for any period of calculation, the
excess of (a) the Total Revenues of the Borrower and the Guarantors on a
consolidated basis over (b) the sum on a consolidated basis, of their
(i) Operating Expenses, (ii) nonoperating expenses, (iii) mandatory principal
and interest payments on Indebtedness and (iv) Capital Expenditures made in
accordance with the then current Annual Budget accepted by the Administrative
Agent pursuant to Section 6.20; provided that such excess shall be adjusted to
exclude (y) depreciation and all other non-cash charges and expenses (other than
expenses that must be accrued monthly such as real and personal property taxes
and insurance premiums) and (z) revenues not resulting in the receipt of cash
during such period.

“Excluded Taxes” means, with respect to any Secured Lender and Bank Participant
hereunder, (a) income taxes imposed on (or measured by) its net income by the
United States of America, or by the jurisdiction under the laws of which such
recipient is organized or in which its principal office is located or, in the
case of any Lender or Bank Participant, in which its applicable lending office
is located, (b) franchise taxes imposed by the United States of America or any
franchise or similar taxes imposed by the jurisdiction under the laws of which
said recipient is organized or in which its principal office is located, or, in
the case of any Lender or Bank Participant, in which its applicable lending
office is located, (c) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction described in clause
(a) above and (d) in the case of a Foreign Lender, any withholding tax that
(i) is in effect and would apply to amounts payable to such Foreign Lender at
the time such Foreign Lender becomes a party to this Agreement (or designated a
new lending office), except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of

 

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a new lending office (or assignment), to receive additional amounts from the
Borrower with respect to any withholding tax pursuant to Section 4.07(a), or
(ii) is attributable to such Foreign Lender’s failure to comply with Section
4.07(e).

“Facilities” means, collectively, each of the senior housing communities
described on Exhibit 5.02(a), and any one of such Facilities is a “Facility”.

“Federal Funds Rate” means, for any day, the per annum rate equal to the
weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York (or, if such
rate is not published for any day, that is a Business Day, the average (rounded
upwards, if necessary to the next 1/100 of 1%) of the quotations for such day by
the Administrative Agent from three (3) Federal funds brokers of recognized
standing selected by it.

“Fee Letter” means the letter dated the Closing Date from the Administrative
Agent and agreed to by the Borrower regarding fees.

“Financial Projections” means the financial projections of performance of the
Facilities which projections are furnished to the Administrative Agent pursuant
to Section 8.01(r).

“Fiscal Quarter” means each of the three (3) month periods ending
March 31, June 30, September 30 and December 31.

“Fiscal Year” means any period of 12 consecutive calendar months for which
financial statements of a Person have been prepared. The current Fiscal Year for
the Borrower and the Guarantors ends on December 31.

“Foreign Lender” means any Secured Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

“Funds Pledge Agreement” means the Funds Pledge Agreement, dated as of the date
hereof, by and among the Borrower, Guarantors and the Administrative Agent for
the benefit of the Lenders.

“Generally Accepted Accounting Principles” or “GAAP” means generally accepted
accounting principles consistently applied and maintained throughout the period
indicated and consistent with the prior financial practice of the applicable
Person, as reflected in the financial statements referred to in Sections 6.01,
except for changes permitted by the Financial Accounting Standards Board or any
similar accounting authority of comparable standing.

“Governmental Authority” means any government or political subdivision, or any
agency, authority, commission, department or instrumentality of either, or any
court, tribunal, central bank or arbitrator.

 

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“Governing Documents” means any certificate of limited partnership, certificate
of formation, articles (or certificate) of incorporation, charter, by-laws,
limited liability company agreement, operating agreement, partnership agreement,
constitution, management agreement, stockholders agreement, voting agreements,
voting trust agreement or other organizational or governing document for any
entity.

“Guarantors” means, collectively, the Intermediate Tier Companies and the
Property Companies, and any one of such entities is a “Guarantor.”

“Guaranty of Non-Recourse Obligations” means the Guaranty of Non-Recourse
Obligations, dated as of the date hereof, by Sunrise Senior Living, Inc. in
favor of the Administrative Agent for the benefit of the Secured Lenders.

“Highest Lawful Rate” means the maximum legal rate of interest which the Lenders
are legally entitled to charge, contract for or receive under any law to which
such interest is subject.

“Improvements” means the buildings, structures (surface and sub-surface) and
other improvements located on the Sites.

“Imputed Debt Service” means, for any calculation period, (a) initially, the
amount of principal and interest payable in such period taking into account the
net effect of any Interest Rate Agreement, and (b) commencing with the Fiscal
Quarter ending March 31, 2009, the higher of (i) the amount of principal and
interest payable in such period taking into account the net effect of any
Interest Rate Agreement and (ii) the amount that would have been payable had the
rate been equal to (A) initially, seven percent (7.0%) constant, (B) commencing
with the Fiscal Quarter ending March 31, 2010, seven and three-eighths percent
(7.375%) constant, (C) commencing with the Fiscal Quarter ending March 31, 2011,
seven and three-quarters percent (7.75%) constant, and (D) commencing with the
Fiscal Quarter ending March 31, 2012, eight percent (8%) constant.

“Indebtedness” means, without duplication:

(a) indebtedness or liability for borrowed money, or for the deferred purchase
price of property or services (exclusive of applicable reserves or escrows held
by third parties);

(b) obligations as lessee under leases which are, should be or should have been
reported as capital leases in accordance with Generally Accepted Accounting
Principles;

(c) current liabilities in respect of unfunded vested benefits under plans
covered by Title IV of ERISA;

(d) all guarantees, endorsements (other than for collection or deposit in the
ordinary course of business) and other contingent obligations to purchase, to
provide funds for payment, to supply funds to invest in any Person or otherwise
to assure a creditor against loss;

 

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(e) obligations secured by any mortgage, lien, pledge, security interest or
other charge or encumbrance on property, whether or not the obligations have
been assumed;

(f) any Interest Rate Agreements; and

(g) all other items or obligations which would be included in determining total
liabilities on the balance sheet of a Person; provided, however, that
“Indebtedness” shall not include trade payables and similar obligations incurred
in the ordinary course of business.

“Indemnities” shall have the meaning ascribed thereto in Section 12.

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Initial Interest Rate Agreement” means the ISDA Master Agreement (including the
schedules and confirmation thereto) dated as of the Closing Date by and between
the Borrower and HSH Nordbank AG.

“Insurance Consultant to Borrower” means a Person, who may be a Member,
director, officer or employee of the Borrower, any Guarantor, the Management
Company, Borrower’s Members or an Affiliate or Subsidiary of any of them, who is
qualified to survey risks and to recommend insurance coverage for entities
comparable to the Borrower and the Guarantors.

“Insurance Consultant to the Administrative Agent” means AMS Risk Management and
Consulting, Inc. or any other insurance expert engaged by the Administrative
Agent to review and report on insurance with respect to the Facilities, the
Borrower and the Guarantors.

“Interest Election Request” means a request made in accordance with Section
4.03.

“Interest Payment Date” means (a) with respect to Base Rate Borrowings, the
first (1st) Business Day of each calendar month and (b) with respect to LIBOR
Borrowings, the expiration date of each LIBOR Period and (c) the date on which
all or part of the principal amount of Advances is paid or prepaid or due to be
paid or prepaid under the Loan Documents.

“Interest Rate Agreements” means an interest rate exchange, hedge or similar
agreement entered into to hedge the interest payable on all or part of the Loan
Obligations, which agreement may include an interest rate swap, a forward or
futures contract or an option (e.g. a call, put, cap, floor or collar) and which
agreement does not constitute an obligation to repay money borrowed, credit
extended or the equivalent thereof, including the Initial Interest Rate
Agreement.

“Intermediate Tier Companies” means each of the entities listed and so
designated on Exhibit 5.20, and each such entity is an “Intermediate Tier
Company.”

“Lender’s Percentage Interest” means with respect to any Lender, its pro rata
share of the Lenders’ Interests based on its Loan Commitment Percentage.

“Lenders” means, collectively, the Lenders set forth on Schedule 1 and any
Additional Lenders.

 

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“Lenders’ Interests” means, as of any calculation date, the aggregate principal
amount of Outstanding Advances.

“LIBOR Advance” and “LIBOR Borrowing” means the portions of Outstanding Advances
designated by the Borrower at the time of incurrence or conversion to bear
interest at a LIBOR Rate plus the Applicable Margin.

“LIBOR Period” means a one (1) month, two (2) month or three (3) month period as
selected by the Borrower pursuant to Section 4.03; provided that (a) the initial
LIBOR Period with respect to a LIBOR Advance shall commence on the date of such
LIBOR Borrowing and each LIBOR Period occurring thereafter in respect to such
LIBOR Advance shall commence on the date on which the next preceding LIBOR
Period applicable thereto expires; (b) if any LIBOR Period for a LIBOR Borrowing
begins on a day for which there is no numerically corresponding day in the
calendar month at the end of such LIBOR Period, such LIBOR Period shall end on
the last Business Day of such calendar month; and (c) if any LIBOR Period would
otherwise expire on a day which is not a Business Day, such LIBOR Period shall
expire on the next succeeding Business Day (provided that if such day is a day
of the month after which no further Business Day occurs in such month, such
LIBOR Period shall expire on the next preceding Business Day).

“LIBOR Rate” means the annual interest rate (for a particular LIBOR Period)
equal to the reserve adjusted rate per annum at which U.S. dollar deposits with
maturities comparable to the applicable LIBOR Period which appears on Reuters
LIBOR 01 Page as of 11:00 a.m., London time, two Business Days prior to the
commencement of such LIBOR Period; provided, however, that if such rate does not
appear on Reuters LIBOR 01 Page, the LIBOR Rate applicable to such LIBOR Period
shall mean a rate per annum equal to the rate at which U.S. dollar deposits in
an amount approximately equal to the outstanding LIBOR Advance amount and with
maturities comparable to such LIBOR Period, are offered in immediately available
funds in the London Interbank Market to the London office of the Administrative
Agent by leading banks in the Eurodollar market at 11:00 a.m., London time, two
(2) Business Days prior to the commencement of such LIBOR Period. The term
“Reuters LIBOR 01 Page” shall mean the display designated as “LIBOR 01 Page” by
Reuters (or such other page as may replace LIBOR 01 Page from Reuters or such
other service as may be nominated by the British Bankers’ Association as the
information vendor for the purpose of displaying British Bankers’ Association
interest settlement rates for U.S. dollar deposits). Any LIBOR Rate determined
on the basis of the rate displayed on LIBOR 01 Page in accordance with the
foregoing provisions of this definition shall be subject to corrections, if any,
made in such rate and displayed by Reuters within one (1) hour of the time when
such rate is first displayed by Reuters. Each determination of the LIBOR Rate
applicable to a particular LIBOR Period shall be made by the Administrative
Agent and shall be conclusive and binding upon the Borrower absent manifest
error.

“Lien” means any lien, security interest or other charge or encumbrance of any
kind, or any other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.

 

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“Loan Commitment Amount” means (a) as to all Lenders, up to $370,500,000 in
aggregate principal amount and (b) as to any Lender, the obligation of such
Lender to make the Advance on the Closing Date under the Loan to the Borrower in
a principal amount not to exceed the amount set forth opposite such Lender’s
name on Schedule 1 under the column heading “Loan Commitment Amount”.

“Loan Commitment Percentage” means, as to any Lender, as of any calculation
date, the ratio, expressed as a percentage, which such Lender’s pro rata share
of the Loan Commitment Amount, as stated in Schedule 1, bears to the aggregate
Loan Commitment Amount at such time (or at any time following the Advance of the
Loan in full, the ratio, expressed as a percentage, which such Lender’s
principal amount of Outstanding Advances of the Loan then bears to the aggregate
principal amount of all Outstanding Advances of the Loan).

“Loan Documents” means the collective reference to this Agreement, the Note, the
Security Documents, the Initial Interest Rate Agreements and all other documents
and instruments from time to time evidencing or securing the Loan and other
payment and performance obligations of the Borrower hereunder or under any of
the Loan Documents.

“Loan Obligations” means all amounts payable to the Secured Lenders pursuant to
the Loan Documents.

“Lock-Box Account” shall have the meaning ascribed to such term in Section 6.25.

“Lock-Box Budget” shall have the meaning ascribed to such term in Section 6.25.

“Lock-Box Trigger Notice” shall have the meaning ascribed to such term in
Section 6.25.

“Long-Term Indebtedness” means Indebtedness for borrowed moneys having a term
from its most recent incurrence or renewal of more than one (1) year.

“Management Agreement” means an agreement between the Management Company and the
Property Companies for the delivery of services to Residents.

“Management Company” means Sunrise Senior Living Management, Inc.

“Managing Member” means (a) with respect to the Borrower, SSLII and (b) with
respect to the Guarantors, any Person appointed to serve as managing member or
manager pursuant to its Governing Documents.

“Material Adverse Effect” means an event or occurrence which adversely affects
in a material manner (a) the assets, liabilities, condition (financial or
otherwise), business or operations of the Borrower, the Borrower’s Members and
the Guarantors on an aggregate basis, (b) the ability of the Borrower, a
Guarantor or the Borrower’s Members to carry out its business as of the date of
this Agreement or as proposed herein to be conducted or to meet or perform its
covenants and obligations under the Loan Documents, (c) the operation of a
Facility, (d) the

 

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operation of the Facilities on an aggregate basis, (e) the ability of the
Management Company carry out its business as of the date of this Agreement or to
meet or perform its covenants and obligations under the Management Agreement, or
(f) the ability of Sunrise Senior Living, Inc. to perform its obligations under
the Guaranty of Non-Recourse Obligations.

“Matters Contested in Good Faith” means matters (a) then being contested in good
faith by appropriate proceedings diligently and continuously pursued, (b) of
which the Administrative Agent has been notified in writing and is being kept
informed in such detail as the Administrative Agent may from time to time
reasonably request, (c) the enforcement of which is effectively stayed during
the period of the contest and (d) with respect to which either (i) adequate
reserves in the nature of a cash deposit or pledge of bonds or other securities,
or a payment bond of a corporate surety in the face amount equal to the total
amount in controversy or a contract of insurance (such as a title company
endorsement), reasonably satisfactory to the Administrative Agent, have been
furnished or (ii) adequate provision therefor, reasonably satisfactory to the
Administrative Agent, has been reserved on the financial statements of the
Borrower.

“Maturity Date” means June 14, 2012.

“Member Interest Pledge and Security Agreement (SSLII)” means the Member
Interest Pledge and Security Agreement (Sunrise Senior Living Investments,
Inc.), dated as of the date hereof, executed by Sunrise Senior Living
Investments, Inc., as member, in favor of the Administrative Agent for the
benefit of the Lenders.

“Member Interest Pledge and Security Agreement (MS)” means the Member Interest
Pledge and Security Agreement (MS Senior Living, L.L.C.), dated as of the date
hereof, executed by MS Senior Living, L.L.C., as member, in favor of the
Administrative Agent for the benefit of the Lenders.

“Mortgaged Property” means all Property subject to the Lien of a Mortgage
whether in existence on the Closing Date or later coming into existence and
whether owned by the Borrower or a Guarantor on the Closing Date or acquired
thereafter, together with any additional Property not included in the foregoing
provisions which may be added to the Mortgaged Property by a supplemental
agreement.

“Mortgages” means each of the (a) Deeds of Trust, Security Agreement, Fixture
Filing and Assignment of Leases and Rents, (b) Mortgages and Security Agreement,
or (c) similarly title security instruments in each case granting a lien on the
Mortgaged Property, dated as of the date hereof, executed by a Guarantor to the
Administrative Agent as security for Loan Obligations, for the benefit of the
Lenders, as the same may be amended, modified or supplemented from time to time,
that secures payment of the Loan Obligations.

“MS Senior” means MS Senior Living, L.L.C.

“Net Income” means, for any period of calculation and for any Person, the Total
Revenues less all Operating Expenses and nonoperating expenses of such Person.
In calculating

 

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Net Income there shall be excluded (a) any extraordinary gains and losses, any
gains or losses attributable to the disposition of capital assets; any gains or
losses attributable to the extinguishment or refinancing of Indebtedness and any
unrealized gains and unrealized losses on investments, and (b) any proceeds from
an event of damage, destruction, or condemnation (except business interruption
or rent loss insurance), net of the expenses of collection.

“Net Insurance and Condemnation Proceeds” means the proceeds of any insurance,
other than rent loss or business interruption insurance, from an event of damage
or destruction, title claim or a condemnation with respect to Mortgaged
Property, net of expenses of collecting such proceeds.

“Note” means, collectively, the Promissory Note, dated the Closing Date, made by
the Borrower, to the order of each Lender (including, without limitation any
Promissory Note made by the Borrower pursuant to Section 13.01), as the same may
be amended, modified or supplemented from time to time.

“Occupied Unit” means an independent or assisted living unit at a Facility for
which one or two Residents are obligated to pay the Resident Service Fee.

“OFAC” means the United States Department of Treasury Office of Foreign Assets
Control.

“OFAC Laws” means any laws, regulations, and Executive Orders relating to the
economic sanctions programs administered by OFAC, including without limitation,
the International Emergency Economic Powers Act, 50 U.S.C. Sections 1701 et
seq.; the Trading with the Enemy Act, 50 App. U.S.C. Sections 1 et seq.; and the
Office of Foreign Assets Control, Department of the Treasury Regulations, 31
C.F.R. Parts 500 et seq. (implementing the economic sanctions programs
administered by OFAC).

“OFAC SDN List” means the list of “Specially Designated Nationals and Blocked
Persons” maintained by OFAC.

“OFAC Violation” has the meaning assigned to such term in Section 6.18(e) of
this Agreement.

“Operating Expenses” means, as of any calculation period, the current operating
expenses of a Person.

“Other Taxes” means present or future revenue, recording, excise, transfer,
stamp, documentary or any similar tax, charge or levy arising from payment made
under a Loan Document or from the execution, delivery or enforcement of any Loan
Document.

“Outstanding” means, with respect to any Advance or Loan Obligation, an Advance
or Loan Obligation which, as of the date of calculation, is unpaid.

 

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“Payment Guaranty” means the Payment Guaranty, dated as of the date hereof,
executed jointly and severally by the Guarantors in favor of the Administrative
Agent for the benefit of the Lenders.

“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.

“Permits” means all consents, licenses, permits, orders or other approvals from
Governmental Authorities required for occupancy and operation of the Facilities
in accordance with Applicable Law.

“Permitted Encumbrances” means

(a) Liens for taxes, assessments and special assessments which are not then
delinquent, or, if then delinquent, are Matters Contested in Good Faith;

(b) utility, access and other easements and rights-of-way, restrictions and
exceptions which the Borrower certifies to the Administrative Agent will not
materially interfere with or impair the operation of a Facility;

(c) any mechanic’s, laborer’s, materialman’s, supplier’s or vendor’s Lien or
rights in respect thereof if payment is not yet due under the contract in
question or if such Lien is a Matter Contested in Good Faith;.

(d) such minor defects and irregularities of title as normally exist with
respect to properties similar in character to the Facilities and which the
Borrower certifies to the Administrative Agent do not materially adversely
affect the value of a Facility or impair the Property affected thereby for the
purpose for which it was acquired or is held;

(e) any Lien, easement, defect or irregularities of title or other matters which
are described on the Schedule B to the Title Policies;

(f) rights of Residents created by the Residency Documents, or under Applicable
Law;

(g) Liens incurred in the ordinary course of business in connection with
workers’ compensation, unemployment insurance, other forms of governmental
insurance or benefits, or to secure performance of statutory obligations;

(h) Liens to secure Purchase Money Debt and Capitalized Leases not to exceed the
principal amount of the Purchase Money Debt and Capitalized Leases permitted to
be incurred pursuant to Section 7.01;

(i) Liens approved in writing by the Administrative Agent.

“Person” means an individual, partnership, limited liability company,
corporation (including a business trust), trust, unincorporated association,
joint venture or other entity.

 

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“Plan” means an employee pension benefit plan as defined in Section 3(2) of
ERISA, which (a) is currently or hereafter sponsored, maintained or contributed
to by the Borrower or an ERISA Affiliate or (b) was at any time during the last
six (6) calendar years preceding the date of this Agreement, sponsored,
maintained or contributed to by the Borrower or an ERISA Affiliate, and which is
subject to Title IV of ERISA.

“Pledge and Security Agreement (ITO)” means the Pledge and Security Agreement
dated as of the date hereof from the Intermediate Tier Owners to the
Administrative Agent for the benefit of the Lenders.

“Prepayment Price Upon Damage, Destruction or Condemnation” means, with respect
to a Mortgaged Property, the amount provided in Exhibit 7.03(c).

“Property” means any and all right, title and interest of any Person in and to
any and all property, whether real or personal, tangible or intangible, and
wherever situated.

“Property Companies” means each of the entities listed and so designated on
Exhibit 5.20, and each such entity is a “Property Company.”

“Purchase Agreement” means the Purchase and Sale Agreement dated April 19, 2007
for member interests in the Borrower among MS Senior, as purchaser, AEW Senior
Housing, LLC and SSLII, including all amendments, exhibits and schedules
thereto.

“Purchase Money Debt” means (a) debt that is incurred to finance all or a
portion of the purchase price of tangible personal Property and which is not
secured by any assets other than the assets acquired or (b) debt (i) that
constitutes a renewal, extension or refunding of, but not an increase in the
principal amount of, Purchase Money Debt that is described in clause (a),
(ii) is binding only on the obligor or obligors under the Purchase Money Debt
being renewed, extended or refunded and (iii) bears interest at a rate per annum
that is commercially reasonable at the time of incurrence.

“Purchaser Lender”‘has the meaning ascribed thereto in Section 13.01.

“Receipts” means all cash, checks, cash equivalents, proceeds and other amounts
collected or received by the Borrower or Guarantors that constitute Total
Revenues.

“Register” has the meaning ascribed thereto in Section 13.01.

“Required Debt Service Coverage Ratio” means, as of each Testing Date, the ratio
required pursuant to Section 6.24(a).

“Residency Documents” means, collectively, the agreements by which Residents of
the Facilities receive services which are substantially in a form satisfactory
to the Administrative Agent.

“Resident” means the occupant or prospective occupant of a living unit at a
Facility.

 

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“Resident Service Fees” means all fees and charges received by the Borrower or a
Guarantor from Residents, including those monthly rental, second person, per
diem, and amenity service fees paid by Residents pursuant to the Residency
Documents.

“Revenues Available for Debt Service” means, with respect to any period of
calculation, the Net Income of the Borrower and the Guarantors on a consolidated
basis adjusted, to the extent included or deducted in determining Net Income, to
(i) add back expenses incurred or recognized during the period under
consideration in respect of (A) interest on Long-Term Indebtedness (including
any credit-enhancement and remarketing fees relating thereto), (B) amortization
of financing charges attributable to Long-Term Indebtedness, (C) depreciation
and other non-cash charges attributable to the ownership or operation of
Property, (D) any fees paid to the Management Company in excess of four percent
(4%) of revenues (as defined in the Management Agreement), and (E) other
non-cash expenses and (ii) deduct (A) revenues not resulting in the receipt of
cash during such period and (B) if the fees paid to the Management Company were
less than four percent (4%) of revenues (as defined in the Management
Agreements), an amount necessary to provide for a management fee equal to four
percent (4%) of revenues (as defined in the Management Agreements). If a
Property Company or Facility is sold, transferred or otherwise disposed of,
after the date of such disposition, such Revenues Available for Debt Service
will be calculated excluding such Property Company or Facility.

“Secured Lenders” means, collectively, the Lenders and the Administrative Agent.

“Security Agreement” means the Security Agreement dated as of date hereof from
Borrower to the Administrative Agent for the benefit of the Lenders.

“Security Documents” means the collective reference to the Mortgages, the
Collateral Assignment of Project Documents, the Assignments of Residency
Documents, the Environmental Indemnity Agreement, any Account Control Agreement,
the Member Interest Pledge and Security Agreement (MS Senior), the Pledge and
Security Agreement (ITO), the Member Interest Pledge and Security Agreement
(SSLII), the Payment Guaranty, the Security Agreement, the Funds Pledge
Agreement, the Guaranty of Non-Recourse Obligations, and all other documents
from time to time securing the Loan Obligations.

“SSLII” means Sunrise Senior Living Investments, Inc.

“State” means the applicable state in which a Facility is located.

“Subordinated Management Fees” means any amount in excess of four percent
(4%) of revenues of a Facility as more specifically defined in the Management
Agreement for such Facility.

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are

 

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at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person.

“Taxes” means all levies, imposts, duties, deductions, withholdings or other
charges (including, without limitation, interest and penalties) imposed, levied,
collected, withheld or assessed by any Governmental Authority.

“Testing Date” means the last day of each Fiscal Quarter and the last day of
each Fiscal Year.

“Title Company” means First American Title Insurance Company, together with such
coinsurers and reinsurers as the Administrative Agent may approve, or such other
title companies as may be approved in writing by Administrative Agent.

“Title Policy” means a title policy issued by the Title Company and delivered
pursuant to Section 8.01.

“Total Revenues” means, for any period of calculation, the aggregate of all
Resident Service Fees and other operating and all non-operating revenues,
receipts and income of the Borrower and Guarantors on a consolidated basis, less
any contractual allowances and adjustments with third-party payors.

“Transfer Supplement” shall have the meaning provided in Section 13.01 of this
Agreement.

“Type” means, when used with respect to an Advance or a Borrowing, whether the
rate of interest thereon is determined by reference to the Base Rate or the
LIBOR Rate.

“UCC” means the Uniform Commercial Code in effect in the applicable state.

SECTION 1.02 Other Interpretive Provisions. With reference to this Agreement and
each other Loan Document, unless otherwise specified herein or in such other
Loan Document:

(a) The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
“include,” “includes” and “including” shall be deemed to be followed by the
phrase “without limitation.” Unless the context requires otherwise, (i) any
definition of or reference to any agreement, instrument or other document shall
be construed as referring to such agreement, instrument or other document as
from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth in this
Agreement or in any other Loan Document), (ii) any reference herein to any
Person shall be construed to include such Person’s successors and assigns,
(iii) the words “herein,” “hereof and “hereunder,” and words of similar import
when used in any Loan Document, shall be construed to refer to such Loan
Document in its entirety and not to any particular provision thereof, (iv) all
references in a Loan Document to Articles, Sections, Exhibits and Schedules
shall be construed to refer to Articles

 

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and Sections of, and Exhibits and Schedules to, the Loan Document in which such
references appear, (v) any reference to any law shall include all statutory and
regulatory provisions consolidating, amending, replacing or interpreting such
law and any reference to any law or regulation shall, unless otherwise
specified, refer to such law or regulation as amended, modified or supplemented
from time to time, and (vi) the words “asset” and “property” shall be construed
to have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.

(b) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including.”

(c) All requirements for consents, approvals, directions and waivers shall be
deemed to require written consent, approval, direction or waiver.

(d) Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document.

SECTION 1.03 Accounting Terms.

(a) All accounting terms not specifically or completely defined herein shall be
construed in conformity with, and unless expressly otherwise required all
financial data (including financial ratios and other financial calculations)
required to be submitted pursuant to this Agreement shall be prepared in
conformity with GAAP applied on a consistent basis, as in effect from time to
time, applied in a manner consistent with that used in preparing the audited
financial statements furnished to the Secured Lenders pursuant to Section 6.01,
except as otherwise specifically prescribed herein.

(b) If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Loan Document, and either the
Borrower or the Administrative Agent shall so request, the Borrower and the
Administrative Agent shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in
GAAP; provided that, until so amended, (i) such ratio or requirement shall
continue to be computed in accordance with GAAP prior to such change therein and
(ii) the Borrower shall provide to the Administrative Agent financial statements
and other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

SECTION 1.04 Rounding. Any financial ratios required to be maintained by the
Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).

 

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SECTION 1.05 Times of Day. Unless otherwise specified, all references herein to
times of day shall be references to Eastern time (daylight or standard, as
applicable).

SECTION 1.06 Valuation. For purposes of determining compliance with all
covenants and provisions of this Agreement and the other Loan Documents,
Property shall be valued (a) with respect to marketable securities, as most
recently quoted in the New York Times or Wall Street Journal (and if such
sources quote different rates, the average thereof) and, otherwise, as evaluated
by a broker, appraiser or other expert appointed by the Borrower and reasonably
satisfactory to the Administrative Agent and (b) with respect to Property, the
book value of the assets as shown on the most recent annual financial statements
of the Borrower or other applicable Person.

ARTICLE II

THE LOAN

SECTION 2.01 Agreements to Lend and Borrow the Loan. Subject to the conditions
and upon the terms herein provided, each Lender severally agrees to lend to the
Borrower, and the Borrower agrees, to borrow from each Lender, on the Closing
Date, a portion of the Loan in an amount up to such Lender’s Loan Commitment
Amount.

SECTION 2.02 Interest on the Loan. Subject to Sections 4.03 and 4.06, each
Advance of Loan proceeds shall be comprised entirely of Base Rate Borrowings or
LIBOR Borrowings, or a combination thereof, as the Borrower may request in
accordance with Section 4.03, and shall bear interest at a LIBOR Rate plus the
Applicable Margin or the Base Rate plus the Applicable Margin, as applicable.
Interest on Outstanding Advances of Loan proceeds shall be payable on each
Interest Payment Date for the period from the immediately preceding Interest
Payment Date on which interest has been paid (or date of the Loan Advance if
later).

SECTION 2.03 Repayment and Prepayment of Loan.

(a) Except for payments required under Sections 6.11 and 7.03, the Loan will be
interest only, provided that the full amount of the outstanding Loan and all
Loan Obligations related thereto shall be repaid on the earlier of (i) the date
on which the Administrative Agent shall declare the Loan to be due and payable
after an Event of Default pursuant to Section 11.01 and (ii) the Maturity Date.

(b) The Loan may be prepaid by the Borrower upon three (3) Business Days’ (or
such lesser number of days as permitted by the Administrative Agent) prior
written, electronic or telephonic notice to the Administrative Agent (which
notice if electronic or telephonic shall be promptly confirmed in writing), in
whole or in part, but if in part in an aggregate principal amount which does not
result in an Outstanding LIBOR Borrowing for any LIBOR Period being reduced
below $1,000,000 in aggregate principal amount. Such notice of prepayment shall
designate the principal amount to be prepaid and the LIBOR Borrowing, if any, to
which it relates. Each prepayment shall be accompanied by the payment of
interest thereon and all other Loan Obligations relating thereto. Any prepayment
of the Loan (including

 

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prepayment on account of acceleration of the Loan) made prior to the second
(2nd) anniversary date of the Closing Date shall be accompanied by payment of
the prepayment fee described in Section 4.09(e) provided that such prepayment
fee shall not be payable with respect to prepayments made pursuant to
Section 4.03(d), 4.05, 6.11 or 7.03(c)(iii) hereof or Section 4 of the Funds
Pledge Agreement or Section 5(h) of the Payment Guaranty.

SECTION 2.04 Procedure for Borrowing.

(a) The Borrower will borrow the entire Loan on the Closing Date.

(b) The execution of this Agreement by the Borrower constitutes an irrevocable
authorization to each Lender to advance proceeds of the Loan on the Closing
Date. All sums so advanced by direct payment shall satisfy pro tanto the
obligations of the applicable Lender under this Agreement, shall be evidenced by
the Note and shall be secured by the Security Documents. The Lenders shall have
no obligation to make any further Advances.

SECTION 2.05 First Advance. The sole Advance of the Loan shall be made upon
satisfaction of all conditions specified in Article VIII and in accordance with
the provisions of Section 2.01(a).

SECTION 2.06 Waivers of Conditions. The Administrative Agent on behalf of the
Lenders, in its sole discretion may, but shall have no obligation to, waive or
vary any requirements imposed on the Borrower for making the Advance on the
Closing Date.

SECTION 2.07 Pro Rata Treatment Amongst Lenders. Each Borrowing by the Borrower
from the Lenders shall be made pro rata according to each Lender’s respective
Loan Commitment Percentage. Each payment (including each prepayment) by the
Borrower on account of principal of and interest on the Loan shall be applied
pro rata according to each Lender’s respective Loan Commitment Percentage and as
otherwise determined by the Administrative Agent.

ARTICLE III

[INTENTIONALLY OMITTED]

ARTICLE IV

PAYMENT PARTICULARS

SECTION 4.01 [INTENTIONALLY OMITTED].

SECTION 4.02 Funding of Borrowing. Subject to the terms and conditions set forth
in this Agreement, each Lender shall make the Advance to be made by it hereunder
on the Closing Date by wire transfer of immediately available funds by 2:00 P.M.
to the account of the Administrative Agent most recently designated by it for
such purpose by notice to the Lenders.

 

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The Administrative Agent will make such Advance available to the Borrower by
promptly crediting the amounts so received, in like funds, to an account
maintained in the United States and designated by the Borrower in writing.

SECTION 4.03 Interest Elections.

(a) Except as provided in paragraphs (c), (d) and (e), each Advance initially
shall be of the Type specified by the Borrower on the Closing Date and, in the
case of a LIBOR Borrowing, shall have an initial Interest Period as specified in
writing by the Borrower. Thereafter, the Borrower may elect to convert such
Borrowing to a different Type or to continue such Borrowing and, in the case of
LIBOR Borrowings, may elect LIBOR Periods therefor, all as provided in this
Section 4.03. The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated among the Lenders holding the Advances comprising such Borrowing in
accordance with their pro rata share and the Advances comprising each such
portion shall be considered a separate Borrowing.

(b) To make an election pursuant to this Section 4.03, the Borrower shall notify
the Administrative Agent of such election by telephone by in the case of LIBOR
Advances, not later than 11:00 a.m. three (3) Business Days before the effective
date of such Interest Election Request, and in the case of Base Rate Advances,
not later than 10:00 a.m. two (2) Business Days before the effective date of
such Interest Election Request. Each such telephonic Interest Election Request
shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent by a written Interest Election Request
substantially in the form of Exhibit 4.03(b) and signed by the Borrower’s
Representative or its agent as designated in writing to the Administrative
Agent. Each telephonic and written Interest Election Request shall specify the
following information:

(i) the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof,
the portion thereof to be allocated to each resulting Borrowing (in which case
the information to be specified pursuant to clauses (iii) and (iv) below shall
be specified for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;

(iii) whether the resulting borrowing is to be Base Rate Borrowing or a LIBOR
Borrowing; and

(iv) if the resulting Borrowing is a LIBOR Borrowing, the LIBOR Period to be
applicable thereto after giving effect to such election, which shall be a period
contemplated by the definition of the term “LIBOR Period”.

If the Borrower fails to deliver an Interest Election Request (and such
Borrowing is not prepaid or repaid as provided herein) or if any such Interest
Election Request requests a LIBOR Borrowing but does not specify a LIBOR Period,
then the Borrower shall be deemed to have

 

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selected a LIBOR Borrowing with a LIBOR Period of one (1) month’s duration.
Promptly following receipt of an Interest Election Request, the Administrative
Agent shall advise each Lender of the details thereof and of such Lender’s
portion of each resulting Borrowing.

(c) Elections with respect to LIBOR Borrowings shall be subject to the
following:

(i) No conversion or partial conversion of a LIBOR Borrowing shall (A) reduce
the outstanding principal amount of such LIBOR Advance for a LIBOR Period to
less than $1,000,000, or (B) result in more than eight (8) different LIBOR
Periods being in effect at anytime;

(ii) Except as set forth in subsection (d), no LIBOR Borrowing may be converted
to a Base Rate Borrowing or to a LIBOR Borrowing with a different LIBOR Period
on other than the first (1st) day of a LIBOR Period; and

(iii) No LIBOR Period shall extend beyond the Maturity Date.

The LIBOR Rate applicable to each LIBOR Advance and Borrowing shall be
determined by the Administrative Agent on the second (2nd) Business Day
preceding each LIBOR Period. The Administrative Agent shall give the Borrower
notice of each LIBOR Rate promptly upon determination thereof. The
Administrative Agent shall send to the Borrower a statement of the amount of
interest due on the Loan two (2) Business Days prior to each Interest Payment
Date.

(d) The interest rate on any LIBOR Advance or Borrowing shall, at the
Administrative Agent’s option, convert to the Base Rate plus the Applicable
Margin and the LIBOR Rate shall not be available:

(i) if on the second (2nd) Business Day preceding the first (1st) day of
proposed LIBOR Period, the Administrative Agent shall have determined or the
Administrative Agent shall have been notified by any Lender that (A) deposits in
U.S. dollars (in the amounts equivalent to the principal amount of the
applicable LIBOR Borrowing) are not being offered by each of the Lenders to
prime banks in the London Interbank Market for the proposed LIBOR Period or
(B) that adequate and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of LIBOR Rate, written
notice of either of such events to be given by the Administrative Agent to the
Borrower within two (2) Business Days after the beginning of such proposed LIBOR
Period (such suspension of LIBOR Periods to remain in effect until the
commencement of any LIBOR Period for which the Administrative Agent shall have
determined that neither of such conditions remains in effect, written notice of
which shall be promptly given by the Administrative Agent to the Borrower);

(ii) for the remaining term of the Loan, as applicable, effective on the last
day of each LIBOR Period immediately following a change in law or regulation, as
a result of which the Administrative Agent shall have determined that (A) it has
become unlawful or impossible for any Lender to maintain the Loan as a LIBOR
Borrowing or

 

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(B) increased cost compensation pursuant to Section 4.05 will not fully and
adequately compensate the Lenders with respect to a LIBOR Borrowing; or

(iii) during the continuance of a Default, effective immediately upon such
Default.

