Unassociated Document


    



    PLEDGE
AGREEMENT

    


    THIS PLEDGE AGREEMENT (this “Agreement”) is
entered into as of February 27, 2009,  among BROOKDALE SENIOR LIVING
INC., a Delaware corporation (the “Borrower”), each of
the Domestic Subsidiaries of the Borrower from time to time party
hereto (individually a “Guarantor” and
collectively the “Guarantors”; the
Guarantors, together with the Borrower, individually an “Obligor” and
collectively the “Obligors”) and BANK
OF AMERICA, N.A., in its capacity as administrative agent (in such capacity, the
“Administrative
Agent”) for the holders of the Secured Obligations (defined
below).

    


    


    RECITALS

    


    WHEREAS, pursuant to that certain
Second Amended and Restated Credit Agreement dated as of the date hereof (as
amended, modified, extended, renewed or replaced from time to time, the “Credit Agreement”)
among the Borrower, the Guarantors identified therein, the Lenders identified
therein and the Administrative Agent, the Lenders have agreed to make Loans and issue Letters of
Credit upon the
terms and subject to the conditions set forth therein; and

    


    WHEREAS, this Agreement is required by
the terms of the Credit Agreement.

    


    NOW, THEREFORE, in consideration of
these premises and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

    


    1.           Definitions.

    


    (a)           Capitalized
terms used and not otherwise defined herein shall have the meanings ascribed to
such terms in the Credit Agreement, and the following terms shall have the
meanings set forth in the UCC (defined below):  Adverse Claim,
Certificated Security, Control, Money, Proceeds, Securities Account,
Security.

    


    (b)           In
addition, the following terms shall have the meanings set forth
below:

    


    “Collateral” has the
meaning provided in Section 2 hereof.

    


    “Equity Interests”
shall mean (a) in the case of a corporation, capital stock, (b) in the
case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of capital
stock, (c) in the case of a partnership, partnership interests (whether
general, preferred or limited), (d) in the case of a limited liability
company, membership interests and (e) any other interest or participation
that confers or could confer on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person,
without limitation, options, warrants and any other “equity security” as defined
in Rule 3a11-1 of the Securities Exchange Act of 1934, as
amended.

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    


    “Pledged Equity”
means, with respect to each Obligor, the percent indicated on Schedule 1(a) hereto
(as amended from time to time in accordance with Section 4(f)) of the
issued and outstanding Equity Interests of each Domestic
Subsidiary of the Obligor set forth on Schedule 1(a)
hereto (as amended from time to time in accordance with Section 4(f)), in
each case together with the certificates (or other agreements or instruments),
if any, representing such shares, and all options and other rights, contractual
or otherwise, with respect thereto, including, but not limited to, the
following:

    


    (1)           all
Equity Interests representing a dividend thereon, or representing a distribution
or return of capital upon or in respect thereof, or resulting from a stock
split, revision, reclassification or other exchange therefor, and any
subscriptions, warrants, rights or options issued to the holder thereof, or
otherwise in respect thereof; and

    


    (2)           in
the event of any consolidation or merger involving the issuer thereof and in
which such issuer is not the surviving Person, all shares of each class of the
Equity Interests of the successor Person formed by or resulting from such
consolidation or merger, to the extent that such successor Person is a direct
Subsidiary of an Obligor.

    


    “Scheduled Consents”
shall mean those letter agreements set forth on Schedule 1(b)
hereto.

    


    “Secured Obligations”
means, without duplication, (a) all Obligations now existing or hereafter
arising pursuant to the Loan Documents and (b) all costs and expenses incurred
in connection with enforcement and collection of the Obligations, including the
reasonable fees, charges and disbursements of counsel.

    


    “UCC” means the
Uniform Commercial Code as in effect from time to time in the state of New York
except as such term may be used in connection with the perfection of the
Collateral and then the applicable jurisdiction with respect to such affected
Collateral shall apply.

    


    2.           Grant of Security Interest
in the Collateral.  To secure the prompt payment and
performance in full when due, whether by lapse of time, acceleration, mandatory
prepayment or otherwise, of the Secured Obligations, each Obligor hereby grants
to the Administrative Agent, for the benefit of the holders of the Secured
Obligations, a continuing security interest in, and a right to set off against,
any and all right, title and interest of such Obligor in and to all of the
following, whether now owned or existing or owned, acquired, or arising
hereafter (collectively, the “Collateral”):

    


    (a)           all
of each Obligor’s right, title and interest in all shares of stock, membership
interests and partnership interests described on Schedule 1(a) hereto
and all certificates described on Schedule 1(a) hereto
evidencing such shares, membership interests or partnership
interests;

    


    
      
        
           


        

        
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    (b)           all Pledged Equity;

    


    (c)           all
books, records, ledger cards, files, correspondence, computer programs, tapes,
disks, and related data processing software (owned by such Obligor) that at any
time evidence or contain information relating to any Collateral or are otherwise
necessary or helpful in the collection thereof or realization thereupon;
and

    


    (d)           all
Proceeds of any and all of the foregoing.

    


    The Obligors and the Administrative
Agent, on behalf of the Lenders, hereby acknowledge and agree that the security
interests created hereby in the Collateral constitute continuing collateral
security for all of the Secured Obligations, whether now existing or hereafter
arising.

