Document:

exv10w42

 

Exhibit 10.42

FIRST AMENDMENT TO CREDIT AGREEMENT

     THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Agreement”) is made as of the 6th day of
March, 2006 between SUNRISE SENIOR LIVING, INC. a Delaware corporation (the “Company”), and BANK OF
AMERICA, N.A., as Administrative Agent, Swing Line Lender and Letter of Credit Issuer (the
“Administrative Agent”) for itself and certain additional lenders who are or shall be from time to
time participating as lenders pursuant to the Credit Agreement as hereinafter defined (collectively
with the Administrative Agent, the “Lenders”).

RECITALS

     A. The Lenders have made a Credit Facility available to the Company in the maximum principal
sum at any one time outstanding of $250,000,000.

     B. The Credit Facility is governed by a Credit Agreement dated December 2, 2005 (as amended,
modified, substituted, extended and renewed from time to time the “Credit Agreement”) by and
between the Company and the Lenders.

     C. The Credit Facility is guaranteed by the Guarantors pursuant to the terms of the Credit
Agreement.

     D. The Company has requested and the Lenders have agreed to modify certain provisions of the
Credit Agreement, and to add a wholly owned subsidiary of the Company, Karrington Operating
Company, Inc., an Ohio corporation (“Karrington”) as a Designated Borrower.

     E. As a condition precedent to the agreements referenced above, the Administrative Agent has
required that this Agreement be executed and delivered to the Administrative Agent on behalf of the
Lenders.

     NOW, THEREFORE, in consideration of the premises, the mutual agreements herein contained, and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Administrative Agent hereby agree as follows:

     1. The above Recitals are a part of this Agreement. Unless otherwise expressly defined in
this Agreement, terms defined in the Credit Agreement shall have the same meaning under this
Agreement.

     2. The Credit Agreement is hereby amended as follows:

     (a) The following defined terms are hereby added to Section 1.1:

     “Bond Letter of Credit” means the Letter of Credit in the form attached
hereto as Exhibit J hereto.

 

 

     “Bond Letter of Credit Expiration Date” means November 5, 2009.

     “Bonds” means the Allegheny County Industrial Development Authority’s
Residential Rental Development Revenue Bonds, 1996 Series A (Karrington of South
Hills Assisted Living Facility Project).

     “Indenture” means the Trust Indenture dated as of May 1, 1996 from the
Allegheny County Industrial Development Authority to PNC Bank, Ohio, National
Association, as predecessor to J.P. Morgan Trust Company, National Association, as
Trustee in connection with the Bonds.

          (b) The following defined term in Section 1.1 is hereby amended and restated as follows:

     “Letter of Credit” means any standby letter of credit issued hereunder
and the Bond Letter of Credit and shall include the Existing Letters of Credit.
Letters of Credit may be issued in Dollars or in an Alternative Currency.

          (c) Section 2.3(a)(i) is hereby amended and restated as follows:

               2.3(a) The Letter of Credit Commitment.

               (i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer
agrees, in reliance upon the agreements of the Lenders set forth in this Section
2.3, (1) from time to time on any Business Day during the period from the Closing
Date until the Letter of Credit Expiration Date, to issue Letters of Credit
denominated in Dollars or in one or more Alternative Currencies in any amount
greater than or equal to $10,000 for the account of the Company, or any of the
Borrowers and to amend or extend Letters of Credit previously issued by it, in
accordance with subsection (b) below, and (2) to honor drawings under the Letters of
Credit; and (B) the Lenders severally agree to participate in Letters of Credit
issued for the account of the Company or any of the Borrowers and any drawings
thereunder; provided that after giving effect to any L/C Credit Extension with
respect to any Letter of Credit, (x) the Total Outstandings shall not exceed the
Aggregate Commitments, (y) the aggregate Outstanding Amount of the Committed Loans
of any Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of
all L/C Obligations, plus such Lender’s Applicable Percentage of the Outstanding
Amount of all Swing Line Loans shall not exceed such Lender’s Commitment, and (z)
the Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit
Sublimit; and provided further that the Outstanding Amount of the L/C Obligations in
an Alternative Currency plus the outstanding Alternative Currency Loans shall not
exceed the Alternative Currency Sublimit. Each request by the Company for the
issuance or amendment of a Letter of Credit shall be deemed to be a representation
by the Company that the L/C Credit Extension so requested complies with the
conditions set forth in the provisos to the preceding sentence. Within the
foregoing limits, and subject to the terms and conditions hereof, the ability of the
Company or any of the

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Borrowers to obtain Letters of Credit shall be fully revolving, and accordingly
the Company may, during the foregoing period, obtain Letters of Credit to replace
Letters of Credit that have expired or that have been drawn upon and reimbursed.
The Lenders hereby agree to issue the Bond Letter of Credit in connection with the
Bonds and with an initial expiration date of the Bond Letter of Credit Expiration
Date. All Existing Letters of Credit shall be deemed to have been issued pursuant
hereto, and from and after the Closing Date shall be subject to and governed by the
terms and conditions hereof.

          (d) The following sub-section (v) is hereby added to Section 2.3(b):

          2.3(b)(v) The Lenders acknowledge that the Bond Letter of Credit permits the
automatic reinstatement of all or a portion of the stated amount thereof after any
drawing thereunder pursuant to its terms. The Company shall not be required to make
a specific request to the L/C Issuer to permit such reinstatement. The Lenders
shall be deemed to have authorized (but may not require) the L/C Issuer to reinstate
all or a portion of the stated amount thereof in accordance with the provisions of
the Bond Letter of Credit.

          (e) Exhibit F is hereby replaced in its entirety with the form of Exhibit F
attached hereto.

          (f) Sections 2.14(a), 2.14(d) and 2.14(e) are hereby amended and restated as follows:

          2.14(a) The Company may at any time, upon not less than fifteen (15) Business
Days’ notice from the Company to the Administrative Agent (or such shorter period as
may be agreed by the Administrative Agent in its sole discretion), designate
any Subsidiary of the Company (an “Applicant Borrower”) as a
Designated Borrower to receive Loans in an Alternative Currency or to have Letters
of Credit issued hereunder by delivering to the Administrative Agent (which shall
promptly deliver counterparts thereof to each Lender) a duly executed notice and
agreement in substantially the form of Exhibit G (a “Designated Borrower
Request and Assumption Agreement”). The parties hereto acknowledge and agree
that prior to any Applicant Borrower becoming entitled to utilize the credit
facilities provided for herein the Administrative Agent and the Lenders shall have
received such supporting resolutions, incumbency certificates, opinions of counsel
and other documents or information, in form, content and scope reasonably
satisfactory to the Administrative Agent, as may be required by the Administrative
Agent or the Required Lenders in their sole discretion, and Notes signed by such new
Borrowers to the extent any Lenders so require. If the Administrative Agent and the
Required Lenders agree that an Applicant Borrower shall be entitled to receive Loans
in an Alternative Currency or to have Letters of Credit issued hereunder, then
promptly following receipt of all such requested resolutions, incumbency
certificates, opinions of counsel and other documents or information, the
Administrative Agent shall send a notice in substantially the form of Exhibit
H (a “Designated Borrower Notice”) to the Company and the Lenders

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specifying the effective date upon which the Applicant Borrower shall
constitute a Designated Borrower for purposes hereof, whereupon each of the Lenders
agrees to permit such Designated Borrower to receive Loans or to have Letters of
Credit issued hereunder, on the terms and conditions set forth herein, and each of
the parties agrees that such Designated Borrower otherwise shall be a Borrower for
all purposes of this Agreement; provided that no Committed Loan Notice or
Letter of Credit Application may be submitted by or on behalf of such Designated
Borrower until the date five (5) Business Days after such effective date. For any
Designated Borrower established under the Laws of the United Kingdom or any other
Foreign Obligor, if Administrative Agent so requires, the Company shall complete the
Administrative Agent’s customary forms before any borrowing by such Designated
Borrower.

          (d) The Company may from time to time, upon not less than fifteen (15) Business
Days’ notice from the Company to the Administrative Agent (or such shorter period as
may be agreed by the Administrative Agent in its sole discretion), terminate a
Designated Borrower’s status as such, provided that there are no outstanding
Loans payable by such Designated Borrower and no Letters of Credit outstanding for
the account of such Designated Borrower, or other amounts payable by such Designated
Borrower on account of any Loans made to it or Letters of Credit issued for its
account, as of the effective date of such termination. The Administrative Agent will
promptly notify the Lenders of any such termination of a Designated Borrower’s
status.

          (e) Prior to any advance of a Loan or issuance of a Letter of Credit for a
Designated Borrower, the Company shall execute and deliver to the Administrative
Agent a Company Guaranty guarantying all obligations of such Designated Borrower for
the benefit of the Lenders.

          (g) The following new Section 9.4 is hereby added:

          Section 9.4 Remedies Under the Indenture.

          If an Event of Default occurs or is occurring the L/C Issuer shall have the
right to exercise the rights and remedies of the Bank under the terms of the
Indenture. In exercising the rights and remedies of the Bank under the Indenture,
the L/C issuer shall follow the direction of the Administrative Agent.

     3. As conditions precedent to the issuance of the Bond Letter of Credit, the Company shall
have complied with all applicable conditions of Section 2.14 for designation of Karrington as a
Designated Borrower including but not limited to execution and delivery of a Designated Borrower
Request and Assumption Agreement, a Designated Borrower Notice and a Company Guaranty, and delivery
of organizational documents, resolutions, incumbency certificates, and opinions of counsel for
Karrington and the Company. The Company and Karrington shall also have complied with all
requirements of the documents governing the Bonds for replacement of letter of credit number
SM416676C issued by First Union National Bank as predecessor to Wachovia Bank, National Association
for the benefit of the Chase Manhattan Trust Company, National Association, Trustee for the account
of Karrington with the Bond Letter of Credit.