In the event that pursuant to the foregoing the Administrative Agent converts
the interest on a LIBOR Rate Advance to the Base Rate plus the Applicable Margin
for a period of more than thirty (30) consecutive days or if no further LIBOR
Advances are available for a period of more than thirty (30) consecutive days
due to the occurrence of an event described in clause (i) or (ii), the Borrower
shall have the right to prepay the Loan in full without payment of the
prepayment fee described in Section 4.09(e).

(e) Notwithstanding any other provisions of this Agreement, during the
continuance of a Default (but only for a retroactive period of not more than
ninety (90) days prior to the Borrower’s receipt of notice from the
Administrative Agent of imposition of the Default Rate) or an Event of Default,
interest on the Loan shall accrue at the Default Rate and be payable on demand.

SECTION 4.04 Place and Manner of Payment; Computation of Interest and Fees
Allocations of Certain Payments.

(a) All payments by the Borrower under this Agreement and the other Loan
Documents shall be made in lawful currency of the United States of America and
in immediately available funds on the date when such payment is due, without set
off or counterclaim. All payments to the Secured Lenders shall be made by
federal wire transfer to J.P. Morgan Chase Bank, New York, ABA No. 021 000 021
for the account of HSH Nordbank AG, New York Branch, Account No. 400949687,
Attention: Loan Operations, Reference: Sunrise AL US (or to such other account
as the Administrative Agent may specify by written notice to the Borrower) with
further indication of the purpose of the payment.

(b) In the event that the date specified for any such payment hereunder is not a
Business Day, such payment shall be made not later than the next following
Business Day and interest shall be paid at the rate and on the basis of
calculation provided for herein on any such payment to the Business Day on which
such payment is made.

(c) Computations of the LIBOR Rate, the corresponding Applicable Margin and the
corresponding Default Rate shall be made by the Administrative Agent on the
basis of a 360-day year for the actual number of days (including the first day
but excluding the last day) elapsed. All other computations, including fees
payable under the Fee Letter, the Base Rate, the corresponding Applicable Margin
and the corresponding Default Rate shall be made by the Administrative Agent on
the basis of a year of a 365/366-day year for the actual number of days
(including the first day but excluding the last day) elapsed.

 

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(d) Any payment received by the Administrative Agent on behalf of the Secured
Lenders after 2:00 P.M. (Eastern time) shall be deemed to have been received by
the Administrative Agent on the next Business Day.

(e) Any payment due under the Loan Documents to which the Borrower is a party
which is not received by the Administrative Agent on behalf of the Secured
Lenders on the date due, following any grace or cure period, shall bear interest
until paid in full at the Default Rate.

(f) Prepayments from Net Insurance and Condemnation Proceeds pursuant to
Section 6.11 will be allocated in accordance with the written direction of the
Borrower.

(g) Notwithstanding the provisions of Sections 2.03(b) or 4.04(f) or any other
provisions of the Loan Documents to the contrary, upon an Event of Default any
amounts received by the Administrative Agent shall be allocated and applied as
the Administrative Agent solely shall determine.

SECTION 4.05 Increased Payments. Except with respect to Taxes, which shall be
governed by Section 4.07, if any change of law or guideline or interpretation or
application thereof by any Governmental Authority charged with the
interpretation or administration thereof or compliance with any request or
directive of any Governmental Authority adopted after the date hereof
(collectively, a “Change in Law”):

(a) subjects any Secured Lender or Bank Participant to taxation with respect to
this Agreement, the other Loan Documents or payment by the Borrower of
principal, interest, upfront fee or quarterly or annual credit fees, commitment
fees, administrative fees, termination fees or other amounts due from the
Borrower hereunder (except for any taxes on the overall net income or share
capital of a Secured Lender or Bank Participant);

(b) imposes, modifies or deems applicable any reserve, special deposit or
similar requirement against credits or commitments to extend credit extended by
assets (funded or contingent) of, deposits with or for the account of, or other
acquisitions of funds by a Secured Lender or Bank Participant;

(c) imposes, modifies or deems applicable any capital adequacy or similar
requirement (i) against assets (funded or contingent) of, or credits or
commitments to extend credit extended by, a Secured Lender or Bank Participant,
or (ii) otherwise applicable to the obligations of a Secured Lender or Bank
Participant under this Agreement; or

(d) imposes upon a Secured Lender or Bank Participant any other condition or
expense with respect to this Agreement, the Loan, or the making, maintenance or
funding of any Advance or any security therefor;

and the result of any of the foregoing (a) through (d) is to increase the cost
to, reduce the income receivable by, or impose any expense (including loss of
margin) upon a Secured Lender or Bank Participant with respect to this
Agreement, the Loan or the making, maintenance or funding of

 

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any Advance (or, in the case of any capital adequacy or similar requirement, to
have the effect of reducing the rate of return on the Secured Lenders’ or Bank
Participants’ capital, taking into consideration such Secured Lender’s or Bank
Participant’s policies with respect to capital adequacy) by an amount which such
Secured Lender or Bank Participant deems to be material to it, then the
Administrative Agent on behalf of itself or any other Secured Lender or Bank
Participant shall from time to time notify, or cause to be notified, the
Borrower of the amount determined in good faith (using any reasonable averaging
and attribution methods) by the Secured Lender or Bank Participant (which
determination shall be conclusive absent manifest error) to be necessary to
compensate the Secured Lender or Bank Participant for such increase, reduction
or imposition. Such amount shall be due and payable by the Borrower thirty
(30) days after demand therefor. A certificate by the Secured Lender or Bank
Participant as to the amount due and payable under this Section 4.05 from time
to time and the method of calculating such amount shall be conclusive absent
manifest error and shall be provided to the Borrower with the notice described
above. The amount payable pursuant to this Section 4.05 shall be payable to the
Administrative Agent in accordance with Section 4.04 or in accordance with such
other payment instructions as the Administrative Agent shall advise the Borrower
in writing. In the event of the occurrence of any of the foregoing, Borrower
shall have the right to prepay the Loan without payment of the prepayment fee
specified in Section 4.09(e).

Failure or delay on the part of any Secured Lender or Bank Participant to demand
compensation pursuant to this Section 4.05 shall not constitute a waiver of such
Secured Lender’s or Bank Participant’s right to demand such compensation;
provided that the Borrower shall not be required to compensate a Secured Lender
or Bank Participant pursuant to this Section 4.05 for any increased costs or
reductions incurred more than ninety (90) days prior to the date that such
Secured Lender or Bank Participant notifies the Borrower of the Change in Law
giving rise to such increased costs or reductions and of such Lender’s intention
to claim compensation therefor; provided further that, if the Change in Law
giving rise to such increased costs or reductions is retroactive, then the
ninety (90) day period referred to above shall be extended to include the period
of retroactive effect thereof; and provided further that Bank Participants shall
receive the benefit of this Section 4.05 only to the extent provided in Section
13.02.

If, subsequent to the imposition of increased costs pursuant to this
Section 4.05, the condition which gave rise to such increased costs ceases or
such increased costs are no longer applicable for any other reason, the Secured
Lender or Bank Participant for which the increased costs were imposed agrees to,
within ten (10) days of the responsible lending officer becoming aware of this
circumstance, so advise the Borrower and the Administrative Agent and from and
after such notification date such increased costs shall cease to apply.

Similarly, if subsequent to the imposition of increased costs pursuant to this
Section 4.05 due to a Change in Law costs are decreased, the Secured Lender or
Bank Participant for which the increased costs were imposed agrees to, within
ten (10) days of the responsible lending officer becoming aware of this
circumstance, so advise the Borrower and the Administrative Agent, and from and
after such notification date such decreased costs shall thereafter apply, but

 

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only to the extent that such decreased costs do not reduce the applicable
amounts to less than the rates payable as of the Closing Date.

SECTION 4.06 Recapture. Any interest payable pursuant to Section 2.02 or
otherwise pursuant to this Agreement or the other Loan Documents will not exceed
the Highest Lawful Rate. In the event any interest required to be paid hereunder
at any time exceeds the Highest Lawful Rate, the portion of such interest
required to be paid on a current basis will equal such Highest Lawful Rate;
provided that the difference between the amount of interest payable assuming no
Highest Lawful Rate and the amount paid on a current basis after giving effect
to the Highest Lawful Rate, will, to the extent permitted by Applicable Law, be
carried forward and will be payable on any subsequent date of calculation so as
to result in a recovery of interest previously unrealized (because of the
limitation dictated by such Highest Lawful Rate) at a rate of interest, and as
part of the interest payable, that, after giving effect to the recovery of such
excess and all other interest paid and accrued hereunder to the date of
calculation, does not exceed such Highest Lawful Rate.

SECTION 4.07 Taxes.

(a) Any and all payments by or on account of any obligation of the Borrower
hereunder or under any other Loan Document shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes that are not Excluded
Taxes; provided that if the Borrower shall be required to deduct any Indemnified
Taxes or Other Taxes that are not Excluded Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 4.07), the applicable Secured Lender or Bank Participant
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with Applicable Law.

(b) In addition, the Borrower shall pay any Other Taxes which are not Excluded
Taxes to the relevant Governmental Authority in accordance with Applicable Law.

(c) The Borrower shall indemnify the Secured Lenders and Bank Participants
within ten (10) days after written demand therefor for the full amount of any
Indemnified Taxes or Other Taxes paid by such Secured Lender or Bank
Participant, as the case may be, on or with respect to any payment by or on
account of any obligation of the Borrower hereunder or under any other Loan
Document (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section 4.07) and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability delivered to the Borrower by or on
behalf of such Secured Lender, shall be conclusive absent manifest error.

(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes
by the Borrower to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental

 

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Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.

(e) Any Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrower are
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate; provided that such Foreign Lender has
received written notice from the Borrower advising it of the availability of
such exemption or reduction and supplying all applicable documentation.

(f) Bank Participants shall receive the benefit of this Section 4.07 only to the
extent provided in Section 13.02.

SECTION 4.08 LIBOR Breakage. In the event of (a) any payment or prepayment
(whether mandatory or optional) of a LIBOR Borrowing, or conversion of a LIBOR
Borrowing to a Base Rate Borrowing, for any reason (including acceleration) on a
date other than the last day of the LIBOR Period for such Borrowing; or (b) any
failure by the Borrower for any reason to borrow a LIBOR Advance in the amount
and on a date specified in an Interest Election Request, or to convert a Base
Rate Borrowing into a LIBOR Borrowing, or continue a LIBOR Borrowing requested
in an Interest Election Request or as deemed to be requested pursuant to
Section 4.03 for any reason, the Borrower shall compensate each Lender for the
loss, cost and expense attributable to such event, which amount shall be equal
to the excess, if any, of (i) the amount of interest that otherwise would have
accrued on the principal amount had such event not occurred to the last day of
the then current LIBOR Period for such Borrowing (or, in the case of a failure
to borrow, convert or continue, the LIBOR Period that would have been
applicable) at the applicable LIBOR Rate for such Advance, over (ii) the amount
of interest that would have accrued on such principal amount for the period from
such event at the interest rate such Lender would bid, were it to bid, as of
such event for dollar deposits of a comparable amount and period from other
banks in the London Interbank Market (as reasonably determined by the
Administrative Agent). Upon the Borrower’s request, the Administrative Agent
shall provide the Borrower with a statement setting forth the basis for
requesting such compensation and the method for determining the amount thereof.
Any such statement shall be conclusive absent manifest error.

SECTION 4.09 Fees.

(a) The Borrower shall pay to the Administrative Agent on the Closing Date, a
nonrefundable structuring fee with respect to the Loan as set forth in the Fee
Letter.

(b) The Borrower agrees to pay on demand:

(i) all reasonable out-of-pocket costs and expenses of the Administrative Agent
in connection with the preparation, execution and delivery of this

 

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Agreement and the other Loan Documents and any other documents which may be
delivered in connection with the Loan Documents including, without limitation,
the reasonable fees and out-of-pocket expenses of counsel for the Administrative
Agent with respect thereto;

(ii) all reasonable costs and expenses of the Administrative Agent in connection
with the administration and enforcement (whether by means of legal proceedings
or otherwise) of any of the rights of the Secured Lenders under this Agreement,
the other Loan Documents, and such other documents which may be delivered in
connection therewith;

(iii) all reasonable fees and out-of-pocket expenses for counsel or other
consultants to or for the benefit of the Administrative Agent in connection with
advising the Secured Lenders as to their rights and responsibilities under, or
with respect to amendments of, this Agreement and the other Loan Documents,
which need for advice arises as a result of (A) the action or inaction of the
Borrower not in compliance with the Agreement, (B) any information, certificate
or report furnished to the Secured Lenders pursuant to the Loan Documents, (C) a
Conditional Default, Default or Event of Default, (D) in connection with
responding to requests from the Borrower for consents and waivers and
(E) syndication or participation of the Loan by HSH Nordbank AG; provided that,
with respect to syndications such costs relate to the basic structure of the
transaction (including reasonable marketing costs) and not to synthetic
restructuring or sales as securities (as distinguished from sales of bank loans)
undertaken by HSH Nordbank AG for purposes of its syndication; and

(iv) all reasonable fees, costs and expenses of any other consultants providing
services to or for the benefit of the Administrative Agent in accordance with
this Agreement; including, if requested by the Administrative Agent, after a
Default or if required for regulatory compliance by the Lenders, updates of the
appraisals delivered under Section 8.01(n).

In addition, if at any time any Governmental Authority shall require revenue or
other documentary stamps or any other tax or fee in connection with the
execution, delivery, filing and recording of this Agreement or the other Loan
Documents, then, if the Borrower lawfully may pay for such stamps, taxes or
fees, the Borrower shall pay, when due and payable, for all such stamps, taxes
and fees, including interest and penalties thereon, and the Borrower agrees to
save the Secured Lenders harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such stamps,
taxes and fees.

(c) Except for Matters Contested in Good Faith, if the Borrower incur any Liens
prohibited hereunder with respect to any Facility or other collateral pledged
pursuant to the Loan Documents or fails to discharge when due and payable any
Indebtedness secured by such Lien (whether or not a Permitted Encumbrance) or
fails to pay when due any premium on insurance required to be maintained
hereunder, or otherwise fail to pay any amount necessary for the protection and
preservation of any Facility or other collateral pledged pursuant to the Loan
Documents, the Administrative Agent may in its sole discretion with reasonable
notice to the

 

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Borrower, pay the same together with interest and penalty, and the Borrower
agrees to reimburse the Administrative Agent immediately for amounts so paid.
With respect to Matters Contested in Good Faith, the Borrower will promptly pay
any valid, final and non-appealable judgment enforcing any such Lien or bill and
cause the same to be satisfied of record.

(d) Upon the occurrence and during the continuance of an Event of Default or
Default, to protect any security interest which the Secured Lenders are granted
in connection with this Agreement or any other Loan Document, the Administrative
Agent may, in its sole discretion, with reasonable notice to the Borrower,
maintain guards, pay any service bureau or warehouseman, obtain bonds, obtain
any record and take any other similar action which shall be reasonable and shall
be necessary or appropriate in the Administrative Agent’s sole discretion, for
the protection and preservation of the Mortgaged Properties, and the Borrower
agrees to immediately reimburse the Administrative Agent for the amounts so
paid.

(e) Except as provided in Sections 4.03(d), 4.05, 6.11 and 7.03(c)(iii) hereof,
in the event the Loan is optionally prepaid by the Borrower prior to the second
(2nd) anniversary of the Closing Date as permitted pursuant to Section 2.03(b),
the Borrower shall on the prepayment date pay the Administrative Agent a
prepayment fee in an amount equal to the quotient of (i) One Hundred Fifty
(150) basis points (1.50%) of the amount prepaid multiplied by (ii) the number
of full or partial months remaining from the date of the prepayment to the
second (2nd) anniversary of the Closing Date, divided by (iii) twenty-four (24).

SECTION 4.10 Evidence of Debt. The Secured Lenders shall maintain in accordance
with their usual practices an account or accounts evidencing the Indebtedness of
the Borrower resulting from each Advance of Loan proceeds and with respect
thereto the amounts of principal and interest Outstanding and the amounts paid
from time to time hereunder. In any legal action or proceeding in respect of
this Agreement, the entries made on the Note and in the accounts maintained by
the Secured Lenders shall be prima facie evidence of the existence and amounts
of the obligations of the Borrower therein recorded. In the event of a conflict
among such accounts, the accounts maintained by the Administrative Agent shall
control, absent manifest error.

SECTION 4.11 Replacement. Upon receipt of an affidavit of an officer of a
Secured Lender as to the loss, theft, destruction or mutilation of a Note
(containing usual and customary indemnification for a lost note) or any other
security document which is not of public record, and, in the case of any such
loss, theft, destruction or mutilation, upon surrender and cancellation of such
Note or any other security document, the Borrower shall issue, in lieu thereof,
a replacement Note or other security document in the same principal amount
thereof and otherwise of like tenor.

SECTION 4.12 Loan Obligations Absolute. The payment obligations of the Borrower
under this Agreement shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including, without limitation, the following:

(a) any lack of validity or enforceability of any of the Loan Documents;

 

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(b) any amendment or waiver of or any consent to departure from all or any of
the Loan Documents;

(c) the existence of any claim, set-off, defense or other right which the
Borrower may have at any time against any of the Secured Lenders, or any other
person or entity, whether in connection with this Agreement, the other Loan
Documents or the transactions contemplated herein or therein or any unrelated
transaction;

(d) any statement or any other document presented in an Interest Election
Request proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect; or

(e) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing.

SECTION 4.13 Mitigation Loan Obligations; Replacement of Lenders. If any Secured
Lender or Bank Participant requests increased compensation under Section 4.05,
or if the Borrower is required to pay any additional amount to any Secured
Lender or Bank Participant or any Governmental Authority for the account of any
Secured Lender or Bank Participant pursuant to Section 4.07, then such Secured
Lender or Bank Participant shall use reasonable efforts to designate a different
lending office for future booking of the Loan or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Secured Lender or Bank Participant, such designation or
assignment (a) would eliminate or reduce amounts payable pursuant to
Section 4.05 or 4.07, as the case may be, in the future and (b) would not
subject such Lender or Bank Participant to any unreimbursed cost or expense and
would not otherwise be disadvantageous to such Lender or Bank Participant. The
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any
Secured Lender or Bank Participant in connection with any such designation or
assignment; provided that such Secured Lender or Bank Participant has given the
Borrower notice of the anticipated approximate amount of such costs and expenses
reasonably in advance of any such designation or assignment.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

To induce the Secured Lenders to enter into this Agreement and the Lenders to
make the Loan, the Borrower hereby represents and warrants to the Secured
Lenders as of the Closing Date as follows:

SECTION 5.01 Existence and Power. Borrower and each Guarantor is a limited
liability company or limited partnership duly organized and existing under the
laws of the State of Delaware with lawful power and authority to enter into the
Loan Documents to which each is a party, and each has the power and authority to
conduct its business as currently conducted and to own its assets.

 

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SECTION 5.02 Facilities, Units and Services; Regulatory Permits.

(a) Attached as Exhibit 5.02(a) is a description of each Facility, including
(i) the legal description and acreage of the land; (ii) the approximate square
footage of the Improvements; (iii) the type of construction of the Improvements;
(iv) the number of independent living units (both as licensed and currently in
operation), (v) the number of assisted living units (both as licensed and
currently in operation); and (vi) other specialized services such Facility is
licensed to provide.

(b) Attached as Schedule I to Exhibit 5.02(b) is a list of all Permits which
have been obtained by or on behalf of the Borrower, the Guarantors, or the
Management Company in connection with acquisition, ownership, marketing and
operation of the Facilities (the “Obtained Regulatory Permits”), and such
Obtained Regulatory Permits constitute all such material consents,
authorizations, licenses, filings and approvals of all Governmental Authorities
which are necessary for the Borrower, the Guarantors and the Management Company
to, own and operate the Facilities as described on Exhibit 5.02(a), except for
Permits described on Schedule II to Exhibit 5.02(b), all of which the Borrower
expects will be obtained by no later than the date indicated on Schedule II to
Exhibit 5.02(b). All filings made by or on behalf of the Borrower, the
Guarantors and the Management Company with Governmental Authorities in
connection with all material Permits contain complete and accurate information
and all of the Obtained Regulatory Permits are in full force and effect as of
the Closing Date.

SECTION 5.03 Due Authorization. The execution, delivery and performance of the
Loan Documents by the Borrower, the Guarantors, the Borrower’s Members and the
Management Company to which each is a party are within its corporate power and
authority, and have been duly authorized by all necessary corporate action of
such Person. The Borrower, the Guarantors, the Borrower’s Members and the
Management Company have approved the form of the Loan Documents to which it is
not a party.

SECTION 5.04 Valid and Binding Obligations. The Loan Documents constitute valid
and binding obligations of the Borrower, the Guarantors, the Borrower’s Members
and the Management Company to which each is a party and each is enforceable
against such Person in accordance with its respective terms, except as such
enforceability may be limited by such party’s bankruptcy, insolvency,
reorganization, moratorium or other laws or equitable principles relating to or
limiting creditors’ rights generally.

SECTION 5.05 Noncontravention. The execution and delivery by the Borrower, the
Guarantors, the Borrower’s Members and the Management Company of the Loan
Documents to which each is a party, and the performance of their obligations
hereunder and thereunder, will not violate any existing Applicable Law or result
in a breach of any of the terms of, or constitute a default under, any
indenture, mortgage, deed of trust, lease or other agreement or instrument to
which such Person is a party or by which it or any of its Property is bound, its
Governing Documents, or decree or order of any Governmental Authority.

SECTION 5.06 Federal Reserve Regulations. Neither the Borrower nor any Guarantor
or Borrower’s Member is engaged principally, or as one of its important
activities, in the

 

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business of extending credit for the purpose of purchasing or carrying margin
stock. No part of the proceeds of the Loan will be used, whether directly or
indirectly, for any purpose that entails a violation of any of the Regulations
of the Federal Reserve Board, including Regulations T, U and X, including for
the purpose of purchasing or carrying any margin stock or for the purpose of
maintaining, reducing or carrying any margin stock originally incurred to
purchase or carry any margin stock that is currently a margin stock or for any
other purpose which might result in the transactions contemplated by the Loan
Documents constituting a “purpose credit” within the meaning of Regulation U.

SECTION 5.07 Pending Litigation and Other Proceedings. There is no pending
action, proceeding or investigation before any Governmental Authority against or
directly involving the Borrower, any Guarantor, a Borrower’s Member or the
Management Company and, to the best knowledge of the Borrower after due inquiry,
there is no threatened action, proceeding or investigation affecting the
Borrower, any Guarantor, a Borrower’s Member or the Management Company before
any Governmental Authority which, in any case, may materially and adversely
affect (a) the validity or enforceability of any of the Loan Documents or
(b) the ability of such Person to perform its obligations under any Loan
Document or the Management Agreement.

SECTION 5.08 Insurance. The Borrower and the Guarantors currently maintain
insurance which meets or exceeds the requirements of Section 6.07 and such
insurance is of such type and in such amounts or in excess of such amounts as
are customarily insured against by senior housing communities of like size and
character as the Mortgaged Property. There are no outstanding premiums due and
payable by the Borrower, the Guarantors or the Management Company with regard to
any of the insurance policies described in Section 6.07.

SECTION 5.09 Adequate Assets; Franchises. Each of the Borrower, the Guarantors,
the Borrower’s Members and the Management Company possesses adequate assets,
franchises, licenses (except as disclosed on Schedule II to Exhibit 5.02(b)),
patents, patent applications, copyrights, trademarks, trademark applications,
and trade names, as may be required to continue to conduct its respective
business as contemplated by the Loan Documents.

SECTION 5.10 Priority Security Interest. Each of the Security Documents is
effective to create in favor of the Administrative Agent a legal, valid and
enforceable Lien as purported therein on the collateral described therein and,
when the Mortgages and the Assignment of Residency Documents are recorded in
accordance with Exhibit 8.01(e), the financing statements identified on Exhibit
8.0l(f) are filed in the offices specified, and upon execution and delivery of
an Account Control Agreement with respect to each account described in
Section 5.21 or 6.21, the Liens created by the Security Documents shall
constitute a fully perfected Lien on, and security interest in, all right, title
and interest of the grantors thereunder in the collateral described therein, to
the extent perfection can be obtained by such recordation and filing, in each
case, except for Permitted Encumbrances, prior and superior in right to any
other Person to the extent perfection can be obtained by such recordation and
filing.

 

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SECTION 5.11 ERISA Plans. Except as described in Exhibit 5.11 hereto:

(a) The Borrower and each ERISA Affiliate have complied in all material respects
with ERISA and, where applicable, the Code regarding each Plan except where
failure to so comply would not have a Material Adverse Effect;

(b) each Plan is, and has been, maintained in substantial compliance with ERISA
and, where applicable, the Code except where failure to so comply would not have
a Material Adverse Effect;

(c) no act, omission or transaction has occurred which could result in
imposition on the Borrower or any ERISA Affiliate (whether directly or
indirectly) of (i) either a civil penalty assessed pursuant to subsections (c),
(i) or (1) of Section 502 of ERISA or a tax imposed pursuant to Chapter 43 of
Subtitle D of the Code or (ii) breach of fiduciary duty liability damages under
Section 409 of ERISA except where failure to so comply would not have a Material
Adverse Effect;

(d) no Plan or any trust created under any such Plan has been terminated since
September 2, 1974 in a manner that would result in the imposition of a Lien on
the Borrower or any ERISA Affiliate pursuant to Section 4068 of ERISA. No
liability to the PBGC (other than for the payment of current premiums which are
not past due) by the Borrower or any ERISA Affiliate has been or is expected by
the Borrower or any ERISA Affiliate to be incurred with respect to any Plan. No
ERISA Event with respect to any Plan has occurred;

(e) full payment when due has been made of all amounts which the Borrower or any
ERISA Affiliate is required under the terms of each Plan or Applicable Law to
have paid as contributions to such Plan as of the Closing Date, and no
accumulated funding deficiency (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, exists with respect to any
Plan;

(f) except as disclosed on Exhibit 5.11, the actuarial present value of the
benefit liabilities under each Plan which is subject to Title IV of ERISA does
not, as of the end of the Borrower’s most recently ended Fiscal Year, exceed the
current value of the assets (computed on a plan termination basis in accordance
with Title IV of ERISA) of such Plan allocable to such benefit liabilities. The
term “actuarial present value of the benefit liabilities” shall have the meaning
specified in Section 4041 of ERISA;

(g) neither the Borrower nor any ERISA Affiliate sponsors, maintains, or
contributes to an employee welfare benefit plan, as defined in Section 3(1) of
ERISA, maintained to provide benefits to former employees of such entities, that
may not be terminated by the Borrower or an ERISA Affiliate in its sole
discretion at any time without any material liability, other than liability for
continuation coverage described in Part 6 of Subtitle 6 of Title I of ERISA;

 

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(h) neither the Borrower nor any ERISA Affiliate sponsors, maintains or
contributes to, or has at any time in the six-year period preceding the date of
this Agreement sponsored, maintained or contributed to, any Multiemployer Plan;
and

(i) neither the Borrower nor any ERISA Affiliate is required to provide security
under Section 401(a)(29) of the Code due to a Plan amendment that results in an
increase in current liability for the Plan.

SECTION 5.12 Defaults. No Default and no Conditional Default has occurred and is
continuing or exists.

SECTION 5.13 Streets. All streets necessary for the full utilization of the
Facilities purpose have been completed or the necessary rights-of-way therefor
have been acquired by the Property Company or dedicated by the appropriate
Governmental Authority.

SECTION 5.14 Utility Services. All utility services necessary for operation of
the Facilities are or will be available at the Site, including water supply and
sanitary and storm sewer facilities, electric, telephone and cable television
facilities.

SECTION 5.15 Condemnation, Etc. Neither the Borrower, nor any of the Guarantors
or Borrower’s Members has any knowledge of any condemnation, zoning or other
land use regulation proceedings, either instituted or planned to be instituted,
which would adversely affect the use or operation of the Facilities.

SECTION 5.16 Purchase Agreement.

(a) As of the Closing Date, MS Senior shall have consummated the acquisition of
the member interests in Borrower in accordance with the Purchase Agreement and
the Acquisition Adjustment Closing Statement with (i) such material
modifications and waivers as shall be disclosed to and accepted by the
Administrative Agent prior to the Closing Date and (ii) such non-material
modifications and waivers as accepted by the MS Senior and Borrower.

(b) As of the Closing Date, the copy of the Purchase Agreement and Acquisition
Adjustment Closing Statement delivered pursuant to Section 8.01(q) are true,
correct and complete and such agreement is in full force and effect and no term
or condition thereof has been amended (except as permitted pursuant to clause
(a)) from the form so delivered or waived except as disclosed to and approved by
the Secured Lenders. To the knowledge of the Borrower, and after due inquiry, no
event has occurred and is continuing which could cause a material breach of the
Purchase Agreement.

SECTION 5.17 Financial Information. The Borrower and the Guarantors have
furnished to the Secured Lenders, (a) audited financial statements of the
Borrower for the twelve (12) month periods ended December 31, 2005 and 2006 and
unaudited statements prepared by the Borrower for the three (3) month period
ended March 31, 2007 and (b) the Financial Projections. The information
described in clause (a) presents fairly, in all material respects, the financial
condition and results of operations and cash flows of the Persons and the
Facilities as

 

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purported therein and as of the dates and for the periods indicated therein in
accordance with GAAP, subject to customary year end adjustment and the absence
of footnotes. The Financial Projections have been prepared by or on behalf of
the Borrower (i) in good faith based on the assumptions stated therein, which
assumptions are believed by the Borrower to be reasonable as of the date hereof,
(ii) are based on the best information available to the Borrower, the
Guarantors, the Borrower’s Members and the Management Company as of the date
hereof and (iii) present fairly, in all material respects, the pro forma results
of operations with respect to the Borrower, the Guarantors and the Facilities.

SECTION 5.18 Solvency. After giving effect to the transactions contemplated by
the Loan Documents, the appraised value of the Mortgaged Properties, together
with other Property of the Borrower, will not be less than the probable
liability of the Borrower’s debts, and the Borrower will have reasonably
sufficient capital to conduct its business. No Bankruptcy Action with respect to
the Borrower, or any Guarantor, Borrower’s Members or the Management Company,
has at any time occurred.

SECTION 5.19 Anti-Terrorism Laws. Neither the Borrower, the Guarantors, nor, to
the best of the Borrower’s knowledge (after due inquiry and investigation), any
persons or entities holding any legal or beneficial interest whatsoever in the
Borrower (whether directly or indirectly) (a) appear on the OFAC SDN List;
(b) are included in, owned by, controlled by, acting for or on behalf of,
providing assistance, support, sponsorship, or services of any kind to, or
otherwise associated with any of the Persons or entities referred to or
described in the OFAC SDN List; and (c) have conducted business with or engaged
in any transaction with any person or entity named on any OFAC SDN List or any
Person or entity included in, owned by, controlled by, acting for or on behalf
of, providing assistance, support, sponsorship, or services of any kind to, or
otherwise associated with any of the persons or entities referred to or
described in the OFAC SDN List; provided, the foregoing representation shall not
apply to any equity owner of any Person the shares of which are publicly-traded
on the New York Stock Exchange, NASDAQ or other recognized securities exchange.

SECTION 5.20 Organizational Structure. As of the Closing Date, (a) Schedule I to
Exhibit 5.20 sets forth the name and jurisdiction of organization of, and the
percentage interest of each of the owners of the Borrower and its Managing
Member; (b) Schedule II to Exhibit 5.20 sets forth the name and jurisdiction of
organization of, and the percentage interest of each of the owners of, each
Guarantor and (c) Schedule III to Exhibit 5.20 sets forth the name and
jurisdiction of organization of, and the percentage interest of each of the
owners of each Borrower’s Members.

SECTION 5.21 Banking Relationships. Attached as Exhibit 5.21 is a list of all of
the operating accounts, including the name of the bank and the account number,
maintained by the Borrower, the Guarantors, and the Management Company for the
Facilities, and each such account is the subject of an Account Control
Agreement. The accounts listed on Exhibit 5.21 constitute all banking and
investment accounts maintained by the Borrower and the Guarantors, and the
Management Company for the Facilities.

 

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SECTION 5.22 Single Purpose Entity. The Borrower represents and warrants that
the Borrower, and each of the Guarantors:

(a) do not and will not engage in any business unrelated to the Facilities;

(b) do not and will not have any assets other than those related to its
respective interests in the Facilities or the operation, management and
financing thereof;

(c) holds itself out as being an entity, separate and apart from any other
Person, including any Affiliate or Subsidiary;

(d) conducts and will conduct its own business in its own name;

(e) maintains and will maintain separate tax returns (except for any entity that
is disregarded for tax purposes) and financial statements, or if part of a
consolidated group, then (i) such Person is shown as a separate member of such
group and (ii) the consolidated financial statements are appropriately footnoted
to show that such Person is not liable or responsible in any manner for the
debts or liabilities of any other Person, including any Affiliate or Subsidiary,
except as contemplated by the Loan Documents in connection with the Loan;

(f) observes and will observe all applicable corporate formalities;

(g) do not and will not assume, guarantee pledge its assets or otherwise
obligate themselves with respect to the debts of any other Person or hold out
its credit as being available to satisfy the obligations of any other Person,
including any Affiliate or Subsidiary, except as contemplated by the Loan
Documents in connection with the Loan;

(h) has not engaged, sought or consented to, and will not engage in, seek or
consent to, any dissolution, winding up, liquidation, consolidation, merger,
sale of all or substantially all of its assets (except as contemplated by this
Agreement), transfer of partnership or membership interests (if such entity is
the general partner in a limited partnership or the sole member or managing
member in a limited liability company), except as permitted by the Loan
Documents, or amendment of its limited partnership agreement, articles of
incorporation, articles of organization, certificate of formation or operating
agreement (as applicable) with respect to the matters set forth in this Section
5.22.

(i) has had, now has, and will have an operating agreement that it will not, so
long as the Loan is outstanding: (i) dissolve, merge, liquidate or consolidate;
(ii) sell all or substantially all of its assets; (iii) engage in any other
business activity or amend its organizational documents with respect to the
matters set forth herein; or (iv) without the affirmative vote of all of its
members and of all other directors or managers of such entity, take any
Bankruptcy Action with respect to itself or any other entity in which it has a
direct or indirect legal or beneficial ownership interest;

(j) has been, is and intends to remain solvent and has paid and intends to
continue to pay its debts and liabilities (including, as applicable, shared
personnel and overhead

 

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expenses) from its assets as the same have or shall become due, and has
maintained, is maintaining and intends to maintain adequate capital for the
normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations;

(k) has paid and will pay its own liabilities and expenses, including the
salaries of its own employees, out of its own funds and assets;

(l) has allocated and will allocate, fairly and reasonably, any overhead
expenses that are shared with any Affiliate, including, but not limited to,
paying for shared office space and services performed by any employee of an
Affiliate; and

(m) has not had and will not have any obligation to indemnify, and has not
indemnified and will not indemnify, its partners, officers, directors or
members, as the case may be, unless such an obligation was and is fully
subordinated to the Loan and will not constitute a claim against the Loan in the
event that cash flow in excess of the amount required to pay the Loan is
insufficient to pay such obligation to indemnify.

SECTION 5.23 Indebtedness. The Borrower and the Guarantors have no outstanding
Indebtedness except for (a) the Loan and (b) Indebtedness listed on Exhibit
5.23(b).

SECTION 5.24 Labor Matters. Except as disclosed on Exhibit 5.24, no Facility has
employees that are subject to a union collective bargaining agreement. There are
no pending strikes, lockouts or slowdowns against the Borrower, any Guarantor or
the Management Company with respect to the Facilities or, overtly threatened
that would reasonably be anticipated to have a Material Adverse Effect. The
hours worked by and payments made to employees at the Facilities have not been
in violation of the Fair Labor Standards Act or any other applicable Federal,
state, local or foreign law dealing with such matters, except as would not
reasonably be expected to have a Material Adverse Effect. All payments due from
the Borrower, any Guarantor or the Management Company, or for which any claim
may be made against the Borrower, any Guarantor or the Management Company, on
account of wages and employee health and welfare insurance and other benefits
for employees of the Facilities, have been paid or accrued as a liability on the
books of such Person, except where such failure to pay or accrue would not
reasonably be expected to have a Material Adverse Effect. The consummation of
the acquisition of the Facilities will not give rise to any right of termination
or right of renegotiation on the part of any union under any collective
bargaining agreement to which the Borrower, any Guarantor or the Management
Company is bound.

SECTION 5.25 No Material Adverse Effect; Accuracy of Information; Reliance by
the Secured Lenders.

