<PAGE>   1
                                                                   EXHIBIT 10.49

                            SECOND AMENDED, RESTATED
                      AND INCREASED MASTER PROMISSORY NOTE

     THIS SECOND AMENDED, RESTATED AND INCREASED MASTER PROMISSORY NOTE is made
this 29th day of July, 1999, by (i) SUNRISE EAST ASSISTED LIVING LIMITED
PARTNERSHIP ("SEAL"), a Virginia limited partnership, (ii) SUNRISE SEAL, L.L.C.
("Sunrise SEAL"), a Virginia limited liability company, (iii) SUNRISE RIVERSIDE
ASSISTED LIVING, L.P., a California limited partnership, SUNRISE HUNTCLIFF
ASSISTED LIVING LIMITED PARTNERSHIP, a Georgia limited partnership, SUNRISE
STERLING CANYON ASSISTED LIVING LIMITED PARTNERSHIP, a California limited
partnership, SUNRISE PARAMUS ASSISTED LIVING LIMITED PARTNERSHIP, a New Jersey
limited partnership, SUNRISE FAIRFIELD ASSISTED LIVING, L.P., a New Jersey
limited partnership, SUNRISE BELLEVUE ASSISTED LIVING LIMITED PARTNERSHIP, a
Washington limited partnership, SUNRISE OAKLAND ASSISTED LIVING LIMITED
PARTNERSHIP, a California limited partnership, SUNRISE WALNUT CREEK ASSISTED
LIVING LIMITED PARTNERSHIP, a California limited partnership and SUNRISE DECATUR
ASSISTED LIVING LIMITED PARTNERSHIP, a Georgia limited partnership
(collectively, the "SEAL Affiliates") (SEAL, Sunrise SEAL and the SEAL
Affiliates sometimes referred to herein collectively as the "Borrowers") and
BANK OF AMERICA, N.A., d/b/a NATIONSBANK, N.A., its successors and assigns,
successor by merger to NationsBank, N.A., as administrative agent (the
"Administrative Agent") for itself and for certain additional lenders
(collectively with the Administrative Agent, the "Lenders") who are or shall be
from time to time participating in a bank group pursuant to a Second Amended and
Restated Agency Agreement of even date herewith (as amended, restated or
substituted from time to time, the "Agency Agreement").

                                    RECITALS

     A. The Lenders have provided a credit facility (such credit facility, as
modified, increased, extended, restated or substituted, is referred to
hereinafter as the "Credit Facility" or the "Loan") in the maximum principal sum
of $250,000,000. Advances or readvances have been made pursuant to, and secured
by, the provisions of that certain Amended and Restated Financing and Security
Agreement dated December 23, 1997 by and between the Administrative Agent and
SEAL (as amended, restated or substituted from time to time, the "Existing
Financing Agreement") and that certain Amended and Restated Master Construction
Loan Agreement dated December 23, 1997 by and between the Administrative Agent
and SEAL (as amended, restated or substituted from time to time, the
"Construction Agreement").

     B. The Loan is evidenced by that certain Amended, Restated, Consolidated
and Increased Master Promissory Note dated December 23, 1997 payable by SEAL to
Administrative Agent on behalf of the Lenders as amended pursuant to the First
Amendment to Amended, Restated, Consolidated and Increased Promissory Note and
Additional Borrower Joinder Supplement by and among SEAL, Sunrise SEAL and the
Administrative Agent (collectively, the "Original Note").


<PAGE>   2



     C. As of December 30, 1998, the Credit Facility was amended by adding
Sunrise SEAL as a co-borrower pursuant to amendments to the Original Note, the
Existing Financing Agreement and certain other Financing Documents executed in
connection therewith.

     D. The Lenders have agreed to increase the Credit Facility Committed Amount
to $400,000,000. In connection with such increase and other modifications to the
Credit Facility, the Existing Financing Agreement and the Construction Agreement
are being amended, restated and consolidated pursuant to the Second Amended and
Restated Financing and Security Agreement of even date herewith (as amended,
restated or substituted from time to time the "Financing Agreement").

     E. Certain Eligible Projects owned by Sunrise Riverside Assisted Living,
L.P., Sunrise Huntcliff Assisted Living Limited Partnership, Sunrise Sterling
Canyon Assisted Living Limited Partnership, Sunrise Paramus Assisted Living
Limited Partnership, Sunrise Fairfield Assisted Living, L.P., Sunrise Bellevue
Assisted Living Limited Partnership, Sunrise Oakland Assisted Living Limited
Partnership, Sunrise Walnut Creek Assisted Living Limited Partnership, and
Sunrise Decatur Assisted Living Limited Partnership (collectively, the "SEAL
Affiliates") have been financed under the Credit Facility, and the SEAL
Affiliates have guaranteed the Credit Facility but have not been added as
borrowers under the Credit Facility.

     F. In connection with the increase to the Credit Facility, (i) the SEAL
Affiliates, and (ii) every other entity beneficially owned, in whole or in part,
directly or indirectly, by Sunrise Assisted Living, Inc. which hereafter pledges
an Eligible Property as collateral for the Credit Facility and enters into a
Joinder Agreement pursuant to the terms of the Financing Agreement
(collectively, the "Additional SEAL Affiliates") are to be added as borrowers
under the Credit Facility.

     G. The Note, the Deeds of Trust (as defined in the Financing Agreement),
the Financing Agreement, the Security Documents (as defined in the Financing
Agreement), and all other documents evidencing or securing the Loan are
hereinafter referred to collectively as the "Financing Documents."

     H. All capitalized terms used and not defined herein shall have the meaning
given to such terms in the Financing Agreement.

     NOW, THEREFORE, in consideration of the premises and other good and

valuable consideration, the receipt and sufficiency of which is hereby

acknowledged, the Administrative Agent and the Borrower covenant and agree as

follows:

