10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number: 000-54685

CNL Healthcare Trust, Inc.

(Exact name of registrant as specified in its charter)

Maryland	27-2876363
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

CNL Center at City Commons 450 South Orange Avenue Orlando, Florida	32801
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (407) 650-1000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of shares of common stock of the registrant outstanding as of August 9, 2012 was 10,174,124.

CNL HEALTHCARE TRUST, INC. AND SUBSIDIARIES

INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Information (unaudited):
	Condensed Consolidated Balance Sheets		1
	Condensed Consolidated Statements of Operations		2
	Condensed Consolidated Statements of Stockholders’ Equity		3
	Condensed Consolidated Statement of Cash Flows		4
	Notes to Condensed Consolidated Financial Statements		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		28
Item 4.	Controls and Procedures		29
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		30
Item 1A.	Risk Factors		30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		30
Item 3.	Defaults Upon Senior Securities		32
Item 4.	Mine Safety Disclosures		32
Item 5.	Other Information		32
Item 6.	Exhibits		32
Signatures			33
Exhibits			34

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

CNL HEALTHCARE TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	June 30, 2012			December 31, 2011
ASSETS
Real estate investment properties, net	$	81,573,932		$	—
Investment in unconsolidated entity		56,142,185			—
Cash		13,082,283			10,001,872
Intangibles, net		1,633,989			—
Loan costs, net		1,687,910			—
Prepaid and other assets		542,824			161,390
Due from affiliates		131,360			—
Restricted cash		39,400			—
Deposits		—			400,000
Total Assets	$	154,833,883		$	10,563,262
LIABILITIES AND STOCKHOLDERS’ EQUITY
Mortgage notes payable	$	89,878,000		$	—
Accounts payable and accrued expenses		2,620,623			668,120
Due to related parties		514,983			192,755
Other liabilities		56,815			—
Total Liabilities		93,070,421			860,875
Commitments and contingencies (Note 11)
Stockholders’ Equity:
Preferred stock, $0.01 par value per share, 200,000,000 shares authorized and unissued		—			—
Excess shares, $0.01 par value per share, 300,000,000 shares authorized and unissued		—			—
Common stock, $0.01 par value per share, 1,120,000,000 and 7,000,000 shares authorized, respectively; 8,317,844 and 1,357,572 shares issued and 8,316,795 and 1,357,572 shares outstanding as of June 30, 2012 and December 31, 2011, respectively		83,168			13,576
Capital in excess of par value		70,149,094			11,504,283
Accumulated loss		(7,652,445	)		(1,759,580	)
Accumulated distributions		(816,355	)		(55,892	)
Total Stockholders’ Equity		61,763,462			9,702,387
Total Liabilities and Stockholders’ Equity	$	154,833,883		$	10,563,262

See accompanying notes to condensed consolidated financial statements.

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CNL HEALTHCARE TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Quarter Ended June  30, 2012			Six Months Ended June  30, 2012
Revenues:
Rental income from operating leases	$	1,922,467		$	2,863,982
Total Revenues		1,922,467			2,863,982
Expenses:
Acquisition fees and expenses		2,429,230			4,328,643
General and administrative		575,352			1,059,400
Asset management fees		210,125			280,167
Property management fees		33,137			49,515
Depreciation and amortization		631,883			842,079
Total Expenses		3,879,727			6,559,804
Operating Loss		(1,957,260	)		(3,695,822	)
Other Income (Expense):
Interest and other income		5,245			5,346
Interest expense and loan cost amortization		(753,922	)		(1,428,761	)
Equity in earnings (loss) of unconsolidated entity		(773,628	)		(773,628	)
Total Other Expense		(1,522,305	)		(2,197,043	)
Net Loss	$	(3,479,565	)	$	(5,892,865	)
Net Loss Per Share of Common Stock (basic and diluted)	$	(0.55	)	$	(1.33	)
Weighted Average Number of Shares of Common Stock Outstanding (basic and diluted)		6,326,923			4,428,705

See accompanying notes to condensed consolidated financial statements.

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CNL HEALTHCARE TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Six Months Ended June 30, 2012 and the Year Ended December 31, 2011

(Unaudited)

	Common Stock						Capital in									Total
	Number of Shares			Par Value			Excess of Par Value			Accumulated Loss			Accumulated Distributions			Stockholders’ Equity
Balance at December 31, 2010		22,222		$	222		$	199,778		$	—		$	—		$	200,000
Subscriptions received for common stock through through public offering and reinvestment plan		1,331,170			13,312			13,276,934			—			—			13,290,246
Stock distributions		4,180			42			(42	)		—			—			—
Stock issuance and offering costs		—			—			(1,972,387	)		—			—			(1,972,387	)
Net loss		—			—			—			(1,759,580	)		—			(1,759,580	)
Cash distributions, declared and paid ($0.06666 per share)		—			—			—			—			(55,892	)		(55,892	)
Balance at December 31, 2011		1,357,572			13,576			11,504,283			(1,759,580	)		(55,892	)		9,702,387
Subscriptions received for common stock through public offering and reinvestment plan		6,903,341			69,032			68,885,420			—			—			68,954,452
Stock distributions		56,931			570			(570	)		—			—			—
Redemption of common stock		(1,049	)		(10	)		(10,464	)								(10,474	)
Stock issuance and offering costs		—			—			(10,229,575	)		—			—			(10,229,575	)
Net loss		—			—			—			(5,892,865	)		—			(5,892,865	)
Cash distributions, declared and paid ($0.19998 per share)		—			—			—						(760,463	)		(760,463	)
Balance at June 30, 2012		8,316,795		$	83,168		$	70,149,094		$	(7,652,445	)	$	(816,355	)	$	61,763,462

See accompanying notes to condensed consolidated financial statements.

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CNL HEALTHCARE TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

	Six Months Ended June  30, 2012
Operating Activities:
Net Cash Used in Operating Activities	$	(1,856,857	)
Investing Activities:
Acquisition of property		(83,650,000	)
Investment in unconsolidated entity		(56,915,813	)
Changes in restricted cash		(39,400	)
Other		(9,087	)
Net Cash Flows Used in Investing Activities		(140,614,300	)
Financing Activities:
Subscriptions received for common stock through public offering		68,533,285
Payment of stock issuance costs		(10,418,795	)
Distributions to stockholders, net of distribution reinvestments		(339,296	)
Redemption of common stock		(10,474	)
Proceeds from mortgage note payable		111,400,000
Principal payment on mortgage note payable		(21,522,000	)
Payment of loan costs		(2,091,152	)
Net Cash Flows Provided by Financing Activities		145,551,568
Net increase in cash		3,080,411
Cash at beginning of period		10,001,872
Cash at End of Period	$	13,082,283
Supplemental Disclosure of Non-Cash Transactions:
Amounts incurred but not paid (included in due to related parties):
Selling Commissions and Marketing Supporting Fees	$	196,753
Stock distributions (at par)	$	570

See accompanying notes to condensed consolidated financial statements.

4

CNL HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012

(UNAUDITED)

1. Organization

CNL Healthcare Trust, Inc., formerly known as CNL Properties Trust, Inc., (“the Company”) is a Maryland corporation incorporated on June 8, 2010 that intends to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes in 2012. In order to better reflect the concentrated investment focus, as described below, the Company amended its amended and restated articles of incorporation on February 9, 2012 to change its name to CNL Healthcare Trust, Inc.

In February 2012, the Company announced it would place its investment focus on acquiring properties primarily in the United States within the senior housing and healthcare sectors, although the Company may also acquire properties in the lifestyle and lodging sectors. Senior housing asset classes the Company may acquire include active adult communities (age-restricted and age-targeted housing), independent and assisted living facilities, continuing care retirement communities, memory care facilities and skilled nursing facilities. Healthcare asset classes the Company may acquire include medical office buildings, as well as other types of healthcare and wellness-related properties such as physicians’ offices, specialty medical and diagnostic service providers, specialty hospitals, walk-in clinics and outpatient surgery centers, hospitals and inpatient rehabilitative facilities, long-term acute care hospitals, pharmaceutical and medical supply manufacturing facilities, laboratories and research facilities and medical marts. Lifestyle asset classes the Company may acquire are those properties that reflect or are affected by the social, consumption and entertainment values of society and generally include ski and mountain resorts, golf courses, attractions (such as amusement parks, waterparks and family entertainment centers), marinas, and other leisure or entertainment-related properties. Lodging asset classes the Company may acquire include resort, boutique and upscale properties or any full service, limited service, extended stay and/or other lodging-related properties. The Company expects to primarily lease its properties to wholly-owned taxable REIT subsidiaries (“TRS Entities”) and engage independent third-party managers under management agreements to operate the properties as permitted under applicable tax regulations. However, it may also lease its properties to third-party tenants under a triple-net lease. The Company also may invest in and originate mortgage, bridge or mezzanine loans or in entities that make investments similar to the foregoing.

On June 27, 2011, the Company commenced its initial public offering of up to $3.0 billion of shares of common stock (the “Offering”), including shares being offered from its distribution reinvestment plan (the “Reinvestment Plan”), pursuant to a registration statement on Form S-11 under the Securities Act of 1933. The shares are being offered at $10.00 per share, or $9.50 per share pursuant to the Reinvestment Plan, unless changed by the board of directors. As of October 5, 2011, the Company received and accepted aggregate subscriptions in excess of the minimum offering amounts of $2.0 million in shares of common stock and the Company commenced operations. Prior to October 5, 2011, the Company was in its development stage and had not commenced operations. As a result, there are no comparative financial statements for the quarter and six months ended June 30, 2011.

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation — The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles of the United States (“GAAP”). The unaudited condensed consolidated financial statements reflect all normal recurring adjustments, which are, in the opinion of management, necessary for the fair presentation of the Company’s results for the interim periods presented. Amounts as of December 31, 2011 included in the unaudited condensed consolidated financial statements have been derived from the audited consolidated financial statements as of that date but do not include all disclosures required by GAAP. These accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of December 31, 2011 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

5

CNL HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012

(UNAUDITED)

2. Summary of Significant Accounting Policies (continued)

The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries over which it has control. All intercompany balances have been eliminated in consolidation.

In accordance with the guidance for the consolidation of variable interest entities (“VIE”), the Company analyzes its variable interests, including loans, leases, guarantees, and equity investments, to determine if the entity in which it has a variable interest is a variable interest entity. The Company’s analysis includes both quantitative and qualitative reviews. The Company bases its quantitative analysis on the forecasted cash flows of the entity, and its qualitative analysis on its review of the design of the entity, its organizational structure including decision-making ability and financial agreements. The Company also uses its quantitative and qualitative analyses to determine if it is the primary beneficiary of the VIE, and if such determination is made, it includes the accounts of the VIE in its consolidated financial statements.

The Company has no items of other comprehensive income (loss) in the periods presented and therefore, has not included other comprehensive income (loss) or total comprehensive income (loss) in the accompanying unaudited condensed consolidated financial statements.

Use of Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods and the disclosure of contingent liabilities. For example, significant estimates and assumptions are made in connection with the allocation of purchase price and analysis of real estate and equity method investments. Actual results could differ from those estimates.

Allocation of Purchase Price for Real Estate Acquisitions — Upon acquisition of properties, the Company estimates the fair value of acquired tangible assets (consisting of land, building and improvements, tenant improvements and equipment) and identifiable intangible assets (consisting of in-place leases) and allocates the purchase price to the assets acquired and liabilities assumed. In estimating the fair value of the tangible and intangible assets acquired, the Company considers information obtained about each property as a result of its due diligence and utilizes various valuation methods, such as estimated cash flow projections using appropriate discount and capitalization rates, estimates of replacement costs net of depreciation and available market information.

The fair value of the tangible assets of an acquired leased property is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land and building based on the determination of the fair values of these assets.

The purchase price is allocated to in-place lease intangibles based on management’s evaluation of the specific characteristics of the acquired lease. Factors considered include estimates of carrying costs during hypothetical expected lease up periods, including estimates of lost rental income during the expected lease up periods, and costs to execute similar leases such as leasing commissions, legal and other related expenses.

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CNL HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012

(UNAUDITED)

2. Summary of Significant Accounting Policies (continued)

Investment in Unconsolidated Entity — The Company accounts for its investment in an unconsolidated joint venture under the equity method of accounting as the Company exercises significant influence, but does not control this entity. This investment is recorded initially at cost and subsequently adjusted for cash contributions, distributions and equity in earnings (loss) of the unconsolidated entity. Based on the respective venture structure and preference the Company receives on distributions and liquidation, the Company records its equity in earnings of the entity under the hypothetical liquidation at book value (“HLBV”) method of accounting. Under this method, the Company recognizes income or loss in each period as if the net book value of the assets in the venture were hypothetically liquidated at the end of each reporting period following the provisions of the joint venture agreement. In any given period, the Company could be recording more or less income than actual cash distributions received and more or less than what the Company may receive in the event of an actual liquidation.

Depreciation and Amortization — Real estate costs related to the acquisition and improvement of properties are capitalized. Repair and maintenance costs are charged to expense as incurred and significant replacements and betterments are capitalized. Repair and maintenance costs include all costs that do not extend the useful life of the real estate asset. The Company considers the period of future benefit of an asset to determine its appropriate useful life. Real estate assets are stated at cost less accumulated depreciation, which is computed using the straight-line method of accounting over the estimated useful lives of the related assets. Buildings and improvements are depreciated over 39 years and equipment is depreciated over its estimated useful life.

Amortization of intangible assets is computed using the straight-line method of accounting over the respective lease term or estimated useful life. If a lease were to be terminated prior to its scheduled expiration, all unamortized costs related to the lease would be written off.

Real Estate Impairments — Real estate assets are reviewed on an ongoing basis to determine whether there are any indicators that the value of the real estate properties (including any related amortizable intangible assets or liabilities) may be impaired. Factors that could trigger an impairment analysis include, among others: (i) significant underperformance relative to historical or projected future operating results; (ii) significant changes in the manner of use of the Company’s real estate assets or the strategy of its overall business; (iii) a significant increase in competition; (iv) a significant adverse change in legal factors or an adverse action or assessment by a regulator, which could affect the value of the Company’s real estate assets; or (v) significant negative industry or economic trends. When such events or changes in circumstances are present, the Company will assess potential impairment by comparing estimated future undiscounted operating cash flows expected to be generated over the life of the asset and from its eventual disposition, to the carrying amount of the asset. In the event that the carrying amount exceeds the estimated future undiscounted operating cash flows, the Company would recognize an impairment provision to adjust the carrying amount of the asset to the estimated fair value. Fair values are generally determined based on incorporating market participant assumptions, discounted cash flow models and the Company’s estimates reflecting the facts and circumstances of each property.

For real estate the Company indirectly owns through an investment in a joint venture, tenant-in-common interest or other similar investment structure and accounts for under the equity method, when impairment indicators are present, the Company compares the estimated fair value of its investment to the carrying value. An impairment charge will be recorded to the extent the fair value of its investment is less than the carrying amount and the decline in value is determined to be other than a temporary decline.

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CNL HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012

(UNAUDITED)

2. Summary of Significant Accounting Policies (continued)

Fair Value Measurements — GAAP emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. GAAP requires the use of observable market data, when available, in making fair value measurements. Observable inputs are inputs that the market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of ours. When market data inputs are unobservable, the Company utilizes inputs that it believes reflects the Company’s best estimate of the assumptions market participants would use in pricing the asset or liability. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. As a basis for considering market participant assumptions in fair value measurements, GAAP establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). The three levels of inputs used to measure fair value are as follows:

• Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

• Level 2 — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3 — Unobservable inputs for the asset or liability, which are typically based on the Company’s own assumptions, as there is little, if any, related market activity.

Revenue Recognition — Rental revenue from leases is recorded on the straight-line basis over the terms of the leases. The Company’s leases require the tenants to pay certain contractual amounts that are set aside by the Company for replacements of fixed assets and other improvements to the properties. These amounts are and will remain the property of the Company during and after the term of the lease. The amounts are recorded as capital improvement reserve income at the time that they are earned and are included in rental income from operating leases in the accompanying condensed consolidated statement of operations.

Loan Costs — Financing costs paid in connection with obtaining debt are deferred and amortized over the life of the debt using the effective interest rate.

Net Loss per Share — Net loss per share is calculated based upon the weighted average number of shares of common stock outstanding during the period in which the Company was operational. For the purposes of determining the weighted average number of shares of common stock outstanding, stock distributions are treated as if they were issued and outstanding for the full periods presented. Therefore, the weighted average number of shares outstanding for the quarter and six months ended June 30, 2012 has been revised to include stock distributions declared through June 30, 2012 as if they were outstanding as of the beginning of each period presented. Included in the weighted average shares outstanding for the quarter and six months ended June 30, 2012 are 61,111 shares declared as stock distributions through June 30, 2012.

Recent Accounting Pronouncements — In May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” This ASU clarifies the application of existing fair value measurements and disclosure requirements and certain changes to principles and requirements for measuring fair value. This update is to be applied prospectively and is effective during interim and annual periods beginning after December 15, 2011. The adoption of this ASU did not have a material impact on the Company’s financial statements and disclosures.

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CNL HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012

(UNAUDITED)

3. Acquisitions

Consolidated Entities — During the six months ended June 30, 2012, the Company acquired the following five senior housing properties:

Property/Description	Location	Date of Acquisition	Allocated Purchase Price
Sweetwater Retirement Community	Billings, MT	2/16/2012	$	16,640,440
One senior housing property
Primrose Retirement Community of Grand Island	Grand Island, NE	2/16/2012		13,862,710
One senior housing property
Primrose Retirement Community of Marion	Marion, OH	2/16/2012		15,480,587
One senior housing property
Primrose Retirement Community of Mansfield	Mansfield, OH	2/16/2012		19,129,186
One senior housing property
Primrose Retirement Community of Casper	Casper, WY	2/16/2012		18,937,077
One senior housing property
			$	84,050,000

The senior housing properties above are subject to long-term triple-net leases with a base term of 10 years and two additional five-year renewal options. Annual base rent is equal to the properties’ lease basis multiplied by the lease rate. The lease rate is 7.875% in the initial lease year and will escalate thereafter pursuant to the lease agreements. Annual capital reserve income is paid to the Company based on $300 per unit each year.

The following summarizes the allocation of the purchase price for the above properties, and the estimated fair values of the assets acquired:

	Total Purchase Price
Land and land improvements	$	5,746,081
Buildings		75,680,273
Equipment		933,313
In-place lease intangibles		1,690,333
	$	84,050,000

The weighted-average amortization period for in-place lease intangibles as of the date of the acquisition was 10 years.

The revenues and net income (loss) attributable to the properties included in the Company’s unaudited condensed consolidated operations were approximately $1.9 million and $0.3 million for the quarter ended June 30, 2012, respectively, and $2.9 million and $(1.6) million for the six months ended June 30, 2012, respectively.

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CNL HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012

(UNAUDITED)

3. Acquisitions (continued)

The following table presents the unaudited pro forma results of operations of the Company as if each of the properties were acquired as of January 1, 2012 and owned during the quarter and six months ended June 30, 2012:

	Quarter ended June 30, 2012			Six months ended June 30, 2012
Revenues	$	1,922,467		$	3,844,948
Net loss	$	(3,479,565	)	$	(6,171,923	)
Loss per share of common stock (basic and diluted)	$	(0.55	)	$	(1.38	)
Weighted average number of shares of common stock outstanding (basic and diluted) (1)		6,326,923			4,484,422

FOOTNOTES:

(1) As a result of the properties being treated as operational since January 1, 2012, the Company assumed approximately 603,303 shares were issued as of January 1, 2012. Consequently the weighted average shares outstanding was adjusted to reflect this amount of shares being issued on January 1, 2012 instead of actual dates on which the shares were issued, and such shares were treated as outstanding as of the beginning of the periods presented.

4. Real Estate Investment Properties, net

As of June 30, 2012, real estate investment properties consisted of the following:

Land and land improvements	$	5,746,081
Buildings		75,680,273
Equipment		933,313
Less: accumulated depreciation		(785,735	)
	$	81,573,932

For the quarter and six months ended June 30, 2012, depreciation expense on the Company’s real estate investment properties was approximately $0.6 million and $0.8 million, respectively.

5. Operating Leases

As of June 30, 2012, the Company owned five real estate investment properties that were 100% leased under operating leases. The leases will expire in February 2022, subject to the tenant’s option to extend the leases for two additional five-year renewal options. Annual base rent is equal to the properties’ lease basis multiplied by the lease rate. The lease rate is 7.875% in the initial lease year and will escalate thereafter pursuant to the lease agreements. Annual capital reserve income is paid to the Company based on $300 per unit each year. Under the terms of the lease agreements, the tenant is responsible for payment of property taxes, general liability insurance, utilities, repairs and maintenance, including structural and roof expenses.

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CNL HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012

(UNAUDITED)

5. Operating leases (continued)

The tenant is expected to pay real estate taxes directly to taxing authorities. However, if the tenant does not pay, the Company will be liable.

The following is a schedule of future minimum lease payments to be received under non-cancellable operating leases as of June 30, 2012:

2012	$	3,372,800
2013		6,929,069
2014		7,139,463
2015		7,349,856
2016		7,560,250
Thereafter		42,057,132
	$	74,408,570

6. Intangibles, net

The gross carrying amount and accumulated amortization of the Company’s intangible assets as of June 30, 2012 are as follows:

Intangible Assets	Gross Carrying Amount		Accumulated Amortization			Net Book Value as of June 30, 2012
In-place leases	$	1,690,333	$	(56,344	)	$	1,633,989

Amortization expense on the Company’s intangible assets was approximately $0.04 million and $0.06 million for the quarter and six months ended June 30, 2012, respectively.

The estimated future amortization for the Company’s intangible assets as of June 30, 2012 was as follows:

2012	$	84,517
2013		169,033
2014		169,033
2015		169,033
2016		169,033
Thereafter		873,340
	$	1,633,989

11

CNL HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012

(UNAUDITED)

7. Unconsolidated Entity

Unconsolidated Entity — In June 2012, the Company acquired a 55% membership interest in seven senior housing properties through a joint venture, CHTSUN Partners IV, LLC (“CHTSun IV”), formed by the Company and its co-venture partner, Sunrise Senior Living Investments, Inc. (“Sunrise”), for approximately $56.7 million. The remaining 45% interest is held by Sunrise. The total acquisition price for the seven senior housing properties was approximately $226.1 million. CHTSun IV obtained a $125.0 million loan from The Prudential Insurance Company of America (“Prudential”), a portion of which was used to refinance the existing indebtedness encumbering the properties in the portfolio. The non-recourse loan which is collateralized by the properties has a maturity date of March 5, 2019 and a fixed-interest rate of 4.66% on $55.0 million of the principal amount and 5.25% on $70.0 million of the principal amount of the loan. The loan requires interest-only payments on $55.0 million of the principal amount until September 5, 2012 and interest-only payments on $70 million of the principal amount until January 5, 2013 and monthly payments on both outstanding amounts thereafter of principal and interest based upon a 30-year amortization schedule.

Under the terms of the venture agreement for CHTSun IV, the Company is entitled to receive a preferred return of 11% on its invested capital for the first six years and shares control over major decisions with Sunrise. Subject to certain restrictions, Sunrise has the option to acquire 100% of the Company’s interest in the Joint Venture in years one and two and in years four through seven. The calculation of Sunrise’s purchase price is based upon a predetermined formula as provided in the venture agreement.

The Company accounts for this investment under the equity method of accounting. While several significant decisions are shared between the Company and its joint venture partner, the Company does not control the venture or direct the activities that most significantly impact the venture’s performance.

As of June 30, 2012, the Company’s investment in its unconsolidated entity was approximately $56.1 million. The following tables present financial information for the Company’s unconsolidated entity as of and for the quarter and six months ended June 30, 2012:

Summarized operating data:

	Quarter ended June 30, 2012 (2)			Six months ended June 30, 2012 (2)
Revenue	$	—		$	—
Operating loss	$	(1,372,635	)	$	(1,372,635	)
Net loss	$	(1,433,935	)	$	(1,433,935	)
Loss allocable to venture partner (1)	$	(660,307	)	$	(660,307	)
Loss allocable to the Company (1)	$	(773,628	)	$	(773,628	)
Amortization of capitalized costs		—			—
Equity in earnings (loss) of unconsolidated entity	$	(773,628	)	$	(773,628	)

FOOTNOTES:

(1) Income is allocated between the Company and its joint venture partner using the HLBV method of accounting.

(2) Represents operating data from the date of acquisition through the end of the period presented.

12

CNL HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012

(UNAUDITED)

8. Borrowings

In connection with the closing of the five senior housing properties, the Company entered into a collateralized loan agreement with a lender in the original aggregate principal amount of $71.4 million (the “Loan”). The Loan matures in February 2013. The Loan initially bore interest at LIBOR plus 6.00% and the Company was required to pay down the Loan at an amount equal to 50% of the net offering proceeds collected through the Company’s offering of common stock, as defined in the loan agreement, until the Loan had been paid down to an outstanding principal balance of approximately $54.0 million. The Company met this requirement in April 2012. For the remainder of the term, monthly interest only payments will be required through maturity, and the Loan will bear interest at a rate equal to LIBOR plus 3.25%. The Company may prepay the Loan at any time, without prepayment penalty. As of June 30, 2012, approximately $49.9 million was outstanding under the Loan.

The Loan is collateralized by first priority mortgages and deeds of trust on all real property of the senior housing properties and by an assignment of all leases and agreements relating to the use and occupancy of the properties. The Loan contains customary affirmative, negative and financial covenants including limitations on incurrence of additional indebtedness, restrictions on distributions, minimum occupancy at the properties, debt service coverage and minimum tangible net worth. As of June 30, 2012, the Company was in compliance with the aforementioned financial covenants.

In connection with the closing of CHTSun IV, the Company entered into a mezzanine loan agreement, providing for a mezzanine loan in the original aggregate principal amount of $40.0 million (the “Mezz Loan”). The Mezz Loan matures on July 5, 2014, unless the Company exercises its option to extend the term of the Mezz Loan for one year, provided certain terms and conditions are satisfied. Interest on the outstanding principal balance of the Mezz Loan accrues from the date of the Mezz Loan through maturity at (i) a rate of 8% per annum from the date of origination through and including the payment date in July, 2013, and (ii) a rate of 12% per annum for the remaining term of the Mezz Loan. Interest payments are payable monthly. At maturity, the Company is required to pay the outstanding principal balance, all accrued and unpaid interest thereon, the exit fee. (defined in the loan agreement as the sum of: (i) 2% of the principal balance of the Mezz Loan being prepaid and/or repaid plus (ii) upon the prepayment and/or repayment of the Mezz Loan in full, if the lender has not received interest payments totaling at least $3,200,000 as of such date, the amount equal to: (x) $3,200,000 minus (y) the aggregate amount of interest payments received as of such date) and all other amounts due. The Company may prepay the Mezz Loan, in whole or in part, plus any applicable exit fee.

