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Exhibit 10.1

SUNRISE SENIOR LIVING, INC.

RESTRUCTURE TERM SHEET

     This binding term sheet (the “Restructure Term Sheet”) dated as of this 22nd day of October, 2009 (the “Term Sheet Effective Date”) sets forth certain definitive terms and conditions upon which the parties hereto shall fully and finally compromise all claims and liabilities (collectively, “Claims”) under (a) certain unsecured Operating Deficit Guarantees (“ODAs”), debt, guarantee, income support, funding obligations, rebalancing claims, participant claims, undertakings or other contractual arrangements (collectively, the “ODAs and Financial Obligations”) of various borrowers or obligors, including Sunrise Senior Living, Inc. (“Sunrise”) and certain of its affiliates, and direct and indirect subsidiaries, which are not incorporated or formed in Germany (collectively, including Sunrise, the “Obligors”) and (b) all unsecured deficiency claims, liabilities and obligations of or against the Obligors under the ODAs and Financial Obligations. It is understood and agreed that no release of Collateral or German Collateral or any on-going obligation of the Obligors or any other party under the Designated Loan Documents to pledge, assign or preserve Collateral or German Collateral is being given by the Lenders hereunder; provided, however, that the Obligors’ financial obligations to operate, preserve, maintain or market for sale the German Collateral as more fully set forth in Section 3 herein shall not extend beyond December 31, 2010. The holders of such Claims from time to time are referred to as “Lenders”. Except as otherwise set forth herein, nothing herein shall be deemed to affect, modify or satisfy any other claims or obligations due and owing by the Obligors to Lenders. For the avoidance of doubt, (a) the Claims include only those obligations arising under the loan documents and agreements set forth on Schedule A (collectively, the “Designated Loan Documents”); and (b) the German Borrowers (as defined herein) are not included within the definition of Obligors herein. The Lenders are listed on Schedule B, together with (i) the amount of the Claims of each such Lender to be satisfied herein (“Designated Claims”), (ii) the ratable share of each such Lender’s Designated Claims expressed as a percentage (“Ratable Share”) of the total of all Designated Claims of all such Lenders, (iii) the amount that is each Lender’s Ratable Share of the total Collateral Value (as defined herein) (the “Ratable Share Amount”); and (iv) the guaranteed minimum distribution payable to each Lender which is 80% (or such higher percentage following a Settlement Share Increase as defined herein) of such Lender’s Ratable Share Amount (the “Guaranteed Minimum Distribution”); provided that Sunrise may at any time prior to the Restructure Effective Date (as defined herein) (but no earlier than seven (7) business days from the Term Sheet Effective Date) delete any Lender that has not executed the Restructure Term Sheet as of the date of such deletion from Schedule B, with any such deletion from Schedule B resulting in an increased Ratable Share and Ratable Share Amount for all remaining Electing Lenders. Such Designated Claims, Ratable Share, Ratable Share Amount and Guaranteed Minimum Distribution have been agreed to in good faith by Obligors and Lenders as of the date hereof.

     Each of the Electing Lenders (as defined herein) shall execute a declaration (the “Electing Lenders Declaration”) in favor of all other Electing Lenders in the form attached hereto as Exhibit A representing and warranting that the amount of such Electing Lender’s Designated Claim is a good-faith estimate of the Designated Claim that such Electing Lender is legally entitled to recover from Sunrise in accordance with the terms and conditions of the loan documents and

RESTRUCTURE TERM SHEET

agreements to which the respective Electing Lender, Obligors and, if applicable German Borrowers, are a party. Except as otherwise set forth herein, or as may otherwise be agreed in writing by Sunrise and the Electing Lenders acting unanimously, there will be no change, modification or dilution of any Designated Claim, Ratable Share, Ratable Share Amount or Guaranteed Minimum Distribution of any Lender as set forth on Schedule B as of the date hereof. Notwithstanding a Non-Electing Lender’s (as defined herein) ability to become an Electing Lender during the Non-Electing Lender Settlement Period (as defined herein), the Ratable Shares and Ratable Share Amount of the Electing Lenders as set forth on Schedule B shall not be diminished or reduced; provided that for the avoidance of doubt all Ratable Shares and Ratable Share Amount of the Electing Lenders set forth on Schedule B shall be deemed set and final as of the Restructure Effective Date (as defined herein) and such Ratable Share and Ratable Share Amount shall remain unchanged unless such Ratable Share and Ratable Share Amount is increased to the Adjusted Ratable Share (as defined herein). No Lenders other than those listed on Schedule B shall participate in the Restructure Transaction (as defined herein) without the prior written consent of Sunrise and all of the Electing Lenders. The amount of the Designated Claim held by any Electing Lender set forth on Schedule B shall be final and has been determined in good faith as of the date hereof in accordance with the terms set forth in the loan documents evidencing, referring or relating to the respective Designated Claims existing as of the date hereof. Subject to the foregoing, other than as expressly set forth herein, after the date hereof: (a) Obligors shall not provide to any Electing Lender, nor shall any Electing Lender have or receive, (i) an increased Designated Claim amount, (ii) additional distribution or payment on any Designated Claim, or (iii) a pledge of any additional collateral to secure any Designated Claim; and (b) Obligors shall not execute or enter into any loan document, agreement or other documentation with any Electing Lender with respect to the Designated Claims (whether written or verbal), except, to the extent appropriate, any extension of an existing standstill agreement between any Electing Lender and the applicable Obligors and/or German Borrowers.

        The closing of the transactions contemplated by the Restructure Term Sheet (“Restructure Transaction”) shall occur as soon as reasonably possible after the satisfaction of the BofA Condition but in no event later than forty (40) days after the satisfaction of the BofA Condition unless extended at the request of Electing Lenders executing this Restructure Term Sheet (which have not disavowed or repudiated this Restructure Term Sheet or the Restructure Documents) holding at least two-thirds of the Ratable Share Amounts of all such Electing Lenders, in such Electing Lenders’ sole and absolute discretion (such date, the “Restructure Effective Date”). Sunrise shall notify the Electing Lenders in writing of the satisfaction of the BofA Condition within three (3) business day of such satisfaction. In the event that the Electing Lenders have not received written notice from Sunrise that the BofA Condition is satisfied on or prior to the twentieth (20th) day following the date of this Restructure Term Sheet, as the same may be extended for not more than 60 days at the request of Electing Lenders executing this Restructure Term Sheet (which have not disavowed or repudiated this Restructure Term Sheet or the Restructure Documents) holding at least two-thirds of the Ratable Share Amounts of all such Electing Lenders, in such Electing Lenders’ sole and absolute discretion (the date that the Electing Lenders are notified of the satisfaction of the BofA Condition being referred to herein as the “BofA Effective Date”), this Restructure Term Sheet shall terminate and the parties to this Restructure Term Sheet shall have no further obligation to enter into the Restructure Transaction. Each Lender executing this Restructure Term Sheet or otherwise electing to participate in the Restructure Transaction (an “Electing Lender”) and the Obligors shall on or prior to the Restructure Effective Date execute and deliver the Restructure Agreement (as defined herein) and all other definitive transaction documentation, including, without limitation, the Lenders Release and Discharge, the Collateral 

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RESTRUCTURE TERM SHEET

Trust Agreement, the Restructure Notes, the Sunrise Undertaking (as all such capitalized terms are defined herein), mortgages, security agreements and other documents and instruments contemplated by this Restructure Term Sheet (collectively, the “Restructure Documents”). The Ratable Share Amount (or where applicable, the Ratable Share of any distributions in respect thereof) and the benefit of the Guaranteed Minimum Distribution related thereto (collectively, “Interests”) of any Lender that does not execute this Restructure Term Sheet or otherwise elect to participate in the Restructure Agreement on or before the Restructure Effective Date (each a “Non-Electing Lender”, and each of its Interests, the “Non-Electing Lender’s Share”), shall be held by the Collateral Trustee and pledged to the Electing Lenders to secure the timely payment to the Electing Lenders of the payments due hereunder, including, without limitation, their respective Guaranteed Minimum Distribution, for a period of twelve (12) months following the Restructure Effective Date, but shall be subject to use by Sunrise to settle or compromise the Claims of any Non-Electing Lender (the “Non-Electing Lender Settlement Period”). During the Non-Electing Lender Settlement Period, Sunrise shall permit any Non-Electing Lender to become an Electing Lender by executing the Electing Lenders Declaration, the Restructure Documents and any other documents or instruments necessary or appropriate to become Electing Lenders with obligations, rights and remedies commensurate to the existing Electing Lenders.

        At the conclusion of the Non-Electing Lender Settlement Period, (i) all remaining Non-Electing Lender’s Shares not otherwise used to settle Non-Electing Lender Claims (the “Unused Non-Electing Lender Shares”) shall be allocated to the Electing Lenders pro rata in accordance with each Electing Lender’s Adjusted Ratable Share of the Collateral (each Electing Lender’s “Adjusted Ratable Share” being the Ratable Share of such Electing Lender’s Designated Claim as a percentage of the total of all Designated Claims of all Electing Lenders) and the Non-Electing Lenders shall have no right to said Collateral, or any Ratable Share or Adjusted Ratable Share of said Collateral and (ii) any monetary distribution made on account of a Non-Electing Lender’s Share and held by the Collateral Trustee shall be distributed to the Electing Lenders on account of the Electing Lender’s Adjusted Ratable Share of said Collateral. For the avoidance of doubt, in no event shall any Electing Lender be entitled to receive for any reason whatsoever any increase in its Ratable Share or to receive any Adjusted Ratable Share, on account of or by reason of a reallocation of the Ratable Share of any other Electing Lender, including, without limitation, by reason of any such other Electing Lender taking any action to repudiate or otherwise disavow any of such other Electing Lender’s obligations under the Restructure Term Sheet or the Restructure Documents. Any monetary distributions made to an Electing Lender at the conclusion of the Non-Electing Lender Settlement Period on account of the Unused Non-Electing Lender Shares shall be applied as a credit against the Guaranteed Minimum Distribution in respect of such Electing Lender.

        This Restructure Term Sheet is intended to be a binding term sheet enforceable against the parties hereto pursuant to its terms. The parties to this Restructure Term Sheet agree to promptly and diligently draft, negotiate and finalize in good faith mutually satisfactory definitive documentation, including, without limitation, the Restructure Documents, and provide to Electing Lenders the Collateral Closing Deliverables (as defined herein) no later than the Restructure Effective Date, in each case that are consistent with the terms of this Restructure Term Sheet, provided, that, on the BofA Effective Date (or any later date designated by the Electing Lenders), Obligors shall execute, deliver and cause to be recorded or filed with the appropriate governmental authority, the Short Form Mortgages (as defined herein) and shall deliver to Electing Lenders the Sunrise Common Stock (as defined herein) as further set forth below. Such definitive documentation shall be on the following principal terms and shall include without limitation, 

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RESTRUCTURE TERM SHEET

conditions, representations, covenants and other terms (including, without limitation local practice requirements in connection with the security documents) customarily included in secured restructure and workout agreements, mortgages, notes, security agreements, financing statements, collateral trust agreements and other documentation contemplated by the Restructure Term Sheet, which such provisions will be consistent with the principal terms set forth herein.

	1. Lender Relief Provided:	The Electing Lenders agree to, and upon the satisfaction of 
	 	conditions included herein, including with out limitation, 
	 	delivery of the Collateral and the Restructure Documents, the 
	 	Electing Lenders shall, unconditionally and absolutely 
	 	terminate, release and discharge, subject only to the Unwind 
	 	Procedures set forth herein (“Lenders Release and 
	 	Discharge”) the Obligors and their officers and directors from 
	 	all liability (if any) in respect of all Designated Claims, which 
	 	Designated Claims shall include all presently unsecured 
	 	obligations and liabilities whatsoever (current, future, 
	 	contingent or otherwise) of the Obligors and their officers and 
	 	directors now or hereafter arising under all ODAs and 
	 	Financial Obligations expressly listed on Schedule A, in 
	 	exchange for granting to the Electing Lenders (or to the 
	 	Collateral Trustee on behalf thereof) (i) the Security Interests 
	 	(as defined herein), (ii) the right to share in the proceeds of the 
	 	Collateral according to their respective Ratable Share or 
	 	Adjusted Ratable Share, as the case may be, (iii) if applicable, 
	 	such Electing Lenders’ Guaranteed Minimum Distribution, (iv) 
	 	if applicable, such Electing Lenders’ Ratable Share of the 
	 	Sunrise Common Stock and (v) if applicable, the Settlement 
	 	Share Increase (as all such capitalized terms are defined herein, 
	 	collectively, the “Restructure Consideration”). 
	 
	 	As part of the Restructure Transaction, Obligors shall agree to 
	 	unconditionally and absolutely terminate, release and discharge 
	 	(“Obligors Release and Discharge”) the Electing Lenders and 
	 	their officers and directors from all liability (if any) whatsoever 
	 	(current, future, contingent or otherwise) subject to the terms

and conditions set forth herein. 
	 
	2. Obligors’ Recourse: 	Notwithstanding anything herein to the contrary, Obligors shall 
	 	remain liable to Electing Lenders and indemnify and hold  
	 	Electing Lenders harmless for all losses, claims, damages and 
	 	liabilities incurred or suffered by Electing Lenders, including 
	 	without limitation seizure, forfeiture or loss of all or any part of 
	 	the Collateral or German Collateral (as defined herein), 
	 	resulting from the following acts or omissions of Obligors 
	 	and/or German Borrowers occurring after the Term Sheet 
	 	Effective Date only as to the Collateral and German Collateral 
	 	(the “Obligors Recourse Liability”): (i) fraud, (ii) material 

misrepresentations, (iii) misapplication or misappropriation of

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RESTRUCTURE TERM SHEET

	 	any funds due to Electing Lenders, (iv) damage to or loss of all 
	 	or any part of the Collateral or the German Collateral as a 
	 	result of intentional waste, gross negligence or willful 
	 	misconduct by Obligors or German Borrowers or their agents, 
	 	affiliates, owners, employees or principals, (v) violation of the 
	 	Obligors’ agreement to cause the German Borrowers to 
	 	maintain and use the German Collateral in accordance with the 
	 	requirements set forth in Section 3 herein, (vi) violation of the 
	 	Obligors’ maintenance and use of the Collateral obligations set 
	 	forth in Section 9 herein, and (vii) criminal acts of Obligors or 
	 	German Borrowers or their agents, affiliates, owners, 
	 	employees or principals, as such Obligors Recourse Liability 
	 	arises in connection with (a) the Restructure Documents and/or 
	 	the Collateral, (b) any sale of the Collateral and/or the German 
	 	Collateral, (c) the Reaffirmation Agreement (as defined 
	 	herein), (d) the German Lenders’ Loan Documents (as defined 
	 	herein), (e) any financial statement or other material certificate, 
	 	report or document furnished or withheld by the Obligors or 
	 	German Borrowers, or (f) any amounts due to the Electing 
	 	Lenders. 
	 