     1. The above Recitals are incorporated herein by reference.


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<PAGE>   3


     2. The Original Note is hereby amended and restated in its entirety as
follows:

$400,000,000                                                July 29, 1999

     FOR VALUE RECEIVED, SUNRISE EAST ASSISTED LIVING LIMITED PARTNERSHIP, a
Virginia limited partnership, SUNRISE SEAL, L.L.C., a Virginia limited liability
company, SUNRISE RIVERSIDE ASSISTED LIVING, L.P., a California limited
partnership, SUNRISE HUNTCLIFF ASSISTED LIVING LIMITED PARTNERSHIP, a Georgia
limited partnership, SUNRISE STERLING CANYON ASSISTED LIVING LIMITED
PARTNERSHIP, a California limited partnership, SUNRISE PARAMUS ASSISTED LIVING
LIMITED PARTNERSHIP, a New Jersey limited partnership, SUNRISE FAIRFIELD
ASSISTED LIVING, L.P., a New Jersey limited partnership, SUNRISE BELLEVUE
ASSISTED LIVING LIMITED PARTNERSHIP, a Washington limited partnership, SUNRISE
OAKLAND ASSISTED LIVING LIMITED PARTNERSHIP, a California limited partnership,
SUNRISE WALNUT CREEK ASSISTED LIVING LIMITED PARTNERSHIP, a California limited
partnership and SUNRISE DECATUR ASSISTED LIVING LIMITED PARTNERSHIP, a Georgia
limited partnership (collectively referred to herein as the "Borrower"),
promises to pay to the order of BANK OF AMERICA, N.A., d/b/a NATIONSBANK, N.A.,
successor by merger to NationsBank, N.A. its successors and assigns (the
"Administrative Agent") as administrative agent for itself and the other lenders
who are or shall be from time to time participating as lenders (collectively
with the Administrative Agent, the "Lenders") hereunder pursuant to the Second
Amended and Restated Agency Agreement of even date herewith, (as amended,
restated or substituted from time to time, the "Agency Agreement"), the maximum
principal sum of FOUR HUNDRED MILLION AND NO/100 DOLLARS ($400,000,000) (the
"Principal Sum") or such greater amount as the Lenders may from time commit to
lend pursuant hereto and to the Agency Agreement, or so much thereof as may be
advanced or readvanced to or for the account of the Borrower pursuant to the
terms and conditions of the Financing Agreement (as hereinafter defined),
together with interest thereon at the rate or rates hereinafter provided. All
defined terms not otherwise defined herein shall have the meaning set forth in
the Financing Agreement.

     1. Interest. Interest on portions of the outstanding Principal Sum shall
accrue and be payable for periods of thirty (30) days each or periods of seven
(7) days each (each a "Eurodollar Period") at a fixed rate for such Eurodollar
Period equal to the sum of (i) Eurodollar Rate (as defined in the Financing
Agreement), which rate shall be adjusted for any Federal Reserve Board reserve
requirements imposed upon the Administrative Agent or any of the Lenders from
time to time, plus (ii) that certain number of basis points per annum (the
"Spread") applicable pursuant to the conditions set forth below. The Eurodollar
Rate determined pursuant to the preceding sentence shall be in effect to the end
of the applicable Eurodollar Period. Interest payable hereunder shall also be
subject to the conditions set forth in Section 2.4 of the Financing Agreement.

No more than six (6) different Eurodollar Periods may be in effect at any one
time provided that not more than one (1) Eurodollar Period may be a seven day
Eurodollar Period. Interest shall be computed for the actual number of days
which have elapsed from the date of each advance of a portion of the Principal
Sum calculated on the basis of a 365-day year.


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<PAGE>   4
For any Eurodollar Period commencing on a date when one or more of SEAL, Sunrise
SEAL or Guarantor (as defined in the Financing Agreement) has a senior secured
debt rating from each of Moody's and Standard & Poors and not lower,
respectively, than BBB- and Baa3, the Spread shall be determined according to
the following grid based on the lower rating, if any, of either Moody's or
Standard & Poors.


<TABLE>
<CAPTION>

       STANDARD & POORS                     MOODY'S
  SENIOR SECURED DEBT RATING      SENIOR SECURED DEBT RATING           SPREAD
  --------------------------      --------------------------           ------
<S>                              <C>                                 <C>
              A-                               A3                       100
             BBB+                             Baa1                      110
             BBB                              Baa2                      120
             BBB-                             Baa3                      130
</TABLE>

If a senior secured debt rating is not available from both Standard & Poors and
Moody's, an implied senior secured debt rating will be used. The implied senior
secured debt rating for both Standard & Poors and Moody's will be equivalent to
the lower of either (A) one level above the lower of Standard & Poors and
Moody's senior unsecured debt rating, or (B) two levels above Standard & Poors
and Moody's subordinated debt rating.

In all cases where a Spread based on an actual or implied secured debt rating is
not available or is lower than above, the Spread shall be one hundred fifty
(150) basis points.

     2. Payments and Maturity.

     (a) Interest only on the outstanding principal balance of the Loan shall be
due and payable on the fifteenth (15th) day of the first (1st) month following
the date hereof and on the fifteenth (15th) day of each and every month
thereafter for a total of thirty-six (36) consecutive months unless otherwise
extended pursuant to the terms of the Financing Agreement; and

     (b) Principal sums repaid prior to the Maturity Date (as hereinafter
defined) may be reborrowed pursuant to the terms of the Financing Documents.

     (c) The outstanding principal balance of the Loan and all accrued and
unpaid interest thereon shall be due and owing at the Maturity Date.

     (d) The Loan shall mature and the entire principal balance of the Loan,
together with all accrued and unpaid interest thereon, shall be due and payable
on the date (the "Maturity Date") referred to in the Financing Agreement as the
Revolving Credit Termination Date.

     The fact that the balance hereunder may be reduced to zero from time to
time pursuant to the Financing Agreement will not affect the continuing validity
of this Note or the Financing Agreement, and the balance may be increased to the
Principal Sum after any such reduction to zero.


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<PAGE>   5

     3. Default Interest. Upon the occurrence of an Event of Default (as
hereinafter defined), the unpaid Principal Sum shall bear interest thereafter
until such Event of Default is cured at a rate which is at all times equal to
three percent (3%) per annum in excess of the rate or rates of interest
otherwise payable hereunder.

     4. Late Charges. In the event that any payment due hereunder is not
received by the Administrative Agent within fifteen (15) days of the date such
payment is due (inclusive of the date when due), the Borrower shall pay to the
Administrative Agent on demand a late charge equal to four percent (4%) of such
payment.

     5. Application and Place of Payments. Unless an Event of Default (as
hereinafter defined) has occurred, all payments made on account of this Note,
including prepayments, shall be applied in the following order:

          (a) First, to all Enforcement Costs and other expenses of the
Administrative Agent and/or the Lenders;

          (b) Second, to all amounts due to the Administrative Agent (in its
capacity as Administrative Agent) from the Borrowers or the Lenders;

          (c) Third, to the Lenders, in accordance with their respective pro
rata shares of the Loan, for the past due interest on the Note;

          (d) Fourth, to the payment of any prepayment penalty due under Section
4.8 of the Financing Agreement.

          (e) Fifth, to the Lenders, in accordance with their respective pro
rata shares of the Loan, for principal of the Note in the order hereinafter
provided plus the pro rata share of the settlement payments due to the
Administrative Agent or other Lender who provided the Interest Rate Protection
(as defined in the Financing Agreement) to the Borrowers (the "Settlement
Payments");

          (f) Sixth, to the Lenders, in accordance with their respective pro
rata shares of the Loan, for past due fees required under the Financing
Documents;

          (g) Seventh, to the Lenders, in accordance with their respective pro
rata shares of the Loan, for all other amounts owed the Lenders pursuant to the
provisions of the Financing Agreement, this Agreement or the Financing
Documents, including but not limited to any unpaid Commitment Fees; and

          (h) Eighth, to the Administrative Agent, in payment or reimbursement
of any over-drafts in any account of the Borrowers.

