Document:

v4-prenegotiationandstandsti.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

Exhibit 10.1

PRE-NEGOTIATION AND STANDSTILL AGREEMENT

This PRE-NEGOTIATION AND STANDSTILL AGREEMENT (this "Agreement"), dated the __ day of February, 2009, among Natixis, London Branch, in its capacity as security trustee for certain lenders under the Loan Agreement (defined below) ("Agent"), with offices at Cannon Bridge House, 25 Dowgate Hill, London EC4R 2YA, United Kingdom, Sunrise Senior Living, Inc. ("Guarantor"), with offices at 7902 Westpark Drive, McLean, VA 22102, U.S.A., Sunrise München-Thalkirchen Senior Living GmbH & Co. KG, with offices registered at the commercial register at the local court of Königsstein im Taunus, represented by its sole general partner, PSRZ (Germany) General Partner GmbH, registered at the commercial register at the local court of Königsstein im Taunus under HRB 6199, Frankfurter Str. 1, 61476 Kronberg im Taunus ("PropCo"), and Sunrise München-Thalkirchen GmbH, with offices registered at the local court of Königsstein im Taunus under HRB 6613, Frankfurter Str., 1 61476 Kronberg im Taunus ("OpCo", and together with PropCo, "Borrower").

AGREEMENT

WHEREAS, Ixis Corporate & Investment Bank (predecessor-by-merger to Natixis, London Branch), as security trustee (“Ixis”), PropCo and certain lenders (together with their successors and assigns, the "PropCo Lenders") are parties to that certain Loan Agreement, dated March 24, 2006 (the "PropCo Loan Agreement"), pursuant to which such lenders made a loan (the "PropCo Loan") to PropCo; 

WHEREAS, Ixis, OpCo and certain lenders (together with their successors and assigns, the "OpCo Lenders", and together with the PropCo Lenders, the "Lenders") are parties to that certain Loan Agreement (the "OpCo Loan Agreement", and together with the PropCo Loan Agreement, the "Loan Agreement"), dated March 24, 2006, pursuant to which such lenders made a loan (the "OpCo Loan", and together with the PropCo Loan, the "Loan") to OpCo; 

WHEREAS, Guarantor agreed to provide certain guarantees to Agent in respect of the Loan, which guarantees are evidenced by (i) that certain Funding Obligation among Agent, PropCo and Guarantor (the "PropCo Funding Obligation") and (ii) that certain Funding Obligation among Agent, OpCo and Guarantor (the "OpCo Funding Obligation", and together with the PropCo Funding Obligation, the "Funding Obligation"); 

WHEREAS, the Loan Agreement contains certain financial covenants, inter alia, that the Loan to Value Ratio not exceed the LTV Threshold (as such terms are defined in the Loan Agreement), and pursuant to Clause 6.3.1.3 of the Loan Agreement, if such Loan to Value Ratio exceeds the LTV Threshold, Borrower must, within 14 days after notification by Agent, either (i) provide Agent with additional security of a nature described in the Loan Agreement or (ii) prepay a portion of the Loan so that the Loan amount is reduced to a sum not exceeding the aggregate LTV Threshold and any additional security that is delivered, provided, that if sufficient additional security is not provided pursuant to Clause 6.3.1.3(i) of the Loan Agreement within 10 days of Agent's notification of the violation of the LTV Threshold, Borrower is deemed to have elected to prepay as set forth in Clause 6.3.1.3(ii) of the Loan Agreement; 

WHEREAS, pursuant to Clause 6.3.1.3 of the Loan Agreement, Agent has delivered to Borrower a letter (the "Notice Letter"), dated January 22, 2009, by which Agent notified Borrower that the Loan to Value Ratio is 119.8% on the basis of a valuation by Atrisreal

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Limited, which Loan to Value Ratio exceeds the LTV Threshold, and requested Borrower's compliance with the terms of the Loan Agreement in respect of such Loan to Value Ratio and the Notice Letter; 

WHEREAS, Borrower has sent Agent a letter, dated February 4, 2009, by which Borrower, among other things, recognized its receipt of the Notice Letter and reserved its rights to dispute a breach of the LTV Threshold; 

WHEREAS, Agent has sent Borrower a letter (the "Borrower Demand"), dated February 5, 2009, pursuant to which Agent informed Borrower that Agent had not received any proposals from Borrower in response to the Notice Letter with respect to providing additional security for the Loan as permitted by Clause 6.3.1.3(i) of the Loan Agreement and, as a result, Agent deems Borrower to have elected to prepay the Loan in accordance with the terms of Clause 6.3.1.3(ii) of the Loan Agreement; 

WHEREAS, Agent has sent Guarantor a letter, dated February 5, 2009, in accordance with Clause 10.1 of the Funding Obligation, by which Agent notified Guarantor (i) of the existence of a Cash Flow Deficit (as defined in the Funding Obligation) (the "LTV Cash Flow Deficit") in the aggregate amount of 8,076,878 euros, (ii) that the Borrower Demand had been served on Borrower for payment by Borrower to Agent of the LTV Cash Flow Deficit and (iii) that, pursuant to the terms of the Funding Obligation, should the Borrower fail to make such payment of the LTV Cash Flow Deficit within a specified time period, Agent will serve a demand on Guarantor pursuant to the terms of the Funding Obligation; 