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     4. Except as specifically set forth herein, the terms, provisions and covenants of the Credit
Agreement, including, but not limited to, all financial covenants and definitions related thereto,
are hereby ratified and confirmed and remain in full force and effect. The parties acknowledge
that regardless of the provisions Section 2.3(iii)(E) of the Credit Agreement, the L/C Issuer has
agreed to issue the Bond Letter of Credit containing certain provisions for automatic reinstatement
after drawings thereunder.

     5. This Agreement may be executed in any number of duplicate originals or counterparts, each
of such duplicate originals or counterparts shall be deemed to be an original and all taken
together shall constitute but one and the same instrument.

     6. By their signatures below, the Guarantors consent to the transactions contemplated by and
the agreements made by the Company under this Agreement and ratify, confirm and reissue their
guaranty as set forth in the Credit Agreement.

[SIGNATURES APPEAR ON FOLLOWING PAGES]

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered under seal by their duly authorized representatives as of the date and year first written
above.

	 	 	 	 	 
	 	COMPANY:

SUNRISE SENIOR LIVING, INC.

 	 
	 	By:  	/s/ Carl G. Adams  	(Seal) 
	 	 	Carl G. Adams 	 
	 	 	Treasurer 	 
	 
	 	GUARANTORS:

SUNRISE SENIOR LIVING MANAGEMENT, INC.

 	 
	 	By:  	/s/ James S. Pope
 	(Seal) 
	 	 	James S. Pope 	 
	 	 	Vice President 	 
	 
	 	SUNRISE SENIOR LIVING INVESTMENTS, INC.

 	 
	 	By:  	/s/ James S. Pope
 	(Seal) 
	 	 	James S. Pope 	 
	 	 	Vice President 	 
	 
	 	SUNRISE DEVELOPMENT, INC.

 	 
	 	By:  	/s/ James S. Pope
 	(Seal) 
	 	 	James S. Pope 	 
	 	 	Vice President 	 
	 
	 	SUNRISE SENIOR LIVING SERVICES, INC.

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

S-1

 

	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as

Administrative Agent

 	 
	 	By:  	/s/ Kristine Thennes
 	(Seal) 
	 	 	Name:  	Kristine Thennes 	 
	 	 	Title:  	Vice President 	 

S-2

 

	 	 	 	 	 

	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as a Lender, L/C Issuer and Swing Line
Lender

 	 
	 	By:  	/s/ Michael J. Landini
 	(Seal) 
	 	 	Michael J. Landini 	 
	 	 	Senior Vice President 	 

S-3

 

	 	 	 	 	 

	 	 	 	 	 
	 	WACHOVIA BANK, NATIONAL ASSOCIATION, as a Lender

 	 
	 	By:  	/s/ Frank S. Kaulback III
 	 
	 	 	Frank S. Kaulback III 	 
	 	 	Senior Vice President 	 

S-4

 

	 	 	 	 	 

	 	 	 	 	 
	 	LASALLE BANK NATIONAL ASSOCIATION, as a Lender

 	 
	 	By:  	/s/ Sam L. Dendinos
 	 
	 	 	Sam L. Dendinos 	 
	 	 	First Vice President 	 

S-5

 

	 	 	 	 	 

	 	 	 	 	 
	 	HSBC BANK USA, N.A., as a Lender

 	 
	 	By:  	/s/ Thomas M. Neale
 	 
	 	 	Thomas M. Neale 	 
	 	 	Senior Vice President 	 

S-6

 

	 	 	 	 	 

	 	 	 	 	 
	 	MANUFACTURERS AND TRADERS TRUST COMPANY, as a Lender

 	 
	 	By:  	/s/ Sharon P. O’Brien
 	 
	 	 	Sharon P. O’Brien 	 
	 	 	Vice President 	 

S-7

 

	 	 	 	 	 

	 	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION, as a Lender

 	 
	 	By:  	/s/ Michael J. Elehwany
 	 
	 	 	Michael J. Elehwany 	 
	 	 	Vice President 	 

S-8

 

	 	 	 	 	 

	 	 	 	 	 
	 	CHEVY CHASE BANK, F.S.B., as a Lender

 	 
	 	By:  	/s/ Ellen-Elizabeth B. Lee
 	 
	 	 	Ellen-Elizabeth B. Lee 	 
	 	 	Assistant Vice President 	 

S-9

 

	 	 	 	 	 

	 	 	 	 	 
	 	FARMERS & MECHANICS BANK, as a Lender

 	 
	 	By:  	/s/ William W. Drummond
 	 
	 	 	William W. Drummond 	 
	 	 	Vice President 	 

S-10

 

	 	 	 	 	 

	 	 	 	 	 
	 	FIRST HORIZON BANK a division of FIRST TENNESSEE
BANK, N.A., as a Lender

 	 
	 	By:  	 	 
	 	 	Blake Bowers 	 
	 	 	Vice President 	 

S-11

 

	 	 	 	 	 

EXHIBIT F

FORM OF COMPANY GUARANTY

MASTER CONTINUING GUARANTY

     FOR VALUE RECEIVED, the sufficiency of which is hereby acknowledged, and in consideration of
credit and/or financial accommodation heretofore or hereafter from time to time made or granted to
the subsidiaries of SUNRISE SENIOR LIVING, INC., a Delaware corporation, identified on Schedule A
hereto, as amended or supplemented or deemed amended or supplemented from time to time in
accordance with Paragraph 19 below (each a “Designated Borrower” and collectively,
the “Designated Borrowers”) by BANK OF AMERICA, N.A. and any other subsidiaries or
affiliates of Bank of America Corporation and its successors and assigns as Administrative Agent
for the Lenders (collectively the “Lenders”), the undersigned Guarantor (the
“Guarantor”) hereby furnishes its guaranty of the Guaranteed Obligations (as hereinafter
defined) as follows:

     1. Guaranty. The Guarantor hereby absolutely and unconditionally guarantees, as a guaranty of
payment and performance and not merely as a guaranty of collection, prompt payment when due,
whether at stated maturity, by required prepayment, upon acceleration, demand or otherwise, and at
all times thereafter, of any and all existing and future indebtedness and liabilities of every
kind, nature and character, direct or indirect, absolute or contingent, liquidated or unliquidated,
voluntary or involuntary and whether for principal, interest, premiums, fees indemnities, damages,
costs, expenses or otherwise, of each Borrower to the Lenders arising in connection with the credit
facilities governed by the Credit Agreement dated as of December 2, 2005 among the Guarantor as
Borrower and the Administrative Agent as Administrative Agent, Serving Line Lender and L/C Issuer
(as amended, restated or substituted from time to time, the “Credit Agreement”) including
without limitation, indebtedness and liabilities arising under any rate swap transaction, basis
swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or
option, bond option, interest rate option, spot or forward foreign exchange transaction, cap
transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option, credit swap or default transaction, or any other similar
transaction (including an option to enter into any of the foregoing) (each, a “Transaction”
and collectively, the “Transactions”) with any Borrower (including any renewals, extensions
or modifications thereof) arising out of or relating to any and all Transactions, including,
without limitation, under any master agreements thereby relating thereto or governing any such
Transaction, entered into between the Lenders and any Borrower, (together with any related
schedules, as amended, supplemented, superseded or replaced from time to time, each a “Master
Agreement” and collectively, the “Master Agreements”), together with any related
schedules thereto and any and all transactions and the related confirmations subject thereto or
governed (including all renewals, extensions, amendments, refinancings and other modifications
thereof and all costs, attorneys’ fees and expenses incurred by the Lenders in connection with the
collection or enforcement thereof), and whether recovery upon such indebtedness and liabilities may
be or hereafter become unenforceable or shall be an allowed or disallowed claim under any
proceeding or case commenced by or against the Guarantor or any Borrower under the Bankruptcy Code
(Title 11, United States Code), any successor statute or any other liquidation, conservatorship,
bankruptcy,

 

 

assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors generally
(collectively, “Debtor Relief Laws”), and including interest that accrues after the
commencement by or against any Borrower of any proceeding under any Debtor Relief Laws
(collectively, the “Guaranteed Obligations”). The Lenders’s books and records showing the
amount of the Guaranteed Obligations shall be admissible in evidence in any action or proceeding,
and shall be binding upon the Guarantor and conclusive for the purpose of establishing the amount
of the Guaranteed Obligations. This Guaranty shall not be affected by the genuineness, validity,
regularity or enforceability of the Guaranteed Obligations or any instrument or agreement
evidencing any Guaranteed Obligations, or by the existence, validity, enforceability, perfection,
non-perfection or extent of any collateral therefor, or by any fact or circumstance relating to the
Guaranteed Obligations which might otherwise constitute a defense to the obligations of the
Guarantor under this Guaranty, and the Guarantor hereby irrevocably waives any defenses it may now
have or hereafter acquire in any way relating to any or all of the foregoing.

     2. No Setoff or Deductions; Taxes; Payments. The Guarantor represents and warrants that it is
organized and resident in the United States of America. The Guarantor shall make all payments
hereunder without setoff or counterclaim and free and clear of and without deduction for any taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now or hereafter imposed or levied by any jurisdiction or any political
subdivision thereof or taxing or other authority therein unless the Guarantor is compelled by law
to make such deduction or withholding. If any such obligation (other than one arising with respect
to taxes based on or measured by the income or profits of the Lenders) is imposed upon the
Guarantor with respect to any amount payable by it hereunder, the Guarantor will pay to the
Lenders, on the date on which such amount is due and payable hereunder, such additional amount in
U.S. dollars as shall be necessary to enable the Lenders to receive the same net amount which the
Lenders would have received on such due date had no such obligation been imposed upon the
Guarantor. The Guarantor will deliver promptly to the Administrative Agent certificates or other
valid vouchers for all taxes or other charges deducted from or paid with respect to payments made
by the Guarantor hereunder. The obligations of the Guarantor under this paragraph shall survive
the payment in full of the Guaranteed Obligations and termination of this Guaranty. At the
Lenders’s option, all payments under this Guaranty shall be made in the United States. The
obligations hereunder shall not be affected by any acts of any legislative body or governmental
authority affecting any Borrower, including but not limited to, any restrictions on the conversion
of currency or repatriation or control of funds or any total or partial expropriation of any
Borrower’s property, or by economic, political, regulatory or other events in the countries where
any Borrower is located.