(a) All information, reports and other papers and data with respect to the
Borrower, the Guarantors, the Borrower’s Members, the Management Company and the
Facilities furnished to the Secured Lenders are complete and correct in all
material respects and are sufficient to give the Secured Lenders true and
accurate knowledge of the subject matter. No fact is known to the Borrower, the
Guarantors, the Borrower’s Members or the Management

 

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Company, which may have a Material Adverse Effect which has not been set forth
in the information, reports, papers and data disclosed in writing to the Secured
Lenders. No document furnished or statement made by or on behalf of the Borrower
or the Guarantors, the Borrower’s Members or the Management Company in
connection with the negotiation, preparation or execution of the Loan Documents
contains any untrue statement of a fact that is material to its creditworthiness
or omits to state a material fact necessary in order to make the statements
contained therein not misleading.

(b) All representations and warranties made in this Agreement are made with the
understanding that each of the Secured Lenders is relying upon the accuracy of
such representations and warranties. Notwithstanding that any Secured Lender may
conduct its own investigation as to some or all of the matters covered by the
representations and warranties in the Loan Documents or any Management Agreement
and any certificates, information, opinions or documents delivered in connection
therewith, each Secured Lender is entitled to rely on all representations and
warranties as a material inducement to extend the credit evidenced by the Loan
Documents.

ARTICLE VI

AFFIRMATIVE COVENANTS

So long as this Agreement has not been terminated or any Loan Obligations are
due and owing, the Borrower hereby covenants to and for the benefit of the
Secured Lenders to comply with the provisions contained in this Article VI
unless the Administrative Agent otherwise consents in writing:

SECTION 6.01 Reporting Requirements. The Borrower will, and will cause each
Guarantor to, keep proper books of record and account in which full, true and
correct entries will be made of all dealings or transactions of or in relation
to its respective business and affairs in accordance with GAAP consistently
applied, and furnish to each of the Secured Lenders the following:

(a) Sunrise Senior Living, Inc.’s Annual Financial Statements. Upon request of
the Administrative Agent, the annual form 10-K of Sunrise Senior Living, Inc.,
certified as to accuracy and completeness by the chief financial officer of
Sunrise Senior Living, Inc.; provided however, Administrative Agent acknowledges
that such forms will not be available until after the accounting review
described in Section 8.01(t)(ii) is complete.

(b) Annual Financial Statements. As soon as available, and in any event within
one hundred twenty (120) days after the close of each Fiscal Year, (i) the
complete consolidated and consolidating audited financial statements of
Borrower, including the balance sheet as of the end of such Fiscal Year and the
related statements of operations and cash flows for such Fiscal Year, setting
forth in each case in comparative form the corresponding figures for the
preceding Fiscal Year, all in reasonable detail, certified by an independent
certified public accountant, and prepared consistent with GAAP, fairly
presenting the financial condition of Borrower as of the end of such Fiscal
Year, (ii) the complete unaudited financial statements of

 

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each Property Company and Intermediate Tier Owner, including the balance sheet
as of the end of such Fiscal Year and the related statements of operations and
cash flows for such Fiscal Year, setting forth in each case in comparative form
the corresponding figures for the preceding Fiscal Year, all in reasonable
detail, certified by the Borrower’s Representative, and prepared in accordance
with GAAP, consistently applied and fairly presenting the financial condition of
the applicable Loan Parties as of the end of such Fiscal Year; (iii) a separate
written report and certificate of the chief financial officer of the Borrower or
its Managing Member regarding the calculations or requirements in Section 6.24
and stating that in making the examination necessary to make such calculations
such officer has obtained no knowledge, except as specifically stated, of any
Default or Conditional Default and (iv) computations as of the end of each
Fiscal Year regarding compliance with Section 6.24 certified as to accuracy,
completeness and conformity with this Agreement by the chief financial officer
of the Borrower or its Managing Member.

(c) Quarterly Financial Statements. As soon as available, and in any event
within forty-five (45) days after each Fiscal Quarter, (i) the unaudited
consolidated and consolidating financial statements of the Borrower and each
Guarantor including the balance sheet as of the end of such fiscal quarter and a
statement of operations cash flows certified, subject to year-end adjustment, by
the chief financial officer of the Borrower and (ii) a report and certificate of
compliance including computations as of the end of each Fiscal Quarter regarding
compliance with Sections 6.24 all in reasonable detail and certified as to
accuracy, completeness and conformity with this Agreement, subject to year-end
adjustment, by the chief financial officer of the Borrower or its Managing
Member.

(d) Certificate of Compliance. Simultaneously with the delivery of each set of
financial statements referred to in Sections 6.01(b) and (c), and as soon as
available and in any event within forty-five (45) days after each Fiscal
Quarter, a certificate in the form of Exhibit 6.01(d) or such other form as
satisfactory to the Administrative Agent signed by the Managing Member of the
Borrower and each Guarantor stating that (i) the Borrower and the Guarantor have
made a review of their activities during the preceding annual or quarterly
period, as the case may be, for the purpose of determining whether or not all of
the terms, provisions and conditions of this Agreement have been complied with
and (ii) to the best of such officers’ knowledge no Default or Conditional
Default has occurred, or if a Default or Conditional Default has occurred such
certificate shall specify each such Default or Conditional Default, the nature
and status thereof and any remedial steps taken or proposed to correct such
default.

(e) Occupancy Report. By no later than the 30th day of each calendar month, a
statement setting forth through the last day of the prior month for each
Facility the number of Occupied Units by specific unit number and type of
occupancy.

(f) Insurance Certification. Simultaneously with the delivery of each set of
annual financial statements referred to in Section 6.01(b), a certificate, dated
the date of furnishing, signed by the Borrower’s Representative to the effect
that the insurance maintained by the Borrower and the Guarantors and the
Management Company and with respect to the Facilities is in compliance with
Section 6.07.

 

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(g) Other Reports. Promptly after the furnishing thereof, a copy of any
financial statement or report furnished to the holder of securities or
Indebtedness of any Borrower or Guarantors pursuant to the terms of any
indenture, loan or credit or similar agreement and not otherwise required to be
furnished pursuant to any other clause of this Section 6.01.

(h) Material Governmental Filings. Promptly upon the filing thereof, a copy of
any material filing made by the Borrower, any Guarantor, Borrower’s Members or
the Management Company with any Governmental Authority relating to a Facility.

(i) Licensure and Inspections. As soon as available, copies of any material
inspection report or citation for any material fire or safety code violation of
a Facility by any Governmental Authority. Additionally, upon any loss or written
threatened loss of any material license or approval applicable to a Facility or
any portion thereof, the Borrower immediately shall send to the Administrative
Agent a statement setting forth the reasons given by the Governmental Authority
and the actions taken or proposed to be taken to obtain or restore such material
license or approval.

(j) [Intentionally Omitted]

(k) Amendments to Management Agreement. Promptly upon execution of any
amendment, modification or supplement to any Management Agreement, to the
Administrative Agent a true and correct copy of such amendment, modification or
supplement.

(l) Other Information. Such other information respecting the business,
properties or the condition or operations, financial or otherwise, of the
Borrower, the Guarantors, SSLII, the Management Company or the Facilities as the
Administrative Agent may from time to time reasonably request.

SECTION 6.02 Notices. The Borrower will, and will cause each Guarantor,
Borrower’s Member and the Management Company to, provide to each of the Secured
Lenders:

(a) Notice of Default. Promptly upon becoming aware thereof, notice by
telephone, promptly confirmed in writing, of any event, action or failure to
take any action which constitutes a Default or Conditional Default.

(b) ERISA. Promptly after becoming aware of the occurrence of any ERISA Event or
of any “prohibited transaction” (as defined in Section 4975 of the Code or
Section 406 of ERISA) in connection with any Plan or any trust created
thereunder, a written notice signed by the Borrower’s Representative specifying
the nature thereof, what action the Borrower is taking or proposes to take with
respect thereto and, when known, any action proposed to be taken by any
Governmental Authority with respect thereto.

(c) Litigation; Arbitration. Prompt written notice of all actions, suits and
proceedings before any Governmental Authority or other governmental commission,
board, bureau, agency or instrumentality, domestic or foreign, or any
arbitration body or authority,

 

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against or involving any Borrower, Guarantor or a Facility which involve claims
equal to or in excess of $500,000.

(d) Material Adverse Effect. Promptly after becoming aware thereof, written
notice of any event which has, or the Borrower reasonably anticipates may have,
a Material Adverse Effect.

(e) Claimed Default. Promptly upon receipt of any notice from, or the taking of
any action by, the holder of any Indebtedness of the Borrower or any Guarantor
with respect to a claimed default which the Borrower reasonably anticipates may
have a Material Adverse Effect, copies of such notice or a report of such
action.

(f) Collective Bargaining. At least thirty (30) days prior to the Borrower or a
Guarantor entering any collective bargaining agreement affecting the operations
or management of such Person or a Facility, notification thereof.

(g) Environmental. After becoming aware of (i) the happening of any event
involving a Release (as defined in the Environmental Indemnity Agreement)
affecting a Facility which would require remediation or payment of response
costs or (ii) any complaint, order, citation or notice with regard to air
emissions or any other environmental, health or safety matter affecting a
Facility from any Person, including, without limitation, the United States
Environmental Protection Agency or any other Governmental Authority, immediate
telephonic notice thereof, promptly confirmed in writing.

(h) Condemnation. Promptly upon receipt thereof, a copy of any notice of
condemnation or threatened condemnation of a Facility.

SECTION 6.03 Interest Rate Agreements. If the Borrower enters into any Interest
Rate Agreement with a counterparty who is not a Lender, the Borrower will
collaterally assign such agreement to the Administrative Agent for the benefit
of the Lenders pursuant to a form of collateral assignment of interest rate
agreement reasonably acceptable to the Administrative Agent, and cause the
counterparty to such agreement to execute a consent to such assignment in a form
acceptable to the Administrative Agent. Any Interest Rate Agreement with a
counterparty who is not a Lender shall be unsecured.

SECTION 6.04 Maintenance of Facilities. The Borrower will, and will cause each
Property Company to, maintain and preserve the Facilities in good repair and
operating condition, making from time to time all necessary repairs thereto and
renewals and replacements thereof. The Borrower and the Property Companies may
make such replacements, additions, modifications and improvements to the
Facilities as they deem necessary or desirable, subject to the following
conditions:

(a) no building or buildings shall be demolished or removed nor shall any
alteration to the Facilities be made which would substantially impair the
structural strength, utility or market value thereof without in each case the
prior written consent of the Administrative Agent; and

 

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(b) all alterations to a Mortgaged Property shall be located wholly within the
boundary lines of the land constituting a part of the Mortgaged Property and
shall become a part of the Mortgaged Property.

SECTION 6.05 Preservation of Lien; Recordation of Interest. The Borrower will
take all necessary action to maintain and preserve the Lien and security
interest of the Mortgages and shall cause to be filed, registered and recorded
all necessary financing statements or other instruments, and any amendments or
continuation statements relating thereto, necessary to be kept and filed in such
manner and in such places as may be required by law to fully preserve and
protect the Lien and security interest in, and all rights of the Administrative
Agent with respect to, the Mortgaged Properties. The Borrower will, upon the
request of the Administrative Agent, from time to time, execute and deliver and,
if necessary, file such further instruments and take such further action as may
be reasonably necessary to effectuate the provisions of the Loan Documents or to
protect the interests of the Administrative Agent in the Mortgaged Properties.
Except to the extent exempt therefrom, the Borrower will pay or cause to be paid
all filing, registration and recording fees incident to such filing,
registration and recording, and all expenses incident to the preparation,
execution and acknowledgment of such instruments of further assurance, and all
federal or state fees and other similar fees, duties, imposts, assessments and
charges arising out of or in connection with the execution and delivery of the
Loan Documents and such instruments of further assurance.

SECTION 6.06 Payment of Taxes; Removal of Liens. The Borrower will, and will
cause each Property Company to, pay all assessments or other governmental
charges as the same respectively become due, all taxes and payments in lieu of
taxes, assessments (general or special) and governmental charges of any kind
whatsoever that may be at any time lawfully assessed or levied against or with
respect to the Facilities or any interest thereon, or upon the Borrower or
Guarantors, including all mortgage recording taxes, and promptly discharge or
cause to be discharged all Liens, encumbrances and charges on the Facilities or
any part thereof, other than Permitted Encumbrances. Notwithstanding the
previous sentence, the Borrower will not be required to pay any tax, charge,
assessment or imposition nor to remove any Lien, nor to comply with any
Applicable Law, with respect to any Matters Contested in Good Faith.
Notwithstanding the foregoing, if the Administrative Agent notifies the Borrower
that, in the reasonable opinion of counsel to the Administrative Agent, by
nonpayment of any of the foregoing items, any Lien created pursuant to the Loan
Documents may be materially endangered or a Facility or any substantial part
thereof will be subject to loss or forfeiture, then the Borrower will promptly
pay all such unpaid items and cause them to be satisfied and discharged.

SECTION 6.07 Insurance.

(a) The Borrower and the Guarantors will maintain the insurance policies
specified in Exhibit 6.07 or such other policies and coverages as recommended in
the insurance certification provided pursuant to paragraph (c) and approved by
the Administrative Agent.

(b) [Intentionally Omitted].

 

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(c) At least once during each twelve (12) month period, commencing with the
period ending December 31, 2008, an Insurance Consultant to Borrower will review
the Borrower’s and the Guarantors’ insurance and certify that such insurance
meets or exceeds the requirements of this Section 6.07. A signed copy of the
report of the Insurance Consultant will be filed with the Administrative Agent,
and the insurance requirements specified hereunder will be deemed modified or
superseded as necessary to conform with any increases in coverage recommended in
such report; provided that if such Insurance Consultant to Borrower is an
employee of Borrower or any Guarantor, any Borrower’s Member, the Management
Company or any Affiliate or Subsidiary thereof, the Administrative Agent may
require the Borrower to engage or retain (at the Borrower’s expense) an
independent Person acceptable to the Administrative Agent to render the report
described in this paragraph (c) (which report may be reviewed by the Insurance
Consultant to the Administrative Agent) at any time (i) that information comes
to the attention of the Administrative Agent that causes it material concern
about the insurance and (ii) once in each three (3) year period.

(d) Approval of any insurance by the Administrative Agent will not constitute a
representation of the solvency of any insurer or sufficiency of any coverage
required under this Agreement. All requirements set forth under this Section
6.07 are considered minimums in terms of the purchase and maintenance of
insurance under this Agreement.

(e) No later than July 31, 2007, the Borrower will deliver to the Administrative
Agent copies of the latest earthquake model reports for the San Gabriel, CA and
Huntington Beach, CA Facilities, in a form satisfactory to the Administrative
Agent. If, as a result of its review of such models, the Insurance Consultant to
the Administrative Agent determines that additional earthquake insurance
coverage is required for such Facilities, the Borrower will cause such insurance
to be procured within thirty (30) days of written notice of such requirement.

SECTION 6.08 Right of Entry. Upon reasonable prior notice, the Borrower will,
and will cause each Guarantor to, permit the duly authorized representatives of
the Secured Lenders to enter the Facilities, or any part thereof, during regular
business hours to examine and copy the Borrower’s and Guarantors’ financial and
corporate books, records and accounts, and to discuss the affairs, finances,
business and accounts of the Borrower and Guarantor with such Person’s officers,
directors and employees to monitor compliance with the provisions of the Loan
Documents. The Borrower shall, and shall cause each Guarantor and the Management
Company to, make its respective representatives available at reasonable times
during regular business hours for the Secured Lenders and their consulting
professionals and any designated representatives, to discuss the Borrower’s, the
Guarantors’ and the Management Company’s affairs, finances and accounts.

SECTION 6.09 Licensure.

(a) The Borrower will, and will cause the Guarantors or the Management Company,
as applicable, to, obtain all Permits listed on Schedule II of Exhibit 5.02(b)
by the date specified on such Schedule. In the event that any Permits required
to be made or obtained by the date specified on Schedule II are not obtained by
the date specified, the Borrower will,

 

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and will cause the Guarantors or the Management Company, as applicable, to, use
commercially reasonable efforts to formulate and implement acceptable
alternatives that permit the consummation of the transactions contemplated by
the Purchase Agreement in accordance with Applicable Law.

(b) The Borrower will, and will cause each of the Guarantors or the Management
Company, as applicable, to, maintain all Permits required for the continued
ownership and operation of the Facilities as contemplated by the Loan Documents.
The Borrower will, and will cause each of the Guarantors or the Management
Company, as applicable, to, effect any changes to the management or operation of
the Facilities which are necessary to maintain such Permits.

SECTION 6.10 Preservation of Corporate Existence. The Borrower will, and will
cause each Guarantor to, preserve and maintain its corporate existence, right
(charter and statutory) and franchises and licenses; provided that, no Borrower
or Guarantor will be required to preserve any right or franchise or license if
the Managing Member or the governing body of such Person shall determine that
the preservation thereof is no longer desirable in the conduct of its business
and that the loss thereof will not have a Material Adverse Effect.

SECTION 6.11 Insurance and Condemnation Proceeds.

(a) All Net Insurance and Condemnation Proceeds received by the Borrower or a
Guarantor in an amount equal to or less than $2,500,000 from a single incident
shall be paid to the Borrower or Guarantor, as applicable, who may use such Net
Proceeds in such manner as they may determine.

(b) All Net Insurance and Condemnation Proceeds in excess of $2,500,000 from a
single incident shall be deposited with the Administrative Agent and applied at
the direction of the Administrative Agent in accordance with the provisions of
this Section 6.11. Within sixty (60) days from receipt of the Net Insurance and
Condemnation Proceeds (or such later date as may be acceptable to the
Administrative Agent), either:

(i) The Borrower shall deliver to the Administrative Agent, in form and
substance reasonably satisfactory to the Administrative Agent:

(A) an executed construction contract for repair, reconstruction or replacement
of the affected Mortgaged Property at a guaranteed maximum price or stipulated
sum or as otherwise reasonably approved by the Administrative Agent;

(B) a completion guaranty by Sunrise Senior Living, Inc. or payment and
performance bonds satisfactory to the Administrative Agent;

(C) insurance during the construction period; and

(D) a cash deposit or an irrevocable letter of credit in an amount at least
equal to the excess, if any, of the funds necessary for payment of amounts

 

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due under the construction contract and for related architectural services, site
work and fixtures, furniture and equipment, over the Net Insurance and
Condemnation Proceeds;

and thereafter promptly proceed to repair, reconstruct and replace such portion
of the affected Mortgaged Property, including all fixtures, furniture and
equipment and effects, to its original condition insofar as possible, and the
Administrative Agent shall disburse the Net Insurance and Condemnation Proceeds
in accordance with its standard requisition procedures for construction loans;
or

(ii) If the items described in paragraph (b)(i) are not delivered within the
required time period, on the next Business Day (A) the Administrative Agent will
apply all Net Insurance and Condemnation Proceeds as a prepayment of the Loan
pursuant to Section 2.03(b) and (B) the Borrower will pay to the Administrative
Agent for prepayment of the Loan the difference, if any, between the amount of
Net Insurance and Condemnation Proceeds applied pursuant to clause (i) and the
Prepayment Price upon damage, destruction or condemnation; provided that, if the
damage, destruction or condemnation affects substantially all of a Mortgaged
Property, the Borrower may elect to prepay the Loan in full with respect to such
Mortgaged Property, subject to the following: (A) 100% of the Net Insurance and
Condemnation Proceeds, after any reasonable third-party expenses related
thereto, are applied to repayment of the Loan, and (B) the Loan is repaid in an
amount not less than the allocated loan amount shown on Exhibit 7.03(b).

(c) Any Net Insurance and Condemnation Proceeds remaining after the completion
of any repair, replacement or reconstruction undertaken pursuant to paragraph
(b)(i) will be applied by the Borrower as a prepayment of the Loan pursuant to
Section 2.03(b).

(d) Notwithstanding the foregoing, (i) if the amount of the Net Insurance and
Condemnation Proceeds is less than $5,000,000, the Administrative Agent will
work in good faith with the Borrower to agree upon abbreviated or streamlined
evaluation and disbursement requirements and procedures as reasonably
appropriate for the circumstances of the damage, destruction or condemnation and
(ii) with respect to any event of damage, destruction or condemnation, the
Borrower may elect to not repair, reconstruct or replace or may elect to do so
on a partial basis only (and any Net Insurance and Condemnation Proceeds which
are not used for repair, reconstruction or replacement will promptly be applied
as described in paragraph (c)) if the Borrower furnishes to the Administrative
Agent a written report of the Management Company advising that (A) the affected
Mortgaged Property can continue to operate effectively without any repair,
reconstruction and replacement or with less than full repair, reconstruction and
replacement and (B) the Borrower is likely to meet the covenants contained in
Section 6.24 through the Maturity Date.

SECTION 6.12 Residency Documents. The Borrower will cause the Guarantors and the
Management Company to contract with Residents on the basis of the forms approved
by the Administrative Agent.

 

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SECTION 6.13 ERISA Compliance. The Borrower will, and will use its best efforts
to cause its ERISA Affiliates to, in a timely fashion, comply in all material
respects with all requirements of ERISA and the Code, including but not limited
to paying all contributions required to meet the minimum funding standards set
forth in ERISA and the Code with respect to each Plan and to file all annual
reports and other disclosures required to be filed pursuant to ERISA or the Code
in connection with ERISA each Plan except where failure to so comply would not
have a Material Adverse Effect. The Borrower will not terminate or take any
other action with respect to, or permit any ERISA Affiliate to terminate or take
any other action with respect to, any Plan so as to result in any material
liability of the Borrower any Guarantor, or any of the Borrower’s Members to the
PBGC.

SECTION 6.14 Compliance with Laws. The Borrower will comply in all material
respects with all Applicable Laws except for Matters Contested in Good Faith,
provided that any such contest does not have a Material Adverse Effect.

SECTION 6.15 Compliance with Other Agreements. The Borrower will, and will cause
the Guarantors, the Borrower’s Members and the Management Company to, comply in
all material respects with the terms and conditions of the Loan Documents to
which they are a party and all other instruments, agreements and other documents
delivered by or on behalf of the Borrower, the Guarantors, the Borrower’s
Members or the Management Company to the Administrative Agent in connection with
the Loan.

SECTION 6.16 Environmental Report Update. From time to time, upon the written
request of the Administrative Agent, the Borrower will deliver to the
Administrative Agent a report prepared by an independent engineering firm or
environmental consultant (appropriately licensed and insured) acceptable to the
Administrative Agent, which report is complete and free of qualification and
states that, after due investigation of the Mortgaged Properties, (a) there is
no evidence that there is any hazardous waste, toxic substance, pollutant or
other contaminant contained in or under the Mortgaged Properties (except in
accordance with Applicable Law); or (b) any such substances have been removed
and disposed of in compliance with all Applicable Laws; provided that any such
request shall be based either on the requirements of Applicable Law or new
information that forms the basis for a reasonable belief that a new
environmental audit will be useful to evaluate a condition of material concern
to the Secured Lenders.

SECTION 6.17 Single Purpose. The Borrower will, and will cause each of the
Guarantors to, conduct their respective businesses to at all times be in
compliance with the provisions of Section 5.22.

SECTION 6.18 Compliance with Anti-Money Laundering and OFAC Laws.

(a) The Borrower shall comply at all times with the requirements of all
Anti-Money Laundering Laws.

(b) The Borrower shall provide the Administrative Agent any information
regarding the Borrower, its Affiliates, and its Subsidiaries necessary for the
Administrative Agent to comply with all Anti-Money Laundering Laws.

 

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(c) The Borrower shall comply at all times with the requirements of all OFAC
Laws.

(d) The Borrower shall not, and shall cause its Affiliates and Subsidiaries and
any persons or entities holding any legal or beneficial interest whatsoever
therein (whether directly or indirectly) not to, conduct business with or engage
in any transaction with any person or entity (other than Residents) named in the
OFAC SDN List or any person or entity included in, owned by, controlled by,
acting for or on behalf of, providing assistance, support, sponsorship, or
services of any kind to, or otherwise associated with any of the persons or
entities referred to or described in the OFAC SDN List.

(e) If the Borrower obtains actual knowledge or receive any written notice that
the Borrower, any Affiliates, Subsidiaries or any persons or entities holding
any legal or beneficial interest whatsoever therein (whether directly or
indirectly) are named on the OFAC SDN List (such occurrence, an “OFAC
Violation”), the Borrower shall immediately (i) give written notice to Lender of
such OFAC Violation, and (ii) comply with all applicable laws with respect to
such OFAC Violation (regardless of whether the party included on the OFAC SDN
List is located within the jurisdiction of the United States of America),
including the OFAC Laws, and the Borrower hereby authorize and consent to the
Administrative Agent’s taking any and all steps the Administrative Agent deems
necessary, in its sole discretion, to comply with all applicable laws with
respect to any such OFAC Violation, including the requirements of the OFAC Laws
(including the “freezing” and/or “blocking” of assets and reporting such action
to OFAC).

(f) Upon the Administrative Agent’s request from time to time, the Borrower
shall deliver a certification confirming compliance with the covenants set forth
in Section 6.18.

SECTION 6.19 Collections. The Borrower will, and will cause the Guarantors and
the Management Company to, promptly upon receipt, deposit all Receipts into a
bank account described on Exhibit 5.21 or in Section 6.21 and hold all such
amounts therein until applied, subject to Sections 6.24(b) and 6.25, to pay
Operating Expenses, Capital Expenditures in accordance with the then current
Annual Budget accepted by the Administrative Agent pursuant to Section 6.20,
principal and interest due on the Loan, Distributions permitted pursuant to
Section 7.03 or for other lawful corporate purpose; provided that a breach of
this Section 6.19 will not be a Default if cured within five (5) Business Days
of notice from the Administrative Agent.

SECTION 6.20 Annual Budget.

(a) The Borrower will, and will cause the Guarantors to, prepare and adopt an
Annual Budget which will consist of an operating and capital budget for the
Borrower and each Guarantor for each Fiscal Year covering the operation of the
Facilities. The Annual Budget shall be approved by the governing body of
respective Borrower and each Guarantor by no later than thirty (30) days after
the commencement of the Fiscal Year to which it applies. If an Annual Budget is
not adopted for any new Fiscal Year by such date, then the Annual Budget in
effect as

 

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of the end of the previous Fiscal Year shall be used for such new Fiscal Year
until replaced by the Annual Budget adopted in accordance with paragraph (b).

(b) Each Annual Budget shall set forth revenues and expenses and capital
expenditures for the respective Facility by category in reasonable detail and
include adjusted operating expenses, total adjusted operating revenues and
projected occupancy and shall be prepared in a format consistent with the format
of the information contained in the Financial Projections. Each Annual Budget
will be submitted by the Borrower to the Administrative Agent within thirty
(30) days after commencement of the Fiscal Year to which it relates and
accompanied by a certificate signed by the chief financial officer of the
Borrower and the applicable Guarantor, and an authorized officer of the
Management Company, certifying that the proposed Annual Budget will enable the
Borrower to be in compliance with the Required Debt Service Coverage Ratio.

(c) The acceptance by the Administrative Agent of the Annual Budget will not
constitute a representation or covenant of the Secured Lenders as to the
accuracy or adequacy of the Annual Budget for any purpose of the Borrower or the
Guarantors or the operations of the Facilities.

SECTION 6.21 Accounts. Any operating, banking or investment account maintained
by the Borrower, a Guarantor or the Management Company (but only accounts for
the Facilities) which is not described on Exhibit 5.21 shall, effective upon
opening and at all times thereafter, remain subject to an Account Control
Agreement which is reasonably satisfactory to the Administrative Agent; provided
that a breach of this Section 6.21 will not be a Default if cured within five
(5) Business Days of notice from the Administrative Agent.

SECTION 6.22 Management. The Borrower will cause each Property Company to retain
the services of Sunrise Senior Living Management, Inc. to manage the Mortgaged
Properties under Management Agreements subject to the Collateral Assignment of
Project Documents, or as otherwise satisfactory to the Administrative Agent.

(a) The Management Agreements or Consent to Collateral Assignment of Contracts
executed by the Management Company will provide:

(i) that the fees of the Management Company will be payable no more frequently
than monthly, and that no compensation will be paid to the Management Company
other than in accordance with the Management Agreement;

(ii) that Subordinated Management Fees will be paid only if at the time of such
payment (A) all payments required under the Loan Documents have been made by the
Borrower, (B) no Event of Default has then occurred and is continuing and, after
giving effect to such payment, no Event of Default would then have occurred and
(C) no Cash Sweep Start Date has occurred and is still in effect;

 

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(iii) during the occurrence of any circumstance specified in paragraph (a)(ii),
the Subordinated Management Fees will be deferred, with interest, until the
conditions described in paragraph (ii) permit payment of such amounts; and

(iv) notwithstanding the foregoing, the Borrower may pay the Subordinated
Management Fees out of equity contributions made by the Borrower’s Members.

SECTION 6.23 Liquidity. The Borrower covenants that it will maintain at all
times a minimum liquidity (based on the valuation of the combined cash and
investments on its balance sheet) of at least $6,000,000, such amount to be
equitably adjusted upon the sale of a Facility or Property Company pursuant to
Section 7.03 based upon the then outstanding principal balance of the Loan. This
covenant will terminate at such time as the Borrower achieves a 1.40:1 Debt
Service Coverage Ratio for two (2) consecutive Fiscal Quarters calculated at an
assumed eight percent (8%) interest rate and assuming monthly amortization on a
twenty-five year level amortization schedule.

SECTION 6.24 Debt Service Coverage Ratio. (a) The Borrower will maintain a Debt
Service Coverage Ratio at least equal to the following:

 

Fiscal Ouarter Ending

   Debt Service
Coverage Ratio    Test Period

December 31, 2007

   1.05:1    3 months annualized

March 31, 2008

   1.10:1    6 months annualized

June 30, 2008

   1.10:1    9 months annualized

September 30, 2008

   1.10:1    Last 12 months

December 31, 2008

   1.10:1    Last 12 months

March 31, 2009

   1.15:1    Last 12 months

June 30, 2009

   1.15:1    Last 12 months

September 30, 2009

   1.15:1    Last 12 months

December 31, 2009

   1.15:1    Last 12 months

March 31, 2010 and thereafter

   1.20:1    Last 12 months

(a) Compliance will be tested (a) quarterly on the basis of the Borrower’s
financial reports described in Section 6.01(b) and (c) for the test period
indicated above ending on the last day of such Fiscal Quarter and (b) annually
on the basis of the financial statements described in Section 6.01(b) for the
Fiscal Year ending on such date. The results will be confirmed in the reports
furnished to the Administrative Agent pursuant to Section 6.01(b), (c) and (d).

(b) Upon the occurrence of a Cash Sweep Start Date, the Borrower immediately
will, and will cause the Guarantors to immediately, remit to the Administrative
Agent an amount equal to the Excess Cash Flow of the Borrower as of the Testing
Date which gave rise to the Cash Sweep Start Date. All amounts so remitted to
the Administrative Agent

 

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pursuant to the Cash Sweep Requirements will be held by the Administrative Agent
and applied in accordance with the provisions of the Funds Pledge Agreement.

(c) So long as the Borrower and Guarantors comply with the Cash Sweep
Requirements, the failure of the Borrower to be in compliance with the Debt
Service Coverage Ratio Requirement will not constitute a Default; provided that
notwithstanding any other provision of the Loan Documents, if the Borrower fails
to achieve a Debt Service Coverage Ratio of at least 1.00:1 for the Fiscal
Quarter ending December 31, 2007 and in each Fiscal Quarter thereafter of at
least 1.05:1, and does not take an action described in Section 6.24(d) below,
the same will constitute a Default, and if the Borrower fails to satisfy the
Debt Service Coverage Ratio Requirement for three (3) consecutive Fiscal
Quarters, the Administrative Agent may use the amounts held from the Cash Flow
Sweep to prepay the Loan.

(d) The Borrower may prevent a Default from occurring under Section 6.24(c) if
the Borrower (A) prepays a principal amount of the Loan, (B) escrows funds with
the Administrative Agent, (C) provides a direct pay letter of credit for the
benefit of the Administrative Agent with terms and conditions and from a
financial institution satisfactory to the Administrative Agent or (D) provides a
guaranty of payment with terms and conditions and from a guarantor all
reasonably acceptable to the Administrative Agent. In the case of (A), the
amount of principal of the Loan prepaid must be at least the amount necessary
for the Borrower to achieve a Debt Service Coverage Ratio of 1.00:1 for the
Fiscal Quarter ending December 31, 2007, and of 1.05:1 for any subsequent Fiscal
Quarter (the “Minimum DSCR”), using the prior Fiscal Quarter’s Revenues
Available for Debt Service and Debt Service Requirements computed as if the Loan
were paid down by such amount (the “DSCR Prepayment Amount”). In the case of
(B), (C) or (D), the amount escrowed or the stated amount of the letter of
credit or the amount guaranteed, as the case may be, must be at least equal to
the sum of the DSCR Prepayment Amount plus the Administrative Agent’s estimate
of interest payable on the DSCR Prepayment Amount over the next one (1) month.
The escrowed funds, letter of credit or guaranty will be held by the
Administrative Agent until the Borrower has achieved the Minimum DSCR for two
(2) consecutive Fiscal Quarters (the “DSCR Cure Release Condition”). If the
Borrower has not satisfied the DSCR Cure Release Condition by the earliest to
occur of the Maturity Date or the occurrence of a Default, then the
Administrative Agent may apply the escrowed funds the proceeds of a drawing on
the letter of credit or the proceeds of a demand for payment under the guaranty
to the prepayment of the Loan.

SECTION 6.25 Lock-Box. If, as of any Testing Date, the Borrower is not in
compliance with provisions of Section 6.19, 6.23 or the Required Debt Service
Coverage Ratio, or upon the occurrence and continuance of a Default or Event of
Default, the Administrative Agent may in its discretion determine to activate
the “lock-box” provisions of this Section 6.25 by so notifying the Borrower, the
Guarantors and the Management Company (a “Lock-Box Trigger Notice”). Upon
receipt of a Lock-Box Trigger Notice the Borrower will immediately commence, but
subject to Applicable Law, depositing all Receipts into to an account (the
“Lock-Box Account”) as directed by the Administrative Agent (which account may
be an account of the Borrower if such account is subject to an Account Control
Agreement and the Administrative Agent is satisfied with the control procedures
of such Account Control Agreement or a collateral account

 

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maintained with or at the direction of the Administrative Agent) and will
continue to do so on a daily basis as and when it receives any such amounts.
Additionally, if the Lock-Box Trigger Notice resulted from any cause other than
a failure to comply with Section 6.19, the Borrower will within thirty (30) days
of the date of the Lock-Box Trigger Notice submit to the Administrative Agent a
proposed revised operating budget for approval or modification. Such Borrower’s
proposed revised operating budget should include on a month-by-month basis all
Operating Expenses to be paid by the Borrower and the Guarantors. Upon review of
the proposed revised budget, the Administrative Agent will notify the Borrower
whether it is approved as submitted or of any modifications it will impose. A
copy of the budget, as approved or modified (the “Lock-Box Budget”), will be
sent to the Borrower, the Guarantors and the Management Company. In the event
that the Borrower fails to submit a proposed revised operating budget to the
Administrative Agent, the Administrative Agent will modify the operating budget
then in effect pursuant to Section 6.20 as it deems appropriate under the then
existing circumstances, and such modified operating budget will constitute the
Lock-Box Budget. During the pendency of a Lock-Box Trigger Notice, the Borrower
will be permitted withdrawals from the Lock-Box Account only to pay Operating
Expenses in accordance with the Lock-Box Budget. The Lock-Box Budget may be
amended and modified by the Administrative Agent at any time and from time to
time as the Administrative Agent in its reasonable discretion determines is
necessary or appropriate under the then existing circumstances. A copy of any
amendment or modification to the Lock-Box Budget will be sent by the
Administrative Agent to the Borrower, the Guarantors and the Management Company.

If at any time following a Lock-Box Trigger Notice (i) the Borrower has been in
compliance with the Required Debt Service Coverage Ratio covenants of
Section 6.24 for two (2) consecutive Fiscal Quarters and no Event of Default has
then occurred and is continuing and all Loan Obligations then due have been paid
in full, the Administrative Agent will notify the Borrower, the Guarantors and
the Management Company that the lock-box provisions of this Section 6.25 are
suspended. Additionally, the Administrative Agent may in its discretion at any
time determine to suspend the lock-box provisions of this Section 6.25 by so
notifying the Borrower. Thereafter, unless and until any subsequent Lock-Box
Trigger Notice is received by the Borrower or the exercise of remedial rights
pursuant to Section 11.02, Receipts may be deposited into the Borrower’s
operating account and applied by the Borrower in its discretion.

The provisions of this Section 6.25 are in addition to the rights of the Secured
Lenders under Section 6.24(b), Article XI, Section 5(f) of the Payment Guaranty,
the Funds Pledge Agreement] or any other provisions of the Loan Documents.