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<PAGE>   6

The application of payments after an Event of Default shall be determined by the
Administrative Agent. All payments on account of this Note shall be paid in
lawful money of the United States of America in immediately available funds
during regular business hours of the Administrative Agent at its principal
office in Baltimore, Maryland or at such other times and places as the
Administrative Agent may at any time and from time to time designate in writing
to the Borrower. Any payment received after 2:30 p.m. (Baltimore Time) shall be
deemed to have been received on the next Banking Day.

     6. Prepayment. The Borrower shall have the right to prepay the Principal
Sum in full or in part, at any time and from time to time in accordance with
Section 4.8 of the Financing Agreement. Sums repaid may be reborrowed.

     7. Financing Agreement and Other Financing Documents. This Note is the Note
described in the Second Amended and Restated Financing and Security Agreement of
even date by and among the Borrowers and the Administrative Agent (as amended or
otherwise modified from time to time, the "Financing Agreement"). The term
"Financing Documents" as used in this Note shall mean collectively this Note,
the Financing Agreement, all Deeds of Trust (as further amended or otherwise
modified from time to time), all of the other Financing Documents (as defined in
the Financing Agreement) and any other instrument, agreement, or document
previously, simultaneously, or hereafter executed and delivered by the Borrower
and/or any other person, singularly or jointly with any other person,
evidencing, securing, guaranteeing, or in connection with the Credit Facility or
the Loan.

     8. Security. This Note is secured by, among other things, certain deeds of
trust or mortgages (each as amended, restated or substituted from time to time,
a "Deed of Trust" collectively, the "Deeds of Trust"), covering that real estate
owned by the Borrower and the improvements thereon more particularly described
in the Deeds of Trust identified on any Borrowing Base Report or listing of
Optional Collateral and all other property, real and personal, more particularly
described in the Deeds of Trust (collectively, the "Property").

     9. Events of Default. The occurrence of any one or more of the following
events shall constitute an event of default (individually, an "Event of Default"
and collectively, the "Events of Default") under the terms of this Note:

          (a) The failure of the Borrower to pay to the Administrative Agent
when due any and all amounts payable by the Borrower to the Lenders under the
terms hereunder and such failure continues for five (5) calendar days after
notice thereof by the Administrative Agent, except with regard to payment of
amounts due at maturity for which no notice or cure period shall be required to
be given and except for a Borrowing Base Deficiency (as defined in the Financing
Agreement) which shall be payable as provided in the Financing Agreement; or

          (b) The occurrence of a Default or an Event of Default (as those terms
are defined in the Financing Agreement) under the terms and conditions of any of
the other Financing Documents, which Default or Event of Default remains uncured
beyond any applicable grace and/or cure period provided therefor.


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<PAGE>   7

     10. Remedies. Upon the occurrence of an Event of Default, at the option of
the Lenders, all amounts payable by the Borrower to the Lenders under the terms
hereof shall immediately become due and payable by the Borrower to the Lenders
without notice to the Borrower or any other person, and the Lenders shall have
all of the rights, powers, and remedies available under the terms of this Note,
any of the other Financing Documents and all applicable laws. The Borrower and
all endorsers, guarantors, and other parties who may now or in the future be
primarily or secondarily liable for the payment of the indebtedness under the
Loan hereby severally waive presentment, protest and demand, notice of protest,
notice of demand and of dishonor and non-payment of this Note and expressly
agree that this Note or any payment hereunder may be extended from time to time
without in any way affecting the liability of the Borrower, guarantors and
endorsers. The Borrower and all endorsers, guarantors, and other parties who may
now or in the future be liable for payment of the Obligations hereby acknowledge
that all advances under the Loan will be made under and will be evidenced by
this Note.

     11. Mandatory Arbitration. Any controversy or claim between or among the
parties hereto including but not limited to those arising out of or relating to
this Note or any related agreements or instruments, including any claim based on
or arising from an alleged tort, shall be determined by binding arbitration in
accordance with the Federal Arbitration Act (or if not applicable, the
applicable state law), as promulgated from time to time by the Rules of Practice
and Procedure for the Arbitration of Commercial Disputes of Judicial Arbitration
and Mediation Services, Inc., predecessor in interest to Endispute, Inc., doing
business as "J.A.M.S./Endispute" and the "Special Rules" set forth below. In the
event of any inconsistency, the Special Rules shall control. Judgment upon any
arbitration award may be entered in any court having jurisdiction. Any party to
this Note may bring an action, including a summary or expedited proceeding, to
compel arbitration of any controversy or claim to which this agreement applies
in any court having jurisdiction over such action. The foregoing
notwithstanding, in a claim pertaining to a Deed of Trust or Collateral located
in a state with "one-action" rule which might limit to Lenders' remedies, the
Administrative Agent shall have the right in its sole discretion to restrict the
application of this arbitration provision to the extent that it would otherwise
result in a limitation on the Lenders' remedies in such state.

          (i) Special Rules. The arbitration shall be conducted in Fairfax
County, Virginia and administered by J.A.M.S./Endispute who will appoint an
arbitrator pursuant to its rules of practice and procedure; if
J.A.M.S./Endispute is unable or legally precluded from administering the
arbitration, then the American Arbitration Association will serve. All
arbitration hearings will be commenced within ninety (90) calendar days of the
demand for arbitration; further, the arbitrator shall only, upon a showing of
cause, be permitted to extend the commencement of such hearing for up to an
additional sixty (60) calendar days.

          (ii) Reservations of Rights. Nothing in this Note shall be deemed to
(i) limit the applicability of any otherwise applicable statutes of limitation
or repose and any waivers contained in this Note; or (ii) be a waiver by
Administrative Agent of the protection afforded to it by 12 U.S.C. Sec. 91 or
any substantially equivalent state law; or (iii) limit the right of the

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<PAGE>   8

Administrative Agent or the Lenders (A) to exercise self help remedies such as
(but not limited to) setoff, or (B) to foreclose against any real or personal
property collateral, or (C) to obtain from a court provisional or ancillary
remedies such as (but not limited to) injunctive relief or the appointment of a
receiver. The Administrative Agent or the Lenders may exercise such self help
rights, foreclose upon such property, or obtain such provisional or ancillary
remedies before, during or after the pendency of any arbitration proceeding
brought pursuant to this Note. At the Administrative Agent's or the Lenders'
option, foreclosure under a deed of trust or mortgage may be accomplished by any
of the following: the exercise of a power of sale under the deed of trust or
mortgage, or by judicial sale under the deed of trust or mortgage, or by
judicial foreclosure. Neither the exercise of self help remedies nor the
institution or maintenance of an action for foreclosure or provisional or
ancillary remedies shall constitute a waiver of the right of any party,
including the claimant in any such action, to arbitrate the merits of the
controversy or claim occasioning resort to such remedies. Notwithstanding the
foregoing, in the event that the Administrative Agent or the Lenders exercise
such self help remedies or other actions, the Borrower has not waived any of its
rights to seek legal or equitable relief to defend against the Administrative
Agent's or the Lenders' exercise of such self help remedies or other actions. No
provision in the Financing Documents regarding submission to jurisdiction and/or
venue in any court is intended or shall be construed to be in derogation of the
provisions in any Financing Document for arbitration of any controversy or
claim.