    


    3.           Representations and
Warranties.  Each Obligor hereby represents and warrants to the
Administrative Agent, for the benefit of the holders of the Secured Obligations,
that:

    


    (a)           Ownership.  Each
Obligor is the legal and beneficial owner of its Collateral and has the right to
pledge, sell, assign or transfer the same.  Subject to any Permitted
Liens, there exists no Adverse Claim with respect to the Pledged Equity of such
Obligor.

    


    (b)           Chief Executive Office;
Books & Records; Legal Name; State of Organization.  As of
the Closing Date, each Obligor’s chief executive office and principal place of
business are (and for the prior four months have been) located at the locations
set forth on Schedule 3(b)
attached hereto, and, as of the Closing Date, each Obligor keeps its books and
records at such applicable locations.  As of the Closing Date, each
Obligor’s exact legal name is as shown in this Agreement and its location
(within the meaning of Section 9-307 of the UCC) is (and for the prior four
months has been) its state of organization as shown in this
Agreement.  As of the Closing Date, no Obligor has in the past four
months changed its name, been party to a merger, consolidation or other change
in structure not disclosed on Schedule 3(b).

    


    (c)           Security
Interest/Priority.  This Agreement creates a valid security
interest in favor of the Administrative Agent, for the benefit of the holders of
the Secured Obligations, in the Collateral of such Obligor and, when properly
perfected by filing, shall constitute a valid and perfected, first priority
security interest in such Collateral (including all uncertificated Pledged
Equity consisting of partnership or limited liability company interests that do
not constitute Securities), to the extent such security interest can be
perfected by filing under the UCC, free and clear of all Liens except for
Permitted Liens.  The taking possession by the Administrative Agent of
the Certificated Securities (if any) evidencing the Pledged Equity will perfect
and establish the first priority of the Administrative Agent’s security interest
in all the Pledged Equity evidenced by such Certificated
Securities.

    


    (d)           Authorization of Pledged
Equity.  All Pledged Equity is duly authorized and validly
issued, is fully paid and, to the extent applicable, nonassessable and is not
subject to the preemptive rights of any Person.

    


    
      
        
           


        

        
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    (e)           No Other Equity
Interests.   As of the Closing Date, no Obligor owns any
Certificated Securities in any Subsidiary that are required to be pledged and
delivered to the Administrative Agent hereunder except as set forth on Schedule 1(a)
hereto.  All such Certificated Securities have been delivered to the
Administrative Agent.

    


    (f)           Consents;
Etc.  There are no restrictions in any organizational document
governing any Pledged Equity or any other document related thereto which would
limit or restrict (i) the grant of a Lien pursuant to this Agreement on such
Pledged Equity, (ii) the perfection of such Lien or (iii) subject to (A)
compliance with the Scheduled Consents and (B) customary restrictions and/or
conditions in the organizational documents governing any Pledged Equity,
including, without limitation, notice of transfer of ownership of such Pledged
Equity, acknowledgment of the terms of the applicable organizational documents
governing such Pledged Equity, and execution of the applicable organizational
documents governing such Pledged Equity (“Transfer
Restrictions”), the exercise of remedies in respect of such perfected
Lien in the Pledged Equity as contemplated by this Agreement.  Except
for (i) the filing or recording of UCC financing statements,
(ii) obtaining Control to perfect the Liens created by this Agreement (to
the extent required under Section 4(a) hereof), (iii) such actions as may
be required by applicable Laws, (iv) such actions required pursuant to the
Scheduled Consents, (v) such actions required by applicable Transfer
Restrictions and (vi) consents, authorizations, filings or other actions which
have been obtained or made, no consent or authorization of, filing with, or
other act by or in respect of, any arbitrator or Governmental Authority and no
consent of any other Person (including, without limitation, any stockholder,
member or creditor of such Obligor), is required for (A) the grant by such
Obligor of the security interest in the Collateral granted hereby or for the
execution, delivery or performance of this Agreement by such Obligor,
(B) the perfection of such security interest (to the extent such security
interest can be perfected by filing under the UCC or the granting of Control) or
(C) the exercise by the Administrative Agent or the holders of the Secured
Obligations of the rights and remedies provided for in this Agreement in
accordance with applicable Laws.

    


    4.           Covenants. Each
Obligor covenants that until such time as the Secured Obligations (excluding
Secured Obligations solely with respect to Cash Collateralized Letters of
Credit) arising under the Loan Documents have been paid in full and the
Commitments and any Letters of Credit (excluding any Cash Collateralized Letters
of Credit) have expired or been terminated, such Obligor shall:

    


    (a)           Pledged Equity.
Deliver to the Administrative Agent promptly upon the receipt thereof by or on
behalf of an Obligor, all certificates and instruments constituting Pledged
Equity.  Prior to delivery to the Administrative Agent, all such
certificates constituting Pledged Equity shall be held in trust by such Obligor
for the benefit of the Administrative Agent pursuant hereto.  All such
certificates representing Pledged Equity shall be delivered in suitable form for
transfer by delivery or shall be accompanied by duly executed instruments of
transfer or assignment in blank, substantially in the form provided in Exhibit 4(a)
hereto.