In connection with entering into the loan with Prudential relating to the CHTSUN IV joint venture, described in Note 7. “Unconsolidated Entity”, the Company entered into a separate agreement with Prudential, where as a condition of Prudential consenting to the Mezz Loan, Prudential required the Company to repay the Mezz Loan within twelve months to the extent the Company raises sufficient net offering proceeds to satisfy the Mezz Loan. To the extent that the Company does not repay the Mezz Loan within twelve months, it will be required to restrict the use of all net offering proceeds to pay down the outstanding balance until the Mezz Loan is repaid in full.

The Mezz Loan is collateralized by a first priority security interest in the Company’s membership interest in CHTSun IV.

The following is a schedule of future principal payments and maturity for the Company’s borrowings as of June 30, 2012:

2012	$	—
2013		49,878,000
2014		40,000,000
2015		—
2016		—
Thereafter		—
	$	89,878,000

13

CNL HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012

(UNAUDITED)

8. Borrowings (continued)

The fair market value and carrying value of the mortgage notes payable was approximately $89.9 million, as of June 30, 2012 based on then-current rates and spreads the Company would expect to obtain for similar borrowings. Because this methodology includes inputs that are less observable by the public and are not necessarily reflected in active markets, the measurement of the estimated fair values related to our mortgage notes payable is categorized as level 3 on the three-level valuation hierarchy. The estimated fair value of accounts payable and accrued expenses approximates the carrying value as of June 30, 2012 and December 31, 2011 because of the relatively short maturities of the obligations.

9. Related Party Arrangements

For the quarter and six months ended June 30, 2012, the Company incurred the following fees in connection with its Offering:

	Quarter Ended June 30, 2012		Six Months Ended June 30, 2012
Selling commissions	$	2,510,748	$	4,432,183
Marketing support fees		1,217,197		2,040,669
	$	3,727,945	$	6,472,852

For the quarter and six months ended June 30, 2012, the Company incurred the following fees and reimbursable expenses as follows:

	Quarter Ended June 30,  2012		Six Months Ended June 30, 2012
Reimbursable expenses:
Offering costs	$	2,022,653	$	3,427,346
Operating expenses		407,337		824,043
		2,429,990		4,251,389
Investment services fees		2,301,311		3,856,236
Property management fees		33,137		49,515
Asset management fees		210,125		280,167
	$	4,974,563	$	8,437,307

14

CNL HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012

(UNAUDITED)

9. Related Party Arrangements (continued)

As of June 30, 2012 and December 31, 2011, the following amounts were included in due to (from) related parties in the financial statements:

	June 30, 2012			December 31, 2011
Reimbursable expenses:
Offering costs	$	(262,390	)	$	41,416
Operating expenses		131,030			69,173
		(131,360	)		110,589
Selling commissions		135,228			57,516
Marketing support fees		61,525			24,650
Property management fees		49,515			—
		246,268			82,166
Due to CNL Lifestyle Properties, Inc.		268,715			—
	$	383,623		$	192,755

Organizational and other offering costs incurred by the Advisor become a liability to the Company only to the extent selling commissions, marketing support fees and organizational and other offering costs do not exceed 15% of the gross proceeds of the Offering. The Advisor has incurred on the Company’s behalf approximately an additional $1.7 million of costs in connection with the Offering exceeding the 15% expense cap as of June 30, 2012. These costs will be recognized by the Company in future periods as the Company receives future Offering proceeds to the extent such costs are within such 15% limitation.

10. Stockholders’ Equity

Public Offering — As of June 30, 2012, the Company had received aggregate offering proceeds of approximately $82.2 million (8.2 million shares) including approximately $0.4 million (47,228 shares) received through its Reinvestment Plan.

Distributions — During the six months ended June 30, 2012, the Company declared cash distributions of approximately $0.76 million of which $0.34 million were paid in cash to stockholders and $0.42 million were reinvested pursuant to the Company’s Reinvestment Plan. In addition, the Company declared and made stock distributions of 56,931 shares of common stock for the six months ended June 30, 2012.

For the six months ended June 30, 2012, 100% of the cash distributions paid to stockholders are expected to be a return of capital to stockholders for federal income tax purposes.

No amounts distributed to stockholders for the six months ended June 30, 2012 were required to be or have been treated by the Company as a return of capital for purposes of calculating the stockholders’ return on their invested capital as described in the Company’s advisory agreement. The distribution of new common shares to recipients is non-taxable.

Redemptions — During the six months ended June 30, 2012, the Company redeemed 1,049 shares of common stock for approximately $0.01 million.

15

CNL HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012

(UNAUDITED)

11. Commitment and Contingencies

In the ordinary course of business, the Company may become subject to litigation or claims. There are no material legal proceedings pending or known to be contemplated against the Company.

See Note 9. “Related Party Arrangements” for information on contingent amounts due to the Company’s Advisor in connection with its Offering and expenses thereof.

12. Subsequent Events

In July 2012, the Company amended its property management agreement. The amendment clarified the nature of the fees payable and duties of the property manager. The fees payable to the property manager under the revised agreement will continue to be determined in a manner consistent with past determinations under the prior agreement.

The Company’s board of directors declared a monthly cash distribution of $0.03333 and a monthly stock distribution of 0.002500 shares on each outstanding share of common stock on July 1, 2012 and August 1, 2012. These distributions are to be paid and distributed by September 30, 2012.

During the period July 1, 2012 through August 9, 2012, the Company received additional subscription proceeds of approximately $18.6 million (1.9 million shares).

16

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

The following discussion is based on the unaudited condensed consolidated financial statements as of June 30, 2012 and December 31, 2011. Amounts as of December 31, 2011 included in the unaudited condensed consolidated financial statements have been derived from the audited consolidated financial statements as of that date. This information should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and the notes thereto, as well as the audited consolidated financial statements, notes and management’s discussion and analysis included in our annual report on Form 10-K for the year ended December 31, 2011. Capitalized terms used in this Item 2 have the same meaning as in the accompanying condensed consolidated financial statements.

Statement Regarding Forward Looking Information

Certain statements in this document may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). CNL Healthcare Trust, Inc., formerly known as CNL Properties Trust, Inc. (herein also referred to as “we,” “our,” or “us”) includes CNL Healthcare Trust, Inc. and each of its subsidiaries. We intend that all such forward-looking statements be covered by the safe-harbor provisions for forward-looking statements of Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable.

All statements, other than statements that relate solely to historical facts, including, among others, statements regarding our future financial position, business strategy, projected levels of growth, results of operations, projected costs and projected financing needs, are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of the management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should,” “continues,” “pro forma” or similar expressions. Forward-looking statements are not guarantees of future performance and actual results may differ materially from those contemplated by such forward-looking statements due to a variety of risks, uncertainties and other factors, including but not limited to, the factors detailed in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 and other documents filed from time to time with the United States Securities and Exchange Commission.

Many of these factors are beyond our ability to control or predict. Such factors include, but are not limited to: the global impact of the current credit crisis in the U.S. and Europe; changes in general economic conditions in the U.S. or globally (including financial market fluctuations); risks associated with our investment strategy; risks associated with the real estate markets in which we invest; risks associated with the use of debt to finance our business activities, including refinancing and interest rate risk and our failure to comply with our potential debt covenants; our failure to obtain, renew or extend necessary financing or to access the debt or equity markets; competition for properties and/or tenants in the markets in which we engage in business; the impact of current and future environmental, zoning and other governmental regulations affecting our potential properties; our ability to make necessary improvements to properties on a timely or cost-efficient basis; risks related to development projects or acquired property value-add conversions, if applicable (including construction delays, cost overruns, our inability to obtain necessary permits and/or public opposition to these activities); defaults on or non-renewal of leases by tenants; failure to lease properties at all or on favorable rents and terms; unknown liabilities in connection with acquired properties or liabilities caused by property managers or operators; our failure to successfully manage growth or integrate acquired properties and operations; material adverse actions or omissions by any joint venture partners; increases in operating costs and other expense items and costs, uninsured losses or losses in excess of our insurance coverage; the impact of outstanding or potential litigation; risks associated with our tax structuring; our failure to qualify and maintain our status as a real estate investment trust and our ability to protect our intellectual property and the value of our brands.

Management believes these forward-looking statements are reasonable. However, such statements are necessarily dependent on assumptions, data or methods that may be incorrect or imprecise and we may not be able to realize them. Investors are cautioned not to place undue reliance on any forward-looking statements which are based on current expectations. All written and oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by these cautionary statements. Further, forward-looking statements speak only as of the date they are made and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time unless otherwise required by law.

17

Overview

CNL Healthcare Trust, Inc., formerly known as CNL Properties Trust, Inc., is a Maryland corporation incorporated on June 8, 2010 that intends to qualify as a real estate investment trust (“REIT”) in 2012 for U.S. federal income tax purposes. In order to better reflect our current investment focus, as described below, we amended our amended and restated articles of incorporation on February 9, 2012 to change our name to CNL Healthcare Trust, Inc.

In February 2012, we announced that we will be placing our investment focus on acquiring properties primarily in the United States within the senior housing and healthcare sectors, although we may also acquire properties in the lifestyle and lodging sectors. Senior housing asset classes we may acquire include active adult communities (age-restricted and age-targeted housing), independent and assisted living facilities, continuing care retirement communities, memory care facilities and skilled nursing facilities. Healthcare asset classes we may acquire include medical office buildings, as well as other types of healthcare and wellness-related properties such as physicians’ offices, specialty medical and diagnostic service providers, specialty hospitals, walk-in clinics and outpatient surgery centers, hospitals and inpatient rehabilitative facilities, long-term acute care hospitals, pharmaceutical and medical supply manufacturing facilities, laboratories and research facilities and medical marts. Lifestyle asset classes we may acquire are those properties that reflect or are affected by the social, consumption and entertainment values and choices of our society and generally include ski and mountain resorts, golf courses, attractions (such as amusement parks, waterparks and family entertainment centers), marinas, and other leisure or entertainment-related properties. Lodging asset classes we may acquire may include resort, boutique and upscale properties or any full service, limited service, extended stay and/or other lodging-related properties. We expect to primarily lease our properties to wholly-owned taxable REIT subsidiaries (“TRS Entities”) and engage independent third-party managers under management agreements to operate the properties as permitted under applicable tax regulations. However, we may also lease our properties to third-party tenants under a triple-net lease. We also may invest in and originate mortgage, bridge or mezzanine loans or in entities that make investments similar to the foregoing.

We believe recent demographic trends and compelling supply and demand indicators present a strong case for an investment focus on the acquisition of senior housing and healthcare properties. We believe that the senior housing and healthcare sectors will continue to provide attractive opportunities as compared to other asset sectors.

Portfolio Analysis

During the first six months of 2012, we acquired interests in 12 senior housing properties of which seven of these properties were owned through an unconsolidated joint venture. Our initial focus has been on high quality senior housing properties that are operated by a mix of national or regional operators. Additionally, we have and may continue to invest in joint ventures where we have preferred returns ahead of our partners, which helps provide downside protection and consistent cash flows from our investment. While we typically seek to invest in properties that are at or near stabilization, we may also invest in new property developments on a more limited basis. Additionally, we are currently exploring diversifying beyond senior housing into medical office properties. We anticipate that the type of senior housing and healthcare assets that we focus on will evolve over time based on the opportunities that we see as well as our goal of building a portfolio with long-term growth and income generation that is diversified by asset type, operator, and geographic location.

Our five wholly-owned senior housing properties are leased under triple-net leases. Under this structure, we report rental income from our consolidated properties and are not directly exposed to the variability of property-level operating revenues and expenses. While we are not directly impacted by the performance of the underlying properties, we believe that the financial and operational performance of our tenants provides an indication about the health of our tenant and their ability to pay our rent. When evaluating our tenant’s performance, management reviews operating statistics of the underlying properties, including revenue per occupied unit (“RevPOU”) and occupancy levels. RevPOU, which we define as total revenue divided by average number of occupied units during a month, is a performance metric within the healthcare sector. This metric assists us to determine the ability to achieve market rental rates and to obtain revenues from providing care related services.

Occupancy on our wholly-owned portfolio was 95.7% and 96.4% as of June 30, 2012 and March 31, 2012, respectively. RevPOU remained unchanged at approximately $3,300 for the three months ended June 30, 2012 and March 31, 2012.

18

Liquidity and Capital Resources

General

Our primary source of capital has been and is expected to continue to be proceeds we receive from our Offering. Our principal demands for funds will be for:

• the acquisition of real estate and real estate-related assets,

• the payment of offering costs and operating expenses,

• the payment of debt service on our outstanding indebtedness, and

• the payment of distributions.

Generally, once we have made substantial investments, we expect to meet cash needs for items other than acquisitions and offering costs from our cash flow from operations, and we expect to meet cash needs for acquisitions and offering costs from net proceeds from our Offering and financings. However, during the early stages of our life cycle and until such time as we are fully invested, we have and may continue to use proceeds from our Offering and/or financing proceeds to pay a portion of our operating expenses, distributions and debt service.

We intend to strategically leverage our real properties and possibly other assets and use debt as a means of providing additional funds for the acquisition of properties and the diversification of our portfolio. Our ability to increase our diversification through borrowings could be adversely affected by credit market conditions which result in lenders reducing or limiting funds available for loans, including loans collateralized by real estate. During times when interest rates on mortgage loans are high or financing is otherwise unavailable on a timely basis, we may purchase certain properties for cash with the intention of obtaining a mortgage loan for a portion of the purchase price at a later time.

Potential future sources of capital include proceeds from collateralized or uncollateralized financings or lines of credit from banks or other lenders, proceeds from the sale of properties, other assets, and undistributed operating cash flows. If necessary, we may use financings or other sources of capital in the event of unforeseen significant capital expenditures.

The number of properties, loans and other permitted investments we may acquire or make will depend on the number of shares sold through our Offering of common stock and the resulting amount of the net offering proceeds available for investment. If the number of shares sold is substantially less than the maximum amount of the Offering, we will likely make only a limited number of investments and will not achieve significant diversification of our investments.

Sources of Liquidity and Capital Resources

Common Stock Offering

To date, our primary source of capital has been the proceeds from our Offering and proceeds from our debt. For the six months ended June 30, 2012, we received aggregate offering proceeds of approximately $69.0 million (6.9 million shares) including approximately $0.4 million (44,316 shares) received through our Reinvestment Plan. During the period July 1, 2012 through August 9, 2012, we received additional subscription proceeds of approximately $18.6 million (1.9 shares). We expect to continue to raise capital under our Offering.

Borrowing

We have borrowed and intend to continue to borrow money to acquire properties and to pay certain related fees and to cover periodic shortfalls between distributions paid and cash flows from operating activities. In general, we have pledged our assets in connection with our borrowings.

19

In connection with the closing of the five senior housing properties, we entered into a collateralized loan agreement with a lender, providing for a one-year senior facility in the original aggregate principal amount of $71.4 million (the “Loan”). The Loan matures in February 2013. The Loan initially bore interest at LIBOR plus 6.00% and we were required to pay down the Loan at an amount equal to 50% of our net offering proceeds collected through our Offering, as defined in the loan agreement, until the Loan had been paid down to an outstanding principal balance of approximately $54.0 million. We met this requirement in April 2012, and for the remainder of the term monthly interest only payments will be required through maturity and the Loan will bear interest at a rate equal to LIBOR plus 3.25%. We may prepay the Loan at any time, without any prepayment penalty. As of June 30, 2012, approximately $49.9 million was outstanding under the Loan.

The Loan is collateralized by first priority mortgages and deeds of trust on all real property of the properties and by an assignment of all leases and agreements relating to the use and occupancy of the properties. The Loan contains customary affirmative, negative and financial covenants including limitations on incurrence of additional indebtedness, restrictions on distributions, minimum occupancy at the properties, debt service coverage and minimum tangible net worth. As of June 30, 2012, we were in compliance with the aforementioned financial covenants.

In connection with the closing of CHTSun IV, we entered into a mezzanine loan agreement, providing for a mezzanine loan in the original aggregate principal amount of $40.0 million (the “Mezz Loan”). The Mezz Loan matures on July 5, 2014, unless we exercise out option to extend the term of the Mezz Loan for one year, provided certain terms and conditions are satisfied. Interest on the outstanding principal balance of the Mezz Loan accrues from the date of the Mezz Loan through maturity at (i) a rate of 8% per annum from the date of origination through and including the payment date occuring in July 2013, and (ii) a rate of 12% per annum for the remaining term of the Mezz Loan. Interest payments are payable monthly. At maturity, we are required to pay the outstanding principal balance, all accrued and unpaid interest thereon, the exit fee (defined in the loan agreement as the sum of: (i) 2% of the principal balance of the Mezz Loan being prepaid and/or repaid plus (ii) upon the prepayment and/or repayment of the Mezz Loan in full, if the lender has not received interest payments totaling at least $3,200,000 as of such date, the amount equal to: (x) $3,200,000 minus (y) the aggregate amount of interest payments received as of such date) and all other amounts due. We may prepay the Mezz Loan, in whole or in part, plus any applicable exit fee.

In connection with entering into the loan with Prudential relating to our CHTSUN IV joint venture, described in Note 7. “Unconsolidated Entity”, we entered into a separate agreement with Prudential, where as a condition of Prudential consenting to the Mezz Loan, Prudential required us to repay the Mezz Loan within twelve months to the extent we raise sufficient net offering proceeds to satisfy the Mezz Loan. To the extent that we do not repay the Mezz Loan within twelve months, we will be required to restrict the use of all net offering proceeds to pay down the outstanding balance until the Mezz Loan is repaid in full.

The Mezz Loan is collateralized by a first priority security interest in our membership interest in CHTSun IV.

We paid approximately $2.1 million in loan costs in connection with the aforementioned debt transactions. As of June 30, 2012, we had an aggregate debt leverage ratio of approximately 58.0%. Our target leverage ratio is between 40% to 60% debt to total assets; however, during our early growth period leverage may be higher for a period of time.

20

Uses of Liquidity and Capital Resources

Acquisitions

Consolidated Entities

During the six months ended June 30, 2012, we acquired the following real estate investment properties:

Property/Description	Location	Date of Acquisition	Allocated Purchase Price
Sweetwater Retirement Community	Billings, MT	2/16/2012	$	16,640,440
One senior housing property
Primrose Retirement Community of Grand Island	Grand Island, NE	2/16/2012		13,862,710
One senior housing property
Primrose Retirement Community of Marion	Marion, OH	2/16/2012		15,480,587
One senior housing property
Primrose Retirement Community of Mansfield	Mansfield, OH	2/16/2012		19,129,186
One senior housing property
Primrose Retirement Community of Casper	Casper, WY	2/16/2012		18,937,077
One senior housing property
			$	84,050,000

The senior housing properties above are subject to long-term triple-net leases. The leases expire in February 2022 subject to the tenant’s option to extend the lease for two additional five year renewal options. Annual base rent is equal to the properties’ lease basis multiplied by the lease rate. The lease rate is 7.875% in the initial lease year and will escalate thereafter pursuant to the lease agreements. Annual capital reserve income is paid to us based on $300 per unit each year. Under the terms of the lease agreements, the tenant is responsible for payment of property taxes, general liability insurance, utilities, repairs and maintenance, including structural and roof expenses. The tenant is expected to pay directly to taxing authorities for real estate taxes. However, if the tenant does not pay, we will be liable.

Unconsolidated Entity

In June 2012, we acquired a 55% membership interest in seven senior housing properties through a joint venture, CHTSun IV, formed by us and our co-venture partner, Sunrise Senior Living Investments, Inc. (“Sunrise”), for approximately $56.7 million. The remaining 45% interest is held by Sunrise. Under the terms of the venture agreement for CHTSun IV, we are entitled to receive a preferred return of 11% on our invested capital for the first six years and share control over major decisions with Sunrise. Subject to certain restrictions, Sunrise has the option to acquire 100% of our interest in the joint venture in years one and two and in years four through seven. The calculation of Sunrise’s purchase price is based upon a predetermined formula as provided in the venture agreement.

Debt Repayments

During the six months ended June 30, 2012, we repaid $21.5 million of outstanding principal under our $71.4 million Loan. Debt payments during the six months ended June 30, 2012 were funded using net proceeds from our Offering.

Stock Issuance and Offering Costs

Under the terms of the Offering, certain affiliates are entitled to receive selling commissions and a marketing support fee of up to 7% and 3%, respectively, of gross offering proceeds on shares sold. In addition, affiliates are entitled to reimbursement of actual expenses incurred in connection with the Offering, such as filing fees, legal, accounting, printing, and due diligence expense reimbursements, which are recorded as stock issuance and offering costs and deducted from stockholders’ equity. In accordance with our articles of incorporation, the total amount of selling commissions, marketing support fees, and other organizational and offering costs paid by us may not exceed 15% of the aggregate gross offering proceeds. Offering costs are generally funded by our Advisor and subsequently reimbursed by us subject to this limitation.

21

During the six months ended June 30, 2012, we paid approximately $10.4 million in stock issuance and Offering costs. The Advisor had incurred approximately $1.7 million of additional costs in connection with the Offering, exceeding the 15% limitation, on our behalf as of June 30, 2012. These costs will be recognized by us in future periods as we receive future offering proceeds to the extent that the costs are within the 15% limitation.

Distributions

Once we qualify as a REIT, we will be required to make distributions, other than capital gain distributions, to our stockholders each year in the amount of at least 90% of our REIT taxable income. We may make distributions in the form of cash or other property, including distributions of our own securities. We expect to generate little, if any, cash flow or funds from operations available for distribution until we make substantial investments. Until we have sufficient cash flow or funds from operations, we have decided and may continue to make stock distributions or to fund all or a portion of cash distributions from sources other than cash flow from operations or funds from operations, such as from cash flows generated by financing activities.

On July 29, 2011, our board of directors authorized a distribution policy providing for monthly cash distributions of $0.03333 per share (which is equal to an annualized distribution rate of 4%) together with stock distributions of 0.002500 shares of common stock per share (which is equal to an annualized distribution rate of 3%) for a total annualized distribution of 7% on each outstanding share of common stock (based on the $10.00 offering price) payable to all common stockholders of record as of the close of business on the first business day of each month. Our board authorized a policy providing for distributions of cash and stock rather than solely of cash in order to retain cash for investment opportunities.

The amount of distributions declared to our stockholders will be determined by our Board of Directors and is dependent upon a number of factors, including:

• Sources of cash available for distribution such as current year and inception to date cumulative cash flows from operating activities, Funds from Operations (“FFO”) and Modified Funds from Operations (“MFFO”), as well as, expected future long-term stabilized cash flows, FFO and MFFO;

• The proportion of distributions paid in cash compared to the amount being reinvested through our Reinvestment Plan;

• Limitations and restrictions contained in the terms of our current and future indebtedness concerning the payment of distributions; and

• Other factors, including but not limited to, the avoidance of distribution volatility, our objective of continuing to qualify as a REIT, capital requirements, the general economic environment and other factors.

Distributions will be paid quarterly and will be calculated for each stockholder as of the first day of each month the stockholder has been a stockholder of record in such quarter. The cash portion of such distribution will be payable and the distribution of shares will be issued on or before the last day of the applicable quarter; however, in no circumstance will the cash distribution and the stock distribution be paid on the same day. Fractional shares of common stock accruing as distributions will be rounded to the nearest hundredth when issued on the distribution date. For the six months ended June 30, 2012, we distributed 56,931 shares of common stock.

The following table represents total cash distributions declared, distributions reinvested and cash distributions per share for the six months ended June 30, 2012. We commenced operations on October 5, 2011, as such there were no distributions declared during the six months ended June 30, 2011.

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									Paid in Cash
Periods	Cash Distributions Per Share		Total Cash Distributions Declared		Distributions Reinvested  (1)		Cash Distributions  (2)		Cash Flows Provided by Operating Activities (3)
2012 Quarter
First	$	0.09999	$	202,598	$	112,295	$	90,303	$	—
Second		0.09999		557,865		308,872		248,993		—
Year	$	0.19998	$	760,463	$	421,167	$	339,296	$	—

FOOTNOTES:

(1) Distributions reinvested may be dilutive to stockholders to the extent that they are not covered by cash flows from operations, FFO and MFFO and such shortfalls are instead covered by proceeds from our Offering.

(2) Cash flows from operating activities calculated in accordance with GAAP are not necessarily indicative of the amount of cash available to pay distributions. For example, GAAP requires that the payment of acquisition fees and costs be classified as a use of cash in operating activities in the statement of cash flows, which directly reduces the measure of cash flows from operations. However, acquisition fees and costs are paid for with proceeds from our Offering as opposed to operating cash flows. Additionally, the board of directors also uses other measures such as FFO and MFFO in order to evaluate the level of distributions.

(3) For the six months ended June 30, 2012, cash distributions paid to stockholders were 100% funded with proceeds from our Offering.

For the six months ended June 30, 2012, 100% of the cash distributions paid to stockholders are expected to be considered a return of capital to stockholders for federal income tax purposes. No amounts distributed to stockholders for the six months ended June 30, 2012, were required to be or have been treated by us as a return of capital for purposes of calculating the stockholders’ return on their invested capital as described in our advisory agreement. The distribution of new common shares to the recipients is non-taxable.

Our board of directors declared a monthly cash distribution of $0.03333 and a monthly stock distribution of 0.002500 shares on each outstanding share of common stock on July 1, 2012 and August 1, 2012. These distributions are to be paid and distributed by September 30, 2012.

Redemptions

During the six months ended June 30, 2012, we redeemed 1,049 shares of common stock for approximately $0.01 million.

Net Cash Used in Operating Activities

During the six months ended June 30, 2012, we used approximately $1.9 million of net cash in operating activities. Cash was used primarily for the payment of acquisition fees and expenses which were funded from proceeds of our Offering. Because we have only recently acquired properties and are in our acquisition stage, the rental income from operating leases from our properties may not be sufficient to fund all of our expenses. Additionally, acquisition fees and expenses are funded with Offering or debt proceeds even though they are required to be shown as a use of operating cash in accordance with GAAP. Until such time as we generate sufficient rental income from operating leases from our investments, we expect to continue to fund such amounts with Offering proceeds.