WHEREAS, Agent has sent Guarantor a letter in accordance with Clause 10.1 of the Funding Obligation (the "Guarantor Demand"), dated February 12, 2009, pursuant to which Agent informed Guarantor that Borrower has failed to satisfy the Borrower Demand and demanded that Guarantor satisfy the LTV Cash Flow Deficit; 

WHEREAS, Borrower failed to pay that portion of the Debt Service (as defined in the Loan Agreement and/or the Funding Obligation, as applicable) consisting of Interest Expenses (as defined in the Loan Agreement) and/or scheduled principal payments (collectively, "Scheduled Debt Service") which was payable on the Interest Payment Date (as defined in the Loan Agreement) of January 29, 2009, and Borrower has indicated that Borrower will not pay Scheduled Debt Service, as required by the Loan Documents, on a going-forward basis; 

WHEREAS, Agent has determined that (i) the failure by Borrower to timely pay the Scheduled Debt Service in January 2009 has resulted in a Cash Flow Deficit and (ii) each failure by Borrower to pay Scheduled Debt Service with respect to any Interest Period (as defined in the Loan Agreement) after January 2009 will result in a further Cash Flow Deficit (each Cash Flow Deficit referred to in clauses (i) and (ii) above being referred to herein as a "Debt Service Cash Flow Deficit"); 

WHEREAS, Agent has not sent to Borrower and/or Guarantor any of the notices and demands described in Sections 2.2 and 10.1 of the Funding Obligation in connection with the Debt Service Cash Flow Deficit relating to January 2009 (a "Debt Service Cash Flow Deficit Demand") and, subject to the terms and conditions of this Agreement, Agent will not send to Borrower and/or Guarantor any Debt Service Cash Flow Deficit Demand during the term of this Agreement; 

WHEREAS, Agent, Borrower and Guarantor have entered into that certain Standstill Agreement, dated February [18], 2009 (the "Borrower Standstill"), which agreement is governed by the laws of the Federal Republic of Germany, pursuant to which Agent has

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agreed, inter alia, not to enforce certain of its rights under the Loan Agreement and the other Loan Documents (as defined below) for a certain period of time during which Agent and Borrower pursue negotiations regarding the violation of the LTV Threshold, the failure to pay Scheduled Debt Service and the satisfaction of the LTV Cash Flow Deficit and the Debt Service Cash Flow Deficit; and 

WHEREAS, Guarantor and Borrower have requested that Agent forbear from exercising certain of Agent's remedies that may now be available pursuant to the Funding Obligation and other Loan Documents for a certain period of time pursuant to the terms hereof; 

NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement and intending to be legally bound by this Agreement, and in consideration of Ten Dollars ($10.00) in hand paid, the parties covenant and agree as follows:

1.  Negotiations.

   (a)  At Guarantor's and Borrower's request, Agent is about to commence discussions and negotiations with Guarantor and Borrower ("Negotiations") concerning certain obligations ("Obligations") of Guarantor and Borrower to Agent that are created, evidenced or secured by, set out or provided for in, or relate to the Loan, the Funding Obligation, the Loan Agreement and the other documents entered into in connection therewith, including, without limitation, this Agreement, the Notice Letter, the Borrower Demand, the Guarantor Demand, the Borrower Standstill and the various letters referenced in the Recitals hereto ("Loan Documents").

   (b)  Without liability for failing to do so, Agent, Guarantor and Borrower (each a "Party", and, collectively, the "Parties") presently plan to discuss various courses of action that may be in their respective interests or their mutual interest.

   (c)  The Parties agree that the Negotiations, or correspondence or drafts of documents relating to the Negotiations, have been and shall be made with a view to a compromise and settlement by the Parties. As such, both the content and existence of all such Negotiations shall be, and shall remain, protected accordingly and shall not be admissible as evidence or subject to discovery with respect to any issue that is or may be before any court or administrative body or the subject of any other proceeding, and any statements made in the course of the Negotiations shall not be used for any other purpose, including, without limitation, proof of admissions of liability.

2.  Term. As used in this Agreement, the "Term" shall mean the period commencing on the date hereof and ending on March 31, 2009; provided, that this Agreement may be sooner terminated pursuant to Paragraph 10 hereof.