    


    
      
        
           


        

        
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    (b)           Filing of Financing
Statements, Notices, etc.  Authorize, and hereby does
authorize, the Administrative Agent to prepare and file such financing
statements (including continuation statements) or amendments thereof or
supplements thereto or other instruments as the Administrative Agent may from
time to time deem necessary or appropriate in order to perfect and maintain the
security interest granted hereunder in accordance with the UCC.  Such
financing statements may describe the collateral in the same manner as described
in this Agreement or may contain an indication or description of collateral that
describes such property in any other manner as the Administrative Agent may
determine is necessary, advisable or prudent to ensure the perfection of the
security interests in the collateral granted to the Administrative Agent in
connection herewith.  Each Obligor shall also execute and deliver to
the Administrative Agent such agreements, assignments or instruments (including
affidavits, notices, reaffirmations and amendments and restatements of existing
documents, as the Administrative Agent may reasonably request) and do all such
other things as the Administrative Agent may reasonably deem necessary or
appropriate (i) to assure to the Administrative Agent its security
interests hereunder are perfected and maintained, including such instruments as
the Administrative Agent may from time to time reasonably request in order to
perfect and maintain the security interests granted hereunder in accordance with
the UCC, (ii) to consummate the transactions contemplated hereby and
(iii) to otherwise protect and assure the Administrative Agent of its
rights and interests hereunder.  Furthermore, each Obligor also hereby
irrevocably makes, constitutes and appoints the Administrative Agent, its
nominee or any other person whom the Administrative Agent may designate, as such
Obligor’s attorney in fact with full power and for the limited purpose to sign
in the name of such Obligor any financing statements, or amendments and
supplements to financing statements, renewal financing statements, notices or
any similar documents which in the Administrative Agent’s reasonable discretion
would be necessary or appropriate in order to perfect and maintain perfection of
the security interests granted hereunder, such power, being coupled with an
interest, being and remaining irrevocable until such time as the Secured
Obligations arising under the Loan Documents have been paid in full and the
Commitments have expired or been terminated.  In the event for any
reason the Law of any jurisdiction other than New York becomes or is applicable
to the Collateral of any Obligor or any part thereof, or to any of the Secured
Obligations, such Obligor agrees to execute and deliver all such instruments and
to do all such other things as the Administrative Agent in its sole discretion
reasonably deems necessary or appropriate to preserve, protect and enforce the
security interest of the Administrative Agent under the Law of such other
jurisdiction (and, if an Obligor shall fail to do so promptly upon the request
of the Administrative Agent, then the Administrative Agent may execute any and
all such requested documents on behalf of such Obligor pursuant to the power of
attorney granted hereinabove).

    


    (c)           Defense of
Title.  Warrant and defend title to and ownership of the
Collateral (except as otherwise permitted under the Credit Agreement and the
other Loan Documents) of such Obligor at its own expense against the claims and
demands of all other parties claiming an interest therein, keep the Collateral
free from all Liens, except for Liens permitted by the Credit Agreement and not
sell, exchange, transfer, assign, lease or otherwise dispose of the Collateral
of such Obligor or any interest therein, except as permitted under the Credit
Agreement and the other Loan Documents.

    


    
      
        
           


        

        
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    (d)           [reserved]

    


    (e)           Issuance or Acquisition of
Equity Interests.  Not without executing and delivering, or
causing to be executed and delivered, to the Administrative Agent such
agreements, documents and instruments as the Administrative Agent may reasonably
require, issue or acquire any Pledged Equity consisting of an interest in a
partnership or a limited liability company that (i) is dealt in or traded on a
securities exchange or in a securities market, (ii) by its terms expressly
provides that it is a Security governed by Article 8 of the UCC, (iii) is an
investment company security, (iv) is held in a Securities Account or (v)
constitutes a Security or a Financial Asset.

    


    (f)           Updates to Schedule
1(a).  Following formation or acquisition of any Domestic
Subsidiary, comply with the terms of Section 7.14(a) of the Credit Agreement
and, if applicable, deliver to the Administrative Agent a replacement Schedule 1(a) hereto
identifying such Subsidiary and indicating the maximum amount of the Equity
Interests of such Subsidiary which the Obligor is allowed to
pledge.

    


    5.           Authorization to File
Financing Statements.  Each Obligor hereby authorizes the
Administrative Agent to prepare and file such financing statements (including
continuation statements) or amendments thereof or supplements thereto or other
instruments as the Administrative Agent may from time to time deem necessary or
appropriate in order to perfect and maintain the security interests granted
hereunder in accordance with the UCC.  Such financing statements may
describe the collateral in the same manner as described in this Agreement or may
contain an indication or description of collateral that describes such property
in any other manner as the Administrative Agent may determine is necessary,
advisable or prudent to ensure the perfection of the security interests in the
collateral granted to the Administrative Agent in connection
herewith.

    


    6.           Advances.  On
failure of any Obligor to perform any of the covenants and agreements contained
herein, the Administrative Agent may, at its sole option and in its sole
discretion, perform the same and in so doing may expend such sums as the
Administrative Agent may reasonably deem advisable in the performance thereof,
including, without limitation, the payment of any taxes, a payment to obtain a
release of a Lien or potential Lien, expenditures made in defending against any
adverse claim and all other expenditures which the Administrative Agent may make
for the protection of the security hereof or which may be compelled to make by
operation of Law.  All such sums and amounts so expended shall be
repayable by the Obligors on a joint and several basis promptly upon timely
notice thereof and demand therefor, shall constitute additional Secured
Obligations and shall bear interest from the date said amounts are expended at
the Default Rate.  No such performance of any covenant or agreement by
the Administrative Agent on behalf of any Obligor, and no such advance or
expenditure therefor, shall relieve the Obligors of any Default or Event of
Default.  The Administrative Agent may make any payment hereby
authorized in accordance with any bill, statement or estimate procured from the
appropriate public office or holder of the claim to be discharged without
inquiry into the accuracy of such bill, statement or estimate or into the
validity of any tax assessment, sale, forfeiture, tax lien, title or claim
except to

    


    


    
      
        
           


        

        
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    the
extent such payment is being contested in good faith by an Obligor in
appropriate proceedings and against which adequate reserves are being maintained
in accordance with GAAP.