     3. Rights of Lenders. The Guarantor consents and agrees that the Lenders may, at any time and
from time to time, without notice or demand, and without affecting the enforceability or continuing
effectiveness hereof: (a) amend, extend, renew, compromise, discharge, accelerate or otherwise
change the time for payment or the terms of the Guaranteed Obligations or any part thereof; (b)
take, hold, exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any
security for the payment of this Guaranty or any Guaranteed Obligations; (c) apply such security
and direct the order or manner of sale thereof as the Lenders in their discretion may determine;
and (d) release or substitute one or more of any endorsers or
other guarantors of any of the Guaranteed Obligations. Without limiting the generality of the
foregoing, the Guarantor consents to the taking of, or failure to take, any action which might in
any manner or to any extent vary the risks of the Guarantor under this Guaranty or which, but for
this provision, might operate as a discharge of the Guarantor.

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     4. Certain Waivers. The Guarantor waives (a) any defense arising by reason of any disability
or other defense of any Borrower or any other guarantor, or the cessation from any cause whatsoever
(including any act or omission of the Lenders) of the liability of any Borrower; (b) any defense
based on any claim that the Guarantor’s obligations exceed or are more burdensome than those of any
Borrower; (c) the benefit of any statute of limitations affecting the Guarantor’s liability
hereunder; (d) any right to require the Lenders to proceed against any Borrower, proceed against or
exhaust any security for the Indebtedness, or pursue any other remedy in the Lenders’ power
whatsoever; (e) any benefit of and any right to participate in any security now or hereafter held
by the Lenders; and (f) to the fullest extent permitted by law, any and all other defenses or
benefits that may be derived from or afforded by applicable law limiting the liability of or
exonerating guarantors or sureties.

     The Guarantor expressly waives all setoffs and counterclaims and all presentments, demands for
payment or performance, notices of nonpayment or nonperformance, protests, notices of protest,
notices of dishonor and all other notices or demands of any kind or nature whatsoever with respect
to the Guaranteed Obligations, and all notices of acceptance of this Guaranty or of the existence,
creation or incurrence of new or additional Guaranteed Obligations.

     5. Obligations Independent. The obligations of the Guarantor hereunder are those of primary
obligor, and not merely as surety, and are independent of the Guaranteed Obligations and the
obligations of any other guarantor, and a separate action may be brought against the Guarantor to
enforce this Guaranty whether or not any Borrower or any other person or entity is joined as a
party.

     6. Subrogation. The Guarantor shall not exercise any right of subrogation, contribution,
indemnity, reimbursement or similar rights with respect to any payments it makes under this
Guaranty until all of the Guaranteed Obligations and any amounts payable under this Guaranty have
been indefeasibly paid and performed in full and any commitments of the Lenders or facilities
provided by the Lenders with respect to the Guaranteed Obligations are terminated. If any amounts
are paid to the Guarantor in violation of the foregoing limitation, then such amounts shall be held
in trust for the benefit of the Lenders and shall forthwith be paid to the Administrative Agent to
reduce the amount of the Guaranteed Obligations, whether matured or unmatured.

     7. Termination; Reinstatement. This Guaranty is a continuing and irrevocable guaranty of all
Guaranteed Obligations now or hereafter existing and shall remain in full force and effect until
all Guaranteed Obligations and any other amounts payable under this Guaranty are indefeasibly paid
in full in cash and any commitments of the Lenders or facilities provided by the Lenders with
respect to the Guaranteed Obligations are terminated. Notwithstanding the foregoing, this Guaranty
shall continue in full force and effect or be revived, as the case may be, if any payment by or on
behalf of any Borrower or the Guarantor is made, or the Lenders exercises its right of setoff, in
respect of the Guaranteed Obligations and such payment or the

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proceeds of such setoff or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any settlement entered
into by the Lenders in its discretion) to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under any Debtor Relief Laws or otherwise, all as if such payment
had not been made or such setoff had not occurred and whether or not the Lenders are in possession
of or have released this Guaranty and regardless of any prior revocation, rescission, termination
or reduction. The obligations of the Guarantor under this paragraph shall survive termination of
this Guaranty.

     8. Subordination. The Guarantor hereby subordinates the payment of all obligations and
indebtedness of the Borrowers owing to the Guarantor, whether now existing or hereafter arising,
including but not limited to, any obligation of the Borrowers to the Guarantor as subrogee of the
Lenders or resulting from the Guarantor’s performance under this Guaranty, to the indefeasible
payment in full in cash of all Guaranteed Obligations. If the Administrative Agent so requests,
any such obligation or indebtedness of the Borrowers to the Guarantor shall be enforced and
performance received by the Guarantor as trustee for the Lenders and the proceeds thereof shall be
paid over to the Administrative Agent on account of the Guaranteed Obligations, but without
reducing or affecting in any manner the liability of the Guarantor under this Guaranty.

     9. Stay of Acceleration. In the event that acceleration of the time for payment of any of the
Guaranteed Obligations is stayed, in connection with any case commenced by or against the Guarantor
or any Borrower under any Debtor Relief Laws, or otherwise, all such amounts shall nonetheless be
payable by the Guarantor immediately upon demand by the Lenders.

     10. Expenses. The Guarantor shall pay on demand all reasonable out-of-pocket expenses
(including reasonable attorneys’ fees and expenses and the allocated cost and disbursements of
internal legal counsel) in any way relating to the enforcement or protection of the Lenders’ rights
under this Guaranty or in respect of the Guaranteed Obligations, including any incurred during any
“workout” or restructuring in respect of the Guaranteed Obligations and any incurred in the
preservation, protection or enforcement of any rights of the Lenders in any proceeding any Debtor
Relief Laws. The obligations of the Guarantor under this paragraph shall survive the payment in
full of the Guaranteed Obligations and termination of this Guaranty.

     11. Miscellaneous. No provision of this Guaranty may be waived, amended, supplemented or
modified, except by a written instrument executed by the Lenders and the Guarantor. No failure by
the Lenders to exercise, and no delay in exercising, any right, remedy or power hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy or power
hereunder preclude any other or further exercise thereof or the exercise of any other right, power
or remedy. The remedies herein provided are cumulative and not exclusive of any remedies provided
by law or in equity. The unenforceability or invalidity of any provision of this Guaranty shall
not affect the enforceability or validity of any other provision herein. Unless otherwise agreed
by the Lenders and the Guarantor in writing, this Guaranty is not intended to supersede or
otherwise affect any other guaranty now or hereafter given by the Guarantor for the benefit of the
Lenders or any term or provision thereof.

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     12. Condition of Borrowers. The Guarantor acknowledges and agrees that it has the sole
responsibility for, and has adequate means of, obtaining from each Borrower and any other guarantor
such information concerning the financial condition, business and operations of such Borrower and
any such other guarantor as the Guarantor requires, and that the Lenders have no duty, and the
Guarantor is not relying on the Lenders at any time, to disclose to the Guarantor any information
relating to the business, operations or financial condition of any Borrower or any other guarantor
(the guarantor waiving any duty on the part of the Lenders to disclose such information and any
defense relating to the failure to provide the same).

     13. Setoff. If and to the extent any payment is not made when due hereunder, the Lenders may
setoff and charge from time to time any amount so due against any or all of the Guarantor’s
accounts or deposits with the Lenders.

     14. Representations and Warranties. The Guarantor represents and warrants that (a) it is duly
organized and in good standing under the laws of the jurisdiction of its organization and has full
capacity and right to make and perform this Guaranty, and all necessary authority has been
obtained; (b) this Guaranty constitutes its legal, valid and binding obligation enforceable in
accordance with its terms; (c) the making and performance of this Guaranty does not and will not
violate the provisions of any applicable law, regulation or order, and does not and will not result
in the breach of, or constitute a default or require any consent under, any material agreement,
instrument, or document to which it is a party or by which it or any of its property may be bound
or affected; and (d) all consents, approvals, licenses and authorizations of, and filings and
registrations with, any governmental authority required under applicable law and regulations for
the making and performance of this Guaranty have been obtained or made and are in full force and
effect.

     15. Indemnification and Survival. Without limitation on any other obligations of the
Guarantor or remedies of the Lenders under this Guaranty, the Guarantor shall, to the fullest
extent permitted by law, indemnify, defend and save and hold harmless the Lenders from and against,
and shall pay on demand, any and all damages, losses, liabilities and expenses (including
attorneys’ fees and expenses and the allocated cost and disbursements of internal legal counsel)
that may be suffered or incurred by the Lenders in connection with or as a result of any failure of
any Guaranteed Obligations to be the legal, valid and binding obligations of the Borrowers
enforceable against the Borrowers in accordance with their respective terms. The obligations of
the Guarantor under this paragraph shall survive the payment in full of the Guaranteed Obligations
and termination of this Guaranty.

     16. GOVERNING LAW; Assignment; Jurisdiction; Notices. THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE COMMONWEALTH OF VIRGINIA. This Guaranty
shall (a) bind the Guarantor and its successors and assigns, provided that the Guarantor may not
assign its rights or obligations under this Guaranty without the prior written consent of the
Lenders (and any attempted assignment without such consent shall be void), and (b) inure to the
benefit of the Lenders and their successors and assigns and the Lenders may, without notice to the
Guarantor and without affecting the Guarantor’s obligations hereunder, assign, sell or grant
participations in the Guaranteed Obligations and this Guaranty, in whole or in part. The Guarantor
hereby irrevocably (i) submits to the non-exclusive jurisdiction of any United States

5

 

Federal or State court sitting in Fairfax County, Virginia in any action or proceeding arising
out of or relating to this Guaranty, and (ii) waives to the fullest extent permitted by law any
defense asserting an inconvenient forum in connection therewith. Service of process by the Lenders
in connection with such action or proceeding shall be binding on the Guarantor if sent to the
Guarantor pursuant to the terms of the Credit Agreement. The Guarantor agrees that the Lenders may
disclose to any assignee of or participant in, or any prospective assignee of or participant in,
any of its rights or obligations of all or part of the Guaranteed Obligations any and all
information in the Lenders’ possession concerning the Guarantor, this Guaranty and any security for
this Guaranty pursuant to the terms of the Credit Agreement.