          (iii) Confidentiality. Any arbitration proceeding, award, findings of
fact, conclusions of law, or other information concerning such arbitration
matters shall be held in confidence by the parties and shall not be disclosed
except to each party's employees or agents as shall be reasonably necessary for
such party to conduct its business; provided, however, that either party may
disclose such information for auditing purposes by independent certified public
accountants, for complying with applicable governmental laws, regulations or
court orders, or that is or becomes part of the public domain through no breach
of this Note.

     12. Consent to Jurisdiction. The Borrower irrevocably submits to the
jurisdiction of any state or federal court sitting in the Commonwealth of
Virginia over any suit, action, or proceeding arising out of or relating to this
Note. The Borrower irrevocably waives, to the fullest extent permitted by law,
any objection that the Borrower may now or hereafter have to the laying the
venue of any such suit, action, or proceeding brought in any such court and any
claim that any such suit, action, or proceeding brought in any such court has
been brought in an inconvenient forum. Final judgment in any such suit, action,
or proceeding brought in any such court shall be conclusive and binding upon the
Borrower and may be enforced in any court in which the Borrower is subject to
jurisdiction by a suit upon such judgment provided that service of process is
effected upon the Borrower as provided in this Note or as otherwise permitted by
applicable law.

     13. Service of Process.

          (a) The Borrower hereby irrevocably designates and appoints Wayne G.
Tatusko, Esquire of Watt, Tieder, Hoffar & Fitzgerald, 7929 Westpark Drive,
McLean, Virginia 22102, as the Borrower's authorized agent to accept and
acknowledge on the Borrower's behalf

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<PAGE>   9

service of any and all process that may be served in any suit, action, or
proceeding instituted in connection with this Note in any state or federal court
sitting in the Commonwealth of Virginia. If such agent shall cease so to act,
the Borrower shall irrevocably designate and appoint without delay another such
agent in the Commonwealth of Virginia satisfactory to the Lenders and shall
promptly deliver to the Administrative Agent evidence in writing of such agent's
acceptance of such appointment and its agreement that such appointment shall be
irrevocable.

          (b) The Borrower hereby consents to process being served in any suit,
action, or proceeding instituted in connection with this Note by (i) the mailing
of a copy thereof by certified mail, postage prepaid, return receipt requested,
to the Borrower and (ii) serving a copy thereof upon the agent hereinabove
designated and appointed by the Borrower as the Borrower's agent for service of
process. The Borrower irrevocably agrees that such service shall be deemed to be
service of process upon the Borrower in any such suit, action, or proceeding.
Nothing in this Note shall affect the right of the Lenders to serve process in
any manner otherwise permitted by law and nothing in this Note will limit the
right of the Lenders otherwise to bring proceedings against the Borrower in the
courts of any jurisdiction or jurisdictions.

     14. WAIVER OF TRIAL BY JURY. THE BORROWER AND THE LENDERS HEREBY WAIVE
TRIAL BY JURY IN ANY ACTION OR PROCEEDING NOT REQUIRED TO BE ARBITRATED PURSUANT
TO THE TERMS HEREOF TO WHICH THE BORROWER AND THE LENDERS, OR ANY OF THEM, MAY
BE PARTIES, ARISING OUT OF OR IN ANY WAY PERTAINING TO (A) THIS NOTE, (B) THE
OTHER FINANCING DOCUMENTS OR (C) ANY OF THE PROPERTY. IT IS AGREED AND
UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS
AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST
PARTIES WHO ARE NOT PARTIES TO THIS NOTE. THIS WAIVER IS KNOWINGLY, WILLINGLY
AND VOLUNTARILY MADE BY THE BORROWER, AND THE BORROWER HEREBY REPRESENTS THAT NO
REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE
THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. THE
BORROWER FURTHER REPRESENTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS
NOTE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF
ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER
WITH COUNSEL.

     15. Expenses. The Borrower promises to pay to the Administrative Agent on
demand by the Administrative Agent all costs and expenses incurred by the
Lenders in connection with the collection and enforcement of this Note,
including, without limitation, all reasonable attorneys' fees and expenses and
all court costs.

     16. Notices. Any notice, request, or demand to or upon the Borrower or the
Lenders shall be deemed to have been properly given or made when delivered in
accordance with Section 11.1 of the Financing Agreement.

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<PAGE>   10

     17. Miscellaneous. Each right, power, and remedy of the Lenders as provided
for in this Note or any of the other Financing Documents, or now or hereafter
existing under any applicable law or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power, or remedy
provided for in this Note or any of the other Financing Documents or now or
hereafter existing under any applicable law, and the exercise or beginning of
the exercise by the Lenders of any one or more of such rights, powers, or
remedies shall not preclude the simultaneous or later exercise by the Lenders of
any or all such other rights, powers, or remedies. No failure or delay by the
Lenders to insist upon the strict performance of any term, condition, covenant,
or agreement of this Note or any of the other Financing Documents, or to
exercise any right, power, or remedy consequent upon a breach thereof, shall
constitute a waiver of any such term, condition, covenant, or agreement or of
any such breach, or preclude the Lenders from exercising any such right, power,
or remedy at a later time or times. By accepting payment after the due date of
any amount payable hereunder, the Lenders shall not be deemed to waive the right
either to require prompt payment when due of all other amounts payable under the
terms hereof or to declare an Event of Default for the failure to effect such
prompt payment of any such other amount. No course of dealing or conduct shall
be effective to amend, modify, waive, release, or change any provisions of this
Note.

     18. Partial Invalidity. In the event any provision of this Note (or any
part of any provision) is held by a court of competent jurisdiction to be
invalid, illegal, or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provision (or remaining part of
the affected provision) of this Note; but this Note shall be construed as if
such invalid, illegal, or unenforceable provision (or part thereof) had not been
contained in this Note, but only to the extent it is invalid, illegal, or
unenforceable.

     19. Captions. The captions herein set forth are for convenience only and
shall not be deemed to define, limit, or describe the scope or intent of this
Note.

     20. Governing Law. The provisions of this Note shall be construed,
interpreted and enforced in accordance with the laws of the Commonwealth of
Virginia as the same may be in effect from time to time.