    


    7.           Remedies.

    


    (a)           General
Remedies.  Upon the occurrence of an Event of Default and
during continuation thereof, the Administrative Agent shall have, in addition to
the rights and remedies provided herein, in the Loan Documents, in any other
documents relating to the Secured Obligations, or by Law (including, but not
limited to, levy of attachment, garnishment and the rights and remedies set
forth in the UCC of the jurisdiction applicable to the affected Collateral), the
rights and remedies of a secured party under the UCC (regardless of whether the
UCC is the law of the jurisdiction where the rights and remedies are asserted
and regardless of whether the UCC applies to the affected Collateral), and
further, the Administrative Agent may, with or without judicial process or the
aid and assistance of others, without demand and without advertisement,
notice, hearing or process of law, all of which each of the Obligors hereby
waives to the fullest extent permitted by Law, at any place and time or times,
sell and deliver any or all Collateral held by or for it at public or private
sale (which in the case of a private sale of Pledged Equity, shall be to a
restricted group of purchasers who will be obligated to agree, among other
things, to acquire such securities for their own account, for investment and not
with a view to the distribution or resale thereof), at any exchange or broker’s
board or elsewhere, by one or more contracts, in one or more parcels, for Money,
upon credit or otherwise, at such prices and upon such terms as the
Administrative Agent deems advisable, in its sole discretion (subject to any and
all mandatory legal requirements).  Each Obligor acknowledges that any
such private sale may be at prices and on terms less favorable to the seller
than the prices and other terms which might have been obtained at a public sale
and, notwithstanding the foregoing, agrees that such private sale shall be
deemed to have been made in a commercially reasonable manner and, in the case of
a sale of Pledged Equity, that the Administrative Agent shall have no obligation
to delay sale of any such securities for the period of time necessary to permit
the issuer of such securities to register such securities for public sale under
the Securities Act of 1933.  Neither the Administrative Agent’s
compliance with applicable Law nor its disclaimer of warranties relating to the
Collateral shall be considered to adversely affect the commercial reasonableness
of any sale.  To the extent the rights of notice cannot be legally
waived hereunder, each Obligor agrees that any requirement of reasonable notice
shall be met if such notice, specifying the place of any public sale or the time
after which any private sale is to be made, is personally served on or mailed,
postage prepaid, to the Borrower in accordance with the notice provisions of the
Credit Agreement at least 10 days before the time of sale or other event giving
rise to the requirement of such notice.  The Administrative Agent may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.  Each Obligor further
acknowledges and agrees that any offer to sell any Pledged Equity which has been
(i) publicly advertised on a bona fide basis in a newspaper or other
publication of general circulation in the financial community of New York, New
York (to the extent that such offer may be advertised without prior registration
under the Securities Act of 1933), or (ii) made privately in the
manner

    


    
      
        
           


        

        
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    described
above shall be deemed to involve a “public sale” under the UCC, notwithstanding
that such sale may not constitute a “public offering” under the Securities Act
of 1933, and the Administrative Agent may, in such event, bid for the purchase
of such securities.  The Administrative Agent shall not be obligated
to make any sale or other disposition of the Collateral regardless of notice
having been given.  To the extent permitted by applicable Law, any
holder of Secured Obligations may be a purchaser at any such sale.  To
the extent permitted by applicable Law, each of the Obligors hereby waives all
of its rights of redemption with respect to any such sale.  Subject to
the provisions of applicable Law, the Administrative Agent may postpone or cause
the postponement of the sale of all or any portion of the Collateral by
announcement at the time and place of such sale, and such sale may, without
further notice, to the extent permitted by Law, be made at the time and place to
which the sale was postponed, or the Administrative Agent may further postpone
such sale by announcement made at such time and place.

    


    (b)           Access.  In
addition to the rights and remedies hereunder, upon the occurrence of an Event
of Default and during the continuance thereof, the Administrative Agent shall
have the right to enter and remain upon the various premises of the Obligors
without cost or charge to the Administrative Agent, and use the same, together
with materials, supplies, books and records of the Obligors for the purpose of
collecting and liquidating the Collateral, or for preparing for sale and
conducting the sale of the Collateral, whether by foreclosure, auction or
otherwise.