	3. German Collateral:	Notwithstanding anything herein to the contrary, all proceeds 

(including any deposits made by a potential purchaser of the 
	 	German Collateral that Sunrise, or any of Sunrise’s affiliates, 
	 	retains pursuant to the terms of any disposition agreement, 
	 	deposit agreement or similar agreement) received by Sunrise 
	 	and its affiliates less the actual, reasonable and customary third 
	 	party closing costs (including, without limitation, all actual 
	 	broker fees, but specifically excluding all transfer taxes and 
	 	fees and expenses of counsel) (the “German Collateral 
	 	Proceeds”), from the future sale of all collateral located in 
	 	Germany securing various loan obligations (collectively, the 
	 	“German Collateral”), which loan obligations (collectively, 
	 	the “German Loans”) due and owing by certain affiliates, 
	 	direct and indirect subsidiaries of Sunrise (collectively, the 
	 	“German Borrowers”) to certain of the Electing Lenders 
	 	(collectively, the “German Lenders”) shall be additional 
	 	consideration to the German Lenders and shall not be part of 
	 	the Collateral or the Collateral Trust (as defined herein) and 
	 	will not be transferred to the Collateral Trust, but will be 
	 	liquidated and distributed to the applicable German Lender 
	 	which holds such German Collateral. 
	 
	 	Sunrise shall use commercially reasonable efforts to sell the 
	 	German Collateral, whether collectively or by separate 
	 	property sale (the “German Collateral Sale”), subject to the 
	 	provisions of the Restructure Term Sheet and the Restructure 
	 	Documents. Until such time as the German Collateral Sale is 

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RESTRUCTURE TERM SHEET
					
	                                       closed and the German Collateral Proceeds have been paid to 
	                                       the respective German Lenders, each respective German 
	                                       Lender’s security interests, mortgages, encumbrances, deeds, 
	                                       claims and other interests in the German Collateral shall 
	                                       remain in full force and effect and nothing set forth in this 
	                                       Restructure Term Sheet, the Restructure Agreement, or any 
	                                       other document executed in connection therewith shall in any 
	                                       manner constitute a waiver, release, modification or 
	                                       relinquishment by the German Lenders of their respective 
	                                       rights and interest in all German Collateral as described in the 
	                                       respective loan documents and agreements by and among 
	                                       German Lenders, Obligors and German Borrowers or any of 
	                                       them relating to the German Loans (collectively, the “German 
	                                       Lenders’ Loan Documents”), which such German Lenders’ 
	                                       Loan Documents shall remain in full force and effect 
	                                       unaffected by the Restructure Transaction and which German 
	                                       Lenders’ Loan Documents shall govern such German Loans, 
	                                       German Collateral and German Collateral Proceeds. 	 
	 
	                                       Unless otherwise agreed between Sunrise and a German 
	                                       Lender in respect of that German Lender’s portion of the 
	                                       German Collateral only, Sunrise shall continue to market the 
	                                       German Collateral for sale and cause the German Borrowers to 
	                                       operate, preserve and maintain the German Collateral through 
	                                       December 31, 2010. Absent further agreement in writing 
	                                       between Sunrise and any German Lenders with respect to such 
	                                       German Lender’s portion of the German Collateral or 
	                                       implementation of the Unwind Procedures, Obligors shall have 
	                                       no financial obligation hereunder to operate, preserve, maintain 
	                                       or market for sale such German Collateral after December 31, 
	                                       2010.
	 
	                                       In consideration of the German Borrowers’ obligation to 
	                                       distribute the German Collateral Proceeds to the German 
	                                       Lenders, in the event that the German Borrowers enter into a 
	                                       bona fide agreement for a German Collateral Sale and if 
	                                       required pursuant to the terms of such agreement, the German 
	                                       Lenders party hereto as Electing Lenders undertake to enter 
	                                       into such release agreements on terms satisfactory to such 
	                                       Electing Lenders (the “German Release Agreements”); 
	                                       provided, that as a condition precedent to entering into such 
	                                       release agreements and in consideration thereof, Sunrise and 
	                                       the German Borrowers shall (i) execute and deliver to the 

                                       German Lenders a reaffirmation agreement (the)
	                                       “Reaffirmation Agreement”) substantially in the form of 
	                                       Exhibit B attached hereto pursuant to which Sunrise will affirm 
	                                       (x) its obligations under the Restructure Agreement and (y) as 
	                                       part of such obligations, the Designated Claims as restructured 

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RESTRUCTURE TERM SHEET

	 	herein and the German Borrowers will affirm the remaining 
	 	obligations owed to each German Lender under the respective 
	 	German Lenders’ Loan Documents (after credit for the 
	 	anticipated proceeds from the German Collateral Sales) in the 
	 	context of any anticipated assignment and (ii) cause the 
	 	delivery by legal counsel for Sunrise (reasonably acceptable to 
	 	the German Lenders) of a legal opinion as to the due 
	 	authorization of Sunrise and the German Borrowers and the 
	 	enforceability of such Reaffirmation Agreement to the German 
	 	Lenders who are Electing Lenders in form reasonably 
	 	acceptable to such German Lenders. 
	 
	 	In the event that any German Collateral Sale fails to close on or 
	 	before December 31, 2009, the German Lenders that are 
	 	Electing Lenders which hold such unsold German Collateral 
	 	shall have the amount of their Designated Claims increased in 
	 	the amount of all expenses, scheduled amortization payments, 
	 	interest, default interest and penalties that accrue under the 
	 	respective German Loans calculated through and including 
	 	December 31, 2010 (the “Adjusted Designated Claim”). The 
	 	increase to the Adjusted Designated Claims shall cause an 
	 	adjustment of all of the Ratable Shares of the total Collateral 
	 	Value. 
	 
	4. Sale and Realization of 	In exchange for the Lenders Release and Discharge, and the 
	Collateral:	other terms and conditions herein, and in order to secure the
	 	obligations under the Restructure Term Sheet, the payment of 
	 	the Guaranteed Minimum Distribution and any other amounts 
	 	due and owing to the Electing Lenders under this Restructure
	 	Term Sheet, the Obligors and Electing Lenders promptly and 
	 	diligently shall negotiate in good faith and on or prior to the 
	 	Restructure Effective Date, finalize and execute a restructure 
	 	agreement incorporating the terms and conditions set forth 
	 	herein (the “Restructure Agreement”), together with all other 
	 	definitive transaction documentation in form reasonably 
	 	satisfactory to the Electing Lenders necessary to implement the 
	 	Restructure Transaction as provided herein. Sunrise shall 
	 	execute and deliver promissory notes, in form reasonably 
	 	satisfactory to the Electing Lenders, in favor of each Electing 
	 	Lender in the amount of such Electing Lender’s Ratable Share
	 	Amount (the “Restructure Notes”). The payment of the 
	 	Restructure Notes shall be secured by a valid, binding, 
	 	enforceable and perfected first lien and security interests in and 
	 	to the collateral identified on Schedule C (the “Collateral”) 
	 	pursuant to certain mortgages and deeds of trust, (collectively, 
	 	the “Short Form Mortgages”) on all real property (it being 
		understood that the Short Form Mortgages that will be 
		recorded on or around the BofA Effective Date will be 

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RESTRUCTURE TERM SHEET

	                                        amended and restated with definitive terms and conditions on 
	                                        or prior to the Restructure Effective Date), security 
	                                        agreements, pledges, financing statements, bank accounts, and 
	                                        other collateral comprising the Collateral, which will be 
	                                        recorded or filed, as applicable, at Obligors’ sole expense 
	                                        (collectively, “Security Interests”) to be held by a collateral 
	                                        trustee for the benefit of the Electing Lenders (the “Collateral 
	                                        Trust”), which Restructure Notes shall be non-recourse to 
	                                        Sunrise except for the pledge of the Security Interests in the 
	                                        Collateral, the Guaranteed Minimum Distribution, the Excess 
	                                        Collateral Proceeds (as defined herein) (if any, which such 
	                                        Excess Collateral Proceeds shall be paid under the Restructure 
	                                        Notes up to the Lender’s Ratable Share Amount, with any 
	                                        additional Excess Collateral Proceeds in excess of the 
	                                        Restructure Note paid in accordance with the Sunrise 
	                                        Undertaking), and the Obligors Recourse Liability 
	                                        (collectively, the “Note Recourse Obligations”). Upon 
	                                        Sunrise’s payment in full or deemed satisfaction (by virtue of 
	                                        (x) payment of such Lender’s Guaranteed Minimum 
	                                        Distribution or (y) payment of all proceeds received from the 
	                                        sale of the Collateral to the Electing Lenders and transfer of the 
	                                        remaining Collateral to the Electing Lenders) of the 
	                                        Restructure Notes, the Restructure Notes shall be discharged 
	                                        and cancelled. 
	 
	                                        In addition to the Restructure Notes, Sunrise shall execute and 
	                                        deliver to each Electing Lender the Sunrise Undertaking (as 
	                                        described below). 
	 
	                                        The trustee of the Collateral Trust shall be a trustee or other 
	                                        third party having experience with commercial real estate, 
	                                        including income producing property (“Collateral Trustee”). 
	                                        The Collateral Trustee shall be selected by consent of the 
	                                        Obligors and Electing Lenders and may be an affiliate of an 
	                                        Electing Lender. The Electing Lenders shall be responsible for 
	                                        paying all fees and expenses (if any) of the Collateral Trustee. 
	                                        All documentation related to the legal organization, 
	                                        establishment and administration of the Collateral Trust 
	                                        (collectively, the “Collateral Trust Agreement”), Security 
	                                        Interests and the monetization and realization on the Collateral 
	                                        shall be subject to the reasonable review and approval of the 
	                                        Required Electing Lenders. Until such time as the requisite 
	                                        Electing Lenders cause the Collateral Trustee to exercise 
	                                        remedies against the Collateral upon a default, the Collateral 
	                                        Trustee’s role shall be (i) to accept, enter into and hold the 
	                                        Security Interests on behalf of the Electing Lenders and (ii) to 
	                                        act as agent of the Electing Lenders pursuant to the Collateral 
	                                        Trust Agreement. All communication between Obligors and 

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	                                        the Electing Lenders shall be direct and the Collateral Trustee 
	                                        shall not act as a conduit or intermediary between the Electing 
	                                        Lenders and the Obligors. It is understood that any change in 
	                                        the role, obligations or liabilities of the Collateral Trustee shall 
	                                        be subject to the written agreement of the Required Electing 
	                                        Lenders and the Collateral Trustee. 
	 
	                                        At Obligors’ sole expense, on or before the Restructure 
	                                        Effective Date, Obligors shall provide Electing Lenders with 
	                                        the following, all of which shall constitute part of the 
	                                        Collateral Closing Deliverables: (i) policies of title insurance 
	                                        insuring the first priority mortgage liens on each Collateral 
	                                        property in the amount of the appraised value set forth on 
	                                        Schedule C (it being understood that Obligors (a) shall not be 
	                                        required to pay in excess of $81,000 for premium and search 
	                                        fees related to all of such title policies, and any excess cost, if 
	                                        any, shall be, at Electing Lenders’ sole discretion, either (1) 
	                                        payable by the Electing Lenders or (2) the policy amounts shall 
	                                        be adjusted accordingly, and (b) shall provide to the title 
	                                        company customary affidavits reasonably acceptable to the 
	                                        applicable title insurance companies); (ii) local counsel legal 
	                                        opinions relating to the Collateral (which local counsel legal 
	                                        opinions may be limited in scope to mortgage enforceability 
	                                        and local counsel providing such opinions shall be permitted to 
	                                        limit the documents that they review in connection with such 
	                                        opinion to the form of mortgage and recording requirements 
	                                        and assume complete enforceability of underlying obligations 
	                                        secured by mortgages) in form and from law firms reasonably 
	                                        satisfactory to the Required Electing Lenders; and (iii) 
	                                        evidence reasonably satisfactory to the Electing Lenders of 
	                                        property and general liability insurance relating to the 
	                                        Collateral to cover customary casualty or other losses (for 
	                                        which insurance is generally available on commercially 
	                                        reasonable terms and rates) as well as professional liability, if 
	                                        any, and all other insurance typically carried by Sunrise and/or 
	                                        its affiliates currently in the operation of its senior living 
	                                        facilities, if any, all of which name the Collateral Trustee and 
	                                        Electing Lenders as additional insureds and loss payees. 
	 
	                                        Any default of a payment obligation due and owing from the 
	                                        Obligors (or any of them) directly to the Electing Lenders (or 
	                                        any of them) under the Restructure Documents, whether in 
	                                        connection with a disposition of the Collateral and/or the 
	                                        German Collateral, the Obligors Recourse Liability or 
	                                        otherwise, if not cured within five (5) business days of written 
	                                        notice of such default by the Electing Lenders, shall result in 
	                                        the Guaranteed Minimum Distribution becoming accelerated 
	                                        and immediately due and payable by Sunrise. Any other 

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	                                          material default by Obligors which remains uncured after 
	                                          notice by the Collateral Trustee beyond ten (10) days with 
	                                          regard to monetary defaults, and beyond thirty (30) days (with 
	                                          reasonable right to extend for not more than thirty (30) 
	                                          additional days, with the exercise of diligence and dispatch) 
	                                          under (i) the Restructure Agreement, (ii) the Restructure 
	                                          Documents, including all mortgages, security instruments and 
	                                          other such material documents required under the Restructure 
	                                          Agreement, (iii) the Restructure Notes, or (iv) the Sunrise 
	                                          Undertaking, in each case related to the Obligors’ obligations 
	                                          to (a) use commercially reasonable efforts to sell, and/or (b) 
	                                          preserve, protect and maintain the Collateral, shall result in the 
	                                          Guaranteed Minimum Distribution becoming accelerated and 
	                                          immediately due and payable by Sunrise. In such event, 
	                                          Electing Lenders shall be permitted to take any and all action 
	                                          necessary to collect all amounts due and owing under the 
	                                          Restructure Notes and Sunrise Undertaking, including, without 
	                                          limitation, foreclosing their interests in the Collateral. 
	 