     3. It is expressly understood and agreed that the indebtedness evidenced by

the Original Note has not been extinguished or discharged hereby and is

consolidated herein. The Borrower and/or the Administrative Agent agree that the

execution of this Note is not intended and shall not cause or result in a

novation with regard to the Original Note.

     4. This Note may be executed in one or more counterparts each of which

shall constitute an original for all purposes; provided, however, that all such

counterparts shall together constitute one and the same instrument.

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<PAGE>   11

     IN WITNESS WHEREOF, the Borrowers and the Administrative Agent have caused
this Second Amended, Restated and Increased Master Promissory Note to be
executed, under seal, by their duly authorized representatives, as of the date
first written above.

                               BORROWERS:

WITNESS OR ATTEST:             SUNRISE EAST ASSISTED LIVING LIMITED PARTNERSHIP,
                               a Virginia limited partnership

                               By:         Sunrise Assisted Living Investments,
                                           Inc., general partner

                                           By:/s/ James S. Pope          (SEAL)
----------------------                     ------------------------------
                                                James S. Pope
                                                Vice President

                               SUNRISE SEAL, L.L.C., a Virginia limited
                               liability company

----------------------         By:         Sunrise Development, Inc.,
                                           Managing Member

                                           By: /s/ James S. Pope         (SEAL)
                                           ------------------------------
                                                 James S. Pope
                                                 Vice President

                               SUNRISE RIVERSIDE ASSISTED LIVING, L.P., a
                               California limited partnership

----------------------         By:         Sunrise Assisted Living Investments,
                                           Inc., its general partner

                                           By: /s/ James S. Pope         (SEAL)
                                           ------------------------------
                                                 James S. Pope
                                                 Vice President

                                       11
<PAGE>   12


                               SUNRISE HUNTCLIFF ASSISTED LIVING LIMITED
                               PARTNERSHIP, a Georgia limited partnership

                               By:         Sunrise Assisted Living Investments,
                                           Inc., its general partner
------------------------

                                           By: /s/ James S. Pope         (SEAL)
                                           ------------------------------
                                                 James S. Pope
                                                  Vice President

                               SUNRISE STERLING CANYON ASSISTED LIVING LIMITED
                               PARTNERSHIP, a California limited partnership

                               By:         Sunrise Assisted Living Investments,
                                           Inc., its general partner
------------------------

                                           By: /s/ James S. Pope         (SEAL)
                                           ------------------------------
                                                  James S. Pope
                                                  Vice President

                               SUNRISE PARAMUS ASSISTED LIVING LIMITED
                               PARTNERSHIP, a New Jersey limited partnership

                               By:         Sunrise Assisted Living Investments,
                                           Inc., its general partner
------------------------

                                           By: /s/ James S. Pope         (SEAL)
                                           ------------------------------
                                                  James S. Pope
                                                  Vice President

                               SUNRISE FAIRFIELD ASSISTED LIVING, L.P., a
                               New Jersey limited partnership

                               By:         Sunrise Assisted Living Investments,
                                           Inc., its general partner
------------------------

                                           By: /s/ James S. Pope         (SEAL)
                                           ------------------------------
                                                  James S. Pope
                                                  Vice President


                                       12
<PAGE>   13


                               SUNRISE BELLEVUE ASSISTED LIVING LIMITED
                               PARTNERSHIP, a Washington limited partnership

                               By:         Sunrise Assisted Living Investments,
                                           Inc., its general partner
------------------------

                                           By: /s/ James S. Pope         (SEAL)
                                           ------------------------------
                                                  James S. Pope
                                                  Vice President

                               SUNRISE OAKLAND ASSISTED LIVING LIMITED
                               PARTNERSHIP, a California limited partnership

                               By:         Sunrise Assisted Living Investments,
                                           Inc., its general partner
------------------------

                                           By: /s/ James S. Pope          (SEAL)
                                           ------------------------------
                                                  James S. Pope
                                                  Vice President

                               SUNRISE WALNUT CREEK ASSISTED LIVING LIMITED
                               PARTNERSHIP, a California limited partnership

                               By:         Sunrise Assisted Living Investments,
                                           Inc., its general partner
------------------------

                                           By: /s/ James S. Pope         (SEAL)
                                           ------------------------------
                                                  James S. Pope
                                                  Vice President

                               SUNRISE DECATUR ASSISTED LIVING LIMITED
                               PARTNERSHIP, a Georgia limited partnership

                               By:         Sunrise Assisted Living Investments,
                                           Inc., its general partner
------------------------

                                           By: /s/ James S. Pope         (SEAL)
                                           ------------------------------
                                                  James S. Pope
                                                  Vice President


                                       13
<PAGE>   14


                           ADMINISTRATIVE AGENT:

WITNESS:                   BANK OF AMERICA, N.A., d/b/a NATIONSBANK, N.A.,
                           successor by merger to NationsBank, N.A., as
                           Administrative Agent for itself and the Other Lenders

                           By:/s/ Sabina Kelly                (SEAL)
-----------------                 ----------------------------
                                  Sabina Kelly
                                  Senior Vice President


                                       14
<PAGE>   15


STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:

     I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that James S. Pope as Vice President of Sunrise
Assisted Living Investments, Inc., a Virginia corporation, the general partner
of Sunrise East Assisted Living Limited Partnership, a Virginia limited
partnership, who executed the foregoing instrument, personally appeared before
me and acknowledged said Instrument to be his act and deed that he executed said
Instrument for the purposes therein contained.

     WITNESS my hand and Notarial Seal.

                                      ------------------------------
                                      Notary Public

My Commission Expires:

STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:

     I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that James S. Pope as Vice President of Sunrise
Development, Inc., a Virginia corporation, the sole member of Sunrise SEAL,
L.L.C., a Virginia limited liability company, who executed the foregoing
instrument, personally appeared before me and acknowledged said Instrument to be
his act and deed that he executed said Instrument for the purposes therein
contained.

     WITNESS my hand and Notarial Seal.

                                      ------------------------------
                                      Notary Public

My Commission Expires:


                                       15
<PAGE>   16


STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:

     I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that James S. Pope as Vice President of Sunrise
Assisted Living Investments, Inc., a Virginia corporation, the general partner
of Sunrise Riverside Assisted Living Limited Partnership, a California limited
partnership, who executed the foregoing instrument, personally appeared before
me and acknowledged said Instrument to be his act and deed that he executed said
Instrument for the purposes therein contained.

     WITNESS my hand and Notarial Seal.

                                      ------------------------------
                                      Notary Public

My Commission Expires:

STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:

     I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that James S. Pope as Vice President of Sunrise
Assisted Living Investments, Inc., a Virginia corporation, the general partner
of Sunrise Huntcliff Assisted Living Limited Partnership, a Georgia limited
partnership, who executed the foregoing instrument, personally appeared before
me and acknowledged said Instrument to be his act and deed that he executed said
Instrument for the purposes therein contained.