    


    (c)           Nonexclusive Nature of
Remedies.  Failure by the Administrative Agent or the holders
of the Secured Obligations to exercise any right, remedy or option under this
Agreement, any other Loan Document, any other document relating to the Secured
Obligations, or as provided by Law, or any delay by the Administrative Agent or
the holders of the Secured Obligations in exercising the same, shall not operate
as a waiver of any such right, remedy or option.  No waiver hereunder
shall be effective unless it is in writing, signed by the party against whom
such waiver is sought to be enforced and then only to the extent specifically
stated, which in the case of the Administrative Agent or the holders of the
Secured Obligations shall only be granted as provided herein.  To the
extent permitted by Law, neither the Administrative Agent, the holders of the
Secured Obligations, nor any party acting as attorney for the Administrative
Agent or the holders of the Secured Obligations, shall be liable hereunder for
any acts or omissions or for any error of judgment or mistake of fact or law
other than their gross negligence or willful misconduct
hereunder.  The rights and remedies of the Administrative Agent and
the holders of the Secured Obligations under this Agreement shall be cumulative
and not exclusive of any other right or remedy which the Administrative Agent or
the holders of the Secured Obligations may have.

    


    
      
        
           


        

        
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    (d)           Retention of
Collateral.  In addition to the rights and remedies hereunder,
the Administrative Agent may, in compliance with Sections 9-620 and 9-621
of the UCC or otherwise complying with the requirements of applicable Law of the
relevant jurisdiction, accept or retain the Collateral in satisfaction of the
Secured Obligations.  Unless and until the Administrative Agent shall
have provided such notices, however, the Administrative Agent shall not be
deemed to have retained any Collateral in satisfaction of any Secured
Obligations for any reason.

    


    (e)           Deficiency.  In
the event that the proceeds of any sale, collection or realization are
insufficient to pay all amounts to which the Administrative Agent or the holders
of the Secured Obligations are legally entitled, the Obligors shall be jointly
and severally liable for the deficiency, together with interest thereon at the
Default Rate, together with the costs of collection and the fees, charges and
disbursements of counsel.  Any surplus remaining after the full
payment and satisfaction of the Secured Obligations shall be returned to the
Obligors or to whomsoever a court of competent jurisdiction shall determine to
be entitled thereto.

    


    (f)           Indemnification.  Each
Obligor hereby agrees to indemnify the Administrative Agent and the Lenders in
accordance with the terms of the Credit Agreement, with respect to the actions
taken by the Administrative Agent in accordance with the
foregoing.  The foregoing indemnity shall survive the repayment of the
Secured Obligations.

    


    8.           Rights of the Administrative
Agent.

    


    (a)           Power of
Attorney.  In addition to other powers of attorney contained
herein, each Obligor hereby designates and appoints the Administrative Agent, on
behalf of the holders of the Secured Obligations, and each of its designees or
agents, as attorney-in-fact of such Obligor, irrevocably and with power of
substitution, with authority to take any or all of the following actions upon
the occurrence and during the continuance of an Event of Default:

     

    (i)           to
demand, collect, settle, compromise, adjust, give discharges and releases, all
as the Administrative Agent may reasonably determine;

    


    (ii)          to
commence and prosecute any actions at any court for the purposes of collecting
any Collateral and enforcing any other right in respect thereof;

    


    (iii)         to
defend, settle or compromise any action brought and, in connection therewith,
give such discharge or release as the Administrative Agent may deem reasonably
appropriate;

    


    (iv)        adjust
and settle claims under any insurance policy relating thereto;

    


    (v)         execute
and deliver all assignments, conveyances, statements, financing statements,
renewal financing statements, security agreements, affidavits,

    


    
      
        
           


        

        
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    notices
and other agreements, instruments and documents that the Administrative Agent
may determine necessary in order to perfect and maintain the security interests
and liens granted in this Agreement and in order to fully consummate all of the
transactions contemplated therein;

    


    (vi)        institute
any foreclosure proceedings that the Administrative Agent may deem
appropriate;

    


    (vii)       to
sign and endorse any drafts, assignments, proxies, stock powers, verifications,
notices and other documents relating to the Collateral;

    


    (viii)      to
exchange any of the Pledged Equity or other property upon any merger,
consolidation, reorganization, recapitalization or other readjustment of the
issuer thereof and, in connection therewith, deposit any of the Pledged Equity
with any committee, depository, transfer agent, registrar or other designated
agency upon such terms as the Administrative Agent may reasonably deem
appropriate;

    


    (ix)         to
vote for a shareholder resolution, or to sign an instrument in writing,
sanctioning the transfer of any or all of the Pledged Equity into the name of
the Administrative Agent or one or more of the holders of the Secured
Obligations or into the name of any transferee to whom the Pledged Equity or any
part thereof may be sold pursuant to Section 7 hereof;

    


    (x)          to
pay or discharge taxes, liens, security interests or other encumbrances levied
or placed on or threatened against the Collateral;

    


    (xi)         to
direct any parties liable for any payment in connection with any of the
Collateral to make payment of any and all monies due and to become due
thereunder directly to the Administrative Agent or as the Administrative Agent
shall direct;

    


    (xii)        to
receive payment of and receipt for any and all monies, claims, and other amounts
due at any time in respect of or arising out of any Collateral; and

    


    (xiii)       do
and perform all such other acts and things as the Administrative Agent may
reasonably deem to be necessary, proper or convenient in connection with the
Collateral.