SECTION 6.26 Environmental. The Borrower will at all times have in place
environmental risk insurance policies or an indemnification from SSLII or
another acceptable guarantor, in each case as described in Section 8.01(y).
Environmental risk policies must provide a limit of no less than $2,000,000 per
loss with an aggregate limit of no less than $10,000,000 providing onsite
cleanup of environmental hazards on, within or under the property (remediation)
and Third-Party Legal Liability coverage for Bodily Injury, Property Damage
including cleanup costs for the location. The policy must cover all Governmental
Authority

 

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mandated cleanups. The Administrative Agent must be included as a mortgagee and
as an additional insured under the policy.

ARTICLE VII

NEGATIVE COVENANTS

The Borrower hereby covenants to and for the benefit of the Secured Lenders to
comply with the provisions contained in this Article VII unless the
Administrative Agent agrees otherwise in writing.

SECTION 7.01 Incurrence of Additional Indebtedness.

(a) The Borrower will not incur, assume or guarantee any Indebtedness other than
(i) the Loan and Indebtedness incurred pursuant to the Loan Documents,
(ii) Indebtedness incurred by the Borrower or any Guarantor to fund deficiencies
in Operating Expenses of the Mortgaged Properties or Capital Expenditures for
the Mortgaged Properties which, in either case, are fully subordinated to the
Loan on terms with subordination and standstill provisions approved by the
Administrative Agent; and (iii) Indebtedness relating to Capital Leases and
Purchase Money Debt included in the then current Annual Budget accepted by the
Administrative Agent pursuant to Section 6.20.

(b) The Borrower will cause the Guarantors not to incur, assume or guarantee any
Indebtedness other than (i) Indebtedness incurred to the Borrower, the
Borrower’s Members or another Guarantor to fund deficiencies in Operating
Expenses of the Facilities or Capital Expenditures for the Facilities which, in
either case, are fully subordinated to the Loan on terms and with subordination
and standstill provisions approved by the Administrative Agent and
(ii) Indebtedness listed on Exhibit 5.23(b).

SECTION 7.02 Consolidation or Merger. The Borrower will not, and will cause the
Guarantors not to, consolidate with or merge into another Person or permit one
or more other Persons to consolidate with or merge into it, provided, however,
that the Administrative Agent will approve the consolidation or merger or
transfer of substantially all of the assets of a Guarantor to another Guarantor
or to the Borrower upon receipt by the Administrative Agent of evidence that all
Permits for such transfer have been obtained and that all Liens and pledges
created by the Loan Documents will be preserved.

SECTION 7.03 Disposal of Assets, Dividends and Distributions.

(a) Unless included in the then current Annual Budget accepted by the
Administrative Agent pursuant to Section 6.20 or as permitted pursuant to this
Section 7.03, the Borrower will not, and will cause the Guarantors not to, sell,
lease, assign or transfer, contribute, dividend, distribute or otherwise dispose
of their Property, including cash and investments; nor will the Borrower or
Guarantors use their cash and investments to acquire interests in any other
Person or to make loans to any other Person, including any other Guarantor, the
Management Company or Affiliate or Subsidiary, or advance any expenses on behalf
of any other Guarantor,

 

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the Management Company or Affiliate or Subsidiary or other Person who is not the
Borrower or a Guarantor; provided that the foregoing shall not prohibit (i) the
abandonment, removal or other disposition of worn-out or obsolete equipment,
(ii) payment of liabilities in the ordinary course of business, (iii) disposal
of tangible personal Property in the ordinary course of business for fair
consideration, (iv) dispositions of a Facility or Property Company described in
paragraph (b) below, or (v) the payment of Distributions pursuant to paragraph
(c) below.

(b) The Borrower may sell, transfer or otherwise dispose of a Facility
(excluding dispositions as a result of a casualty or condemnation to the extent
addressed in Section 6.11) or a Property Company if the following conditions are
satisfied:

(i) no Conditional Default, Default or Event of Default has occurred and is
continuing, unless the sale will generate funds sufficient to cure such Default
and such sales proceeds are so applied.

(ii) the Borrower makes a payment to the Administrative Agent for the benefit of
the Lender in an amount equal to the sum of (A) the disposition amount shown for
such Facility or Property Company on Exhibit 7.03(b) as a prepayment of the
Loan, plus (B) any interest Outstanding on the Loan on the date of payment and
plus (C) any prepayment fee due under Section 4.09(e); and

(iii) the Borrower has furnished to the Administrative Agent satisfactory pro
forma financial statements for the Borrower demonstrating that for each Testing
Date during the balance of the Fiscal Year in which the disposition will occur
and for the Fiscal Year immediately following the disposition, after giving
effect to the proposed disposition and prepayment described in subsection
(b)(ii)(A) above, the Borrower will have a Debt Service Coverage Ratio of not
less than the DSCR Release Test Amount (the “DSCR Release Test”). If the
Borrower does not satisfy the DSCR Release Test, then the Borrower may still
proceed with the disposition of the Facility or the Property Company if the
Borrower (A) prepays a principal amount of the Loan, (B) escrows funds with the
Administrative Agent or (C) provides a direct pay letter of credit for the
benefit of the Administrative Agent with terms and conditions and from a
financial institution satisfactory to the Administrative Agent, with a term
expiring not sooner than the Maturity Date. In the case of (A), the amount of
principal of the Loan prepaid must be at least the amount necessary for the
Borrower to comply with the DSCR Release Test (the “Additional Prepayment
Amount”). In the case of (B) or (C), the amount escrowed or the stated amount of
the letter of credit, as the case may be, must be at least equal to the sum of
the Additional Prepayment Amount plus the Administrative Agent’s estimate of
interest payable on the Additional Prepayment Amount over the next one (1) month
following the disposition of the Facility or the Property Company. The escrowed
funds or letter of credit will be held by the Administrative Agent until the
Borrower has achieved a Debt Service Coverage Ratio, as measured under
Section 6.24, of not less than the DSCR Release Test Amount for three
(3) consecutive Fiscal Quarters (the “Escrow Release Condition”). If the
Borrower has not satisfied the Escrow Release Conditions by the earliest to
occur of the Maturity Date or the occurrence of a Default,

 

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then the Administrative Agent may apply the escrowed funds or the proceeds of a
drawing on the letter of credit to the prepayment of the Loan.

(c) The Borrower may make Distributions beginning after the Fiscal Quarter
ending December 31, 2007, provided that:

(i) no Default or Event of Default has occurred and is continuing;

(ii) after giving effect to the Distribution, the Borrower has a cash balance in
an amount equal to not less than the amount required under Section 6.23; and

(iii) if at the time of the Distribution, the Debt Service Coverage Ratio is
greater than 1.40:1, then 50% of the Revenues Available for Debt Service in
excess of those required for a 1.40:1 Debt Service Coverage Ratio will be
applied to prepay the Loan; provided however, that the amount applied to prepay
the Loan will not be greater than the amount of principal that would have been
repaid as of such date based on a twenty-five (25) year mortgage style
prepayment schedule assuming a seven (7) percent (7%) interest rate, with such
amortization schedule commencing on the earlier of July 1, 2009 or the first
month such excess Revenues Available for Debt Service are required to be applied
to principal, and the remaining amounts may be paid by the Borrower as
Distributions.

(d) Amounts applied as repayments of the Loan under subsections (b)(ii)(A),
(b)(iii) and (c)(iii) (except for amounts under subsection (c)(iii) applied on
the Maturity Date or after a Default, which will be applied as the
Administrative Agent so determines) will be applied first to any amounts
Outstanding that are not subject to an Interest Rate Agreement, and any balance
remaining will be applied to amounts Outstanding that are subject to an Interest
Rate Agreement and will be subject to any LIBOR breakage as provided in Section
4.08.

SECTION 7.04 Mortgage, Security Interests and Encumbrances. Except for Permitted
Encumbrances, the Borrower will not, and will cause the Guarantors not to, grant
a deed of trust, mortgage or other Lien upon, pledge, grant a security interest
in, or make an assignment of their respective Property.

SECTION 7.05 Amendments. The Borrower will not, and will cause the Guarantors
and the Management Company not to, amend, modify or supplement, or agree to any
amendment or modification of, or supplement to, any of the Loan Documents or the
Management Agreement, except to the extent permitted by this Agreement.

SECTION 7.06 Compliance With ERISA. The Borrower will not, and will cause the
Guarantors not to, terminate or take any other action with respect to, or permit
any Affiliate or Subsidiary to, terminate or take any other action with respect
to, any Plan so as to result in any material liability of the Borrower or a
Guarantor to the PBGC.

SECTION 7.07 Accounting Methods and Fiscal Year. The Borrower will not, and will
cause the Guarantors not to, adopt, permit or consent to any change in
accounting practices other

 

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than as required by Generally Accepted Accounting Principles or any change in
their respective Fiscal Year.

SECTION 7.08 Change in Control. The Borrower will not, and will cause the
Guarantors not to, amend their respective Governing Documents if the effect of
such amendment is to change the identity of such Person’s Members or Managing
Member. Notwithstanding the foregoing, (a) changes in ownership of MS Senior
will be permitted so long as Morgan Stanley Funding II, L.P. (or any successor
partnerships thereto that are directly or indirectly Controlled by Morgan
Stanley, a Delaware corporation) continues to directly Control MS Senior and
(b) MS Senior may exercise its right to buy out SSLII under the buy-sell
provisions of the Borrower’s operating agreement so long as Sunrise Senior
Living Management Company, Inc. remains the Management Company.

SECTION 7.09 No Other Business. The Borrower will not, and will cause the
Guarantors not to, engage in any business other than ownership, construction,
development and operation of the Facilities.

SECTION 7.10 New Management Agreements; Amendments and Termination. The Borrower
will not, and will cause the Property Companies not to, terminate or vote to
terminate any of the Management Agreements or enter into any new contract or
contracts for the delivery of marketing or management services for the
Facilities except to the extent if approved by the Administrative Agent.

SECITON 7.11 Residency Documents. Except for minor adjustments, emergencies and
extraordinary circumstances, the Borrower will not, and will cause the
Guarantors not to, make any material change to the Residency Documents (unless
required by Applicable Law, in which case prior notice shall be given to the
Administrative Agent).

SECTION 7.12 Use of Proceeds. The Borrower will not make any expenditure of the
proceeds of Advances other than as a direct or indirect payment of costs of the
acquisition of the member interests in Borrower by MS Senior and the
distributions to SSLII as shown on the Acquisition Adjustment Closing Statement.

SECTION 7.13 Capital Expenditures. The Borrower will not, and will cause the
Guarantors not to, make Capital Expenditures, including payments due under
Capitalized Leases and Purchase Money Debt, in any Fiscal Year except
(a) Capital Expenditures in accordance with the then current Annual Budget
accepted by the Administrative Agent pursuant to Section 6.20, (b) as permitted
under Section 6.11 with respect to the application of Net Insurance and
Condemnation Proceeds with respect to the Mortgaged Properties or (c) Capital
Expenditures funded by capital contributions from the Borrower’s Members.

 

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ARTICLE VIII

CONDITIONS PRECEDENT TO CLOSING

SECTION 8.01 Documentary Requirements for Closing. The obligations of the
Administrative Agent to administer the Loan Documents and the Lenders to make
the Loan are subject to the condition precedent that the Administrative Agent
shall have received on or before the Closing Date the following, each dated such
date and in form and substance satisfactory to the Administrative Agent unless
waived by the Administrative Agent:

(a) Corporate Authority Documents.

(i) Resolutions of the Borrower and Guarantors. Copies of the resolutions of the
Borrower, each of the Guarantors and Borrower’s Members, approving such Person’s
execution and delivery of the Loan Documents and the Management Agreements to
which it is a party and approving the forms of such documents to which it is not
a party and the other matters contemplated hereby, certified by an officer of
each such Person as being true and complete and in full force and effect on the
Closing Date.

(ii) Articles of Organization of the Borrower, the Guarantors and Borrower’s
Members. The articles of organization, certificate of incorporation or
certificate of limited partnership of the Borrower, the Guarantors and the
Borrower’s Members, certified to be in full force and effect as of a date not
more than thirty (30) days preceding the Closing Date by an appropriate official
of the jurisdiction of organization and certified by an officer of such Person
as being true and complete and in full force and effect on the Closing Date.

(iii) Operating Agreement of the Borrower, the Guarantors and the Borrower’s
Members. The operating agreement, partnership agreement or by-laws of the
Borrower, the Guarantors and the Borrower’s Members, certified by an officer of
such Person as being true and complete and in full force and effect on the
Closing Date.

(iv) Good Standing of the Borrower, Guarantors and Borrower’s Members.
Certificates for the Borrower, the Guarantors and the Borrower’s Members issued
by an appropriate official of the jurisdiction organization and the taxing
authority of such jurisdiction, issued no more than thirty (30) days preceding
the Closing Date, stating that such Person is in good standing in such
jurisdiction.

(v) Incumbency Certificate of the Borrower, Guarantors and Borrower’s Members.
Certificates of the secretary of the Managing Member of the Borrower, the
Guarantors and the Borrower’s Members certifying the names and true signatures
of the officers of such Person authorized to sign the Loan Documents and the
Management Agreements to which such Person is a party and the other documents to
be delivered by it hereunder or thereunder.

 

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(b) Financing Documents. An executed original of:

(i) this Agreement;

(ii) each of the Mortgages;

(iii) the Note to each Lender shown on Schedule 1;

(iv) the Pledge and Security Agreement (ITO);

(v) the Member Interest Pledge and Security Agreement (MS Senior);

(vi) the Member Interest Pledge and Security Agreement (SSLI);

(vii) the Environmental Indemnity Agreement;

(viii) the Collateral Assignment of Project Documents and consents thereto;

(ix) each of the Assignments of Residency Documents;

(x) the Payment Guaranty;

(xi) the Security Agreement;

(xii) the Fee Letter;

(xiii) the Guaranty of Non-Recourse Obligations;

(xiv) the Funds Pledge Agreement; and

(xv) the Account Control Agreement(s).

(c) Real Estate Related Items. With respect to each Facility:

(i) Survey. An “as-built” survey of each Site conducted in accordance with
minimum ALTA requirements and certified to the Administrative Agent as of a date
no earlier than one hundred twenty (120) days prior to the Closing Date, which
survey and certification shall be in a form reasonably acceptable to the
Administrative Agent.

(ii) Zoning, Approvals, Utilities and Wetlands Exemption. Evidence of
(A) satisfactory zoning of the Facility, (B) a Certificate of Occupancy for the
number of units shown on Schedule I of Exhibit 5.02(b) (provided that this
requirement will be waived to the extent that the Borrower certifies that, after
reasonable efforts, a copy of a Certificate of Occupancy cannot be obtained from
the Governmental Authority and the Administrative Agent is satisfied that such
inability is not related to substantial issues and is satisfied by other
evidence furnished by the Borrower that no occupancy approval

 

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irregularity exists) and (b) all other occupancy, environmental and land use
Permits to occupy the Facilities, (C) the availability to the Facilities of all
utility and municipal services, roads and infrastructure required for operation,
use and occupancy of the Facilities and (D) the absence of any wetlands on the
land constituting the Facilities or that all federal, state or local approvals
and mitigation credits have been obtained.

(d) Title Policies for Mortgaged Properties. A mortgagee’s ALTA 1970 (as amended
in 1984) title policy, issued by the Title Company in a form satisfactory to the
Administrative Agent for each Mortgaged Property. Each Title Policy will include
such affirmative coverage endorsements and reinsurance requested by the
Administrative Agent. Each Title Policy shall list the Administrative Agent for
the benefit of the Secured Lenders as insured parties as their interests appear,
and shall insure that each of the Property Companies has a valid fee interest in
the land and the Improvements and fixtures constituting its Mortgaged Property.
The amount of insurance shall not be less than the Loan Commitment Amount. The
amount of title insurance for each Mortgaged Property shall not be less than the
amount shown for such Property on Exhibit 8.01(d). To the extent available in
the jurisdiction in which the Mortgaged Properties are located, each Title
Policy shall insure against mechanics and materialman’s liens, shall provide
“gap” coverage, shall contain no exceptions for creditors’ rights, survey,
parties-in-possession or other exceptions except as consented to by the
Administrative Agent, and shall be accompanied by true and complete copies of
all documents or instruments enumerated as exceptions to title (including all
Liens and judgments) and by a UCC search. Evidence satisfactory to the
Administrative Agent shall be provided that all premiums of each Title Policy
have been paid.

(e) Recording of Mortgages. Evidence that each of the Mortgages and Assignments
of Residency Documents have been recorded as specified on Exhibit 8.01(e) in
such manner as may be required by law to fully perfect and protect the first
priority Lien of the Mortgages, and that all filing and recording fees and
taxes, if any, have been paid in full for the sum of the maximum amount of the
Mortgages, or in lieu thereof, evidence that the Title Policy insures the
Mortgaged Properties for the period from the Closing Date until the actual
recording of the Mortgages.

(f) Perfection of Security Interests. Evidence that (i) proper UCC financing
statements will be duly filed as specified in Exhibit 8.01(f) with respect to
the security interests granted to the Administrative Agent in the Security
Documents in such manner as may be required by the UCC to perfect or otherwise
establish the security interests purported to be granted to the Administrative
Agent pursuant to such Security Documents, and that such filings (together with
the filings described in paragraph (e)) constitute all filings required under
the UCC to fully perfect, to the extent that such security interests can be
perfected by filing, such security interests, that (ii) all UCC filing fees, if
any, have been paid and (iii) delivery of all certificates and assignments
required under the Security Agreement, the Pledge and Security Agreement (ITO),
the Member Interest Pledge Agreement (SSLII) and the Member Interest Pledge
Agreement (MS Senior).

 

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(g) Other Indebtedness Instruments. A copy, certified by an officer of the
Borrower as being true and complete, of each instrument of Indebtedness listed
on Exhibit 5.23(b).

(h) Environmental Reports. A report to the Administrative Agent for the benefit
of the Secured Lenders, or on which the Administrative Agent for the benefit of
the Secured Lenders is expressly authorized to rely, prepared or updated within
one hundred eighty (180) days of the Closing Date, by an environmental
consultant acceptable to the Administrative Agent, which report is acceptable as
to the environmental condition of each Facility.

(i) Regulatory Approvals. Copies of each of the Permits listed on Schedule I to
Exhibit 5.02(b) acceptable to the Administrative Agent, certified by an officer
of the Borrower as being true and complete and in full force and effect; to the
extent that any Permits have not been transferred to, or issued in the name of,
the Borrower, applicable Guarantor or the Management Company, copies of all
interim documents such as leases, management agreements and management
sub-contracts entered into by the Borrower, any Guarantor or the Management
Company to continue the operation of a Facility and evidence satisfactory to the
Administrative Agent that such arrangements have been approved by all necessary
Governmental Authority.

(j) Opinions. Opinions, dated the Closing Date, addressed to the Secured Lenders
or on which the Secured Lenders are expressly authorized to rely, from counsel
to the Borrower, the Guarantors, the Borrower’s Members and the Management
Company in a form acceptable to the Administrative Agent, as to such matters as
the Administrative Agent may reasonably request.

(k) Insurance. (i) Declaration pages, endorsements and certificates of insurance
executed by an authorized agent of each carrier evidencing the insurance
policies currently in effect with respect to each Facility, the Borrower and the
Guarantors, together with a letter from an Insurance Consultant to Borrower
addressed to the Administrative Agent (or on which the Administrative Agent is
expressly authorized to rely) to the effect that such insurance meets the
requirements of Section 6.07 as of the Closing Date and (ii) a report to the
Administrative Agent from the Insurance Consultant to the Administrative Agent
to the effect that the provisions of Section 6.07 and the items described in
clause (i) are satisfactory.

(l) Taxes. Evidence that all past and current (if then due and payable) taxes
and assessments applicable to the Facilities or payable by the Borrower or a
Guarantor in connection with the Facilities have been paid.

(m) Management Agreements. A copy of an executed Management Agreement for each
Facility with the Management Company, each in compliance with Section 6.22 in a
form satisfactory to the Administrative Agent.

(n) Appraisals. An M.A.I, appraisal of the value of each Facility, in compliance
with the Financial Institutions Reform, Recovery and Enforcement Act of 1989
satisfactory form and substance to the Administrative Agent, indicating a
maximum of 80% debt

 

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to value, such calculation to be based on the aggregate Long-Term Indebtedness
of the Facilities divided by the aggregate appraised “as is” value of the
Facilities.

(o) Certificate of Sunrise Senior Living, Inc. A certificate of an officer of
Sunrise Senior Living, Inc. acceptable to the Administrative Agent, dated the
Closing Date, stating that to the best knowledge of Sunrise Senior Living, Inc.
there is no event, circumstance or fact pertaining to the Facilities, the
Borrower, SSLII or the Guarantors which would have a Material Adverse Effect or
adversely affect the Financial Projections.

(p) Purchase Agreement and Acquisition Documents. A copy (i) of the Purchase
Agreement, including all amendments, exhibits and schedules thereto, (ii) the
documents evidencing the transfer of the member interests in the Borrower to MS
Senior and (iii) the Acquisition Adjustment Closing Statement, all certified by
an authorized officer of Borrower satisfactory to the Secured Lenders to be
complete and accurate copies thereof.

(q) Property Condition Assessments. A Property Condition Assessment for each
Facility on which the Secured Lenders are expressly authorized to rely and
evidence satisfactory to the Secured Lenders that the Borrower and the
Guarantors will implement the recommendations contained therein, if any,
including establishment of a capital asset replacement reserve fund if
recommended, to address immediate capital needs the Facilities, all satisfactory
to the Administrative Agent.

(r) Financial Projections. The Financial Projections satisfactory in form and
substance to the Administrative Agent.

(s) Borrower Certificate. A certificate of an officer of the Borrower acceptable
to the Administrative Agent, dated the Closing Date, stating that: (i) no
petition by or against the Borrower has at any time been filed under any
Bankruptcy Law; (ii) there is no pending action, proceeding or investigation
before any Governmental Authority against or directly involving the Borrower,
and to the best knowledge of the Borrower there is no threatened action,
proceeding or investigation affecting the Borrower before any Governmental
Authority, which, in any case, may materially and adversely affect (A) the
financial condition or operations of the Borrower, the Guarantors or the
Facilities or (B) the validity or enforceability of any of the Loan Documents;
(iii) the Borrower has not incurred any obligations or liabilities which would
have a Material Adverse Effect; (iv) since the date of the Commitment Letter
there has been no event which has caused or might reasonably be anticipated to
cause a Material Adverse Effect or adversely effect the assumptions or
conclusions stated in the Financial Projections; and (v) in the Borrower’s best
judgment, the assumptions upon which the Financial Projections are based are
reasonable and constitute an appropriate basis for the conclusions contained
therein.

(t) SSLII Certificate. A certificate of an officer of SSLII acceptable to the
Administrative Agent, dated the Closing Date, stating that: (i) no petition by
or against SSLII has at any time been filed under any Bankruptcy Law;
(ii) except for corrections or other changes that arise out of or otherwise
result from the publicly announced accounting review and restatement of the
consolidated financial statements of Sunrise Senior Living, Inc. and its

 

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subsidiaries, all written financial information regarding SSLII was true and
correct in all material respects as of the applicable date(s) specified therein
provided to the Administrative Agent and remains materially true and correct as
of the date of this Agreement, except in either case as may be indicated in
other information provided to the Administrative Agent, or as may have been
publicly disclosed by Sunrise Senior Living, Inc.; (iii) there is no pending
action, proceeding or investigation before any Governmental Authority against or
directly involving SSLII, and to the best knowledge of SSLII there is no
threatened action, proceeding or investigation affecting SSLII before any
Governmental Authority, which, in any case, may materially and adversely affect
(A) the financial condition or operations of SSLII, the Borrower, the Guarantors
or the Facilities or (B) the validity or enforceability of any of the Loan
Documents; (iv) SSLII has not incurred any obligations or liabilities which
would have a Material Adverse Effect; (v) except as set forth in clause (ii),
since the date of the Commitment Letter there has been no event which has caused
or might reasonably be anticipated to cause a Material Adverse Effect or
adversely effect the assumptions or conclusions stated in the Financial
Projections; and (vi) in SSLII’s best judgment, the assumptions upon which the
Financial Projections are based are reasonable and constitute an appropriate
basis for the conclusions contained therein.

(u) MS Senior Certificate. A certificate of an officer of MS Senior acceptable
to the Administrative Agent, dated the Closing Date, stating that: (i) no
petition by or against MS Senior has at any time been filed under any Bankruptcy
Law; and (ii) there is no pending action, proceeding or investigation before any
Governmental Authority against or directly involving MS Senior, and to the best
knowledge of MS Senior, there is no threatened action, proceeding or
investigation affecting MS Senior before any Governmental Authority, which, in
any case, may materially and adversely affect (1) the financial condition or
operations of MS Senior or (2) the validity or enforceability of any of the Loan
Documents to which MS Senior is a party.

(v) Certificate of the Management Company. A certificate of an officer of the
Management Company acceptable to the Administrative Agent, dated the Closing
Date, stating that (i) in the Management Company’s best judgment, the
assumptions upon which the Financial Projections are based are reasonable and
constitute an appropriate basis for the conclusions contained therein; and
(ii) there is no event, circumstance or fact pertaining to the Facilities, the
Borrower, any Guarantor, SSLII or the Management Company which is known to
management of the Management Company and not disclosed which, if disclosed,
would have a Material Adverse Effect or adversely effect the assumptions or
conclusions stated in the Financial Projections.

(w) Uses of Funds. A settlement statement, in form and substance satisfactory to
the Administrative Agent, of the uses of the Advances of the Term Loan requested
by the Borrower.

(x) Reserved.

(y) Environmental Insurance. Either (i) declaration pages, endorsements and
certificates of insurance executed by an authorized agent of each carrier
evidencing that the Borrower or Guarantors have environmental risk insurance
policies covering the Facilities

 

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acceptable to the Administrative Agent, naming the Administrative Agent as an
additional insured, or (ii) an environmental indemnification from SSLII in the
form of the Environmental Indemnity Agreement.

(z) Miscellaneous. Such other instruments, documents and opinions as the
Administrative Agent shall reasonably require to evidence and secure the Loan
Obligations, this Agreement, the other Loan Documents, and the Management
Agreements and the requirements of any Governmental Authority to which the
Secured Lenders or the Borrower, any Guarantor, any of Borrower’s Members or the
Management Company are subject.

SECTION 8.02 Additional Conditions Precedent for the Closing. The following
shall have occurred on or prior to the Closing Date:

(a) Fees and Expenses. Payment by the Borrower to the Administrative Agent of
(i) the fees payable pursuant to this Agreement, (ii) the fees and expenses of
counsel to the Administrative Agent, the fees and expenses of the Insurance
Consultant to the Administrative Agent, appraisal fees, all expenses associated
with the Lenders’ initial syndication of the Loan and any other reasonable
out-of-pocket expenses of the Administrative Agent all incurred through the
Closing Date and (iii) any other expenses of the Administrative Agent incurred
through the Closing Date.

(b) No Material Adverse Effect or Change. In the reasonable judgment of the
Administrative Agent, (i) since the most recent date on which the Borrower the
Guarantors, the Borrower’s Members and the Management Company have supplied
information, financial or otherwise, to the Administrative Agent, there has been
no event which has caused or might reasonably be anticipated to cause a Material
Adverse Effect and (ii) there has been no material adverse change or disruption
in the financial, banking or capital markets or in or affecting the syndication
markets for credit facilities similar in nature to this Agreement.

(c) No Illegality. In the sole determination of the Lenders, there shall have
been no introduction of or charge in the interpretation of any law or regulation
that would make it unlawful or unduly burdensome for the Lenders to enter into
the Agreement, no outbreak, or escalation of hostilities or other calamity or
crises, not suspension of or material limitation on trading on the New York
Stock Exchange or any other national securities exchange, no declaration of a
general banking moratorium by United, States, Germany or New York banking
authorities, and no establishment of any new restrictions on transactions in
securities or on banks material affecting the free market for securities or the
extension of credit by banks.

(d) No Material Adverse Effect or Change on Syndication Market. In the sole
judgment of the Lenders since the date of the Commitment Letter, there has been
no systemic material adverse change or disruption in the financial, banking or
capital markets.

(e) Due Diligence. The Secured Lenders shall have satisfactorily completed their
due diligence procedures.

 

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(f) Interest Rate Agreements. The Borrower has entered into an Interest Rate
Agreement with HSH Nordbank AG providing an interest rate swap for a notional
amount of not less than $259,350,000, for a term of five (5) years, and
providing for an interest rate cap for the balance of the Loan for a term of not
less than three (3) years, and otherwise reasonably acceptable to the
Administrative Agent.

ARTICLE IX

[INTENTIONALLY OMITTED]

ARTICLE X

THE ADMINISTRATIVE AGENT

SECTION 10.01 Appointment. HSH Nordbank AG, acting through its New York Branch
is hereby appointed to act as Administrative Agent under this Agreement and the
other Loan Documents for the Lenders. Subject to the provisions of this Article
X, the Lenders hereby irrevocably authorize, and each holder of any Note by the
acceptance of such Note shall be deemed irrevocably to authorize, the
Administrative Agent to take such action on its behalf under the provisions of
this Agreement and the other Loan Documents and any other instruments and
agreements referred to herein or therein, and to exercise such powers and to
perform such duties hereunder and thereunder, as are specifically delegated to
or required of the Administrative Agent by the terms hereof or thereof, together
with such powers as are reasonably incidental thereto. HSH Nordbank AG, acting
through its New York Branch agrees to act as Administrative Agent on behalf of
the Lenders to the extent provided in this Agreement.

SECTION 10.02 Duties and Immunities.

(a) The Administrative Agent (which term as used herein includes its Affiliates
and its Affiliates’ officers, directors, employees and agents) shall not have
any duties or responsibilities except those expressly set forth in this
Agreement and the Loan Documents. The duties of the Administrative Agent shall
be administrative in nature; the Administrative Agent shall exercise in good
faith the same commercially reasonable care which it would exercise in dealing
with loans for its own account and shall not have by reason of this Agreement or
any Loan Document a trustee or fiduciary relationship in respect of the Lenders;
and nothing in this Agreement or any other Loan Document, expressed or implied,
is intended to or shall be so construed as to impose upon the Administrative
Agent any obligations in respect of this Agreement or any other Loan Document,
except as expressly set forth herein or therein.

(b) Each of the Lenders expressly acknowledges (i) that the Administrative Agent
has not made any representations or warranties to it and that no act by the
Administrative Agent hereafter taken, including any review of the affairs of the
Borrower, shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender; (ii) that the Administrative Agent is not
responsible to any Lender for any recitals, statements, representations or
warranties contained in this Agreement or the other Loan Documents, or in any
certificate or other document referred to or provided for in, or received by it
under, this

 

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Agreement or any other Loan Document, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure by the Borrower, any Guarantor, any of Borrower’s
Members, the Management Company or any other Person to perform any of its
obligations under this Agreement or any other Loan Document; (iii) that the
Administrative Agent shall not be required to initiate or conduct any litigation
or collection proceedings under this Agreement or any other Loan Documents;
(iv) that the Administrative Agent shall not be responsible for any action taken
or omitted to be taken by it under this Agreement or any other Loan Document,
except for its own gross negligence or willful misconduct or the failure to
observe the standard of care set forth in this Article X with respect to
documents and sums of money held by it; and (v) that the Administrative Agent
shall have no duty or responsibility, either initially or on a continuing basis,
to provide any Lender with any credit or other information, whether coming into
its possession before the making of any Advances hereunder or at any time or
times thereafter, except for notices, reports or other information, if any,
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder.

(c) The Administrative Agent may employ agents and attorneys-in-fact, shall be
entitled to rely on good faith of independent counsel and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. The Administrative Agent shall
maintain complete books and records with respect to the Loan Obligations and
shall make the same available for review by the Lenders at its offices during
normal business hours. The Administrative Agent may deem and treat the payee of
any Note as the holder of such Note for all purposes of this Agreement unless
and until a Transfer Supplement transferring or reducing such Note has been
executed. The Administrative Agent shall deliver to the Lenders copies of all
written reports, notices and other communications received or delivered by the
Administrative Agent, in its capacity as such, to or from the Borrower, promptly
after receipt of same, unless the Borrower, any Guarantor, any of Borrower’s
Members or the Management Company is required pursuant to this Agreement to
deliver copies of such written report, notice or other communication directly to
the Lenders.

(d) The Administrative Agent shall be entitled to rely upon any writing,
facsimile transmission, telex or teletype message, resolution, notice, consent,
certificate, letter, cablegram, statement, order or other document or
conversation by telephone or otherwise believed by it in good faith to be
genuine and correct and to have been signed, sent or made by the proper party or
parties, and upon opinions of counsel and other professional advisers selected
by the Administrative Agent.

SECTION 10.03 Defaults and Notices; Exercise of Remedies. The Administrative
Agent shall not have any obligation to the Lenders to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions of
this Agreement or any other Loan Document on the part of the Borrower, any
Guarantor, any of Borrower’s Members or the Management Company or any other
Person, or the financial condition of the Borrower, any Guarantor, any of
Borrower’s Members or the Management Company or any other Person or the
existence or possible existence of any Event of Default, Default or Conditional
Default. In the absence of actual knowledge, the Administrative Agent shall not
be deemed to have

 

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knowledge of the occurrence of a Conditional Default, Default or Event of
Default unless the Administrative Agent has received notice from a Lender, the
Borrower, any Guarantor, any of Borrower’s Members or the Management Company
specifying such Conditional Default, Default or Event of Default and stating
that such notice is a “notice of default.” In the event that the Administrative
Agent receives such a notice of the occurrence of a Conditional Default, Default
or Event of Default, the Administrative Agent shall give prompt notice of such
Conditional Default, Default or Event of Default to each Lender.

SECTION 10.04 Non-Reliance. Each Lender agrees that it has, independently and
without reliance on the Administrative Agent and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Borrower, the Guarantors, the Borrower’s Members and the Management Company and
the Facilities and its lending interest related thereto, has made its own
decision to enter into this Agreement and accept the Note and that it will,
independently and without reliance upon the Administrative Agent, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own analysis in connection with its Lender’s Percentage
Interest.

SECTION 10.05 Indemnification. Each Lender agrees to reimburse and indemnify the
Administrative Agent (to the extent not reimbursed by the Borrower after
commercially reasonable efforts to obtain such reimbursement), pro rata in
accordance with its Lender’s Percentage Interest for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which are
imposed on, incurred by or asserted against the Administrative Agent in its
capacity as Administrative Agent, in any way relating to or arising out of this
Agreement, the Note, or any other Loan Documents or any action taken or omitted
by the Administrative Agent hereunder or thereunder; provided that such
indemnification obligation shall not apply to any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements determined in a final, non-appealable judgment by a
court of competent jurisdiction to be the result of the gross negligence or
willful misconduct of the Administrative Agent.

SECTION 10.06 Individual Capacity. With respect to the obligations of the
Borrower relating to the Note, HSH Nordbank AG, acting through its New York
Branch, as Administrative Agent, shall have the same rights and powers hereunder
as any other Lender, and may exercise the same as though it were not the
Administrative Agent and the terms “Lender,” and “holders of Notes” shall,
unless the context hereof otherwise indicates, include HSH Nordbank AG, acting
through its New York Branch and any other Lender, in its individual capacity.
HSH Nordbank AG, acting through its New York Branch, may, without liability to
account, make loans to, accept deposits from, act as trustee under indenture of,
and generally engage in any kind of banking or trust business with the Borrower,
any Guarantor, any of Borrower’s Members or the Management Company and their
related entities as though it were not acting as the Administrative Agent
hereunder.

SECTION 10.07 Distributions. Whenever a Lender or the Administrative Agent
receives any payment on behalf of another Lender, it shall distribute the same
to the appropriate

 

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Lender, in lawful money of the United States and in like kind of funds received
by it. All such payments received prior to 2:00 P.M., shall be so paid on the
date received or, if received later than 2:00 P.M., on the next succeeding
Business Day.

SECTION 10.08 Successors. The Administrative Agent may resign at any time by
giving thirty (30) days advance written notice thereof to each of the Lenders
and the Borrower, such resignation to become effective upon the discharge of the
Administrative Agent from its duties under this Agreement, as set forth in this
Section 10.08. Upon the resignation of the Administrative Agent, at no expense
to the Borrower, and with the Borrower’s prior written reasonable consent, the
Lenders may appoint another entity to act as the Administrative Agent. Upon the
acceptance by a successor to the Administrative Agent of its appointment as the
Administrative Agent hereunder, such successor to the Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties under this Agreement and, except as
set forth in the following sentence, all of its rights, powers and privileges
hereunder shall terminate. After any retiring Administrative Agent’s resignation
hereunder, the provisions of this Article X shall inure to its benefit as to any
actions taken or omitted by it while it was the Administrative Agent under this
Agreement.

SECTION 10.09 Certain Consents Required.