	                                          The estimated value of the separate Collateral (the “Collateral 
	                                          Value”) is set forth on Schedule C. The transaction documents 
	                                          in connection with the Restructure Agreement will include a 
	                                          schedule setting forth a minimum gross sales price (“Release 
	                                          Price”) for each separate piece or grouping of Collateral which 
	                                          shall be an amount agreed to by the Required Electing Lenders 
	                                          (which in no event shall be less than 80% of the respective 
	                                          Collateral Value). Obligors shall use their commercially 
	                                          reasonable efforts and good faith to diligently take, or cause to 
	                                          be taken, all actions, and to do, or cause to be done, and to 
	                                          assist and cooperate with Electing Lenders in doing all things 
	                                          commercially reasonably necessary, to sell, and thereafter to 
	                                          consummate, in a commercially reasonable manner, the sale of 
	                                          the Collateral. Obligors shall be obligated to accept, and shall 
	                                          thereafter work diligently to consummate, any bona fide offer 
	                                          to purchase, any separate Collateral for a sale price in cash 
	                                          equal to or better than the specified Release Price. At the 
	                                          election of Electing Lenders (which have not disavowed or 
	                                          repudiated this Restructure Term Sheet or the Restructure 
	                                          Documents) holding at least two-thirds of the Ratable Share 
	                                          Amounts of all such Electing Lenders, as such amounts may be 
	                                          adjusted pursuant to the terms hereof (the “Required Electing 
	                                          Lenders”), communicated in writing to Obligors reasonably in 
	                                          advance of the Collateral Sale Deadline (as defined herein), the 
	                                          Required Electing Lenders may request that Obligors accept 
	                                          (subject to the approval of the Obligors in their sole 
	                                          discretion), and if accepted by Obligors, Obligors shall 
	                                          thereafter work diligently to consummate, any bona fide offer 
	                                          to purchase any separate piece of Collateral for a sale price in 

10

RESTRUCTURE TERM SHEET

	                                        cash that is less than the Release Price; the Collateral Sale 
	                                        Deadline shall be extended as reasonably necessary for any 
	                                        closing for which Obligors have accepted any such bona fide 
	                                        offer. The Electing Lenders will create a contact list for the 
	                                        Electing Lenders respective point person to interact with the 
	                                        Obligors and the Collateral Trustee, and to streamline the 
	                                        issuance of reports and consent requests, including any 
	                                        modifications or additions to any Release Price or any 
	                                        approved sale procedures or transaction documents. 
	 
	                                        Promptly upon execution and delivery of the Lenders Release 
	                                        and Discharge, Restructure Agreement and the Security 
	                                        Interests and all other Restructure Documents, Obligors shall 
	                                        commence the above-described sale process. Obligors shall 
	                                        supply Electing Lenders with all necessary documents to 
	                                        enable the Electing Lenders to review and reasonably approve 
	                                        all aspects of the Obligors’ marketing plans, including 
	                                        retention of additional brokers other than the approved brokers 
	                                        listed on Schedule D (the “Brokers”), and the terms of each 
	                                        such brokerage or marketing agreement entered into with 
	                                        respect to the Collateral. Electing Lenders shall also be 
	                                        entitled to review and Required Electing Lenders shall 
	                                        reasonably approve all material terms of any proposed sale 
	                                        contract, including, without limitation, the identity and 
	                                        financial ability of the proposed purchaser. Electing Lenders 
	                                        acknowledge that Obligors may retain Alvarez & Marsal as 
	                                        financial advisor to Obligors, provided however that Obligors 
	                                        shall be solely responsible for payment of any fees and 
	                                        expenses due and owing to Alvarez & Marsal and no such fees 
	                                        and expenses shall be paid from the German Collateral or the 
	                                        Collateral, or any proceeds thereof. Any affiliation between 
	                                        any proposed purchaser and any officer, director or shareholder 
	                                        of the Obligors or Lenders (the “Related Purchaser”) must be 
	                                        disclosed to the Electing Lenders in writing and Required 
	                                        Electing Lenders must reasonably approve in writing the sale 
	                                        of any Collateral to a Related Purchaser. 
	 
	                                        All proceeds of the sale or other disposition of the Collateral, 
	                                        after deducting all commercially reasonable brokerage fees and 
	                                        expenses, recording, transfer and other transaction costs, all 
	                                        third party costs and expenses required to be borne by the 
	                                        seller in any contract of sale and all other reasonable third party 
	                                        out of pocket fees, costs and expenses, specifically excluding 
	                                        any prorated taxes, operating or otherwise (collectively, the 
	                                        “Third Party Sale Expenses”), incurred by Obligors in 
	                                        connection with the sale transactions (collectively, the “Net 
	                                        Sale Proceeds”), which such Third Party Sale Expenses shall 
	                                        not exceed 6% of the purchase price of the Collateral, shall be 

11

RESTRUCTURE TERM SHEET

	 	distributed ratably to the Electing Lenders, in accordance with 
	 	their Ratable Share or Adjusted Ratable Share, as applicable. 
	 	At least three (3) business days prior to the closing on the sale 
	 	or other disposition of any portion of the Collateral, Obligors 
	 	shall provide a draft closing statement to the Electing Lenders 
	 	showing the total proceeds, the Net Sale Proceeds and the 
	 	amount of the Net Sale Proceeds to be distributed to each 
	 	Electing Lender. Such closing statement must be approved by 
	 	the Required Electing Lenders prior to such closing. All such 
	 	sales or other dispositions shall be held through a title 
	 	insurance company acting as closing agent, which will 
	 	distribute all Net Sales Proceeds directly to the Electing 
	 	Lenders in accordance with the approved closing statement. 
	 	Notwithstanding anything herein to the contrary, all Net Sale 
	 	Proceeds shall be for the exclusive benefit of the Electing 
	 	Lenders, subject to the Obligors’ right to use the Non-Electing 
	 	Lender’s Ratable Share of such Net Sale Proceeds to settle or 
	 	compromise the Claims of any Non-Electing Lender during the 
	 	pendency of the Non-Electing Lender Settlement Period. 
	 
	5. Guaranteed Minimum

Distribution: 	Subject to the provisions hereof, Obligors shall ensure that the 

aggregate Guaranteed Minimum Distribution set forth in

Schedule B with respect to all Collateral is paid to Electing 
	 	Lenders regardless of whether the Obligors are able to sell the 
	 	Collateral. If (A) the Obligors are unable to sell sufficient 
	 	Collateral to satisfy the Guaranteed Minimum Distribution on 
	 	or before the expiration of thirty (30) months following the 
	 	Restructure Effective Date (the “Collateral Sale Deadline”), 
	 	which such Collateral Sale Deadline may be extended by 
	 	written notice from the Required Electing Lenders, or (B) the 
	 	sale and liquidation of all of the Collateral prior to the 
	 	Collateral Sale Deadline results in payment to each Electing 
	 	Lender of less than the full amount of each Electing Lender’s 
	 	respective Guaranteed Minimum Distribution, the Electing 
	 	Lenders shall have the right and obligation upon the approval 
	 	of the Required Electing Lenders (the “Final Election”) either 
	 	(a) to require the Obligors to pay to each Electing Lender an 
	 	amount equal to the difference between (i) the Guaranteed 
	 	Minimum Distribution payable to such Electing Lender and (ii) 
	 	the total payment to such Electing Lender resulting from the 
	 	sale of the Collateral (the “Collateral Shortfall”) in cash 
	 	within the earlier to occur of the Collateral Sale Deadline or 
	 	thirty (30) days following the closing of the sale of the last 
	 	piece of Collateral (the “Final Collateral Sale”), and 
	 	simultaneously to cause the Collateral Trustee to reconvey to 
	 	Obligors and/or discharge and terminate of record all Security 
	 	Interests, and to terminate the Collateral Trust or (b) to retain 
	 	all Net Sale Proceeds previously received by the Electing 

12

RESTRUCTURE TERM SHEET

	 	Lenders and require the Obligors to convey their respective 
	 	interests in and to the remaining Collateral to the Electing 
	 	Lenders or the Collateral Trustee on behalf of the Electing 
	 	Lenders, as directed; and in either event, simultaneously with 
	 	such Final Election, Lenders and Collateral Trustee shall 
	 	unconditionally release Obligors from all further obligations 
	 	and liabilities under the Restructure Transaction (including, 
	 	without limitation, the Restructure Notes and Sunrise 
	 	Undertaking) and all definitive transaction documentation 
	 	(except for any indemnities that survive termination, including 
	 	without limitation the Obligors Recourse Liability). If the sale 
	 	and liquidation of the Collateral results in payment to each 
	 	Electing Lender of more than the full amount of each Electing 
	 	Lender’s respective Guaranteed Minimum Distribution (the 
	 	“Excess Collateral Proceeds”), such Excess Collateral 
	 	Proceeds shall be retained by such Electing Lender pursuant to 
	 	(i) the Restructure Notes up to the respective Electing Lender’s 
	 	Ratable Share Amount and (ii) the Sunrise Undertaking for all 
	 	Net Sales Proceeds paid to Electing Lenders in accordance 
	 	with each Electing Lenders Ratable Share or Adjusted Ratable 
	 	Share which exceeds such Electing Lender’s Restructure Note. 
	 
	6. Sunrise Undertaking: 	Sunrise separately shall enter into an agreement in favor of 

each Electing Lender (the “Sunrise Undertaking”) pursuant to 
	 	which Sunrise (i) shall unconditionally assign to the Electing 
	 	Lender any right to receive its Ratable Share or Adjusted 
	 	Ratable Share, as applicable, of any and all Net Sales Proceeds 
	 	notwithstanding that such Net Sales Proceeds may exceed such 
	 	Electing Lender’s Restructure Note and (ii) shall cause the 
	 	Obligors to promptly pay, or cause to be paid, to the Electing 
	 	Lenders (in accordance with each Electing Lenders Ratable 
	 	Share or Adjusted Ratable Share, as applicable) all such excess 
	 	Net Sales Proceeds as and when received on a property-by- 
	 	property basis. 
	 
	7. Sunrise Common Stock:	On the Restructure Effective Date, as additional consideration 

for the Restructure Transaction, Sunrise shall issue to each 
	 	Electing Lender who becomes an Electing Lender on or prior 
	 	to the Restructure Effective Date a number of shares of 
	 	Sunrise’s common stock (the “Sunrise Common Stock”) 
	 	equal to (x) such Electing Lender’s Ratable Share multiplied 
	 	by (y) 5,000,000; provided, however, that any Electing Lender 
	 	that has executed the Restructure Term Sheet at least three 
	 	business days prior to the BofA Effective Date shall receive its 
	 	respective share of Sunrise Common Stock on the BofA 
	 	Effective Date; provided, further that the BofA Effective Date 
	 	shall not occur prior to October 28, 2009. Notwithstanding 
	 	anything herein to the contrary, in the event that the BofA 

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RESTRUCTURE TERM SHEET

	 	Effective Date occurs earlier than seven (7) business days after 
	 	the Term Sheet Effective Date, any Lender that becomes an 
	 	Electing Lender by executing the Restructure Term Sheet prior 
	 	to the seventh (7th) business day after the Term Sheet Effective 
	 	Date, shall receive its respective share of Sunrise Common 
	 	Stock no later than three (3) business days after such Lender 
	 	becomes an Electing Lender by executing the Restructure 
	 	Term Sheet. 
	 
	 	Sunrise will represent and warrant to such Electing Lenders 
	 	that, upon issuance, the Sunrise Common Stock will be validly 
	 	issued, fully paid and nonassessable. 
	 
	 	The Sunrise Common Stock will be restricted stock under the 
	 	U.S. Securities Act of 1933, as amended (the “Securities 
	 	Act”). Each Electing Lender makes the representations and 
	 	warranties set forth on Exhibit C and will be required to make 
	 	the same representations and warranties in the definitive 
	 	documentation (with references to “this Restructure Term 
	 	Sheet” in Exhibit C being revised to refer to the definitive 
	 	agreement being executed). 
	 
	 	Each Electing Lender may assign or transfer any portion or 
	 	amount of its Claims, provided however that any assignee of 
	 	the Claims must acknowledge, affirm and assume the 
	 	Restructure Term Sheet, or if the Restructure Effective Date 
	 	has occurred, the Restructure Documents. 
	 
	8. Settlement Share Increase: 	To the extent that the Obligors enter into any settlement, 

document, agreement or other arrangement with a Non- 
	 	Electing Lender to (i) settle, resolve or otherwise increase the 
	 	amount of the Non-Electing Lender’s Designated Claims, the 
	 	Guaranteed Minimum Distribution or Claims above the 
	 	amount that the Non-Electing Lender would have received 
	 	hereunder as set forth on Schedule B, (ii) liquidate the Non- 
	 	Electing Lender’s Designated Claims or Claims against 
	 	Obligors, (iii) revise any Non-Electing Lender’s loan 
	 	documents in a manner that affects the Non-Electing Lender’s 
	 	Designated Claims or Claims, (iv) execute any new loan 
	 	documents with any Non-Electing Lender in a manner that 
	 	affects the Non-Electing Lender’s Designated Claims or 
	 	Claims, (v) provide any payment, distribution or pledge of 
	 	collateral on account of such Non-Electing Lender’s 
	 	Designated Claims or Claims, or (vi) take any other action to 
	 	benefit the Non-Electing Lender on account of such Non- 
	 	Electing Lender’s Designated Claims or Claims that results in 
	 	payment or distribution of cash, collateral or other value that 
	 	exceeds the percentage distribution of the Electing Lenders’ 

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RESTRUCTURE TERM SHEET

	 	Designated Claims pursuant to the Ratable Share of the total 
	 	Collateral Value and resulting Guaranteed Minimum 
	 	Distribution (any such action, a “Non-Electing Share 
	 	Settlement”), Obligors shall notify the Electing Lenders in 
	 	writing, within five (5) business days of the closing of any such 
	 	Non-Electing Share Settlement, which notification shall 
	 	include all terms and conditions of the Non-Electing Share 
	 	Settlement. 
	 