     WITNESS my hand and Notarial Seal.

                                      ------------------------------
                                      Notary Public

My Commission Expires:

                                       16
<PAGE>   17


STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:

     I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that James S. Pope as Vice President of Sunrise
Assisted Living Investments, Inc., a Virginia corporation, the general partner
of Sunrise Sterling Canyon Assisted Living Limited Partnership, a California
limited partnership, who executed the foregoing instrument, personally appeared
before me and acknowledged said Instrument to be his act and deed that he
executed said Instrument for the purposes therein contained.

     WITNESS my hand and Notarial Seal.

                                      ------------------------------
                                      Notary Public

My Commission Expires:

STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:

     I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that James S. Pope as Vice President of Sunrise
Assisted Living Investments, Inc., a Virginia corporation, the general partner
of Sunrise Paramus Assisted Living Limited Partnership, a New Jersey limited
partnership, who executed the foregoing instrument, personally appeared before
me and acknowledged said Instrument to be his act and deed that he executed said
Instrument for the purposes therein contained.

     WITNESS my hand and Notarial Seal.

                                      ------------------------------
                                      Notary Public

My Commission Expires:


                                       17
<PAGE>   18


STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:

     I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that James S. Pope as Vice President of Sunrise
Assisted Living Investments, Inc., a Virginia corporation, the general partner
of Sunrise Fairfield Assisted Living Limited Partnership, a New Jersey limited
partnership, who executed the foregoing instrument, personally appeared before
me and acknowledged said Instrument to be his act and deed that he executed said
Instrument for the purposes therein contained.

     WITNESS my hand and Notarial Seal.

                                      ------------------------------
                                      Notary Public

My Commission Expires:

STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:

     I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that James S. Pope as Vice President of Sunrise
Assisted Living Investments, Inc., a Virginia corporation, the general partner
of Sunrise Bellevue Assisted Living Limited Partnership, a Washington limited
partnership, who executed the foregoing instrument, personally appeared before
me and acknowledged said Instrument to be his act and deed that he executed said
Instrument for the purposes therein contained.

     WITNESS my hand and Notarial Seal.

                                      ------------------------------
                                      Notary Public

My Commission Expires:


                                       18
<PAGE>   19


STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:

     I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that James S. Pope as Vice President of Sunrise
Assisted Living Investments, Inc., a Virginia corporation, the general partner
of Sunrise Oakland Assisted Living Limited Partnership, a California limited
partnership, who executed the foregoing instrument, personally appeared before
me and acknowledged said Instrument to be his act and deed that he executed said
Instrument for the purposes therein contained.

     WITNESS my hand and Notarial Seal.

                                      ------------------------------
                                      Notary Public

My Commission Expires:

STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:

     I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that James S. Pope as Vice President of Sunrise
Assisted Living Investments, Inc., a Virginia corporation, the general partner
of Sunrise Walnut Creek Assisted Living Limited Partnership, a California
limited partnership, who executed the foregoing instrument, personally appeared
before me and acknowledged said Instrument to be his act and deed that he
executed said Instrument for the purposes therein contained.

     WITNESS my hand and Notarial Seal.

                                      ------------------------------
                                      Notary Public

My Commission Expires:


                                       19
<PAGE>   20


STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:

     I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that James S. Pope as Vice President of Sunrise
Assisted Living Investments, Inc., a Virginia corporation, the general partner
of Sunrise Decatur Assisted Living Limited Partnership, a Georgia limited
partnership, who executed the foregoing instrument, personally appeared before
me and acknowledged said Instrument to be his act and deed that he executed said
Instrument for the purposes therein contained.

     WITNESS my hand and Notarial Seal.

                                      ------------------------------
                                      Notary Public

My Commission Expires:

STATE/COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF ________________, TO WIT:

     I, _____________________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that Sabina Kelly, a Senior Vice President of Bank
of America, N.A., d/b/a NationsBank, N.A., successor by merger to NationsBank,
N.A., who executed the foregoing instrument, personally appeared before me and
acknowledged said Instrument to be her act and deed that she executed said
Instrument for the purposes therein contained.

     WITNESS my hand and Notarial Seal.

                                      ------------------------------
                                      Notary Public

My Commission Expires:


                                       20
<PAGE>   21


                                    EXHIBIT A
                                JOINDER AGREEMENT


                                       21
<PAGE>   22

                      AMENDMENT TO SECOND AMENDED, RESTATED
                      AND INCREASED MASTER PROMISSORY NOTE

     THIS AMENDMENT TO SECOND AMENDED, RESTATED AND INCREASED PROMISSORY NOTE
(this "Agreement") is made this 14th day of March, 2000, by and among SUNRISE
EAST ASSISTED LIVING LIMITED PARTNERSHIP, a Virginia limited partnership
("SEAL"), SUNRISE SEAL, L.L.C., a Virginia limited liability company ("Sunrise
SEAL"), SUNRISE DECATUR ASSISTED LIVING LIMITED PARTNERSHIP, a Georgia limited
partnership, SUNRISE FAIRFIELD ASSISTED LIVING, L.P., a New Jersey limited
partnership, SUNRISE BELLEVUE ASSISTED LIVING LIMITED PARTNERSHIP, a Washington
limited partnership, SUNRISE WALNUT CREEK ASSISTED LIVING LIMITED PARTNERSHIP, a
California limited partnership, SUNRISE OAKLAND ASSISTED LIVING LIMITED
PARTNERSHIP, a California limited partnership, SUNRISE PARAMUS ASSISTED LIVING
LIMITED PARTNERSHIP, a New Jersey limited partnership, SUNRISE RIVERSIDE
ASSISTED LIVING, L.P., a California limited partnership, SUNRISE HUNTCLIFF
ASSISTED LIVING LIMITED PARTNERSHIP, a Georgia limited partnership, SUNRISE
STERLING CANYON ASSISTED LIVING LIMITED PARTNERSHIP, a California limited
partnership, (collectively the "Original Borrowers") and SUNRISE WESTMINSTER
ASSISTED LIVING, L.L.C., a Colorado limited liability company, SUNRISE PINEHURST
ASSISTED LIVING LIMITED PARTNERSHIP, a Colorado limited partnership, SUNRISE
PARMA ASSISTED LIVING, L.L.C., a Virginia limited liability company, SUNRISE
HAMILTON ASSISTED LIVING, L.L.C., a Virginia limited liability company, SUNRISE
EDINA ASSISTED LIVING, L.L.C., a Minnesota limited liability company, SUNRISE
FARMINGTON HILLS ASSISTED LIVING, L.L.C., a Michigan limited liability company,
SUNRISE BATON ROUGE ASSISTED LIVING, L.L.C., a Louisiana limited liability
company, SUNRISE NEW ORLEANS ASSISTED LIVING, L.L.C., a Louisiana limited
liability company, SUNRISE HOLLY ASSISTED LIVING LIMITED PARTNERSHIP, a Colorado
limited partnership, SUNRISE WESTON ASSISTED LIMITED PARTNERSHIP, a
Massachusetts limited partnership, SUNRISE NORTHSHORE ASSISTED LIVING LIMITED
PARTNERSHIP, a Florida limited partnership, SUNRISE CHESTERFIELD ASSISTED
LIVING, L.L.C., a Missouri limited liability company, and SUNRISE CLAREMONT
ASSISTED LIVING, L.P., a California limited partnership (the "Additional
Borrowers", collectively with the Original Borrowers and any other Additional
Borrowers, as hereinafter defined, the "Borrowers"), and BANK OF AMERICA, N.A.,
as administrative agent (the "Administrative Agent") for itself and for UNITED
BANK, as syndication agent (the "Syndication Agent"), FLEET NATIONAL BANK, as
documentation agent (the "Documentation Agent") and certain additional lenders
who are or shall be from time to time participating as lenders hereunder
pursuant to the Agency Agreement, as hereinafter defined (collectively with the
Administrative Agent, the "Lenders").