(a) Subject to Section 10.09(b), the Administrative Agent reserves the right, in
its discretion, in each instance without prior notice to or consent by any of
the Lenders, (i) to exercise or refrain from exercising any powers or rights
which the Administrative Agent or any of the Lenders may have under or with
respect to this Agreement, any Note or any other Loan Document, (ii) to enforce
or forbear from enforcing the Loan Documents, (iii) to grant or withhold
consents, approvals or waivers and to make any other determinations in
connection with the Loan and the Loan Documents, (iv) to amend or modify the
Loan Documents, (v) to acquire additional security or release any security given
with respect to any of the Loan Obligations, (vi) to collect all sums due under
the Loan Documents, (vii) to declare the Loan Obligations due and payable when
permitted to do so pursuant to the terms of the Loan Documents, (viii) to
enforce the Loan Documents, (ix) to take possession of, foreclose or accept a
deed and/or assignment of the security for any of the Loan Obligations or any
portion thereof in lieu of foreclosure, (x) to sell, dispose of or otherwise
deal with the ownership and operation of any security for any of the Loan
Obligations, (xi) to bid at foreclosure of any Security Document such amount as
the Administrative Agent shall determine in its discretion, and (xii) to
exercise or determine not to exercise all powers which are incidental to any of
the foregoing.

(b) Notwithstanding anything contained in Section 10.09(a), the Administrative
Agent will not without the unanimous consent of the Lenders: (i) consent to the
reduction of any amount or rate of interest payable to the Lenders under this
Agreement or the Note, (ii) increase the amount of the Loan Commitment Amount,
(iii) extend the Maturity Date, (iv) postpone the due date of any amount due to
the Administrative Agent on behalf of the Lenders or (v) consent to the sale,
transfer or conveyance of a material portion of the collateral except as
specifically permitted under the Loan Documents or release of any obligor under
a

 

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Loan Document from any of its material obligations thereunder (except upon the
complete payment of the Loan Obligations); provided that the foregoing
restrictions shall not apply in connection with any waiver, amendment,
modification, consent, extension, postponement or agreement required by any
Applicable Law or order or decree or any court.

(c) If the Administrative Agent shall request the Lenders’ consent under
subsection (b) and shall not receive such consent or denial thereof from any
Lender within ten (10) Business Days (or, in the sole discretion of the
Administrative Agent, such greater number of Business Days as the Administrative
Agent may stipulate in writing with respect to a particular request) after
making such request, then the Lender shall be deemed to have granted such
consent. In the event the Lender denies its consent to any action requiring the
consent of the Lender pursuant to subsection (b), the Administrative Agent shall
have the option, but not the obligation, exercisable at any time thereafter, to
purchase the entirety of such Lender’s Percentage Interest in the Loan and the
Loan Documents by delivering to the Lender a written notice of tender, together
with an amount of cash or Federal Reserve Funds or other funds immediately
available in New York, New York equal to 100% of the Lender’s pro rata share in
all Outstanding Advances plus any unpaid interest and fees accrued under the
Loan Documents to the date of such tender, plus any other amounts due and
payable to the Lender hereunder. If such tender is duly made, the Administrative
Agent shall thereupon be deemed to have acquired the entirety of the Lender’s
Percentage Interest in the Loan and the Loan Documents and Loan Commitment
Percentage of the Lender shall thereafter be zero and the Lender shall have no
further rights or obligations under this Agreement; provided that the
Administrative Agent shall have the right thereupon to receive, and shall
accept, such documents and instruments as shall be legally necessary to effect
the transfer of the Lender for which such tender was made.

(d) The Administrative Agent may at any time request instructions from the
Lenders with respect to any actions, consents, waivers or approvals which, by
the terms of any of the Loan Documents, the Administrative Agent is permitted or
required to take or to grant, and the Administrative Agent shall be absolutely
entitled to refrain from taking any action or to withhold any approval, consent
or waiver and shall not be under any liability whatsoever to any Person for
refraining from any action or withholding any approval, consent or waiver under
any of the Loan Documents until the Administrative Agent shall have received
such instructions.

(e) Each Lender acknowledges that, with respect to the Loan and the Loan
Documents, the Administrative Agent shall have the sole and exclusive authority
to deal and communicate with the Borrower, any Guarantor and any other Person on
behalf of the Lenders. Each Lender agrees that it will not take any legal
action, nor institute any actions or proceedings, against the Borrower, any
Guarantor or any other Person with respect to any portion of the Loan
Obligations, without the prior written consent of the Administrative Agent,
which consent may be withheld by the Administrative Agent in its discretion.

SECTION 10.10 Status of Collections. The Administrative Agent will keep the
Lenders informed of the status of payments on the Loan and use its best efforts
to keep the Lenders informed of the collectibility of outstanding principal,
interest, fees and any other amounts owing to the Administrative Agent on behalf
of the Lenders under the Loan Documents.

 

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SECTION 10.11 Information. The Administrative Agent will furnish to the Lenders
copies of all reports, certificates and other written statements furnished by
the Borrower to the Administrative Agent pursuant to Section 6.01 of this
Agreement; provided that the Administrative Agent assumes no responsibility with
respect to the authenticity, validity, accuracy or completeness of any such
financial or nonfinancial materials. The Administrative Agent will furnish to
the Lenders, promptly following receipt thereof by the Administrative Agent,
copies of any proposed modifications of the Loan Documents presented to the
Administrative Agent for approval. No failure on the part of the Administrative
Agent to furnish information pursuant to this Section 10.11 shall result in any
liability of the Administrative Agent or release the Lenders from any of its
obligations hereunder.

SECTION 10.12 Borrower’s Default and Material Events. The Administrative Agent
will give to the Lenders, and the Lenders will give to the Administrative Agent,
prompt telephonic notice (confirmed in writing) of (a) any Default under the
Loan Documents of which the Administrative Agent or a Lender, as the case may
be, has actual knowledge and (b) any other matter of which the Administrative
Agent or a Lender, as the case may be, has actual knowledge and which in the
reasonable judgment of the party required to give such notice could materially
and adversely affect its interests or the interests of the other party in the
Loan, but, in the absence of willful misconduct or gross negligence, no failure
to give any such notice shall result in liability on the part of the party
required to give such notice.

SECTION 10.13 Administrative Agency Provisions Solely for the Benefit of the
Lenders. Notwithstanding anything in this Agreement to the contrary, the
provisions of this Article X are solely for the benefit of the Administrative
Agent and the Lenders, and the Borrower hereby acknowledges and agrees that the
provisions of this Article X may be modified, amended and waived by the
Administrative Agent and the Lenders without notice to or approval or consent by
the Borrower or any other Person.

ARTICLE XI

EVENTS OF DEFAULT

SECTION 11.01 Events of Default. The occurrence of any of the following events
(whatever the reason for such event and whether voluntary, involuntary or
effected by operation of law) shall be a “Default” hereunder unless waived in
writing by the Administrative Agent and upon written notice to the Borrower,
shall be an “Event of Default”:

(a) the Borrower fails to pay when due any amount specified in Sections 2.02 or
2.03 and any such failure remains unremedied for three (3) Business Days after
receipt of written notice from Administrative Agent (provided that
Administrative Agent shall not be obligated to provide such notice more than
once in any twelve (12) month period during the term of the Loan, in which event
such failure to pay shall be calculated to commence within three (3) Business
Days after the same becomes due without further notice to the Borrower); or
(ii) except as otherwise specified in this Section 11.01, the Borrower or any
Guarantor fails to pay any other amount payable under the Loan Documents and
such failure remains unremedied for twenty (20) days;

 

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(b) there shall occur a failure by the Borrower to observe or perform any of the
covenants or conditions contained in Sections 6.05 (in a material respect), 6.07
(with respect to a lapse in any required insurance), 6.09 (in a material
respect), 6.10, 6.14 (in a material respect), 6.19, 6.21, 6.25, 7.01, 7.02,
7.03, 7.04, 7.08 or 7.10.

(c) the Borrower, any Guarantor, a Borrower’s Member or the Management Company
fails to observe or perform any of the covenants, conditions or provisions of
the Loan Documents to which it is a party (other than as otherwise specified in
this Section 11.01) and to remedy such default within thirty (30) days after
such failure; provided that, if such failure is known only to the Administrative
Agent and not to the Borrower, any Guarantor, any of Borrower’s Members or the
Management Company then such failure shall not constitute an Event of Default
until thirty (30) days after receipt of notice from the Administrative Agent of
such failure; provided further that, if the Administrative Agent is satisfied
that such failure is not reasonably susceptible to cure within thirty (30) days
and that the Borrower, or applicable Guarantor, Borrower’s Member or Management
Company is, diligently pursuing such cure, such period will be extended for up
to an additional ninety (90) days and the Administrative Agent will not
unreasonably withhold its consent to further extensions;

(d) any representation or warranty made by the Borrower, a Guarantor, a
Borrower’s Member or the Management Company in any Loan Document, or in any
certificate, financial or other statement furnished by or on behalf of such
Person to any Secured Lender pursuant to the Loan Documents, proves to have been
untrue or incomplete in any material respect when made provided that, in the
event of an inadvertent breach of any of the foregoing, such breach shall not
have been remedied within thirty (30) days of the earlier of the date the
Administrative Agent notifies the Borrower of the breach or the date the
Borrower became aware of such breach;

(e) a Bankruptcy Action occurs with respect to the Borrower, any Guarantor or
the Management Company; provided that Borrower will have the right to replace
the Management Company with a new manager reasonably acceptable to the
Administrative Agent, so long as such replacement takes place within thirty
(30) days of such Bankruptcy Action.

(f) an event described in Section 6(a), (b), (c) or (h) of the Member Interest
Pledge and Security Agreement (SSLII); Section 6(a), (b), (c) or (h) of the
Pledge and Security Agreement (ITO); Section 6(a), (b), (c) or (h) of the
Security Agreement; or Section 6(a), (b), (c) or (h) of the Member Interest
Pledge or Security Agreement (MS Senior);

(g) any provision of this Agreement or any of the other Loan Documents at any
time for any reason ceases to be the legal, valid and binding obligation of the
party thereto or ceases to be in full force and effect, or is declared to be
null and void and such result would in the judgment of the Administrative Agent
have a Material Adverse Effect, or the validity or enforceability thereof is
contested by such Person, or such Person renounces the same or denies that it
has any further liability hereunder or thereunder;

(h) the Borrower or any Guarantor (i) fails to make any payment or payments of
any Indebtedness, as applicable, when due (whether by scheduled maturity,
required

 

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prepayment, acceleration, demand or otherwise) and such failure continues after
the applicable grace period, if any, specified in the agreement or instrument
relating to such Indebtedness, except for Matters Contested in Good Faith, or
(ii) fails to perform or observe any term, covenant or condition on its part to
be performed or observed under any agreement or instrument (other than any
failure to perform any term contemplated by sub-clause (i) hereof), except for
Matters Contested in Good Faith, if, in either case, the effect of such failure
to perform or observe is to accelerate, or to permit the acceleration, mandatory
redemption or tender of, the maturity of any Indebtedness in excess of $250,000;

(i) any judgment is entered in a litigation or administrative proceeding, and is
not paid within sixty (60) days, involving the Borrower, a Guarantor, the
Management Company or a Facility or any instrument, contract or document
delivered to the Administrative Agent pursuant to the Loan Documents and the
amount of the judgment from such litigation or proceeding, in the Administrative
Agent’s judgment, a Material Adverse Effect;

(j) Intentionally Omitted;

(k) Intentionally Omitted;

(l) Intentionally Omitted;

(m) a Mortgaged Property suffers a loss by fire or other casualty and such loss
is not fully insured and any deficiency exceeding $1,500,000 between the amount
of insurance paid with respect to such loss and the cost of repairing the
destruction is not timely deposited in escrow with the Administrative Agent, or
the Loan prepayment for the Facility in the amount describe in
Section 6.11(b)(ii) is not made as provided in Section 6.11;

(n) (i) any material Permit with respect to a Facility is revoked, suspended or
annulled, or (ii) a proceeding is instituted against the Borrower a Guarantor or
the Management Company, and the proceeding is not dismissed within thirty
(30) days, for the revocation, suspension or annulment of a material Permit for
a Facility which, in the reasonable judgment of the Administrative Agent, has a
Material Adverse Effect;

(o) Intentionally Omitted;

(p) the Managing Member of Borrower is not either SSLII or MS Senior;

(q) the independent certified public accountant retained by such Person
(i) fails to deliver an unqualified opinion (other than an opinion qualified as
result of a change in application of Generally Accepted Accounting Principles,
such change being one with which such accountants concur) with respect to the
financial statements of the Borrower, as applicable, or (ii) delivers an opinion
on the financial statements of Sunrise Senior Living, Inc. or the Borrower, as
applicable, which opinion includes an explanatory paragraph which describes
conditions which raise substantial doubt about Sunrise Senior Living, Inc.’s or
the Borrower’s, as applicable, ability to continue to operate as a going
concern;

 

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(r) Sunrise Senior Living Management, Inc. ceases to be the Management Company
for all of the Facilities without the Administrative Agent’s prior consent to
such termination;

(s) the Borrower fails to cure as provided in Section 6.24(d) when the Debt
Service Coverage Ratio is less than 1.00:1 on December 31, 2007, or less than
1.05:1 thereafter, as of any Testing Date;

(t) the Borrower fails, within five (5) Business Days of the date required, to
comply with the Cash Sweep Requirements;

(u) any Borrower, Borrower’s Member, Guarantor or the Management Company fails,
within five (5) days of the date required, to comply with the Cash Sweep
Requirements;

(v) a Guarantor fails to pay any of its Guaranty Obligations within five
(5) Business Days after a demand request therefor by the Administrative Agent in
accordance with the Payment Guaranty;

(w) a Guarantor fails to observe or perform any of the covenants or conditions
contained in Section 5(a), (b), (c) or (d) of the Payment Guaranty.

SECTION 11.02 Consequences of an Event of Default. If an Event of Default
specified in Section 11.01 hereof has occurred and is continuing, the
Administrative Agent may:

(a) by notice to the Borrower declare all Loan Obligations to be due and payable
forthwith, whereupon the same immediately shall become due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived; provided that, if a Default described in
Section 11.01(e) or (f) has occurred, the Loan Obligations will be automatically
accelerated on the date of the occurrence of such Default without presentment,
demand, protest, notice of intention to accelerate, notice of acceleration or
other notice of any kind to the Borrower or any other Person, all of which are
hereby expressly waived;

(b) either personally or by attorney or agent without bringing any action or
proceeding, or by a receiver to be appointed by a court in any appropriate
action or proceeding, take whatever action at law or in equity may appear
necessary or desirable to collect the amounts due and payable under the Loan
Documents or to enforce performance or observance of any obligation, agreement
or covenant of the Borrower under the Loan Documents, whether for specific
performance of any agreement or covenant of the Borrower or in aid of the
execution of any power granted to the Lenders or the Administrative Agent in the
Loan Documents;

(c) exercise any and all remedies any Lender may have under the Loan Documents;

(d) [Intentionally Omitted];

 

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(e) employ sales agents and negotiate and execute Residency Documents in
connection with all or any part of the Mortgaged Properties or require the
Borrower to retain a new Management Company for any or all of the Mortgaged
Properties;

(f) exercise the “lock-box” provisions of Section 6.25;

(g) apply all amounts then on deposit in the Borrower’s Fund under the Funds
Pledge Agreement to pay Loan Obligations;

(h) exercise all other remedies available to any of the Secured Lenders at law
or equity; and

(i) if not in place, obtain insurance coverages as are required hereunder, and
all expenses incurred by the Administrative Agent in connection with such action
or in obtaining such insurance and keeping it in effect shall be paid by the
Borrower promptly after demand.

SECTION 11.03 Remedies Cumulative; Solely for the Benefit of the Secured
Lenders. To the extent permitted by, and subject to the mandatory requirements
of, Applicable Law, each and every right, power and remedy herein specifically
given to any of the Secured Lenders in the Loan Documents shall be cumulative,
concurrent and nonexclusive and shall be in addition to every other right, power
and remedy herein specifically given or now or hereafter existing at law, in
equity or by statute, and each and every right, power and remedy (whether
specifically herein given or otherwise existing) may be exercised from time to
time and as often and in such order as may be deemed expedient by the Secured
Lenders, and the exercise or the beginning of the exercise of any power or
remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other right, power or remedy.

The rights and remedies of the Secured Lenders specified herein are for the sole
and exclusive benefit, use and protection of the Secured Lenders, and the
Secured Lenders are entitled, but shall have no duty or obligation to the
Borrower or any other Person or otherwise, to exercise or to refrain from
exercising any right or remedy reserved to the Secured Lenders hereunder or
under any of the other Loan Documents.

SECTION 11.04 Waivers or Omissions. No delay or omission by any of the Secured
Lenders in the exercise of any right, remedy or power or in the pursuit of any
remedy shall impair any such right, remedy or power or be construed to be a
waiver of any default on the part of any of the Secured Lenders or to be
acquiescence therein. No express or implied waiver by any of the Secured Lenders
of any Default shall in any way be, or be construed to be, a waiver of any
future or subsequent Default.

SECTION 11.05 Continuance of Proceedings. In case any of the Secured Lenders
shall proceed to invoke any right, remedy or recourse permitted hereunder or
under the Loan Documents and shall thereafter elect to discontinue or abandon
the same for any reason, the Secured Lenders shall have the unqualified right so
to do and, in such event, the Borrower, the Guarantors, the Borrower’s Members
and the Management Company and the Secured Lenders shall be restored to their
former positions with respect to the Loan Obligations, the Loan

 

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Documents, the Mortgaged Properties and otherwise, and the rights, remedies,
recourse and powers of the Secured Lenders hereunder shall continue as if the
same had never been invoked.

SECTION 11.06 Injunctive Relief. The Borrower recognizes that in the event it
fails to perform, observe or discharge any of its obligations or liabilities
under the Loan Documents, any remedy of law may prove to be inadequate relief to
the Secured Lenders; therefore, the Borrower agrees that the Secured Lenders, if
the Secured Lenders so request, shall be entitled to temporary and permanent
injunctive relief in any such case without the requirement to post a bond or
other security.

SECTION 11.07 Power of Attorney. For the purpose of carrying out the provisions
and exercising the rights, powers and privileges granted by this Article XI, the
Borrower hereby irrevocably constitutes and appoints each of the Secured Lenders
(individually) during the continuation of an Event of Default as its true and
lawful attorney-in-fact to execute, acknowledge and deliver any instruments and
do and perform any acts such as are referred to in this Article XI, in the name
and on behalf of the Borrower. This power of attorney is a power coupled with an
interest and cannot be revoked.

ARTICLE XII

INDEMNIFICATION AND LIABILITY

SECTION 12.01 Indemnification. In addition to any and all rights of
reimbursement, indemnification, subrogation or any other rights pursuant hereto
or under law or equity, the Borrower hereby agrees (to the extent permitted by
law) to indemnify and hold harmless the Secured Lenders and Bank Participants
and their respective officers, directors and agents (the “Indemnities”) from and
against any and all claims, damages, losses, liabilities, reasonable costs or
expenses whatsoever (including reasonable attorneys’ fees and court costs) which
any of the Indemnities may incur (or which may be claimed against any of the
Indemnities by any Person or entity whatsoever) by reason of or in connection
with (a) the use of the proceeds of the Loan; (b) the use or occupancy of the
Facilities by the Borrower, the Borrower’s Members, the Guarantors or the
Management Company or any other Person; or (c) the involvement of the Secured
Lenders or Bank Participants in any legal suit, investigation, proceeding,
inquiry or action as a consequence, direct or indirect, of the Secured Lenders’
or Bank Participants’ making of the Loan, the Secured Lenders entering into this
Agreement or action taken thereunder or under any of the Loan Documents or any
other event or transaction in connection with or contemplated by any of the
foregoing, provided that, such indemnification obligation shall not apply (i) to
any portion of such claims, damages, losses, liabilities, costs, or expenses or
disbursements determined in a final, non-appealable judgment by a court of
competent jurisdiction to be the result of the gross negligence or willful
misconduct of a Secured Lender or Bank Participant or (ii) in disputes among
Secured Lenders (including Bank Participants) or between any Secured Lenders
(including Bank Participants) and the Administrative Agent or to a breach of
this Agreement by the Administrative Agent or any Secured Lender or any Bank
Participant. If any proceeding shall be brought or threatened against an
Indemnities by reason of or in connection with the events described in clause
(a), (b) or (c), (and except as otherwise provided in the

 

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proviso above), the applicable Indemnities shall promptly notify the Borrower in
writing and the Borrower shall assume the defense thereof, including the
employment of counsels chosen by the Indemnities (with fees and terms reasonably
satisfactory to the Borrower) and the payment of all costs of litigation.
Notwithstanding the preceding sentence, each of the Indemnities shall have the
right to employ their own respective counsel and to determine their own defense
of such action in any such case, but the fees and expenses of such counsel shall
be at the expense of Indemnities or the applicable Secured Lender or Bank
Participant unless (i) the employment of such counsel shall have been authorized
in writing by the Borrower or (ii) the Borrower, after due notice of the action,
shall not have employed counsel reasonably satisfactory to such Indemnities to
have charge of such defense, in either of which events the reasonable fees and
expenses of the respective counsels for such Indemnities shall be borne by the
Borrower to the extent that such action is covered by this indemnification
provision. The Borrower shall not be liable for any settlement of any such
action effected without its consent. Nothing under this Section 12.02 is
intended to limit the Borrower’s payment of Loan Obligations.

SECTION 12.02 Liability of the Secured Lenders. Neither the Secured Lenders nor
the Bank Participants, or any of their respective officers or directors, shall
be liable or responsible for: (a) the use which may be made of the proceeds of
Advances of the Loan; (b) the validity, sufficiency or genuineness of documents,
or of any endorsement(s) thereon, even if such documents should in fact prove to
be in any or all respects invalid, insufficient, fraudulent or forged;
(c) payment by any Secured Lender against presentation of documents which do not
comply with the terms of this Agreement, including failure of any documents to
bear any reference or adequate reference to this Agreement; or (d) any other
circumstances whatsoever resulting from making or failing to make payment in
accordance with this Agreement. In furtherance and not in limitation of the
foregoing, the Secured Lenders may accept documents that appear on their face to
be in order, without responsibility for further investigation, regardless of any
notice or information to the contrary.

SECTION 12.03 Payment. The Borrower shall pay or reimburse the Indemnities for
any and all amounts due pursuant to events described in this Article XII upon
demand therefor by the Secured Lenders, accompanied by a written statement
describing the matters giving rise to such payment and the basis for computation
of the amount so payable. Any amount payable by the Borrower hereunder which is
not paid within ten (10) Business Days following demand shall bear interest at
the Default Rate except for Matters Contested in Good Faith.

SECTION 12.04 Survival. The obligations of the Borrower under this Article XII
shall survive payment and performance of the Loan Obligations.

SECTION 12.05 Absolute and Unconditional Agreement.

(a) The obligations of the Borrower under this Article XII shall be a
continuing, absolute and unconditional indemnity, without regard to:

(i) any limitation, discharge, cancellation, invalidity, rejection or
unenforceability of the Loan, any Loan Obligations or the Loan Documents or any
part thereof; and

 

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(ii) any circumstance whatsoever which constitutes or might be construed to be
an equitable or legal discharge of the Borrower from the Loan Obligations.

(b) The Borrower’s liability hereunder shall not be conditioned or contingent
upon the pursuit by the Secured Lenders of any right or remedy against the
Borrower any Guarantor, any of Borrower’s Members or the Management Company or
other Person at any time and shall not be affected or limited in any manner by
any action taken by the Secured Lenders in connection with exercise of any
remedies under the Loan Documents.

ARTICLE XIII

PURCHASER LENDERS, PARTICIPATIONS

SECTION 13.01 Assignments.

(a) Any Lender may, in the ordinary course of its commercial banking or lending
business and in accordance with Applicable Law and with the approval of the
Administrative Agent, (i) at any time sell or assign all or any part of its
rights and obligations under this Agreement and the other Loan Documents to any
existing Lender or any Affiliate thereof, and (ii) with the consent of the
Borrower (which Borrower consent shall not be unreasonably withheld and shall
not be required for a sale or assignment to an Eligible Assignee or during an
Event of Default) sell or assign to any other Person (any purchaser or assignee
under clause (i) or (ii), a “Purchaser Lender”) all or any part of its rights
and obligations under this Agreement and the other Loan Documents, in each
instance under clause (i) or (ii) above, pursuant to a transfer supplement that
is in a form reasonably satisfactory to the Administrative Agent (a “Transfer
Supplement”), executed by such Purchaser Lender, such transferor Lender, the
Administrative Agent and, if applicable, the Borrower, and delivered to the
Administrative Agent for its acceptance and recording in the Register (as
defined below); provided that (x) in the event of a sale or assignment under
clause (i) or (ii) above of less than all of a selling or assigning Lender’s
rights and obligations, such selling or assigning Lender shall retain a Lender’s
Percentage Interest of at least $10,000,000 (or such lesser amount as the
Administrative Agent and Borrower may reasonably approve) and (y) any sale or
assignment under clause (i) or (ii) above shall result in the Purchaser Lender
acquiring, pursuant to such sale or assignment, a Lender’s Percentage Interest
of at least $10,000,000 (or such lesser amount as the Administrative Agent and
Borrower may reasonably approve). Upon such execution, delivery, acceptance and
recording, from and after the “Transfer Effective Date” (as defined in the
Transfer Supplement) determined pursuant to such Transfer Supplement, (x) the
Purchaser Lender thereunder shall be a party to this Agreement (if not already a
party hereto), and, to the extent provided in such Transfer Supplement (and in
addition to any existing rights and obligations as a Lender hereunder), have the
rights and obligations of a Lender hereunder with an interest as set forth
therein, and (y) the transferor Lender thereunder shall, to the extent of the
interest transferred as reflected in such Transfer Supplement, be released from
its obligations under this Agreement and the other Loan Documents (and, in the
case of a Transfer Supplement covering all or the remaining portion of a
transferor Lender’s rights and obligations under this Agreement, such

 

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transferor Lender shall cease to be a party hereto). Such Transfer Supplement
shall be deemed to amend this Agreement to the extent, and only to the extent,
necessary to reflect the addition of such Purchaser Lender and the resulting
adjustment of Lender Interests arising from the purchase by such Purchaser
Lender of all or a portion of the rights and obligations of such transferor
Lender. On or prior to the Transfer Effective Date determined pursuant to such
Transfer Supplement, the Borrower shall execute and deliver to the
Administrative Agent in exchange for the surrendered Note such new Note, payable
to the order of such Purchaser Lender in an amount equal to the interest sold or
assigned to it pursuant to such Transfer Supplement and, if the transferor
Lender has retained any interest hereunder, a new Note to the order of the
transferor Lender in an amount equal to the interest retained by the transferor
Lender. Such new Note shall be dated the Closing Date (but with indication of
reissuance as of the Transfer Effective Date) and shall otherwise be in the form
of the Note replaced thereby. The Note surrendered by the transferor Lender
shall be returned by the Administrative Agent to the Borrower marked “canceled.”
Notwithstanding the above, any Lender shall have the right at any time without
the approval or consent of the Administrative Agent or the Borrower to grant a
security interest in all or any portion of such Lender’s rights in this
Agreement or the other Loan Documents to any Federal Reserve Bank or the central
reserve bank or similar authority of any other country to secure any obligation
of such Lender to such bank or similar authority. The Borrower authorizes each
of the Lenders to provide to potential Purchaser Lenders copies of this
Agreement, any other Loan Documents and any other documents, instruments,
certificates, opinions, insurance policies, financial statements and financial,
operational and other information and materials previously provided to any of
the Secured Lenders.

(b) The Administrative Agent shall, as Borrower’s agent solely for purposes of
this subsection (b), maintain at its address referred to in Section 14.05 a copy
of each Transfer Supplement delivered to it and a register (the “Register”) for
the recordation of the names and addresses of the Lenders and each Lender’s
Percentage Interest and the principal amount of the Loan and owing to each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Borrower, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register as the
owner of the interest recorded therein for all purposes of this Agreement, and
the Register shall be available for inspection by the Borrower or any Lender
(with respect to any entry relating to such Lender) at any reasonable time and
from time to time upon reasonable prior notice.

(c) Upon its receipt of a Transfer Supplement executed by a transferor Lender
(with respect to any entry relating to such Lender), a Purchaser Lender and the
Administrative Agent (and, if applicable, the Borrower), together with payment
by the Purchaser Lender to the Administrative Agent of a registration and
processing fee of $3,500 if the Purchaser Lender is not a Lender prior to the
execution of such supplement and $1,500 otherwise, the Administrative Agent
shall (i) promptly accept such Transfer Supplement and (ii) on the Transfer
Effective Date determined pursuant thereto record the information contained
therein in the Register and give notice of such acceptance and recordation to
the relevant Lenders and the Borrower. Failure to make any such recordation or
any error in such recordation shall not offset the Borrower’s obligations in
respect of the Loan.

 

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(d) If any Purchaser Lender is organized under the laws of any jurisdiction
other than the United States or any state thereof, the transferor Lender shall
cause such Purchaser Lender, concurrently with the effectiveness of such
transfer, (i) to represent to the transferor Lender (for the benefit of the
transferor Lender, the Administrative Agent and the Borrower) that no taxes will
be required to be withheld by the Administrative Agent, the Borrower or the
transferor Lender with respect to any payments to be made to such Purchaser
Lender in respect of the Loan, (ii) to furnish to the transferor Lender, the
Administrative Agent and the Borrower either United States Internal Revenue
Service Form W-8BEN or U.S. Internal Revenue Service Form W-8ECI (wherein such
Purchaser Lender claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder) and to provide a new Form
W-8BEN or Form W-8ECI upon the expiration or obsolescence of any previously
delivered form and (iii) to furnish to the Administrative Agent comparable
statements in accordance with applicable U.S. laws and regulations to comply
from time to time with all Applicable Laws with regard to such withholding tax
exemption.

(e) If any Lender (a “Benefitted Lender”) shall at any time receive any payment
on account of all or part of its interest in the Loan or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or involuntarily,
by set-off, or otherwise), in a greater proportion than any such payment to and
collateral received by any other Lender, in respect of such other Lender’s
Percentage Interest in the Loan or interest thereon, such Benefitted Lender
shall purchase for cash from the other Lenders such portion of each such other
Lender’s Percentage Interest or shall provide such other Lenders with the
benefits of any such collateral, or the proceeds thereof, as shall be necessary
to cause such Benefitted Lender to share the excess payment or benefits of such
collateral, or the proceeds ratably with each of the Lenders; provided, however,
that if all or any portion of such excess payment or benefits is thereafter
recovered from such Benefitted Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but
without interest. The Borrower agrees that each Lender so purchasing a portion
of another Lender’s Percentage Interest may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such portion
as fully as if such Lender were the direct holder of such portion. The
Administrative Agent shall promptly give the Borrower notice of any set-off of
which it has knowledge, provided that the failure to give such notice shall not
affect the validity of such set-off. Each Lender agrees to include in any
participation agreement with a Bank Participant provisions substantially
incorporating the provisions of this subsection (e).

(f) Each Purchaser Lender shall either (x) represent that it is neither an
employee benefit plan as defined in Section 3(3) of ERISA, not a plan as defined
in Section 4975(e)(l) of the Code, nor are any of the assets to be used to
purchase such Mortgage Loan “plan assets” within the meaning of Department of
Labor Regulation Section 2510.3 101 or (y) provide evidence satisfactory to the
Administrative Agent that it is entitled to rely on an exemption from the
prohibited transaction and plan asset rules of ERISA.

(g) Notwithstanding anything in this Agreement to the contrary, (i) no Lender
shall, sell, assign or transfer any Lender’s Percentage Interest in the Loan to
the Borrower, any Guarantor, a Borrower’s Member, the Management Company or any
Affiliate or subsidiary

 

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thereof and (ii) no Lender shall sell, assign, negotiate, pledge, hypothecate or
otherwise transfer all or any part of its rights and obligations under this
Agreement or any other Loan Document except as expressly provided above or with
the approval of the Administrative Agent.

SECTION 13.02 Participations. A Lender may, in the ordinary course of its
business and in accordance with Applicable Law and with the approval of the
Administrative Agent, at any time sell participations to Bank Participants in
all or a portion of its rights and obligations under this Agreement and the
other Loan Documents; provided that

(i) such Lender’s obligations under this Agreement and the other Loan Documents
shall remain unchanged; and

(ii) the Borrower will continue to deal solely and directly with the Secured
Lenders as provided herein.

The Borrower authorizes each of the Lenders to provide to potential Bank
Participants copies of this Agreement, any other Loan Documents and any other
documents, instruments, certificates, opinions, insurance policies, financial
statements, financial, operational and other information and materials
previously provided to any of the Secured Lenders. The Borrower agrees that each
Bank Participant shall be entitled to the benefits of Sections 4.05,4.07, 4.08
and 12.01 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to Section 13.01; provided that a Bank
Participant shall not be entitled to receive any greater payment under
Section 4.05 or 4.07 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Bank Participant, unless
the sale of the participation to such Bank Participant is made with the
Borrower’s prior consent and it so provides for such greater payment; and
provided further that a Bank Participant that would be a Foreign Lender if it
were a Lender shall not be entitled to the benefits of Section 4.07 unless the
Borrower is notified of the participation sold to such Bank Participant and such
Bank Participant agrees, for the benefit of the Borrower, to comply with
Section 4.13 as though it were a Lender.

The Borrower agrees that if amounts outstanding under the Loan Documents are due
and unpaid, or have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Bank Participant of which the Borrower
has been provided prior notice by a Secured Lender shall, to the extent
permitted by Applicable Law, be deemed to have the right of set-off in respect
of its participating interest to the same extent as if the amount of its
participating interest were owing directly to a Lender provided that such Bank
Participant agrees to be subject to the provisions of Section 13.01(e). No
Lender may sell participations in all or a portion of its rights and obligations
under this Agreement or any of the other Loan Documents, except as provided
above.

 

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ARTICLE XIV

GENERAL CONDITIONS

The following conditions shall be applicable throughout the term of this
Agreement:

SECTION 14.01 No Broker. The Borrower represents and warrants that no broker was
involved in procuring the Loan except any such broker whose commission has been
paid in full by the Borrower on or prior to the Closing Date, and agrees to
indemnify and save harmless the Secured Lenders and Bank Participants from and
against any and all claims for any brokerage commission arising out of the Loan
Documents.

SECTION 14.02 Further Assurances. From time to time upon the request of the
Administrative Agent, the Borrower will, and will cause the Guarantors, the
Borrower’s Members and the Management Company, to, promptly and duly execute,
acknowledge and deliver any and all such further instruments and documents as
the Administrative Agent may deem necessary or desirable to confirm the Loan
Documents, to carry out the purpose and intent hereof and thereof or to enable
the Secured Lenders to enforce any of its rights hereunder or thereunder.

SECTION 14.03 Amendments and Waivers. The Borrower and the Administrative Agent
may from time to time enter into agreements amending, modifying or supplementing
this Agreement and/or any of the other the Loan Documents or changing the rights
of the parties hereunder or thereunder, and the Administrative Agent may from
time to time grant waivers or consents to a departure from the due performance
of the obligations of the applicable obligor hereunder or thereunder. Any such
agreement, waiver or consent must be in writing and shall be effective only to
the extent specifically set forth in such writing. In the case of any such
waiver or consent relating to any provision hereof, any Conditional Default,
Default or Event of Default so waived or consented to shall be deemed to be
cured and not continuing, but no such waiver or consent shall extend to any
other or subsequent Conditional Default, Default or Event of Default or impair
any right consequent thereto.

SECTION 14.04 No Implied Waivers. No Advance, course of dealing, delay or
failure of the Secured Lenders to exercise any right, power or privilege under
this Agreement or the other Loan Documents (including any delay in sending a
notice required for an Event of Default) shall constitute a waiver of any
Conditional Default, Default or Event of Default nor affect any other or future
exercise thereof or exercise of any other right, power or privilege; nor shall
any single or partial exercise of any such right, power or privilege or any
abandonment or discontinuance of steps to enforce such a right, power or
privilege preclude any further exercise thereof or of any other right, power or
privilege. The rights and remedies of the Secured Lenders under this Agreement
and the other Loan Documents are cumulative and not exclusive of any rights or
remedies which the Secured Lenders would otherwise have under any other Loan
Document or at law or in equity.

SECTION 14.05 Notices. Except for Interest Election Requests which shall be
submitted in accordance with Section 4.03, all notices, requests, demands,
directions and other

 

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communications (collectively “notices”) under the provisions of this Agreement
and the other Loan Documents shall be in writing (including telexed and
facsimile communication) unless otherwise expressly permitted hereunder or under
such other Loan Document and shall be sent and deemed delivered as follows:
(i) if by first class mail, five (5) days after mailing (provided that no notice
of an Event of Default or other notice sent pursuant to Sections 11.01 or 11.02
or any demand for payment other than routine interest statements shall be given
by this method); (ii) if by overnight delivery, on the next Business Day; and
(iii) if by facsimile, when confirmation of receipt is obtained. The email
addresses set forth below are provided for convenience only and not for purposes
of proper notification under this Agreement. All notices shall be sent to the
applicable party at the following address or in accordance with the last
unrevoked written direction from such party to the other parties hereto:

If to the Borrower, a Guarantor, SSLII, Management Company,

Sunrise Senior Living, Inc. or MS Senior:

[Name of Party]

c/o Sunrise Senior Living Investments, Inc.