	 	Obligors may enter into Non-Electing Share Settlements at 
	 	their sole discretion. However, if Obligors shall enter into 
	 	Non-Electing Share Settlements with Lenders holding fifteen 
	 	percent (15%) or more in the aggregate of the Designated 
	 	Claims set forth on Schedule B, Obligors shall be required to 
	 	increase the Guaranteed Minimum Distribution to all Electing 
	 	Lenders who have executed this Restructure Term Sheet to the 
	 	same weighted average percentage recovery provided to Non- 
	 	Electing Lenders who have entered into Non-Electing Share 
	 	Settlements (the “Settlement Share Increase”). 
	 	Notwithstanding the above, in no case shall the Guaranteed 
	 	Minimum Distribution payment amount to Electing Lenders be 
	 	diminished. 
	 
	9. Obligors' Maintenance

and Use of Collateral: 	Obligors shall preserve, protect and maintain the Collateral in 

good operating order in accordance with past practices, and 

shall not suffer or permit any liens or encumbrances thereon, 
	 	except for permitted encumbrances reasonably approved by 
	 	Electing Lenders and all Permitted Encumbrances set forth on 
	 	Schedule E attached hereto, which shall include without 
	 	limitation the lien of taxes not yet due and payable; all 
	 	easements, rights of way, zoning and land use laws and 
	 	restrictions, development agreements, declarations, covenants, 
	 	conditions and restrictions, and similar encumbrances; all 
	 	mechanics, vendors and other statutory liens, where there are 
	 	good faith disputes that are being litigated or otherwise 
	 	resolved (Obligors being required to provide evidence of such 
	 	dispute and resolution) incurred in the ordinary course of 
	 	business, which in the aggregate do not exceed $200,000 (the 
	 	“Permitted Mechanics Liens”); and any state of facts an 
	 	accurate survey or inspection of the respective Collateral 
	 	would show. All mechanics, vendors and other statutory liens 
	 	(other than inchoate landlord’s liens) which are not Permitted 
	 	Mechanics Liens shall be removed or bonded over by Obligors 
	 	at the earlier of (i) five (5) business days prior to a sale of the 
	 	respective collateral or (ii) within sixty (60) days of their 
	 	appearance of record at Obligors expense. Obligors shall 
	 	remain responsible for all taxes and insurance accruing on the 
	 	Collateral prior to the sale of the Collateral whether payable 

15

RESTRUCTURE TERM SHEET

	                                        before or after such sale. Prior to the sale of the Collateral, 
	                                        Obligors shall be responsible for payment of all operating 
	                                        expenses, necessary capital expenditures and all other 
	                                        obligations associated with the Collateral, including without 
	                                        limitation payment of all claims associated with the Collateral 
	                                        and shall fulfill all usual and customary obligations (including 
	                                        any standard representations negotiated by Obligors) required 
	                                        under standard sale agreements with bona fide purchasers of 
	                                        the type of Collateral being sold as-is, where-is, with all faults 
	                                        and subject to such seller obligations for prorations, 
	                                        adjustments and other payments, which arise prior to the 
	                                        respective sale, excluding any surviving indemnification 
	                                        obligations. All such expenses, liabilities or obligations 
	                                        accruing or payable after the sale of the Collateral shall be 
	                                        prorated between the Obligors and the applicable buyer. 
	                                        Obligors shall be liable for all Obligors Recourse Liability 
	                                        relating to the Collateral. Upon the election of the Lenders to 
	                                        acquire the Obligors’ interests in the remaining Collateral, and 
	                                        transfer of the Collateral to Lenders pursuant to Section 5, all 
	                                        of the foregoing obligations of Obligors with respect to the 
	                                        remaining Collateral shall terminate for any liabilities which 
	                                        accrue after the date of the transfer. 
	 
	                                        Except upon the occurrence and during the continuance of an 
	                                        Event of Default as defined in the Restructure Agreement, 
	                                        Obligors shall have the right to use and operate the Collateral 
	                                        in the ordinary course of business, provided however that from 
	                                        and after execution of the Restructure Agreement and until the 
	                                        closing of the sale of the respective Collateral, to the extent 
	                                        that any Collateral generates income (the “Collateral 
	                                        Income”) in excess of all ordinary, commercially reasonable 
	                                        and customary third party, out of pocket expenses of operating 
	                                        the Collateral, which are supported by monthly financial 
	                                        statements, including without limitation proceeds from 
	                                        settlements, judgments, payments or other recoveries from 
	                                        litigation or claims relating to any of the Collateral (the 
	                                        “Excess Income”), the Excess Income will be segregated by 
	                                        the Obligors for payment of any fees, expenses or costs of 
	                                        operating, maintaining or using the Collateral pending the 
	                                        closing of the sale of the Collateral and for payment of the 
	                                        Third Party Sale Expenses associated with the sale of any of 
	                                        the Collateral, provided that any such Excess Income used for 
	                                        Third Party Sale Expenses shall not affect the 6% cap on Third 
	                                        Party Sale Expenses. Obligors shall provide to Electing 
	                                        Lenders monthly financial statements on all Collateral on or 
	                                        before the last day of the following month for the immediately 
	                                        preceding month. Electing Lenders shall maintain a first 
	                                        priority, perfected security interest in all deposit accounts in 

16

RESTRUCTURE TERM SHEET

		
	 	which Obligors deposit the Collateral Income, subject to 
	 	Obligors’ rights to use the same as above provided. 
	 
	 	On or before the execution of the Restructure Term Sheet, 
	 	Obligors shall have provided access to or delivered to Electing 
	 	Lenders all information in Obligors’ possession or control 
	 	relating to title reports, title updates, title searches, Phase 1 
	 	environmental reports, engineering reports, market studies, 
	 	appraisals, pending development or construction contracts, 
	 	information on all pending litigation related to or involving the 
	 	Collateral, all applicable contracts, surveys, zoning, site plans, 
	 	specifications, permitted uses, permits and licenses, applicable 
	 	development orders, and any other third party reports relating 
	 	to the Collateral (collectively, the “Collateral Reports”). On 
	 	or before the Restructure Effective Date, Obligors shall deliver 
	 	to Electing Lenders the following (together with the designated 
	 	items in Paragraph 4, the “Collateral Closing Deliverables”): 
	 	copies of all other new or updated Collateral Reports as 
	 	required hereunder, provided that (i) Obligors shall have no 
	 	obligation to prepare or cause to be prepared new or updated 
	 	Collateral Reports (except as provided herein) and (ii) the 
	 	Electing Lenders may at their own expense prepare or procure 
	 	the preparation of new or updated Collateral Reports. The 
	 	Obligors have provided or promptly shall provide to the 
	 	Collateral Trustee and the Electing Lenders reliance letters 
	 	with respect to the 2009 appraisals of the Collateral in form 
	 	reasonably acceptable to the Electing Lenders, each issued by 
	 	the applicable appraiser; and new Phase 1 environmental 
	 	reports which may be relied upon by Electing Lenders and the 
	 	Collateral Trustee (or updates of existing Phase 1s and reliance 
	 	letters in favor of the Electing Lenders in respect of the 
	 	Collateral properties). All of the foregoing shall be at the sole 
	 	expense of Obligors. 
	 
	10. Unwind of Transactions:  	In the event of the commencement of any bankruptcy or other 

insolvency proceeding by or against Sunrise, German 
	 	Borrowers or any other Obligor transferring the Collateral to 
	 	the Collateral Trust (an “Insolvency Proceeding”) and to the 
	 	extent that any court in an Insolvency Proceeding (i) enters a 
	 	final, non-appealable order and (ii) in the case of the German 
	 	Borrowers only, such final, nonappealable order is found to be 
	 	enforceable and binding in a final, nonappealable order in a 
	 	court in the United States (a “Final Court Order”) avoiding 
	 	any part (in a manner adverse to the Electing Lenders), or all 
	 	of, the Restructure Transaction, including any or all sales or 
	 	dispositions of Collateral which may have occurred up to and 
	 	including such date, and the payment or receipt of all Net Sale 
	 	Proceeds thereof, as the case may be, then the parties hereto 

17

RESTRUCTURE TERM SHEET

		
	 	acknowledge and agree that, as part of the voluntary, bargained 
	 	and knowing consideration for, and as an inducement to, the 
	 	parties to execute this Restructure Term Sheet, all provisions of 
	 	this Restructure Transaction shall be unwound, including 
	 	without limitation the return to the Obligors and/or their 
	 	bankruptcy estate, as the case may be, of all Collateral 
	 	deposited with the Collateral Trustee and/or sold or disposed to 
	 	the Obligors and the restoration and reinstatement of all 
	 	liability due and owing by Obligors to the respective Electing 
	 	Lender to the full extent of Obligors’ liability provided under 
	 	the Designated Loan Documents, which restored Claim may 
	 	exceed the amount of the Designated Claims set forth herein 
	 	(collectively, the “Unwind Procedures”), provided however, 
	 	for the avoidance of doubt, the closing of the German 
	 	Collateral Sale and the application of the German Collateral 
	 	Proceeds by the German Lenders shall not be subject to the 
	 	Unwind Procedures. Sunrise acknowledges and agrees that, 
	 	whether or not the German Lenders’ Loan Documents are 
	 	released, in the event that the Unwind Procedures are 
	 	instituted, the Claims of the Electing Lenders shall be restored 
	 	to the full amount of the Designated Claims plus any interest, 
	 	fees or other charges that may have accrued thereon pursuant 
	 	to the Designated Loan Documents whether or not such 
	 	Designated Loan Documents were released; provided, further, 
	 	that in no event shall any release or assignment of any German 
	 	Loans prior to any Insolvency Proceeding adversely impair or 
	 	prejudice any of the Designated Claims. 
	 
	 	In connection with an Insolvency Proceeding, the parties agree 
	 	that any other party hereto may file a copy of the Restructure 
	 	Term Sheet, the Restructure Agreement and any other 
	 	document evidencing, referring or relating to the Restructure 
	 	Transaction with any court or recording office as written 
	 	evidence of the knowing, voluntary, and bargained agreement 
	 	of the parties to implement the Unwind Procedures upon the 
		entry of a Final Court Order.
	 
	11. Tax Treatment:  	At the request of the other party, the Obligors and the Electing

Lenders shall endeavor to design and implement the 
	 	transactions set forth herein, including without limitation the 
	 	German Collateral Sale, in a manner so as to minimize 
	 	potential negative tax consequences to both parties, provided 
	 	that for the avoidance of doubt, all taxes (excepting any 
	 	income taxes owed by the Electing Lenders) shall be borne by 
	 	Obligors, and such endeavor by the Electing Lenders shall not 
	 	require any undertaking by Electing Lenders that impairs such 
	 	Electing Lenders’ legal rights with respect to the Collateral 

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RESTRUCTURE TERM SHEET

			
	 	and/or German Collateral or collection of the same. 
	 
	12. Sunrise Credit

Agreement Agent Approval: 	The written consent of Bank of America, in its capacity as 

Administrative Agent, to the Restructure Agreement is a 

condition (the “BofA Condition”) to the effectiveness of the 
	 	Restructure Transaction. Sunrise shall diligently pursue such 
	 	written consent from Bank of America in good faith. 
	 
	13. Legal Opinion: 	At Sunrise’s expense and as a condition to the Electing 

Lenders’ obligation to enter into the Restructure Transaction, 
	 	legal counsel for Sunrise will deliver an enforceability and 
	 	authority opinion to the Electing Lenders concerning the 
	 	Restructure Agreement in a form reasonably acceptable to 
	 	Electing Lenders in their sole discretion. The legal opinion 
	 	shall be customary and reasonable in all respects given the 
	 	nature and size of the transaction. 	 
	 
	14. Waiver of Defenses: 	The Obligors agree to forever waive and not assert or raise any 

defenses to their obligations in respect of the Restructure 
	 	Consideration on account of (i) the Electing Lenders’ 
	 	execution and delivery of the Lenders Release and Discharge; 
	 	and (ii) any German Collateral Sale, including, without 
	 	limitation, any release agreements executed in connection 
	 	therewith and any assignment and transfer of the residual 
	 	German Loans. Language that is reasonably satisfactory to the 
	 	Electing Lenders evidencing this waiver of defenses shall be 
	 	included in the Restructure Documents and any documentation 
	 	relating to a German Collateral Sale. 	 
	 
	15. Corporate

Authority/Execution: 	On or prior to execution of this Restructure Term Sheet, 

Sunrise shall provide authorization of its Board of Directors for 

Sunrise to execute the Restructure Term Sheet and, together 
	 	with the Obligors, enter into the Restructure Transaction. On 
	 	the Restructure Effective Date, Sunrise shall and shall cause 
	 	Obligors to provide resolutions authorizing the execution of the 
	 	definitive documentation contemplated hereby. Prior to 
	 	execution of this Restructure Term Sheet, Sunrise shall provide 
	 	a secretary’s certificate attesting to the incumbency of the 
	 	signatory of this Restructure Term Sheet and the definitive 
	 	documentation contemplated hereby. 	 
	 
	16. Monthly Updates: 	From and after the Restructure Effective Date, Obligors, 

Brokers and Collateral Trustee shall participate in monthly 
	 	update calls with Electing Lenders to discuss, inter alia, the 
	 	status of the sale of the Collateral. 	 
	 