     17. WAIVER OF JURY TRIAL; FINAL AGREEMENT. TO THE EXTENT ALLOWED BY APPLICABLE LAW, THE
GUARANTOR AND THE LENDERS EACH IRREVOCABLY WAIVES TRIAL BY JURY WITH RESPECT TO ANY ACTION, CLAIM,
SUIT OR PROCEEDING ON, ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE GUARANTEED OBLIGATIONS.
THIS GUARANTY REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

     18. Dispute Resolution. Disputes arising hereunder shall be subject to arbitration to the
extent provided under the terms of the Credit Agreement.

     19. Amending Schedule A. From time to time the Guarantor and the Administrative Agent may
amend or supplement Schedule A hereto to add or delete Borrowers or to change other information
thereon by a written instrument executed by the Lenders and the Guarantor. Any such amended
Schedule A shall be deemed to replace or supplement, as applicable, the prior Schedule A without
further action by any party hereto; provided that (i) Schedule A shall be automatically
deemed amended to include any extensions of credit extended to any subsidiary of the Guarantor in
reliance on this Guaranty, (ii) no amendment shall terminate this Guaranty as to Guaranteed
Obligations which remain outstanding or to extensions of credit made pursuant to existing
commitments which would have been Guaranteed Obligations but for such amendment (including, in each
case, all renewals, compromises, extensions and modifications of such Guaranteed Obligations),
(iii) no amendment shall limit the rights of the Lenders under paragraph 7 hereof, and (iv) no
amendment shall in itself be deemed a commitment by the Lenders to extend any credit.

     20. Special Agreement With Respect To Debt Restructuring. Notwithstanding any limitation on
liability set forth in Paragraph 1 to the contrary, if the Guaranteed Obligations are made subject
to a debt restructuring arrangement between a country and its creditors or creditors of persons or
entities of such country, and as a result thereof the Lenders, as holders of such Guaranteed
Obligations and other credit facilities to such country, persons or entities of such country, shall
agree to provide any new credit facilities, the Guarantor shall fund (and be the beneficial owner
of) that amount of such new credit facilities which is calculated by (i) dividing the face value of
its Guaranteed Obligations by the aggregate amount of the Lenders’ credit facilities made part of
the restructuring arrangement and (ii) multiplying the result by the amount of such new credit
facilities. The Guarantor agrees to execute and deliver such

6

 

documents and take such actions as may be requested by the Lenders to effect the purposes of
this paragraph. The Administrative Agent agrees to provide the Guarantor with copies of the
relevant documents governing its participation in the restructuring arrangement and new credit
facilities and shall provide the Guarantor with the basis on which it has calculated the
Guarantor’s portion of such new credit facilities, which calculations shall be conclusive absent
manifest error.

     21. Foreign Currency. If the Administrative Agent so notifies the Guarantor in writing, at
the Lenders’ sole and absolute discretion, payments under this Guaranty shall be the U.S. Dollar
equivalent of the Guaranteed Obligations or any portion thereof, determined as of the date payment
is made. If any claim arising under or related to this Guaranty is reduced to judgment denominated
in a currency (the “Judgment Currency”) other than the currencies in which the Guaranteed
Obligations are denominated or the currencies payable hereunder (collectively the
“Obligations Currency”), the judgment shall be for the equivalent in the Judgment Currency
of the amount of the claim denominated in the Obligations Currency included in the judgment,
determined as of the date of judgment. The equivalent of any Obligations Currency amount in any
Judgment Currency shall be calculated at the spot rate for the purchase of the Obligations Currency
with the Judgment Currency quoted by the Lenders in the place of the Lenders’ choice at or about
8:00 a.m. on the date for determination specified above. The Guarantor shall indemnify the Lenders
and hold the Lenders harmless from and against all loss or damage resulting from any change in
exchange rates between the date any claim is reduced to judgment and the date of payment thereof by
the Guarantor or any failure of the amount of any such judgment to be calculated as provided in
this paragraph.

     Executed as of the 6th day of March, 2006.

	 	 	 	 	 
	 	SUNRISE SENIOR LIVING, INC.

 	 
	 	By:  	 	[SEAL] 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

7

 

	 	 	 	 	 

SCHEDULE A TO

COMPANY GUARANTY

     Subject to Paragraph 19 of the Master Continuing Guaranty to which this Schedule is or will be
attached, all obligations of the following entities to Bank of America, N.A., its affiliates and
subsidiaries, shall constitute Guaranteed Obligations guaranteed pursuant to the Company Guaranty:

	 	 	 	 	 
	 	Designated Borrowers:

Karrington Operating Company, Inc.

 	 
	 	 	 
	 	 	 
	 	 	 

8

 

	 	 	 	 	 

[MODEL LETTER AMENDING SCHEDULE A]

(May be sent from Bank to the Guarantor or vice versa)

                                                        , 200_

                                                                                

                                                                                

                                                                                

     Att:                                                                    

     Re:                                                                    
                Company Guaranty dated as of ______, 2006

Ladies and Gentleman:

     We refer to that certain Company Guaranty dated as of ______, 2006 made by Sunrise Senior
Living, Inc. (the “Guarantor”) in favor of Bank of America, N.A. and affiliates (as amended
from time to time, the “Guaranty;” terms not defined herein have the meanings assigned to
them in the Guaranty), pursuant to which the Guarantor guarantees the obligations of certain of its
subsidiaries and affiliates of Guarantor.

     Subject to Paragraph 18 of the Guaranty, the undersigned hereby confirm their agreement that
Schedule A to the Guaranty is hereby amended and restated as set forth in Schedule A hereto and all
references in the Guaranty and any other documents evidencing the Obligations shall refer to the
Guaranty as amended hereby. This letter may be executed in any number of counterparts and all of
such counterparts taken together shall be deemed to constitute but one and the same instrument.

	 	 	 	 	 
	 	Very truly yours,

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	Agreed and Accepted:
 	 	 
	 	 	 
	 	 	 	 
	By:  	 	 	 
	 	Title: 	 	 	 
	 	 	 	 

9

 

	 	 	 	 	 

Amended as of _______________

SCHEDULE A TO MASTER CONTINUING GUARANTY

     Subject to Paragraph 19 of the Company Guaranty to which this Schedule is or will be attached,
all obligations of the following entities to Bank of America, N.A., its affiliates and
subsidiaries, shall constitute Guaranteed Obligations guaranteed pursuant to the Company Guaranty.

	 	 	 	 	 
	 	Designated Borrowers:

Karrington Operating Company, Inc.

 	 
	 	 	 
	 	 	 
	 	 	 

10

 

	 	 	 	 	 

EXHIBIT J

FORM OF BOND LETTER OF CREDIT

11

 

IRREVOCABLE DIRECT PAY LETTER OF CREDIT

BANK OF AMERICA, N.A.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Issue/	 	Stated	 	Maximum Stated
	Letter of Credit No.	 	Effective Date	 	Expiration Date	 	Amount
	3079662
	 	March 6, 2006	 	November 5, 2009	 	 	$4,472,329	 

J.P. Morgan Trust Company,
 National
Association, as Trustee

Chase Financial Tower

250 West Huron Road, Suite 220

Cleveland, Ohio 44113

Attention: Corporate Trust Department

Ladies and Gentlemen:

     At the request and on the instructions of our customer, Karrington Operating Company, Inc., an
Ohio corporation (the “Borrower”), we hereby establish this irrevocable direct pay letter of credit
(the “Letter of Credit”) in the amount of $4,472,329 (the “Initial Stated Amount;” and, as the same
may from time to time be reduced and thereafter reinstated as hereinafter provided, the “Stated
Amount”), consisting of (i) the amount of $4,400,000 (as reduced and thereafter reinstated from
time to time as hereinafter provided, the “Principal Component”), which may be drawn upon with
respect to payment of the unpaid principal amount of, or portion of, the purchase price
corresponding to the principal of, the Bonds (as hereinafter defined), as certified to us, and (ii)
the amount of $72,329 (as reduced and thereafter reinstated from time to time as hereinafter
provided, the “Interest Component”), which may be drawn upon with respect to the payment of up to
50 days’ accrued interest on the Bonds or portion of the purchase price representing accrued
interest on the Bonds, in each case assuming a maximum interest rate of 12% per annum and computed
on the basis of the actual number of days elapsed over a year of 365 days (the “Maximum Rate”), as
certified to us, in your favor, as Trustee under that certain Trust Indenture dated as of May 1,
1996 (the “Indenture”), by and between you, as successor to PNC Bank, Ohio, National Association,
as Trustee, and the Allegheny County Industrial Development Authority (the “Issuer”), pursuant to
which the Issuer has issued and there remains outstanding $4,400,000 in aggregate principal amount
of its Residential Rental Development Revenue Bonds, 1996 Series A (Karrington of South Hills
Assisted Living Facility Project) (the “Bonds”). This Letter of Credit is effective immediately and
expires on the expiration date described below.

 

 

 

     Subject to the other provisions of this Letter of Credit, you or your transferee may obtain
the funds available under this Letter of Credit by presentment to us of your sight draft or drafts
drawn on Bank of America, N.A., Los Angeles, California. Each draft presented to us must be
accompanied by your certification substantially in the form of one or more of the Annexes described
below, as may be applicable to the type of drawing you are making (each such demand and
presentation, a “Drawing”). You must comply with all of the instructions in brackets in preparing
each such certification.