7902 Westpark Drive

McLean, VA 22102

Attention: John Gaul, General Counsel

Telephone: (703) 744-1710

Facsimile: (703) 744-1990

Email: john.gaul@sunriseseniorliving.com

and

c/o Sunrise Senior Living Investments, Inc.

7902 Westpark Drive

McLean, VA 22102

Attention: James S. Pope, Executive Vice President, Capital Group

Telephone: (703) 744-1631

Facsimile: (703) 744-1645

Email: jay.pope@sunriseseniorliving.com

and

MS Senior Living, L.L.C.

1585 Broadway, Floor 37

New York, NY 10036

Attention: Mr. Mark Hudspeth

Telephone: (212) 761-4679

Facsimile: (212) 507-4365

Email: mark.hudspeth@morganstanley.com

 

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with a copy to:

Wayne G. Tatusko, Esq.

3016 Williams Drive, Suite 200

Fairfax, VA 22031

Telephone: (703) 205-0710

Facsimile: (703) 205-9059

Email: wtatusko@tatuskolaw.com

with a copy to:

Jones Day

2727 North Harwood Street

Dallas, TX 75201

Attention: Susan Cox, Esq.

Telephone: (214) 969-4586

Facsimile: (214) 969-5100

Email: scox@jonesday.com

If to the Administrative Agent or HSHN as a Lender:

HSH Nordbank AG, New York Branch

230 Park Avenue

New York, NY 10169-0005

Attention: David Canavan, Senior Vice President

Telephone: (212) 407-6035

Facsimile: (212) 407-6833

Email: david.canavan@hsh-nordbank.com

With a copy to:

HSH Nordbank, New York Branch

230 Park Avenue

New York, NY 10169-0005

Attention: Jon D. Karnofsky, General Counsel

Telephone: (212) 407-6142

Facsimile: (212) 407-6811

Email: jon.karnofsky@hsh-nordbank. com

The Secured Lenders may rely on any notice purportedly made by or on behalf of
the Borrower and shall have no duty to verify the identity or authority of the
Person giving such notice. Whenever the Secured Lenders are required or
empowered to provide any notice, consent, approval or direction under this
Agreement, such notice, consent, approval or direction shall be given by the
Administrative Agent, and the Borrower may conclusively rely on any such
communication. Whenever notices are required to be given to the Secured Lenders,
such notices shall be given to the Administrative Agent.

 

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SECTION 14.06 Right of Setoff.

(a) Upon the occurrence of an Event of Default and subject to their obligations
to other Secured Lenders under Articles X and XIII the Secured Lenders may, at
any time and from time to time, without notice to the Borrower or any other
Person (any such notice being expressly waived), set-off and appropriate and
apply, against and on account of, any Loan Obligations of the Borrower to the
Secured Lenders, without regard to whether or not the Secured Lenders shall have
made any demand therefor, and although such Loan Obligations may be contingent
or unmatured, any and all deposits (general or special, including but not
limited to indebtedness evidenced by certificates of deposit, whether matured or
unmatured, but not including trust accounts) and any other Indebtedness at any
time held or owing by any of the Secured Lenders to or for the credit or the
account of the Borrower.

(b) The Secured Lenders agree to promptly notify the Borrower after any such
set-off and application referred to in subsection (a) above, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. Subject to the provisions of subsection (a) above, the rights of
the Secured Lenders under this Section 14.06 are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which the
Secured Lenders may have.

SECTION 14.07 No Third Party Rights. Nothing in this Agreement, whether express
or implied, shall be construed to give to any Person other than the parties
hereto and Bank Participants any legal or equitable right, remedy or claim under
or in respect of this Agreement, which is intended for the sole and exclusive
benefit of the parties hereto.

SECTION 14.08 Severability. The provisions of this Agreement are intended to be
severable. If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.

SECTION 14.09 Secured Lenders Only Beneficiaries. All conditions of the
obligation of the Secured Lenders to make Advances are solely and exclusively
for the benefit of the Secured Lenders and their assigns and no Person other
than the Administrative Agent acting on behalf of the Secured Lenders shall have
standing to require satisfaction of such conditions in accordance with their
terms or be entitled to assume that the Secured Lenders will refuse to make
Advances in the absence of strict compliance with any or all thereof and no
Person (other than the Secured Lenders) shall, under any circumstances, be
deemed to be a beneficiary of such conditions, any or all of which may be freely
waived in whole or in part by the Administrative Agent at any time if in the
sole discretion of the Administrative Agent, it deems advisable to do so. The
Secured Lenders’ obligations to make Advances, subject to the terms and
conditions of this Agreement, is solely for the benefit of Borrower and no other
Person shall be deemed to be a beneficiary of such obligation nor entitled to
require any Advance hereunder.

 

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SECTION 14.10 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.

(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK (AND, FOR PURPOSES OF DETERMINING THE HIGHEST
LAWFUL RATE, APPLICABLE FEDERAL LAW IF THE APPLICATION OF FEDERAL LAW RESULTS IN
A HIGHER RATE OF INTEREST) WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS
PROVISIONS.

(b) THE BORROWER CONSENTS TO AND SUBMITS TO IN PERSONAM JURISDICTION AND VENUE
IN THE STATE OF NEW YORK, COUNTY OF NEW YORK, AND IN THE FEDERAL DISTRICT COURTS
WHICH ARE LOCATED IN THE CITY OF NEW YORK. THE BORROWER ASSERTS THAT IT HAS
PURPOSEFULLY AVAILED ITSELF OF THE BENEFITS OF THE LAWS OF THE STATE OF NEW YORK
AND WAIVES ANY OBJECTION TO IN PERSONAM JURISDICTION ON THE GROUNDS OF MINIMUM
CONTACTS, WAIVES ANY OBJECTION TO VENUE, AND WAIVES ANY PLEA OF FORUM NON
CONVENIENS. THIS CONSENT TO AND SUBMISSION TO JURISDICTION IS WITH REGARD TO ANY
ACTION RELATED TO THIS AGREEMENT, REGARDLESS OF WHETHER THE BORROWER’S ACTIONS
TOOK PLACE IN THE STATE OR ELSEWHERE IN THE UNITED STATES. THIS SUBMISSION TO
JURISDICTION IS NONEXCLUSIVE, AND DOES NOT PRECLUDE THE SECURED LENDERS FROM
OBTAINING JURISDICTION OVER THE BORROWER IN ANY COURT OTHERWISE HAVING
JURISDICTION.

(c) THE BORROWER AND THE SECURED LENDERS AGREE TO WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY AND ALL CLAIMS OR CAUSES OF ACTION BASED UPON OR ARISING
OUT OF THIS AGREEMENT. IT IS HEREBY ACKNOWLEDGED THAT THE WAIVER OF A JURY TRIAL
IS A MATERIAL INDUCEMENT FOR THE BORROWER AND THE SECURED LENDERS TO ENTER INTO
THIS AGREEMENT AND THAT THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY THE
BORROWER AND THE SECURED LENDERS IS MADE IN RELIANCE UPON SUCH WAIVER. THE
BORROWER AND THE SECURED LENDERS FURTHER WARRANT AND REPRESENT THAT SUCH WAIVER
HAS BEEN KNOWINGLY AND VOLUNTARILY MADE BY EACH PARTY HERETO, FOLLOWING
CONSULTATION WITH THEIR RESPECTIVE LEGAL COUNSEL.

(d) The Borrower acknowledges that it has had the opportunity to obtain the
advice of experienced counsel of its own choosing in connection with the
negotiation and execution of this Agreement and to obtain the advice of such
counsel with respect to all matters contained herein, including, without
limitation, the provision in Section 14.10(c) for waiver of trial by jury.

(e) The waivers made pursuant to this Section 14.10 are irrevocable and
unmodifiable, whether in writing or orally, and are applicable to any subsequent
amendments, renewals, supplements or modifications of this Agreement. In the
event of litigation, this Agreement may be filed as a written consent to a trial
by the court.

 

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SECTION 14.11 Prior Understandings. This Agreement and the other Loan Documents
supersede any term sheet, the Commitment Letter and all other prior
understandings and agreements, whether written or oral, among the parties hereto
relating to the transactions provided for herein and therein.

SECTION 14.12 Duration. All representations and warranties of the Borrower
contained herein or made in connection herewith shall survive the making of and
shall not be waived by the execution and delivery of this Agreement or the other
Loan Documents, any investigation by the Borrower, the approval of any
disbursements, or honoring of any Advances hereunder. Subject to Section 12.04,
all covenants and agreements of the Borrower contained herein shall continue in
full force and effect from and after date hereof until the latest date of
payment in full of all Loan Obligations of the Borrower.

SECTION 14.13 Preferences. To the extent that any of the Secured Lender receive
any payment from or on behalf of the Borrower which payment or any part thereof
is subsequently: (a) invalidated; (b) declared to constitute a fraudulent
conveyance or preferential transfer; (c) set aside; or (d) required to be repaid
to a trustee, receiver or any other party under any bankruptcy law, state or
federal law, common law or equitable cause, then, to the extent of such payment
received to the extent permitted by Applicable Law, the obligations or part
thereof intended to be satisfied shall be revived and continue in full force and
effect, as if such payment has not been received by such Secured Lender.

SECTION 14.14 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts each
of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument.

SECTION 14.15 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors and permitted assigns. The Borrower may not assign its rights or
obligations under this Agreement or the other Loan Documents without the prior
consent of the Administrative Agent. A Lender may participate portions of its
Lender’s Percentage Interest and sell a portion of its Lender’s Percentage
Interest relating to the Loan in accordance with Article XIII.

SECTION 14.16 Rights Cumulative. All rights, powers and remedies herein given to
the Secured Lenders are cumulative and not alternative, and are in addition to
all statutes or rules of law; any forbearance or delay by the Secured Lenders in
exercising the same shall not be deemed to be a waiver thereof, and the exercise
of any right or partial exercise thereof shall not preclude the further exercise
thereof, and the same shall continue in full force and effect until specifically
waived by an instrument in writing executed by the Administrative Agent. All
representations and covenants by the Borrower shall survive the making of the
Advances and the provisions hereof shall be binding upon and inure to the
benefit of the respective successors and assigns of the parties hereto.

SECTION 14.17 Signs and Advertising. The Secured Lenders shall be permitted to
use the business name and trademark of the Borrower the Guarantors, the
Borrower’s Members and

 

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the Management Company in marketing and promotional materials, including
brochures, tombstone and other advertising and websites to include the name of
the Borrower the Guarantors, the Borrower’s Members and the Management Company
and the Facilities on representative client and transactional lists.

SECTION 14.18 Schedules and Exhibits. The Schedules and Exhibits attached to
this Agreement are an integral part hereof and are hereby made a part of this
Agreement.

SECTION 14.19 Captions and Headings. The captions and headings of the various
sections and subsections of this Agreement have been inserted only for the
purposes of convenience; such captions are not a part of this Agreement and
shall not be deemed in any manner to modify, explain, enlarge or restrict any of
the provisions of this Agreement.

SECTION 14.20 Extent of Covenants; No Personal Liability. No covenant,
stipulation, obligation or agreement of the Borrower contained in this Agreement
shall be deemed to be a covenant, stipulation, obligation or agreement of any
present or future owner, member, shareholder, director, trustee, officer,
employee or agent of the Borrower in his or her individual capacity; and no such
individual (including any such person executing this Agreement) shall be liable
personally hereunder; provided that the foregoing limitation of liability will
not extend to any actions or inactions on the part of any person constituting a
fraud, misappropriation of funds, willful misconduct or gross negligence.

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 

LENDER:

HSH NORDBANK AG, NEW YORK BRANCH,

as Administrative Agent, sole Arranger and Lender

By:  

/s/ David Canavan

 

David Canavan

 

Senior Vice President

By:  

/s/ Gregory J. Nuber

 

Gregory J. Nuber

 

Senior Vice President

BORROWER:

AL US DEVELOPMENT VENTURE, LLC,

a Delaware limited liability company

By:  

Sunrise Senior Living Investments, Inc.,

a Virginia corporation, its Administrative Managing Member

  By:        

James S. Pope

   

Vice President

Signature Page of Loan Agreement

 

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

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 

LENDER:

HSH NORDBANK AG, NEW YORK BRANCH,

as Administrative Agent, sole Arranger and Lender

By:      

David Canavan

 

Senior Vice President

By:      

Gregory J. Nuber

 

Senior Vice President

BORROWER:

AL US DEVELOPMENT VENTURE, LLC,

a Delaware limited liability company

By:  

Sunrise Senior Living Investments, Inc.,

a Virginia corporation, its Administrative Managing Member

  By:  

/s/ James S. Pope

   

James S. Pope

   

Vice President

 

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

Exhibit 4.03(b)

Form of Interest Election Request

The undersigned, pursuant to Section 4.03(b) of the Loan Agreement by and among
AL US Development Venture, LLC (the “Borrower”) and HSH NORDBANK AG, acting
through its NEW YORK BRANCH, as Lender, sole Arranger and Administrative Agent
(the “Administrative Agent”), and such other financial institutions as from time
to time become Lenders, dated as of June 14, 2007 (the “Loan Agreement”), DOES
HEREBY CERTIFY for the benefit of the Secured Lenders as follows (all
capitalized terms not otherwise defined shall have the meaning assigned to such
term in the Loan Agreement):

The Borrowing to which this Interest Election Request applies is
                                                     .

The effective date of the election made pursuant to such Interest Election
Request (which shall be a Business Day) is
                                             .

The resulting Borrowing is to be comprised of: [INSERT DOLLAR AMOUNTS/Base Rate
or LIBOR and LIBOR Periods].

The LIBOR Period(s) to be applicable after giving effect to such election shall
be a period(s) contemplated by the definition of the term “LIBOR Period” in the
Loan Agreement.

IN WITNESS WHEREOF, the undersigned has executed this Interest Election Request
as of the          day of                         ,             .

 

BORROWER: AL US DEVELOPMENT VENTURE, LLC By:   Sunrise Senior Living
Investments, Inc.,
its Managing Member   By:       Name:       Title:    

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

Exhibit 5.02(a)

Facilities, Units and Services

See Attached.

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

Bonita

Real property in the City of Chula Vista, County of San Diego, State of
California, described as follows:

PARCEL A:

PARCEL 2 OF PARCEL MAP NO. 18475, IN THE COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID SAN DIEGO COUNTY
ON MAY 15, 2000 AS FILE NO. 2000-249888 OF OFFICIAL RECORDS.

PARCEL B:

AN EASEMENT FOR INGRESS AND EGRESS, DRIVEWAY PURPOSES, STORM DRAIN AND RIGHT TO
CONSTRUCT, USE, MAINTAIN, OPERATE, REPLACE AND REPAIR AN UNDERGROUND PIPELINE
FOR STORM DRAIN PURPOSES AND SIGNAGE AS SET FORTH IN THAT CERTAIN DOCUMENT
ENTITLED EASEMENT AGREEMENT, BY AND BETWEEN STATE FARM MUTUAL AUTOMOTIVE
INSURANCE COMPANY (“GRANTOR”) AND BONITA ASSISTED LIVING, LLC, A DELAWARE
LIMITED LIABILITY COMPANY (“GRANTEE”), DATED OCTOBER 31, 2001 AND RECORDED
OCTOBER 31, 2001 AS DOCUMENT NO. 2001-0793221 AND BEING MORE PARTICULARLY
DESCRIBED AS FOLLOWS:

EASEMENT AREA

THAT PORTION OF PARCEL 1 OF PARCEL MAP NO. 184751, FILED IN THE OFFICE OF THE
COUNTY RECORDER OF SAN DIEGO COUNTY, MAY 15, 2000, AS FILE NO. 2000-249888.

OFFICIAL RECORDS OF SAN DIEGO COUNTY DESCRIBED AS FOLLOWS:

BEGINNING AT THE MOST NORTHEASTERLY CORNER OF SAID PARCEL 1, SAID CORNER BEING
ON THE SOUTHERLY RIGHT-OF-WAY OF BONITA ROAD, A 102.00 FOOT PUBLIC ROAD, SAID
CORNER ALSO BEING THE TRUE POINT OF BEGINNING; THENCE ALONG THE NORTHERLY LINE
OF SAID PARCEL 1 AND SAID SOUTHERLY RIGHT-OF-WAY OF BONITA ROAD, SOUTH 49
DEGREES 56’03” WEST, 53.33 FEET; THENCE LEAVING SAID NORTHERLY LINE AND SAID
SOUTHERLY RIGHT-OF-WAY, ON A LINE THAT IS PARALLEL WITH THE EASTERLY LINE OF
SAID PARCEL 1, SOUTH 29 DEGREES 58’19” EAST, 70.00 FEET; THENCE AT A RIGHT ANGLE
TO THE SAID EASTERLY LINE OF PARCEL 1, NORTH 60 DEGREES 01’41” EAST, 52.50 FEET
TO THE SAID EASTERLY LINE OF SAID PARCEL 1; THENCE ALONG THE SAID EASTERLY LINE,
NORTH 29 DEGREES 58’19” WEST, 79.34 FEET TO THE TRUE POINT OF BEGINNING.

APN: 570—180-54

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Boulder:

Real property in the City of Boulder, County of Boulder, State of Colorado,
described as follows:

Lot 2A, Elk Park Subdivision Amendment No. l, together with easement rights
appertaining thereto including but not limited to the 25.0’ access easement, as
recorded November 5, 2001 at Reception No. 2215931.

APN: 500415

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Grosse Pointe Woods

Real property in the City of Grosse Pointe Woods, County of Wayne, State of
Michigan, described as follows:

That part of P.C. 184, described as beginning at a point on the Easterly line of
Mack Avenue, 150 feet wide, distant South 72°03’50” East, 60.09 feet and South
14o50’39” West, 174.74 feet from the intersection of the Northerly line of P.C.
184 with the original line of Mack Avenue, 66 feet wide and proceeding thence
South 71°53’11” East 240.39 feet; thence South 14°50’39” West, 106.17 feet;
thence North 71°53’11” West, 240.39 feet to the easterly line of Mack Avenue;
thence North 14°50’39” East along said line, 106.17 feet to the point of
beginning.

Also Lots 1 through 6 except that part taken for Mack Avenue right of way and
Lot 159, Brys Subdivision, according to the plat thereof as recorded in Liber 50
of Plats, page 8, Wayne County Records.

AND FURTHER BEING DESCRIBED ON A SURVEY PREPARED BY PROFESSIONAL ENGINEERING
ASSOCIATES, JOB NO. 2001184, AS:

PART OF PRIVATE CLAIM 184, ALSO LOTS 1 THROUGH 6 EXCEPT THAT PART TAKEN FOR MACK
AVENUE (150 FEET WIDE), LOT 159 AND THE VACATED PUBLIC ALLEY ADJACENT TO LOTS 1
THROUGH 6 AND LOT 159 OF “BRYS’ SUBDIVISION” OF PART OF PRIVATE CLAIM 184 LYING
BETWEEN MACK AVENUE AND MARTER ROAD, GROSSE POINT WOODS, WAYNE COUNTY, MICHIGAN
(LIBER 50 OF PLATS, PAGE 8) WAYNE COUNTY RECORDS DESCRIBED AS BEGINNING AT A
POINT ON THE EASTERLY LINE OF MACK AVENUE, 150 FEET WIDE, DISTANT S72°03’50”E,
60.09 FEET AND S14°50’39”W, 174.74 FEET FROM THE INTERSECTION OF THE NORTHERLY
LINE OF PRIVATE CLAIM 184 WITH THE ORIGINAL CENTER LINE OF MACK AVENUE 66.00
FEET WIDE AND PROCEEDING THENCE S71°53’11”E, 240.37 FEET; THENCE S14°49’57”W,
106.17 FEET; THENCE N71°53’11”W, 87.11 FEET TO THE NORTHEAST CORNER

OF LOT 159; THENCE ALONG THE EAST LINE OF SAID LOT S17°49’04”W, 135.34 FEET TO
THE SOUTHEAST CORNER OF LOT 159; THENCE ALONG THE NORTH RIGHT OF WAY LINE OF
BRYS DRIVE (60 FEET WIDE) N72°13’34”W, 146.37 FEET TO A POINT ON THE EAST RIGHT
OF WAY LINE OF MACK AVENUE (150 FEET WIDE); THENCE ALONG SAID LINE N14°49’33”E,
136.43 FEET TO A POINT ON THE NORTHERLY LINE OF “BRYS1 SUBDIVISION”; THENCE
CONTINUING ALONG THE EAST RIGHT OF WAY LINE OF MACK AVENUE (150 FEET WIDE)
N14°57’21”E, 106.16 FEET TO THE POINT OF BEGINNING.

APN: 40-004-01-0159-000 and 40-004-01-0001-301

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Grosse Pointe II (Vernier)

Real property in the City of Grosse Pointe Woods, County of Wayne, State of
Michigan, described as follows:

PARCEL 1

PART OF LOTS 1 AND 2 OF PLAT OF PARTITION OF PRIVATE CLAIM 249, THE ESTATE OF
CHAS. VERNIER, AS RECORDED IN LIBER 67 OF DEEDS, PAGE 517, WAYNE COUNTY RECORDS,
BEING PART OF THE CITY OF GROSSE POINTE WOODS, WAYNE COUNTY, MICHIGAN, DESCRIBED
AS: BEGINNING AT A POINT ON THE NORTHERLY LINE OF VERNIER ROAD 66 FEET WIDE,
DISTANT SOUTH 72 DEGREES 10 MINUTES 40 SECONDS EAST, 150.0 FEET FROM THE
INTERSECTION OF SAID NORTHERLY LINE WITH THE EASTERLY LINE OF MACK AVENUE, 143.0
FEET WIDE, AND PROCEEDING THENCE NORTH 8 DEGREES 53 MINUTES 40 SECONDS EAST,
321.33 FEET TO THE SOUTHERLY BOUNDARY OF J. E. BEAUFAIT SUBDIVISION NO. 1 (LIBER
42, PAGE 84 OF PLATS); THENCE SOUTH 72 DEGREES 01 MINUTES EAST 109.05 FEET ALONG
SAID SOUTHERLY BOUNDARY; THENCE SOUTH 8 DEGREES 53 MINUTES 40 SECONDS WEST,
318.27 FEET TO THE NORTHERLY LINE OF VERNIER ROAD; THENCE NORTH 72 DEGREES 10
MINUTES 40 SECONDS WEST, 109.0 FEET TO THE POINT OF BEGINNING, EXCEPT THE
SOUTHERLY 27.35 FEET DEEDED TO THE MICHIGAN STATE HIGHWAY COMMISSION, IN LIBER
14956, PAGE 559, WAYNE COUNTY RECORDS.

ALSO:

PARCEL 2

PART OF LOTS 1 AND 2 OF THE PLAT OF PARTITION OF PRIVATE CLAIM 249, THE ESTATE
OF CHAS. VERNIER, AS RECORDED IN LIBER 67 OF DEEDS, PAGE 517, WAYNE COUNTY
RECORDS, DESCRIBED AS: BEGINNING AT A POINT ON THE NORTHERLY LINE OF VERNIER
ROAD, 66 FEET WIDE, AS NOW ESTABLISHED, MEASURED SOUTH 72 DEGREES 10 MINUTES 40
SECONDS EAST, A DISTANCE OF 259.00 FEET FROM THE INTERSECTION OF SAID NORTHERLY
LINE WITH THE EASTERLY LINE OF MACK AVENUE, 143 FEET WIDE, AS NOW ESTABLISHED;
THENCE NORTH 08 DEGREES 53 MINUTES 40 SECONDS EAST, A DISTANCE OF 318.18 FEET TO
THE SOUTHERLY BOUNDARY OF J. E. BEAUFA1T SUBDIVISION NO. 1 AS RECORDED IN LIBER
42, PAGE 84, OF PLATS, WAYNE COUNTY RECORDS; THENCE SOUTH 72 DEGREES 01 MINUTES
EAST ALONG SAID SOUTHERLY BOUNDARY A DISTANCE OF 20 FEET; THENCE SOUTH 08
DEGREES 53 MINUTES 40 SECONDS WEST A DISTANCE OF 318.27 FEET TO THE NORTHERLY
LINE OF VERNIER ROAD; THENCE NORTH 72 DEGREES 10 MINUTES 40 SECONDS WEST ALONG
SAID NORTHERLY LINE OF VERNIER ROAD, A DISTANCE OF 20 FEET TO THE POINT OF
BEGINNING, EXCEPT THE SOUTHERLY 27.35 FEET DEEDED TO THE MICHIGAN STATE HIGHWAY
COMMISSION IN LIBER 14956, PAGE 559, WAYNE COUNTY RECORDS.

TOGETHER WITH EASEMENTS FOR INGRESS AND EGRESS OVER THE DRIVEWAY AND/OR DRIVE
AISLES AS DEPICTED ON EXHIBIT 3 ATTACHED TO AND MADE PART OF AND DISCLOSED BY
THAT RECIPROCAL EASEMENT BY AND BETWEEN SUNRISE GROSSE POINTE SENIOR LIVING,
L.L.C., A MICHIGAN LIMITED LIABILITY CORPORATION, AND CURIS PROPERTIES LIMITED
PARTNERSHIP, A MICHIGAN LIMITED PARTNERSHIP, DATED AUGUST 30, 2004 AND RECORDED
JUNE 30, 2005 IN LIBER 43017, PAGE 445.

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

AND ALSO DESCRIBED per plat of survey prepared by Professional Engineering
Associates dated August 4, 2004, last revised June 7, 2007, Job No. 2003-251 as:

Part of Lots 1 and 2 of Plat of Partition of Private Claim 249, The Estate of
Chas. Vernier, as recorded in Liber 67 of Deeds, Page 517, Wayne County Records,
being part of the City of Grosse Pointe Woods, Wayne County, Michigan, described
as: Commencing at the intersection of the Southerly line of said Private Claim
249, also being the Northerly line of Vernier Road, 66 feet wide, with the
Easterly line of Mack Avenue, 143 feet wide; thence along said Northerly line
S72°10’40”E, 150.00 feet; thence N08°37”52”E, 27.35 feet to the Point of
Beginning; thence continuing N08°37’52”E, 290.90 feet to the Southerly line of
J. E. Beaufait Subdivision No.l as recorded in Liber 42, Page 84 of Plats, Wayne
County Records; thence along said Southerly line S72°12’28”E, 129.05 feet;
thence S08°38’31”W, 290.96 feet to Northerly line of Vernier Road, 60 foot half
width; thence along said Northerly line N72°10’40”W, 129.01 feet to the Point of
Beginning.

APN: 40-004-99-0006-700

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Huntington Beach

Real property in the City of Huntington Beach, County of Orange, State of
California, described as follows:

PARCEL A:

PARCEL 2 OF PARCEL MAP NO. 83-562, AS SHOWN ON A MAP FILED IN BOOK 183, PAGES
44, 45 AND 46 OF PARCEL MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA.

EXCEPTING ALL OIL, GAS AND OTHER HYDROCARBONS, GEOTHERMAL RESOURCES, AND ALL
OTHER MINERALS WHETHER SIMILAR TO THOSE HEREIN SPECIFIED OR NOT, WITHIN OR THAT
MAY BE PRODUCED FROM SAID PROPERTY, TOGETHER WITH THE SOLE AND EXCLUSIVE RIGHT
TO DRILL AND MAINTAIN WELLS OR OTHER WORKS INTO OR THROUGH SAID PROPERTY AND THE
ADJOINING STREETS, ROADS AND HIGHWAYS BELOW A DEPTH OF 500 FEET AND TO PRODUCE,
INJECT, STORE AND REMOVE FROM AND THROUGH SUCH WELLS OR WORKS, OIL, GAS WATER,
AND OTHER SUBSTANCES OF WHATEVER NATURE, INCLUDING THE RIGHT TO PERFORM BELOW
SAID DEPTH ANY AND ALL OPERATIONS DEEMED NECESSARY OR CONVENIENT FOR THE
EXERCISE OF SUCH RIGHTS, BUT WITHOUT THE RIGHT OF SURFACE ENTRY OR THE FIRST 500
FEET BELOW THE SURFACE OF THE PROPERTY, AS RESERVED BY HUNTINGTON BEACH COMPANY
IN DEED RECORDED OCTOBER 31, 1990 AS INSTRUMENT NO. 90-577992 OF OFFICIAL
RECORDS.

ALSO EXCEPTING ANY AND ALL WATER RIGHTS OR INTERESTS THEREIN, TOGETHER WITH THE
RIGHT TO GRANT AND TRANSFER ALL OR A PORTION OF THE SAME, NO MATTER HOW ACQUIRED
BY GRANTOR, AND OWNED OR USED BY GRANTOR IN CONNECTION WITH OR

WITH RESPECT TO THE PROPERTY, TOGETHER WITH THE RIGHT AND POWER TO EXPLORE,
DRILL, REDRILL, REMOVE AND STORE THE SAME FROM THE PROPERTY OR TO DIVERT OR
OTHERWISE UTILIZE SUCH WATER, RIGHTS OR INTEREST ON ANY OTHER PROPERTY, WHETHER
SUCH WATER RIGHTS SHALL BE RIPARIAN, OVERLYING, APPROPRIATIVE, LITTORAL,
PERCOLATING, PRESCRIPTIVE, ADJUDICATED, STATUTORY OR CONTRACTUAL; BUT WITHOUT,
HOWEVER, ANY RIGHT TO ENTER UPON THE SURFACE OF THE PROPERTY IN THE EXERCISE OF
SUCH RIGHTS OR UPON THE UPPER THIRTY (30) FEET OF THE SUBSURFACE OF THE
PROPERTY, AND ALSO WITHOUT ANY RIGHTS TO ENTER UPON THE SUBSURFACE THEREUNDER IN
SUCH MANNER AS TO MATERIALLY IMPAIR THE SUPPORT OR STABILITY OF ANY STRUCTURES
OR IMPROVEMENTS FROM TIME TO TIME LOCATED ON THE PROPERTY, AS RESERVED BY
HUNTINGTON BEACH COMPANY IN DEED RECORDED OCTOBER 31, 1990 AS INSTRUMENT NO.
90-577992 OF OFFICIAL RECORDS.

FURTHER EXCEPTING ALL RIGHTS TO WATER WITHIN, UNDERLYING OR PRODUCED FROM THE
REAL PROPERTY AND ADJOINING STREETS, ROADS AND HIGHWAYS AND THE USE AND
ENJOYMENT THEREOF, EXCLUDING ONLY THOSE RIGHTS TO SURFACE WATER THAT ARE NOT
ATTACHED TO OR A PART OF RIGHTS TO SUBSURFACE WATER, WITHOUT, HOWEVER, ANY
RIGHTS OF SURFACE ENTRY EXCEPT AS SPECIFIED THEREIN, AS RESERVED IN THE DEED
FROM PACIFIC COAST HOMES RECORDED MAY 9, 1996 AS INSTRUMENT NO. 19960234822 OF
OFFICIAL RECORDS.

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

PARCEL B:

A PERMANENT, NON-EXCLUSIVE EASEMENT FOR VEHICULAR AND PEDESTRIAN ACCESS OVER
THAT PORTION OF PARCELS 2 AND 3 OF PARCEL MAP NO. 83-562, AS SHOWN ON A MAP
FILED IN BOOK 144, PAGES 4 AND 5 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF ORANGE COUNTY, CALIFORNIA DESCRIBED AS FOLLOWS:

BEGINNING AT THE SOUTHEAST CORNER OF SAID PARCEL 3; THENCE NORTH 18° 25’ 23”
EAST ALONG THE EASTERLY LINE OF SAID PARCELS 2 AND 3, A DISTANCE OF 185.26 FEET;
THENCE NORTH 00° 31’ 18” EAST ALONG THE EASTERLY LINE OF SAID PARCEL 2, A
DISTANCE OF 16.38 FEET TO A POINT ON A NON-TANGENT CURVE CONCAVE NORTHWESTERLY
HAVING A RADIUS OF 300.00 FEET, A RADIAL LINE TO SAID POINT BEARS SOUTH 74° 39’
10” EAST; THENCE SOUTHWEST ALONG SAID CURVE 101.18 FEET THROUGH A CENTRAL ANGLE
OF 19° 19’ 29” TO A POINT ON A REVERSE CURVE CONCAVE SOUTHEASTERLY, HAVING A
RADIUS OF 360.00 FEET, A RADIAL LINE TO SAID POINT BEARS NORTH 55° 19’ 41” WEST;
THENCE SOUTHWEST ALONG SAID CURVE 80.97 FEET THROUGH A CENTRAL ANGLE OF 12° 53’
13” TO A POINT ON A REVERSE CURVE CONCAVE NORTHWESTERLY, HAVING A RADIUS OF
30.00 FEET, A RADIAL LINE TO SAID POINT BEARS SOUTH 68° 12’ 54” EAST; THENCE
SOUTHWEST ALONG SAID CURVE 16.14 FEET THROUGH A CENTRAL ANGLE OF 30° 49’ 31”;
THENCE SOUTH 48° 21’ 17” EAST 13.17 FEET TO A POINT ON THE SOUTH LINE OF SAID
PARCEL 3, SAID POINT BEING ON A CURVE CONCAVE SOUTHWESTERLY HAVING A RADIUS OF
850.00 FEET, A RADIAL LINE TO SAID POINT BEARS NORTH 19° 44’ 46” EAST; THENCE
SOUTHEASTERLY ALONG SAID CURVE AND SOUTH LINE OF SAID PARCEL 3, A DISTANCE OF
23.39 FEET THROUGH A CENTRAL ANGLE OF 1° 34’ 36” TO THE POINT OF BEGINNING.

APN: 023-010-18

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Pacific Beach (La Jolla)

Real property in the City of Pacific Beach, County of San Diego, State of
California, described as follows:

LOTS 1 THROUGH 6 INCLUSIVE IN BLOCK 6 OF PACIFIC BEACH VISTA TRACT, IN THE CITY
OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF
NO. 916, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, AUGUST
4, 1904

APN: 415-162-20

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La Palma

Real property in the City of La Palma, County of Orange, State of California,
described as follows:

PARCEL 1 AS SHOWN ON EXHIBIT “B” OF LLA 2000-101, RECORDED APRIL 5, 2002 AS
INSTRUMENT NO. 20020286730 AND RE-RECORDED APRIL 23, 2002 AS INSTRUMENT NO.
2002033209 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA.

TOGETHER WITH RIGHTS, BENEFITS AND/OR EASEMENTS NON-EXCLUSIVE VEHICULAR AND
PEDESTRIAN INGRESS/EGRESS AND AUTOMOBILE PARKING GRANTED FOR THE BENEFIT OF THE
SALE PARCEL BY GRANT OF EASEMENTS AND RECIPROCAL EASEMENTS DATED APRIL 24, 2002,
BY AND BETWEEN VHS OF ORANGE COUNTY, INC., A DELAWARE CORPORATION AND LA PALMA
ASSISTED LIVING, LLC, A DELAWARE LIMITED LIABILITY COMPANY, RECORDED APRIL 30,
2002 AS INSTRUMENT NO. 20020362001 IN OFFICIAL RECORDS OF ORANGE COUNTY,
CALIFORNIA.

APN: 263-634-05, 263-634-06 (New) and 263-634-20 (Old)

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

Newtown Square

ALL THAT CERTAIN tract or parcel of land SITUATE in Newtown Township, Delaware
County, Pennsylvania as shown on Plan Volume 23, page 271 and bounded and
described as follows:

BEGINNING at the Westerly corner in common of Lots 1 and 2 on the title line
through the bed of Newtown Street Road (S.R. 0252) at a point in line of lands
now or late of Pulte Home Corp.; thence from the point of beginning, along said
title line through the bed of Newtown Street Road, along said lands of Pulte
Home Corp. and along lands now or late of Paper Mill Holding Company, LTD North
18 degrees 51 minutes 16 seconds East 420.15 feet to a comer of lands now or
late of Newtown Street Road Associates; thence leaving said title line through
the bed of Newtown Street Road, crossing the Easterly widened right of way line
thereof 34.10 feet distant, and along said lands of Newtown Street Road
Associates, South 72 degrees 06 minutes 27 seconds East 368.68 feet to a corner
of Lot 3; thence along Lot 3, South 09 degrees 56 minutes 01 seconds East 654.06
feet to a point on line of lands now or late of Suburban Swimming Club; thence
along said lands, South 29 degrees 52 minutes 44 seconds West 230.95 feet to a
corner of Lot 1; thence along Lot 1, the following three (3) courses and
distances: (1) North 26 degrees 06 minutes 02 seconds West 461.74 feet;
(2) North 46 degrees 35 minutes 38 seconds West 112.65 feet; (3) crossing said
widened easterly right of way line of Newtown Street Road 175.80 feet distant,
North 71 degrees 08 minutes 44 seconds West 210.73 feet to the point and place
of BEGINNING.

Together with Easement benefiting said land for a 50 foot wide non-exclusive,
perpetual ingress and egress easement for vehicular and pedestrian traffic and
an easement for the installation, construction, inspection, maintenance,
replacement, repair and use of utilities and storm water facilities over Lot 1
as contained in Joint Obligations and Easement Agreement by Paper Mill Holding
Company, Ltd., and Newtown Square Assisted Living, L.L.C. in Record Book 2519
page 2334.