    


    
      	
               
      

            	
              This
      power of attorney is a power coupled with an interest and shall be
      irrevocable until such time as the Secured Obligations (excluding Secured
      Obligations solely with respect to Cash Collateralized Letters of Credit)
      arising under the Loan Documents have been paid in full and the
      Commitments and any Letter of Credit (excluding any Cash Collateralized
      Letter of Credit) have expired or been terminated.  The
      Administrative Agent shall be under no duty to exercise or withhold the
      exercise of any of the rights, powers, privileges and options expressly or
      implicitly granted to the Administrative Agent in this Agreement,
      and

            


    

    


    
      
        
           


        

        
          10

          
            

          

        

        
           


        

      

    

    
 

    
      	
               
      

            	
              shall
      not be liable for any failure to do so or any delay in doing
      so.  The Administrative Agent shall not be liable for any act or
      omission or for any error of judgment or any mistake of fact or law in its
      individual capacity or its capacity as attorney-in-fact except acts or
      omissions resulting from its gross negligence or willful
      misconduct.  This power of attorney is conferred on the
      Administrative Agent solely to protect, preserve and realize upon its
      security interest in the
Collateral.

            


    

    


    (b)           Assignment by the
Administrative Agent. The Administrative Agent may from time to time
assign the Secured Obligations to a successor Administrative Agent appointed in
accordance with the Credit Agreement, and such successor shall be entitled to
all of the rights and remedies of the Administrative Agent under this Agreement
in relation thereto.

    


    (c)           The Administrative Agent’s
Duty of Care.  Other than the exercise of reasonable care to
assure the safe custody of the Collateral while being held by the Administrative
Agent hereunder, the Administrative Agent shall have no duty or liability to
preserve rights pertaining thereto, it being understood and agreed that the
Obligors shall be responsible for preservation of all rights in the Collateral,
and the Administrative Agent shall be relieved of all responsibility for the
Collateral upon surrendering it or tendering the surrender of it to the
Obligors.  The Administrative Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which the Administrative Agent accords its own property, which shall be no less
than the treatment employed by a reasonable and prudent agent in the industry,
it being understood that the Administrative Agent shall not have responsibility
for taking any necessary steps to preserve rights against any parties with
respect to any of the Collateral.  In the event of a public or private
sale of Collateral pursuant to Section 7 hereof, the Administrative Agent shall
have no responsibility for (i) ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relating to
any Collateral, whether or not the Administrative Agent has or is deemed to have
knowledge of such matters, or (ii) taking any steps to clean, repair or
otherwise prepare the Collateral for sale.

    


    (d)           Voting and Payment Rights in
Respect of the Pledged Equity.

    


    (i)           So
long as no Event of Default shall exist and no notice has been given by the
Administrative Agent pursuant to clause (ii) below, each Obligor may
(A) exercise any and all voting and other consensual rights pertaining to
the Pledged Equity of such Obligor or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the Credit Agreement and
(B) receive and retain any and all dividends (other than stock dividends
and other dividends constituting Collateral which are addressed hereinabove),
principal or interest paid in respect of the Pledged Equity to the extent they
are allowed under the Credit Agreement; and

    


    (ii)           During
the continuance of an Event of Default and following the giving of notice by the
Administrative Agent to such Obligor of the exercise by

    


    
      
        
           


        

        
          11

          
            

          

        

        
           


        

      

    

    
 

    the
Administrative Agent of the rights under this clause (ii), (A) all rights of an
Obligor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to clause (i)(A) above shall cease
and all such rights shall thereupon become vested in the Administrative Agent
which shall then have the sole right to exercise such voting and other
consensual rights, (B) all rights of an Obligor to receive the dividends,
principal and interest payments which it would otherwise be authorized to
receive and retain pursuant to clause (i)(B) above shall cease and all such
rights shall thereupon be vested in the Administrative Agent which shall then
have the sole right to receive and hold as Collateral such dividends, principal
and interest payments, and (C) all dividends, principal and interest payments
which are received by an Obligor contrary to the provisions of clause (ii)(B)
above shall be received in trust for the benefit of the Administrative Agent,
shall be segregated from other property or funds of such Obligor, and shall be
forthwith paid over to the Administrative Agent as Collateral in the exact form
received, to be held by the Administrative Agent as Collateral and as further
collateral security for the Secured Obligations.

    


    (e)           Releases of
Collateral.  (i) If any Collateral shall be sold, transferred
or otherwise disposed of by any Obligor in a transaction permitted by the Credit
Agreement, then the Administrative Agent, at the request and sole expense of
such Obligor, shall promptly execute and deliver to such Obligor all releases
and other documents, and take such other action, reasonably necessary for the
release of the Liens created hereby or by any other Collateral Document on such
Collateral.  (ii) The Administrative Agent may release any of the
Pledged Equity from this Agreement or may substitute any of the Pledged Equity
for other Pledged Equity without altering, varying or diminishing in any way the
force, effect, lien, pledge or security interest of this Agreement as to any
Pledged Equity not expressly released or substituted, and this Agreement shall
continue as a first priority lien on all Pledged Equity not expressly released
or substituted.

    


    9.           Application of
Proceeds.  Upon the acceleration of the Obligations under the
terms of the Credit Agreement, any payments in respect of the Secured
Obligations and any proceeds of the Collateral, when received by the
Administrative Agent or any holder of the Secured Obligations in Money, will be
applied in reduction of the Secured Obligations in the order set forth in the
Credit Agreement.

    


    10.           Continuing
Agreement.

    


    (a)           This
Agreement shall remain in full force and effect until such time as the Secured
Obligations (excluding Secured Obligations solely with respect to Cash
Collateralized Letters of Credit) arising under the Loan Documents have been
paid in full and the Commitments and any Letter of Credit (excluding any Cash
Collateralized Letter of Credit) have expired or been terminated, at which time
this Agreement shall be automatically terminated and the Administrative Agent
shall, upon the request and at the expense of the Obligors, forthwith release
all of its liens and security interests hereunder and shall execute and deliver
all UCC termination statements and/or other documents reasonably requested by
the Obligors evidencing such termination.