     1. Annex A (Periodic Interest Demand With Reinstatement Request). If you are
demanding funds with respect to a scheduled interest payment on the Bonds in accordance with the
Indenture, and such amount is to be reinstated immediately following the Drawing, your draft or
drafts should be accompanied by your Annex A certification.

     2. Annex B (“Principal and Interest Demand Without Reinstatement Request). If you are
demanding funds with respect to the payment of principal and interest on the Bonds in connection
with a partial redemption of Bonds in accordance with the Indenture, which amount is not to be
reinstated following the Drawing, your draft or drafts should be accompanied by your Annex B
certification.

     3. Annex C (Principal and Interest Demand). If you are demanding funds with respect to
the payment of principal and interest on the Bonds in connection with a purchase of the Bonds in
accordance with the Indenture (a “Liquidity Drawing”), your draft or drafts should be accompanied
by your Annex C certification.

     4. Annex D (Final Drawing). Any draft constituting your final Drawing under this
Letter of Credit must be accompanied by your Annex D certification. Only one draft accompanied by
an Annex D certification may be presented for payment against this Letter of Credit; upon any such
presentation, no further draft may be drawn and presented hereunder.

     In each case where we have received a draft as described above, your remittance instructions
and one or more of the certificates described above at or before 11:00 a.m., Los Angeles time
(hereinafter referred to as “Local Time”), on a Business Day (as defined below), we will make
payment by 7:00 a.m., Local Time, on the following Business Day. If we receive such items after
11:00 a.m., Local Time, on a Business Day, we will make payment by 7:00 a.m., Local Time, on the
second Business Day thereafter

     Demands for payment hereunder honored by the Bank shall not, in the aggregate, exceed the
Stated Amount, as the Stated Amount may have been reinstated by us as provided herein. Subject to
the preceding sentence, each Drawing honored by the Bank hereunder shall pro tanto reduce the
Stated Amount hereof, it being understood that after the effectiveness of any such reduction you
shall no longer have any right to make a Drawing hereunder in respect of the amount of such
principal and/or interest on the Bonds causing or corresponding to such reduction.

 

 

 

     Drafts honored by us under this Letter of Credit shall not exceed the Stated Amount available
to you under this Letter of Credit, as such amount may vary from time to time. Each draft honored
by us will reduce the Stated Amount available under this Letter of Credit. However, in the case of
a draft or drafts accompanied by your certification substantially in the form of Annex A and
presented in full compliance with the terms and conditions of this Letter of Credit, the Stated
Amount of this Letter of Credit shall, on the date each draft is honored by us, automatically be
reinstated by us, by an amount equal to the amount of that Drawing; after such reinstatement, the
Stated Amount of this Letter of Credit shall be the same as it was immediately prior to such
Drawing.

     Upon receipt by the Bank of a certificate substantially in the form of Annex E (Trustee
Certificate as to Remarketing) attached hereto from you, the Principal and/or Interest Components
of the Stated Amount shall be automatically reinstated in the amounts shown on such Annex E which
have been paid to the Bank.

     Notwithstanding anything contained herein to the contrary, this Letter of Credit shall not
apply to the payment of principal and interest payable with respect to any Bonds which are
registered in the name of the Issuer (“Issuer Bonds”) or in the name of the Borrower or an
affiliate of the Borrower (“Borrower Bonds”) or to the payment of principal and interest payable
with respect to any Bonds which are held by you as agent for the Bank pursuant to Section 4.05 of
the Indenture (“Pledged Bonds”).

     Each draft presented for payment against this Letter of Credit and each accompanying
certification must be dated the date of its presentation to us, and may be presented only on a
Business Day. As used in this Letter of Credit, “Business Day” shall mean any day other than a
Saturday, Sunday, legal holiday or a day on which banking institutions in Los Angeles, California
are authorized or required to close. Drafts must be marked conspicuously “Drawn under Bank of
America, N.A. Irrevocable Direct Pay Letter of Credit No. 3079662.” The certifications you are
required to submit to us along with your draft or drafts should be prepared either (i) in the form
of a letter on your letterhead signed by your officer or (ii) in the form of a facsimile copy of
such a letter sent by one of your officers to: (213) 240-6989.

     Other than the foregoing provisions for communication by facsimile copy, communications with
respect to this Letter of Credit shall be in writing and shall be addressed to us at Bank of
America, N.A., Trade Operation Center, Mail Code CA9-705-07-05, 1000 West Temple Street, Los
Angeles, California 90012-1514, Attention: Standby Letter of Credit Dept, specifically referring
to the number and date of this Letter of Credit.

     If a demand for payment made by you hereunder does not, in any instance, conform to the terms
and conditions of this Letter of Credit, we shall give you prompt notice that the purported demand
was not effected in accordance with this Letter of Credit, stating the reasons therefor and that
we are holding any documents at your disposal or are returning them to you, as

 

 

we may elect. Upon being notified that the purported demand was not effected in conformity with
this Letter of Credit, you may attempt to correct any such nonconforming demand for payment if, and
to the extent that, you as Trustee are entitled (without regard to the provisions of this sentence)
and able to do so.

     By paying you an amount demanded in accordance with this Letter of Credit, we make no
representation as to the correctness of the amount demanded or your calculations and
representations on the certificates required of you by this Letter of Credit.

     This Letter of Credit shall expire on the earliest of (i) the Stated Expiration Date shown on
the first page hereof, or any extension thereof as set forth in a Notice of Extension in the form
of Annex F hereto, (ii) when any draft accompanied by your certification substantially in the form
of Annex D to this Letter of Credit is honored and paid by us, (iii) the day on which this Letter
of Credit is surrendered by the Trustee to the Bank, accompanied by a certificate substantially in
the form of Annex G (Surrender Certificate) to this Letter of Credit, (iv) two (2) Business Days
following the effective date of the conversion of the rate of interest borne by the Bonds to a
Term Rate under the Indenture (the “Term Rate Conversion Date”), as certified by you in
substantially the form of Annex H (Notice of Term Rate Conversion Date) to this Letter of Credit,
or (v) 30 days after you receive our Annex I (Notice of Event of Default under Credit Agreement)
certification or, if such day is not a Business Day, on the next succeeding Business Day. Any
notice or certification in the form of Annex F or Annex I will be delivered to you at the address
indicated above or, if we have received a Transfer Demand in the form of Annex J, to your
transferee at the address set forth in such Annex J.

     Payments of Drawings under this Letter of Credit shall be made from funds of the Bank and not
from any moneys provided to the Bank by the Borrower, the Issuer or any party related to the
Borrower or the Issuer.

     This Letter of Credit shall be governed by and construed in accordance with the International
Standby Practices (ISP 98), and, to the extent not inconsistent therewith, the laws of the
Commonwealth of Virginia.

     This Letter of Credit sets forth in full our undertaking, and such undertaking shall not in
any way be modified, amended, amplified or limited by reference to any document, instrument or
agreement referred to herein (including, without limitation, the Bonds), except only the Annexes
and drafts referred to herein; and any such reference shall not be deemed to incorporate herein by
reference any document, instrument or agreement except for such Annexes and drafts.

     This Letter of Credit is transferable. Transfer may be made to any person or entity whom you
or any transferee hereunder designate as a successor trustee under the Indenture. Transfer of the
available Drawing under this Letter of Credit to such transferee shall be effected by the
presentation to us of this Letter of Credit accompanied by a request designating your successor in
the form of Annex J (Transfer Demand) attached hereto, with the signature of the appropriate

 

 

officer signing on your behalf authenticated by another one of your officers, and the payment of
One Thousand Dollars ($1,000) paid by the Borrower as a transfer fee. Upon presentation and
payment, we shall forthwith effect a transfer of this Letter of Credit to your designated
transferee.

	 	 	 	 	 
	 	Very truly yours,

BANK OF AMERICA, N.A.

 	 
	 	By:  	/s/ Sandra Leon
 	 
	 	 	Name:  	Sandra Leon 	 
	 	 	Title:  	Vice President 	 

 

 

	 	 	 	 	 

Annex A 

(Periodic Interest Demand With Reinstatement Request)

Bank of America, N.A.

Irrevocable Letter of Credit No. 3079662

Bank of America, N.A.

Trade Operation Center

Mail Code CA9-705-07-05

1000 West Temple Street

Los Angeles, California 90012-1514

Attention: Standby Letter of Credit Dept.

			
	Re:	 	Drawing for Interest Due on Scheduled Interest Payment Date

Ladies and Gentlemen:

     We refer to your Letter of Credit No. 3079662 (the “Letter of Credit”). Any term which is
defined in the Letter of Credit shall have the same meaning when used herein. The undersigned, a
duly authorized officer of J.P. Morgan Trust Company, National Association, as trustee (the
“Trustee” or “we”), hereby certifies to you that:

     1. We are the Trustee or a successor Trustee under the Indenture for the holders of the
Residential Rental Development Revenue Bonds, 1996 Series A (Karrington of South Hills Assisted
Living Facility Project) (the “Bonds”), issued by the Allegheny County Industrial Development
Authority.

     2. We hereby make demand under the Letter of Credit, by our presentment of the
sight draft accompanying this Certificate, for payment of $                     representing accrued
and unpaid interest on the Bonds with respect to a scheduled interest payment.

     3. The amount of the draft accompanying this Certificate does not exceed the amount available
on the date hereof to be drawn under the Letter of Credit in respect of interest accrued on the
Bonds and was computed in accordance with the terms and conditions of the Bonds and the Indenture.
The date specified in paragraph 4 below is not earlier than the date upon which the payment hereby
demanded is required to be made under the terms and conditions of the Bonds and the Indenture. The
Letter of Credit has not terminated prior to the time of the delivery of this Certificate and the
accompanying draft.