3.  Representations of Guarantor and Borrower. Each of Guarantor and Borrower hereby represents that: 

    (a)  Each of the statements made in the Recitals of this Agreement is true and correct; 

    (b)  No consent, approval, order, authorization, designation, registration, declaration or filing of, with, or by any third party or governmental authority is required by Guarantor or Borrower for the execution of this Agreement and the

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negotiations contemplated hereby. The execution by Guarantor and Borrower of this Agreement and the performance by Guarantor and Borrower of their obligations hereunder does not and shall not result in any breach of or constitute a default under, any mortgage, deed of trust, lease, bank loan, credit agreement, corporate charter, partnership agreement, bylaws, or other instrument or agreement to which Guarantor or Borrower is a party or by which Guarantor's or Borrower's assets and properties may be bound or affected; 

   (c)  Each of Guarantor and Borrower is duly incorporated, formed or organized and validly existing under the laws of the jurisdiction of its incorporation, formation or organization; and 

   (d)  There are no actions, suits, or proceedings pending or, to the knowledge of Guarantor and/or Borrower, threatened or anticipated against or affecting Guarantor and/or Borrower that could reasonably be expected to affect the validity or enforceability of this Agreement, the Loan or the Loan Documents, at law or in equity, or before or by any governmental authority, and neither Guarantor nor Borrower is in default with respect to any order, writ, injunction, decree, or demand of any court or any governmental authority.

   4.  All Agreements, Amendments, and Waivers in Writing. The Negotiations may be lengthy and complex. Notwithstanding that the Parties may reach one or more oral understandings or agreements on one or more issues that the Parties are discussing or trying to resolve, no Party shall be bound by any oral agreement of any kind (including, without limitation, any waiver of any right or remedy), and no rights, claims, obligations or liabilities of any kind, either express or implied, shall arise or exist in favor of or be binding upon any Party, or any other person, except to the extent (if any) expressly set out in a written agreement signed by the Party that is to be bound thereby.

   5.  Amendments in Writing. This Agreement may be amended only by a written agreement signed by the Parties.

   6.  Intentionally Omitted.

   7.  Loan Documents Remain in Force

    (a)  Notwithstanding any other provision of this Agreement or any claim of Guarantor, Borrower or any other person to the contrary, the Loan Documents (including, without limitation, Section 2.1 of the Funding Obligation) are and remain in full force and effect, unmodified, and shall remain in full force and effect, unmodified, unless and until amended or modified by (and only to the extent provided in) a written agreement executed and delivered hereafter in accordance with the provisions of this Agreement. Guarantor and Borrower acknowledge that, as of the date hereof, (i) neither Agent nor any Lender is in default of any of its obligations under the Funding Obligation or the other Loan Documents and as of the date hereof each has fully performed all its obligations under the Funding Obligation and the other Loan Documents, (ii) no event has occurred that would in any way render Agent or any Lender liable to Guarantor or Borrower under the Funding Obligation or the other Loan Documents, (iii) neither Agent nor any Lender is liable to Guarantor or Borrower in any way for any thing or matter whatsoever, whether or not relating to the Loan, (iv) neither Guarantor nor Borrower has any claims or causes of action against Agent or any Lender of any nature whatsoever, whether or not relating to the Loan, and (v) that, to the extent that any claim or cause of action

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may exist, Guarantor and Borrower each hereby waive, relinquish and release Agent and the Lenders from each and every liability, claim, cause of action and grounds for suit that Guarantor or Borrower may have against Agent or such Lenders, whether or not related to the Loan.

    (b)  Specifically, but without limiting in any manner whatsoever the generality of the foregoing, nothing contained in this Agreement is intended to nullify or otherwise alter any agreement or waiver set forth in the Loan Documents regarding such matters as waiver of right to jury trial, venue, or jurisdiction of any lawsuit or other proceeding or action pertaining to the Loan Documents or obligations; provided, however, that this sentence shall not limit the effectiveness of this Agreement.

   8.  Standstill. For the Term of this Agreement, and so long as no Event of Default (as defined below) shall occur under this Agreement, Agent agrees that (i) Agent shall not commence or prosecute an action or proceeding to enforce its demand for payment by Guarantor of the LTV Cash Flow Deficit described in the Guarantor Demand and (ii) subject to agreements set forth in the following sentence, Agent shall not deliver to Borrower and/or Guarantor any Debt Service Cash Flow Deficit Demand, nor shall Agent commence or prosecute an action or proceeding to enforce any demand for payment by Guarantor of any Debt Service Cash Flow Deficit; provided, however, that Agent shall not be limited by this Agreement with respect to the exercise of any rights or remedies against Borrower or the Property, as such matters are governed by the Borrower Standstill. The Parties agree that, notwithstanding anything to the contrary contained in the Loan Documents, including, without limitation, Sections 2.2 and 10.1 of the Funding Obligation, a Debt Service Cash Flow Deficit shall be deemed to occur, and Guarantor shall remain obligated to pay to Agent the amount of the applicable Debt Service Cash Flow Deficit, upon Borrower's and/or Guarantor's failure to timely pay Scheduled Debt Service without the requirement that Agent deliver any Debt Service Cash Flow Deficit Demand to Borrower and/or Guarantor.