Results of Operations

From the time of our formation on June 8, 2010 through October 4, 2011, we had not commenced operations because we were in our development stage and had not received the minimum required offering amount of $2.0 million in shares of common stock. Operations commenced on October 5, 2011, when aggregate subscription proceeds in excess of the minimum offering amount were released to us from escrow. As a result, there are no comparative financial statements for the six months ended June 30, 2011.

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As of June 30, 2012, we owned five senior housing properties and a 55% interest in seven senior housing properties through an unconsolidated joint venture. The results of operations for the quarter and six months ended June 30, 2012 are not indicative of future performance due to the limited time in which we have been operational and the fact that we completed our first property acquisitions in February 2012 and acquired the 55% interest in June 2012. As we continue to acquire properties, we expect to have increased revenues and incur greater expenses in each of the above categories.

The following is a discussion of our results of operations for the quarter and six months ended June 30, 2012:

Rental Income from Operating Leases. Rental income from operating leases was approximately $1.9 million and $2.9 million for the quarter and six months ended June 30, 2012, respectively, as a result of the five senior housing properties acquired in February 2012. We do not anticipate significant additional sources of revenues for the remainder of 2012 until we make additional consolidated acquisitions. Our second investment was through an unconsolidated joint venture and the results of this entity will flow through equity in earnings (loss) from unconsolidated entity.

Acquisition Fees and Expenses. Acquisition fees and expenses for the quarter and six months ended June 30, 2012 were approximately $2.4 million and $4.3 million, respectively, primarily relating to the acquisition of five senior housing properties, the 55% membership interest in the CHTSun IV venture and other acquisitions which are in process. This amount includes an investment services fee of approximately $2.3 million and $3.9 million for the quarter and six months ended June 30, 2012, respectively, which was paid to our Advisor for services in connection with identifying, negotiating and closing on the five senior housing properties acquired and the formation of CHTSun IV venture.

General and Administrative. General and administrative expenses for the quarter and six months ended June 30, 2012 were approximately $0.6 million and $1.1 million, respectively, and were comprised primarily of personnel expenses of affiliates of our Advisor, directors’ and officers’ insurance, accounting and legal fees, and board of director fees.

Asset Management Fees. We incurred approximately $0.2 million and $0.3 million in asset management fees payable to our Advisor during the quarter and six months ended June 30, 2012, respectively, as a result of the five senior housing properties acquired.

Property Management Fees. We incurred approximately $0.03 million and $0.05 million in property management fees payable to our property manager during the quarter and six months ended June 30, 2012, respectively, as a result of its services in managing the property operations of our five senior housing properties.

Depreciation and Amortization. Depreciation and amortization expenses for the quarter and six months ended June 30, 2012 was approximately $0.6 million and $0.8 million, respectively, and was comprised of depreciation and amortization of the buildings, equipment, land improvements and in-place leases related to our five senior housing properties.

Interest Expense and Loan Cost Amortization. Interest expense and loan cost amortization for the quarter and six months ended June 30, 2012 was approximately $0.8 million and $1.4 million, respectively, consisting primarily of interest expense and loan cost amortization relating to debts obtained in connection with the acquisition of the five senior housing properties and the 55% membership interest in the CHTSun IV venture.

Equity in earnings (loss) of unconsolidated entity. Loss on our unconsolidated entity was approximately $0.8 million for both the quarter and six months ended June 30, 2012. In connection with the initial formation of CHTSUN Partners IV, the venture incurred approximately $1.3 million in non-recurring transaction costs, which contributed to the venture’s net loss for the period. Equity in earnings or losses are allocated using the HLBV method, which can create significant variability in earnings or losses from the venture while the preferred cash distributions that we anticipate to receive from the venture may be more consistent as result of our distribution preferences.

We are not aware of any material trends or uncertainties, favorable or unfavorable, that may be reasonably anticipated to have a material impact on either capital resources or the revenues or income to be derived from the acquisition and operation of properties, loans and other permitted investments, other than those referred to in the risk factors identified in “Part II, Item 1A” of this report and the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2011.

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Funds from Operations and Modified Funds from Operations

Due to certain unique operating characteristics of real estate companies, as discussed below, National Association Real Estate Investment Trust (“NAREIT”) promulgated a measure known as funds from operations, or (“FFO”), which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental performance measure. FFO is not equivalent to net income or loss as determined under GAAP.

We define FFO, a non-GAAP measure, consistent with the standards approved by the Board of Governors of NAREIT. NAREIT defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from sales of property, asset impairment write-downs, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Our FFO calculation complies with NAREIT’s policy described above.

The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time, especially if such assets are not adequately maintained or repaired and renovated as required by relevant circumstances and/or is requested or required by lessees for operational purposes in order to maintain the value of the property. We believe that, because real estate values historically rise and fall with market conditions, including inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, provides a more complete understanding of our performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income or loss. However, FFO and modified funds from operations (“MFFO”), as described below, should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or loss in its applicability in evaluating operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP FFO and MFFO measures and the adjustments to GAAP in calculating FFO and MFFO.

Changes in the accounting and reporting promulgations under GAAP for acquisition fees and expenses from a capitalization/depreciation model to an expensed-as-incurred model that were put into effect in 2009 and other changes to GAAP accounting for real estate subsequent to the establishment of NAREIT’s definition of FFO have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses as items that are expensed under GAAP and accounted for as operating expenses. Our management believes these fees and expenses do not affect our overall long-term operating performance. Publicly registered, non-listed REITs typically have a significant amount of acquisition activity and are substantially more dynamic during their initial years of investment and operation. While other start up entities may also experience significant acquisition activity during their initial years, we believe that non-listed REITs are unique in that they have a limited life with targeted exit strategies within a relatively limited time frame after its acquisition activity ceases. Due to the above factors and other unique features of publicly registered, non-listed REITs, the Investment Program Association (“IPA”), an industry trade group, has standardized a measure known as MFFO which the IPA has recommended as a supplemental measure for publicly registered non-listed REITs and which we believe to be another appropriate supplemental measure to reflect the operating performance of a non-listed REIT. MFFO is not equivalent to our net income or loss as determined under GAAP, and MFFO may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate with a limited life and targeted exit strategy, as currently intended. We believe that because MFFO excludes costs that we consider more reflective of investing activities and other non-operating items included in FFO and also excludes acquisition fees and expenses that affect our operations only in periods in which properties are acquired, MFFO can provide, on a going forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) of our operating performance after the period in which we acquired our properties and once our portfolio is in place. By providing MFFO, we believe we are presenting useful information that assists investors and analysts to better assess the sustainability of our operating performance after our properties have been acquired. We also believe that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry.

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We define MFFO, a non-GAAP measure, consistent with the IPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: MFFO (the “Practice Guideline”) issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for the following items, as applicable, included in the determination of GAAP net income or loss: acquisition fees and expenses; amounts relating to deferred rent receivables and amortization of above and below market leases and liabilities (which are adjusted in order to remove the impact of GAAP straight-line adjustments from rental revenues); accretion of discounts and amortization of premiums on debt investments, mark-to-market adjustments included in net income; nonrecurring gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan and unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis. The accretion of discounts and amortization of premiums on debt investments, nonrecurring unrealized gains and losses on hedges, foreign exchange, derivatives or securities holdings, unrealized gains and losses resulting from consolidations, as well as other listed cash flow adjustments are adjustments made to net income in calculating the cash flows provided by operating activities and, in some cases, reflect gains or losses which are unrealized and may not ultimately be realized.

Our MFFO calculation complies with the IPA’s Practice Guideline described above. In calculating MFFO, we exclude acquisition related expenses. Under GAAP, acquisition fees and expenses are characterized as operating expenses in determining operating net income or loss. These expenses are paid in cash by us. All paid and accrued acquisition fees and expenses will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of other properties are generated to cover the purchase price of the property.

Our management uses MFFO and the adjustments used to calculate it in order to evaluate our performance against other non-listed REITs which have limited lives with short and defined acquisition periods and targeted exit strategies shortly thereafter. As noted above, MFFO may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate in this manner. We believe that our use of MFFO and the adjustments used to calculate it allow us to present our performance in a manner that reflects certain characteristics that are unique to non-listed REITs, such as their limited life, limited and defined acquisition period and targeted exit strategy, and hence that the use of such measures is useful to investors. For example, acquisitions costs are funded from our subscription proceeds and other financing sources and not from operations. By excluding expensed acquisition costs, the use of MFFO provides information consistent with management’s analysis of the operating performance of the properties.

Presentation of this information is intended to provide useful information to investors as they compare the operating performance of different non-listed REITs, although it should be noted that not all REITs calculate FFO and MFFO the same way and as such comparisons with other REITs may not be meaningful. Furthermore, FFO and MFFO are not necessarily indicative of cash flows available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as an indication of our performance, as an alternative to cash flows from operations as an indication of its liquidity, or indicative of funds available to fund our cash needs including its ability to make distributions to our stockholders. FFO and MFFO should be reviewed in conjunction with other GAAP measurements as an indication of our performance. MFFO has limitations as a performance measure in an offering such as ours where the price of a share of common stock is a stated value and there is no net asset value determination during the offering stage and for a period thereafter. MFFO is useful in assisting management and investors in assessing the sustainability of operating performance in future operating periods, and in particular, after the offering and acquisition stages are complete and net asset value is disclosed. FFO and MFFO are not useful measures in evaluating net asset value because impairments are taken into account in determining net asset value but not in determining FFO and MFFO.

Neither the SEC, NAREIT nor any other regulatory body has passed judgment on the acceptability of the adjustments we use to calculate FFO or MFFO. In the future, the SEC, NAREIT or another regulatory body may decide to standardize the allowable adjustments across the non-listed REIT industry and we would have to adjust its calculation and characterization of FFO or MFFO.

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The following table presents a reconciliation of net loss to FFO and MFFO for the quarter and six months ended June 30, 2012:

	Quarter Ended June 30, 2012			Six Months Ended June 30, 2012
Net Loss	$	(3,479,565	)	$	(5,892,865	)
Adjustments:
Depreciation and amortization		631,883			842,079
Total funds from operations		(2,847,682	)		(5,050,786	)
Acquisition fees and expenses (1)		2,429,230			4,328,643
Straight-line adjustments for leases (2)		(236,626	)		(344,633	)
MFFO adjustments from unconsolidated entity :(3)
Acquisition fees and expenses		720,809			720,809
Modified funds from operations	$	65,731		$	(345,967	)
Weighted average number of shares of common stock outstanding (basic and diluted)		6,326,923			4,428,705
FFO per share (basic and diluted)	$	(0.45	)	$	(1.14	)
MFFO per share (basic and diluted)	$	0.01		$	(0.08	)

FOOTNOTES:

(1) In evaluating investments in real estate, management differentiates the costs to acquire the investment from the operations derived from the investment. By adding back acquisition expenses, management believes MFFO provides useful supplemental information of its operating performance and will also allow comparability between different real estate entities regardless of their level of acquisition activities. Acquisition expenses include payments to our Advisor or third parties. Acquisition expenses under GAAP are considered operating expenses and as expenses included in the determination of net income (loss) and income or (loss) from continuing operations, both of which are performance measures under GAAP. All paid or accrued acquisition expenses will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of properties are generated to cover the purchase price of the property.

(2) Under GAAP, rental receipts are allocated to periods using various methodologies. This may result in income recognition that is significantly different than underlying contract terms. By adjusting for these items (to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments), MFFO provides useful supplemental information on the realized economic impact of lease terms and debt investments, providing insight on the contractual cash flows of such lease terms and debt investments, and aligns results with management’s analysis of operating performance.

(3) This amount represents our share of the FFO or MFFO adjustments allowable under the NAREIT or IPA definitions, respectively, multiplied by the percentage of income or loss recognized under the HLBV method.

Off-Balance Sheet Arrangements

In June 2012, we acquired a 55% membership interest in seven senior housing properties through a joint venture, CHTSun IV. CHTSun IV obtained a $125.0 million loan from Prudential, a portion of which was used to refinance the existing indebtedness encumbering the properties in the portfolio. The non-recourse loan, which is collateralized by the

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properties, has a maturity date of March 5, 2019 and a fixed-interest rate of 4.66% on $55.0 million of the principal amount and 5.25% on $70.0 million of the principal amount of the loan. The loan requires interest-only payments on $55.0 million of the principal amount until September 5, 2012 and interest-only payments on $70 million of the principal amount until January 5, 2013 and monthly payments on both outstanding amounts thereafter of principal and interest based upon a 30-year amortization schedule.

Contractual Obligations

The following table presents our contractual obligations and the related payment periods as of June 30, 2012:

	For the period ending December 31,
	2012		2013-2014		2015-2016		Thereafter		Total
Mortgage note payable (principal and interest)	$	1,085,364	$	50,105,472	$	—	$	—	$	51,190,836
Mezzanine loan (principal and interest) (1)		1,413,333		3,924,444		42,826,667		—	$	48,164,444
	$	2,498,697	$	54,029,916	$	42,826,667	$	—	$	99,355,280

FOOTNOTE:

(1) In connection with entering into the loan with Prudential relating to our CHTSUN IV joint venture, described in Note 7. “Unconsolidated Entity”, we entered into a separate agreement with Prudential, where as a condition of Prudential consenting to the Mezz Loan, Prudential required us to repay the Mezz Loan within twelve months to the extent we raise sufficient net offering proceeds to satisfy the Mezz Loan. To the extent that we do not repay the Mezz Loan within twelve months, we will be required to restrict the use of all net offering proceeds to pay down the outstanding balance until the Mezz Loan is repaid in full.

Critical Accounting Policies and Estimates

Investment in Unconsolidated Entities

We account for our investments in unconsolidated joint ventures under the equity method of accounting as we exercise significant influence, but do not control these entities. These investments are recorded initially at cost and subsequently adjusted for cash contributions, distributions and equity in earnings (loss) of the unconsolidated entity. Based on the respective venture structures and preferences we receive on distributions and liquidation, we record our equity in earnings (loss) of the entities under the HLBV method of accounting. Under this method, we recognize income or loss in each period as if the net book value of the assets in the venture were hypothetically liquidated under the provisions of the joint venture agreement at the end of each reporting period. In any given period, we could be recording more or less income than actual cash distributions received and more or less than what we may receive in the event of an actual liquidation.

Impact of Recent Accounting Pronouncements

See Item 1. “Financial Information” for a summary of the impact of recent accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures about Market Risks

We may be exposed to interest rate changes primarily as a result of long-term debt used to acquire properties and to make loans and other permitted investments. Our interest rate risk management objectives will be to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve our objectives, we expect to borrow primarily at fixed rates or variable rates with the lowest margins available, and in some cases, with the ability to convert variable rates to fixed rates. With regard to variable rate financing, we will assess interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities.

We may be exposed to foreign currency exchange rate movements in the event that we invest outside of the United States. At such time as we have foreign investments, we will evaluate various foreign currency risk mitigating strategies in an effort to minimize any impact on earnings.

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The following is a schedule as of June 30, 2012, of our variable rate debt maturities for the remainder of 2012 and each of the next four years, and thereafter (principal maturities only) in thousands:

	Expected Maturities
	2012		2013			2014			2015		2016		Thereafter		Total			Fair Value
Fixed rate debt	$	—	$	—		$	40,000		$	—	$	—	$	—	$	40,000		$	40,000	(2)
Variable rate debt	$	—	$	49,878		$	—		$	—	$	—	$	—	$	49,878		$	49,900	(2)
	$	—	$	49,878		$	40,000		$	—	$	—	$	—	$	89,878		$	89,900	(2)
Weighted average interest rate on fixed debt debt (3)		—		—			8.0	%		—		—		—		8.0	%
Average interest rate on variable debt (1)		—		LIBOR + 3.25	%		—			—		—		—		LIBOR + 3.25	%

FOOTNOTES:

(1) The 30-day LIBOR rate was approximately 0.2432% at June 30, 2012.

(2) The estimated fair value of our variable rate debt was determined using discounted cash flows based on market interest rates as of June 30, 2012. We determined market rates through discussions with our existing lenders pricing our loans with similar terms and current rates and spreads.

(3) The interest rate is 8% through July 2013 and increases to 12% from July 2013 through the maturity date.

Management estimates that a hypothetical one-percentage point increase in Libor would increase interest expense approximately $0.3 million for the second half of 2012

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures are effective at the reasonable assurance level as of the end of the period covered by this report.

We believe, however, that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, within a company have been detected.

Changes in Internal Control over Financial Reporting

During the most recent fiscal quarter, there were no changes in our internal controls over financial reporting (as defined under Rule 13a-15(f) under the Exchange Act) that have materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings — None

Item 1A. Risk Factors

Except for revisions to the risk factors below, there have been no material changes in our assessment of our risk factors from those set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

Changes in accounting pronouncements could adversely impact our or our tenants’ reported financial performance. Accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. From time to time, the Financial Accounting Standards Board and the Commission, entities that create and interpret appropriate accounting standards, may change the financial accounting and reporting standards or their interpretation and application of these standards that govern the preparation of our financial statements. These changes could have a material impact on our reported financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retroactively, resulting in restating prior period financial statements. Similarly, these changes could have a material impact on our tenants’ reported financial condition or results of operations and affect their preferences regarding leasing real estate. In such event, tenants may determine not to lease properties from us, or, if applicable, exercise their option to renew their leases with us. This in turn could cause a delay in investing our offering proceeds, make it more difficult for us to enter into leases on terms we find favorable and impact the distributions to stockholders.

Cyber security risks and cyber incidents could adversely affect our business and disrupt operations. Cyber incidents can result from deliberate attacks or unintentional events. These incidents can include, but are not limited to, gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption. The result of these incidents could include, but are not limited to, disrupted operations, misstated financial data, liability for stolen assets or information, increased cyber security protection costs, litigation and reputational damage adversely affecting customer or investor confidence.

FINRA Rule Proposals Related to Valuation.

Pursuant to Financial Industry Regulatory Authority (“FINRA”) Rule 2310, no later than 18 months after the last sale in our Offering of common stock (including any follow-on offering), we are required to disclose an estimated per share value that is not based solely on the offering price of securities in the offering. There is no guarantee that such estimated per share value will equal or exceed, or not be substantially less than, the per share amount paid by investors in our Offering. In addition, in March 2012, FINRA requested public comment through April 11, 2012 on its proposed amendment to the National Association of Securities Dealers (“NASD”) Rule 2340 to require that per share estimated values of non-traded REITs be reported on customer account statements and modify the account statement disclosures that accompany the per share estimated value. Due to the fact that the managing dealer and participating brokers selling our common stock in our Offering are subject to FINRA rules and regulations, any significant changes to Rule 2340 could have a material impact on when the Company initially publishes its per share value. In the event we are required to publish such estimated value prior to completion of our Offering, including any follow-on offering, if any, such action could impact the price at which our shares are offered and our ability to raise capital through any offerings.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

During the period covered by this quarterly report, we did not sell any equity securities that were not registered under the Securities Act of 1933.

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Use of Proceeds from Registered Securities

On June 27, 2011, our Registration Statement (File No. 333-168129), covering a public offering of up to 300,000,000 shares of common stock, was declared effective by the SEC, and our Offering commenced and is ongoing. The use of proceeds from our Offering was as follows as of June 30, 2012:

	Total			Payments to Affiliates (2)			Payments to Others
Shares registered		300,000,000
Aggregate price of offering amount registered	$	3,000,000,000
Shares sold (1)		8,234,511
Aggregate amount sold	$	82,244,698
Offering expenses (3)		(12,267,600	)	$	(7,584,356	)	$	(4,683,244	)
Net offering proceeds to the issuer		69,977,098
Proceeds from borrowing, net of loan costs		109,208,848
Total net offering proceeds and borrowing		179,185,946
Purchases of real estate		(84,050,000	)					(84,050,000	)
Investments in unconsolidated entity		(56,915,813	)					(56,915,813	)
Payment of acquisition fees and expenses		(5,223,069	)		(3,926,971	)		(1,296,098	)
Repayment of borrowing		(19,078,865	)					(19,078,865	)
Payment of distributions (4)		(816,355	)		(5,964	)		(810,391	)
Redemption of common stock		(10,474	)					(10,474	)
Payment of lease costs		(9,087	)					(9,087	)
Unused proceeds from Offering and borrowing	$	13,082,283

FOOTNOTES:

(1) Excludes unregistered shares and 61,111 shares issued as stock distributions.

(2) Represents direct or indirect payments to directors, officers, or general partners of the issuer or their associates; to persons owning 10% or more of any class of equity securities or the issuer; and to affiliates of the issuer.

(3) Offering expenses paid to affiliates includes selling commissions and marketing support fees paid to the Managing Dealer of our Offering (all or a portion of which may be paid to unaffiliated participating brokers by the Managing Dealer). Reimbursements to our Advisor of expenses of the Offering that it has incurred on our behalf from unrelated parties such as legal fees, auditing fees, printing costs, and registration fees are included in payments to others for purposes of this table. This table does not include amounts incurred by the Advisor in excess of 15% limitation described in the footnotes to the accompanying financial statements.

(4) Until such time as we have sufficient operating cash flows from our assets, we will pay distributions, debt service and/or operating expenses from net proceeds of our Offering and borrowings. The amounts presented above represent the net proceeds used for such purposes as of June 30, 2012. Distributions paid include amounts reinvested pursuant to our distributions reinvestment plan of $448,668 (47,228 shares).

We intend to pay offering expenses, acquire properties and make other permitted investments with proceeds from the Offering. In addition, we have paid, and until such time as we have sufficient operating cash flows from our assets, we will continue to pay distributions and operating expenses from our net proceeds from our Offering.

31

Redemption of Shares and Issuer Purchases of Equity Securities

Pursuant to our share redemption plan, any stockholder who has held shares for not less than one year may present all or any portion equal to at least 25% of their shares to us for redemption at prices based on the amount of time that the redeeming stockholder has held the applicable shares, but in no event greater than the price of shares sold to the public in any offering. We may, at our discretion, redeem the shares, subject to certain conditions and limitations under the redemption plan. However, at no time during a 12-month period may we redeem more than 5% of the weighted average number of our outstanding common stock at the beginning of such 12-month period. For the quarter ended June 30, 2012, we redeemed the following shares:

Period	Total Number  of Shares Purchased		Average Price Paid  Per Share		Total Number  of Shares Purchased as Part of Publically Announced Plan			Maximum Number of Shares  That May Yet be Purchased Under the Plan
April 1, 2012 through April 30, 2012		—		—		—			90,418
May 1, 2012 through May 31, 2012		—		—		—			132,451
June 1, 2012 through June 30, 2012		1,049	$	9.99		1,049	(1)		163,939
Total		1,049				1,049

FOOTNOTE:

(1) This number represents the maximum number of shares which can be redeemed under the redemption plan without exceeding the five percent limitation in a rolling 12-month period described above.

Item 3. Defaults Upon Senior Securities — None

Item 4: Mine Safety Disclosure — Not Applicable

Item 5. Other Information — None

Item 6. Exhibits

The exhibits required by this item are set forth in the Exhibit Index attached hereto and are filed or incorporated as part of this report.

32

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, on the 14th day of August 2012.

CNL HEALTHCARE TRUST, INC.
By:	/s/ Stephen H. Mauldin
	STEPHEN H. MAULDIN
	Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ Joseph T. Johnson
	JOSEPH T. JOHNSON
	Senior Vice President, Chief Financial Officer and Treasurer
	(Principal Financial Officer)

33

EXHIBIT INDEX

The following documents are filed or incorporated as part of this report.

Exhibit No.	Description
10.1	Transfer Agreement dated as of June 4, 2012, by and among Sunrise Senior Living Investments, Inc., CHT Partners, LP, and Sunrise Senior Living Management, Inc. (Filed herewith.)
10.2	First Amendment to Transfer Agreement dated as of June 25, 2012, by and among Sunrise Senior Living Investments, Inc., CHT Partners, LP, and Surnise Senior Living Management, Inc. (Filed herewith.)
10.3	Amended and Restated Limited Liability Company Agreement of CHTSun Partners IV, LLC dated as of June 29, 2012, by and between Sunrise Senior Living Investments, Inc. and CHT SL IV Holding, LLC. (Filed herewith.)
10.4	Management Agreement dated as of June 29, 2012, by and among Sunrise Senior Living Management, Inc., Sunrise Connecticut Avenue Assisted Living Owner, L.L.C., and CHTSun Partners IV, LLC. (Filed herewith.)
10.5	Amended and Restated Loan Agreement dated as of June 29, 2012, by and among Santa Monica Assisted Living Owner, LLC, et al. and The Prudential Insurance Company of America (Filed herewith.)
10.6	(Sunrise of Gilbert) Promissory Note ($17,061,000) dated June 29, 2012, made by Gilbert AZ Senior Living Owner, LLC and CHTSun Gilbert AZ Senior Living, LLC in favor of The Prudential Insurance Company of America (Filed herewith.)
10.7	(Sunrise of Gilbert — First) Deed of Trust and Security Agreement dated as of June 29, 2012 by Gilbert AZ Senior Living Owner, LLC and CHTSun Gilbert AZ Senior Living, LLC (f/k/a MetSun Two Gilbert AZ Senior Living, LLC) to First American Title Insurance Company (Trustee) f/b/o The Prudential Insurance Company of America (Filed herewith.)
10.8	(Sunrise of Gilbert) Recourse Liabilities Guaranty dated June 29, 2012, given by CNL Healthcare Trust, Inc. and Sunrise Senior Living Investments, Inc. f/b/o The Prudential Insurance Company of America (Filed herewith.)
10.9	Mezzanine Loan Agreement dated as of June 29, 2012, between CHT SL IV Holding, LLC and RCG LV Debt IV Non-REIT Assets Holdings, LLC (Filed herewith.)
10.10	(Mezzanine Loan) Promissory Note ($40,000,000) dated June 29, 2012, made by CHT SL IV Holding, LLC in favor of RCG LV DEBT IV Non-REIT Assets Holdings, LLC (Filed herewith.)
10.11	Pledge and Security Agreement dated June 29, 2012, by CHT SL IV Holding, LLC in favor of RCG LV DEBT IV Non-REIT Assets Holdings, LLC (Filed herewith.)
10.12	Mezzanine Guaranty dated June 29, 2012, by CNL Healthcare Trust, Inc. f/b/o RCG LV Debt IV Non-REIT Assets Holdings, LLC (Filed herewith.)
10.13	Mezzanine Loan Repayment Agreement and Security Agreement dated June 29, 2012, by CNL Healthcare Trust, Inc. and the Prudential Insurance Company of America (Filed herewith.)
10.14	Schedule of Omitted Documents (Filed herewith.)
31.1	Certification of Chief Executive Officer of CNL Healthcare Trust, Inc., Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)
31.2	Certification of Chief Financial Officer of CNL Healthcare Trust, Inc., Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)
32.1	Certification of Chief Executive Officer and Chief Financial Officer of CNL Healthcare Trust, Inc., Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)

34

Exhibit No.

Description

101

The following materials from CNL Healthcare Trust, Inc. Quarterly Report on Form 10-Q for the quarter and six months ended June 30, 2012, formatted in XBRL (Extensible Business Reporting Language); (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Stockholder Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to the Condensed Consolidated Financial Statements.

* Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

35

EX-10.1

Exhibit 10.1

Execution Version

TRANSFER AGREEMENT

by and among

SUNRISE SENIOR LIVING INVESTMENTS, INC.,

a Virginia corporation,

and

CHT PARTNERS, LP,

a Delaware limited partnership

and

SUNRISE SENIOR LIVING MANAGEMENT, INC.,

a Virginia corporation

June 4, 2012

TABLE OF CONTENTS

Article I. INTERPRETATION 4

Section 1.01	Defined Terms	4
Section 1.02	Additional Defined Terms	8
Section 1.03	Exhibits	11

Article II. AGREEMENT TO TRANSFER TRANSFEROR’S INTEREST 11

Section 2.01	Transfer of Transferor’s Interest	11
Section 2.02	Owned Assets	11
Section 2.03	Operating Cash	13
Section 2.04	Down Payment	13

Article III. DUE DILIGENCE 14

Section 3.01	Investigation of Facilities	14
Section 3.02	Title	16
Section 3.03	Satisfaction of Conditions Precedent	16

Article IV. REPRESENTATIONS AND WARRANTIES OF TRANSFEREE 17

Section 4.01	Organization, Good Standing and Entity Authority	17
Section 4.02	Authorization and Binding Effect of Documents	17
Section 4.03	ERISA	17
Section 4.04	Absence of Conflicts	17
Section 4.05	Consents	18
Section 4.06	Broker’s or Finder’s Fees	18
Section 4.07	No Judgments	18
Section 4.08	No Insolvency	18
Section 4.09	Specially Designated National or Blocked Person	18
Section 4.10	Transferee Financials	19

Article V.	INTENTIONALLY OMITTED	19
Article VI.	INTENTIONALLY OMITTED	19
Article VII.	REPRESENTATIONS AND WARRANTIES OF TRANSFEROR	19

Section 7.01	Organization, Good Standing, Entity Authority and Qualification	19
Section 7.02	Authorization and Binding Effect of Documents	19
Section 7.03	Absence of Conflicts	20
Section 7.04	Consents	20
Section 7.05	Broker’s or Finder’s Fees	20

i

Section 7.06	ERISA	21
Section 7.07	Ownership of Transferor’s Interest	21
Section 7.08	No Judgments	21
Section 7.09	No Governmental Approvals	21
Section 7.10	No Insolvency	22

Article VIII. BUSINESS REPRESENTATIONS 22

Section 8.01	Financial Statements; No Undisclosed Liabilities; Absence of Certain Changes	22
Section 8.02	Books and Records; Internal Controls	23
Section 8.03	Obligations	24
Section 8.04	Medicare; Medicaid	24
Section 8.05	No Possessory Rights	24
Section 8.06	Employees	24
Section 8.07	Licenses	24
Section 8.08	Litigation	25
Section 8.09	Environmental Matters	25
Section 8.10	Intentionally Omitted	25
Section 8.11	Compliance with Laws	25
Section 8.12	Residence Agreements	25
Section 8.13	Taxes	26
Section 8.14	Personal Property	26
Section 8.15	Title	26
Section 8.16	Intentionally Omitted	26
Section 8.17	Contracts	26
Section 8.18	Insurance	27
Section 8.19	Condemnation	27
Section 8.20	Purchase Rights	27
Section 8.21	Compliance with Permitted Exceptions	27
Section 8.22	Utilities	27
Section 8.23	Existing Owner Financing Documents	28
Section 8.24	Management Documents	28

Article IX. COVENANTS 28

Section 9.01	Publicity	28
Section 9.02	Commercially Reasonable Efforts	28
Section 9.03	No Recordation	28
Section 9.04	Licenses	29
Section 9.05	Casualty	29
Section 9.06	Condemnation	29
Section 9.07	Operation of Business	29

Article X. CONDITIONS PRECEDENT TO THE OBLIGATION OF TRANSFEREE AND TRANSFEROR TO CLOSE 30

ii

Section 10.01	Conditions to Transferee’s Obligation to Close	30
Section 10.02	Intentionally Omitted	30
Section 10.03	Conditions to Transferor’s Obligation to Close	30

Article XI. CLOSING 31

Section 11.01	Time and Place	31
Section 11.02	Delivery of Documents at Closing	31

Article XII. INDEMNITY; DEFAULT; DAMAGES 33

Section 12.01	Survival	33
Section 12.02	Intentionally Omitted	33
Section 12.03	Transferee’s Remedies for Transferor’s Defaults	33
Section 12.04	Transferor’s Remedies for Transferee’s Defaults	33
Section 12.05	Limitation on Liability for Business Representations	34
Section 12.06	Intentionally Omitted	34
Section 12.07	Indemnification by Transferee	34
Section 12.08	Intentionally Omitted	34
Section 12.09	Indemnification by Transferor	34
Section 12.10	Intentionally Omitted	34
Section 12.11	Administration of Indemnification	34
Section 12.12	Exclusivity	35

Article XIII. DOWN PAYMENT AND ESCROW 35

Section 13.01	Investment of Down Payment	35
Section 13.02	Disbursement of Down Payment	36
Section 13.03	Disputes	38
Section 13.04	Compensation	38
Section 13.05	Liability of Escrow Agent	38

Article XIV. JOINT VENTURE AND FACILITY DOCUMENTS 38

Section 14.01	Formation of Joint Venture	38
Section 14.02	Termination of Existing Facility Documents	40
Section 14.03	New Facility Documents	40
Section 14.04	Other Documents	41
Section 14.05	Escrow	41

Article XV. FEES AND EXPENSES 42

Section 15.01	Fees and Expenses	42
Section 15.02	Title Costs	43
Section 15.03	Transfer Taxes	43
Section 15.04	Other Closing Costs	43
Section 15.05	Transferee Mezz Financing Cost Reimbursement	43
Section 15.06	Intentionally Omitted	44

iii

Section 15.07	Other Transferee Mezz Financing Costs	44
Section 15.08	Transferee Closing Cost Amount	44

Article XVI. REFINANCING 44

Section 16.01	Cooperation	44
Section 16.02	Financing Fees	45
Section 16.03	Refinancing Closing	45

Article XVII. REPRESENTATIONS AND WARRANTIES OF MANAGER 45

Section 17.01 Manager Representations 45

Article XVIII. MISCELLANEOUS 46

Section 18.01	Further Actions	46
Section 18.02	Intentionally Omitted	46
Section 18.03	Notices	46
Section 18.04	Entire Agreement	47
Section 18.05	Not Construed Against Drafter	47
Section 18.06	Binding Effect; Benefits	47
Section 18.07	Assignment	47
Section 18.08	Governing Law	48
Section 18.09	Amendments and Waivers	48
Section 18.10	Severability	48
Section 18.11	Headings	48
Section 18.12	Counterparts	48
Section 18.13	References	48
Section 18.14	Exhibits	48
Section 18.15	Attorneys’ Fees	48
Section 18.16	Waiver of Jury Trial	49
Section 18.17	Facsimile and PDF Signatures	49
Section 18.18	Informational Meetings	49

SCHEDULES

1. Example of Methodology for Calculating the Quarterly Interest Rate Differential Amount

EXHIBITS

A Facilities; Facility Owners

B. Refinancing Term Sheet

C. Prior Management Agreements and Prior Owner Agreements

D. Form of Assignment and Assumption of Interest Agreement

iv

E. Intentionally Omitted

F. Transferor’s Non-Imputation Affidavit

G. Intentionally Omitted

H. Non-Foreign Status Affidavit

I. Form of JV Agreement

J. Form of Management Termination

K. Form of Owner Agreement Termination

L. Form of Pooling Agreement Termination

M. Form of Operating Lease

N Form of New Management Agreement

O. Form of Management Agreement Guaranty

P. Form of Manager Pooling Agreement

Q. Form of Delegation Agreement

R. Form of Contribution and Indemnification Agreement

S. Form of Mezz Loan Recognition Agreement

v

TRANSFER AGREEMENT

THIS TRANSFER AGREEMENT (this “Agreement”) is dated as of the 4th day of June, 2012, by and among SUNRISE SENIOR LIVING INVESTMENTS, INC., a Virginia corporation (“Transferor”), CHT PARTNERS, LP, a Delaware limited partnership (“Transferee”), and SUNRISE SENIOR LIVING MANAGEMENT, INC., a Virginia corporation (“Manager”). Certain capitalized terms used herein are defined in Section 1.01.

RECITALS:

A. Transferor is the sole member of CHTSUN PARTNERS IV, LLC, a Delaware limited liability company (“Newco”)

B. Transferor is the sole member of the Sun IV LLC, a Delaware limited liability company (the “Company”). Transferor’s interest in the Company is referred to herein as “Transferor’s Interest.”

C. The Company is the sole member of (i) MetSun Three Pool One, LLC, a Delaware limited liability company (the “Pool One Company”), and (ii) MetSun Two Pool Two, LLC, a Delaware limited liability company (the “Pool Two Company” and collectively with the Pool One Company, the “Pool Companies”).

D. The Pool One Company is the sole member of each of the entities identified as a “Pool One Owner” on Exhibit A attached hereto and the Pool Two Company is the sole member of each of the entities identified as a “Pool Two Owner” on Exhibit A attached hereto. The Pool One Owners and the Pool Two Owners are referred to herein as the “MetSun Facility Owners” (and for purposes of clarification, MetSun Three Dublin OH Senior Living (the “Dublin Property Owner”) is not a MetSun Facility Owner).

E. Each MetSun Facility Owner owns the fee simple interest in one of the five (5) senior living facilities described across from such MetSun Facility Owner’s name on Exhibit A attached hereto (the “MetSun Facilities”) and the Dublin Property Owner owns the fee simple interest in the development property located at 4175 Stoneridge Lane, Dublin, OH (the “Dublin Property”).

F. Transferor is the sole member of Sunrise Connecticut Avenue Assisted Living, LLC, a Virginia limited liability company ( “Conn. Ave. Facility Owner”). Conn. Ave. Facility Owner owns, directly, the fee simple interest in the assisted living facility known as Sunrise of Connecticut Avenue (the “Conn. Ave. Facility”).

G. Transferor is the sole member of Santa Monica AL, LLC, a Delaware limited liability company (“Santa Monica LP”). Santa Monica LP is the sole member of Santa Monica GP, LLC, a Delaware limited liability company (“Santa Monica GP”), and the sole limited partner (owning a 99% limited partnership interest) of AL Santa Monica Senior Housing LP, a Delaware limited partnership (“Santa Monica Facility Owner” and together with the Conn. Ave. Facility Owner and the MetSun Facility Owners, the “Facility Owners” ). Santa Monica GP is the sole general partner (owning a 1% general partnership interest) of Santa Monica Facility Owner. Santa Monica Facility Owner owns the fee simple interest in the assisted living facility known as Sunrise of Santa Monica (the “Santa Monica Facility” and together with the Conn. Ave. Facility and the MetSun Facilities, the “Facilities” and each a “Facility”).

1

H. Pursuant to a separate management agreement and related documents for each Facility, each of the Facilities is managed by Manager, an Affiliate of Transferor.

I. Transferor and Transferee are pursuing (i) a refinancing of the MetSun Facilities with the Prudential Insurance Company of America (“Lender”) and (ii) a modification of the existing financing in effect in favor of Lender secured by the Conn. Ave Facility and the Santa Monica Facility, each to be entered into at Closing by Newco and/or its subsidiaries on the terms set forth on Exhibit B attached hereto (the “Refinancing Term Sheet”) and such other terms and conditions as are reasonably satisfactory to both Transferor and Transferee (collectively, the “Refinancing”).

J. Transferor shall cause the Company to form, prior to Closing, a new Delaware “C” corporation wholly owned by the Company (“TRS”).

K. Transferor shall cause the Company, prior to Closing, to form the following seven (7) new Delaware entities, which immediately following the Restructuring and Closing, shall be wholly owned by the Company: (i) Metaire LA Senior Living Owner, LLC, a Delaware limited liability company, (ii) Baton Rouge LA Senior Living Owner, LLC, a Delaware limited liability company, (iii) Gilbert AZ Senior Living Owner, LLC, a Delaware limited liability company , (iv) Lombard IL Senior Living Owner, LLC, a Delaware limited liability company, (v) Louisville KY Senior Living Owner, LLC, a Delaware limited liability company, (vi) Connecticut Avenue Assisted Living Owner, LLC, a Delaware limited liability company, and (vii) Santa Monica Assisted Living Owner, LLC, a Delaware limited liability company (each a “New Facility Owner” and collectively the “New Facility Owners”).

L. At Closing, Transferor intends to assign to the Company (a) 100% of its ownership interest in Conn. Ave. Facility Owner and (b) 100% of its ownership interest in Santa Monica LP (the “Conn. Ave/Santa Monica Assignment”).

M. At Closing, immediately after the contribution of Transferor’s Interest to Newco, Transferor and Transferee intend to cause the Facility Owners to transfer and convey to the applicable New Facility Owners, by Special Warranty Deed, fee simple title in and to the Real Property (the “Real Property Conveyance”).

N. At Closing, immediately after the Real Property Conveyance, Transferor and Transferee intend to cause the Company to assign 100% of its interests in the Pool Companies, Conn. Ave. Facility Owner and Santa Monica LP to TRS.

O. At Closing, in return for an approximately fifty five percent (55%) membership interest in Newco (subject to adjustment as set forth herein provided that in no event shall the membership interest of Transferee in Newco be less than 51%), Transferee intends to contribute to Newco an amount equal to (i) Fifty Six Million, Eight Hundred Thousand Dollars ($56,800,000.00) (the “Transferee Cash Contribution Amount”), plus (ii) Transferee’s pro-rata share of Shared Expenses (as hereinafter defined) (collectively, the “Transferee Contribution”).

2

P. At Closing, immediately after the Conn. Ave/Santa Monica Assignment, Transferor intends to contribute 100% of Transferor’s Interest to Newco plus Transferor’s pro-rata share of the Shared Expenses (collectively, the “Transferor Contribution”) upon which Transferor will retain an approximately forty-five percent (45%) membership interest in Newco (subject to adjustment as set forth herein).

Q. A portion of the Transferee Contribution in an amount equal to approximately Forty Nine Million, Six Hundred and Sixty Seven Thousand, Five Hundred and Fifty Five Dollars ($49,667,555.67) (the “Existing Financing Payoff Amount”) shall be utilized at Closing to prepay in full the existing financing encumbering the MetLife Facilities and the Dublin Property.

R. That portion of the Transferee Contribution remaining after payment of the Existing Financing Payoff Amount, any Transferee Closing Cost Amount and the Transferee’s Shared Expenses, if any, shall be used by Newco for working capital purposes.

S. A portion of the cash held by the Company immediately after Closing in the amount of Five Million Dollars ($5,000,000.00) (the “Initial Distribution”) shall be distributed to Transferor immediately after Closing in accordance with the terms and conditions of the JV Agreement (as hereinafter defined).

T. The steps described in the foregoing Recitals J-P to form a new joint venture for the purpose of owning and operating the Facilities, as well as any other structuring required pursuant to the Refinancing and agreed to by Transferor and Transferee in their reasonable discretion, shall hereinafter be referred to as the “Restructuring.”

U. On the occurrence of the Closing, Transferor and Manager intend to terminate or cause to be terminated (a) the Management Agreements listed and described on Exhibit C attached hereto (individually, a “Prior Management Agreement” and collectively, the “Prior Management Agreements”), (b) the Owner Agreements listed and described on Exhibit C attached hereto (individually, a “Prior Owner Agreement” and collectively the “Prior Owner Agreements”), (c) that certain Manager Pooling Agreement (MetLife Three Transaction Pool One) dated as of September 23, 2008, among certain Facility Owners, the Company (as successor in interest to Master MetSun Three, LP) and Manager (as amended, the “Prior Pool One Pooling Agreement”) and (d) that certain Manager Pooling Agreement dated as of March 20, 2012, among certain Facility Owners, the Company and Manager (as amended, the “Prior Pool Two Pooling Agreement” and together with the Prior Pool One Pooling Agreement, the “Prior Pooling Agreements”).

V. At Closing, immediately after the termination of the Prior Management Agreements, Prior Owner Agreements and the Prior Pooling Agreements, Transferor and Transferee intend to cause the Facility Owners and Facility Lessees to execute and deliver the Operating Leases, New Management Agreements and Manager Pooling Agreement (each as hereinafter defined) and Manager intends to execute and deliver such New Management Agreements and Manager Pooling Agreement and Transferee intends to execute and deliver the Management Agreement Guaranties.

3

Accordingly, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Article I.

INTERPRETATION

Section 1.01 Defined Terms. As used herein, the following terms shall have the meanings indicated:

Affiliate: With respect to any specified Person that is not an individual, another Person which, directly or indirectly, controls, is controlled by, or is under common control with, the specified Person.

Assignment and Assumption of Interest Agreement: Assignment and Assumption Agreement substantially in the form of Exhibit D.

Business Day: Any day, other than a Saturday, a Sunday or a day on which banks in New York City are required or authorized to close.

Charter Documents: (i) with respect to any Person which is a corporation, the certificate of incorporation an bylaws of such Person, (ii) with respect to any Person which is a limited liability company, the certificate of formation and operating or limited liability company agreement of such Person, and (iii) with respect to any Person which is a limited partnership, the certificate of limited partnership and partnership agreement of such Person.

Code: The United States Internal Revenue Code of 1986, as amended.

Contract Date: The date of this Agreement, set forth in the introductory paragraph.

Disclosure Statement: The Disclosure Statement prepared by Transferor and delivered to Transferee as of the date hereof.

Documents: This Agreement and all Exhibits hereto, and each other agreement, certificate or instrument delivered pursuant to this Agreement.

Down Payment: The sum of Five Hundred Thousand Dollars ($500,000.00).

Due Diligence Period: A period ending at 5:00pm EST on the date that is forty-five (45) days following the date of this Agreement, as the same may be extended by the mutual written consent of the parties hereto.

Environmental Claims: All claims for reimbursement, remediation, abatement, removal, clean up, contribution, personal injury, property damage, damage to natural resources or violations of Environmental Laws, made by any Governmental Entity or other Person arising from or in connection with the (i) spill, leak, emission, discharge or release of any Hazardous Materials over, on, in, under or from the Real Property, or (ii) violation of any Environmental Laws with respect to the Real Property.

4

Environmental Laws: Any federal, state or local law, statute, rule, regulation, order, ordinance, decree, injunction, judgment, governmental restriction or any other requirement of law (including common law) regulating Hazardous Materials or relating to the protection of human health and safety from Hazardous Materials or relating to the protection of natural resources or the environment and applicable to the Owned Assets.

Environmental Liabilities: All Liabilities under any Environmental Laws arising from or in connection with the Real Property, including, without limitation, any obligations to manage, control, contain, remove, remedy, respond to, clean up or abate any spill, leak, emission, discharge or release of any Hazardous Materials, pollution, contamination or radiation into any water, soil, sediment, air or other environmental media.

ERISA: The Employee Retirement Income Security Act of 1974, as amended.

Escrow Agent: First American Title Insurance Company, National Commercial Services Office in Orlando, Florida.

Existing Owner Financing: The existing mortgage financing obtained by the Facility Owners with respect to the Facilities.

GAAP: United States generally accepted accounting principles, consistently applied.

Governmental Entity: Any governmental authority, agency, commission, board or public authority.

Hazardous Materials: Any material that: (i) is or contains asbestos, urea formaldehyde insulation, polychlorinated biphenyls, petroleum or petroleum products, radon gas, or microbiological contamination, (ii) the presence of which in the environment requires remediation or abatement pursuant to any Environmental Law, or is defined, listed or identified pursuant to any Environmental Law as a “hazardous waste,” “hazardous substance,” “toxic substance” or words of similar import, or (iii) is regulated under any Environmental Law; provided, however, that Hazardous Material shall not include (a) cleaning material, pre-packaged supplies, and petroleum products customarily used in the operation and maintenance of comparable properties, (b) cleaning materials, personal grooming items, and other items sold in pre-packaged containers for consumer use and used by tenants and residents in the Facilities, (c) any pharmaceuticals, vaccines or medical products or devices, or medical waste or biological waste, including those materials defined as “medical waste” or “biological waste” under Environmental Laws, and (d) petroleum products used in the operation and maintenance of motor vehicles from time to time located on the Facilities’ parking areas and equipment, so long as, to the extent required, all applicable Licenses for the use of any of the foregoing have been obtained and are in full force and effect and so long as all the foregoing are used, stored, handled, transported and disposed of, and otherwise managed in quantities and types appropriate for such activities and in compliance with all Environmental Laws.

Healthcare Permits: All licenses, permits, certifications or approvals issued by Governmental Entities necessary for Facility Owners and Manager to provide healthcare and other assisted living services to Residents as are provided or offered by Facility Owners or Manager as of the Contract Date.

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Liabilities: Liabilities, obligations, commitments or responsibilities of any nature whatsoever, whether direct or indirect, matured or unmatured, fixed or unfixed, known or unknown, accrued, asserted or unasserted, choate or inchoate, liquidated or unliquidated, secured or unsecured, absolute, contingent or otherwise, including any direct or indirect indebtedness, guaranty, endorsement, claim, Loss, Taxes, damage, deficiency, cost or expense, but excluding, with respect to the relationships among the parties to this Agreement created hereunder, consequential damages.

Licenses: All certificates, licenses, and permits issued by Governmental Entities in connection with the ownership, leasing, use, occupancy, operation, and maintenance of the Facilities, including the Healthcare Permits.

Lien: Any mortgage, deed of trust, pledge, hypothecation, title defect, right of first refusal, security or other adverse interest, voting trust agreement, community property interest, encumbrance, claim, option, lien, lease or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, affecting any assets or property, including any agreement to give or grant any of the foregoing, any conditional sale or other title retention agreement, and the filing of or agreement to give any financing statement with respect to any assets or property under the Uniform Commercial Code or comparable law of any jurisdiction.

Loss: With respect to any Person, any and all costs, obligations, liabilities, demands, claims, settlement payments, awards, judgments, fines, penalties, damages, and reasonable out-of-pocket expenses, including court costs and reasonable attorneys’ fees, whether or not arising out of a third party claim, but excluding consequential damages.

Material Adverse Effect: Any change, event, development or effect that individually or in the aggregate has a material adverse effect on (a) the assets, business, operations, capitalization, financial condition (including Liabilities) or results of operations of Newco, the Company, the Pool Companies, Santa Monica GP, Santa Monica LP, the Facility Owners, the New Facility Owners, the Facilities, or the Real Property in the aggregate or (b) the ability of the parties to consummate the transactions contemplated by this Agreement.

Medicaid/Medicare Contracts: Any contracts with any Governmental Entity or other Person, which are necessary for the Facility Owners or Manager to be reimbursed, paid or otherwise compensated for the care of elderly, disabled or low income individuals at the Facilities, pursuant to Title XVIII or Title XIX of the Social Security Act, Title 42 United States Code, Chapter 7, as amended from time to time, or any similar state law governing the care of elderly, disabled or low income individuals. For purposes of this definition, the term ‘care’ includes any acute health care, long term care, preventive care or other type of health care, or any goods or services provided in connection with the provision of such care.

Newco Subsidiaries: From and after Closing, the Company, the Pool Companies, TRS, the Facility Owners, the New Facility Owners, Santa Monica GP, Santa Monica LP (and their direct and indirect subsidiaries).

Permitted Exceptions: (i) The Lien of real estate taxes and assessments and other charges by Governmental Entities that are not yet delinquent, (ii) the rights of Residents under the

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Residence Agreements, (iii) such matters as are shown on the Pro Forma Title Policies, (iv) the lien of any equipment lease or financing or purchase money Lien, in each case incurred in the ordinary course of business consistent with past practice, (v) Liens set out in Section 1.01 of the Disclosure Statement and (vi) such other matters as are approved by Transferee in writing (such approval to be deemed given upon completion of the Closing after written disclosure to Transferee of such other matters) or that are permitted pursuant to the terms of this Agreement.

Person: Any individual, partnership, corporation, limited liability company, trust or other legal entity.

Pro-Forma Title Policies: The Pro-Forma Title Policies prepared and delivered by the Escrow Agent to Transferee on or before the expiration of the Due Diligence Period, with respect to the issuance by the Escrow Agent of an owner’s policy of title insurance insuring each Facility Owner’s title to the applicable Real Property, effective as of the acquisition by Transferee of the ownership of Transferor’s Interest as provided herein.

Real Property: The Land and all buildings, structures, fixtures and other improvements located thereon, as more fully described in Exhibit A, including all permits, easements, Licenses, rights-of-way, rights and related appurtenances.

Resident: Each individual resident at the Facilities in his/her capacity as such.

Resident Deposits: All deposits or advances of any kind or nature from any Resident.

Resident Pre-paid Rent: All rental amounts paid in advance of the date when such payment is due by any Resident.

Specially Designated National or Blocked Person: (i) A person or entity designated by the U.S. Department of the Treasury’s Office of Foreign Assets Control from time to time as a “specially designated national or blocked person” or similar status, (ii) a person or entity described in Section 1 of U.S. Executive Order 13224, issued on September 23, 2001 (the “Executive Order”), or (iii) a person or entity otherwise identified by Governmental Entity or legal authority as a person with whom a United States Person is prohibited from transacting business. As of the date hereof, a list of such designations and the text of the Executive Order are published under the internet website address www.ustreas.gov/offices/enforcement/ofac.

SSLI: Sunrise Senior Living, Inc., a Delaware corporation, which is the sole owner of Transferor.

Taxes: All federal, state, local and foreign taxes including, without limitation, income, gains, transfer, unemployment, withholding, payroll, social security, real property, personal property, excise, sales, use and franchise taxes, levies, assessments, imposts, duties, licenses and registration fees and charges of any nature whatsoever, including interest, penalties and additions with respect thereto and any interest in respect of such additions or penalties, but excluding impact fees or other similar exactions levied or payable in connection with the development or operation of any of the Facilities and excluding special assessments.

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Tax Return: Any return, filing, report, declaration, questionnaire or other document required to be filed for any period with any taxing authority (whether domestic or foreign) in connection with any Taxes (whether or not payment is required to be made with respect to such document).

Title Commitment: A current commitment for title insurance for each of the Facilities.

Title Policy: An owner’s policy of title insurance insuring each Facility Owner’s title to the applicable Real Property, effective as of the acquisition by Transferee of the ownership of the Transferor Interests as provided herein.

Transferee Mezz Borrower. CHT SL IV Holding, LLC, a Delaware limited liability company or such other Affiliate of Transferee, in Transferee’s sole discretion.

Transferee Mezz Financing. Certain mezzanine financing to be obtained by Transferee Mezz Borrower from Transferee Mezz Lender, to finance Transferee’s payment of the Transferee Contribution.

Transferee Mezz Lender. RCG LV Debt IV Non-REIT Assets Holdings, LLC, a Delaware limited liability company, or an Affiliate thereof, and its successors and/or assigns.

Transferee Closing Cost Amount: An amount equal to Two Million, One Hundred and Thirty Two Thousand, Four Hundred and Forty Four Dollars ($2,132,444.33).

United States Person: (i) Any individual or business entity, regardless of location, that is a resident of the United States; (ii) any individual or business entity physically located within the United States; (iii) any business entity organized under the laws of the United States or of any state, territory, possession, or district thereof; and (iv) any business entity, wheresoever organized or doing business, which is owned or controlled by an individual or business entity specified in (i) or (iii) above.

Section 1.02 Additional Defined Terms. As used herein, the following terms shall have the meanings defined in the recitals or sections indicated below:

Access Indemnified Parties	Section 3.01(b)
Agreement	Preamble
Business Representations	Introductory paragraph to Article VIII
Business Representations Damage Cap	Section 12.05
Closing	Section 11.01
Closing Date	Section 3.03
Closing Statement	Section 11.02(a)(v)
Company	Recital B
Conn. Ave. Facility	Recital F
Conn. Ave. Facility Owner	Recital F
Conn. Ave/Santa Monica Assignment	Recital L
Contracts	Section 8.17
Contribution and Indemnification Agreement	Section 14.04(b)
Deed Transfers	Section 14.03(a)

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Delegation Agreement	Section 14.04(a)
Documents	Section 15.01(a)
Dublin Property	Recital E
Dublin Property Owner	Recital D
Due Diligence Materials	Section 3.01(f)
Environmental Reports	Section 8.09
Enterprise Valuation	Section 2.01(c)
Executive Order	Section 1.01, definition of Specially Designated National or Blocked Person
Existing Financing Payoff Amount	Recital Q
Facility Agreements	Section 2.02(c)
Facility/Facilities	Recital G
Facility Owners	Recital G
Failure of Condition Notice	Section 13.02(e)
Financials	Section 8.01(a)
Guarantors	Section 14.04(b)
Improvements	Section 2.02(a)(i)
Indemnified Party	Section 12.11(a)
Indemnifying Party	Section 12.11(a)
Initial Distribution	Recital S
JV Agreement	Section 14.01(a)
Land	Section 2.02(a)(i)
Lender	Recital I
Loan	Section 14.04(b)
Local Counsel Costs	Section 15.01(a)
Management Agreement Guaranty	Section 14.03(d)
Management Termination(s)	Section 14.02(a)
Manager	Preamble
Manager Pooling Agreement	Section 14.03(e)
MetSun Facilities	Recital E
MetSun Facility Owners	Recital D
Mezz Loan Recognition/Comfort Letter	Section 15.05
New Facility Owner(s)	Recital K
New Management Agreement	Section 14.03(c)
Newco	Recital A
Non-Imputation Affidavit	Section 3.02(a)
Operating Cash Infusion	Section 2.03
Operating Lease	Section 14.03(b)
Other Refinancing Fees and Expenses	Section 16.02
Other Shared Closing Costs	Section 15.04
Owned Assets	Section 2.02
Owner Agreement Termination(s)	Section 14.02(b)
Personal Property	Section 2.02(b)(v)
Pool Companies	Recital C
Pool One Company	Recital C
Pool One Owner	Recital D

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Pool Two Company	Recital C
Pool Two Owner	Recital D
Pooling Agreement Termination	Section 14.02(c)
Prior Management Agreement(s)	Recital U
Prior Owner Agreement(s)	Recital U
Prior Pool One Pooling Agreement	Recital U
Prior Pool Two Pooling Agreement	Recital U
Prior Pooling Agreements	Recital U
Real Property Conveyance	Recital M
Refinancing	Recital I
Refinancing Fee	Section 16.02
Refinancing Term Sheet	Recital I
Refinancing Third-Party Costs	Section 15.01(b)
Rent Rolls	Section 8.12
Residence Agreements	Section 2.02(c)
Restructuring	Recital T
Restructuring Documents	Section 14.05
Santa Monica Facility	Recital G
Santa Monica Facility owner	Recital G
Santa Monica GP	Recital G
Santa Monica LP	Recital G
Shared Expenses	Section 15.08
Survey	Section 3.02(a)
Third-Party Costs	Section 15.01(b)
Title Insurance Costs	Section 15.02
Transfer Taxes	Section 15.03
Transferee	Preamble
Transferee Cash Contribution Amount	Recital O
Transferee Contribution	Recital O
Transferee Default Notice	Section 13.02(d)
Transferee Notice of Objection to Transferor Reimbursable Transaction Costs	Section 13.02(e)
Transferee’s Objection Notice	Section 13.02(d)
Transferor	Preamble
Transferor Board Consent	Section 7.02(a)
Transferor Contribution	Recital P
Transferor Default Notice	Section 13.02(c)
Transferor Reimbursable Transaction Costs	Section 15.05
Transferor’s Failure of Condition Objection Notice	Section 13.02(e)
Transferor’s Interest	Recital B
Transferor’s Non-Imputation Affidavit	Section 3.02(a)(i)
Transferor’s Objection Notice	Section 13.02(c)
TRS	Recital J

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Section 1.03 Exhibits. The inclusion of any information on any one exhibit will constitute disclosure of such information for all purposes hereunder, and information need not be repeated on multiple exhibits.

Article II.

AGREEMENT TO TRANSFER TRANSFEROR’S INTEREST

Section 2.01 Transfer of Transferor’s Interest.

(a) Upon and subject to the terms and conditions provided herein, at the Closing, Transferee will pay the Transferee Contribution as follows: Transferee shall contribute to Newco an amount equal to the Transferee Contribution less the Down Payment, which shall be credited and paid to Newco pursuant to Article XIII.

(b) On the Closing Date, Transferor shall cause the Transferor Interests to be transferred to Newco, free and clear of any Lien, and Newco shall assume the Transferor Interests in accordance with the terms of this Agreement.

(c) The parties agree that the Transferee Contribution has been calculated based upon an enterprise valuation for the Company, the Conn. Ave. Facility Owner and Santa Monica Facility Owner (and their respective direct and indirect subsidiaries and interests in the Facilities) of Two Hundred and Twenty Six Million and Eight Six Thousand Dollars ($226,086,000.00) (the “Enterprise Valuation”).

Section 2.02 Owned Assets. As of the Closing, Transferor shall take such steps as may be necessary so that all tangible and intangible assets, excluding any assets leased or licensed from a third party, used in, and material to, the operation of the Facilities as they are currently being operated by the Facility Owners (as further described below, the “Owned Assets”) will be owned by Newco or the Newco Subsidiaries (as the case may be) free of all Liens, other than Permitted Exceptions. The Owned Assets include the following:

(a) Real Property.

(i) The Real Property, including, but not limited to, a fee simple interest in those certain real properties consisting of land (“Land”) and all buildings, structures, fixtures and other improvements located thereon (“Improvements”), such Land and Improvements being more particularly described in Exhibit A.

(ii) All right, title and interest of the Facility Owners as landlord (whether named as such therein, or by assignment or otherwise), including, but not limited to, in any leases and subleases (including Residence Agreements), if any, regarding the Real Property now existing or in effect at the Closing, and all amendments, modifications, supplements, renewals and extensions thereof, together with any security deposits made by the lessees or Residents thereunder.

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(b) Personal Property.

(i) Any and all furniture, fixtures, furnishings, inventory, machinery and equipment used in connection with the Facilities, and all other personal property used in connection with the Real Property and located upon the Real Property now or as of the Closing. In no event shall the Personal Property include any property owned by any Resident or Manager, notwithstanding Manager’s use of such property in connection with its management and administration of the Facilities.

(ii) Goodwill and going concern value.

(iii) All existing warranties and guaranties (express or implied) issued to the Facility Owners (or any prior owner or lessee of the Facilities, to the extent any Facility Owner has an interest therein) in connection with the Improvements or the Personal Property described in paragraph (b)(i) above.

(iv) All petty cash, all unrecognized community fees and all rights to hold Resident Deposits or other tenant security deposits received or held in connection with each Facility.

(v) The tangible and intangible property described in Sections 2.02(b)(i) through 2.02(b)(iv) shall be referred to herein as the “Personal Property.”

(c) Facility Agreements and Residence Agreements. All rights of Facility Owners in, to and under all contracts, leases, subleases, agreements, commitments and other arrangements, and any amendments or modifications thereof, used or useful in the operation of the Facilities as of the date hereof or made or entered into by the Facility Owners or Manager between the date hereof and the Closing Date in compliance with this Agreement (the “Facility Agreements”), and all occupancy, residency, tenancy and similar written agreements entered into in the ordinary course of business with Residents, and all amendments, modifications, supplements, renewals, and extensions thereof (“Residence Agreements”).

(d) Records. True and complete copies of all of the books, records, accounts, files, logs, ledgers and journals pertaining to or used in the operation of the Facilities, including, but not limited to, any electronic data stored on computer disks or tapes, and originals of any of the foregoing that relate to the Facilities, together with the basic corporate, partnership or limited liability company documents and records of the Company, the Pool Companies, Santa Monica GP, Santa Monica LP and the Facility Owners.

(e) Licenses. Any and all Licenses now held in the name of Transferor, Manager, the Company, the Pool Companies, Santa Monica GP, Santa Monica LP and the Facility Owners, or any of their Affiliates and used or useful in the operation of the Facilities, and any renewals, extensions, amendments or modifications thereof, except to the extent not transferable or assignable under applicable law.

(f) Miscellaneous Assets. Any other tangible or intangible assets, properties or rights of any kind or nature not otherwise described above in this Section 2.02 and now or hereafter owned by Newco, the Company, the Pool Companies, Santa Monica GP, Santa Monica LP, or the Facility Owners and used in connection with the operation of the Facilities, including, without limitation, any and all rights of Newco, the Company, the Pool Companies, Santa

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Monica GP, Santa Monica LP or the Facility Owners in and to (i) all web sites, URLs, domain names, trade names, trademarks, service marks, logos and all copyrights used exclusively in connection with the Facilities, (ii) phone numbers and phone listings for the Facilities, (iii) all deposits in connection with any Facility Agreement or utility service, (iv) all deposits, letters of credit and guarantees of future performance from third parties held by the Newco, the Company, the Pool Companies, Santa Monica GP, Santa Monica LP and the Facility Owners and (v) all software, video tapes, films, brochures, marketing packages and other advertising and promotional materials used solely in connection with the Facilities.

(g) Excluded Assets. At Closing, the following assets shall not be considered Owned Assets: (i) all assets owned solely by Manager, Transferor or SSLI, including, without limitation, all web sites, URLs, domain names, trade names, trademarks, service marks, logos and copyrights, (ii) all assets owned by tenants or licensees and (iii) all assets owned by Residents.

Section 2.03 Operating Cash. All cash held by the Company, Santa Monica LP, Santa Monica GP, the Pool Companies, and the Facility Owners as of the Closing Date shall be distributed to Transferor at Closing. At Closing, after such distribution, Transferor shall fund in to the operating account of the TRS an amount equal to One Million, Five Hundred Thousand Dollars ($1,500,000.00) in the aggregate for purposes of working capital (the “Operating Cash Infusion”). In no event shall any portion or all of the Operating Cash Infusion be deemed to be part of the Transferor Contribution nor shall Transferor receive any capital account credit for such Operating Cash Infusion under the JV Agreement. Transferee acknowledges and agrees that from and after the Closing Date, to the extent not prohibited by the documents evidencing the Refinancing, (a) working capital will be held in operating accounts owned by the TRS and the Company and (b) FF&E reserves will be held in operating accounts owned by the Company. Transferor and Transferee agree that any such operating accounts may held at Keybank or such other bank or financial institution agreed to by Transferor and Transferee.

Section 2.04 Down Payment.

(a) Not later than three (3) Business Days after the Contract Date, Transferee shall deposit with Escrow Agent the Down Payment. The parties acknowledge that, except as otherwise provided herein, the Down Payment shall be applied at Closing toward the Transferee Contribution. The failure of the Down Payment to be timely deposited in accordance with this Section 2.04(a) shall render this Agreement immediately terminable at any time thereafter by Transferor upon written notice to Escrow Agent, unless prior to such termination Transferee makes the delinquent Down Payment and receives written acceptance thereof from Transferor.

(b) If Transferee shall have deposited the Down Payment with the Escrow Agent in accordance with Section 2.04(a), then, upon the expiration of the Due Diligence Period the Down Payment shall become non-refundable to Transferee, except as otherwise provided herein.

(c) The Down Payment shall be held, invested and, along with all amounts earned thereon, credited and disbursed in accordance with the provisions of Article XIII.

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Article III.

DUE DILIGENCE

Section 3.01 Investigation of Facilities. Transferor shall provide Transferee with the following rights of access for purposes of conducting due diligence with respect to the Facilities, Newco, the Company, Santa Monica LP, Santa Monica GP, the Pool Companies and the Facility Owners, subject to the terms and conditions of this Section 3.01.

(a) To the extent not already delivered, Transferor shall deliver, or direct Manager to deliver, to Transferee accurate and complete copies of all due diligence materials reasonably requested by Transferee that are in Transferor’s, the Company’s Santa Monica LP’s, Santa Monica GP’s, the Pool Companies’, Facility Owners’ or Manager’s possession or under Transferor’s, the Company’s, Santa Monica LP’s, Santa Monica GP’s, the Pool Companies’, Facility Owners’ or Manager’s direct or indirect control.

(b) Subject to the rights of the Residents under the Residence Agreements, Transferee, and its agents, contractors and representatives, shall have the right to enter onto the Facilities prior to Closing for purposes of conducting property surveys, environmental studies, engineering tests and such similar property-related tests, studies and/or investigations as Transferee deems necessary or desirable to evaluate the Facilities. All such tests, studies and investigations shall be conducted at Transferee’s sole risk and expense. Transferee shall give Transferor reasonable prior notice of Transferee’s entry onto the Facilities for purposes of conducting such tests, studies and investigations, and Manager shall have the right to accompany Transferee or its agents, employees, contractors and representatives during any such tests, studies and investigations. In performing its diligence activities, Transferee shall use reasonable efforts to minimize any interference with the activities of Residents and to take such measures as Transferor may reasonably request in order to minimize, to the extent reasonably practicable, any disruption to the operation of the Facilities and the occupancy of its Residents. Transferee and its agents, contractors and representatives shall not perform any soil, groundwater, or other environmental sampling, drilling, coring or other invasive sampling or testing without Transferor’s consent, which consent shall not be unreasonably withheld. Transferee shall at all relevant times have liability insurance coverages in amounts reasonably acceptable to Transferor to cover the activities undertaken by Transferee and its agents, employees, contractors and representatives pursuant to this Section 3.01(b). Transferee shall indemnify, defend and hold Transferor, the Pool Companies, Santa Monica LP, Santa Monica GP, the Facility Owners and Manager and their respective direct and indirect Affiliates (the “Access Indemnified Parties” harmless from and against any Loss, for damage to property and injury to persons, arising out of the entry by Transferee or its agents, employees, contractors or representatives onto the Facilities, and their activities thereon, such indemnification to survive the Closing or termination of this Agreement. Notwithstanding anything to the contrary herein, the Access Indemnified Parties agree that in connection with any loss, liability, damage or claim incurred by the Access Indemnified Parties and for which the Access Indemnified Parties are indemnified hereunder, the Access Indemnified Parties shall first seek recovery against any insurance provided by Transferee covering such loss, liability, damage or claim before seeking recovery against Transferee; provided that to the extent the Access Indemnified Parties have not made such recovery within ninety (90) days after the occurrence of any such loss, liability, damage or claim, the Access Indemnified Parties may seek recovery against Transferee. Transferee represents and warrants that to its knowledge, as of the date hereof, no event has occurred which could be the basis for a claim under the indemnity contained in this Section 3.01(b).

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(c) In the event that Transferee is not satisfied, in its sole and absolute discretion, with the proposed acquisition, ownership, financing (including, without limitation, the Transferee’s Mezz Financing) or operation of the Owned Assets or of the Transferor’s Interest, then Transferee shall have the absolute right to terminate this Agreement at any time on or prior to the end of the Due Diligence Period. Such right to terminate shall be exercised by Transferee giving written notice to Transferor in accordance with Section 13.02(a) and Section 18.03 hereof, which written notice must be received by Transferor prior to the end of the Due Diligence Period.

(d) Upon a termination of this Agreement by Transferee in accordance with Section 3.01(c), Transferee shall be entitled to receive a disbursement of the Down Payment in accordance with the provisions hereof, and Transferor and Transferee shall be released from any and all further liabilities and obligations under this Agreement, except to the extent otherwise expressly provided in this Agreement.

(e) If this Agreement shall not have been terminated in accordance with Section 3.01(c), then this Agreement shall continue in full force in accordance with its terms and the Down Payment shall become non-refundable to Transferee, except as may otherwise be provided in this Agreement.

(f) Upon any termination of this Agreement (whether pursuant to this Section 3.01 or otherwise), Transferee shall (i) return all original due diligence materials provided by Manager or Transferor and destroy all other due diligence materials prepared by Transferee (collectively, the “Due Diligence Materials”), (ii) use its commercially reasonable efforts to cause all persons to whom Transferee has provided any original Due Diligence Materials to return such materials and to destroy all other Due Diligence Materials, and (iii) certify to Manager and Transferor that, to Transferee’s knowledge, all original Due Diligence Materials have been returned to Manager or Transferor and all other Due Diligence Materials have been destroyed. The provisions of this Section 3.01(f) shall survive the termination of this Agreement.

(g) Transferor and Manager acknowledge and agree to conduct and complete, no later than seventy-four (74) days following the Closing Date, an audit of property-level financials for the Owned Assets as specified by Rule 3-05 of Regulation S-X of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, provided such audit shall be at the sole cost and expense of Transferee. In connection therewith, Transferor and Manager agree to obtain and provide to the auditors any and all data and financial information in the possession of Transferor, the Company, the Pool Companies, Santa Monica GP, Santa Monica LP or the Facility Owners which are necessary or required by the auditors in connection with their preparation and completion of the foregoing audit. The rights and obligations of Transferor, Manager and Transferee under this Section 3.01(g) shall survive the Closing.

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Section 3.02 Title.

(a) Transferee shall obtain a Title Commitment and a survey (“Survey”) for each Facility. The costs of such Title Commitment, each Title Policy, any endorsements to the Title Policies and a Survey for each Facility shall be paid in accordance with Article XV below. To the extent required by the Title Company, Transferor or any Newco Subsidiary, as applicable, shall execute a non-imputation Affidavit in the form attached hereto as Exhibit F (the “Non-Imputation Affidavit”) as required to cause a non-imputation endorsement to be issued with each Title Policy and shall cause each Facility Owner to execute any and all affidavits, indemnification agreements or other agreements necessary and reasonably requested by Escrow Agent for the issuance of said endorsement, each Title Policy and all other endorsements to each Title Policy, at the time of Closing

(b) Notwithstanding any other provision of this Section 3.02, Transferor shall cause to be released at or prior to Closing all Liens encumbering Transferor’s Interest, Newco, the Company, the Pool Companies, Santa Monica LP and Santa Monica GP and the Facility Owners, other than Permitted Exceptions.

(c) Neither Transferor nor any Facility Owner shall cause any change in the status of title to the Facilities prior to Closing which would reasonably be anticipated to have a Material Adverse Effect.

Section 3.03 Satisfaction of Conditions Precedent. Transferor and Transferee will endeavor diligently and in good faith to satisfy as promptly as practical all conditions precedent set forth in this Agreement to the respective obligations of Transferor and Transferee hereunder. The Closing shall take place, as provided in Section 11.01, on or before the date that is ten (10) days following the expiration of the Due Diligence Period (such date, the “Closing Date”). If all conditions precedent have not been satisfied or waived on or prior to the Closing Date, then the party in whose favor such condition precedent runs may terminate this Agreement and all other Documents (except for those provisions of this Agreement and such other Documents that by their terms survive such termination), whereupon the parties hereto shall have no further obligations to each other in relation to this Agreement, such other Documents or the transactions contemplated hereunder or thereunder (except for those obligations set forth in provisions of this Agreement and such other Documents that by their terms survive such termination), and provided that the provisions of Article XIII shall control the disposition of the Down Payment; provided, however, notwithstanding the foregoing, (i) provided that Transferor is not in default under any material term of this Agreement, in the event that any of the closing conditions set forth in Section 10.03(d) or (e) are not satisfied or waived by Transferor on or prior to the Closing Date, Transferor shall be permitted to extend the Closing Date by not more than sixty (60) days, by delivering written notice to Transferee specifying the extended Closing Date and (ii) provided that Transferee is not in default under any material term of this Agreement, in the event that any of the closing conditions set forth in Section 10.01(d) or (e) are not satisfied or waived by Transferee on or prior to the Closing Date, Transferee shall be permitted to extend the Closing Date by not more than sixty (60) days, by delivering written notice to Transferor specifying the extended Closing Date.

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Article IV.

REPRESENTATIONS AND WARRANTIES OF TRANSFEREE

Transferee represents and warrants to Transferor as follows:

Section 4.01 Organization, Good Standing and Entity Authority. Transferee is a limited partnership, duly organized, validly existing and in good standing under the laws of Delaware, and has all requisite corporate power to own and operate its properties and carry on its business.

Section 4.02 Authorization and Binding Effect of Documents. Transferee (and any applicable Affiliate) has all requisite power and authority to enter into this Agreement and, at Closing, shall have all requisite power and authority to enter into the other Documents to which Transferee is to be a party and to consummate the transactions contemplated by this Agreement and such other Documents. The execution and delivery of this Agreement by Transferee and the consummation by Transferee of the transactions contemplated hereby, on the terms and subject to the conditions herein shall be, on or before the expiration of the Due Diligence Period, duly authorized by all necessary action on the part of Transferee and Transferee’s board of directors. This Agreement has been, and each of the other Documents to which Transferee is to be a party will be, duly executed and delivered by Transferee at or prior to Closing. This Agreement constitutes (and each of the other Documents to which Transferee is to be a party, when executed and delivered, will constitute) the valid and binding obligation of Transferee enforceable against Transferee in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights of creditors generally and to the exercise of judicial discretion in accordance with general principles of equity, whether applied by a court of law or of equity.

Section 4.03 ERISA.

(a) Transferee is not an employee pension benefit plan subject to the provisions of Title IV of ERISA or subject to the minimum funding standards under Part 3, Subtitle B, Title I of ERISA or Section 412 of the Code or Section 302 of ERISA, and none of its assets constitutes assets of any such employee benefit plan subject to Part 4, Subtitle B, Title I of ERISA.

(b) Transferee is not a “governmental plan” within the meaning of Section 3(32) of ERISA and the funds used by Transferee to acquire the Facilities are not assets of any such governmental plan and are not subject to state statutes regulating investments of and fiduciary obligations with respect to governmental plans. The consummation of the transactions contemplated by this Agreement will not violate such statutes.

Section 4.04 Absence of Conflicts. The execution, delivery and performance by Transferee of this Agreement and the other Documents to which Transferee is to be a party, and consummation by Transferee of the transactions contemplated hereby and thereby, do not and will not (i) conflict with or result in any breach of any of the terms, conditions or provisions of, (ii) constitute a default under, (iii) result in a violation of, or (iv) give any third party the right to modify, terminate or accelerate any obligation under the provisions of any certificate or articles of incorporation, bylaws, operating or partnership agreement or other charter documents of

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Transferee (or its Affiliates), any law, regulation, judgment, rule, order or decree to which Transferee (or its Affiliates) is subject, or any indenture, mortgage, lease, loan agreement or other agreement or instrument to which Transferee (or its Affiliates) is subject.

Section 4.05 Consents. Except for such reports and filings that an Affiliate of Transferee may be required to make with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, the execution, delivery and performance by Transferee of this Agreement and the other Documents to which Transferee is to be a party do not require any order, permission, consent, approval, authorization, registration or validation of, or exemption, clearance or other action by, or notice or declaration to, or filing with, any Governmental Entity, or, except for the consent of Transferee’s board of directors which shall be obtained prior to the expiration of the Due Diligence Period, the consent, waiver or approval of any other Person which has not been obtained and is currently in full force and effect.

Section 4.06 Broker’s or Finder’s Fees. No agent, broker, investment banker or other person or firm acting on behalf of or under the authority of Transferee (or any of its Affiliates) is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee, directly or indirectly, from Transferor in connection with the transactions contemplated by this Agreement. Transferee agrees to indemnify and hold Transferor harmless from any Loss resulting from a breach of this representation and warranty. Notwithstanding the provisions of Section 12.01 below, such agreement to indemnify shall survive the Closing without time limitation.

Section 4.07 No Judgments. Except as set forth in Section 4.07 of the Disclosure Statement, there are no judgments presently outstanding and unsatisfied directly against Transferee, and Transferee is not involved in any litigation at law or in equity, or in any proceeding before any court, or by or before any Governmental Entity, which judgment, litigation or proceeding could reasonably be anticipated to have a Material Adverse Effect and which is not fully covered by insurance and, to Transferee’s knowledge, (i) no such judgment, litigation or proceeding is threatened against Transferee which could reasonably be anticipated to have a Material Adverse Effect and (ii) no investigation looking toward such a proceeding has begun or is contemplated.

Section 4.08 No Insolvency. Transferee has not committed an act of bankruptcy, proposed a compromise or arrangement to its creditors generally, had any petition for a receiving order in bankruptcy filed against it, instituted any proceeding with respect to a compromise or arrangement, instituted any proceeding to have itself declared bankrupt or wound-up, instituted any proceeding to have a receiver appointed in connection with any of its assets, had any encumbrancer take possession of any of its assets, or had any execution or distress become enforceable or become levied upon any of its assets.

Section 4.09 Specially Designated National or Blocked Person. Neither Transferee (including, without limitation, any and all of its partners, directors and officers), nor any of its Affiliates is a Specially Designated National or Blocked Person. Neither Transferee nor any of its Affiliates is directly or indirectly owned or controlled by the government of any country that is subject to an embargo by the United States government. Neither Transferee nor any of its Affiliates is acting on behalf of a government of any country that is subject to such an embargo.

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Section 4.10 Transferee Financials. The audited and unaudited financial statements of Transferee for the period ending April 30, 2012, copies of which have been provided to Transferor, fairly present in all material respects the financial condition and the results of operations of Transferee as at the respective dates and for the periods covered by such financial statements, all in accordance with GAAP, consistently applied, subject, in the case of unaudited financial statements, to normal recurring year-end adjustments, and the absence of notes.

As used in this Agreement, the phrase “to Transferee’s knowledge” and similar phrases shall mean the current, actual (not constructive, imputed, or implied) knowledge, after due inquiry, of Stephen H. Mauldin and Joseph T. Johnson, who Transferee represents are the persons most knowledgeable about Transferee’s overall business and affairs. Notwithstanding anything herein to the contrary, Transferee shall have no Liability to Transferor for a breach of any representation or warranty hereunder, if the breach in question is based on a condition, state of facts or other matter which was currently and actually known (and not constructively, by imputation or by implication) by the party claiming such breach, or disclosed in writing to the party claiming such breach, on or prior to the date hereof.

Article V.

INTENTIONALLY OMITTED

Article VI.

INTENTIONALLY OMITTED

Article VII.

REPRESENTATIONS AND WARRANTIES OF TRANSFEROR

Transferor represents and warrants to Transferee as follows:

Section 7.01 Organization, Good Standing, Entity Authority and Qualification. Transferor is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Virginia. Transferor has all requisite company power to own, operate and lease its properties and carry on its business. Each of Newco, the Company, the Pool Companies, Santa Monica GP, Santa Monica LP and the Facility Owners are limited liability companies or limited partnerships, as the case may be, duly organized, validly existing and in good standing under the laws of their respective jurisdictions of organization, have all requisite company power to own and operate their properties and carry on their businesses, and are qualified to do business in each of the jurisdictions in which the nature of their business or the ownership of their properties make such qualification necessary.

Section 7.02 Authorization and Binding Effect of Documents.

(a) Transferor (and any applicable Affiliate) has all requisite power and authority to enter into this Agreement and, at Closing, shall have all requisite power and authority to enter into the other Documents to which it is a party and to consummate the transactions contemplated by this Agreement and such other Documents. Subject to Section 7.02(b) below, the execution and delivery of this Agreement by Transferor and the consummation by Transferor of the transactions contemplated hereby, on the terms and subject to the conditions herein shall be, on or before seven (7) Business Days following the date of this

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Agreement, duly authorized by all necessary action on the part of Transferor and Transferor’s shareholders, members and board of directors (the “Transferor Board Consent”). This Agreement has been, and each of the other Documents to which Transferor is to be a party will be, duly executed and delivered by Transferor at or prior to Closing. This Agreement constitutes (and each of the other Documents to which Transferor is to be a party, when executed and delivered, will constitute) the valid and binding obligation of Transferor enforceable against Transferor in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights of creditors generally and to the exercise of judicial discretion in accordance with general principles of equity, whether applied by a court of law or of equity.

(b) In the event that Transferor has not received the Transferor Board Consent on or before the date that is seven (7) Business Days following the date of this Agreement, then Transferor shall have the absolute right to terminate this Agreement at any time on or prior to the date that is eight (8) Business Days following the date of this Agreement. Such right to terminate shall be exercised by Transferor giving written notice to Transferee in accordance with Section 13.02(a) and Section 18.03 hereof, which written notice must be received by Transferor prior to the date that is eight (8) Business Days following the date of this Agreement. If Transferor terminates this Agreement in accordance with this Section 7.02(b), the Down Payment shall be returned to Transferee.

Section 7.03 Absence of Conflicts. The execution, delivery and performance by Transferor of this Agreement and the other Documents to which Transferor is to be a party, and consummation by Transferor of the transactions contemplated hereby and thereby, do not and will not (i) conflict with or result in any breach of any of the terms, conditions or provisions of, (ii) constitute a default under, (iii) result in a violation of, or (iv) give any third party the right to modify, terminate or accelerate any obligation under, the provisions of the certificate or articles of incorporation, bylaws, operating or partnership agreement or other charter documents of Transferor, Newco, the Company, the Pool Companies, Santa Monica GP, Santa Monica LP, the Facility Owners or any of their Affiliates, any indenture, mortgage, lease, loan agreement or other agreement or instrument by which Transferor, Newco, the Company, the Pool Companies, Santa Monica GP, Santa Monica LP, the Facility Owners or any of their Affiliates is bound or affected, or any law, regulation, rule, judgment, order or decree to which Transferor, Newco, the Company, the Pool Companies, Santa Monica GP, Santa Monica LP, the Facility Owners or any of their Affiliates is subject.

Section 7.04 Consents. Except as set forth in Section 7.04 of the Disclosure Statement, the execution, delivery and performance by Transferor of this Agreement and the other Documents to which it is a party, and consummation by Transferor of the transactions contemplated hereby and thereby, do not and will not require the authorization, consent, approval, exemption, clearance or other action by or notice or declaration to, or filing with, any court or Governmental Entity, or, except for the Transferor Board Consent which shall be obtained pursuant to Section 7.02 above, the consent, waiver or approval of any other Person.

Section 7.05 Broker’s or Finder’s Fees. No agent, broker, investment banker, or other Person acting on behalf of Transferor (or any Affiliate of Transferor) or under its authority is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee, directly or

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indirectly, from Transferor or Transferee in connection with the transactions contemplated by this Agreement. Transferor agrees to indemnify and hold Transferee and its Affiliates harmless from any Loss resulting from a breach of this representation and warranty. Notwithstanding the provisions of Section 12.01 below, such agreement to indemnify shall survive the Closing without time limitation.

Section 7.06 ERISA.

(a) Transferor is not an employee pension benefit plan subject to the provisions of Title IV of ERISA or subject to the minimum funding standards under Part 3, Subtitle B, Title I of ERISA or Section 412 of the Code or Section 302 of ERISA, and none of its assets constitute assets of any such employee benefit plan subject to Part 4, Subtitle B, Title I of ERISA.

(b) Transferor is not a “governmental plan” within the meaning of Section 3(32) of ERISA and no funds received by Transferor in this transaction are assets of any such governmental plan and are not subject to state statutes regulating investments of and fiduciary obligations with respect to governmental plans. The consummation of the transactions contemplated by this Agreement will not violate such statutes.

Section 7.07 Ownership of Transferor’s Interest. Transferor is the sole legal and beneficial owner of Transferor’s Interest. Transferor’s Interest is free and clear of all Liens encumbering Transferor’s Interest, and Transferor has good and marketable title to Transferor’s Interest. Transferor’s Interest is validly issued, fully paid and non-assessable. There is no restriction or limitation on Transferor’s right to sell Transferor’s Interest as contemplated by this Agreement. At Closing, Transferor will transfer to Transferee good and marketable title to Transferor’s Interest, free and clear of all Liens.

Section 7.08 No Judgments. Except as set forth in Section 7.08 of the Disclosure Statement, there are no judgments presently outstanding and unsatisfied against Transferor, Newco, the Company, the Pool Companies, Santa Monica LP, Santa Monica GP or any of the Facility Owners, and, to Transferor’s knowledge, none of Transferor, Newco, the Company, the Pool Companies, Santa Monica LP, Santa Monica GP or any of the Facility Owners is involved in any litigation at law or in equity, or in any proceeding before any court, or by or before any governmental or administrative agency, which judgment, litigation or proceeding would reasonably be anticipated to have a Material Adverse Effect and which is not fully covered by insurance and, to Transferor’s knowledge, no such judgment, litigation or proceeding is threatened against Transferor, Newco, the Company, the Pool Companies, Santa Monica LP, Santa Monica GP or any of the Facility Owners.

Section 7.09 No Governmental Approvals. Except as set forth in Section 7.09 of the Disclosure Statement, no order, permission, consent, approval, license, authorization, registration or validation of, or filing with, or exemption by, any Governmental Entity is required to authorize, or is required in connection with the execution, delivery and performance by Transferor of this Agreement, any Document to which Transferor is a party or Transferor’s taking of any action thereby contemplated, which has not been (or as of the Closing will not have been) obtained and is (or as of Closing will be) in full force and effect.

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Section 7.10 No Insolvency. None of Newco, the Company, the Pool Companies, Santa Monica LP, Santa Monica GP or the Facility Owners has committed an act of bankruptcy, proposed a compromise or arrangement to its creditors generally, had any petition for a receiving order in bankruptcy filed against it, taken any proceeding with respect to a compromise or arrangement, taken any proceeding to have itself declared bankrupt or wound-up, taken any proceeding to have a receiver appointed in connection with its interest in any Facility, had any encumbrancer take possession of its interest in any Facility, or had any execution or distress become enforceable or become levied upon its interest in any Facility. Transferor has not committed an act of bankruptcy, had any petition for a receiving order in bankruptcy filed against it, filed in any court in lieu of bankruptcy any legal proceeding with respect to a compromise or arrangement, filed any legal proceeding to have itself declared bankrupt or wound-up, taken any proceeding to have a receiver appointed in connection with its interest in any Facility, had any encumbrancer take possession of its interest in any Facility, or had any execution or distress become enforceable or become levied upon its interest in any Facility.

As used in this Agreement, the phrase “to Transferor’s knowledge” and similar phrases shall mean the current, actual (not constructive, imputed, or implied) knowledge, after due inquiry, of Greg Neeb, Philip Kroskin, Edward Burnett and Jerry Liang, who Transferor represents are the persons most knowledgeable about Transferor’s overall business and affairs. Notwithstanding anything herein to the contrary, Transferor shall have no Liability to Transferee for a breach of any representation or warranty hereunder, if the breach in question is based on a condition, state of facts or other matter which was currently and actually known (and not constructively, by imputation or by implication) by the party claiming such breach, or disclosed in writing to the party claiming such breach, on or prior to the date hereof.

Article VIII.

BUSINESS REPRESENTATIONS

Transferor represents and warrants to Transferee as follows (the following representations, the “Business Representations”):

Section 8.01 Financial Statements; No Undisclosed Liabilities; Absence of Certain Changes.

(a) The unaudited financial statements of each of the Facility Owners as identified in Section 8.01 of the Disclosure Statement (the “Financials”), copies of which have been provided to Transferee, fairly present in all material respects the financial condition and the results of operations of the Facility Owners as of the respective dates and for the periods covered by such financial statements, all in accordance with GAAP, consistently applied, subject to normal recurring year-end adjustments, and the absence of notes.

(b) Except as set forth in the Financials, there are no material Liabilities of the Facility Owners of any kind whatsoever of the type required to be reflected on a balance sheet prepared in accordance with GAAP, other than:

(i) contingent Liabilities, which, in accordance with GAAP, are not required to be reflected on a balance sheet;

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(ii) any Liabilities incurred since April 30, 2012 in the ordinary course of business of the Facility Owners consistent with past practice or in connection with this Agreement or the other Documents; and

(iii) in the case of unaudited financial statements, normal recurring year-end adjustments and the absence of notes.

(c) Except as set forth in Section 8.01(c) of the Disclosure Statement, since April 30, 2012, the Facility Owners have conducted their respective businesses in the ordinary course of business consistent with past practice and there has not been:

(i) any event, occurrence or development of a state of circumstances or facts which, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect;

(ii) other than dividends and distributions paid in the ordinary course of business of the Facility Owners consistent with past practice, any declaration, setting aside or payment of any dividend or other distribution with respect to any equity interest of the Facility Owners (other than dividends or distributions in cash in an amount consistent with the requirements of this Agreement), or any split, combination or reclassification of any equity interest of the Facility Owners;

(iii) any amendment of any term of any outstanding equity interest of the Facility Owners;

(iv) any incurrence, assumption or guarantee by the Facility Owners of any indebtedness that would have a Material Adverse Effect;

(v) as of the expiration of the Due Diligence Period, any creation or assumption by the Facility Owners of any Lien on any asset that would have a Material Adverse Effect, except for Permitted Exceptions;

(vi) any (i) transaction or commitment made, or any Contract entered into, by the Facility Owners relating to its assets or business (including the acquisition or disposition of any assets) that involved the acquisition or disposition of assets other than for fair value or that involved an amount in excess of One Hundred Thousand Dollars ($100,000), or (ii) relinquishment by the Facility Owners of any material Contract or other right outside of the ordinary course of business consistent with past practice that would have Material Adverse Effect; and

(vii) any change in any method of accounting or accounting practice not required by GAAP by the Facility Owners or any election for Taxes.

Section 8.02 Books and Records; Internal Controls. All records relating to Newco, the Company, the Pool Companies, Santa Monica LP, Santa Monica GP and the Facility Owners (including books and records, contract documents, accounts receivable data, financial statements and other similar records) are maintained, in all material respects, to the extent applicable, in accordance with GAAP and the internal controls on financial reporting of Newco, the Company, the Pool Companies, Santa Monica LP, Santa Monica GP and the Facility Owners.

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Section 8.03 Obligations. Except (a) to the extent reflected or reserved against in the Financials, (b) normal trade creditors payable in the ordinary and normal course of business since the dates of such Financials and (c) the Existing Owner Financing, none of Newco, the Company, the Pool Companies, Santa Monica LP, Santa Monica GP or the Facility Owners have any material outstanding Liabilities, which in each case would reasonably be anticipated to have a Material Adverse Effect.

Section 8.04 Medicare; Medicaid. Except as set forth in Section 8.04 of the Disclosure Statement, none of Transferor, Newco, the Company, the Pool Companies, Santa Monica LP, Santa Monica GP or any Facility Owners are party to any Medicaid/Medicare Contracts with respect to the provision of services at the Facilities. Except as set forth in Section 8.04 of the Disclosure Statement, no action, proceeding, or investigation in connection with Medicare, Medicaid or other public or private third-party payor or other programs is pending or, to Transferor’s knowledge, threatened against any of Transferor, Newco, the Company, the Pool Companies, Santa Monica LP, Santa Monica GP, Manager or any Facility Owner in connection with the Facilities which would reasonably be anticipated to have a Material Adverse Effect. To Transferor’s knowledge, none of Transferor, Newco, the Company, the Pool Companies, Santa Monica LP, Santa Monica GP, Manager or any Facility Owner has received written notice of any threatened or pending investigation in connection with the Facilities relating to (i) any fraud, false statement or false claim applicable to its business or (ii) any patient care, patient rights or other law applicable to its business, in each case which would reasonably be anticipated to have a Material Adverse Effect.

Section 8.05 No Possessory Rights. Except for any parties in possession pursuant to, and any rights of possession granted under, the Residence Agreements, and except as shown in the Title Commitments or as set forth in Section 8.05 of the Disclosure Statement, there are no parties in possession of any part of the Facilities, and there are no other rights of possession which have been granted by Transferor, Newco, the Company, the Pool Companies, Santa Monica LP, Santa Monica GP or any Facility Owners to any third party or parties, except for licenses to use space which are cancelable by Transferor, Newco, the Company the Pool Companies, Santa Monica LP, Santa Monica GP or any Facility Owners on ninety (90) days or less notice.

Section 8.06 Employees. None of Newco, the Company, the Pool Companies, Santa Monica LP, Santa Monica GP or the Facility Owners has any employees. All personnel employed at the Facilities are employees of Manager.

Section 8.07 Licenses. Except as set forth in Section 8.07 of the Disclosure Statement, the Company, the Pool Companies, Santa Monica LP, Santa Monica GP, Manager and the Facility Owners have all material Licenses necessary to the conduct of their business as presently conducted and all such Licenses are valid and in full force and effect. Except with respect to the Healthcare Permits, no consent is required from any issuer of a License, where the failure to obtain such consent would reasonably be expected to have a Material Adverse Effect. There is no pending or, to Transferor’s knowledge, threatened action, investigation or proceeding with

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respect to revocation, cancellation, suspension or non-renewal of any License for any Facility which would reasonably be anticipated to have a Material Adverse Effect, and except as set forth in Section 8.07 of the Disclosure Statement, no notice has been received by Transferor, Newco, the Company, the Pool Companies, Santa Monica LP, Santa Monica GP, the Facility Owners or Manager from any Governmental Entity currently asserting the violation of the terms of any Licenses or currently threatening to revoke, cancel, suspend or not renew the terms of any such existing License, which would reasonably be anticipated to have a Material Adverse Effect.

Section 8.08 Litigation. A true and correct listing and summary of all litigation with respect to the Real Property, Facilities, Newco, the Company, the Pool Companies, Santa Monica GP, Santa Monica LP, the Facility Owners or (with respect to the Facilities) Manager which is not fully covered by insurance in place (subject to applicable deductibles) with respect to each of the Facilities and which would reasonably be anticipated to have a Material Adverse Effect which is pending or, to Transferor’s knowledge, threatened in writing against any of Transferor (as to the Facilities), the Real Property, the Facility Owners, Newco, the Company, the Pool Companies, Santa Monica GP, Santa Monica LP or the Manager (as to the Facilities) is included as Section 8.08 of the Disclosure Statement.

Section 8.09 Environmental Matters. Transferor has provided Transferee with access to or copies of all environmental reports and documentation related to the environmental reports in the possession of Transferor, the Company, the Pool Companies, Santa Monica LP, Santa Monica GP, the Facility Owners or Manager with respect to the Real Property and the Facilities (the “Environmental Reports”). Except as set forth on Section 8.09 of the Disclosure Statement, no written notice has been received by Transferor, the Facility Owners, Manager, Newco, the Company, the Pool Companies, Santa Monica LP or Santa Monica GP that the Real Property or Facilities are in violation of Environmental Laws. Except as disclosed in the Environmental Reports and in any additional environmental reports received by Transferee prior to the Closing Date, to Transferor’s knowledge (a) there are no underground storage tanks on the Real Property and (b) the Facilities do not contain any Hazardous Substances other than to a de minimus extent and in any event in compliance with Environmental Laws. Except as set forth on Section 8.09 of the Disclosure Statement or in any additional environmental reports and documentation received by Transferee prior to the Closing Date, to Transferor’s knowledge there are no Environmental Claims and no Environmental Liabilities other than to a de minimus extent and in any event in compliance with Environmental Laws.

Section 8.10 Intentionally Omitted.

Section 8.11 Compliance with Laws. Except as would not reasonably be anticipated to have a Material Adverse Effect and except as set forth in Section 8.11 of the Disclosure Statement or in any zoning letters provided to Transferee prior to the end of the Due Diligence Period, no written notice has been received by Transferor, the Facility Owners, Manager, Newco, the Company, the Pool Companies, Santa Monica GP or Santa Monica LP, nor does Transferor have knowledge, that the Facilities are in violation of any applicable statute, law, regulation, rule, ordinance, order, License or permit.

Section 8.12 Residence Agreements. Transferee has been supplied with true and correct copies of the forms (on a state-by-state basis) of the Residence Agreement currently in

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use for new admissions at the Facilities. No Facility Owner is in default, and, to Transferee’s knowledge, no Resident is in default, under any of its obligations under any Residence Agreement which default could reasonably be anticipated to have a Material Adverse Effect. The Residence Agreements identified on the Rent Rolls were in full force and effect as of the date of the applicable Rent Roll, except as would not reasonably be anticipated to have a Material Adverse Effect. The Rent Rolls are true and correct in all respects except as would not reasonably be anticipated to have a Material Adverse Effect, subject to the information on the then-current aged receivables report. As used in this Section 8.12, the term “Rent Rolls” means the schedules of Residents at the Facilities attached as Section 8.12 of the Disclosure Statement.

Section 8.13 Taxes. To Transferor’s knowledge, each of Transferor (with respect to the Facilities), Newco, the Company, the Pool Companies, Santa Monica GP, Santa Monica LP and the Facility Owners has prepared and duly and timely filed (or has filed as part of a consolidated tax filing) all tax reports and returns required to be filed by it and all such returns are accurate in all material respects. In addition, except as set forth in Section 8.13 of the Disclosure Statement, to Transferor’s knowledge, whether or not shown on such returns or reports to be due, of Transferor, Newco, the Company, the Pool Companies, Santa Monica GP, Santa Monica LP and the Facility Owners each has duly paid or provided for the payment of all taxes and other charges due or claimed to be due from it by federal, state, local or foreign taxing authorities (including, without limitation, those due in respect of the Real Property and the Facilities, and the income, franchises, licenses, sales, usages or payrolls associated therewith). There are no tax liens upon any property or assets of Transferor (with respect to the Facilities), the Company, Newco, the Pool Companies, Santa Monica GP, Santa Monica LP and the Facility Owners, except liens for current taxes not yet delinquent.

Section 8.14 Personal Property. As of the expiration of the Due Diligence Period, each Facility Owner shall own or lease all of the Personal Property that is currently used in the operations of the applicable Facility as it is currently conducted, free and clear of all Liens other than Permitted Exceptions. There are no assets necessary or material to the operation of the Facilities as currently operated that are not Owned Assets, other than Excluded Assets.

Section 8.15 Title. To Transferor’s knowledge and subject to easements, covenants, conditions and restrictions of record as of the date hereof and to Permitted Exceptions in place on or prior to the expiration of the Due Diligence Period, (a) each Facility Owner is the owner of a fee simple interest in the Land and Improvements set forth across from such Facility Owner’s name as described on Exhibit A attached hereto and (b) the Facility Owner is, or will be at Closing, the owner of all of the remaining property constituting the Personal Property with respect to the Facility owned by such Facility Owner, free and clear of all Liens, except for Permitted Exceptions and as otherwise expressly disclosed in this Agreement (including Section 1.01 of the Disclosure Statement).

Section 8.16 Intentionally Omitted.

Section 8.17 Contracts. Except as would not be reasonably anticipated to have Material Adverse Effect, (a) all service, maintenance, purchase order and other contracts, agreements and equipment leases as are needed with respect to the ownership, maintenance, operation, provisioning or equipping of the Facilities as presently conducted (the “Contracts”) are in full

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force and effect and (b) none of Transferor, Manager or any Facility Owner, or, to Transferor’s knowledge, any other party to the Contracts, is in breach or default under any obligation thereunder or any provisions thereof, and no condition exists that, with notice or the passage of time, or both, will constitute a breach or default under any obligation thereunder or any provisions thereof. Section 8.17 of the Disclosure Statement sets forth a true, correct and complete list of those Contracts which were entered into pursuant to a master or other agreement pertaining to each Facility.

Section 8.18 Insurance. Neither Newco, the Company, the Pool Companies, Santa Monica GP, Santa Monica LP, Facility Owners, or Manager has received written notice from any insurance carrier of defects or inadequacies in the Real Property or Facilities, which, if uncorrected, would result in a termination of insurance coverage or a material increase in the premiums charged therefor. Section 8.18 of the Disclosure Statement attached hereto sets forth a correct and complete list of each insurance policy maintained with respect to the Real Property and or Facilities. With respect to each insurance policy shown on Section 8.18 of the Disclosure Statement: (i) the policy is legal, valid, binding, enforceable and in full force and effect, (ii) neither Newco, the Company, the Pooled Companies, Santa Monica LP, Santa Monica GP, Facility Owners or Manager, nor to Transferor’s knowledge, any other party to the policy, is in material breach or default thereunder, and to Transferor’s knowledge, no event has occurred which, with notice or the lapse of time, would constitute such a material breach or default, or permit termination or modification under such policy against any insured party.

Section 8.19 Condemnation. Neither Transferor, Newco, the Company, the Pool Companies, Santa Monica GP, Santa Monica LP, the Facility Owners or Manager has received any written notice of, nor, to Transferor’s Knowledge, is there any pending or contemplated condemnation, eminent domain or similar proceeding with respect to all or any portion of the Owned Asset.

Section 8.20 Purchase Rights. There are no unrecorded purchase contracts, options or other agreements of any kind, whereby any Person other than the Transferee has or will have any right to acquire title to (a) all or any portion of the Real Property or (b) all or any portion of the Personal Property.

Section 8.21 Compliance with Permitted Exceptions. Neither Transferor, Newco, the Company, the Pool Companies, Santa Monica GP, Santa Monica LP, Manager or any Facility Owner has received or given any written notice of any violation of any Permitted Exception which has not been cured or dismissed.

Section 8.22 Utilities. All public utilities including, without limitation, sewer, water, electric, gas, and telephone, required for the operation of the Facilities as currently operated are installed and lawfully operating, and all installation and connection charges therefor have been paid in full, except as would not reasonably be anticipated to have a Material Adverse Effect. Neither Transferor, Newco, the Company, the Pool Companies, Santa Monica GP, Santa Monica LP, the Manager nor any Facility Owner has received any notice stating that the provision of utilities violates any public or private easement.

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Section 8.23 Existing Owner Financing Documents. Section 8.23 of the Disclosure Statement sets forth a true, correct and complete list of all notes, mortgages, deeds of trust, security agreements, and other material instruments, documents and agreements relating to the Existing Owner Financing.

Section 8.24 Management Documents. The Prior Management Agreements, Prior Owner Agreements and the Prior Pooling Agreements comprise all agreements and contracts existing as of the date hereof which relate to the provision of property management services at the Facilities by Manager. Transferor represents and warrants to Transferee that except for the Prior Management Agreements, Prior Owner Agreements and the Prior Pooling Agreement, as of the date hereof, there exists no other agreements, contracts or license agreement with respect to the provision of property management services at the Facilities.

Article IX.

COVENANTS

Section 9.01 Publicity. The parties agree that, prior to the Closing, no public release or announcement concerning the transactions contemplated hereby shall be issued by any party without the prior written consent of the other parties, except as required by law or applicable regulations. The parties may disclose this Transfer Agreement and matters relating to the subject matter hereof to (i) their professional advisers (including legal and financial advisers) or (ii) to any prospective or existing lenders, provided that in each case any such party informs the recipient of the confidentiality obligations of such party hereunder. The parties understand and agree that if required by law, or if required by applicable disclosure requirements under applicable securities laws or other laws, one or more of the parties may (i) disclose certain information concerning the transaction, (ii) issue one (1) or more press releases concerning the execution of this Agreement and/or the transfer of the Transferor’s Interest, provided that with respect to (a) any press release by Transferee or its Affiliates which identifies Transferor or its Affiliates, Transferee shall use its reasonable best efforts to seek the prior approval of the Transferor, such approval not to be unreasonably delayed or withheld and (b) any press release by Transferor or its Affiliates which identifies Transferee or its Affiliates, Transferor shall use its reasonable best efforts to seek the prior approval of the Transferor, such approval not to be unreasonably delayed or withheld and, in each case, such requirement to seek prior approval not to preclude any party or its Affiliate from complying with applicable disclosure obligations under law, and (iii) file a copy of this Agreement with the Securities and Exchange Commission.

Section 9.02 Commercially Reasonable Efforts. Subject to the terms and conditions of this Agreement, each party will use its commercially reasonable efforts to take all action and to do all things necessary, proper or advisable to satisfy any condition hereunder in its power to satisfy and for which it is responsible for the satisfaction of, and to consummate and make effective as soon as practicable the transactions contemplated by this Agreement. In furtherance of the foregoing, each party will use its commercially reasonable efforts to cause a First Mortgage Loan Application to be finalized, executed and delivered to Lender by the applicable parties thereto on or before the date that is seven (7) days after the date hereof.

Section 9.03 No Recordation. Transferor and Transferee each agrees that neither this Agreement nor any memorandum or notice hereof shall be recorded and Transferee agrees (i) not

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to file any notice of pendency or other instrument (other than a judgment) against the Facilities or any interest therein in connection herewith and (ii) to indemnify Transferor against all Losses or Liabilities incurred by either of them by reason of the filing by Transferee, as applicable, of such notice of pendency or other instrument.

Section 9.04 Licenses. During the Due Diligence Period, Transferor will cause Manager and the Facility Owners to apply for and diligently pursue issuance of the Licenses. Without limiting the generality of the foregoing, Transferor shall promptly provide to Transferee such information in its possession and control concerning the Company, Newco, the Pool Companies, Santa Monica LP, Santa Monica GP, Manager, the Facility Owners, the New Facility Owners and the Facilities as may be requested by any Governmental Entity in connection with the issuance of the Licenses and, if requested by such Governmental Entity, Transferor shall allow, or cause the Company, the Pool Companies, Santa Monica LP, Santa Monica GP, Manager or the Facility Owners to allow, representatives of the Governmental Entity to inspect the Facilities in connection with the application for any Licenses.

Section 9.05 Casualty. In the event that all or any portion of the Facilities is damaged or destroyed by fire or other casualty prior to Closing and the cost of repair for all such damaged or destroyed Facilities in the aggregate is less than $15,000,000.00, subject to the terms of the Existing Lease Financing, Transferor shall promptly cause the applicable Facility Owner to undertake such repair and complete the same. Closing will not be extended to permit the Facility Owner to complete the same, but subject to the terms of the Existing Owner Financing, the insurance proceeds will be escrowed to pay the costs of restoration. In the event the cost of repair thereof is equal to or greater than $15,000,000.00, Transferee, in its sole discretion, shall either (i) proceed to Closing, in which event all insurance proceeds attributable to such damage or destruction shall be retained by the Facility Owner at Closing and the amount of any deductible with respect to such damage or destruction shall be paid by Transferor and Transferee in accordance with Article XV below or (ii) as Transferee’s sole and exclusive remedy in such event, terminate this Agreement, in which event the Down Payment shall be promptly returned to Transferee, and Transferor and Transferee shall be released from any and all further liabilities or obligations under this Agreement, except those liabilities or obligations that expressly survive such termination.

Section 9.06 Condemnation. In the event there is any permanent or temporary actual or threatened taking or condemnation of any material portion of any Facility, Transferor shall notify Transferee of the same as promptly as commercially practicable, and Transferee shall have the right, at its sole option, (i) to proceed to Closing in which event any and all proceeds of such taking or condemnation shall be delivered or assigned to the Facility Owner at Closing, or (ii) as Transferee’s sole and exclusive remedy in such event, terminate this Agreement, in which event the Down Payment shall be promptly returned to Transferee, and Transferor and Transferee shall be released from any and all further liabilities or obligations under this Agreement, except those liabilities or obligations that expressly survive such termination.

Section 9.07 Operation of Business. Through the Closing Date, Transferor shall cause Manager to continue to manage and operate the Facilities, taken as a whole, in the ordinary course of business in the manner it has previously managed and operated the Facilities prior to the date of this Agreement.

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Article X.

CONDITIONS PRECEDENT TO THE OBLIGATION

OF TRANSFEREE AND TRANSFEROR TO CLOSE

Section 10.01 Conditions to Transferee’s Obligation to Close. The obligation of Transferee to proceed to Closing is subject to the satisfaction of each of the following conditions, any of which may be waived, in whole or in part, in writing by Transferee at or prior to Closing:

(a) Transferor shall have performed in all material respects all their respective obligations under this Agreement which are required to be performed at or prior to Closing.

(b) All representations and warranties of Transferor set forth in Article VII and Article VIII of this Agreement shall have been true and correct as of the Contract Date and as of the Closing Date with the same force and effect as though made on and as of the Closing Date.

(c) Transferor shall have executed and/or delivered all of the documents required to be delivered at Closing pursuant to Section 11.02 (a).

(d) The Licenses shall have been issued and shall be in full force and effect, it being understood that this condition shall be deemed satisfied if any License has been issued, but such license is subject to revocation, cancellation, suspension or non-renewal in the event that post-licensure requirements that have not been satisfied as of Closing are not completed subsequent to Closing.

(e) The Refinancing shall have closed simultaneously with the closing of the transactions contemplated in this Agreement, on substantially the terms and conditions set forth in the Refinancing Term Sheet and such other terms as are customary for similar mortgage financing or otherwise reasonably acceptable to Transferee.

(f) Transferee shall have obtained the Transferee Mezz Financing, subject to terms and conditions satisfactory to Transferee in its sole and absolute discretion and subject to the terms and conditions of Section 15.05 below.

Section 10.02 Intentionally Omitted.

Section 10.03 Conditions to Transferor’s Obligation to Close. The obligation of Transferor to proceed to Closing is subject to the satisfaction of each of the following conditions, any of which may be waived, in whole or in part, in writing by Transferor at or prior to Closing:

(a) Transferee shall have performed in all material respects its obligations under this Agreement which are required to be performed at or prior to Closing.

(b) All representations and warranties of Transferee set forth in Article IV and Section 3.01(b) of this Agreement shall be true and correct as of the Contract Date and as of Closing with the same force and effect as though made on and as of the Closing Date.

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(c) Transferee shall have executed and delivered all of the documents required to be delivered at Closing pursuant to Sections 11.02 (b).

(d) Provided that Transferor is not in breach of its obligations under Section 9.04, the Licenses shall have been issued and shall be in full force and effect, it being understood that this condition shall be deemed satisfied if any License has been issued, but such license is subject to revocation, cancellation, suspension or non-renewal in the event that post-licensure requirements that have not been satisfied as of Closing are not completed subsequent to Closing.

(e) The Refinancing shall have closed simultaneously with the closing of the transactions contemplated in this Agreement, on substantially the terms and conditions set forth in the Refinancing Term Sheet and such other terms as are customary for similar mortgage financing or otherwise reasonably acceptable to Transferor.

Article XI.

CLOSING

Section 11.01 Time and Place. Closing of Transferor’s assignment of Transferor’s Interest pursuant to this Agreement (the “Closing”) shall take place at the offices of Willkie Farr & Gallagher LLP in New York City (or at such other place as Transferee and Transferor mutually agree) on the Closing Date or such other date as is mutually agreed upon by Transferor and Transferee.

Section 11.02 Delivery of Documents at Closing.

(a) At Closing, Transferor shall:

(i) Execute and deliver to Transferee (or its designee) the Assignment and Assumption of Interest Agreement.

(ii) Execute, acknowledge and deliver a certificate to Transferee confirming the matters set forth in Sections 10.01 (a) and (b) with respect to Transferor, as of the Closing Date, such certificates to be signed by an officer of Transferor.

(iii) Provide to Transferee (A) a copy of the Charter Documents of Transferor certified by a duly authorized officer of Transferor, (B) a copy of resolutions or other actions of the board of directors and shareholders of Transferor certified by a duly authorized officer of Transferor, and (C) such other evidence of the power and authority of Transferor to consummate the transactions described in this Agreement as Transferee may reasonably require.

(iv) Execute, cause to be acknowledged as appropriate and deliver to Transferee such additional documents as may be reasonably necessary or customary to consummate the transactions contemplated by this Agreement.

(v) Execute, cause to be acknowledged as appropriate and deliver to Transferee a closing statement or memorandum in a form reasonably acceptable to Transferee and Transferee (the “Closing Statement”).

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(vi) Execute, cause to be acknowledged and deliver to Transferee a non-foreign status affidavit in the form of Exhibit H, as required by Section 1445 of the Code.

(vii) Execute or cause to be executed, and cause to be acknowledged and filed, as applicable, any and all transfer tax forms, or signature pages to transfer tax forms, required by applicable law or advisable, in the reasonable opinion of Transferee, in connection with the transfer of Transferor’s Interests or the indirect interests in the Facility Owners to Transferee (or its designee) as contemplated hereunder.

(viii) Pay and fully satisfy all obligations which are evidenced by any Lien encumbering Transferor’s Interest which are not permitted hereunder.

(ix) Execute and deliver, or cause to be executed and delivered, all Restructuring Documents to be executed by Transferor, Newco, the Company, the Pool Companies, Santa Monica GP, Santa Monica LP, the Facility Owners or Manager.

(x) Execute, cause to be acknowledged and deliver to the Escrow Holder one or more Transferor’s Non-Imputation Affidavits.

(xi) If a search of the title to the Transferor’s Interests discloses judgments, penalties or other returns against other Persons having names the same as or similar to that of Transferor, Transferor will, on request, execute and deliver to Transferee (or cause to be delivered to Transferee) an affidavit from Transferor to the effect that such judgments, penalties or other returns are not against Transferor.

(xii) Execute and deliver the Mezz Loan Recognition/Comfort Letter.

(b) At Closing, Transferee shall:

(i) Execute, acknowledge and deliver the Assignment and Assumption of Interest Agreement.

(ii) Execute, acknowledge and deliver a certificate to Transferor confirming the matters set forth in Sections 10.03(a) and (b) with respect to Transferee, as of the Closing Date, such certificates to be signed by an officer of Transferee.

(iii) Provide to Transferor (A) a copy of the Charter Documents of Transferee certified by a duly authorized officer or partner of Transferee, (B) a copy of resolutions or other actions of the partners of Transferee certified by a duly authorized officer or partner of Transferee, and (C) such other evidence of the power and authority of Transferee to consummate the transactions described in this Agreement as Transferor may reasonably require.

(iv) Execute, cause to be acknowledged as appropriate and deliver such additional documents as may be reasonably necessary or customary to consummate the transactions contemplated by this Agreement.

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(v) Execute and deliver, or cause to be executed and delivered, all Restructuring Documents to be executed by Transferee, Newco, the Company, the Pool Companies, Santa Monica GP, Santa Monica LP or the Facility Owners.

(vi) Execute, cause to be acknowledged as appropriate and deliver the Closing Statement.

(vii) Execute, and cause to be notarized and filed, as applicable, any and all transfer tax forms, or signature pages to transfer tax forms, required by applicable law or advisable, in the reasonable opinion of Transferee, in connection with the transfer of the Transferor’s Interest or the indirect interests in the Facility Companies to Transferee (or its designee), as contemplated hereunder.

Article XII.

INDEMNITY; DEFAULT; DAMAGES

Section 12.01 Survival. Except for those representations, warranties, covenants or agreements contained in this Agreement the obligations in relation to which are expressly stated to survive the Closing beyond the below-referenced twelve (12) month period or without time limitation, all claims for any breach by a party of any representation, warranty, covenant or agreement made by it in this Agreement or in any other Document must be set forth in reasonable detail in a written notice received by such party not later than the date that is twelve (12) months following the Closing Date and any litigation with respect to such claim shall be commenced on or prior to the date that is sixty (60) days after the expiration of such twelve (12) month period. The following representations and warranties shall survive without time limit: (a) Transferee’s representations and warranties contained in Sections 4.01 through 4.09 and (b) Transferor’s representations and warranties contained in Sections 7.01 through 7.10.

Section 12.02 Intentionally Omitted.

Section 12.03 Transferee’s Remedies for Transferor’s Defaults. If Transferor breaches any of its representations or warranties hereunder, or defaults on any of its obligations hereunder in any material respect, and such default continues for ten (10) Business Days after written notice thereof from Transferee specifying such default, Transferee may, as its sole remedy hereunder, by delivering notice in writing to Transferor in the manner provided in this Agreement, either, (i) terminate this Agreement and the other Documents and declare it and them null and void (except for those Liabilities that expressly survive such termination) in which event Transferee shall receive a disbursement of the Down Payment, (ii) seek enforcement of this Agreement by a decree of specific performance or injunctive relief requiring Transferor to fulfill its obligations under this Agreement, including but not limited to the transfer of Transferor’s Interest or (iii) waive any such conditions or defaults and consummate the transactions contemplated by this Agreement and the Documents in the same manner as if there had been no conditions or defaults.

Section 12.04 Transferor’s Remedies for Transferee’s Defaults. If Transferee breaches any of its representations or warranties hereunder, or defaults on any of its obligations hereunder in any material respect, and such default continues for ten (10) Business Days after written notice thereof from Transferor specifying such default, Transferor may, as its sole remedy hereunder, by

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delivering notice in writing to Transferee in the manner provided in this Agreement, either, (i) terminate this Agreement and the other Documents and declare it and them null and void (except for those Liabilities that expressly survive such termination), in which event Transferor shall retain the Down Payment as liquidated damages as the sole legal or equitable remedy, the parties hereby acknowledging and agreeing that the damages which Transferor would suffer as a result of such default and termination would be difficult, if not impossible, to determine and that the liquidated damages provided for herein are a fair and reasonable estimation of such damages or (ii) waive any such conditions or defaults and consummate the transactions contemplated by this Agreement and the Documents in the same manner as if there had been no conditions or defaults; it being expressly understood and agreed that Transferor shall not have any right or remedy to seek specific performance or injunctive relief with respect to any default by Transferee.

Section 12.05 Limitation on Liability for Business Representations. Notwithstanding anything to the contrary contained herein or in any other Document, if the Closing of the transactions hereunder shall have occurred, Transferor shall have no Liability to Transferee for the breach of the Business Representations in excess of, individually or in the aggregate, $4,000,000.00 (the “Business Representations Damage Cap”). Transferee shall not enter any judgment or collect an amount hereunder in excess of the Business Representations Damage Cap.

Section 12.06 Intentionally Omitted.

Section 12.07 Indemnification by Transferee. Transferee shall, during the applicable survival period, indemnify, defend, and hold harmless Transferor and its members, officers, directors, employees, Affiliates, successors and assigns from and against, and pay or reimburse each of them for and with respect to, any Loss relating to, arising out of or resulting from any breach by Transferee of any of its representations, warranties, covenants or agreements in this Agreement or any other Document.

Section 12.08 Intentionally Omitted.

Section 12.09 Indemnification by Transferor. Transferor shall, during the applicable survival period, indemnify, defend, and hold harmless Transferee and its respective members, officers, directors, employees, Affiliates, successors and assigns from and against, and pay or reimburse each of them for and with respect to, any Loss relating to, arising out of, or resulting from any breach by Transferor of any of its representations, warranties, covenants or agreements in this Agreement or any other Document, subject to the Business Representations Damage Cap with respect to breaches of the Business Representations.

Section 12.10 Intentionally Omitted.

Section 12.11 Administration of Indemnification. For purposes of administering the indemnification provisions set forth in Sections 12.07 and 12.09, the following procedure shall apply:

(a) Whenever a claim shall arise for indemnification under this Article, the party entitled to indemnification (the “Indemnified Party”) shall promptly give written notice to the party from whom indemnification is sought (the “Indemnifying Party”) setting forth in

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reasonable detail, to the extent then available, the facts concerning the nature of such claim and the basis upon which the Indemnified Party believes that it is entitled to indemnification hereunder.

(b) In the event of any claim for indemnification resulting from or in connection with any claim by a third party, the Indemnifying Party shall be entitled, at its sole expense, either (i) to participate in defending against such claim or (ii) to assume the entire defense with counsel which is selected by it and which is reasonably satisfactory to the Indemnified Party provided that (A) the Indemnifying Party agrees in writing that it does not and will not contest its responsibility for indemnifying the Indemnified Party in respect of such claim or proceeding and (B) no settlement shall be made and no judgment consented to without the prior written consent of the Indemnified Party which shall not be unreasonably withheld. If, however, (i) the claim, action, suit or proceeding would, if successful, result in the imposition of damages for which the Indemnifying Party would not be solely responsible, or (ii) representation of both parties by the same counsel would otherwise be inappropriate due to actual or potential differing interests between them, then the Indemnifying Party shall not be entitled to assume the entire defense and each party shall be entitled to retain counsel who shall cooperate with one another in defending against such claim. In the case of clause (i) of the immediately preceding sentence, the Indemnifying Party shall be obligated to bear only that portion of the expense of the Indemnified Party’s counsel that is in proportion to the damages indemnifiable by the Indemnifying Party compared to the total amount of the third-party claim against the Indemnified Party.

(c) If the Indemnifying Party does not choose to defend against a claim by a third party, the Indemnified Party may defend in such manner as it deems appropriate or settle the claim (after giving notice thereof to the Indemnifying Party) on such terms as the Indemnified Party may deem appropriate, and the Indemnified Party shall be entitled to periodic reimbursement of defense expenses incurred and prompt indemnification from the Indemnifying Party in accordance with this Article.

(d) Failure or delay by an Indemnified Party to give prompt notice of any claim (if given prior to expiration of any applicable survival period) shall not release, waive or otherwise affect an Indemnifying Party’s obligations with respect to the claim, except to the extent that the Indemnifying Party can demonstrate actual loss or prejudice as a result of such failure or delay.

Section 12.12 Exclusivity. The rights and remedies set forth in this Article XII shall be exclusive of all other rights to monetary damages that any party (or any party’s successors or assigns) would otherwise have at law or in equity in connection with the transactions contemplated by this Agreement or any other Document, other than with respect to claims based on common law fraud or rights which by law cannot be waived or limited.

Article XIII.

DOWN PAYMENT AND ESCROW

Section 13.01 Investment of Down Payment. Escrow Agent shall deposit the Down Payment in an escrow account in the name of Escrow Agent in a commercial bank designated by

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Transferee, provided that Transferee approves Wells Fargo, Bank of America, or JP Morgan Chase as such commercial bank. Escrow Agent shall invest the Down Payment in an insured interest bearing account, or in interest bearing investments backed by securities issued by the U.S. federal government, as Transferee may from time to time direct.

Section 13.02 Disbursement of Down Payment. Escrow Agent shall hold the Down Payment in escrow and release the same as follows:

(a) If at any time prior to expiration of the Due Diligence Period, Escrow Agent shall receive written notice from Transferee stating that (i) Transferee is terminating this Agreement, and (ii) Transferee is simultaneously giving Transferor a copy of such notice, Escrow Agent shall promptly disburse the Down Payment to Transferee without the need for further instructions from or approvals by any other party to this Agreement. If at any time on or prior to the date that is eight (8) Business Days after the date of this Agreement, Escrow Agent shall receive written notice from Transferor stating that (i) Transferor is terminating this Agreement due to the failure to receive the Transferor Board Consent and (ii) Transferor is simultaneously giving Transferee a copy of such notice, Escrow Agent shall promptly disburse the Down Payment to Transferee without the need for further instructions from or approvals by any other party to this Agreement.

(b) If at any time after the expiration of the Due Diligence Period, but prior to Closing, Escrow Agent shall receive written notice from Transferee stating that (i) Transferee is terminating this Agreement for a reason other than a Transferor default or another reason which would permit Transferee to receive the Down Payment, and (ii) Transferee is simultaneously giving Transferor a copy of such notice, Escrow Agent shall promptly disburse the Down Payment to Transferor, without the need for further instructions from or approvals by any other party to this Agreement.

(c) Except as provided in Section 13.02(e), if Escrow Agent shall receive written notice from Transferee (“Transferor Default Notice”) stating that (i) Transferor has failed to complete Closing in accordance with the terms of this Agreement, or has defaulted in any other manner under this Agreement, (ii) Transferor has not cured such failure or default in accordance with Section 12.02, and (iii) Transferee is demanding the return of the Down Payment, then Escrow Agent shall immediately and simultaneously deliver a copy of the Transferor Default Notice to Transferor. If on or before the date which is five (5) Business Days following Transferor’s receipt of the Transferor Default Notice, Transferor shall object in writing (“Transferor’s Objection Notice”) to the return of the Down Payment to Transferee, then Escrow Agent shall not return the Down Payment to Transferee. If Transferor shall not deliver a Transferor’s Objection Notice to Escrow Agent on or before the date which is five (5) Business Days following Transferor’s receipt of the Transferor Default Notice, then Escrow Agent shall promptly return the Down Payment to Transferee without the need for further instructions from or approvals by any other party to this Agreement.

(d) Except as provided in Section 13.02(e), if Escrow Agent shall receive written notice from Transferor (“Transferee Default Notice”) stating that (i) Transferee has failed to complete Closing in accordance with the terms of this Agreement, or has defaulted in any other manner under this Agreement, (ii) Transferee has not cured such failure or default in

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accordance with Section 12.03, and (iii) Transferor is demanding the return of the Down Payment, then Escrow Agent shall immediately and simultaneously deliver a copy of the Transferee Default Notice to Transferor. If on or before the date which is five (5) Business Days following Transferee’s receipt of the Transferee Default Notice, Transferee shall object in writing (“Transferee’s Objection Notice”) to the return of the Down Payment to Transferor, then Escrow Agent shall not return the Down Payment to Transferor. If Transferee shall not deliver a Transferee’s Objection Notice to Escrow Agent on or before the date which is five (5) Business Days following Transferee’s receipt of the Transferee Default Notice, then Escrow Agent shall promptly return the Down Payment to Transferor without the need for further instructions from or approvals by any other party to this Agreement.

(e) Subject to Section 15.05 below, if Escrow Agent shall receive written notice from Transferee (“Failure of Condition Notice”) stating that Transferee is demanding the return of the Down Payment because either (i) Transferee has failed to complete Closing in accordance with the terms of this Agreement solely due to a failure of the conditions set forth in Section 10.01(d), (e) or (f) or (ii) Transferor has failed to complete Closing in accordance with the terms of this Agreement solely due to a failure of the conditions set forth in Section 10.03(d) or (e) and confirming that Transferor is not in breach of its obligations under Section 9.04, then Escrow Agent shall immediately deliver a copy of the Failure of Condition Notice to Transferor. If on or before the date which is five (5) Business Days following Transferor’s receipt of the Failure of Transferee Condition Notice, Transferor shall object in writing to the return of the Down Payment to Transferee because (x) Transferor objects to Transferee’s statement in the Failure of Condition Notice regarding failure of any conditions specified in subsections (i) or (ii) above or (y) Transferor is demanding payment of any Transferor Reimbursable Transaction Costs from the Down Payment (“Transferor’s Failure of Condition Objection Notice”), then Escrow Agent shall not return the Down Payment to Transferee. If Transferor shall not deliver a Transferor’s Failure of Condition Notice to Escrow Agent on or before the date which is five (5) Business Days following Transferor’s receipt of the Failure of Condition Notice, then Escrow Agent shall promptly return the Down Payment to Transferee, without the need for further instructions from or approvals by any other party to this Agreement. If Transferor’s Failure of Condition Notice specifies that Transferor is demanding payment of any Transferor Reimbursable Transaction Costs from the Down Payment, then Escrow Agent shall immediately and simultaneously deliver a copy of the Transferor Failure of Condition Objection Notice to Transferee and on or before the date which is five (5) Business Days following Transferee’s receipt of the Transferor’s Failure of Condition Objection Notice, Escrow Agent shall receive written notice from Transferee stating that Transferee is objecting to the amount of Transferor Reimbursable Transaction Costs which Transferor is demanding be paid to Transferor (the “Transferee Notice of Objection to Transferor Reimbursable Transaction Costs”), then Escrow Agent shall not disburse any portion of the Down Payment to Transferor or Transferee. If Transferee shall not deliver a Transferee’s Notice of Objection to Transferor Reimbursable Transaction Costs on or before the date which is five (5) Business Days following Transferee’s receipt of the Transferor’s Failure of Condition Objection Notice, then Escrow Agent shall promptly disburse to Transferor from the Down Payment, an amount equal to the Transferor Reimbursable Transaction Costs demanded in the Transferor’s Failure of Condition Objection Notice and return to Transferee any remaining portion of the Down Payment, without the need for further instructions from or approvals by any other party to this Agreement.

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(f) Unless the Down Payment shall have been previously released by Escrow Agent pursuant to this Section 13.02, at Closing, Escrow Agent shall deliver the Down Payment to Newco as part of the Transferee Contribution.

Section 13.03 Disputes. In the event of any dispute between Transferor and Transferee regarding the disbursement of the Down Payment pursuant to Sections 13.02(c), (d) or (e), or in the event Escrow Agent shall receive conflicting demands or instructions with respect to the disbursement of the Down Payment, Escrow Agent shall withhold disbursement of the Down Payment until it receives either (i) joint written instructions from Transferor and Transferee with respect to the disbursement of the Down Payment or (ii) an order binding upon it from a court of competent jurisdiction with respect to the disbursement of the Down Payment. Notwithstanding the foregoing, in the event of any such dispute or conflicting demands or instructions, Escrow Agent shall have the right to deliver the Down Payment into the registry of any court of competent jurisdiction, and Escrow Agent shall thereupon be released from any further liabilities or obligations with respect to the Down Payment.

Section 13.04 Compensation. Escrow Agent shall receive no compensation for its services performed pursuant to this Agreement except for reasonable attorneys’ fees and costs incurred as a result of any dispute between the parties hereto. Such fees and costs shall be borne by the party adjudged by a court of competent jurisdiction to have been at fault.