AND ALSO DESCRIBED on an ALTA/ACSM Land Title Survey prepared by Chester Valley
Engineers, Inc., Paoli, Pennsylvania dated April 3, 2007, last revised June 6,
2007, Project No. 18225 as:

BEGINNING at the westerly corner in common of Lots 1 and 2 on the widened
easterly right of way line of Newtown Street Road - S.R. 0252, said right of way
line being parallel with and 40 feet easterly from the centerline thereof;
thence from the point of beginning, along said right of way line, North 18
degrees 44 minutes 32 seconds East 420.72 feet to a point on line of lands now
or late of Newtown Street Road Associates; thence leaving said right of way
line, along said lands, South 72 degrees 06 minutes 27 seconds East 334.58 feet
to a corner of Lot 3; thence along Lot 3, South 09 degrees 56 minutes 01 second
East 654.06 feet to a point on line of lands now or late of Suburban Swimming
Club; thence along said lands, South 29 degrees 52 minutes 44 seconds West
230.95 feet to a corner of Lot 1; thence along Lot 1, the following three
(3) courses and distances: (1) North 26 degrees 06 minutes 02 seconds West
461.74 feet; (2) North 46 degrees 35 minutes 38 seconds West 112.65 feet;
(3) North 71 degrees 08 minutes 44 seconds West 175.80 feet to the point of
beginning.

BEING Tax Parcel No. 30-00-01717-10.

BEING the same premises which Paper Mill Holding Company, Ltd. by Deed dated
9/5/2002 and recorded 9/6/2002 in the County of Delaware in Record Book 2519
page 2327, conveyed unto Newtown Square Assisted Living, L.L.C., in fee.

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

Playa Vista

Real property in the City of Playa Vista, County of Los Angeles, State of
California, described as follows:

PARCEL 2 OF THAT CERTAIN CERTIFICATE OF COMPLIANCE FOR LOT LINE ADJUSTMENT
RECORDED JANUARY 9, 2004 AS INSTRUMENT NO. 04-60805, OFFICIAL RECORDS, AND
DESCRIBED AS FOLLOWS:

LOTS 11 AND 12 OF TRACT NO. 49104-03, IN THE CITY OF LOS ANGELES, COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 1240 PAGES 26 THROUGH 32,
INCLUSIVE, OF MAPS, RECORDS OF SAID COUNTY.

EXCEPT THEREFROM THAT PORTION OF SAID LOT 11 LYING NORTHWESTERLY OF A LINE
PARALLEL WITH AND 312.00 FEET NORTHWESTERLY OF THE SOUTHEASTERLY LINE OF LOT 12
OF SAID TRACT NO. 49104-03.

ALSO EXCEPT THEREFROM THE RIGHT TO ALL OIL, GAS AND OTHER HYDROCARBONS IN SAID
LAND, TOGETHER WITH THE EXCLUSIVE RIGHT TO USE PERPETUALLY THE SUBSURFACE OIL
AND/OR GAS FORMATIONS FOR INSPECTING, STORING AND WITHDRAWING NATURAL GAS
THEREIN AND THEREFROM AND FOR REPRESSURING THE SAME, BUT NOT EXCLUDING OR
RESERVING, HOWEVER, THE RIGHT TO GO UPON OR USE THE SURFACE OF SAID LAND OR ANY
PART OR PORTIONS THEREOF, AS RESERVED BY THE UNITED STATES OF AMERICA, AND ITS
ASSIGNS, BY DECREE ENTERED FEBRUARY 5, 1952 IN UNITED STATES DISTRICT COURT,
SOUTHERN DISTRICT OF CALIFORNIA, CENTRAL DIVISION, CASE NO. 2454-B, CIVIL, A
CERTIFIED COPY OF WHICH WAS RECORDED FEBRUARY 18, 1952 AS INSTRUMENT NO. 3526,

IN BOOK 38244 PAGE 397 OF OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORDER
OF SAID COUNTY.

RESERVING THEREFROM ANY AND ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS,
NATURAL GAS RIGHTS AND OTHER HYDROCARBONS BY WHATSOEVER NAME KNOWN, GEOTHERMAL
STEAM OR OTHER RESOURCES, AND ALL PRODUCTS DERIVED FROM ANY OF THE FOREGOING,
THAT MAY BE WITHIN OR UNDER THE PARCEL, TOGETHER WITH THE PERPETUAL RIGHT OF
DRILLING, MINING OR EXPLORING AND OPERATING THEREFORE AND STORING IN AND
REMOVING THE SAME FROM THE LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO
WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN THOSE CONVEYED
HEREBY, OIL OR GAS WELLS, TUNNELS AND SHAFTS INTO, THROUGH OR ACROSS THE
SUBSURFACE OF THE PARCEL, AND TO BOTTOM SUCH WHIPSTOCKED OR DIRECTIONALLY
DRILLED WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR
LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR, DEEPEN AND
OPERATE ANY SUCH WELLS OR MINES; WITHOUT HOWEVER, THE RIGHT TO ENTER UPON,
DRILL, MINE, STORE, EXPLORE AND OPERATE THROUGH THE SURFACE OR THE UPPER 500
FEET OF THE SUBSURFACE OF THE PARCEL.

TOGETHER WITH THE RIGHTS, IF ANY, GRANTED IN THE MASTER DECLARATION OF
COVENANTS, CONDITIONS, RESTRICTIONS AND RESERVATIONS OF EASEMENTS FOR PLAYA
VISTA, A MASTER PLANNED COMMUNITY RECORDED ON FEBRUARY 7, 2000, AS INSTRUMENT
NO. 00-0187083 OF THE OFFICIAL RECORDS OF SAID COUNTY, AND ANY AMENDMENTS OR
SUPPLEMENTS THERETO.

APN: 4211-022-009, 4211-022-010 and 4211-022-011

APN:

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Sacramento

Real property in the City of Sacramento, County of Sacramento, State of
California, described as follows:

ALL THAT PORTION OF LOT 49 AS SHOWN ON THE PLAT OF “SWANSTON ACRES”, RECORDED IN
THE OFFICE OF THE COUNTY RECORDER OF SACRAMENTO COUNTY, MAY 23, 1922, IN BOOK 16
OF MAPS, MAP NO. 53, DESCRIBED AS FOLLOWS:

COMMENCING AT A POINT ON THE EAST LINE OF SAID LOT 49 AND ON THE CENTER LINE OF
A 60 FOOT COUNTY ROAD RUNNING NORTH AND SOUTH ALONG THE SAID EAST LINE OF SAID
LOT 49, LOCATED NORTH 1° 46’ 30” WEST, 216.20 FEET FROM THE SOUTHEAST CORNER OF
SAID LOT 49 (SAID POINT OF COMMENCEMENT BEARS SOUTH 1° 46” 30” EAST, 788 FEET
FROM THE NORTHEAST CORNER OF SAID LOT 49); THENCE SOUTH 89° 02’ WEST 453.30 FEET
TO A POINT ON THE WEST LINE OF SAID LOT 49 (WHICH POINT BEARS NORTH 1° 46’ 30”
WEST, 129.70 FEET FROM THE SOUTHWEST CORNER OF SAID LOT 49); THENCE NORTH 1° 46’
30” WEST, ALONG THE WEST LINE OF SAID LOT 49, 186 FEET TO A POINT, (WHICH POINT
BEARS SOUTH 1° 46’ 30” EAST 602 FEET FROM THE NORTHWEST CORNER OF SAID LOT 49);
THENCE NORTH 89° 02’ EAST, 453.30 FEET TO A POINT ON THE EAST LINE OF SAID LOT
49 AND ON THE CENTER LINE OF SAID 60 FOOT COUNTY ROAD, (WHICH POINT BEARS SOUTH
1° 46’ 30” EAST, 602 FEET FROM THE NORTHEAST CORNER OF SAID LOT 49); THENCE
SOUTH 1° 46’ 30” EAST, ALONG THE EAST LINE OF LOT 49 AND ALONG THE CENTER LINE
OF SAID 60 FOOT COUNTY ROAD, 186 FEET TO THE POINT OF COMMENCEMENT.

APN: 294-0180-012-000

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San Marino (Gabriel)

Real property in the City of San Gabriel, County of Los Angeles, State of
California, described as follows:

PARCEL 1:

THAT PORTION OF LOT 11 IN BLOCK 15 SUBDIVISION NO. 3, SUNNY SLOPE ESTATE, AS PER
MAP RECORDED IN BOOK 55 PAGES 33 AND 34 OF MISCELLANEOUS RECORDS, IN THE OFFICE
OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT IN THE NORTHEASTERLY LINE OF SAID LOT AT THE MOST NORTHERLY
CORNER OF TRACT 12862, AS PER MAP RECORDED IN BOOK 263 PAGES 33 AND 34 OF MAPS,
IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY; THENCE ALONG THE
NORTHWESTERLY LINE OF SAID TRACT, SOUTH 42 DEGREES 03’ 38” WEST 80.58 FEET TO
THE ANGLE POINT THEREIN; THENCE SOUTH 70 DEGREES 22’ 50” WEST 207.27 FEET;
THENCE NORTH 19 DEGREES 37’ 10” WEST TO THE NORTHERLY LINE OF SAID LOT 11;
THENCE EASTERLY AND SOUTHEASTERLY ALONG THE NORTHERLY AND NORTHEASTERLY
BOUNDARIES OF SAID LOT TO THE POINT OF BEGINNING.

EXCEPT THE INTEREST OF THE COUNTY OF LOS ANGELES, IN HUNTINGTON DRIVE AND SUNNY
SLOPE DRIVE, AS GRANTED BY DEED RECORDED ON AUGUST 1, 1945, IN BOOK 22232 PAGE
83, OFFICIAL RECORDS.

PARCEL 2:

A NON-EXCLUSIVE EASEMENT TO CONSTRUCT, OPERATE, USE, MAINTAIN, REPAIR,
RECONSTRUCT, AND REPLACE OF AN UNDERGROUND STORM DRAIN BY CONNECTING TO THE
EXISTING UNDERGROUND STORM DRAIN ON THE BURDENED PROPERTY AND AN ACCESS EASEMENT
FOR CONSTRUCTION, MAINTENANCE, REPAIR AND REPLACEMENT OF THE EXISTING
UNDERGROUND STORM DRAIN ON THE BURDENED PROPERTY AS CREATED IN “GRANT OF
EASEMENT” AFFECTING THOSE PORTIONS AS DELINEATED IN EXHIBITS “C” AND “D”
THEREIN, SUBJECT TO THE TERMS AND PROVISIONS PROVIDED THEREIN, RECORDED JULY 17,
2003 AS INSTRUMENT NO. 03-2037032 AND “GRANT OF RECIPROCAL EASEMENT” AFFECTING
THOSE PORTIONS AS DELINEATED IN EXHIBITS “C” AND “D” THEREIN, SUBJECT TO THE
TERMS AND PROVISIONS PROVIDED THEREIN, RECORDED JULY 17, 2003 AS INSTRUMENT NO.
03-2037033.

APN: 5376-021-001

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Seal Beach

Real property in the City of Seal Beach, County of Orange, State of California,
described as follows:

PARCEL A:

PARCEL 4 OF PARCEL MAP NO. 97-165, AS SHOWN ON A MAP FILED IN BOOK 307, PAGES 5,
6 AND 7 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY,
CALIFORNIA.

EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN THE LAND DESCRIBED IN THE DEED
TO THE CITY OF SEAL BEACH, RECORDED JULY 12, 2000 AS INSTRUMENT NO. 20000364428
OF OFFICIAL RECORDS OF SAID ORANGE COUNTY.

PARCEL B:

APPURTENANT NON-EXCLUSIVE EASEMENTS FOR VEHICULAR AND PEDESTRIAN ACCESS, INGRESS
AND EGRESS PURPOSES, EMERGENCY AND UTILITY AND UTILITIES FACILITIES, AS SAID
EASEMENTS ARE SET FORTH IN THAT CERTAIN DECLARATION OF COVENANTS, CONDITIONS AND
RESTRICTIONS AND GRANT OF RECIPROCAL EASEMENTS RECORDED AS INSTRUMENT NO.
20000336172 AND CORRECTED BY CORRECTIVE DECLARATION OF COVENANTS, CONDITIONS AND
RESTRICTIONS AND GRANT OF RECIPROCAL EASEMENTS RECORDED JUNE 30, 2000 AS
INSTRUMENT NO. 20000345292 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA.

PARCEL C:

APPURTENANT NON-EXCLUSIVE EASEMENTS FOR VEHICULAR AND PEDESTRIAN ACCESS, INGRESS
AND EGRESS, PURPOSES, CONSTRUCTION, MAINTENANCE AND REPLACEMENT OF UTILITIES AND
SIGN EASEMENTS, AS SAID EASEMENTS ARE RESERVED IN THAT CERTAIN GRANT DEED
RECORDED AS INSTRUMENT NO. 2000356783 AND CORRECTED BY DOCUMENT RECORDED JULY
12, 2000 AS INSTRUMENT NO. 20000364428 OF OFFICIAL RECORDS OF ORANGE COUNTY,
CALIFORNIA.

PARCEL D:

RIGHTS AND BENEFITS RUNNING WITH THE LAND AS CONTAINED IN DEVELOPMENT AGREEMENT
AND AMENDMENT TO MEMORANDUM OF UNDERSTANDING DATED JULY 14, 1997 BY AND BETWEEN
CITY OF SEAL BEACH AND BIXBY RANCH COMPANY, RECORDED MARCH 3, 1999 AS DOCUMENT
NUMBER 19990152663 AMONG THE OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA.

APN: 217-371-07 and 217-371-08

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Studio City

THE NORTH 230 FEET OF SOUTH 330 FEET OF WEST 155 FEET OF LOT 16 OF TRACT NO.
2590, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS
PER MAP RECORDED IN BOOK 26 PAGE 57 OF MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY.

EXCEPT ANY PORTION THEREOF LYING WITHIN THE LINES OF HORTENSE STREET AS SHOWN ON
MAP OF TRACT NO. 4877 IN BOOK 130 PAGE 3 OF MAPS.

APN: 2362-019-012

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Wilmington

ALL that certain lot, piece or parcel of land with the buildings thereon
erected, situate in Brandywine Hundred, New Castle County and State of Delaware,
known as 2215 Shipley Road, being Lot No. 1 on the Record Major Land Development
Plan for Manorhouse Retirement Centers, Inc., prepared by Landmark Engineering,
Inc. and recorded on July 26, 2000 in the Office of the Recorder of Deeds in and
for New Castle County, State of Delaware, in Microfilm No. 14249, as follows, to
wit:

BEGINNING at an iron pipe found in concrete in the easterly right-of-way line of
Shipley Road (60 feet wide) and a common corner with lands, now or formerly, of
Ray Atwood Weldin and Jean Consegilio Weldin, husband and wife, said Beginning
point being further located from the southerly end of a 30 foot radius junction
curve joining the said easterly right-of-way line of Shipley Road with the
southerly right-of-way line of Delwynn Drive (50 feet wide) by the following two
(2) courses: (1) by the said easterly right-of-way line of Shipley Road South
03° 22’ 00” East, 80.00 feet to an iron pipe found in concrete at the
southwesterly corner of Lot 1, as shown on the Final Street and Lot Plan of
“Delwynn”, on file in the Recorder of Deeds Office in and for New Castle County,
Delaware, in Microfilm No. 808; (2) continuing by the said easterly right-of-way
line of Shipley Road South 03° 22’ 00” East, 541.09 feet to the point of
Beginning; thence from the point of Beginning, by said lands of Weldin, North
86° 38’ 24” East, 628.69 feet to the centerline of Shellpot Creek, passing over
an iron pipe found in concrete, 603.01 feet from the beginning of this course;
thence by the said centerline of Shellpot Creek, the following ten (10) courses:
(1) South 13°46’ 53” West, 70.79 feet; (2) South 33° 34’ 00” West, 25.71 feet;
(3) South 02° 24’ 40” East, 109.49 feet; (4) South 12° 05’ 19” West, 69.60 feet;
(5) South 37° 21’ 10” West, 31.04 feet; (6) South 80° 39’38” West, 45.36 feet;
(7) South 37° 42’ 32” West, 67.68 feet; (8) South 04° 25’ 09” East, 59.48 feet;
(9) South 27° 38’ 52” East, 59.27 feet; (10) South 01° 27’ 36” West, 71.71 feet
to a common corner with lands, now or formerly, of Helen Plummer; thence by said
lands of Plummer, the following two (2) courses: (1) North 75° 52’ 31” West,
311.24 feet to an iron pipe found in concrete; (2) North 72° 18’ 05” West,
197.45 feet to an iron pipe set in the aforesaid easterly right-of-way line of
Shipley Road; thence by the said easterly right-of-way line of Shipley Road, the
following two (2) courses: (1) North 03° 27’ 00” West, 338.52 feet; and
(2) North 03” 22’ 00” West, 26.00 feet to the point of Beginning.

TOGETHER WITH all rights, reservations and easements as set forth in the
following Easement Agreements: (1) Easement between Helen Plummer and Richard H.
Plummer and New Castle County dated November 12, 1999 and recorded in the Office
of the Recorder of Deeds in and for New Castle County, State of Delaware, in
Deed Book 2746, Page 293 and more particulary described as:

BEGINNING IN THE EASTERLY RIGHT-OF-WAY LINE OF SHIPLEY ROAD, (60’ WIDE); SAID
POINT OF BEGINNING BEING LOCATED FROM THE SOUTHERLY END OF A 30’ RADIUS JUNCTION
CURVE JOINING THE SOUTHERLY RIGHT-OF-WAY LINE OF DELWYNN DRIVE, (50’ WIDE) WITH
THE EASTERLY RIGHT-OF-WAY LINE OF SHIPLEY ROAD, (60’ WIDE), BY THE FOLLOWING TWO
(2) COURSES:

1. BY THE SAID EASTERLY LINE OF SHIPLEY ROAD, S 03° 22’ 00” E. 647.09’ TO AN
ANGLE POINT, PASSING OVER AN IRON PIPE IN CONCRETE FOUND AT 80.00’ AND ANOTHER
IRON PIPE IN CONCRETE FOUND AT 621.09’ FROM THE BEGINNING OF THIS COURSE;

2. STILL BY THE EASTERLY LINE OF SHIPLEY ROAD S 03° 27’ 00” E, 577.17’ TO THE
POINT OF BEGINNING, PASSING OVER AN IRON PIPE AT 338.52’ FROM THE BEGINNING OF
THIS COURSE;

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

THENCE, FROM THE POINT OF BEGINNING, BY THE WESTERLY LINE OF THIS 40’ WIDE
SANITARY SEWER EASEMENT N 13° 33’ 23” E, 130.22’ TO A DIVISION LINE BETWEEN
LANDS, NOW OR FORMERLY, OF HELEN PLUMMER;

THENCE, BY THE SAME, S 72° 25’ 00” E, 40.10’;

THENCE, BY THE EASTERLY LINE OF THIS 40’ WIDE SANITARY SEWER EASEMENT S 13° 33’
23” W, 179.31’ TO THE NORTHERLY LINE OF LANDS, NOW OR FORMERLY, OF ANNA M.
WARING; THENCE, PARTIALLY BY THE SAME, N 68° 30’ 00” W, 25.44’ TO THE AFORESAID
EASTERLY LINE OF SHIPLEY ROAD;

THENCE, BY THE SAME, N 03° 27’ 00” W, 50.60’ TO THE POINT OF BEGINNING.

and (2) Easement between Helen Plummer and Richard H. Plummer and New Castle
County dated November 18, 1999 and recorded in the Office of the Recorder of
Deeds in and for New Castle County, State of Delaware, in Deed Book 2746, Page
297, and more particularly described as:

BEGINNING IN THE SOUTHERLY LINE OF LANDS, NOW OR FORMERLY, OF HELEN PLUMMER;
SAID. BEGINNING POINT BEING LOCATED FROM THE SOUTHERLY END OF A 30’ RADIUS
JUNCTION CURVE JOINING THE SOUTHERLY RIGHT-OF-WAY LINE OF DELWYNN DRIVE, (50’
WIDE), WITH THE EASTERLY RIGHT-OF-WAY LINE OF SHIPLEY ROAD, (60’ WIDE) BY THE
FOLLOWING THREE (3) COURSES:

1. BY THE SAID EASTERLY LINE OF SHIPLEY ROAD S 03° 22’ 00” E. 647.09’ TO AN
ANGLE POINT, PASSING OVER AN IRON PIPE IN CONCRETE FOUND AT 80.00’ AND ANOTHER
IRON PIPE IN CONCRETE FOUND AT 621.09’ FROM THE BEGINNING OF THIS COURSE;

2. STILL BY THE SAID EASTERLY LINE OF SHIPLEY ROAD S 03° 27’ 00” E. 338.52’ TO
AN IRON PIPE;

3. BY THE AFORESAID SOUTHERLY LINE OF LANDS OF HELEN PLUMMER, S 72° 18’ 05” E.
69.9’ TO THE SAID POINT OF BEGINNING;

THENCE FROM THE POINT OF BEGINNING, CONTINUING ALONG THE SOUTHERLY LINE OF LANDS
OF HELEN PLUMMER S 72° 18’ 05” E, 40.11’;

THENCE, BY THE EASTERLY LINE OF THIS 40’ WIDE SANITARY SEWER EASEMENT S 13° 33’
23” W, 92.86’ TO A DIVISION LINE BETWEEN OTHER LANDS OF THE SAID HELEN PLUMMER;

THENCE, BY THE SAME N 72° 25’ 00” W 40.10’;

THENCE, BY THE WESTERLY LINE OF THIS 40’ WIDE SANITARY SEWER EASEMENT N 13° 33’
23” E 92.94’ TO THE POINT OF BEGINNING.

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Woodland Hills

Real property in the City of Los Angeles, County of Los Angeles, State of
California, described as follows:

PARCEL “E”, IN THE CITY OF LOS ANGELES, AS SHOWN ON PARCEL MAP L. A. NO. 2662,
AS PER MAP FILED IN BOOK 45 PAGE 67 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY.

APN: 2166-033-035

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Exhibit 5.02 (a)

Facility Information

 

                      Unit Mix      Total
Units      Total
Residents      Square
Footage  

AL US

  

Address

               AL      ALZ      IL           

Bonita

   3302 Bonita Road    Chula Vista      CA         42         17         0      
  59         71         44,845   

Boulder

   3975 28th Street    Boulder      CO         62         22         0        
84         99         63,734   

Grosse Pointe

   21304 Mack   

Grosse

Pointe

                    

Woods

   Avenue   

Woods

Grosse

     Ml         38         19         0         57         67         41,000   

Grosse Pointe II

(Vernier)

  

1850 Vernier

Road

  

Pointe

Woods

     Ml         0         38         0         38         46         30,000   

Huntington Beach

   7401 Yorktown Avenue   

Huntington

Beach

     CA         65         30         0         95         114         68,996   

Pacific Beach

(La Jolla)

  

810 Turquoise

Street

   Pacific Beach      CA         31         19         0         50         61
        40,370   

La Palma

   5321 La Palma Avenue    La Palma      CA         43         16         0   
     59         71         44,063   

Newtown Square

  

333 South

Newtown Street

Road

  

Newtown

Square

     PA         57         20         0         77         92         54,752   

Playa Vista

  

5555 Playa Vista

Drive

   Playa Vista      CA         46         33         0         79         97   
     67,180   

Sacramento

  

345 Munroe

Street

   Sacramento      CA         35         17         0         52         62   
     37,623   

San Marino

  

8332 Huntington

Drive

   San Gabriel      CA         35         17         0         52         63   
     39,569   

Seal Beach

  

3850 Lampson

Avenue

   Seal Beach      CA         44         36         75         55         177   
     131,247   

Studio City

  

4610 Cold water

Canyon Avenue

   Studio City      CA         59         21         0         80         96   
     60,000   

Wilmington

  

2215 Shipley

Road

   Wilmington      DE         54         15         0         69         82   
     53,975   

Woodland Hills

  

20461 Ventura

Boulevard

  

Woodland

Hills

     CA         62         23         0         85         102         62,000   
                                                                       673      
  343         75         1,091         1,300      

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

Exhibit 5.02 (a)

Facility Information

Bonita, CA

* Wood framed interior and exterior on concrete slab on grade

Assisted Living

Alzheimer’s Care

Hospice

Boulder, CO

* Wood and steel framed building on continuous spread and pad footings

Assisted Living

Alzheimer’s Care

Hospice

Grosse Pointe Woods, MI

* Steel framed building on continuous spread and pad footings

Assisted Living

Alzheimer’s Care

Grosse Pointe Woods (Vernier), MI

* Steel framed building on continuous spread and pad footings

Alzheimer’s Care

Short-term Stays

Hospice

Huntington Beach, CA

* Wood framed interior and exterior walls on cast-in-place reinforced concrete
slab grade with continuous perimeter and thickened internal footings.

Assisted Living

Alzheimer’s Care

La Jolla, CA

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

Exhibit 5.02 (a)

Facility Information

*Building’s structural system consists of elevated concrete floor and roof decks
supported by concrete columns and beams. The foundations consists of
conventional spread footing and continuous strip footings around the building. A
concrete slab on grade covers the ground below the first floor.

Assisted Living

Alzheimer’s Care

Hospice

La Palma, CA

*Wood framed interior and exterior walls on reinforced concrete slab on grade
with continuous perimeter and thickened internal footings.

Assisted Living

Alzheimer’s Care

Newtown Square, PA

*Foundation is reinforced concrete slab on grade with continuous concrete trench
footings and individual column footings. Elevated floors are composite steel
frame construction with lightweight concrete slab over composite metal deck.

Assisted Living

Alzheimer’s Care

Hospice

Playa Vista, CA

*Steel frame on reinforced concrete piles.

Assisted Living

Alzheimer’s Care

Short-term Stays

Hospice

Sacramento, CA

*Wood frame interior and exterior walls on reinforced concrete slab on grade
with continuous perimeter and thickened internal footings.

Assisted Living

Alzheimer’s Care

San Marino (San Gabriel), CA

*Wood framed walls on concrete slab on grade subterranean parking structure.

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

Exhibit 5.02 (a)

Facility Information

Assisted Living

Alzheimer’s Care

Seal Beach, CA

* Steel frame on reinforced concrete piles.

Independent Living

Assisted Living

Alzheimer’s Care

Studio City, CA

*Elevated concrete floors and roof decks supported by concrete columns and
beams. Interior partition walls are wood framed. Foundation is reinforced
concrete drilled piers on concrete slab.

Assisted Living

Alzheimer’s Care

Wilmington, DE

*Steel frame on reinforced concrete footings, foundation walls and reinforced
slab on grade concrete.

Assisted Living

Alzheimer’s Care

Woodland Hills, CA

*Steel columns and beams support elevated metal decks filled with concrete.
Foundation is concrete slab on grade.

Assisted Living

Alzheimer’s Care

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

Exhibit 5.02 (b)

Regulatory Permits

Bonita, CA

Licensed for: RCFE Dementia

Business License: California State Board of Equalization Seller’s Permit

Certificate of Occupancy

Elevator Permit

Boulder, CO

Licensed for: Assisted Living

Business License: Sales Tax License

Certificate of Occupancy

Grosse Pointe Woods, MI

Licensed for: Home for the Aged

Boiler Certificates

Business License: Sales Tax License

Certificate of Occupancy

Elevator Permit

Grosse Pointe Woods II, MI

Licensed for: Home for the Aged

Boiler Certificates

Business License: Sales Tax License

Certificate of Occupancy

Elevator Permit

Huntington Beach, CA

Licensed for: RCFE Dementia

Business License: City of Huntington Beach Business License

Certificate of Occupancy

La Palma, CA

Licensed for: RCFE Dementia

Business License: Business License Certificate

Certificate of Occupancy

Elevator Permit

FOG Permit

Generator Permit

Newtown Square, PA

Licensed for: Personal Care Services

Business License: Certificate of Registration, Sales Tax License

Certificate of Occupancy

Elevator Permit

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

Food License

Pacific Beach, CA

Licensed for: RCFE Dementia

Business License: Certificate of Payment of Business Tax

Certificate of Occupancy

Elevator Permit

Playa Vista, CA

Licensed for: RCFE

Boiler Certificates

Business License: City of Los Angeles Tax Registration Certificate

Certificate of Occupancy

Elevator Permit

Sacramento, CA

Licensed for: RCFE Hospice

Boiler Certificates

Business License: California State Board of Equalization Seller’s Permit

Certificate of Occupancy

Elevator Permit

San Marino, CA

Licensed for: RCFE

Business License: California State Board of Equalization Seller’s Permit

Certificate of Occupancy

Elevator Permit

Seal Beach, CA

Licensed for: RCFE Dementia

Business License: City of Seal Beach General Business License

Certificate of Occupancy

Elevator Permit

FOG Permit

Studio City, CA

Licensed for: RCFE Delayed

Business License: City of Los Angeles Tax Registration Certificate

Certificate of Occupancy

Elevator Permit

Wilmington, DE

Assisted Living License

Boiler Certificate

Business License: State of Delaware Business License

Certificate of Occupancy

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

Elevator Permit

Food License

Woodland Hills, CA

Licensed for: RCFE

Boiler Certificate

Business License: California State Board of Equalization Seller’s Permit

Certificate of Occupancy

Elevator Permit

Wastewater Permit

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

Exhibit 5.11

ERISA Plans

None.

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

Exhibit 5.20 - Schedule I

Organizational Structure

 

ENTITY

   NAME OF OWNER    JURISDICTION
OF
ORGANIZATION
OF OWNER    OWNERSHIP
PERCENTAGE AL US Development Venture, LLC    Sunrise Senior Living
Investments, Inc.    Virginia    20%    MS Senior Living, L.L.C.    Delaware   
80% Sunrise Senior Living Investments, Inc. (Managing Member of Borrower)   
Sunrise Senior Living,
Inc.    Delaware    100%

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

Exhibit 5.20 - Schedule II

Organizational Structure

 

GUARANTOR

  

NAME OF OWNER

  

JURISDICTION

OF

ORGANIZATION OF
OWNER

  

OWNERSHIP

PERCENTAGE

AL U.S. Pool One, LLC    AL US Development Venture, LLC    Delaware    100% AL
U.S. Pool Two, LLC    AL US Development Venture, LLC    Delaware    100% AL U.S.
Pool Three, LLC    AL US Development Venture, LLC    Delaware    100% AL
California GP, LLC    AL US Development Venture, LLC    Delaware    100% AL
California GP-II, LLC    AL US Development Venture, LLC    Delaware    100% AL
California GP-III, LLC    AL US Development Venture, LLC    Delaware    100%
Boulder Assisted Living, LLC    AL US Pool One, LLC    Delaware    100% Newtown
Square Assisted Living, L.L.C.    AL US Pool One, LLC    Delaware    100% AL
U.S./Bonita Senior Housing, L.P.    AL US Pool One, LLC    Delaware   
99% of limited partnership interests    AL California GP, LLC    Delaware    1%
of general partnership interests Wilmington Assisted Living, LLC    AL US Pool
One, LLC    Delaware    100%

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

AL U.S./LaPalma Senior Housing, L.P.    AL US Pool One, LLC    Delaware    99%
of limited partnership interests    AL California GP, LLC    Delaware    1% of
general partnership interests

AL U.S./LaJolla Senior Housing, L.P.

   AL US Pool One, LLC    Delaware    99% of limited partnership interests    AL
California GP, LLC    Delaware    1% of general partnership interests

AL U.S./Sacramento Senior Housing, L.P.

   AL US Pool One, LLC    Delaware    99% of limited partnership interests    AL
California GP, LLC    Delaware    1% of general partnership interests

G.P. Woods Assisted Living, LLC

   AL US Pool Two, LLC    Delaware    100%

AL U.S./Huntington Beach Senior Housing, L.P.

   AL US Pool Two, LLC    Delaware    99% of limited partnership interests    AL
California GP-II, LLC    Delaware    1% of general partnership interests

AL U.S./San Gabriel Senior Housing, L.P.

   AL US Pool Two, LLC    Delaware    99% of limited partnership interests    AL
California GP-II, LLC    Delaware    1% of general partnership interests

AL U.S./Seal Beach Senior Housing, L.P.

   AL US Pool Two, LLC    Delaware    99% of limited partnership interests    AL
California GP-II, LLC    Delaware    1% of general partnership interests

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

AL U.S./Studio City Senior Housing, L.P.    AL US Pool Two, LLC    Delaware   
99% of limited partnership interests    AL California GP-II, LLC    Delaware   
1% of general partnership interests AL U.S./Woodland Hills Senior Housing, L.P.
   AL US Pool Two, LLC    Delaware    99% of limited partnership interests    AL
California GP-II, LLC    Delaware    1% of general partnership interests AL
U.S./GP Woods II Senior Housing LLC    AL US Pool Three, LLC    Delaware    100%
AL U.S./Playa Vista Senior Housing, L.P.    AL US Pool Three, LLC    Delaware   
99% of limited partnership interests    AL California GP-III, LLC    Delaware   
1% of general partnership interests

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

Exhibit 5.20 - Schedule III

Organizational Structure

 

ENTITY

  

NAME OF OWNER

   JURISDICTION
OF
ORGANIZATION
OF OWNER    OWNERSHIP
PERCENTAGE Sunrise Senior Living Investments, Inc.
(Managing Member of Borrower)    Sunrise Senior Living, Inc.    Delaware    100%
MS Senior Living, L.L.C.    Morgan Stanley Real Estate Funding II, L.P.   
Delaware    100%

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

Exhibit 5.21

Banking Arrangements

 

1.

Account Name: AL US Development Venture, LLC

Account #: ****

ABA: ****

 

2.

Account Name: AL US Development Venture, LLC - FF&E

Account #: ****

ABA: ****

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

Exhibit 5.23(b)

Indebtedness

None.

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

Exhibit 5.24

Labor Matters

None.

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

Exhibit 6.01(d)

Form of Certificate of Compliance

This certificate is being delivered by AL US Development Venture, LLC (the
“Borrower”), pursuant to Section 6.01(d) of the Loan Agreement dated as of
June 14, 2007 (the “Agreement”), by and among the Borrower, HSH Nordbank AG,
acting through its New York Branch, as Lender, sole Arranger, and Administrative
Agent (the “Administrative Agent”). This certificate is being filed within 45
days after the Fiscal Quarter ended                          to evidence the
Borrower’s compliance with certain covenant requirements of Article VI of the
Agreement. Capitalized terms not otherwise defined have the meanings ascribed
thereto in the Agreement.

I, the Chief Executive Officer or Chief Financial Officer of the Managing Member
of the Borrower hereby certify that:

All financial statements of the Borrower to the Administrative Agent have been
prepared in accordance with GAAP (subject to year-end adjustments).

 

Section 6.23:   The Borrower has maintained a minimum liquidity of at least
$6,000,000 for the Fiscal Quarter ended             .

 

Section 6.24:   The Required Debt Service Coverage Ratio covenant has been
satisfied for the Fiscal Quarter ended             . (Calculations attached)

Under my supervision, the Borrower has made a review of its activities and the
activities of the Guarantors during the preceding annual or quarterly period, as
the case may be, for the purpose of determining whether or not such Person have
complied with all of the terms, provisions and conditions of the Agreement. To
the best of my knowledge, no Default or Conditional Default under the Agreement
has occurred.

 

BORROWER: AL US DEVELOPMENT VENTURE, LLC By:  

Sunrise Senior Living Investments, Inc.,

its Managing Member

  By:       Name:       Title:    

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

Exhibit 6.07

Insurance Requirements

Borrower shall, and will cause Guarantors to, secure, pay for and maintain
without interruption, at its own expense, the following insurance policies
including all specified coverages and limits during the term of this Loan
Agreement:

 

  A.

PROPERTY INSURANCE - Borrower and Guarantors shall maintain a Special Causes of
Loss (“All Risk” ISO Form or Equivalent) perils policy covering the buildings
and improvements, and any other permanent structures for one hundred percent
(100%) of the actual replacement cost. The policy shall also provide a sub limit
of Twenty-five Million Dollars ($25,000,000) for the peril of Earthquake and a
sublimit of Ten Million Dollars ($10,000,000) for the peril of Flood in Zone “A”
(In addition to maximum Federal Flood limit). Upon the request of Mortgagee,
replacement cost for insurance purposes will be established by an independent
appraiser mutually selected by Borrower and the Administrative Agent. The policy
will include Agreed Amount (waiving co-insurance), Replacement Cost Valuation
and Building Ordinance coverages. The policy will include a standard Mortgagee
Clause (ISO Form or Equivalent, i.e. Borrower’s acts will not impair Lenders’
right to recover, exclusive payment of loss to the Administrative Agent and
automatic cancellation notice to the Administrative Agent). The policy will
require that all losses in excess One Million Dollars ($1,000,000) will be
adjusted with the Administrative Agent. The Mortgagor(s) waives any and all
rights of subrogation against Mortgagee.

 

  B.