   9.  Events of Default. Each of the following shall be an event of default (each an "Event of Default") under this Agreement:

    (a)      If any representation of Guarantor or Borrower contained herein shall prove to be incorrect or misleading; 

    (b)      If Guarantor or Borrower shall default under any covenant or other provision of this Agreement; 

    (c)      If any Event of Default (as defined in the Loan Agreement) shall occur after the date hereof (except for any Event of Default arising out of (i) the failure to satisfy the LTV Cash Flow Deficit which is described in the Borrower Demand and Guarantor Demand and (ii) the failure by Borrower and/or Guarantor to timely pay the Scheduled Debt Service and/or the Debt Service Cash Flow Deficit(s) relating to Scheduled Debt Service payable on January 29, 2009 and thereafter); 

    (d)      If an acceleration of the Loan shall occur after the date hereof pursuant to the terms of the Loan Agreement based on an Event of Default (as defined in the Loan Agreement), other than a breach of the LTV Threshold and/or failure to timely pay Scheduled Debt Service; 

    (e)      Intentionally Omitted;

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    (f)      The appointment, by the order of a court of competent jurisdiction, of a trustee, receiver, or liquidator of the Property or any part thereof, or of Guarantor or Borrower; 

    (g)     The filing by Guarantor or Borrower of a petition in bankruptcy or for an arrangement or for reorganization pursuant to Title 11 of the United States Code (11 U.S.C. §§ 101 et seq.) (the "Bankruptcy Code") or any similar law, federal or state, or any similar law of any other country or jurisdiction, or Guarantor's or Borrower's making an assignment for the benefit of creditors, or admitting in writing its inability to pay its debts generally as they become due, or consenting to the appointment of a receiver or receivers of all or any part of its property; 

    (h)     The filing by any of the creditors of Guarantor or Borrower of a petition in bankruptcy against Guarantor or Borrower for reorganization of Guarantor or Borrower pursuant to the Bankruptcy Code or any similar law, federal or state, or any similar law of any other country or jurisdiction; 

    (i)      The adjudication or declaration, by decree of a court of competent jurisdiction, that Guarantor or Borrower is bankrupt or insolvent; and 

    (j)      The termination of the Borrower Standstill.

For the avoidance of doubt, any exclusions in clauses (i) and (ii) of Section 9(c) above shall not be deemed a waiver or release of Borrower's and/or Guarantor's obligations in respect of payment of the said amounts.

   10.  Remedies on Default. Upon the occurrence of an Event of Default under this Agreement, this Agreement shall automatically terminate and Agent shall have the right to exercise all rights and remedies available to Agent under the Funding Obligation and/or the other Loan Documents or take such other action to protect or enforce its rights as are available in law or equity.

   11.  No Waiver of Rights Under Loan Documents. Except with respect to Lender's standstill obligations contained in [Clause 2] of the Borrower Standstill and Paragraph 8 hereof, this Agreement, the Negotiations, and any other actions taken or statements made after the date of this Agreement, shall not constitute or evidence any waiver, release, modification, or limitation of any Party's rights, remedies, or obligations, or of any default (whether or not known on the date of this Agreement or later known or arising), under or concerning the Loan Documents or of any notice given or action taken by Agent under the Loan Documents or concerning them, except to the extent (if any) expressly and specifically provided otherwise in a written agreement executed in accordance with the provisions of this Agreement.

   12.  Waiver and Release of Certain Future Claims Related to the Negotiations. Each Party to this Agreement hereby irrevocably waives and releases any and all claims, actions, causes of action, suits, and defenses that the Party might later have against the other Party for or by reason of any statement or utterance (whether oral or in writing) whatsoever that may be made during the course of the Negotiations; provided, however, that the waiver and release set forth in the preceding portion of this Paragraph 12 shall not: 

    (a)  Release any Party from any of its obligations under this Agreement, the Obligations, the Loan Documents, or any written agreement executed in accordance with this Agreement; or

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    (b)  Waive, release, limit, restrict, or affect in any way:

   (i)  Any rights or remedies of Agent under the Loan Documents or concerning any of the Obligations; or 

   (ii)  Any notices given or that may later be given, and any actions taken or that may later be taken, by Agent in connection with the assertion or enforcement of any such rights or remedies.

   13.  Certain Guarantor and Borrower Covenants. The following are covenants and agreements that shall be observed by Guarantor and/or Borrower, as applicable:

    (a)  Guarantor shall observe and perform all of its obligations under the Loan Documents and this Agreement.

    (b)  Guarantor shall provide Agent with such information about the financial status and condition of Guarantor as Agent may reasonably request from time to time. Guarantor authorizes and allows Agent and its representatives, upon reasonable notice and at any reasonable time during normal business hours, to examine and, at Agent's option and Agent's cost and expense, to conduct an audit of Guarantor's financial books and records and all other records relating or pertaining to the operation of the Property and Agent shall be permitted to photocopy any such books and records. To the extent that Guarantor is legally permitted to do so, Guarantor shall provide Agent with copies of all reports and examinations, which are provided to Guarantor or its affiliates or to which they are otherwise entitled, based on Guarantor's books and records, which are or may be prepared for or on behalf of any of Guarantor's lenders or financing parties, including any such reports and examinations prepared by the Guarantor.

    (c)  Guarantor shall indemnify and hold harmless Agent from and against all costs, damages, expenses, liabilities, claims, suits, and causes of action of every nature arising out of or in connection with the execution, observance, or performance of this Agreement by Agent.