     4. We request that the payment hereby demanded be made no later than 7:00 a.m.,
Los Angeles time (“Local Time”), on                                  ,                      [if this certificate and an
accompanying draft are delivered at or before 11:00 a.m., Local Time, insert a date which is the
next Business Day; if this certificate and an accompanying draft are delivered after 11:00 a.m.,
Local Time, insert a date which is a Business Day and is no earlier than the second succeeding
Business Day following the date those documents are delivered]. Unless otherwise agreed to in a

 

 

writing signed by you and us, please [deposit/wire transfer] the amount hereby demanded to our
account number                                          [insert account number] with                            
              [insert
name and address of banking institution to receive funds].

     5. Please reinstate the Letter of Credit by the amount specified in paragraph 2 of this
Certificate in accordance with the terms set forth in the Letter of Credit; following such
reinstatement, the Stated Amount shall be the same as it was immediately prior to this Drawing.

     6. The amount demanded hereby is not being made in respect of any Issuer Bonds, Borrower
Bonds or Pledged Bonds.

     IN WITNESS WHEREOF, we have executed and delivered this Certificate as Trustee as
of the ___day of                     .

	 	 	 	 	 
	 	Very truly yours,

J.P. MORGAN TRUST COMPANY, 

NATIONAL ASSOCIATION, as Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

Annex B 

(Principal and Interest Demand Without Reinstatement Request)

Bank of America, N.A.

Irrevocable Letter of Credit No. 3079662

Bank of America, N.A.

Trade Operation Center

Mail Code CA9-705-07-05

1000 West Temple Street

Los Angeles, California 90012-1514

Attention: Standby Letter of Credit Dept.

			
	Re:	 	Drawing for Partial Redemption of the Bonds

Ladies and Gentlemen:

     We refer to your Letter of Credit No. 3079662 (the “Letter of Credit”). Any term which is
defined in the Letter of Credit shall have the same meaning when used herein. The undersigned, a
duly authorized officer of J.P. Morgan Trust Company, National Association, as trustee (the
“Trustee” or “we”), hereby certifies to you that:

     1. We are the Trustee or a successor Trustee under the Indenture for the holders of the
Residential Rental Development Revenue Bonds, 1996 Series A (Karrington of South Hills Assisted
Living Facility Project) (the “Bonds”), issued by the Allegheny County Industrial Development
Authority.

     2. We hereby make demand under the Letter of Credit for payment of
$                    , of which $                     shall be with respect to the principal of certain of the
Bonds, and $                     shall be with respect to interest to be paid on the Bonds, which total
amount is due with respect to a partial redemption of Bonds pursuant to the Indenture.

     3. The amount of the draft accompanying this Certificate does not exceed the amount available
on the date hereof to be drawn under the Letter of Credit and was computed in accordance with the
terms and conditions of the Bonds and the Indenture. The date specified in paragraph 4 below is
not earlier than the date upon which the payment hereby demanded is required to be made under the
terms and conditions of the Bonds and the Indenture. The Letter of Credit has not terminated prior
to the time of the delivery of this Certificate and the accompanying draft.

     4. We request that the payment hereby demanded be made no later than 7:00 a.m.,
Los Angeles time (“Local Time”), on                      [if this certificate and an accompanying
draft are delivered at or before 11:00 a.m., Local Time, insert a date which is the next Business
Day; if this certificate and an accompanying draft are delivered after 11:00 a.m., Local Time,
insert a date which is a Business Day and is no earlier than the second succeeding Business Day

 

 

following the date those documents are delivered]. Unless otherwise agreed to in writing signed by
you and us, please [deposit/wire transfer] the amount hereby demanded to our account
number                      [insert account number] with                                                    
          [insert
name and address of banking institution to receive funds].

     5. Upon application of the amount with respect to principal of the Bonds set forth in
paragraph 2 of this Certificate, there shall be outstanding $                     principal amount of
the Bonds and the Stated Amount of the Letter of Credit shall be $                    .

     6. The amount demanded hereby is not being made in respect of any Issuer Bonds,
Borrower Bonds or Pledged Bonds.

     IN WITNESS WHEREOF, we have executed and delivered this Certificate as Trustee as
of the ___day of                                         ,                     .

	 	 	 	 	 
	 	Very truly yours,

J.P. MORGAN TRUST COMPANY,

NATIONAL ASSOCIATION, as Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

Annex C 

(Principal and Interest Demand)

Bank of America, N.A.

Irrevocable Letter of Credit No. 3079662

Bank of America, N.A.

Trade Operation Center

Mail Code CA9-705-07-05

1000 West Temple Street

Los Angeles, California 90012-1514

Attention: Standby Letter of Credit Dept.

			
	Re:	 	Drawing for Purchase of Bonds

Ladies and Gentlemen:

     We refer to your Letter of Credit No. 3079662 (the “Letter of Credit”). Any term which is
defined in the Letter of Credit shall have the same meaning when used herein. The undersigned, a
duly authorized officer of J.P. Morgan Trust Company, National Association, as trustee (the
“Trustee” or “we”), hereby certifies to you that:

     1. We are the Trustee or a successor Trustee under the Indenture for the holders of the
Residential Rental Development Revenue Bonds, 1996 Series A (Karrington of South Hills Assisted
Living Facility Project) (the “Bonds”), issued by the Allegheny County Industrial Development
Authority.

     2. We hereby make demand under the Letter of Credit for payment of
$                    , of which $                     shall be with respect to the principal of the Bonds,
and $                     shall be with respect to interest to be paid on the Bonds, which total amount
is due with respect to the payment of all or a portion of the purchase price of Bonds pursuant to
the Indenture.

     3. The amount of the draft accompanying this Certificate does not exceed the amount available
on the date hereof to be drawn under the Letter of Credit and was computed in accordance with the
terms and conditions of the Bonds and the Indenture. The date specified in paragraph 4 below is
not earlier than the date upon which the payment hereby demanded is required to be made under the
terms and conditions of the Bonds and the Indenture. The Letter of Credit has not terminated prior
to the time of the delivery of this Certificate and the accompanying draft.

     4. We request that the payment hereby demanded be made no later than 7:00 a.m.,
Los Angeles time (“Local Time”), on                                         ,                   
   [if this certificate and an
accompanying draft are delivered at or before 11:00 a.m., Local Time, insert a date which is the
next Business Day; if this certificate and an accompanying draft are delivered after 11:00 a.m.,

 

 

Local Time, insert a date which is a Business Day and is no earlier than the second succeeding
Business Day following the date those documents are delivered]. Unless otherwise agreed to in a
writing signed by you and us, please [deposit/wire transfer] the amount hereby demanded to our
account number            
                              [insert account number] with                     
         
                               [insert
name and address of banking institution to receive funds].

     5. The amount demanded hereby is not being made in respect of any Issuer Bonds, Borrower
Bonds or Pledged Bonds. We hereby certify that Bonds in an aggregate outstanding principal amount
equal to the amount demanded hereby with respect to principal shall be recorded as Pledged Bonds
in accordance with the registration requirements for such Bonds set forth in Section 4.05(a) of
the Indenture.

     IN WITNESS WHEREOF, we have executed and delivered this Certificate as Trustee as
of the ___day of                     .

	 	 	 	 	 
	 	Very truly yours,

J.P. MORGAN TRUST COMPANY,

NATIONAL ASSOCIATION, as Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

Annex D 

(Final Drawing)

Bank of America, N.A.

Irrevocable Letter of Credit No. 3079662

Bank of America, N.A.

Trade Operation Center

Mail Code CA9-705-07-05

1000 West Temple Street

Los Angeles, California 90012-1514

Attention: Standby Letter of Credit Dept.

			
	Re:	 	Final Drawing and Termination

Ladies and Gentlemen:

     We refer to your Letter of Credit No. 3079662 (the “Letter of Credit”). Any term which is
defined in the Letter of Credit shall have the same meaning when used herein. The undersigned, a
duly authorized officer of J.P. Morgan Trust Company, National Association, as trustee (the
“Trustee” or “we”), hereby certifies to you that:

     1. We are the Trustee or a successor Trustee under the Indenture for the holders of the
Residential Rental Development Revenue Bonds, 1996 Series A (Karrington of South Hills Assisted
Living Facility Project) (the “Bonds”), issued by the Allegheny County Industrial Development
Authority.

     2. We hereby make demand for payment of $                     of which
$                     shall be with respect to the principal of the Bonds, and $                     shall be
with respect to interest, if any, on the Bonds.

     3. This Drawing is being made as a result of the maturity, acceleration, or redemption of all
outstanding Bonds in accordance with the terms and conditions of the Bonds and the Indenture.

     4. The amount of the draft accompanying this Certificate does not exceed the amount available
on the date hereof to be drawn under the Letter of Credit and was computed in accordance with the
terms and conditions of the Bonds and the Indenture. The date specified in paragraph 5 below is
not earlier than the date upon which the payment hereby demanded is required to be made under the
terms and conditions of the Bonds and the Indenture. The Letter of Credit has not terminated prior
to the delivery of this Certificate and the accompanying draft.

     5. The sight draft accompanying this Certificate constitutes the final Drawing under the
Letter of Credit and upon payment of such draft, the Letter of Credit is canceled. We request that
the payment hereby demanded be made no later than 7:00 a.m., Los Angeles time (“Local

 

 

Time”), on                                           [if this certificate and an accompanying draft are delivered at or
before 11:00 a.m., Local Time, insert a date which is the next Business Day; if this certificate
and an accompanying draft are delivered after 11:00 a.m., Local Time, insert a date which is a
Business Day and is no earlier than the second succeeding Business Day following the date those
documents are delivered]. Please [deposit/wire transfer] the amount hereby demanded to our
account number                                           [insert account number] with                            
              
[insert name and address of banking institution to receive funds].

     6. The amount demanded hereby is not being made in respect of any Issuer Bonds,
Borrower Bonds or Pledged Bonds.

     IN WITNESS WHEREOF, we have executed and delivered this Certificate as Trustee as
of the ___day of                     .

	 	 	 	 	 
	 	Very truly yours,

J.P. MORGAN TRUST COMPANY,

NATIONAL ASSOCIATION, as Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

Annex E

(Trustee Certificate as to Remarketing)

Bank of America, N.A.