	17. Choice of Law:	The terms and provisions of the Restructure Transaction, 
	 	including without limitation this Restructure Term Sheet and 

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RESTRUCTURE TERM SHEET

					
	 	the Restructure Agreement shall be governed by, and construed 
	 	in accordance with, the substantive laws of the State of New 
	 	York without regard to conflict of law principles. 	 
	 
	18. Jurisdiction: 	Each of the parties hereto hereby irrevocably consents to the 
	 	non-exclusive jurisdiction of the courts of the State of New 
	 	York and of any federal court located therein, in connection 
	 	with any suit, action or other proceeding arising out of or 
		relating to this Restructure Term Sheet or the transactions 
		contemplated hereby.
	 
	19. Jury Waiver:  	OBLIGORS AND ELECTING LENDERS WAIVER ANY
		RIGHT THAT EACH OF THEM MAY HAVE TO A TRIAL 
	 	BY JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF, 
	 	DEMAND, ACTION OR CAUSE OF ACTION ARISING 
	 	OUT OF OR IN ANY WAY RELATED TO THE 
	 	RESTRUCTURE TERM SHEET, THE RESTRUCTURE 
	 	AGREEMENT OR THE RESTRUCTURE TRANSACTION, 
	 	OR THE EXERCISE OF ANY PARTY’S RIGHTS AND 
	 	REMEDIES UNDER THE RESTRUCTURE TERM SHEET, 
	 	THE RESTRUCTURE AGREEMENT OR THE 
	 	RESTRUCTURE TRANSACTION, OR THE CONDUCT OR 
	 	THE RELATIONSHIP OF THE PARTIES HERETO, IN ALL 
	 	OF THE FOREGOING CASES WHETHER NOW 
	 	EXISTING OR HEREAFTER ARISING AND WHETHER 
	 	SOUNDING IN CONTRACT, TORT OR OTHERWISE. 
	 	THE PARTIES AGREE THAT ANY OTHER PARTY 
	 	HERETO MAY FILE A COPY OF THIS RESTRUCTURE 
	 	TERM SHEET WITH ANY COURT AS WRITTEN 
	 	EVIDENCE OF THE KNOWING, VOLUNTARY, AND 
	 	BARGAINED AGREEMENT OF THE PARTIES 
	 	IRREVOCABLY TO WAIVE THEIR RESPECTIVE 
	 	RIGHTS TO TRIAL BY JURY AS AN INDUCEMENT TO 
	 	THE EXECUTION OF THE RESTRUCTURE TERM SHEET 
	 	HEREUNDER AND TO PROCEED WITH THE 
	 	RESTRUCTURE TRANSACTION, AND THAT, TO THE 
	 	EXTENT PERMITTED BY APPLICABLE LAW, ANY 
	 	DISPUTE OR CONTROVERSY WHATSOEVER 
	 	(WHETHER OR NOT MODIFIED HEREIN) BETWEEN 
	 	OBLIGORS AND ELECTING LENDERS SHALL INSTEAD 
	 	BE TRIED IN A COURT OF COMPETENT JURISDICTION 
	 	BY A JUDGE SITTING WITHOUT A JURY. 	 
	 
	20. Consideration:  	The Obligors and Electing Lenders acknowledge and agree that  
		the mutual agreements proposed herein, together with other 
	 	good and valuable consideration the receipt and sufficiency of 
	 	which are herein acknowledged, constitute adequate and 
	 	sufficient consideration herein and for the proposed 

20

RESTRUCTURE TERM SHEET

	 	Restructure Transaction. Electing Lenders and Obligors agree 
	 	that the proposed terms of the Restructure Transaction as 
	 	provided herein constitute reasonably equivalent value and 
	 	consideration to each Obligor and Electing Lender, based on 
	 	Electing Lenders’ agreement to withhold taking action to 
	 	prosecute and liquidate the Designated Claims against one or 
	 	more of the Obligors and receiving adequate security and other 
	 	consideration therefor. The value and benefit to each Obligor 
	 	individually, and to the global enterprise of all Obligors, of the 
	 	proposed Restructure Transaction is hereby acknowledged and 
	 	each Obligor agrees that the Restructure Agreement is in the 
	 	best interest of each Obligor and all of the Obligors. Obligors 
	 	and Electing Lenders agree that the proposed terms of the 
	 	Restructure Transaction as set forth in the Restructure 
	 	Agreement were negotiated in good faith and without collusion 
	 	of any kind. 
	 
	21. Joint and Several

Liability: 	All obligations and liabilities of the Obligors described in this 

Restructure Term Sheet and all documents and instruments 

contemplated hereby shall be joint and several. 
	 
	22. Specific Performance: 	Each of the Obligors, on the one hand, and the Electing

Lenders, on the other hand, agree that irreparable damage 
	 	would occur and that such parties would not have any adequate 
	 	remedy at law in the event that the Restructuring Transaction 
	 	fails to close in accordance with the terms and conditions of 
	 	this Restructure Term Sheet. It is accordingly agreed that the 
	 	parties shall be entitled to an injunction or injunctions to 
	 	prevent breaches of the parties’ obligations to negotiate, 
	 	execute and deliver the Restructure Documents and close the 
	 	Restructure Transaction, each in accordance with the terms of 
	 	this Restructure Term Sheet, and to specific performance of 
	 	such obligations, in addition to any other remedy at law or in 
	 	equity; provided, however, after the BofA Effective Date, none 
	 	of the parties shall have any right to terminate this Restructure 
	 	Term Sheet. 
	 
	23. Legal Fees:  	On the Restructure Effective Date, Obligors shall pay all

reasonable legal fees and expenses incurred by counsel for 
	 	Capmark and Natixis in drafting, negotiating and executing the 
	 	Restructure Term Sheet and the Restructure Documents; 
	 	provided that such legal fees and expenses shall not exceed 
	 	$500,000. 

[Signature Pages Follow]

21

RESTRUCTURE TERM SHEET

     IN WITNESS WHEREOF, the parties hereto have caused this Restructure Term Sheet to be duly executed and delivered by their proper and duly authorized officers as of the day and year first written above.

	SUNRISE SENIOR LIVING, INC. 
	 
	By: /s/ Mark S. Ordan
	     Name: Mark S. Ordan
	     Title: Chief Executive Officer

 

RESTRUCTURE TERM SHEET

	CAPMARK FINANCE INC. 
	 
	 
	By: /s/ William E. Shine
	     Name: William E. Shine
	     Title: Executive Vice President            

 

RESTRUCTURE TERM SHEET

	NATIXIS, LONDON BRANCH 
	 
	 
	By: /s/ David Newby 
	     Name: David Newby
	     Title: Managing Director
	 
	 
	By: /s/ Gregoire Hennekinne
	     Name: Gregoire Hennekinne
	     Title: Director

 

RESTRUCTURE TERM SHEET

SCHEDULE A

 

 

	 	RESTRUCTURE TERM SHEET

	SCHEDULE B

 

RESTRUCTURE TERM SHEET

SCHEDULE C

COLLATERAL

 

RESTRUCTURE TERM SHEET

	SCHEDULE D

	APPROVED BROKERS

	Marcus & Millichap

CB Richard Ellis

 

 

RESTRUCTURE TERM SHEET

		

	SCHEDULE Esunriseivsettlementagreement.htm - Generated by SEC Publisher for SEC Filing

 

Exhibit 10.2

EXECUTION COPY

SETTLEMENT AGREEMENT

     THIS SETTLEMENT AGREEMENT (the “Agreement”) is dated as of October 26, 2009, by and among SUNRISE SENIOR LIVING INVESTMENTS, INC. (“Managing Member”), SUNRISE SENIOR LIVING MANAGEMENT, INC. (“Manager”), and SUNRISE SENIOR LIVING, INC. (“SSL;” Managing Member, Manager and SSL are referred to collectively as the “Sunrise Parties”), on the one hand, and US SENIOR LIVING INVESTMENTS, LLC (“Investor Member”) and SUNRISE IV SENIOR LIVING HOLDINGS, LLC (“Sunrise IV”), on the other hand. Managing Member, Manager, SSL, Investor Member and Sunrise IV are referred to collectively as the “Parties.”

RECITALS:

     WHEREAS, Managing Member and Investor Member are parties to that certain Amended and Restated Operating Agreement of Sunrise IV, dated as of June 30, 2005 (as amended, modified or supplemented prior to the date hereof, the “Operating Agreement”);

     WHEREAS, Managing Member owns 20% of the membership interests in Sunrise IV (the “MM Interest”) and Investor Member owns 80% of the membership interests in Sunrise IV;

     WHEREAS, pursuant to certain provisions contained in the Operating Agreement, including Sections 12.2 through 12.5 of the Operating Agreement, Managing Member has made certain financial commitments and is required to provide financing to Sunrise IV;

     WHEREAS, Managing Member has previously provided financing to Sunrise IV as required by the Operating Agreement (all financing provided by Managing Member to Sunrise IV prior to the date of this Agreement is referred to collectively as the “MM Financing”), including certain financing under Sections 12.4 and 12.5 of the Operating Agreement (the “Income Support Financing”);

     WHEREAS, Managing Member is currently required to provide additional Income Support Financing to Sunrise IV pursuant to the terms of the Operating Agreement, but Managing Member has breached its obligation to provide such additional financing to Sunrise IV;

     WHEREAS, Managing Member desires to transfer the MM Interest to Investor Member and to terminate and be fully released from any and all of its obligations under the Operating Agreement (including its continuing obligations to provide financing to Sunrise IV under the Operating Agreement);

     WHEREAS, Sunrise IV indirectly owns 16 retirement or senior living facilities (each, a “Facility” and, collectively, the “Facilities”) that are managed by Manager pursuant to (i) an individual management agreement entered into by Manager for management of each Facility, including any interim management, administrative services, consulting services, sub-management or similar agreements in favor of Manager concerning operation of such Facility (collectively, the “Management Agreements”), and (ii) a Master Owner/Manager Agreement, dated July 1, 2005, by and between Sunrise IV, Manager and Investor Member (as amended, modified or supplemented prior to the date hereof, the “MOMA”);

     WHEREAS, Sunrise IV is a party to (i) that certain Amended and Restated Acquisition and Construction Loan Agreement, dated as of December 22, 2005 (as amended, modified or supplemented prior to the date hereof, the “Loan Agreement”), by and among Sunrise IV (as borrower), HSH Nordbank AG, acting through its New York Branch (“Nordbank”), as a lender, lead arranger and administrative agent, and such other financial institutions as from time to time become lenders (collectively, the “Lenders”); (ii) the Common Terms Agreement, dated as of June 30, 2005 (as amended, modified or supplemented prior to the date hereof, the “Common Terms Agreement”), by and among Nordbank, Sunrise IV, the Intermediate Tier Owners (as defined therein), SSL, as liquidity support provider, and the Property Companies (as defined therein), and (iii) certain other documents executed in connection with the financing evidenced by the Loan Agreement and Common Terms Agreement (the Loan Agreement, the Common Terms Agreement, the ODA Agreement (as hereinafter defined) and such other documents are referred to collectively as the “Loan Documents”);

     WHEREAS, pursuant to the terms of that certain Member Interest Pledge and Security Agreement, dated as of June 30, 2005 (as amended, modified or supplemented through the date hereof, the “Membership Interest Pledge”), between Managing Member and Nordbank, Managing Member has pledged its membership interests in Sunrise IV to Nordbank for the benefit of the Lenders and to secure the payment of all amounts due under the Loan Documents;

     WHEREAS, pursuant to the terms of that certain Operating Deficits Agreement, dated as of June 30, 2005 (as amended, modified or supplemented through the date hereof, the “ODA Agreement”), between SSL and Nordbank, SSL has guaranteed to Nordbank for the benefit of the Lenders the payment of all Operating Deficits (as defined in the ODA Agreement) of Sunrise IV, the Intermediate Tier Owners, the Property Companies and, to the extent liable therefore, the Manager;

     WHEREAS, SSL has breached its obligation under the ODA Agreement to fund default interest with respect to the loan outstanding under the Loan Documents, and SSL desires to be released from any and all obligations under the Loan Documents (including the ODA Agreement);

     WHEREAS, pursuant to the terms and conditions of the Management Agreements, Manager is entitled to receive certain management fees;

     WHEREAS, Section 3.17 of the Common Terms Agreement provides that any management fees earned under each Management Agreement in excess of 3% of revenues for the relevant Facility (the “Subordinated Management Fees”) shall be paid only if (i) Sunrise IV has made all payments required to be made under the Loan Documents, and (ii) no event of default has then occurred and is continuing under the Loan Documents and, after giving effect to such payment, no event of default would then have occurred;

     WHEREAS, Nordbank has provided written notice to Sunrise IV of the existence of certain events of default under the Loan Documents, and such events of default are continuing;

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     WHEREAS, due to the existence and continuation of events of default under the Loan Documents, Manager has not received payment of certain Subordinated Management Fees and the payment of such Subordinated Management Fees has been deferred;

     WHEREAS, Manager desires to cease management of the Facilities;

     WHEREAS, the Sunrise Parties desire to receive from Nordbank (on behalf of Nordbank and the Lenders) a full and unconditional release of any and all liabilities and obligations of any and all of the Sunrise Parties relating to or arising under the Loan Documents (including the ODA Agreement and any and all guaranties or indemnities given by any of the Sunrise Parties relating to the financing evidenced by the Loan Documents);

     WHEREAS, in order to induce Nordbank to grant a release to the Sunrise Parties, the Investor Member and its affiliates will incur significant liabilities and make significant financial commitments in favor of Nordbank (for the benefit of Nordbank and the other Lenders);

     WHEREAS, the Parties desire to enter into this Agreement to evidence and implement a “global” settlement of all issues and claims arising out of or relating to Sunrise IV, the Facilities (including the acquisition, ownership, financing, leasing and management thereof), and the Loan Documents and, accordingly, the Parties have engaged in good faith, arms length negotiations that culminated in the Parties’ agreement as set forth herein;

     NOW, THEREFORE, in consideration of the mutual promises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound, do hereby agree as follows:

     1.     Recitals. The recitals of this Agreement are hereby incorporated herein in their entirety.

     2.     Release of Managing Member. Effective as of the date of this Agreement, each Investor Member Releasor (as defined below) hereby expressly releases, acquits, and forever discharges Managing Member, each of its affiliates and subsidiaries (other than Manager, which is separately released pursuant to Section 5 hereof), and each and every past and present employee, attorney, officer, director or shareholder of Managing Member (collectively, the “Managing Member Released Parties”), from any and all claims, causes of action, suits, debts, obligations, liabilities, demands, losses, covenants, dues, sums of money, reckonings, bonds, bills, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, executions, costs, and expenses (including attorneys’ fees) of any kind, character, or nature whatsoever, known or unknown, fixed or contingent, in law or equity (collectively, “Claims”) which the Investor Member Releasors and each or any of the Investor Member Releasors’ heirs, executors, administrators, successors and assigns ever had, now have or hereafter can, shall or may have for, upon, or by reason of any matter, cause or thing whatsoever which relate to, or arise out of, the management, operation, or funding of Sunrise IV or of Sunrise IV’s direct or indirect subsidiaries (including any and all Claims of any kind or nature whatsoever relating to, arising out of, or existing under, the Operating Agreement) or the acquisition or ownership of the Facilities and other assets by Sunrise IV and its direct and indirect subsidiaries and which the Investor Member Releasors may have or claim to have against a Managing Member Released

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Party, or which may hereafter arise out of, relate to, or be connected with any act of commission or omission of a Managing Member Released Party existing or occurring prior to the date of this Agreement; provided, however, notwithstanding any other provision of this Agreement, the release of Claims pursuant to this Section 2 shall not apply to any Claims arising under this Agreement or under any Other Sunrise Document (as defined below) and shall not release Managing Member or SSL from their obligations under this Agreement or under any Other Sunrise Document. “Investor Member Releasors” shall mean (i) Sunrise IV and each direct or indirect subsidiary of Sunrise IV, and (ii) Investor Member and Investor Member’s affiliates, principals, owners, and members.