    (d)  During the Term of the Agreement, each of Borrower and Guarantor hereby agrees and covenants not to commence or prosecute any claim or action against Agent, or any affiliate of Agent, or any Lenders.

   14.  Future Negotiations. Each of Guarantor and Borrower acknowledges and agrees that, this Agreement notwithstanding, Agent has no obligation whatsoever to discuss, negotiate, or to agree to any restructuring of the Obligations, or any modification, amendment, restructuring, or reinstatement of the Loan Documents or this Agreement, or to forbear from exercising its rights and remedies under those documents.

   15.  Fees and Expenses. All reasonable costs, charges, fees and expenses triggered by this Agreement or incurred in connection with its preparation, translation, execution or amendment (in each case including reasonable fees for legal advisors) shall be paid jointly and severally by Guarantor and Borrower and, in addition to and not in limitation of the foregoing, Guarantor shall pay, as and when billed by Agent, all fees, costs and expenses (including, without limitation, fees and expenses for Agent's attorneys) paid or incurred by Agent in connection with the negotiation of this Agreement or in connection with the Negotiations and other actions contemplated under this Agreement.

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   16.  Voluntary Agreement. Each of Borrower and Guarantor represents and warrants to Agent that both Guarantor and Borrower are represented by legal counsel of its choice, that it has consulted with such counsel regarding this Agreement, that it is fully aware of the terms and provisions contained in this Agreement and of their effect, and that it has voluntarily and without coercion or duress of any kind entered into this Agreement.

   17.  Inducement. The Parties understand that Agent would not enter into the Negotiations concerning the Loan and the Funding Obligation without the execution and delivery of this Agreement, which sets forth the nature of, and the terms governing, such Negotiations.

   18.  Survival. Except for Paragraphs 1(a), 1(b), 8, 9 and 19, the provisions of this Agreement shall survive any termination of the Negotiations.

   19.  Approval. Any representations made by any of the parties designated by Agent shall be of no force and effect unless and until such time as appropriate approvals have been obtained from the senior management of Agent and such approvals have been communicated to Guarantor and/or Borrower and set forth in a written agreement executed and delivered in accordance with this Agreement.

   20.  Miscellaneous

(a)  Except for the Borrower Standstill, this Agreement constitutes the entire agreement concerning the subject matter of this Agreement, and it supersedes any prior or contemporaneous oral or written representations, statements, understandings, or agreements concerning the subject matter of this Agreement.

(b)  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns. This Agreement has been negotiated, executed and delivered in New York City, New York and it is anticipated that all Negotiations will be conducted in New York City, New York. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the principles of conflicts of law.

(c)  In any dispute concerning this Agreement, the prevailing Party shall be entitled to recover all reasonable costs and attorney's fees from the non-prevailing Party.

(d)  Paragraph headings are for convenience only and shall not be used to interpret any term or provision of this Agreement.

(e)  This Agreement may be executed in one or more counter parts, each of which shall constitute an original and all of which taken together shall constitute one agreement.

(f)   Each person executing this Agreement on behalf of any Party represents that the person has full authority and legal power to do so and binds the Party on whose behalf he or she has executed this Agreement.

(g)  The relationship between each of Borrower and Agent, and Guarantor and Agent, is that of debtor and creditor. Nothing contained in this Agreement shall be deemed to create a partnership or joint venture or other relationship between Borrower and Agent, Guarantor and Agent, or between Agent and any other party, or to cause Agent to be

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liable or responsible in any way for the actions, liabilities, debts or obligations of Borrower or Guarantor or any other party.

     21.   Waiver of Jury Trial.  EACH PARTY TO THIS AGREEMENT KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR RELATING TO THIS AGREEMENT, ANY LOAN DOCUMENT, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT, OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH THIS AGREEMENT OR ARISING FROM ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OF ANY OF THE PARTIES TO THIS AGREEMENT, OR ANY OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY LOAN DOCUMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES THAT IS HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS DISCUSSED THIS WAIVER WITH THAT LEGAL COUNSEL. EACH PARTY TO THIS AGREEMENT FURTHER ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING OF THIS WAIVER.

[Signatures commence on following page.]

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IN WITNESS WHEREOF, the parties to this Agreement executed and delivered this Agreement as of the date first written above.

                                                                           SUNRISE MÜNCHEN-THALKIRCHEN 

                                                                           GMBH

                                                                           By: /s/ Paul S. Milstein

                                                                           Name: Paul S. Milstein

                                                                           Title: Prokurist

                                                                           SUNRISE MÜNCHEN-THALKIRCHEN 

                                                                           SENIOR LIVING GMBH & CO. KG:

                                                                           By: /s/ Paul S. Milstein

                                                                           Name: Paul S. Milstein

                                                                           Title: Prokurist

                                                                           SUNRISE SENIOR LIVING, INC.

                                                                           By: /s/ John Gaul

                                                                           Name: John Gaul

                                                                           Title: General Counsel

                                                                           NATIXIS, LONDON BRANCH:

                                                                           By: /s/ Grégoire Hennekinne

                                                                           Name: Grégoire Hennekinne

                                                                           Title: Director

                                                                           By: /s/ David Newby

                                                                           Name: David Newby

                                                                           Title: Managing Director

10exhibit10-2.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

Exhibit 10.2

Standstill Agreement

(Stillhaltevereinbarung)

This Standstill Agreement (Stillhaltevereinbarung) ("Agreement") is made on 19 February 2009 between

	1.    	Sunrise München-Thalkirchen Senior Living GmbH & Co. KG, registered with the commercial register (Handelsregister) at the local court (Amtsgericht) of Königstein im Taunus under HRA 3038, Frankfurter Str. 1, 61476 Kronberg im Taunus, represented by its sole general partner, PSRZ (Germany) General Partner GmbH, registered with the commercial register (Handelsregister) at the local court (Amtsgericht) of Königstein im Taunus under HRB 6199, Frankfurter Str. 1, 61476 Kronberg im Taunus
	 
	 	– "PropCo" – 
	 
	2.      	Sunrise München-Thalkirchen GmbH, registered with the commercial register at the local court of Königstein im Taunus under HRB 6614, Frankfurter Str. 1, 61476 Kronberg im Taunus
	 
	 	– "OpCo" – 
	 
	3.      	Sunrise Senior Living Inc., 7902 Westpark Drive, McLean, VA 22102, U.S.A.
	 
	 	– "Guarantor" – 
	 
	4.      	Natixis, London Branch, Cannon Bridge House, 25 Dowgate Hill, London EC4R 2YA, United Kingdom
	 
	 	in its capacity as agent under the Loan Agreements (as defined below) also for and on behalf of the other Finance Parties
	 
	 	– "Agent" – 

PropCo, OpCo, the Guarantor and the Agent are hereinafter collectively referred to as the "Parties" and each a "Party"

The Parties hereby agree as follows:

PREAMBLE:

	(A)      	OpCo and the Agent are parties to a loan agreement dated 24 March 2006 (the "OpCo Loan Agreement") under which, inter alia, the Lender (as defined in the OpCo Loan Agreement) has made available to OpCo the Facilities (as defined in the OpCo Loan Agreement);

	(B)      	PropCo and the Agent are parties to a loan agreement dated 24 March 2006 (the "PropCo Loan Agreement" and collectively with the OpCo Loan Agreement, the "Loan Agreements") under which, inter alia, the Lender (as defined in the PropCo Loan Agreement) has made available to PropCo the Facilities (as defined in the PropCo Loan Agreement);
	 
	(C)   	The Guarantor and the Agent are parties to (i) a funding obligation agreement dated 5 October 2006 with PropCo (the "PropCo Funding Obligation") and (ii) a funding obligation agreement dated 5 October 2006 with OpCo (the "OpCo Funding Obligation" and collectively with the PropCo Funding Obligation, the "Funding Obligations"). Under the Funding Obligations, the Guarantor has agreed, subject to the terms set out therein, to pay to the Agent (on behalf of itself as well as of the Finance Parties) amounts equal to the Cash Flow Deficit (as defined in the Funding Obligations) of OpCo or PropCo, as the case may be;
	 
	(D)  	The Loan Agreements contain certain financial covenants, inter alia, not to exceed the LTV Threshold. Per Clause 6.3.1.3 of the Loan Agreements, if the LTV Threshold is exceeded, the respective Borrower has to, within 14 days after notification by the Agent, provide the Agent with (or procure the provision of) additional security of a nature as further set out in the Loan Agreements, or, if proposals of such security are not made within time, is deemed to have elected for prepayment of a portion of the Loans to an extent that the Loans are reduced to a sum not exceeding the LTV Threshold;
	 
	(E)  	Per letter dated 22 January 2009, the Agent informed PropCo, OpCo and the Guarantor that per a valuation by Atrisreal Limited, the Loan-To-Value Ratio was 119.8%, and asked the Borrowers to comply with the procedures set out in the Loan Agreements;
	 
	(F)  	Per letter dated 4 February 2009 from PropCo and OpCo to the Agent, PropCo and OpCo reserved their rights to challenge the valuation on the basis of which the breach of the LTV Threshold had been claimed;
	 
	(G)  	Per letters dated 5 February 2009, the Agent informed PropCo and OpCo that it had not received any proposals from the Borrowers, that they were deemed to have elected for prepayment and requested payment thereof, and informed the Guarantor that a cash flow deficit of EUR 8,076,878 existed which the Guarantor had to pay under the Funding Obligations;
	 

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	(H)      	Per letter dated 12 February 2009, the Agent served a demand on the Guarantor for payment of an amount equal to the cash flow deficit of EUR 8,076,878 pursuant to the Funding Obligations;
	 
	(I)      	It is contemplated that the Parties have entered, or will enter, into a pre-negotiation and standstill agreement (the “US Standstill Agreement”) dated on or about the date hereof with respect to Guarantor’s obligations under the Funding Obligations;
	 
	(J)      	The following payments have become due or will, during the term of this Agreement, become due and payable pursuant to the terms of the Loan Agreements:
	

 

	EUR 56,981.28 (interest and principal)

under the OpCo Loan Agreement 	  	Due date: 29 January 2009
	  
	

	  	

	EUR 347,522.91 (interest and principal)

under the PropCo Loan Agreement  	  	Due date: 29 January 2009
	  
	

	  	

	Interest under the Loan Agreements  	  	Due date: 27 February 2009  
	

	  	

	Interest under the Loan Agreements  	  	Due date: 31 March 2009  

 

	 	These payments are hereinafter collectively referred to as the "Claims".
	 
	(K)      	The Parties are currently in discussions in connection with the Loan Agreements.
	 
	(L)      	OpCo, PropCo and the Guarantor intend to sell the Munich business.
	 
	(M)    	As the Parties intend to continue their discussions in good faith, and to avoid any doubts as to the current non-existence of an obligation of the managing directors (Geschäftsführer) of the general partner of PropCo and OpCo as to their duty to file for commencement of insolvency proceedings, it is the Parties' intention to enter into this Agreement.
	 

The Parties agree as follows:

	1.        	Definitions and interpretation
	 
	 	Capitalized terms used herein shall, unless defined otherwise herein, have the same meaning as in the Loan Agreements.
	 
	2.   	Standstill Agreement
	 
	 	Until expiration of this Agreement in accordance with clause 3 below, the Agent agrees (on behalf of itself as well as of the Finance Parties):
	 

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	 	(a)      	not to enforce (durchsetzen)
	 
	 	 	(i)   	its claims for prepayment of the Loans based on Clause 6.3.1.3 of the Loan Agreements; and/or
	 
	 	 	(ii)   	its Claims
	 
	 	(or any portion thereof) either by filing of legal proceedings of any kind, or by realization of any security subject to German law granted under or in connection with the Loan Agreements (for the avoidance of doubt, the Funding Obligations shall not be affected by this Agreement), and that any prepayment obligation (with the exception of any obligation under the Funding Obligations which are subject to the US Standstill Agreement) and the payment of the Claims shall be stayed (gestundet) from the date of this Agreement and during the term of this Agreement;
	 
	 	(b)      	not to accelerate (kündigen) the Loan Agreements (or any portion thereof) based on
	 
	 	 	(i)   	a breach of the LTV Threshold which has arisen, or might potentially arise, due to the facts and circumstances described in Preamble (D) herein or in connection therewith; and/or
	 
	 	 	(ii)   	an Event of Default which has arisen, or might potentially arise due to non-payment or delayed payment of the Claims;
	 
	 	 	and/or
	 
	 	(c)  	not to demand that additional security is provided, other than the provision of additional security as required pursuant to Clause 6.3.1.3 of the Loan Agreements which is currently subject of the Parties’ negotiations.
	 
	3.      	Term
	 
	 	This Agreement shall remain effective until the earlier of:
	 
		(a)      	the Parties having definitely aborted their negotiations and this has been confirmed by the relevant other Party/Parties in writing, such confirmation not to be unreasonably withheld. The Parties, as of the date of this Agreement, consider it more likely than not (überwiegend wahrscheinlich) that a solution can be reached which will enable OpCo and PropCo to continue to trade as a going concern (Fortführung des Geschäftsbetriebs);
	 
	 	(b)  	the acceleration of the Loan Agreements based on an Event of Default (other than a breach of the LTV Threshold or the non-payment or delayed payment of the Claims);
	 

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	 	(c)      	the application for the opening of insolvency proceedings or the commencement of insolvency proceedings (Eröffnung des Insolvenzverfahrens) with respect to OpCo or PropCo or the Guarantor;
	 
	 	(d)      	the termination of the US Standstill Agreement (including by way of an early termination); or
	 
	 	(e)      	31 March 2009.
	 
	 	For the avoidance of doubt, the Agent shall have the right to exercise all rights and remedies available to the Agent (on behalf of itself as well as of the Finance Parties) under the Loan Agreements upon expiration of this Agreement.
	 
	4.      	No waiver of rights or defenses
	 
	 	Nothing in this Agreement shall, to the extent not expressed herein, constitute a waiver, amendment or termination of any agreement between the Parties or of the rights, remedies or defenses any Party has against another Party and the Parties confirm that the Loan Agreements and any security granted in connection therewith remain in full force and effect to the extent they have been in full force and effect would it not have been for this Agreement.
	 
	5.      	Confirmations
	 
	 	OpCo and PropCo confirm that
	 
	 	(a)      	subject to the execution of this Agreement, neither OpCo nor PropCo is overindebted (überschuldet) or illiquid (zahlungsunfähig) for the purpose of Sections 17 – 19 of the German Insolvency Code (Insolvenzordnung); 
	 
	 	(b)      	the execution of this Agreement does not impair other creditors of PropCo or OpCo; and
	 
	 	to the best of their knowledge, it is not anticipated that during the term of this Agreement the financial situation of OpCo and PropCo will deteriorate leading to any of the effects described in (a) and (b) of this clause.
	 
	6.      	Covenants
	 
	 	(a)      	OpCo and PropCo shall
	 
	 	 	(i)    	observe and perform all their respective obligations under the Loan Agreements;
	 

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	 	(ii)	provide the Agent with such information about the financial status and condition of the Borrowers as the Agent may reasonably request from time to time. Each Borrower authorizes and allows the Agent and its representatives, upon reasonable notice and at any reasonable time during normal business hours, to examine, at its own cost and expense, Borrower's financial books and records and all other records relating or pertaining to the operation of the Property, and the Agent shall be permitted, at its own cost and expense, to photocopy any such books and records; and
	 
	 	(iii) 	not take legal proceedings or actions against the Agent during the term of this Agreement.
	 
	(b)      	In relation to the sale of the Munich business
	 
	 	(i)	OpCo and PropCo undertake to, without undue delay, search, select, present and – subject to the Agent’s approval - mandate a broker and advisor respectively for such sale;
	 
	 	(ii)	OpCo, PropCo and the Guarantor undertake to provide for any information requested during such sale procedure, in particular by the mandated broker / advisor for distribution to any potential interested parties in order to enable a due diligence (to the extent required and in accordance with the sale procedure and permitted by law);
	 
	 	(iii)	OpCo, PropCo and the Guarantor undertake to fully cooperate with the broker / advisor and any other relevant party (to the extent required) during such sale procedure while maintaining and keeping up the Munich business during the term of this Agreement; and
	 
	 	(iv)  	OpCo and PropCo undertake to carry out any other actions/declarations and measures as reasonably necessary to facilitate such sale, in any event in their best corporate interest.
	 
	 	For the avoidance of doubt, any sale of the Munich business - irrespective of an asset or a share deal - requires the prior written consent of the Agent.
	 
	(c)	Notwithstanding any other provision of this Agreement or any claim of Guarantor, OpCo, PropCo or any other person to the contrary, the Financing Documents and the other documents entered into in connection therewith (including, without limitation, Section 2.1 of the Funding Obligations) are and remain in full force and effect, unmodified, and shall remain in full force and effect, unmodified, unless and until amended or modified by (and only to the
	 

6

	 	extent provided in) a written agreement executed and delivered hereafter in accordance with the provisions of this Agreement.
	 
	7.      	Miscellaneous
	 
	 	(a)  	If at any time, any one or more of the provisions hereof is or becomes invalid, illegal or unenforceable in any respect under the law of any jurisdiction, such provision shall as to such jurisdiction, be ineffective to the extent necessary without affecting or impairing the validity, legality and enforceability of the remaining provisions hereof or of such provisions in any other jurisdiction. The invalid, illegal or unenforceable provision shall be deemed to be replaced with such valid, legal or enforceable provision which comes as close as possible to the original intent of the parties and the invalid, illegal or unenforceable provision. Should a gap (Regelungslücke) become evident in this Agreement, such gap shall, without affecting or impairing the validity, legality and enforceability of the remaining provisions hereof, be deemed to be filled in with such provision which comes as close as possible to the original intent of the Parties.
	 
	 	(b)  	Changes and amendments to this Agreement including this clause 7 shall be made in writing.
	 
	 	(c) 	This Agreement is governed by the laws of the Federal Republic of Germany.
	 
	 	(d) 	The place of jurisdiction for any and all disputes arising under or in connection with this Agreement shall be the district court (Landgericht) in Frankfurt am Main. The Agent however, shall also be entitled to take action against any of the other Parties in any other court of competent jurisdiction.
	 
	 	(e)       	All duly evidenced costs, charges, fees and expenses triggered by this Agreement or incurred in connection with its preparation, translation, execution or amendment (in each case including duly evidenced fees for legal advisers) shall be paid jointly and severally by OpCo, PropCo and the Guarantor.
	 

[remainder of page intentionally left blank]

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	Sunrise München-Thalkirchen Senior Living GmbH & Co. KG
	  
	
by its general partner PSRZ (Germany) General Partner GmbH

 

	
	
	/s/ Richard Nadeau  
	Name: 		Richard Nadeau
	Title:	  	Geschäftsführer
	  
	  
	  
	Sunrise München-Thalkirchen GmbH  
	
	/s/ Paul Milstein
	Name:  		Paul Milstein
	Title:	  	Prokurist
	  
	  
	  
	Sunrise Senior Living Inc.
	
	/s/ Richard Nadeau
	Name:  		Richard Nadeau
	Title:	  	Chief Financial Officer 

8

Natixis, London Branch

in its capacity as Agent under the Loan Agreements (on behalf of itself as well as of the Finance Parties)

	/s/ David Newby		/s/ Grégoire Hennekinne
	Name: 		David Newby	  	Name:		Grégoire Hennekinne
	Title:	  	Head of UK Real Estate Finance &	  	Title:	  	Director, Real Estate Finance
	  	  	European CMBS	  	  	  	  

9

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