PERSONAL PROPERTY (including machinery, equipment, furniture, fixtures, stock) -
Borrower and Guarantors shall maintain a Special Causes of Loss perils Property
policy for all Personal Property owned, leased or for which they are legally
liable. The policy will include a Lender’s Loss Payable endorsement in favor of
the Administrative Agent (ISO Form CP1218 or Equivalent).

The policy providing Real Property and Personal Property coverages, as specified
in Sections (A) and (B) above, may include a deductible of no more than One
Hundred Thousand Dollars ($100,000). Flood deductible can be no more than 5% of
values (for individual location) with a One Million Dollar ($1,000,000) minimum
deductible; Named Storm Flood (Tier 1) 5% of insured values with a minimum One
Million Dollar ($1,000,000) deductible; Named Windstorm (Tier 1 Florida) at 5%
of insured values with a One Million Dollar ($1,000,000) minimum deductible.

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

  C.

BUSINESS INCOME/RENTS/EXTRA Expense - Borrower and Guarantors shall maintain
combined Business Income or Rents/Extra Expense coverage with a limit
representing no less than one hundred percent (100%) of the projected annual net
profit plus continuing expenses (including debt service) or gross rents
including all tenant charges of not less than one year for the operation. Such
coverage shall include extensions for Off Premises Power losses ($1,000,000) and
an Extended Period of Indemnity ninety (90) days endorsements. These coverages
may have a deductible of Forty-eight (48) Hours, or One Hundred Thousand Dollars
($100,000), if a separate deductible applies. The policy shall be endorsed to
include the Mortgagee as a Loss Payee.

Real, Personal Property and Business Income/Rents coverages may be written on a
Blanket, Loss Limit or Specific basis but, the limit of coverage must be
sufficient to cover one hundred percent (100%) of the values required under this
agreement. All Property coverage including Real Property, Personal Property and
Business Income (Rents) cannot include any exclusions/limitations regarding
coverage for Terrorism or Terrorist Acts.

 

  D.

BOILER AND MACHINERY - Borrower and Guarantors shall maintain a Boiler and
Machinery policy for the operations/facilities written on a Comprehensive Form
with a combined direct and indirect limit of no less than Twenty-Five Million
Dollars ($25,000,000). The policy shall include a Standard Mortgagee
endorsement. The policy shall include extensions for Agreed Amount (waiving
co-insurance) and Replacement Cost Valuation. The policy may contain deductibles
of no greater than Twenty-five Thousand Dollars ($25,000) direct and Forty-eight
(48) Hours indirect.

COMMERCIAL GENERAL LIABILITY (2000 ISO Form or Equivalent) - Borrower and
Guarantors shall maintain a Commercial General Liability policy with a One
Million Dollar ($1,000,000) combined single limit for bodily injury and property
damage, including Products Liability/Completed Operations, Personal/Advertising
Injury, Contractual Liability and all standard policy form extensions. The
policy must provide a Two Million Dollar ($2,000,000) general aggregate (per
location, if multi-location risk) and be written on an “occurrence form”. The
policy will include an extension for Sexual Abuse & Molestation coverage and the
policy cannot contain a Mold exclusion.

The policy shall be endorsed to include HSH Nordbank, AG, acting through its New
York Branch as an Additional Insured. Definition of Additional Insured shall
include all Officers, Directors, Employees, Agents and Representatives of the
additional insured. The coverage for additional insured shall apply on a primary
basis irrespective of any other insurance whether collectible or not (ISO
Endorsement Form CG 20 26 11 85 Additional Insured - Designated Person or
Organization or equivalent).

 

  F.

PROFESSIONAL LIABILITY - Borrower and Guarantors shall maintain a Professional
Liability policy covering all acts, errors & omissions in providing Healthcare
Services to any person with a limit of not less than Ten Million dollars
($10,000,000)

 

2

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

 

each loss and Ten Million Dollars ($10,000,000) in the aggregate. The deductible
under this policy shall be no greater than Ten Thousand Dollars ($10,000).
Alternatively, this coverage can be provided as an endorsement to the General
Liability coverage under Section (E) above.

 

  G.

AUTOMOBILE - Borrower and Guarantor shall maintain a comprehensive Automobile
Liability Insurance Policy written under coverage “Symbol 1”, providing a One
Million Dollar ($1,000,000) combined single limit for bodily injury and property
damage covering all owned, non-owned and hired vehicles of the Borrower and
Guarantors.

 

  H.

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE - Borrower and Guarantors
shall maintain a standard Workers Compensation policy meeting all statutory
requirements covering the state where the company is operating, including
Employers Liability coverage subject to a limit of no less than Five Hundred
Thousand Dollars ($500,000) each employee, Five Hundred Thousand Dollars
($500,000) each accident, Five Hundred Thousand Dollars ($500,000) policy limit.

 

  I.

UMBRELLA - An Umbrella policy shall be purchased with a limit of not less than
Fifty Million Dollars ($50,000,000) providing Excess coverage over all limits
and coverages indicated in paragraphs (e), (f) and (g) above. The limits can be
obtained by a combination of Primary and Excess Umbrella policies, provided that
all layers follow form with the underlying policies indicated in (e), (f) and
(g) and are written on an “occurrence” form. This policy shall be endorsed to
include HSH Nordbank AG, New York Branch as an Additional Insured in the same
manner as set forth under Section (E) above.

 

3

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

All policies of insurance indicated above shall be written with insurance
companies licensed and admitted to do business in the applicable state and shall
be rated no lower than “A X” in the most recent edition of A.M. Best’s and “AA”
in the most recent edition of Standard & Poor’s or such other carrier acceptable
to Administrative Agent at its sole discretion. All policies discussed above
shall be endorsed to provide that in the event of a cancellation, non-renewal or
material modification, HSH Nordbank AG, acting through its New York Branch shall
receive thirty (30) days prior written notice by certified mail, return receipt
requested. The Borrower shall furnish HSH Nordbank AG, acting through its New
York Branch with Declaration Pages of each policy, copies of policy endorsements
including HSH Nordbank AG, acting through its New York Branch as Mortgagee,
Lender’s Loss Payable and Additional Insured (within 30 - 60 days of closing)
and Certificates of Insurance executed by an authorized agent evidencing
compliance with all insurance provisions discussed above on an annual basis. The
Borrower and Guarantors shall document that all said policies are paid in full
as of the closing date and annually for each renewal period.

Declaration Pages, Endorsements and Certificates of Insurance executed by an
authorized agent of each carrier evidencing continuation of all coverages will
be provided on the Closing Date, and annually on or before five (5) days prior
to the expiration of each policy. All documentation and other notices related to
the insurance program shall be delivered to HSH Nordbank AG, acting through its
New York Branch concurrently with the delivery of such certificates or notices
to such carrier or to Mortgagors, or any of them, as applicable.

Any other insurance reasonably requested by Borrower and Guarantors in such
amounts and covering such risks as may be reasonably required and customary for
the operation/facility of the Borrower and Guarantors. Approval of any insurance
by the Administrative Agent shall not be a representation of the solvency of any
insurer or sufficiency of any coverage required under this agreement. All
requirements set forth under Section 6.07 are considered minimums in terms of
the purchase and maintenance of insurance under this agreement.

 

4

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

Exhibit 7.03(b)

Minimum Release Payments

 

Property Company

  

Facility

   Allocated Loan
Amount      Disposition
Amount  

Boulder Assisted Living, L.L.C.

  

Sunrise Assisted Living of Boulder

   $ 27,407,530       $ 30,148,283   

Newtown Square Assisted Living, L.L.C.

  

Sunrise of Newtown Square

   $ 24,397,454       $ 26,837,199   

Wilmington Assisted Living, L.L.C.

  

Sunrise Assisted Living of Wilmington

   $ 21,862,654       $ 24,048,919   

AL U.S./Bonita Senior Housing, L.P.

  

Sunrise Assisted Living of Bonita

   $ 15,288,015       $ 16,816,817   

AL U.S./LaPalma Senior Housing, L.P.

  

Sunrise Assisted Living at La Palma

   $ 18,456,516       $ 20,302,168   

AL U.S./LaJolla Senior Housing, L.P.

  

Sunrise Assisted Living of La Jolla

   $ 27,169,892       $ 29,886,881   

AL U.S./Sacramento Senior Housing, L.P.

  

Sunrise Assisted Living of Sacramento

   $ 18,060,453       $ 19,866,498   

G.P. Woods Assisted Living, LLC

  

Grosse Pointe Woods

   $ 17,578,512       $ 19,336,363   

AL U.S./Huntington Beach Senior Housing, L.P.

  

Sunrise of Huntingdon Beach

   $ 30,100,755       $ 33,110,831   

AL U.S./San Gabriel Senior Housing, L.P.

  

Sunrise Assisted Living at San Marino

   $ 16,000,928       $ 17,601,021   

AL U.S./Seal Beach Senior Housing, L.P.

  

Sunrise of Seal Beach

   $ 56,716,159       $ 62,387,775   

AL U.S./Studio City Senior Housing, L.P.

  

Sunrise Assisted Living of Studio City

   $ 26,140,129       $ 28,754,142   

AL U.S./Woodland Hills Senior Housing, L.P.

  

Sunrise Assisted Living of Woodland Hills

   $ 28,041,230       $ 30,845,353   

AL U.S./GP Woods II Senior Housing LLC

  

Sunrise on Vernier

   $ 13,495,868       $ 14,845,455   

AL U.S./Playa Vista Senior Housing, L.P.

  

Sunrise of Playa Vista

   $ 29,783,905       $ 32,762,296                        

SUM

      $ 370,500,000       $ 407,550,001                        

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

Exhibit 8.01(d)

Title Insurance Amounts

See Attached.

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

Exhibit 8.01 (d) - Lender’s Title insurance Amounts

 

Property

   Title Insurance
Amount  

Bonita

   $ 15,288,015.00   

Boulder

   $ 27,407,530.00   

Grosse Pointe Woods

   $ 17,578,512.00   

Grosse Pointe II (on Vernier)

   $ 13,495,868.00   

Huntington Beach

   $ 30,100,755.00   

Pacific Beach (La Jolla)

   $ 27,169,892.00   

La Palma

   $ 18,456,516.00   

Newtown Square

   $ 24,397,454.00   

Playa Vista

   $ 29,783,905.00   

Sacramento

   $ 18,060,453.00   

San Marino

   $ 16,000,928.00   

Seal Beach

   $ 56,716,159.00   

Studio City

   $ 26,140,129.00   

Wilmington

   $ 21,862,654.00   

Woodland Hills

   $ 28,041,230.00   

Sum of Amounts =

   $ 370,500,000.00   

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

Exhibit 8.01(e)

UCC Filing Information

 

Document

  

Debtor(s)

   Additional
Debtor   

Secured Party

  

UCC Financing Statement

Deed of Trust, Security Agreement, Fixture Filing and Assignment of Leases and
Rents    AL U.S./Bonita Senior Housing, L.P.    N/A    HSH NORDBANK AG, acting
through its New York Branch, as Administrative Agent    File with the California
Secretary of State Deed of Trust, Security Agreement, Fixture Filing and
Assignment of Leases and Rents    AL U.S./Bonita Senior Housing, L.P.    N/A   
HSH NORDBANK AG, acting through its New York Branch, as Administrative Agent   
File with San Diego County, California Deed of Trust, Security Agreement,
Fixture Filing and Assignment of Leases and Rents    AL U.S./Huntington Beach
Senior Housing, L.P.    N/A   

HSH NORDBANK

AG, acting through its New York Branch, as Administrative Agent

   File with the California Secretary of State Deed of Trust, Security
Agreement, Fixture Filing and Assignment of Leases and Rents    AL
U.S./Huntington Beach Senior Housing, L.P.    N/A    HSH NORDBANK AG, acting
through its New York Branch, as Administrative Agent    File with Orange County,
California Deed of Trust, Security Agreement, Fixture Filing and Assignment of
Leases and Rents    AL U.S./LaJolla Senior Housing, L.P.    N/A    HSH NORDBANK
AG, acting through its New York Branch, as Administrative Agent    File with the
California Secretary of State Deed of Trust, Security Agreement, Fixture Filing
and Assignment of Leases and Rents    AL U.S./LaJolla Senior Housing, L.P.   
N/A    HSH NORDBANK AG, acting through its New York Branch, as Administrative
Agent    File with San Diego County, California

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

Document

  

Debtor(s)

  

Additional

Debtor

  

Secured Party

  

UCC Financing

Statement

Deed of Trust, Security Agreement, Fixture Filing and Assignment of Leases and
Rents    AL U.S./LaPalma Senior Housing, L.P.    N/A    HSH NORDBANK AG, acting
through its New York Branch, as Administrative Agent    File with the California
Secretary of State Deed of Trust, Security Agreement, Fixture Filing and
Assignment of Leases and Rents    AL U.S./LaPalma Senior Housing, L.P.    N/A   
HSH NORDBANK AG, acting through its New York Branch, as Administrative Agent   
File with Orange County, California Deed of Trust, Security Agreement, Fixture
Filing and Assignment of Leases and Rents    AL U.S./Playa Vista Senior Housing,
L.P.    N/A    HSH NORDBANK AG, acting through its New York Branch, as
Administrative Agent    File with the California Secretary of State Deed of
Trust, Security Agreement, Fixture Filing and Assignment of Leases and Rents   
AL U.S./Playa Vista Senior Housing, L.P.    N/A    HSH NORDBANK AG, acting
through its New York Branch, as Administrative Agent    File with Los Angeles
County, California Deed of Trust, Security Agreement, Fixture Filing and
Assignment of Leases and Rents   

AL

U.S./Sacramento Senior Housing, L.P.

   N/A    HSH NORDBANK AG, acting through its New York Branch, as Administrative
Agent    File with the California Secretary of State Deed of Trust, Security
Agreement, Fixture Filing and Assignment of Leases and Rents    AL
U.S./Sacramento Senior Housing, L.P.    N/A    HSH NORDBANK AG, acting through
its New York Branch, as Administrative Agent    File with Sacramento County,
California Deed of Trust, Security Agreement, Fixture Filing and Assignment of
Leases and Rents    AL U.S./San Gabriel Senior Housing, L.P.    N/A    HSH
NORDBANK AG, acting through its New York Branch, as Administrative Agent    File
with the California Secretary of State

 

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

Document

  

Debtor(s)

  

Additional

Debtor

  

Secured Party

  

UCC Financing

Statement

Deed of Trust, Security Agreement, Fixture Filing and Assignment of Leases and
Rents    AL U.S./San Gabriel Senior Housing, L.P.    N/A    HSH NORDBANK AG,
acting through its New York Branch, as Administrative Agent    File with Los
Angeles County, California Deed of Trust, Security Agreement, Fixture Filing and
Assignment of Leases and Rents    AL U.S./Seal Beach Senior Housing, L.P.    N/A
   HSH NORDBANK AG, acting through its New York Branch, as Administrative Agent
   File with the California Secretary of State Deed of Trust, Security
Agreement, Fixture Filing and Assignment of Leases and Rents    AL U.S./Seal
Beach Senior Housing, L.P.    N/A    HSH NORDBANK AG, acting through its New
York Branch, as Administrative Agent    File with Orange County, California Deed
of Trust, Security Agreement, Fixture Filing and Assignment of Leases and Rents
   AL U.S./Studio City Senior Housing, L.P.    N/A    HSH NORDBANK AG, acting
through its New York Branch, as Administrative Agent    File with the California
Secretary of State Deed of Trust, Security Agreement, Fixture Filing and
Assignment of Leases and Rents    AL U.S./Studio City Senior Housing, L.P.   
N/A    HSH NORDBANK AG, acting through its New York Branch, as Administrative
Agent    File with Los Angeles County, California Deed of Trust, Security
Agreement, Fixture Filing and Assignment of Leases and Rents    AL U.S./Woodland
Hills Senior Housing, L.P.    N/A    HSH NORDBANK AG, acting through its New
York Branch, as Administrative Agent    File with the California Secretary of
State Deed of Trust, Security Agreement, Fixture Filing and Assignment of Leases
and Rents    AL U.S./Woodland Hills Senior Housing, L.P.    N/A    HSH NORDBANK
AG, acting through its New York Branch, as Administrative Agent    File with Los
Angeles County, California

 

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

Document

  

Debtor(s)

  

Additional

Debtor

  

Secured Party

  

UCC Financing

Statement

Deed of Trust, Security Agreement, Fixture Filing and Assignment of Leases and
Rents    Boulder Assisted Living, LLC    N/A    HSH NORDBANK AG, acting through
its New York Branch, as Administrative Agent    File with the Delaware Secretary
of State Deed of Trust, Security Agreement, Fixture Filing and Assignment of
Leases and Rents    Boulder Assisted Living, LLC    N/A    HSH NORDBANK AG,
acting through its New York Branch, as Administrative Agent    File with Boulder
County, Colorado Mortgage, Security Agreement, Fixture Filing and Assignment of
Leases and Rents    Wilmington Assisted Living, LLC    N/A    HSH NORDBANK AG,
acting through its New York Branch, as Administrative Agent    File with the
Delaware Secretary of State Mortgage, Security Agreement, Fixture Filing and
Assignment of Leases and Rents    Wilmington Assisted Living, LLC    N/A    HSH
NORDBANK AG, acting through its New York Branch, as Administrative Agent    File
with New Castle County, Delaware Mortgage    G.P. Woods Assisted Living, L.L.C.
   N/A    HSH NORDBANK AG, acting through its New York Branch, as Administrative
Agent    File with the Delaware Secretary of State Mortgage    G.P. Woods
Assisted Living, L.L.C.    N/A    HSH NORDBANK AG, acting through its New York
Branch, as Administrative Agent    File with Wayne County, Michigan Mortgage   
AL U.S./GP Woods II Senior Housing, L.L.C.    N/A    HSH NORDBANK AG, acting
through its New York Branch, as Administrative Agent    File with the Delaware
Secretary of State

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

Document

  

Debtor(s)

  

Additional
Debtor

  

Secured Party

  

UCC Financing

Statement

Mortgage    AL U.S./GP Woods II Senior Housing, L.L.C.    N/A    HSH NORDBANK
AG, acting through its New York Branch, as Administrative Agent    File with
Wayne County, Michigan Open-End Mortgage, Security Agreement, Fixture Filing and
Assignment of Leases and Rents    Newtown Square Assisted Living, L.L.C.    N/A
   HSH NORDBANK AG, acting through its New York Branch, as Administrative Agent
   File with the Delaware Secretary of State Open-End Mortgage, Security
Agreement, Fixture Filing and Assignment of Leases and Rents    Newtown Square
Assisted Living, L.L.C.    N/A    HSH NORDBANK AG, acting through its New York
Branch, as Administrative Agent    File with Delaware County, Pennsylvania
Member Interest Pledge and Security Agreement (SSLII)    Sunrise Senior Living
Investments, Inc.    N/A    HSH NORDBANK AG, acting through its New York Branch,
as Administrative Agent    File with the Commonwealth of Virginia State
Corporations Commission Member Interest Pledge and Security Agreement (MS Senior
Living, LLC)    MS Senior Living, L.L.C    N/A    HSH NORDBANK AG, acting
through its New York Branch, as Administrative Agent    File with the Delaware
Secretary of State Pledge and Security Agreement (AL California GP, LLC)    AL
California GP, LLC    N/A    HSH NORDBANK AG, acting through its New York
Branch, as Administrative Agent    File with the Delaware Secretary of State
Pledge and Security Agreement (AL California GP-II, LLC)    AL California GP-II,
LLC    N/A    HSH NORDBANK AG, acting through its New York Branch, as
Administrative Agent    File with the Delaware Secretary of State

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

Document

  

Debtor(s)

  

Additional

Debtor

  

Secured Party

  

UCC Financing

Statement

Pledge and Security Agreement (AL California GP-III, LLC)    AL California
GP-III, LLC    N/A   

HSH NORDBANK

AG, acting through its New York Branch, as Administrative Agent

   File with the Delaware Secretary of State Pledge and Security Agreement (AL
US Pool One, LLC)    AL US Pool One, LLC    N/A    HSH NORDBANK AG, acting
through its New York Branch, as Administrative Agent    File with the Delaware
Secretary of State Pledge and Security Agreement (AL US Pool Two, LLC)    AL US
Pool Two, LLC    N/A    HSH NORDBANK AG, acting through its New York Branch, as
Administrative Agent    File with the Delaware Secretary of State Pledge and
Security Agreement (AL US Pool Three, LLC)    AL US Pool Three, LLC    N/A   
HSH NORDBANK AG, acting through its New York Branch, as Administrative Agent   
File with the Delaware Secretary of State Security Agreement    AL US
Development Venture, LLC    N/A    HSH NORDBANK AG, acting through its New York
Branch, as Administrative Agent    File with the Delaware Secretary of State

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

Exhibit 8.01 (f)

Mortgage Recording Information

 

Document

  

Signatory

  

Trustee(s)

  

Lender(s)

  

Record

Deed of Trust, Security Agreement, Fixture Filing and Assignment of Leases and
Rents    AL U.S./Bonita Senior Housing, L.P.    First American Title Insurance
Company    HSH NORDBANK AG, acting through its NEW YORK BRANCH, as
Administrative Agent    File with San Diego County, California Deed of Trust,
Security Agreement, Fixture Filing and Assignment of Leases and Rents    AL
U.S./Huntington Beach Senior Housing, L.P.    First American Title Insurance
Company    HSH NORDBANK AG, acting through its NEW YORK BRANCH, as
Administrative Agent    File with Orange County, California Deed of Trust,
Security Agreement, Fixture Filing and Assignment of Leases and Rents    AL
U.S./LaJolla Senior Housing, L.P.    First American Title Insurance Company   
HSH NORDBANK AG, acting through its NEW YORK BRANCH, as Administrative Agent   
File with San Diego County, California Deed of Trust, Security Agreement,
Fixture Filing and Assignment of Leases and Rents    AL U.S./LaPalma Senior
Housing, L.P.    First American Title Insurance Company    HSH NORDBANK AG,
acting through its NEW YORK BRANCH, as Administrative Agent    File with Orange
County, California

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

Document

  

Signatory

  

Trustee(s)

  

Lender(s)

  

Record

Deed of Trust, Security Agreement, Fixture Filing and Assignment of Leases and
Rents    AL U.S./Playa Vista Senior Housing, L.P.    First American Title
Insurance Company    HSH NORDBANK AG, acting through its NEW YORK BRANCH, as
Administrative Agent    File with Los Angeles County, California Deed of Trust,
Security Agreement, Fixture Filing and Assignment of Leases and Rents    AL
U.S./Sacramento Senior Housing, L.P.    First American Title Insurance Company
   HSH NORDBANK AG, acting through its NEW YORK BRANCH, as Administrative Agent
   File with Sacramento County, California Deed of Trust, Security Agreement,
Fixture Filing and Assignment of Leases and Rents    AL U.S./San Gabriel Senior
Housing, L.P.    First American Title Insurance Company    HSH NORDBANK AG,
acting through its NEW YORK BRANCH, as Administrative Agent    File with Los
Angeles County, California Deed of Trust, Security Agreement, Fixture Filing and
Assignment of Leases and Rents    AL U.S./Seal Beach Senior Housing, L.P.   
First American Title Insurance Company    HSH NORDBANK AG, acting through its
NEW YORK BRANCH, as Administrative Agent    File with Orange County, California

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

Document

  

Signatory

  

Trustee(s)

  

Lender(s)

  

Record

Deed of Trust, Security Agreement, Fixture Filing and Assignment of Leases and
Rents    AL U.S./Studio City Senior Housing, L.P.    First American Title
Insurance Company    HSH NORDBANK AG, acting through its NEW YORK BRANCH, as
Administrative Agent    File with Los Angeles County, California Deed of Trust,
Security Agreement, Fixture Filing and Assignment of Leases and Rents    AL
U.S./Woodland Hills Senior Housing, L.P.    First American Title Insurance
Company   

HSH NORDBANK

AG, acting through its NEW YORK BRANCH, as Administrative Agent

   File with Los Angeles County, California Deed of Trust, Security Agreement,
Fixture Filing and Assignment of Leases and Rents    Boulder Assisted Living,
LLC    Public Trustee of the County of Boulder, State of Colorado    HSH
NORDBANK AG, acting through its NEW YORK BRANCH, as Administrative Agent    File
with Boulder County, Colorado

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

Document

  

Signatory

  

Lender(s)

  

Record

Mortgage, Security Agreement, Fixture Filing and Assignment of Leases and Rents
   Wilmington Assisted Living, LLC    HSH NORDBANK AG, acting through its NEW
YORK BRANCH, as Administrative Agent    File with New Castle County, Delaware
Mortgage    G.P. Woods Assisted Living, L.L.C.    HSH NORDBANK AG, acting
through its NEW YORK BRANCH, as Administrative Agent    File with Wayne County,
Michigan Mortgage    AL U.S./GP Woods II Senior Housing, L.L.C.    HSH NORDBANK
AG, acting through its NEW YORK BRANCH, as Administrative Agent    File with
Wayne County, Michigan Open-End Mortgage, Security Agreement, Fixture Filing and
Assignment of Leases and Rents    Newtown Square Assisted Living, L.L.C.    HSH
NORDBANK AG, acting through its NEW YORK BRANCH, as Administrative Agent    File
with Delaware County, Pennsylvania

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

Exhibit 13.01

Form of Transfer Supplement

TRANSFER SUPPLEMENT, dated as of the date set forth in Item 1 of Schedule I
hereto, among the Transferor Lender set forth in Item 2 of Schedule I hereto
(the “Transferor Lender”), the Purchaser Lender set forth in Item 3 of Schedule
I hereto (the “Purchaser Lender”), and HSH NORDBANK AG, acting through its New
York Branch as Administrative Agent for the Lenders under the Loan Agreement
described below (in such capacity, the “Administrative Agent”).

WHEREAS, this Transfer Supplement is being executed and delivered in accordance
with Section 13.01 of the Loan Agreement dated as of June 14, 2007 (the “Loan
Agreement”) by and among AL US Development Venture, LLC (the “Borrower”), HSH
Nordbank AG, acting through its New York Branch, as Lender, sole Arranger and
Administrative Agent and such other financial institutions as may from time to
time become Lenders;

WHEREAS, the Purchaser Lender (if it is not already a Lender party to the Loan
Agreement) wishes to become a Lender party to the Loan Agreement; and

WHEREAS, the Transferor Lender is selling and assigning to the Purchaser Lender
a portion of its rights, obligations and commitments under the Loan Agreement as
described below;

NOW, THEREFORE, the parties hereto hereby agree as follows:

1. Assignment and Assumption. Effective upon receipt by the Transferor Lender of
the Purchase Price set forth in paragraph 3 below from the Purchaser Lender, the
Transferor Lender hereby irrevocably sells, assigns and transfers to the
Purchaser Lender, without recourse, representation or warranty, and the
Purchaser Lender hereby irrevocably purchases, takes and assumes from the
Transferor Lender (subject to any arrangements made with respect to fees or
interest pursuant to paragraph 3 below), the Purchaser Lender’s purchased
percentage of the Transferor Lender’s Percentage Interest (the “Purchased
Interest”) and any other amounts relating thereto owing to the Transferor Lender
under the Loan Agreement and the Transferor Lender’s Note or Notes, together
with all instruments, documents and collateral security pertaining thereto.

2. Effective Date. Upon receipt by the Administrative Agent of five
(5) counterparts of this Transfer Supplement, to each of which is attached a
fully completed Schedule I, and each of which has been executed by the
Transferor Lender and the Purchaser Lender (and any other Person required by the
Loan Agreement to execute this Transfer Supplement), the Administrative Agent
will transmit to the Borrower, the Transferor Lender and the Purchaser Lender a
Transfer Effective Notice, substantially in the form of Schedule II to this
Transfer Supplement (a “Transfer Effective Notice”). Such Transfer Effective
Notice shall set forth, inter alia, the date on which the transfer effected by
this Transfer Supplement shall become effective (the “Transfer Effective Date”).
As of 12:00 noon (New York City time) on the Transfer

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

Effective Date, (i) the Purchaser Lender shall have the rights and obligations
of a Lender under the Loan Agreement and the other Loan Documents with respect
to the rights and obligations assigned to the Purchaser Lender hereunder and
(ii) the Transferor Lender shall relinquish its rights and be released from its
corresponding obligations under the Loan Agreement and the other Loan Documents
with respect to the rights and obligations assigned to the Purchaser Lender
hereunder.

3. Purchase Price; Payment Obligations. On and after the Transfer Effective
Date, the Purchaser Lender shall be entitled to receive from the Administrative
Agent all payments of principal, interest and fees with respect to the Purchased
Interest made on or after the Transfer Effective Date with respect to the
interest assigned hereby. In consideration for the sale and assignment of the
Purchased Interest hereunder, at or before 12:00 noon (Eastern time) on the
Transfer Effective Date, (i) the Purchaser Lender shall pay the Transferor
Lender, on the Transfer Effective Date, the purchase price, as agreed between
the Transferor Lender and the Purchaser Lenders of the Purchased Interest. In
the event that any amount of interest, fees or other amounts accruing prior to
the Transfer Effective Date was included in the purchase price paid by the
Purchaser Lender but was not paid by the Borrower prior to the Transferor
Effective Date, the Transferor Lender and the Purchaser Lender will make
appropriate arrangements for payment of such amount upon payment thereof by the
Borrower.

4. Notes. On or prior to the Transfer Effective Date, the Transferor Lender will
deliver to the Administrative Agent its Note. On or prior to the Transfer
Effective Date, the Borrower will deliver to the Administrative Agent a Note for
the Purchaser Lender and a Note for the Transferor Lender, in each case in
principal amounts reflecting, in accordance with the Loan Agreement, its
respective Lender’s Percentage Interest (in each case as adjusted pursuant to
this Transfer Supplement). Each such new Note shall be dated the Closing Date
and shall be substantially in the form of the Note superseded thereby. Promptly
after the Transfer Effective Date, the Administrative Agent will send to the
Transferor Lender and the Purchaser Lender their respective new Notes and will
send to the Borrower the superseded Note of the Transferor Lender, marked
“Canceled”.

5. Loan Documents. On the Transfer Effective Date, the Administrative Agent
will, at the expense of the Transferor Lender, provide to the Purchaser Lender
(if it is not already a Lender party to the Loan Agreement) copies of those of
the documents relating to the Purchased Interest delivered to the Administrative
Agent on the Closing Date in respect of the conditions precedent set forth in
the Loan Agreement as requested in writing by the Purchaser Lender to the
Administrative Agent concurrently with execution and delivery of this Transfer
Supplement.

6. Further Assurances. Each of the parties to this Transfer Supplement agrees
that at any time and from time to time upon the written request of any other
party, it will execute and deliver such further documents and do such further
acts and things as such other party may reasonably request to effect the
purposes of this Transfer Supplement.

7. Representations and Warranties. By executing and delivering this Transfer
Supplement, the Transferor Lender and the Purchaser Lender confirm to and agree
with each other and the Administrative Agent, and the Lenders as follows:

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

(i) other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned hereby free and clear of any
adverse claim, the Transferor Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Loan Agreement or the other
Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any instrument or
document furnished pursuant thereto;

(ii) the Transferor Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any
other Person or the performance or observance by the Borrower or any other
Person of any of its obligations under any Loan Document or any instrument or
document furnished pursuant thereto;

(iii) the Purchaser Lender confirms that it has received a copy of the Loan
Agreement, together with such other Loan Documents and other documents and
information relating to the Purchased Interest as it has deemed appropriate to
make its own credit analysis and decision to enter into this Transfer
Supplement;

(iv) the Purchaser Lender will, independently and without reliance upon the
Administrative Agent, the Transferor Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Agreement and the other Loan Documents;

(v) the Purchaser Lender appoints and authorizes HSH Nordbank AG, acting through
its New York Branch, to take such action as Administrative Agent on its behalf
and to exercise such powers under the Loan Agreement and the other Loan
Documents as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are reasonably incidental thereto, all in
accordance with the Loan Agreement; and

(vi) the Purchaser Lender agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Agreement and the
other Loan Documents are required to be performed by it as a Lender as if it
were an original party to such documents.

8. Commitments. Schedule I sets forth the revised Lender’s Percentage Interest
of the Transferor Lender and the Purchaser Lender, as well as administrative
information with respect to the Purchaser Lender.

9. Counterparts. This Transfer Supplement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument as any of the parties hereto may execute this Transfer Supplement by
signing any such counterpart.

10. Notices. Notices shall be given under this Transfer Supplement in the manner
set forth in the Loan Agreement. For the purpose hereof, the address and payment
instructions of the Transferor Lender and of the Purchaser Lender shall be as
set forth in Schedule I.

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

11. Governing Law. This Transfer Supplement shall be governed by, and construed
and interpreted in accordance with, the laws of the State of New York.

12. Definitions. Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to such terms in the Loan Agreement.

[Signature page follows]

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

IN WITNESS WHEREOF, the parties hereto have caused this Transfer Supplement to
be executed by their respective duly authorized officers as of the date set
forth in Item 1 of Schedule I.

 

HSH NORDBANK AG, acting through

its New York Branch, as Administrative Agent

By:       Name:     Title:  

[NAME OF TRANSFEROR LENDER],

as Transferor Lender

By:       Name:     Title:   By:       Name:     Title:  

[NAME OF PURCHASER LENDER],

as Purchaser Lender

By:       Name:     Title:  

 

CONSENTED TO AND ACKNOWLEDGED: *

 

BORROWER:

 

AL US DEVELOPMENT VENTURE, LLC

By:  

Sunrise Senior Living Investments, Inc.,

its Managing Member

  By:       Name:       Title:    

 

*

If required under the Loan Agreement.

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

SCHEDULE I

TO

TRANSFER SUPPLEMENT

COMPLETION OF INFORMATION

AND SIGNATURES FOR

TRANSFER LENDER SUPPLEMENT

 

Re:

Loan Agreement, dated as of June 14, 2007

 

Item 1 (Date of Transfer Lender Supplement):

  

[Insert date of Transfer Lender Supplement]

Item 2 (Transferor Lender):

  

HSH Nordbank AG, acting through its New York Branch

Item 3 (Purchaser Lender):

  

[Insert name of Purchaser Lender]

Item 4 Amounts:

 

           Loan Commitment Amount  

A.

  

Principal Amount of Transferor Lender’s Percentage Interest prior to transfer

  

B.

  

Percentage of Transferor Lenders’ Interests prior to transfer

  

C.

  

Principal Amount of Purchaser Lender’s Percentage Interest purchased under the
Transfer Supplement

  

D.

  

Aggregate Principal Amount of Purchaser Lender’s Percentage Interest after
transfer

  

E.

  

Aggregate Percentage of Purchaser Lenders’ Interests after transfer

  

F.

  

Aggregate Principal Amount of Transferor Lender’s Percentage Interest after
transfer

  

G.

  

Aggregate Principal Amount of Transferor Lenders’ Interests after transfer

  

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

SCHEDULE I

TO

TRANSFER SUPPLEMENT

Item 5 Purchaser Lender Information

 

Address for Notices:

   Payment Instructions   

ABA No. Account No.:            

  

Reference:            

Transferor Lender Information

  

Payment Instructions:

Address for Notices:

  

J.P. Morgan Chase Bank, New York

  

ABA No. ****

HSH Nordbank AG, acting through its

  

For the account of HSH Nordbank AG

New York Branch

  

Account No. ****

  

Reference: Sunrise AL US

230 Park Avenue

  

New York, New York 10169-0005

  

Attention: David Canavan

  

Telephone: (212) 407-6035

  

Facsimile: (212) 407-6833

  

Reference: Sunrise AG

  

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

SCHEDULE II

TO

TRANSFER SUPPLEMENT

[Form of Transfer Effective Notice]

 

To:

AL US Development Venture, LLC, [Name of Purchaser Lender] and HSH Nordbank AG,
acting through its New York Branch, as a Lender

The undersigned, as Administrative Agent under the Loan Agreement dated as of
June 14, 2007 (as amended, modified and supplemented from time to time, the
“Loan Agreement”) among AL US Development Venture, LLC, HSH Nordbank AG, acting
through its New York Branch as Lender, sole Arranger and Administrative Agent,
and such other financial institutions as may from time to time become Lenders,
acknowledges receipt of five executed counterparts of a completed Transfer
Supplement, as described in Schedule I attached hereto. Terms defined in such
Transfer Supplement are used herein as therein defined.

1. Pursuant to such Transfer Supplement, you are advised that the Transfer
Effective Date will be [insert date].

2. Pursuant to such Transfer Supplement, the Transferor Lender is required to
deliver to the Administrative Agent on or before the Transfer Effective Date its
Note.

3. Pursuant to such Transfer Supplement, AL US Development Venture, LLC is
required to deliver to the Administrative Agent on or before the Transfer
Effective Date the following new Notes, dated [insert Closing Date].

 

      Principal
Amount    Payee

Pursuant to such Transfer Supplement, the Purchaser Lender is required to pay
its Purchase Price to the Transferor Lender at or before 12:00 noon (Eastern
time) on the Transfer Effective Date in immediately available funds.

 

Date:    

Very truly yours,

 

HSH Nordbank AG, acting through its

New York Branch, as Administrative Agent

      By:           Name:           Title: