SUNRISE SENIOR LIVING INC - FORM 8-K - EX-10.1 - October 28, 2009

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8-K - SUNRISE SENIOR LIVING INCeightkbody.htm
EX-99.1 - SUNRISE SENIOR LIVING INCsunrisepressrelease.htm
EX-10.2 - SUNRISE SENIOR LIVING INCsunriseivsettlementagreement.htm
EX-10.3 - SUNRISE SENIOR LIVING INCsunrise_fountainssettlement1.htm

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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  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 

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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 

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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 

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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 

13

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 

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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 

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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 

18

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 E


 

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