                             INTRODUCTORY STATEMENT

     A. As evidenced by the terms of the Second Amended, Restated and Increased
Promissory Note dated July 29, 1999, from the Borrowers other than the
Additional Borrowers (as hereinafter defined), jointly and severally, as makers,
to the Lender, as payee (such Second Amended, Restated and Increased Promissory
Note, together with all modifications thereto, extensions or renewals thereof
and substitutions therefor being hereinafter referred to as the


<PAGE>   23



"Note"), the Borrowers other than the Additional Borrowers became indebted unto
the Lender for a loan in the maximum principal amount at any one time
outstanding of $400,000,000 (the "Credit Facility" or the "Loan"). Pursuant to
their respective Additional Borrower Joinder Supplements each of the Additional
Borrowers became co-borrowers under the Note and jointly and severally liable
with the other Borrowers for the obligations under the Loan.

     B. The Loan is advanced pursuant to the terms of and secured as provided in
the Second Amended and Restated Financing and Security Agreement dated July 29,
1999 executed by the Borrowers (the "Existing Financing Agreement").

     C. The Borrowers have applied to the Lenders to modify certain terms an
conditions of the Existing Financing Agreement and of the Second Amended and
Restated Guaranty of Payment Agreement dated July 29, 1999 by Sunrise Assisted
Living, Inc. (the "Guarantor") for the benefit of the Lenders (the "Existing
Guaranty"). The Lenders have agreed on the condition, among others that the
Existing Financing Agreement and the Existing Guaranty be amended and restated
in their entirety pursuant to the terms of the Third Amended and Restated
Financing and Security Agreement of even date herewith by and among the
Borrowers and the Administrative Agent (as amended, modified, restated, renewed
or substituted, the "Financing Agreement") and the Third Amended and Restated
Guaranty of Payment Agreement of even date herewith by the Guarantor for the
benefit of the Lenders (as amended, modified, restated, renewed or substituted,
the "Guaranty").

     D. The Lenders have agreed to make available the Credit Facility upon the
conditions that this Agreement amending the interest rate applicable to the Note
be executed and delivered to the Administrative Agent.

                                   AGREEMENTS

     NOW, THEREFORE, in consideration of the premises and for the sum of One
Dollar ($1.00) and other good and valuable consideration, the receipt and
sufficiency whereof are hereby acknowledged, the Borrowers and the Lender do
hereby mutually covenant and agree as follows:

     1. Incorporation of Recitals. The parties hereto acknowledge and agree that
the recitals hereinabove set forth are true and correct in all respects and that
the same are incorporated herein and made a part hereof.

     2. Outstanding Obligations. The parties hereto acknowledge and agree (a)
that the outstanding principal balance of the Note as of March 14, 2000 is
$238,200,000, and (b) that the unpaid principal balance of the Note, together
with accrued and unpaid interest thereon, is due and owing subject to the terms
of repayment hereinafter set forth, without defense or offset.

     3. Interest Rate. Paragraph 1 (Interest) on page 3 of the Note is hereby
amended and restated in its entirety as follows and shall be effective as of the
date first above written:

                                       2
<PAGE>   24

         1.    Interest. Interest on portions of the outstanding Principal Sum
         shall accrue and be payable for periods of thirty (30) days each or
         periods of seven (7) days each (each a "Eurodollar Period") at a fixed
         rate for such Eurodollar Period equal to the sum of (i) Eurodollar Rate
         (as defined in the Financing Agreement), which rate shall be adjusted
         for any Federal Reserve Board reserve requirements imposed upon the
         Administrative Agent or any of the Lenders from time to time, plus (ii)
         one hundred seventy five (175) basis points per annum. The Eurodollar
         Rate determined pursuant to the preceding sentence shall be in effect
         to the end of the applicable Eurodollar Period. Interest payable
         hereunder shall also be subject to the conditions set forth in Section
         2.4 of the Financing Agreement.

         No more than six (6) different Eurodollar Periods may be in effect at
         any one time provided that not more than one (1) Eurodollar Period may
         be a seven day Eurodollar Period. Interest shall be computed for the
         actual number of days which have elapsed from the date of each advance
         of a portion of the Principal Sum calculated on the basis of a 365-day
         year.

     4. Continuation of Loan Terms. Except as otherwise expressly set forth
below, the outstanding principal balance of the Note shall continue to be repaid
on the terms and subject to the conditions set forth in the Note and the other
documents evidencing the Loan. All capitalized terms used but not defined in
this Agreement shall have the meaning given to such terms in the Financing
Documents.

     5. Continuing Agreements; Novation. Except as expressly modified hereby and
by the Financing Agreement and the Guaranty, the parties hereto ratify and
confirm each and every provision of the Note, and each of the other Financing
Documents as if the same were set forth herein. In the event that any of the
terms and conditions in the Note or in any of the other Financing Documents
conflict in any way with the terms and provisions hereof, the terms and
provisions hereof shall prevail. The parties hereto covenant and agree that the
execution of this Agreement is not intended to and shall not cause or result in
a novation with regard to the Note, the Financing Agreement, the Guaranty and/or
the other Financing Documents and that the existing indebtedness of the
Borrowers to the Lender evidenced by the Note is continuing, without
interruption, and has not been discharged by a new agreement.

     6. Entire Agreement. NO STATEMENTS, AGREEMENTS OR REPRESENTATIONS, ORAL OR
WRITTEN, WHICH MAY HAVE BEEN MADE TO ANY OF THE BORROWERS OR TO ANY EMPLOYEE OR
AGENT OF THE BORROWERS, EITHER BY THE LENDER OR BY ANY EMPLOYEE, AGENT OR BROKER
ACTING ON THE LENDER'S BEHALF, WITH RESPECT TO THE MODIFICATION OF THE LOAN,
SHALL BE OF ANY FORCE OR EFFECT, EXCEPT TO THE EXTENT STATED IN THIS AGREEMENT,
AND ALL PRIOR AGREEMENTS AND REPRESENTATIONS WITH RESPECT TO THE MODIFICATION OF
THE LOAN ARE MERGED HEREIN.