    


    
      
        
           


        

        
          12

          
            

          

        

        
           


        

      

    

    


    


    (b)           This
Agreement shall continue to be effective or be automatically reinstated, as the
case may be, if at any time payment, in whole or in part, of any of the Secured
Obligations is rescinded or must otherwise be restored or returned by the
Administrative Agent or any holder of the Secured Obligations as a preference,
fraudulent conveyance or otherwise under any Debtor Relief Law, all as though
such payment had not been made; provided that in the event payment of all or any
part of the Secured Obligations is rescinded or must be restored or returned,
all reasonable costs and expenses (including without limitation any reasonable
legal fees and disbursements) incurred by the Administrative Agent or any holder
of the Secured Obligations in defending and enforcing such reinstatement shall
be deemed to be included as a part of the Secured Obligations.

    


    11.           Amendments; Waivers;
Modifications, etc.  This Agreement and the provisions hereof
may not be amended, waived, modified, changed, discharged or terminated except
as set forth in the Credit Agreement.

    


    12.           Successors in
Interest.  This Agreement shall be binding upon each Obligor,
its successors and assigns and shall inure, together with the rights and
remedies of the Administrative Agent and the holders of the Secured Obligations
hereunder, to the benefit of the Administrative Agent and the holders of the
Secured Obligations and their successors and permitted assigns.

    


    13.           Notices.  All
notices required or permitted to be given under this Agreement shall be in
conformance with the terms of the Credit Agreement.

    


    14.           Counterparts;
Signatures.  This Agreement may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same
instrument.  It shall not be necessary in making proof of this
Agreement to produce or account for more than one such
counterpart.  Any signature delivered by facsimile or electronic mail
shall be deemed to be an original signature hereto, provided that the
Obligors shall deliver an original to the Administrative Agent upon the
Administrative Agent’s request.

    


    15.           Headings.  The
headings of the sections hereof are provided for convenience only and shall not
in any way affect the meaning or construction of any provision of this
Agreement.

    


    16.           Governing Law; Submission to
Jurisdiction; Venue; WAIVER OF JURY TRIAL.  The terms of Sections 11.14 and
11.15 of the
Credit Agreement with respect to governing law, submission to jurisdiction,
venue and waiver of jury trial are incorporated herein by reference, mutatis mutandis, and the
parties hereto agree to such terms.

    


    17.           Severability.  If
any provision of any of the Agreement is determined to be illegal, invalid or
unenforceable, such provision shall be fully severable and the remaining
provisions shall remain in full force and effect and shall be construed without
giving effect to the illegal, invalid or unenforceable provisions.

    


    
      
        
           


        

        
          13

          
            

          

        

        
           


        

      

    

    


    


    18.           Entirety.  This
Agreement, the other Loan Documents and the other documents relating to the
Secured Obligations represent the entire agreement of the parties hereto and
thereto, and supersede all prior agreements and understandings, oral or written,
if any, including any commitment letters or correspondence relating to the Loan
Documents, any other documents relating to the Secured Obligations, or the
transactions contemplated herein and therein.

    


    19.           Other
Security.  To the extent that any of the Secured Obligations
are now or hereafter secured by property other than the Collateral (including,
without limitation, real property and securities owned by an Obligor), or by a
guarantee, endorsement or property of any other Person, then the Administrative
Agent shall have the right to proceed against such other property, guarantee or
endorsement upon the occurrence and during the continuance of any Event of
Default, and the Administrative Agent shall have the right, in its sole
discretion, to determine which rights, security, liens, security interests or
remedies the Administrative Agent shall at any time pursue, relinquish,
subordinate, modify or take with respect thereto, without in any way modifying
or affecting any of them or the Secured Obligations or any of the rights of the
Administrative Agent or the holders of the Secured Obligations under this
Agreement, under any other of the Loan Documents or under any other document
relating to the Secured Obligations.

    


    20.           Joinder.  At
any time after the date of this Agreement, one or more additional Persons may
become party hereto by executing and delivering to the Administrative Agent a
Joinder Agreement.  Immediately upon such execution and delivery of
such Joinder Agreement (and without any further action), each such additional
Person will become a party to this Agreement as an “Obligor” and have all of the
rights and obligations of an Obligor hereunder and this Agreement and the
schedules hereto shall be deemed amended by such Joinder Agreement.

    


    21.           Rights of Required
Lenders.  All rights of the Administrative Agent hereunder, if
not exercised by the Administrative Agent, may be exercised by the Required
Lenders.

    


    22.           Consent of Issuers of
Pledged Equity.  Each issuer of Pledged Equity party to this
Agreement hereby acknowledges, consents and agrees to the grant of the security
interests in such Pledged Equity by the applicable Obligors pursuant to this
Agreement, together with all rights accompanying such security interest as
provided by this Agreement and applicable law, notwithstanding any
anti-assignment provisions in any operating agreement, limited partnership
agreement or similar organizational or governance documents of such
issuer.

    


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        14

        
          

        

      

      
         


      

    

    
 

    Each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.