3.     Release of Sunrise IV and Investor Member by SSL and Managing Member. Effective as of the date of this Agreement, each Sunrise Releasor (as defined below) hereby expressly releases, acquits, and forever discharges Sunrise IV, Investor Member, each direct or indirect subsidiary of Sunrise IV (including the Intermediate Tier Owners and the Property Companies), each subsidiary or affiliate of Investor Member, each entity that directly or indirectly provided or provides funding to Investor Member, and each and every past or present employee, attorney, officer, director, manager, member or shareholder of Investor Member, any subsidiary or affiliate of Investor Member, or any entity that provided or provides funding to Investor Member (collectively, the “Investor Member Released Parties”), from any and all Claims which the Sunrise Releasors and each or any of the Sunrise Releasors’ heirs, executors, administrators, successors and assigns ever had, now have or hereafter can, shall or may have for, upon, or by reason of any matter, cause or thing whatsoever which relate to, or arise out of, the management, operation, or funding of Sunrise IV or of Sunrise IV’s direct or indirect subsidiaries (including the MM Financing and any and all other Claims of any kind or nature whatsoever relating to, arising out of, or existing under, the Operating Agreement) or the acquisition or ownership of the Facilities and other assets by Sunrise IV and its direct and indirect subsidiaries (including Claims arising out of, or relating to, the Managing Member’s right under the Operating Agreement to transfer or cause to be transferred certain parcels of land to Managing Member or its affiliates, which shall be a deemed contribution of such parcels to Sunrise IV (the “Contributed Parcels”)), and which the Sunrise Releasors may have or claim to have against an Investor Member Released Party, or which may hereafter arise out of, relate to, or be connected with any act of commission or omission of an Investor Member Released Party existing or occurring prior to the date of this Agreement; provided, however, notwithstanding any other provision of this Agreement, the release of Claims pursuant to this Section 3 shall not apply to any Claims arising under this Agreement or under any Other Investor Member Document (as defined below) and shall not release Sunrise IV or Investor Member from their respective obligations under this Agreement or under any Other Investor Member Document. “Sunrise Releasors” shall mean SSL, Managing Member, and each of their respective affiliates (other than Manager), principals, owners and shareholders.

     4.     Release of Sunrise IV and Investor Member by Manager. Effective as of the date of this Agreement, Manager hereby releases, acquits, and forever discharges the Investor Member Released Parties from any and all Claims which relate to the management or operation of the Facilities (including all Subordinated Management Fees, all other amounts due under the Management Agreements as of the date of this Agreement and any Claims arising due to breaches of the Management Agreements prior to the date of this Agreement) and which Manager and each or any of Manager’s heirs, executors, administrators, successors and assigns

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ever had, now have or hereafter can, shall or may have against an Investor Member Released Party, or which may hereafter arise out of, relate to, or be connected with any act of commission or omission of an Investor Member Released Party existing or occurring prior to the date of this Agreement; provided, however, notwithstanding any other provision of this Agreement, the release of Claims pursuant to this Section 4 (i) shall not apply to (1) any Claims arising under this Agreement or under any Other Investor Member Document, or (2) any Claims for intercompany balances required to be paid by Sunrise IV or the Property Companies and arising from and after September 30, 2009, and (ii) shall not release Sunrise IV or Investor Member from their respective obligations under this Agreement or under any Other Investor Member Document.

     5.     Release of Manager. Effective as of the date of this Agreement, each Investor Member Releasor hereby releases, acquits, and forever discharges the Manager and each and every past and present employee, attorney, officer and director of Manager (collectively, the “Manager Released Parties”) from any and all Claims which relate to the management or operation of the Facilities (including any Claims arising due to breaches of the Management Agreements and the MOMA prior to the date of this Agreement) and which Investor Member Releasors and each or any of Investor Member Releasors’ heirs, executors, administrators, successors and assigns ever had, now have or hereafter can, shall or may have against a Manager Released Party, or which may hereafter arise out of, relate to, or be connected with any act of commission or omission of a Manager Released Party existing or occurring prior to the date of this Agreement; provided, however, notwithstanding any other provision of this Agreement, the release of Claims pursuant to this Section 5 (i) shall not apply to (1) any Claims arising under this Agreement or under any Other Sunrise Document, or (2) any Claims for intercompany balances required to be paid by Manager and arising from and after September 30, 2009, and (ii) shall not release Manager from its obligations under this Agreement or under any Other Sunrise Document.

     6.     Assignment of Membership Interests. Effective as of the date of this Agreement, Managing Member shall assign, transfer and convey to Investor Member (or Investor Member’s designee) the MM Interest and all of Managing Member’s rights under the Operating Agreement by executing and delivering the Bill of Sale and Assignment Agreement (the “Bill of Sale”) attached as Exhibit A hereto and made a part hereof. Managing Member represents and warrants to Investor Member that (i) Managing Member is the sole legal and beneficial owner of the Transferred Interest (as such term is defined in the Bill of Sale) and, other than the Membership Interest Pledge, Managing Member has not previously assigned, transferred or conveyed all or any portion of the Transferred Interest or pledged the Transferred Interest as security for any indebtedness, (ii) following the execution and delivery of the Bill of Sale, Investor Member shall have good and valid title to the Transferred Interest, free and clear of any and all liens, claims and encumbrances of any kind or nature whatsoever (other than the Membership Interest Pledge, the Operating Agreement and any other agreements which become effective or are entered into, permitted or suffered to exist by Investor Member or any of its affiliates on or after the date hereof with respect to the Transferred Interest), and (iii) from and after the date of this Agreement, Managing Member and its affiliates shall not have or hold any membership interest or other direct or indirect ownership interest in Sunrise IV (it being understood that all such membership and ownership interests shall have been transferred to Investor Member pursuant to the Bill of Sale) and, subject to and in accordance with Section 2 of

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this Agreement, Managing Member shall have no Claims of any kind or nature whatsoever against any Investor Member Released Party that have not been waived or released.

     7.     Amendment to MOMA. Effective as of the date of this Agreement, Sunrise IV, Investor Member, and Manager shall enter into that certain Amendment to Master Owner/Manager Agreement (the “MOMA Amendment”), attached as Exhibit B hereto and made a part hereof, providing for, among other things, the termination of each of the Management Agreements on the dates set forth in the MOMA Amendment (the date of termination of a Management Agreement is referred to as the “Termination Date” for such Management Agreement).

     8.     Operations Transfer Agreement. Effective as of the date of this Agreement, Sunrise IV, Manager, and Watermark Retirement Communities, Inc. (“New Manager”) shall enter into the Master Operations Transfer Agreement attached as Exhibit C hereto and made a part hereof (the “Operations Transfer Agreement”), providing for the transition of management services for the Facilities from Manager to New Manager.

     9.     Continuation of Insurance. Manager acknowledges and agrees that, from and after the Termination Date of the Management Agreement for each Facility, it will continue providing insurance coverage (including third-party insurance) for such Facility and the related Property Company for claims arising from events that occur on or prior to such Termination Date for the lines of coverage required to be maintained pursuant to, and that meet or exceed the minimum insurance requirements set forth in, the relevant Management Agreement; provided, however, that Sunrise IV and/or the Property Company shall, pursuant to an Escrow Agreement substantially in the form of Exhibit D (the “Escrow Agreement”), fund an escrow account on such Termination Date to cover the amount of any Facility deductibles (as contemplated by Section 3.03 of Exhibit G to the relevant Management Agreement) in the aggregate amount set forth on Schedule 9(a) for each Facility; provided, further, that Sunrise IV shall provide a guarantee with respect to the difference between the amount escrowed as set forth on Schedule 9(a) and the maximum post-Termination Date deductible liability for each Facility as set forth on Schedule 9(a). When obtaining insurance for the period from the date of this Agreement through the Termination Date for each Facility, Manager shall initially obtain insurance coverage for each Facility and Property Company for the time period set forth on Schedule 9(b) hereto (with respect to each Facility, the “Initial Coverage Period”); provided, however, that Sunrise IV or the Property Companies shall be responsible for paying any and all insurance premiums attributable to the Initial Coverage Period regardless of whether the Termination Date for any Management Agreement occurs prior to the end of the applicable Initial Coverage Period. Any insurance coverage that is required for time periods subsequent to the Initial Coverage Period shall be obtained on a month-to-month basis through the applicable Termination Date. The amounts each Facility and Property Company will be charged for each line of coverage during the Initial Coverage Period and for each month thereafter are set forth on Schedule 9(c) hereto to the extent such amounts are currently known and, to the extent such amounts are not currently known, the amounts charged will be consistent with past history and will reflect current, fair-market pricing. From and after the date of this Agreement and continuing until the Adjacent Parcel Transition Date for each Adjacent Parcel, Manager will (i) manage such Adjacent Parcel in the ordinary course consistent with past practice, and (ii) continue to provide liability insurance coverage for such Adjacent Parcel consistent with past practice. “Adjacent Parcel Transition Date” means,

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with respect to each Adjacent Parcel, the Termination Date of the Management Agreement for the Facility associated with such Adjacent Parcel (or, with respect to the Adjacent Parcel associated with the Millbrook, NY Facility, the assignment of the agreements listed on Schedule 7.13 of the Operations Transfer Agreement). Sunrise IV or the Property Companies shall be responsible for paying the insurance premiums incurred in connection with obtaining and keeping in place insurance coverage for each Facility (and each Adjacent Parcel) through the Termination Date of the Management Agreement for such Facility (and the associated Adjacent Parcel, if applicable) and shall be entitled to receive any and all net amounts recovered due to any early termination of insurance coverage for any one or more Facilities/Property Companies.

     10.     Nordbank/Sunrise Mutual Releases. Effective as of the date of this Agreement, and as a condition to the effectiveness of this Agreement and the Other Sunrise Documents, the Sunrise Parties shall execute and deliver, and Investor Member shall obtain from Nordbank (on behalf of the Lenders) and deliver to the Sunrise Parties a copy duly executed by Nordbank of, the mutual Release Agreements attached hereto as Exhibit E-1 and Exhibit E-2 and that certain Settlement Agreement attached hereto as Exhibit E-3.

     11.     Transfer of Trademarks. Effective as of the date of this Agreement, SSL and Sunrise IV shall enter into the Nunc Pro Tunc Trademark Assignment, attached as Exhibit F and made a part hereof (the “Trademark Assignment”), providing for the transfer, conveyance and assignment by SSL to Sunrise IV, effective as of June 30, 2005, of all of SSL’s right, title and interest in and to the trademarks (together with the goodwill of the business symbolized thereby) listed in Exhibit G, which is attached hereto and made a part hereof, and SSL shall file with the California Secretary of State the Assignment of Trademark or Service Mark, attached as Exhibit H and made a part hereof, providing for the transfer, conveyance and assignment by SSL to Sunrise IV of all of SSL’s right, title and interest in and to the California State Registration for the mark THE FOUNTAINS and Design.

     12.     Transfer of Domain Names. Effective as of the date of this Agreement, SSL and Sunrise IV shall enter into the Nunc Pro Tunc Domain Name Assignment, attached as Exhibit I and made a part hereof, providing for the transfer, conveyance and assignment by SSL to Sunrise IV, effective as of June 30, 2005, of all of SSL’s right, title and interest in and to the domain names listed in Exhibit J, which is attached hereto and made a part hereof.

     13.     Transfer of Trademark Licenses Agreements. Effective as of the date of this Agreement, SSL and Sunrise IV shall enter into the Assignment and Assumption of Trademark Licenses, attached as Exhibit K and made a part hereof, providing for the transfer, conveyance and assignment by SSL to Sunrise IV of all of SSL’s right, title and interest in and to the license agreements listed in Exhibit L, which is attached hereto and made a part hereof. Notwithstanding any other provision of this Agreement, the transfers of assets made by SSL to Sunrise IV pursuant to Sections 11, 12, and 13 of this Agreement shall be made by SSL free and clear of any and all liens, claims, security interests and encumbrances of any kind or nature whatsoever, except for liens granted pursuant to the Loan Documents and encumbrances expressly contemplated by the Loan Documents or the Trademark Assignment. Without limiting the generality of the foregoing, on the date of this Agreement, SSL shall deliver to Sunrise IV duly executed lien releases, in form and substance reasonably satisfactory to Investor Member,

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releasing and discharging the existing liens on the trademarks being transferred to Sunrise IV pursuant to Section 11.