                                       3
<PAGE>   25

     7. Captions. The captions herein set forth are for convenience only and
shall not be deemed to define, limit or describe the scope or intent of this
Agreement.

     8. Governing Law. The provisions of this Agreement shall be construed,
interpreted and enforced in accordance with the laws of the Commonwealth of
Virginia as the same may be in effect from time to time.

                         [SIGNATURES ON FOLLOWING PAGE]


                                       4
<PAGE>   26




     IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date first above written.



                               BORROWERS:

WITNESS/ATTEST:                SUNRISE EAST ASSISTED LIVING LIMITED
                               PARTNERSHIP,
                               a Virginia limited partnership

                               By:   Sunrise Assisted Living Investments, Inc.,
                                     General Partner

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President

                               SUNRISE SEAL, L.L.C., a Virginia limited
                               liability company

                               By:   Sunrise Development, Inc.,
                                     Managing Member

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President

                               SUNRISE DECATUR ASSISTED LIVING
                               LIMITED PARTNERSHIP, a Georgia limited
                               partnership

                               By:   Sunrise Assisted Living Investments,
                                     Inc., General Partner

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President

                               SUNRISE FAIRFIELD ASSISTED LIVING, L.P.,
                               a New Jersey limited partnership

                               By:   Sunrise Assisted Living Investments,
                                     Inc., General Partner

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President


                                       5
<PAGE>   27


                               SUNRISE BELLEVUE ASSISTED LIVING
                               LIMITED PARTNERSHIP, a Washington limited
                               partnership

                               By:   Sunrise Assisted Living Investments,
                                     Inc., General Partner

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President

                               SUNRISE WALNUT CREEK ASSISTED LIVING
                               LIMITED PARTNERSHIP, a California limited
                               partnership

                               By:   Sunrise Assisted Living Investments,
                                     Inc., General Partner

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President

                               SUNRISE OAKLAND ASSISTED LIVING
                               LIMITED PARTNERSHIP, a California limited
                               partnership

                               By:   Sunrise Assisted Living Investments,
                                     Inc., General Partner

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President

                               SUNRISE PARAMUS ASSISTED LIVING
                               LIMITED PARTNERSHIP, a New Jersey limited
                               partnership

                               By:   Sunrise Assisted Living Investments,
                                     Inc., General Partner

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President

                                       6
<PAGE>   28

                               SUNRISE RIVERSIDE ASSISTED LIVING, L.P.,
                               a California limited partnership

                               By:   Sunrise Assisted Living Investments,
                                     Inc., General Partner

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President

                               SUNRISE HUNTCLIFF ASSISTED LIVING
                               LIMITED PARTNERSHIP, a Georgia limited
                               partnership

                               By:   Sunrise Assisted Living Investments,
                                     Inc., General Partner

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President

                               SUNRISE STERLING CANYON ASSISTED
                               LIVING LIMITED PARTNERSHIP, a California
                               limited partnership

                               By:   Sunrise Assisted Living Investments,
                                     Inc., General Partner

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President

                               SUNRISE WESTMINSTER ASSISTED
                               LIVING, L.L.C., a Colorado limited liability
                               company

                               By:   Sunrise Assisted Living Investments, Inc.,
                                     Sole Member

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President


                                       7
<PAGE>   29


                               SUNRISE PINEHURST ASSISTED LIVING
                               LIMITED PARTNERSHIP, a Colorado limited
                               partnership

                               By:   Sunrise Assisted Living Investments, Inc.,
                                     General Partner

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President

                               SUNRISE PARMA ASSISTED LIVING, L.L.C.,
                               a Virginia limited liability company

                               By:   Sunrise Assisted Living Investments, Inc.,
                                     Sole Member

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President

                               SUNRISE HAMILTON ASSISTED LIVING,
                               L.L.C., a Virginia limited liability company

                               By:   Sunrise Assisted Living Investments, Inc.,
                                     Sole Member

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President

                               SUNRISE EDINA ASSISTED LIVING, L.L.C.,
                               a Minnesota limited liability company

                               By:   Sunrise Assisted Living Investments, Inc.,
                                     Sole Member

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President


                                       8
<PAGE>   30


                               SUNRISE FARMINGTON HILLS ASSISTED
                               LIVING, L.L.C., a Michigan limited liability
                               company

                               By:   Sunrise Assisted Living Investments, Inc.,
                                     Sole Member

--------------------            By:/s/  James S. Pope      (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President

                               SUNRISE BATON ROUGE ASSISTED LIVING,
                               L.L.C., a Louisiana limited liability company

                               By:   Sunrise Assisted Living Investments, Inc.,
                                     Sole Member

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President

                               SUNRISE OF NEW ORLEANS ASSISTED
                               LIVING, L.L.C.,  a Louisiana limited liability
                               company

                               By:   Sunrise Assisted Living Investments, Inc.,
                                     Sole Member

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President

                               SUNRISE HOLLY ASSISTED LIVING LIMITED
                               PARTNERSHIP, a Colorado limited partnership

                               By:   Sunrise Assisted Living Investments, Inc.,
                                     General Partner

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President

                                       9
<PAGE>   31


                               SUNRISE WESTON ASSISTED LIVING
                               LIMITED PARTNERSHIP, a Massachusetts
                               limited partnership

                               By:   Sunrise Assisted Living Investments, Inc.,
                                     General Partner

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President

                               SUNRISE NORTHSHORE ASSISTED LIVING
                               LIMITED PARTNERSHIP,  a Florida limited
                               partnership

                               By:   Sunrise Assisted Living Investments, Inc.,
                                     General Partner

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President

                               SUNRISE CHESTERFIELD ASSISTED LIVING,
                               L.L.C., a Missouri limited liability company

                               By:   Sunrise Assisted Living Investments, Inc.,
                                     Sole Member

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President

                               SUNRISE CLAREMONT ASSISTED LIVING
                               L.P., a California limited partnership

                               By:   Sunrise Assisted Living Investments,
                                     Inc., General Partner

--------------------            By:/s/ James S. Pope       (SEAL)
                                        ------------------------
                                        James S. Pope
                                        Vice President


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<PAGE>   32


                               ADMINISTRATIVE AGENT:

WITNESS:                       BANK OF AMERICA, N.A.,
                               as Administrative Agent for the Lenders

--------------------      By: /s/ Leslie M. Zuga           (SEAL)
                                   -----------------------------
                                   Leslie M. Zuga
                                   Senior Vice President



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