    


    
      	
              OBLIGORS:

            	
              BROOKDALE
      SENIOR LIVING INC., a

              Delaware
      corporation

               

               

              By:   /s/ T. Andrew
      Smith                       
      

              Name:  T.
      Andrew Smith

              Title:   Executive
      Vice President and Secretary

               

               

            
	 
      	
              AHC
      PROPERTIES, INC., a Delaware

              corporation

               

               

                    
                By:   /s/ T. Andrew
      Smith                       
      
Name:  T.
      Andrew Smith

              Title:   Executive
      Vice President and Secretary

               

               

            
	 
      	
              ALS
      CANADA, INC., a Delaware corporation

               

               

                    
                By:   /s/ T. Andrew
      Smith                       
      
Name:  T.
      Andrew Smith

              Title:   Executive
      Vice President and Secretary

               

               

            
	 
      	
              AMERICAN
      RETIREMENT

              CORPORATION,
      a Tennessee corporation

               

               

                    
                By:   /s/ T. Andrew
      Smith                       
      
Name:  T.
      Andrew Smith

              Title:   Executive
      Vice President and Secretary

               

               

            
	 
      	
              ARC
      LP HOLDINGS, LLC, a Tennessee

              limited
      liability company

               

               

                    
                By:   /s/ T. Andrew
      Smith                       
      
Name:  T.
      Andrew Smith

              Title:   Executive
      Vice President and Secretary

               

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    
      	 
      	 
      
	 
      	
              ARCPI
      HOLDINGS, INC., a Delaware

              corporation

               

               

                    
                By:   /s/ T. Andrew
      Smith                       
      
Name:  T.
      Andrew Smith

              Title:   Executive
      Vice President and Secretary

               

               

            
	 
      	
              BLC-GC
      MEMBER, LLC, a Delaware limited

              liability
      company

               

               

                    
                By:   /s/ T. Andrew
      Smith                       
      
Name:  T.
      Andrew Smith

              Title:   Executive
      Vice President and Secretary

               

               

            
	 
      	
              BROOKDALE
      DEVELOPMENT, LLC, a

              Delaware
      limited liability company

               

               

                    
                By:   /s/ T. Andrew
      Smith                       
      
Name:  T.
      Andrew Smith

              Title:   Executive
      Vice President and Secretary

               

               

            
	 
      	
              BROOKDALE
      LIVING COMMUNITIES,

              INC.,
      a Delaware corporation

               

               

                    
                By:   /s/ T. Andrew
      Smith                       
      
Name:  T.
      Andrew Smith

              Title:   Executive
      Vice President and Secretary

               

               

            
	 
      	
               

              BROOKDALE
      OPERATIONS, LLC, a

              Delaware
      limited liability company

               

                    
                By:   /s/ T. Andrew
      Smith                       
      
Name:  T.
      Andrew Smith

              Title:   Executive
      Vice President and Secretary

               

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    
 

    
      	 
      	
              BROOKDALE
      SENIOR LIVING

              COMMUNITIES,
      INC., a Delaware

              corporation,
      f/k/a Alterra Healthcare

              Corporation,
      a Delaware corporation

               

               

                    
                By:   /s/ T. Andrew
      Smith                       
      
Name:  T.
      Andrew Smith

              Title:   Executive
      Vice President and Secretary

               

            
	 
      	 
      
	 
      	
              BROOKDALE
      WELLINGTON, INC., a

              Delaware
      corporation

               

               

                    
                By:   /s/ T. Andrew
      Smith                       
      
Name:  T.
      Andrew Smith

              Title:   Executive
      Vice President and Secretary

               

               

            
	 
      	
              FEBC-ALT
      HOLDINGS INC., a Delaware

              corporation

               

               

                    
                By:   /s/ T. Andrew
      Smith                       
      
Name:  T.
      Andrew Smith

              Title:   Executive
      Vice President and Secretary

               

               

            
	 
      	
              FEBC-ALT
      INVESTORS, LLC, a Delaware

              limited
      liability company

               

               

                    
                By:   /s/ T. Andrew
      Smith                       
      
Name:  T.
      Andrew Smith

              Title:   Executive
      Vice President and Secretary

               

            
	 
      	 
      
	 
      	
              FIT
      REN LLC, a Delaware limited liability

              company

               

               

                    
                By:   /s/ T. Andrew
      Smith                       
      
Name:  T.
      Andrew Smith

              Title:   Executive
      Vice President and Secretary

               

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    
 

    
      	 
      	 
      
	 
      	
              SALI
      ASSETS, LLC, a North Carolina limited

              liability
      company

               

                    
                By:   /s/ T. Andrew
      Smith                       
      
Name:  T.
      Andrew Smith

              Title:   Executive
      Vice President and Secretary

               

               

            
	 
      	
              SOUTHERN
      ASSISTED LIVING, INC., a

              North
      Carolina corporation

               

                    
                By:   /s/ T. Andrew
      Smith                       
      
Name:  T.
      Andrew Smith

              Title:   Executive
      Vice President and Secretary

            


    

    


     


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    
 

    
      Accepted
and agreed to as of the date first above written.

      


      BANK OF
AMERICA, N.A., as Administrative Agent

       

    

    
      
        	
                By:

              	
                  /s/
      Kevin Ahart

              	 
      	 
      
	
                Name:

              	
                     
      Kevin Ahart

              	 
      	 
      
	
                Title:

              	
                   
      Vice President