Irrevocable Letter of Credit No. 3079662

Bank of America, N.A.

Trade Operation Center

Mail Code CA9-705-07-05

1000 West Temple Street

Los Angeles, California 90012-1514

Attention: Standby Letter of Credit Dept.

			
	Re:	 	Irrevocable Letter of Credit No. 3079662

Ladies and Gentlemen:

     The undersigned, a duly authorized officer of J.P. Morgan Trust Company, National
Association, as trustee (the “Trustee”), hereby notifies Bank of America, N.A. (the “Bank”), with
reference to Letter of Credit No. 3079662 (the “Letter of Credit”; terms defined therein and not
otherwise defined herein shall have the meanings set forth in the Letter of Credit) issued by the
Bank in favor of the Trustee as follows:

     1.                                                               is
the Remarketing Agent under the Indenture for
the holders of the Bonds.

     2. The Trustee has been advised by the Borrower or the Remarketing Agent that the
amount of $                                         paid to the Bank today by the Borrower or the Remarketing
Agent on behalf of the Borrower is a payment made to reimburse the Bank, pursuant to the Credit
Agreement dated as of December 2, 2005 (the “Credit Agreement”), among Sunrise Senior Living, Inc.
and certain of its affiliates, the Bank, as administrative agent, the Bank as lender and the other
parties identified therein, for amounts drawn under the Letter of Credit pursuant to a Liquidity
Drawing.

     3. Of the amount referred to in paragraph 2, $                     represents the
aggregate principal amount of Pledged Bonds resold or to be resold on behalf of the Borrower.

     4. Of the amount referred to in paragraph 2, $                     represents accrued and
unpaid interest on such Pledged Bonds.

     5. Upon receipt of this Certificate, you are hereby notified that such Bonds are no
longer Pledged Bonds and the Principal Component and the Interest Component of the Stated
Amount of the Letter of Credit are required to be reinstated automatically pursuant to, and
in the
amounts required by, the Letter of Credit.

 

 

     IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of

this                day of _______________,             .

	 	 	 	 	 
	 	J.P. MORGAN TRUST COMPANY,
NATIONAL
ASSOCIATION, as Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

Annex F 

(Notice of Extension)

Bank of America, N.A.

Irrevocable Letter of
Credit No. 3079662

			
	To:	 	Beneficiary under our Letter of Credit No. 3079662 issued for the account of

Karrington Operating Company, Inc. (the “Letter of Credit”)

			
	Re:	 	Extension of Stated Expiration Date of Letter of Credit

Ladies and Gentlemen:

     Bank of America, N.A., as issuer of the Letter of Credit, hereby amends the Stated
Expiration Date set forth on the first page of the Letter of Credit from [INSERT CURRENT
LOC EXPIRATION DATE] to                          ,                     .

     All the terms of the Letter of Credit shall continue in full force and effect except as
amended hereby.

     IN WITNESS WHEREOF, we have executed and delivered this Notice as of this ___ day
of                                         ,                     .

	 	 	 	 	 
	 	Very truly yours,

BANK OF AMERICA, N.A.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

Annex G 

(Surrender Certificate)

Bank of America, N.A.

Irrevocable Letter of Credit No. 3079662

Bank of America, N.A.

Trade Operation Center

Mail Code CA9-705-07-05

1000 West Temple Street

Los Angeles, California 90012-1514

Attention: Standby Letter of Credit Dept.

Ladies and Gentlemen:

     We refer to your Letter of Credit No. 3079662 (the “Letter of Credit”). Any term which is
defined in the Letter of Credit shall have the same meaning when used herein. The undersigned, a
duly authorized officer of JP. Morgan Trust Company, National Association, as trustee (the
“Trustee” of “we”), hereby certifies to you that:

     1. We are the Trustee or a successor Trustee under the Indenture for the holders of the
Residential Rental Development Revenue Bonds, 1996 Series A (Karrington of South Hills Assisted
Living Facility Project) (the “Bonds”), issued by the Allegheny County Industrial Development
Authority.

     2. We hereby surrender the attached Letter of Credit to you.

     3. The Letter of Credit is hereby terminated in accordance with its terms.

     4. No payment is demanded of you in connection with this surrender of the Letter of Credit.

     IN WITNESS WHEREOF, we have executed and delivered this certificate as Trustee as
of the ___day of                    ,                     .

	 	 	 	 	 
	 	Very truly yours,

J.P. MORGAN TRUST COMPANY,
 NATIONAL
ASSOCIATION, as Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

Annex H 

(Notice of Term Rate Conversion Date)

Bank of America, N.A.

Trade Operation Center

Mail Code CA9-705-07-05

1000 West Temple Street

Los Angeles, California 90012-1514

Attention: Standby Letter of Credit Dept.

			
	Re:	 	Conversion of Bonds to a Term Rate

Ladies and Gentlemen:

     We refer to your Letter of Credit No. 3079662 (the “Letter of Credit”). Any term which is
defined in the Letter of Credit shall have the same meaning when used herein. The undersigned, a
duly authorized officer of J.P. Morgan Trust Company, National Association, as trustee (the
“Trustee” or “we”), hereby certifies to you that:

     1. We are the Trustee or a successor Trustee under the Indenture for the holders of the
Residential Rental Development Revenue Bonds, 1996 Series A (Karrington of South Hills Assisted
Living Facility Project) (the “Bonds”), issued by the Allegheny County Industrial Development
Authority.

     2. Pursuant to the terms of the Indenture, the Bonds have been converted to bear interest at
a Term Rate effective on                                      ,                      (the “Term Rate Conversion Date”).

     3. 
The Letter of Credit will expire on        
               
               
   ,          
           , which is two (2)
Business Days following the Term Rate Conversion Date.

     IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of this
___day of                                         ,                     .

	 	 	 	 	 
	 	J.P. MORGAN TRUST COMPANY,
 NATIONAL
ASSOCIATION, as Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

Annex I 

(Notice of Event of Default under Credit Agreement)

Bank of America, N. A.

Irrevocable Letter of Credit No. 3079662

			
	To:	 	Beneficiary under our Letter of Credit No. 3079662 issued for the account of
Karrington Operating Company, Inc. (the “Letter of Credit”)

			
	Re:	 	Event of Default under Credit Agreement

Ladies and Gentlemen:

     We hereby certify to you that:

     1. An Event of Default has occurred under the Credit Agreement dated as of December 2, 2005
(the “Credit Agreement”), among Sunrise Senior Living, Inc. and certain of its affiliates, Bank of
America, N.A. (the “Bank”), as administrative agent, the Bank as lender and the other parties
identified therein.

     2. Pursuant to Section 7.03 of the Indenture (as such term and all other capitalized terms
are used in the Letter of Credit), the Bank hereby directs you to accelerate payment of the Bonds
immediately and, in connection therewith, to draw on the Letter of Credit to pay for such
acceleration pursuant to a draft accompanied by an Annex D certification, unless you have received
separate written instructions from us accompanying this notice directing you not to declare the
Bonds immediately due and payable but, instead, to submit a Liquidity Drawing and use the proceeds
thereof to purchase the Bonds on the date specified therein in accordance with Section 4.02(c) of
the Indenture (which purchase date shall be a Business Day not earlier than 20 days and not more
than 25 days after the date of receipt by you of such notice and separate written instructions).

     3. Unless it expires earlier in accordance with its terms, the Letter of Credit will
expire on                                         ,                      [insert date that is 30 days from beneficiary’s receipt of
this notice or, if such day is not a Business Day, the next succeeding Business Day],

     IN WITNESS WHEREOF, we have executed and delivered this certificate as of this
___day of                               ,                     .

	 	 	 	 	 
	 	Very truly yours,

BANK OF AMERICA, N. A.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

Annex J 

(Transfer Demand)

Bank of America, N.A.

Irrevocable Letter of Credit No. 3079662

Bank of America, N.A.

Trade Operation Center

Mail Code CA9-705-07-05

1000 West Temple Street

Los Angeles, California 90012-1514

Attention: Standby Letter of Credit Dept.

			
	Re:	 	Instruction to Transfer Letter of Credit No. 3079662 issued for the account
of Karrington Operating Company, Inc. (the “Borrower”)

Ladies and Gentlemen:

For value received, the undersigned beneficiary (the “Transferor”) hereby irrevocably transfers to:

     (Name of Transferee and Address)

(the “Transferee”) all rights of the Transferor with respect to the above-referenced Letter of
Credit, including the right to draw under said Letter of Credit in the amount of the full
unutilized balance thereof. Said Transferee has succeeded the Transferor as Trustee under that
certain Trust Indenture dated as of May 1, 1996 (the “Indenture”) by and between the Allegheny
County Industrial Development Authority (the “Issuer”) and J.P. Morgan Trust Company, National
Association, as trustee, with respect to the Issuer’s Residential Rental Development Revenue Bonds,
1996 Series A (Karrington of South Hills Assisted Living Facility Project).

     By virtue of this transfer, the Transferee shall have the sole rights as beneficiary of said
Letter of Credit, including sole rights relating to any past or future amendments thereof, whether
increases or extensions or otherwise. All amendments are to be advised directly to the Transferee
without necessity of any consent of or notice to the Transferor.

     By its signature below, the Transferee acknowledges that it has duly succeeded the Transferor
as Trustee under the Indenture, and agrees to be bound by the terms of the Indenture as if it were
the original Trustee thereunder.

 

 

     The Letter of Credit is returned herewith, and we ask you to endorse the transfer on the
reverse thereof and to forward it directly to the Transferee with your customary notice of
transfer. Also, please find enclosed our payment of $1,000 paid by the Borrower as a transfer fee
in accordance with the Letter of Credit.