     14.     Allocation of Income. Notwithstanding any provision of the Operating Agreement to the contrary, Managing Member and Investor Member agree that any and all cancellation of indebtedness income arising as a result of the cancellation of the MM Financing pursuant to the releases granted by Managing Member and SSL to Sunrise IV and its direct or indirect subsidiaries pursuant to Section 3 of this Agreement shall be allocated 100% to Managing Member. On the date of this Agreement, the following actions shall be deemed to have occurred in the following order and sequence: (i) first, the dividend or distribution of the Adjacent Parcels (as defined below) to Managing Member and the subsequent contribution of the Adjacent Parcels (and deemed contribution of the Contributed Parcels) from Managing Member to Sunrise IV (or Sunrise IV’s designees), as contemplated by Section 3 and Section 15 of this Agreement; (ii) second, SSL and Managing Member shall be deemed to have granted the releases set forth in Section 3 of this Agreement; and (iii) third, the Managing Member shall be deemed to have assigned the Transferred Interest to Investor Member pursuant to the Bill of Sale. The Parties further agree that, immediately after the contribution by Managing Member of the Adjacent Parcels to Sunrise IV (or Sunrise IV’s designees), Sunrise IV will “mark-to-market” all of its assets for capital accounting purposes, and will allocate the net book gain or loss among Managing Member and Investor Member pursuant to the Operating Agreement. Such allocation will take place immediately before the allocation of cancellation of indebtedness income to Managing Member and any other allocations for the period ending on the date of this Agreement, which shall be made using the “closing of the books” method under Section 706 of the Internal Revenue Code.

     15.     Transfer of Adjacent Parcels. Effective as of the date of this Agreement, (i) the Managing Member shall acquire fee simple title to the parcels of real property described on Exhibit M (the “Adjacent Parcels”) from the current owners of the Adjacent Parcels listed on Exhibit M (the “Current Owners”), through dividends or distributions made by the Current Owners to the Managing Member (each such dividend or distribution, an “Adjacent Parcel Distribution”), and (ii) Managing Member shall transfer and convey fee simple title to the Adjacent Parcels to Sunrise IV (or Sunrise IV’s designees), free and clear of any and all monetary liens, by executing and delivering to Sunrise IV (or Sunrise IV’s designees) the Quitclaim Deeds in the forms attached hereto as Exhibits N, O, P and Q, together with all applicable transfer tax and change of ownership affidavits and such other certificates, affidavits, assignments, indemnities, instruments and other documents as shall be reasonably requested (as to both form and substance) by the applicable title insurance company or the Lenders and are necessary or required in connection with the transfer and conveyance of the Adjacent Parcels and the obtaining by Sunrise IV, its designees and the Lenders of owner’s and mortgagee’s title insurance policies with respect to the Adjacent Parcels in form and substance reasonably acceptable to the Investor Member with the endorsements listed on Schedule 15(a). All costs and expenses associated with transferring the Adjacent Parcels (and the deemed contribution of the Contributed Parcels) to Sunrise IV (or Sunrise IV’s designees), including transfer, franchise, deed, fixed asset, stamp, and documentary stamp taxes, the fees, costs and expenses associated with obtaining owner’s and mortgagee’s title insurance commitments and policies with not more than those endorsements listed on Schedule 15(a) (including the fees and expenses of the title insurance company) and surveys, engineering and environmental reports, recording fees for the

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deeds and mortgages, and the legal fees and expenses of Nordbank’s counsel and Investor Member’s counsel relating to or arising out of the conveyance and granting of mortgages with respect to the Adjacent Parcels and the Contributed Parcels, in each case as set forth on Schedule 15(b) attached hereto (collectively, the “Adjacent Parcel Expenses”), shall be paid by the Sunrise Parties to Investor Member on the date of this Agreement; provided, however, in the event any Adjacent Parcel Expenses are not paid on the date of this Agreement, any such unpaid Adjacent Parcel Expenses may be deducted from, or setoff against, amounts due and payable to the Sunrise Parties pursuant to this Agreement or any Other Sunrise Document (it being understood that in no event shall the Adjacent Parcel Expenses be greater than the aggregate amount set forth on Schedule 15(b)). All real property taxes with respect to the Adjacent Parcels for calendar year 2009 shall be prorated between the Managing Member and Sunrise IV as of the date of this Agreement based on the tax bills for the 2008 calendar year.

     16.     Settlement. It is understood and agreed by the Parties that this Agreement is a compromise and settlement of disputed claims and the execution, delivery and performance of this Agreement and the Exhibits hereto shall not be deemed or construed as an admission of liability or responsibility at any time or for any purpose whatsoever.

     17.     Binding Agreement. Each of the Parties hereby represents and warrants that it has carefully read this Agreement, knows and understands its contents and its binding legal effect and has consulted with counsel of its choice prior to signing this Agreement. Each of the Parties signs this Agreement of its own free will, without any legal reservations, duress, coercion or undue influence, and it is the intention of each of the Parties that each Party be legally bound hereby. The Parties agree that this Agreement (including the Schedules and Exhibits hereto) embodies the full, entire and sole agreement of the Parties and recites the sole consideration for the promises exchanged, and that this Agreement may not be modified except in writing signed by all Parties hereto. In reaching and executing this Agreement, no Party has relied upon any representation or promise except those set forth herein.

    18.     Authority, Etc.

     (a) The Sunrise Parties jointly and severally represent and warrant to Investor Member and Sunrise IV that (i) each Sunrise Party is a corporation duly organized, validly existing and in good standing under the laws of the state of its organization, (ii) each Sunrise Party has full power and authority to execute and deliver this Agreement and the other documents, agreements, releases and instruments being executed by such Sunrise Party in connection with or pursuant to this Agreement (the “Other Sunrise Documents”) and to consummate the transactions contemplated hereby and thereby, (iii) this Agreement and the Other Sunrise Documents have been duly executed by the Sunrise Parties and constitute the valid and binding agreements of the Sunrise Parties and are enforceable against the Sunrise Parties in accordance with their terms, (iv) no other corporate or organizational proceedings on the part of any Sunrise Party are necessary to approve and authorize the execution and delivery of this Agreement or the Other Sunrise Documents to which such Sunrise Party is a party and the consummation of the transactions contemplated hereby and thereby, (v) the execution, delivery and performance by the Sunrise Parties of this Agreement and the Other Sunrise Documents, and the consummation of the transactions contemplated hereby and thereby, do not and shall not conflict with, result in

9

any breach, default or violation of, or require any authorization, consent or approval that has not already been obtained under (1) the organizational documents of any Sunrise Party, (2) any contract to which a Sunrise Party is a party or by which a Sunrise Party is bound, or (3) any order, rule, regulation, law, decree, permit or license of any court or any governmental organization or entity, (vi) as of the date of this Agreement, except for copyrights that are generally used within the “Sunrise System” (as such term is defined in the Management Agreements), no Sunrise Party, and no affiliate of any Sunrise Party, holds any registered or unregistered copyright that is used by Sunrise IV or any one or more of its subsidiaries in connection with the conduct of their respective businesses, (vii) as of the date of this Agreement, the Sunrise Parties and their affiliates have transferred to Sunrise IV all of the Intellectual Property (as defined below) owned, held, or licensed by the Sunrise Parties or their affiliates and that is used by Sunrise IV or any one or more of its subsidiaries in connection with the conduct of their respective businesses, (viii) in connection with each Adjacent Parcel Distribution, as of the date of such Adjacent Parcel Distribution, (1) Managing Member was a member of each Current Owner that is a Delaware limited liability company and was a partner of each Current Owner that is a Delaware limited partnership, (2) each Current Owner that is a limited liability company has complied with §18-607(a) of the Delaware Limited Liability Company Act, and (3) each Current Owner that is a limited partnership has complied with §17-607(a) of the Delaware Revised Uniform Limited Partnership Act, and (ix) with respect to the Adjacent Parcel located at 909 109th Avenue NE, Bellevue, Washington (the “Bellevue Parcel”), (1) the Sunrise Parties have completed all corrective actions required to be taken by the City of Bellevue, Washington, in each case in accordance with all applicable federal, state, city and local laws, statutes, codes, rules, regulations, ordinances, decrees, and orders, in order to resolve that certain Request for Voluntary Compliance, dated May 21, 2009 (case no. 09-113766), issued by the City of Bellevue, Washington (the "Request"), as such Request has been modified by certain conversations and e-mails regarding the compliance requested therein, and as such compliance is evidenced by that certain e-mail dated July 29, 2009 at 4:46 p.m. from Raj Johal on behalf of the City of Bellevue to Blake Martin, Director of Maintenance of Pacific Regent of Bellevue, and (2) the Sunrise Parties (or their affiliates) have paid all costs and expenses arising out of or relating to the actions referenced in this clause (ix), and none of such costs and expenses have been charged to, or reimbursed by, Sunrise IV, any Intermediate Tier Owner, any Property Company, or any Facility. “Intellectual Property” means any trademark, service mark, trade name, design, trade dress, logo, internet domain name, invention (whether patented or not), U.S. or foreign patent, pending patent application in the U.S. or foreign jurisdictions, any continuation, divisional or equivalent thereof, trade secret, confidential business information, copyright, know-how (including any registrations or applications for registration of any of the foregoing), license agreement, computer software, website, telephone number or any other similar type of proprietary intellectual property right; provided, however, notwithstanding the foregoing, the term “Intellectual Property” shall not include any of the foregoing which are specific to the policies, procedures and/or processes of any one or more of the Sunrise Parties, and/or any of their respective affiliates, or are otherwise generally used within the Sunrise System.

     (b) Investor Member represents and warrants to the Sunrise Parties that (i) Investor Member is a limited liability company duly organized, validly existing and in good standing under the laws of the state of its organization, (ii) Investor Member has full power and authority to execute and deliver this Agreement and the other documents, agreements, releases and instruments being executed by Investor Member in connection with or pursuant to this

10

Agreement (the “Other Investor Member Documents”) and to consummate the transactions contemplated hereby and thereby, (iii) this Agreement and the Other Investor Member Documents have been duly executed by Investor Member and constitute the valid and binding agreements of Investor Member and are enforceable against Investor Member in accordance with their terms, (iv) no other limited liability company or organizational proceedings on the part of Investor Member are necessary to approve and authorize the execution and delivery of this Agreement or the Other Investor Member Documents and the consummation of the transactions contemplated hereby and thereby, and (v) the execution, delivery and performance by Investor Member of this Agreement and the Other Investor Member Documents, and the consummation of the transactions contemplated hereby and thereby, do not and shall not conflict with, result in any breach, default or violation of, or require any authorization, consent or approval under or from (1) the organizational documents of Investor Member, (2) any contract to which Investor Member is a party or by which Investor Member is bound, or (3) any order, rule, regulation, law, decree, permit or license of any court or any governmental organization or entity.

     19.     Severability. If any one part of this Agreement shall be deemed invalid and unenforceable, then the remaining parts shall remain binding and in effect to the extent (i) the context thereof shall permit in light of the declared invalidity or unenforceability, and (ii) such declaration of invalidity or unenforceability and the asserted enforceability of remaining terms and provisions do not materially amend, alter or contradict the intent of the Parties as expressed by the terms of this Agreement.

     20.     Counterparts. This Agreement may be executed in one or more counterparts, and by the different Parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

     21.     Further Assurances. Each of the Parties shall execute and deliver any additional papers, documents, and other assurances, and shall do any acts and things reasonably necessary in connection with the performance hereunder and to carry out the intent of this Agreement. The Parties further agree not to take any action that may frustrate the intent or purpose of this Agreement. Without limiting the generality of the foregoing, from time to time after the date of this Agreement, and without further consideration, the Sunrise Parties, upon the request of Investor Member, shall execute and deliver such documents and instruments of conveyance and transfer as Investor Member may reasonably request in order to (i) consummate more effectively the transfer and conveyance of assets, rights and properties pursuant to this Agreement or the Other Sunrise Documents to Investor Member, Sunrise IV or their respective affiliates (including the Property Companies) or designees, (ii) vest in Investor Member, Sunrise IV, or such affiliates or designees title to such transferred assets, rights and properties, (iii) permit Investor Member, Sunrise IV or such affiliates or designees to perfect, record or protect their interests in such transferred assets, rights and properties, or (iv) otherwise more fully consummate the transaction contemplated by this Agreement or the Other Sunrise Documents.

     22.     No Prior Assignment. Each Party represents and warrants to the others that, except with respect to the Adjacent Parcels, (i) such Party is the sole owner of all of the assets, rights and claims being released, transferred and/or assigned by such Party under this Agreement, the MOMA Amendment and the Operations Transfer Agreement (as applicable), (ii)

11

there does not exist any presently effective assignment or agreement of transfer with respect to the assets, rights or claims which are being released, transferred or assigned by such Party under this Agreement, and (iii) such Party has never assigned or transferred previously in any manner whatsoever any assets, rights or claims which are being released, transferred or assigned under this Agreement, except for (1) liens granted pursuant to the Loan Documents, (2) encumbrances expressly contemplated by the Loan Documents or the Trademark Assignment, and (3) transfers or assignments that are no longer effective and that have been reversed or cancelled.

    23.     Survival of Claims Against Sunrise Parties.

     (a)     The Sunrise Parties, jointly and severally, agree to indemnify, defend, and hold harmless the Investor Member Released Parties from, against, for and in respect of any Losses asserted against, or paid, suffered or incurred by, the Investor Member Released Parties and resulting from, based upon, or arising out of: (i) the breach of any representation or warranty made by any Sunrise Party in this Agreement or in any of the Other Sunrise Documents, (ii) the breach of any covenant or agreement of any Sunrise Party made in this Agreement or any Other Sunrise Documents, (iii) any Claim released by Manager or any Sunrise Releasor in this Agreement or any Other Sunrise Documents (provided, however, the Sunrise Parties shall not be required to indemnify the Investor Member Released Parties with respect to any Claim held by a third party that is not a Sunrise Releasor, Manager or a person or entity affiliated with any one or more of the Sunrise Parties and that is not a successor, assign, assignee, or transferee of a Sunrise Releasor, Manager or any such affiliate of one or more of the Sunrise Parties, which Claim is independently held by such third party and did not arise by or through a Sunrise Releasor, Manager or any such affiliate of one or more of the Sunrise Parties), or (iv) any indemnification claims asserted by New Manager against Sunrise IV (and/or its direct and indirect subsidiaries) pursuant to Section 9.1(b) of the Operations Transfer Agreement which result from or arise out of any breach by Manager of any provision of the Operations Transfer Agreement, subject to applicable notice, grace or cure periods. “Losses” shall mean any and all demands, claims, actions, causes of action, assessments, losses, diminution in value, damages, liabilities, costs, and expenses, including interest, penalties, costs of investigation and defense, and reasonable attorneys’ and other professional fees and expenses.