	 	 	 	 	 
	 	Very truly yours,

J.P. MORGAN TRUST COMPANY,

NATIONAL ASSOCIATION, as Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	Acknowledged by

[insert name of Transferee]

as Transferee and successor Trustee

 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:exv10w43

 

Exhibit 10.43

SECOND AMENDMENT TO CREDIT AGREEMENT

     THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this “Agreement”) is made as of the 31st
day of January, 2007 between SUNRISE SENIOR LIVING, INC. a Delaware corporation (the “Company”),
and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and Letter of Credit Issuer
(the “Administrative Agent”) for itself and certain additional lenders who are or shall be from
time to time participating as lenders pursuant to the Credit Agreement as hereinafter defined
(collectively with the Administrative Agent, the “Lenders”).

RECITALS

     A. The Lenders have made a Credit Facility available to the Company in the maximum principal
sum at any one time outstanding of $250,000,000.

     B. The Credit Facility is governed by a Credit Agreement dated December 2, 2005 as amended by
that certain First Amendment to Credit Agreement dated March 6, 2006 (as amended, modified,
substituted, extended and renewed from time to time the “Credit Agreement”) by and between the
Company and the Lenders.

     C. The Credit Facility is guaranteed by the Guarantors pursuant to the terms of the Credit
Agreement.

     D. The Company and the Lenders have agreed to (i) modify the delivery deadlines for certain
financial statements; (ii) add a covenant for provision of certain additional monthly financial
reports until the delivery of the delayed quarterly and annual financial statements; (iii) increase
the applicable interest rate of the Loan until delivery of the delayed financial statements; and
(iv) make such other changes to the Credit Agreement as are more particularly set forth herein.

     E. As a condition precedent to the agreements referenced above, the Administrative Agent has
required that this Agreement be executed and delivered to the Administrative Agent on behalf of the
Lenders.

AGREEMENTS

     NOW, THEREFORE, in consideration of the premises, the mutual agreements herein contained, and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company, the Lenders and the Administrative Agent hereby agree as follows:

 

 

     1. The above Recitals are a part of this Agreement. Unless otherwise expressly defined in
this Agreement, terms defined in the Credit Agreement shall have the same meaning under this
Agreement.

     2. The Company represents and warrants to the Lender as follows:

          (a) The Company has the power and authority to execute and deliver this Agreement and perform
its obligations hereunder;

          (b) The Credit Agreement, as amended by this Agreement, and each of the other Loan Documents
remains in full force and effect, and each constitutes the valid and legally binding obligation of
Borrower, enforceable in accordance with its terms;

          (c) All of the Company’s representations and warranties contained in the Credit Agreement and
the other Loan Documents are true and correct on and as of the date of the Company’s execution of
this Agreement with the exception of representations and warranties regarding financial statements
described in Section 6.5 of the Credit Agreement; and

          (d) No Event of Default and no event which, with notice, lapse of time or both would
constitute an Event of Default, has occurred and is continuing under the Credit Agreement or the
other Loan Documents which has not been waived in writing by the Lender.

     3. The Company hereby acknowledges and agrees that pursuant to the terms of Sections 7.1 and
7.2 of the Credit Agreement the Company is required to deliver to the Administrative Agent certain
quarterly and annual financial statements and certain Compliance Certificates within the time
period specified therein. The Company, the Administrative Agent and the Lenders hereby agree to
modify the delivery dates of: (a) all quarterly financial statements for 2006, (b) quarterly
financial statement for the quarter ending March 31, 2007, and (c) the annual financial statement
for the Company for the fiscal year ending December 31, 2006, as each such financial statement was
to be submitted to the SEC, and (d) the Compliance Certificates to be submitted to the
Administrative Agent with each such financial statement required pursuant to Section 7.2 of the
Credit Agreement (collectively, the “Outstanding Financial Reports”). The modification applies to
the quarterly statements for the fiscal quarters ending March 31, 2006, June 30, 2006, September
30, 2006, December 31, 2006 and March 31, 2007 and the annual statement for the fiscal year ended
December 31, 2006. As amended by this Agreement, the financial statements will be due no later
than June 30, 2007. The Company hereby further agrees that if such above-referenced quarterly and
annual financial statements are not complete by June 1, 2007, then on or before June 1, 2007, the
Company shall provide internally prepared financial statements for its fiscal year 2006, in form
and detail satisfactory to Administrative Agent.

     4. The Company, the Administrative Agent and the Lenders hereby agree that commencing on
January 1, 2007 through the date of the delivery to the Administrative Agent of the Outstanding
Financial Reports the Borrowers shall pay interest on the Outstanding Amount at the Applicable Rate
provided as Pricing Level IV under the terms and conditions provided in the Credit Agreement.

2

 

     5. The Company, the Administrative Agent and the Lenders hereby agree that commencing with
reports for operations during the month of December, 2006 through the date of the delivery to the
Administrative Agent of the Outstanding Financial Reports, the Company shall deliver, within
forty-five (45) days after the end of each month, internally prepared operating data that reflects
revenue, expense, margin, average daily rate and occupancy for only such Senior Living Facilities,
on an aggregate basis, in which the Company or its affiliates have an ownership interest and which
operated in both the current month and the corresponding month of the previous fiscal year in
comparative form for both periods fairly presenting the financial condition of such Senior Living
Facility.

     6. The Company, the Administrative Agent and the Lenders hereby agree that the Company shall
pay to the Administrative Agent for the account of each Lender that executes this Agreement, in
accordance with its Applicable Percentage, a fee equal to five (5) basis points.

     7. Except as specifically set forth herein, the terms, provisions and covenants of the Credit
Agreement, including, but not limited to, all financial covenants and definitions related thereto,
are hereby ratified and confirmed and remain in full force and effect.

     8. This Agreement may be executed in any number of duplicate originals or counterparts, each
of such duplicate originals or counterparts shall be deemed to be an original and all taken
together shall constitute but one and the same instrument.

     9. By their signatures below, the Guarantors consent to the transactions contemplated by and
the agreements made by the Company under this Agreement and ratify, confirm and reissue their
guaranty as set forth in the Credit Agreement.

[SIGNATURES APPEAR ON FOLLOWING PAGES]

3

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered under seal by their duly authorized representatives as of the date and year first written
above.

	 	 	 	 	 
	 	COMPANY:

SUNRISE SENIOR LIVING, INC.

 	 
	 	By:  	/s/ Carl G. Adams
 	(Seal)
	 	 	Carl G. Adams 	 
	 	 	Treasurer 	 
	 
	 	GUARANTORS:

SUNRISE SENIOR LIVING MANAGEMENT, INC.

 
	 	By:  	/s/ Carl G. Adams
 	(Seal)
	 	 	Carl G. Adams 	 
	 	 	Vice President 	 
	 
	 	SUNRISE SENIOR LIVING INVESTMENTS, INC.

 
	 	By:  	/s/ Carl G. Adams
 	(Seal)
	 	 	Carl G. Adams 	 
	 	 	Vice President 	 
	 
	 	SUNRISE DEVELOPMENT, INC.

 	 
	 	By:  	/s/ Carl G. Adams
 	(Seal)
	 	 	Carl G. Adams 	 
	 	 	Vice President 	 
	 
	 	SUNRISE SENIOR LIVING SERVICES, INC.

 	 
	 	By:  	/s/ Carl G. Adams
 	(Seal)
	 	 	Carl G. Adams 	 
	 	 	Vice President 	 
	 

S-1

 

	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as

Administrative Agent

 	 
	 	By:  	/s/ Ronaldo Naval
 	(Seal)
	 	 	Name:  	Ronaldo Naval 	 
	 	 	Title:  	Vice Presdident 	 
	 

S-2

 

	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as a Lender, L/C Issuer and Swing Line
Lender

 	 
	 	By:  	/s/ Michael J. Landini
 	(Seal)
	 	 	Michael J. Landini 	 
	 	 	Senior Vice President 	 
	 

S-3

 

	 	 	 	 	 
	 	WACHOVIA BANK, NATIONAL
 ASSOCIATION, as a Lender

 	 
	 	By:  	/s/ Frank S. Kaulback III
 	 
	 	 	Frank S. Kaulback III 	 
	 	 	Senior Vice President 	 
	 

S-4

 

	 	 	 	 	 
	 	LASALLE BANK NATIONAL ASSOCIATION, 
as a Lender

 	 
	 	By:  	/s/ Sam L. Dendrinos
 	 
	 	 	Sam L. Dendrinos 	 
	 	 	First Vice President 	 

S-5

 

	 	 	 	 	 

	 	 	 	 	 
	 	HSBC BANK USA, N.A., as a Lender

 	 
	 	By:  	/s/ Jeffrey M. Henry
 	 
	 	 	Jeffrey M. Henry 	 
	 	 	Vice President 	 

S-6

 

	 	 	 	 	 

	 	 	 	 	 
	 	MANUFACTURERS AND TRADERS TRUST COMPANY, as a Lender

 	 
	 	By:  	/s/ Sharon P. O’Brien
 	 
	 	 	Sharon P. O’Brien 	 
	 	 	Vice President 	 
	 

S-7

 

	 	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION, as a Lender

 	 
	 	By:  	/s/ Douglas T. Brown
 	 
	 	 	Douglas T. Brown 	 
	 	 	Senior Vice President 	 

S-8

 

	 	 	 	 	 

	 	 	 	 	 
	 	CHEVY CHASE BANK, F.S.B., as a Lender

 	 
	 	By:  	/s/ Ellen-Elizabeth B. Lee
 	 
	 	 	Ellen-Elizabeth B. Lee 	 
	 	 	Assistant Vice President 	 

S-9

 

	 	 	 	 	 

	 	 	 	 	 
	 	FARMERS & MECHANICS BANK, as a Lender

 	 
	 	By:  	/s/ William W. Drummond
 	 
	 	 	William W. Drummond 	 
	 	 	Senior Vice President 	 

S-10

 

	 	 	 	 	 

	 	 	 	 	 
	 	FIRST HORIZON BANK a division of FIRST TENNESSEE
BANK, N.A., as a Lender

 	 
	 	By:  	/s/ Kenneth W. Rub
 	 
	 	 	Kenneth W. Rub 	 
	 	 	Vice President 	 
	 

S-11

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