     (b)     Except for the Core Representations, each of the representations and warranties of the Sunrise Parties contained in this Agreement or in any Other Sunrise Document shall survive for a period ending on the date that is one (1) year after the date of the final Closing (as such term is defined in the Operations Transfer Agreement) (the “Survival Period”), provided any claim for which notice has been given prior to the expiration of the Survival Period may be continued after the expiration of the Survival Period until finally resolved. The Core Representations shall survive without limitations as to time. “Core Representations” shall mean the representations of the Sunrise Parties contained in Sections 6 and 22 of this Agreement. No Investor Member Released Party may bring a claim against a Sunrise Party for breach of a representation and warranty unless written notice of such breach is given prior to the expiration of the Survival Period; provided, however, notwithstanding the foregoing, a claim arising out of a breach of a Core Representation may be brought at any time and shall not be time barred. An Investor Member Released Party shall be entitled in good faith to offset any indemnification claim under this Section 23 against amounts due to the Sunrise Parties, including any management fees due and payable under the MOMA Amendment; provided, however, that from

12

and after the 360th day after the date of this Agreement, 50% of all Management Fees earned, due and payable from and after such 360th day will not be subject to offset by an Investor Member Released Party. In addition to such offset rights (it being understood that the remedies of the Investor Member Released Parties under this Section 23 shall be cumulative), the Investor Member Released Parties shall be entitled to recover from the Sunrise Parties for any indemnification claim under this Section 23. Notwithstanding anything to the contrary set forth herein, in any Other Sunrise Document (including the MOMA Amendment, the Operations Transfer Agreement and any document, instrument, certificate or agreement executed or delivered in connection with this Agreement, the MOMA Amendment, any Closing or the Operations Transfer Agreement), in the Management Agreements or any document, instrument or agreement related to the Management Agreements, or any other document, instrument or agreement executed or delivered by Manager or any Managing Member Released Parties related to the ownership, use, operation or management of the Facilities or Sunrise IV or any of its direct or indirect subsidiaries (collectively, the “Sunrise Transaction Documents”), the maximum aggregate liability of all Sunrise Parties and their respective affiliates under all Sunrise Transaction Documents for any and all Losses suffered or incurred by any party to a Sunrise Transaction Document, whether for breach of a representation, warranty or covenant, indemnification or other obligation shall not, in the aggregate, exceed the amount of $2,500,000 (plus any amounts which are subject to offset as contemplated by this Section 23(b)); provided, however, that the preceding limitation on liability shall not apply to limit any indemnification claim under this Section 23 for (i) Losses arising directly or indirectly from the gross negligence, fraud or willful misconduct (including knowing or intentional breaches) of any of the Sunrise Parties, (ii) Losses arising from any breach of Section 18(a)(i)-(v) or (viii) of this Agreement, (iii) Losses arising from any breach of Section 7(a), 7(b), 7(c)(iii), 7(d), 7(e), 7(h), or 16 of the MOMA Amendment, (iv) Losses resulting from, based upon, or arising out of, any Claims released by Manager or any Sunrise Releasor in this Agreement or any Other Sunrise Document, or (v) Losses resulting from, based upon or arising due to any failure by Manager to provide insurance coverage as (and to the extent) required by Section 9 of this Agreement. The covenants and agreements of the Sunrise Parties contained in this Agreement or in the Other Sunrise Documents that are to be performed on or after the date hereof shall survive the execution and delivery of this Agreement and the Other Sunrise Documents, and the Sunrise Parties shall be liable after the date hereof for any breach thereof, subject in all cases to the limitation on liability set forth herein (if applicable).

    24.     Survival of Claims Against Investor Member and Sunrise IV.

     (a)     Investor Member and Sunrise IV, jointly and severally, agree to indemnify, defend, and hold harmless Managing Member Released Parties and Manager Released Parties from, against, for and in respect of any Losses asserted against, or paid, suffered or incurred by, the Managing Member Released Parties or Manager Released Parties and resulting from, based upon, or arising out of: (i) the breach of any representation or warranty made by Investor Member or Sunrise IV in this Agreement or in any of the Other Investor Member Documents, (ii) the breach of any covenant or agreement of Investor Member or Sunrise IV made in this Agreement, any Other Investor Member Documents, or the Operations Transfer Agreement, or (iii) any Claim released by Investor Member or Sunrise IV in this Agreement, any Other Investor Member Documents, or the Operations Transfer Agreement (provided, however, Investor Member and Sunrise IV shall not be required to indemnify the Managing Member Released

13

Parties or the Manager Released Parties with respect to any Claim held by a third party that is not an Investor Member Releasor and that is not a successor, assign, assignee, or transferee of an Investor Member Releasor, which Claim is independently held by such third party and did not arise by or through an Investor Member Releasor).

     (b)     Each of the representations and warranties of Investor Member or Sunrise IV contained in this Agreement or in any Other Investor Member Document shall survive for a period ending on the last day of the Survival Period, provided any claim for which notice has been given prior to the expiration of the Survival Period may be continued after the expiration of the Survival Period until finally resolved. No Managing Member Released Party or Manager Released Party may bring a claim against Investor Member or Sunrise IV for breach of a representation and warranty unless written notice of such breach is given prior to the expiration of the Survival Period. A Managing Member Released Party or Manager Released Party shall be entitled to recover from Investor Member or Sunrise IV for any indemnification claim under this Section 24. Notwithstanding anything to the contrary set forth herein, in any Other Investor Member Document (including the MOMA Amendment and any document, instrument, certificate or agreement executed or delivered in connection with this Agreement, the MOMA Amendment, or any Closing), in the Management Agreements, the Operations Transfer Agreement or any document, instrument or agreement related to the Management Agreements, or any other document, instrument or agreement executed or delivered by any Investor Member Released Parties related to the ownership, use, operation or management of the Facilities or Sunrise IV or any of its direct or indirect subsidiaries (collectively, the “Investor Member Transaction Documents”), the maximum aggregate liability of Investor Member, Sunrise IV and their affiliates under all Investor Member Transaction Documents for any and all Losses suffered or incurred by any party to an Investor Member Transaction Document, whether for breach of a representation, warranty or covenant, indemnification or other obligation shall not, in the aggregate, exceed the amount of $2,500,000; provided, however, that the preceding limitation on liability shall not apply to limit any indemnification claim under this Section 24 for (i) Losses arising directly or indirectly from the gross negligence, fraud or willful misconduct (including knowing or intentional breaches) of Investor Member or Sunrise IV, (ii) Losses arising from any breach of Section 18(b) of this Agreement, (iii) Losses resulting from, based upon, or arising out of, any Claims released by any Investor Member Releasor in this Agreement or any Other Investor Member Document, (iv) Losses arising from any breach of the obligations of the Investor Member Released Parties to pay any management fees required under the MOMA Amendment or to make any reimbursements required under the Management Agreements and the MOMA Amendment (subject to the Investor Member Released Parties’ rights of offset as contemplated by Section 23(b)), or (v) Losses arising from any breach by Sunrise IV of its obligation to fund amounts into escrow under the Escrow Agreement or its guaranty obligations under the first sentence of Section 9 of this Agreement. The covenants and agreements of Investor Member and Sunrise IV contained in this Agreement or in the Other Investor Member Documents that are to be performed on or after the date hereof shall survive the execution and delivery of this Agreement and the Other Investor Member Documents, and Investor Member and Sunrise IV shall be liable after the date hereof for any breach thereof, subject in all cases to the limitation on liability set forth herein (if applicable).

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     25.     Arbitration of Setoff Claims. To the extent any Investor Member Released Party does not pay to Manager any Management Fee that is due and payable pursuant to Section 4 of the MOMA Amendment based upon any claim of offset as provided in Section 23 of this Agreement, in the event Manager disputes the validity or amount of the indemnification claim giving rise to such right of offset, such dispute shall be resolved through the following procedures: (i) the Investor Member Released Parties shall give written notice (the “Setoff Notice”) to Manager within 10 business days after such Management Fee is due and payable of the Investor Member Released Parties’ Losses that are subject to offset (provided that subsequent Setoff Notices for the same Losses shall not be required); (ii) within 30 days of receipt of the Setoff Notice, Manager shall respond to the Setoff Notice by sending a written response to the Investor Member setting forth (in reasonable detail) Manager’s position and defenses to the claimed Losses (the “Setoff Response”) (it being understood that, if Manager does not provide the Setoff Response within such 30-day period, Manager shall be deemed to have waived any right to dispute the offset of the Losses stated in the Setoff Notice); (iii) in the event an offset dispute is not resolved within 30 days after receipt of the Setoff Response, either any Investor Member Released Party or the Manager shall have the right to submit the offset dispute to binding arbitration pursuant to the expedited rules of the American Arbitration Association (the “AAA”), and the Investor Member Released Parties and the Manager hereby consent to each other’s right to compel arbitration pursuant to this Section 25; (iv) the arbitrator shall be appointed by the AAA and shall be an independent qualified arbitrator with no less than 10 years experience in the negotiation and implementation of management arrangements for senior living and senior health care communities (“Qualified Arbitrator”), who shall be the sole person to act as the arbitrator to resolve the offset dispute, (v) the appointment of the Qualified Arbitrator and the issuance of its final decision on the offset dispute shall take place all within 30 days of the submission of the dispute to arbitration (unless the parties jointly consent to a longer period of time); (vi) as part of the arbitration process, both parties will be required, on the same date and approximate time, to submit confidential settlement offers to the arbitrator which will not be disclosed to the other party until both sides have submitted their settlement offers; (vii) each of the parties shall pay one-half of the fees of the Qualified Arbitrator; and (viii) as part of the Qualified Arbitrator’s ruling, the Qualified Arbitrator shall award reasonable attorneys’ fees and costs to the party whose settlement offer is closer to the award entered by the Qualified Arbitrator. If the arbitration procedure set forth in this Section 25 has been used three (3) or more times in any twelve (12) month period and any Investor Member Released Party has been the “losing party” (i.e., the party who has been required to pay the other party’s attorneys’ fees and costs) in at least three (3) of such proceedings, no Investor Member Released Party shall have any further right to offset against any Management Fees pursuant to Section 23 hereof and the Investor Member shall not have the right to pre-approve the payment of any Management Fees pursuant to Section 4 of the MOMA (it being understood, however, that the Investor Member shall retain the right to dispute the payment of any Management Fees after they have been received by Manager).

     26.     Right to Cure. No party shall have the right to claim that another party hereto (the “Breaching Party”) is in breach or has failed to perform hereunder unless written notice of such alleged breach or failure to perform has been delivered to the Breaching Party and such Breaching Party has failed to cure such breach or failure to perform within ten (10) days of receipt of such notice; provided, however, the provisions of this Section 26 shall not apply to breaches or failures to perform that are incapable of being cured or to breaches or failures to

15

perform with respect to which the non-Breaching Party does not have actual knowledge at the time such breach or failure to perform occurs.

     27.     Construction of Agreement. It is understood and acknowledged that this Agreement shall not be construed in favor of or against any Party hereto by reason of the extent to which any Party or its counsel has participated in the drafting of this Agreement. The terms “include,” “including” and other similar terms are not limiting.

     28.     Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Parties’ respective successors and assigns.

     29.     Governing Laws. This Agreement shall be governed by and construed in accordance with the federal laws of the United States of America and internal laws of the State of Delaware applicable to contracts made and to be performed in such state (without regard to the principle of conflicts of law applicable under Delaware law).

     30.     Waiver of Jury Trial. To the maximum extent permitted by law, the Parties hereby knowingly, voluntarily and intentionally WAIVE ANY RIGHT TO A TRIAL BY JURY in respect of any action, cause of action, claim, demand or proceeding arising out of, under or in connection with this Agreement or the transactions related hereto, or any course of conduct, course of dealing, statements (whether oral or written) or actions of any Party, in each case whether now existing or hereafter arising, and whether sounding in contract, tort, or otherwise.

     31.     Costs. Except as otherwise provided expressly in this Agreement, each Party will bear its own costs and expenses incurred under and in connection with this Agreement.

     32.     Time of Essence. Time is of the essence of this Agreement and each provision of this Agreement.

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     IN WITNESS WHEREOF, the Parties have entered into this Agreement as of the date first above-written.

		
	SUNRISE SENIOR LIVING 

INVESTMENTS, INC. 
	 
	By: 	/s/ Anne H. Stuart 
	 	Name: Anne H. Stuart

Title: Vice President
	 	
	 
	SUNRISE SENIOR LIVING 

MANAGEMENT, INC. 
	 
	By: 	/s/ Anne H. Stuart 
	 	Name: Anne H. Stuart
	 	Title: Vice President
	 
	 
	SUNRISE SENIOR LIVING, INC. 
	 
	By: 	/s/ D. Gregory Neeb
	 	Name: D. Gregory Neeb

Title: Chief Investment Officer
	 	
	
	US SENIOR LIVING INVESTMENTS, LLC 
	 
	By: 	/s/ Jill A. Russo 
	 	Name: Jill A. Russo

Title: Vice President
	 	
	 
	SUNRISE IV SENIOR LIVING 

HOLDINGS, LLC 
	 
	By: 	         US Senior Living Investments, LLC, as 
	 	         Investor Member pursuant to Section 
	 	         10.6(b) of the Operating Agreement 
	 
	 
	By: 	/s/ Jill A. Russo 
	 	Name: Jill A. Russo

Title: Vice President

17

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