Section 13.05 Liability of Escrow Agent. The parties covenant and agree that in performing any of its duties under this Agreement, Escrow Agent shall not be liable for any Loss which it may incur as a result of serving as Escrow Agent hereunder, except for any Loss arising out of its willful default or gross negligence. Accordingly, Escrow Agent shall not incur any liability with respect to (i) any action taken or omitted to be taken in good faith upon advice of its counsel given with respect to any questions relating to its duties and responsibilities (ii) to any action taken or omitted to be taken in reliance upon any document, not only as to its due execution and the validity and effectiveness of its provisions, but also to the truth and accuracy of any information contained therein, which Escrow Agent shall in good faith believe to be genuine, to have been signed or presented by a proper person or persons and to conform with the provisions of this Agreement or (iii) failure, insolvency, or inability of the depositary to pay said funds upon demand for withdrawal; or (iv) levies by taxing authorities based upon the taxpayer identification number used to establish this interest bearing account. Transferor and Transferee, hereby agree, jointly and severally, to indemnify and hold harmless Escrow Agent against any and all Losses which may be imposed upon or incurred by Escrow Agent in connection with its serving as Escrow Agent hereunder, except for any Loss arising out of its willful default or gross negligence.

Article XIV.

JOINT VENTURE AND FACILITY DOCUMENTS

Section 14.01 Formation of Joint Venture.

(a) Upon the occurrence of the Closing, Transferor and Transferee shall take such steps as may be necessary to consummate the Restructuring. Transferee shall contribute the Transferee Contribution to Newco and Transferor shall contribute the Transferor Contribution to

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Newco. In connection with the Restructuring, on the Closing Date, Transferor and Transferee covenant and agree to enter into the amended and restated limited liability company agreement of Newco in the form attached hereto as Exhibit I (the “JV Agreement”), subject to changes requested by the Lender and approved by Transferor and Transferee in their reasonable discretion, which shall amend and restate the existing limited liability company agreement of Newco and create a joint venture that will, upon the Closing and immediately following the Restructuring, directly or indirectly own the Company, the Pool Companies, Santa Monica LP, Santa Monica GP, the TRS, the Facility Owners and the New Facility Owners.

(b) Simultaneously with the Closing, Newco shall distribute the Initial Distribution to Transferor in accordance with the terms and condition of the JV Agreement.

(c) At Closing, in the event that (a) the Closing has occurred and Transferee has obtained the Transferee Mezz Financing and (b) the Stated Rate (as defined below) payable under the refinancing of the MetSun Facilities is a rate that is less than or equal to 5.25% ), the parties shall calculate the schedule of “Quarterly Interest Rate Differential Amounts” (as defined in the JV Agreement) to be attached to the JV Agreement as Schedule 1.2 in accordance with the following methodology: the Quarterly Interest Rate Differential Amount shall be an amount, calculated on a quarterly basis, equal to the difference between (a) the debt service payment that is actually payable under the refinancing of the MetSun Facilities over the term of the Refinancing (i.e., based on an interest rate of 5.25%) minus (b) debt service payment that would have been payable under the refinancing of the MetSun Facilities over the term of the Refinancing assuming the Stated Rate. The foregoing methodology (as set forth and described on Schedule 1) assumes that following the closing of the Refinancing, (i) there is no reduction to the actual interest rate payable under the refinancing of the MetSun Facilities and (ii) there are no partial prepayments of any outstanding principal under the refinancing of the MetSun Facilities. Transferor and Transferee acknowledge and agree that in the event following the closing of the Refinancing, either (i) the actual interest rate payable under the refinancing of the MetSun Facilities is reduced such that the same is less than 5.25% or (ii) there is a partial prepayment of principal made by the borrower thereunder, the Quarterly Interest Rate Differential Amounts shall be adjusted accordingly such that the same shall be calculated based upon the reduced interest rate and/or then outstanding principal balance of the loan evidenced by the refinancing of the MetSun Facilities, as applicable; it being understood and agreed that in the event of a reduction in the actual interest rate payable under the refinancing of the MetSun Facilities following Closing, the interest rate differential for purposes of recalculating the Quarterly Interest Rate Differential Amounts shall be the new reduced interest rate and the Stated Rate. By way of example only, assuming a Stated Rate of 5.10%, in the event the actual interest rate payable under the refinancing of the MetSun Facilities is reduced following the Closing to a rate that is equal to or less than 5.10%, no Quarterly Interest Rate Differential Amounts would be due and payable thereafter. The “Stated Rate” shall mean the actual rate quoted by Lender as of the “rate lock” date but in no event shall the Stated Rate, for purposes of this Section 14.01(c) and calculation of the Quarterly Interest Rate Differential Amount, be less than 4.95%. An example of the methodology described in this Section 14.01(c) is attached hereto as Schedule 1 assuming a Stated Rate of 5.10% per annum for the refinancing of the MetSun Facilities.

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Section 14.02 Termination of Existing Facility Documents.

(a) On or prior to the occurrence of the Closing, Manager shall, and Transferor shall cause each Facility Owner to, terminate the Prior Management Agreements pursuant to a Termination of Management Agreement substantially in the form attached hereto as Exhibit J (individually, a “Management Termination” and collectively, the “Management Terminations”).

(b) On or prior to the occurrence of the Closing, Manager shall, and Transferor shall cause the Company, the applicable Pool Company, and each applicable Facility Owners to, terminate the Prior Owner Agreements pursuant to a Termination of Owner Agreement substantially in the form attached hereto as Exhibit K (individually, a “Owner Agreement Termination” and collectively, the “Owner Agreement Terminations”).

(c) On or prior to the occurrence of the Closing, Manager shall, and Transferor shall cause the Company, the applicable Pool Company and the applicable Facility Owners to, terminate the Prior Pooling Agreements pursuant to one or more Terminations of Manager Pooling Agreement, substantially in the form attached hereto as Exhibit L (the “Pooling Agreement Termination”).

Section 14.03 New Facility Documents.

(a) Deed Conveyance of Real Property. Upon the occurrence of the Closing and immediately prior to the transfer of the Pool Companies, Conn. Ave. Facility Owner and Santa Monica LP. from the Company to TRS, Transferor and Transferee shall cause the Facility Owners to transfer and convey to the New Facility Owner, fee simple title in and to the Real Property (the “Deed Transfers”). The Deed Transfers shall be made by special warranty deed in form customary for the jurisdiction in which the applicable Real Property is located and reasonably approved by Transferor and Transferee, subject to changes requested by Lender and approved by Transferor and Transferee in their reasonable discretion. Each Facility Owner shall further assign, transfer and convey to the applicable New Facility Owner, all right, title and interest of such Facility Owner in and to any and all tangible and intangible personal property relating directly or indirectly to the applicable Real Property and/or Facility. Such assignment, transfer and conveyance of personal property shall be made by bill of sale in form reasonably approved by Transferor and Transferee, subject to changes requested by Lender and approved by Transferor and Transferee in their reasonable discretion.

(b) Operating Lease. Upon the occurrence of the Closing, Transferor and Transferee shall cause each New Facility Owner and Facility Lessee (as hereinafter defined) to enter into a Lease substantially in the form attached hereto as Exhibit M (each, an “Operating Lease”), subject to changes requested by Lender and approved by Transferor and Transferee in their reasonable discretion and to changes agreed to by Transferor and Transferee in their reasonable discretion as necessary to conform to local law. Any and all references to “Facility Lessee” or “Facility Lessees” herein shall mean the applicable Facility Owner in its capacity as the lessee under the Operating Lease.

(c) Management Agreement. Upon the occurrence of the Closing, Manager shall, and Transferor and Transferee shall cause each Facility Lessee to, enter into a Management Agreement for the management and marketing services of the Facilities substantially in the form

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attached hereto as Exhibit N (each, a “New Management Agreement”), subject to changes requested by the Lender and approved by Transferor and Transferee in their reasonable discretion.

(d) Management Agreement Guaranty. Upon the occurrence of the Closing, Transferor and Transferee shall cause Newco to enter into a Guaranty in favor of Manager substantially in the form attached hereto as Exhibit O (each, a “Management Agreement Guaranty) with respect to each New Management Agreement, subject to changes requested by the Lender and approved by Transferor and Transferee in their reasonable discretion

(e) Manager Pooling Agreement. Upon the occurrence of the Closing, Manager shall, and Transferor and Transferee shall cause Newco and each of the Facility Lessees, to enter into the Manager Pooling Agreement substantially in the form attached hereto as Exhibit P (the “Manager Pooling Agreement”), subject to changes requested by the Lender and approved by Transferor and Transferee in their reasonable discretion, to pool revenues and expenses of the Facilities leased by such Facility Lessee for purposes of, among other things, netting such revenues at one Facility against expenses at the other Facilities leased by such Facility Lessee.

Section 14.04 Other Documents.

(a) Delegation Agreement. At Closing and in connection with the execution of the JV Agreement, Transferor and Transferee shall cause the Transferor and Transferee entities that are parties to the JV Agreement, respectively, to execute a Delegation Agreement in the form attached hereto as Exhibit Q (the “Delegation Agreement”) pursuant to which the applicable Transferee party to the JV Agreement shall delegate to the applicable Transferor party to the JV Agreement, certain responsibilities and obligations of the managing member under the JV Agreement.

(b) Contribution and Indemnification Agreement. At Closing and in connection with the closing of the Refinancing, Transferor and Transferee shall cause the Transferee and Transferor guarantors of the loan (the “Loan”) evidenced by the Refinancing (together, the “Guarantors”), respectively, and Newco, to execute a Contribution and Indemnification Agreement in the form attached hereto as Exhibit R (the “Contribution and Indemnification Agreement”), subject to (i) changes required to conform to the documents evidencing the Refinancing and (ii) changes requested by the Lender and approved by Transferor and Transferee in their reasonable discretion, pursuant to which Transferee and the Guarantors set forth the rights of Guarantors against Transferee if Guarantors make payments under any guarantees of the Loan and Guarantor set forth their understanding concerning the manner in which they will share liability between themselves if either pays more than their proportionate share of any obligation under any guarantees of the Loan.

Section 14.05 Escrow. Transferee, Transferor and Manager shall cause their respective executed counterparts to the JV Agreement, Management Terminations, Owner Agreement Terminations, Pooling Agreement Termination, Operating Leases, New Management Agreements, Management Agreement Guaranties, Manager Pooling Agreement, Delegation Agreement, Contribution and Indemnification Agreement, together with any other agreements,

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leases, certificates or other documents reasonably necessary to effectuate the Restructuring and otherwise in form and substance reasonably acceptable to Transferor, Transferee and Manger and any additional documents required by Lender to implement the Refinancing and agreed to by Transferor and Transferee in their reasonable discretion (collectively, the “Restructuring Documents”), to be deposited into escrow with Escrow Agent prior to Closing pursuant to an escrow agreement and instruction letter mutually satisfactory to Transferor and Transferee which shall provide that such documents shall be released from escrow and made effective upon the consummation of the Closing.

Article XV.

FEES AND EXPENSES

Section 15.01 Fees and Expenses.

(a) Except as otherwise specifically provided in this Agreement, Transferor and Transferee shall each pay the fees and expenses of their own attorneys, accountants, financial advisors, investment bankers and employees in connection with the preparation and negotiation of this Agreement, all documents prepared and negotiated pursuant to this Agreement, and the Restructuring Documents (collectively, the “Documents”), and such amounts shall not count against the Transferee Closing Cost Amount; provided, that, the fees and expenses of local counsel engaged to represent Newco in connection with the Restructuring (“Local Counsel Costs”) shall be borne in accordance with Section 15.08 below.

(b) Subject to Section 15.05 below, any Third-Party Costs incurred by Transferee or its Affiliates shall be paid solely by Transferee without contribution from Transferor and shall not be counted against the Transferee Closing Cost Amount under Section 15.08 below, unless such costs were required to be incurred in connection with the Refinancing (collectively, the “Refinancing Third-Party Costs”), in which event such Refinancing Third Party Costs shall be borne in accordance with Section 15.08 below and shall be counted against the Transferee Closing Cost Amount under Section 15.08 below. Subject to Section 15.05 below, any Third-Party Costs incurred by Transferor or its Affiliates shall be paid solely by Transferor without contribution from Transferee, unless such costs are Refinancing Third-Party Costs, in which event such costs and expenses, shall be borne in accordance with Section 15.08 below. It is understood, acknowledged and agreed by Transferor and Transferee that, subject to Section 15.05 below, any Refinancing Third-Party Costs incurred in connection with the Refinancing shall be borne in accordance with Section 15.08 below regardless of whether any such Refinancing Third-Party Costs would have been incurred by Transferee or its Affiliates had there been no Refinancing and such Refinancing Third Party Costs shall be counted against the Transferee Closing Cost Amount. Any Third-Party Costs incurred by Transferee which are not also Refinancing Third-Party Costs, shall be paid solely by Transferee (and shall not be counted against the Transferee Closing Cost Amount) and any Third-Party Costs incurred by Transferor which are not also Refinancing Third-Party Costs, shall be paid solely by Transferor. As used herein, the term “Third-Party Costs” shall mean all third party, out-of-pocket due diligence costs incurred in connection with the evaluation of the Real Property, the Facilities, Newco, the Company, the Pool Companies, Santa Monica LP, Santa Monica GP and the Facility Owners, including, without limitation, surveys, soil tests, engineering tests or other tests, environmental studies, market studies, other studies, reports, and property appraisals. Subject to Section 15.05

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below, to the extent that the Refinancing Third-Party Costs incurred by Transferee or its Affiliate are known and have or shall be paid on or prior to the Closing Date by Transferee or its Affiliate, Transferor shall reimburse Transferee for Transferor’s allocated share of such costs in accordance Section 15.08 below in immediately available funds. Subject to Section 15.05 below, to the extent that the Refinancing Third-Party Costs incurred by Transferor or its Affiliate are known and have or shall be paid on or prior to the Closing Date by Transferor or its Affiliate, Transferee shall reimburse Transferor for Transferee’s allocated share of such costs in accordance with Section 15.08 below in immediately available funds.

Section 15.02 Title Costs. Subject to Section 15.05 below, the cost of the Title Commitments and the Title Policies (including any non-imputation endorsements and other customary endorsements thereto) and any escrow costs and other fees associated therewith (collectively, the “Title Insurance Costs”) shall be borne by Section 15.08 below.

Section 15.03 Transfer Taxes. Any real estate transfer taxes, fees or similar charges incurred in connection with the Restructuring (collectively, the “Transfer Taxes”) will be borne in accordance with Section 15.08 below.

Section 15.04 Other Closing Costs. Except as explicitly set forth herein, all other costs, expenses and legal fees incurred by Transferee or Transferor in connection with the Closing, including, without limitation, costs, expenses and legal fees incurred in connection with (i) the Refinancing, and (ii) the issuance of the Licenses to Newco, the Company, the Facility Lessees, the Facility Owners and/or Manager (collectively, the “Other Shared Closing Costs”), shall be borne in accordance with Section 15.08 below.

Section 15.05 Transferee Mezz Financing Cost Reimbursement. Notwithstanding anything to the contrary contained herein, in the event that Transferee is unable to obtain the Transferee Mezz Financing on terms satisfactory to Transferee and the Closing does not occur for any reason, then Transferee shall reimburse Transferor promptly upon demand, accompanied by reasonable detailed backup information, for all reasonable out of pocket costs and expenses incurred by Transferor solely in connection with this transaction, the proposed Restructuring and the proposed Refinancing, including, without limitation, attorneys fees, expenses and disbursements, Local Counsel Costs, Third Party Costs, Title Insurance Costs, Other Shared Closing Costs, Refinancing Fees, Other Refinancing Fees and Expenses (collectively, the “Transferor Reimbursable Transaction Costs”); provided, however, (a) the Transferor Reimbursable Transaction Costs payable to Transferor shall not exceed in the aggregate, an amount equal to Four Million and No/100 Dollars ($4,000,000.00) less any Transferor Reimbursable Transaction Costs which Transferee has previously paid on Transferor’s behalf and (b) if (x) Transferee is unable to obtain the Transferee Mezz Financing, (y) the Closing does not occur for a reason other than Transferee’s inability to obtain the Transferee Mezz Financing and (z) but for such reason Transferee would have been able to obtain the Transferee Mezz Financing, then Transferor shall not be entitled to any Transferor Reimbursable Transaction Costs under this Section 15.05. Transferee agree that in the event Transferor Reimbursable Transaction Costs are due from Transferee to Transferor hereunder, Transferor may (but is not obligated to and any failure to do so shall not waive Transferor’s right to reimbursement of the Transferor Reimbursable Transaction Costs), subject to Section 13.02(e) hereof, instruct Escrow Agent in its Transferor’s Failure of Condition Objection Notice to, at Transferor’s option, make

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such reimbursement to Transferor from the Down Payment, it being understood that if Transferor elects to take reimbursement from the Down Payment, then to the extent the Transferor Reimbursable Transaction Costs exceed the Down Payment, Transferee shall remain obligated to reimburse Transferor an amount to such excess in accordance with the terms of this Section 15.05 and to the extent the Transferor Reimbursable Transaction Costs do not exceed the Down Payment, the difference between the Down Payment and the Transferor Reimbursable Transaction Costs shall be delivered to the Transferee. In connection with the closing of the Transferee Mezz Financing, Transferor acknowledges and agrees to execute and deliver to the Transferee Mezz Lender, at Closing, a recognition/comfort letter in the form attached hereto as Exhibit S (the “Mezz Loan Recognition Agreement”). In no event shall Transferor be entitled to any Transferor Reimbursable Transaction Costs if the Closing does not occur because Transferor fails or otherwise refuses to execute and deliver the Mezz Loan Recognition Agreement at Closing.

Section 15.06 Intentionally Omitted.

Section 15.07 Other Transferee Mezz Financing Costs. Notwithstanding anything to the contrary contained herein, Transferee shall pay the fees and expenses of its own attorneys, accountants, financial advisors, investment bankers and employees in connection with the preparation and negotiation of the Transferee Mezz Financing, including, without limitation, any fees, costs and expenses payable to Lender in connection with the Transferee Mezz Financing. In no event shall any such costs be counted against the Transferee Closing Cost Amount or entitle Transferee to capital account credit under the JV Agreement.

Section 15.08 Transferee Closing Cost Amount. Transferee shall bear the costs of any Refinancing Third-Party Closing Costs, Local Counsel Costs, Title Insurance Costs, Transfer Taxes, Other Shared Closing Costs (other than costs of preparation and negotiation of the Documents which shall be borne by Transferor and Transferee as set forth in Section 15.01 above), Refinancing Fee or Other Refinancing Fees and Expenses to the extent that such costs are equal to or less than the Transferee Closing Cost Amount. To the extent that any Refinancing Third-Party Closing Costs, Local Counsel Costs, Title Insurance Costs, Transfer Taxes, Other Shared Closing Costs (other than costs of preparation and negotiation of the Documents which shall be borne by Transferor and Transferee as set forth in Section 15.01 above), Refinancing Fee or Other Refinancing Fees and Expenses are greater than the Transferee Closing Cost Amount (such greater costs, the “Shared Expenses”), then such greater costs will be borne by Transferor and Transferee in accordance with their respective percentage interests in Newco following the Restructuring. Any payments by Transferor or Transferee in respect of any Shared Expenses shall be deemed capital contributions of Transferor and Transferee, as applicable, under the JV Agreement. Transferor and Transferee hereby acknowledge and agree that amount of the Transferee Closing Cost Amount due and payable by Transferee pursuant to this Section 15.08 shall be netted and paid from the Transferee Cash Contribution Amount.

Article XVI.

REFINANCING

Section 16.01 Cooperation. Transferor and Transferee will cooperate and use commercially reasonable efforts to secure the Refinancing. The proceeds of the Refinancing shall be utilized at Closing to repay in full the Existing Owner Financing encumbering the MetSun Facilities.

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Section 16.02 Financing Fees. Subject to Section 15.06 above, any (a) financing fee, extension fee, rate lock fee, interest rate breakage costs or other similar fee in connection with the Refinancing (a “Refinancing Fee”) required to be paid prior to the Closing, (b) Refinancing Third-Party Costs and (c) any other fees and expenses incurred in connection with the Refinancing (including, without limitation, any legal fees of a lender, any mortgage recordation or similar fees and any due diligence costs incurred by a lender) (collectively, the “Other Refinancing Fees and Expenses”) shall be shall be borne in accordance with Section 15.08 above.

Section 16.03 Refinancing Closing. The closing of the Refinancing and the Closing hereunder shall occur simultaneously. At the Closing, Transferor and Transferee shall deliver, and shall cause Newco and its subsidiaries to deliver, those documents, instruments and other deliveries as are required to be delivered to consummate the Refinancing, including, without limitation, any guaranties, to the extent reasonably acceptable to Transferor and Transferee, and any such documents shall constitute Restructuring Documents hereunder.

Article XVII.

REPRESENTATIONS AND WARRANTIES OF MANAGER

Section 17.01 Manager Representations. Manager hereby represents and warrants to Transferee as follows:

(a) Manager is a Virginia corporation duly formed and validly existing under the laws of the state of its organization, with all requisite power and authority to carry on its business as now being conducted. Manager has all requisite power and authority to enter into this Agreement and, at Closing, shall have all requisite power and authority to enter into the other agreements contemplated to be entered into by it in connection herewith and to carry out the transactions contemplated hereby and thereby.

(b) The execution and delivery of this Agreement and the other agreements to be entered into by it in connection herewith and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of Manager. This Agreement has been, and such other agreements to be entered into by Manager will be, executed and delivered by a duly authorized officer of Manager and upon execution of same shall constitute the valid and binding obligations of Manager, enforceable against Manager in accordance with the terms hereof and thereof, subject as to enforcement to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors rights and to general principles of equity.

(c) The execution, delivery and performance of this Agreement and all other agreements contemplated hereby by Manager do not: (i) to Manager’s knowledge violate any decree or judgment of any court or governmental authority that may be applicable to Manager; (ii) to Manager’s knowledge violate any law (or regulation promulgated under any law); (iii) violate or conflict with, or result in a breach of, or constitute a default under (or an event

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with or without notice or lapse of time or both would constitute a default) under, any contract or agreement to which Manager is a party; or (iv) violate or conflict with any provision of the organizational documents of Manager.

Article XVIII.

MISCELLANEOUS

Section 18.01 Further Actions. From time to time before, at and after the Closing, each party, at its expense and without further consideration, will execute and deliver such documents as reasonably requested by any other party in order more effectively to consummate the transactions contemplated hereby.

Section 18.02 Intentionally Omitted.

Section 18.03 Notices. All notices, demands or other communications given hereunder shall be in writing and shall be sufficiently given if delivered by courier (including overnight delivery service) or sent by registered or certified mail, first class, postage prepaid, or by electronic mail or facsimile (provided that an additional copy is delivered by one of the foregoing methods), addressed as follows:

(a) If to Transferor:

c/o Sunrise Senior Living, Inc.

7900 Westpark Drive, Suite T-900

McLean, Virginia 22102

Attn.: General Counsel

Telecopy No.: (703) 744-1990

Telephone No.: (703) 854-0334

with a copy to:

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, New York 10019

Attn.: Eugene A. Pinover, Esq.

Telecopy No.: (212) 728-9254

Telephone No.: (212) 728-8254

(b) If to Transferee, to:

CHT Partners, LP

CNL Center at City Commons

450 South Orange Ave.

Orlando, Florida 32801

Attn.:	Joseph T. Johnson, SVP and CFO and
	Holly Greer, SVP and General Counsel

Telecopy No.: 407-540- 2544
Telephone No.:	407-540-7618 (Johnson)
	407-540-7546 (Greer)

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with a copy to:

Lowndes, Drosdick, Doster, Kantor & Reed, PA

215 North Eola Drive

Orlando, Florida 32801

Attn.: Peter Luis Lopez, Esq.

Telecopy No.: 407-843-4444

Telephone No.: 407-418-6277

or such other address as a party may from time to time notify the other party in writing (as provided above). Any such notice, demand or communication shall be deemed to have been given (i) if so mailed, as of the close of the fifth Business Day following the date so mailed, (ii) if delivered by courier, on the date received and (iii) if sent by facsimile, on the date transmitted if during normal business hours of the recipient, and otherwise on the next Business Day of the recipient, in each case as evidenced by receipt by the sending party of electronic confirmation of successful transmission form the receiving party’s facsimile machine.

Section 18.04 Entire Agreement. This Agreement, the Exhibits and the other Documents contain the entire understanding among the parties with respect to the subject matter hereof and are intended to be a full integration of all prior or contemporaneous agreements, conditions or undertakings among the parties hereto. There are no promises, agreements, conditions, undertakings, warranties or representations, oral or written, express or implied, among the parties with respect to the subject matter hereof other than as set forth in this Agreement and the Exhibits and other Documents.

Section 18.05 Not Construed Against Drafter. This Agreement has been negotiated and prepared by the parties and their respective counsel, and should any provision of this Agreement require judicial interpretation, the court interpreting or construing the provision shall not apply the rule of construction that a document is to be construed more strictly against one party.

Section 18.06 Binding Effect; Benefits. Except as otherwise provided herein, this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors or permitted assigns. Except to the extent specified herein, nothing in this Agreement, express or implied, shall confer on any person other than the parties hereto and their respective successors or permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement.

Section 18.07 Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by any party without the prior written consent of the other parties, provided that Transferor or Transferee may assign all of their respective rights under this Agreement to an Affiliate, provided further that (i) the respective representations and warranties of Transferor or Transferee hereunder shall be true and correct in all material respects as applied to the applicable assignee, (ii) both Transferee or Transferee, as applicable, and the assignee shall execute and deliver to the other parties hereto a written instrument in form and substance satisfactory to such parties, in their reasonable discretion, in which Transferee or Transferee, as applicable, and the assignee agree to be jointly and severally liable for

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performance of all of the applicable assignee’s obligations under this Agreement, (iii) Transferee or Transferor, as applicable, and the assignee shall deliver such other documents and instruments as reasonably requested by the other parties hereto, including appropriate certified resolutions of the members or boards of directors of Transferee or Transferor, as applicable, and the assignee and (iv) Transferor or Transferee, as applicable, shall remain fully liable for its obligations under this Agreement.

Section 18.08 Governing Law. This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of Delaware without regard to its principles of conflicts of laws.

Section 18.09 Amendments and Waivers. No term or provision of this Agreement may be amended, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against whom the enforcement of such amendment, waiver, discharge or termination is sought. Any waiver shall be effective only in accordance with its express terms and conditions.

Section 18.10 Severability. Any provision of this Agreement which is unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such unenforceability without invalidating the remaining provisions hereof, and any such unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereto hereby waive any provision of law now or hereafter in effect which renders any provision hereof unenforceable in any respect.

Section 18.11 Headings. The captions in this Agreement are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.

Section 18.12 Counterparts. This Agreement may be executed in any number of counterparts, and by any party on separate counterparts, each of which shall be an original, and all of which together shall constitute one and the same instrument.

Section 18.13 References. All references in this Agreement to Articles and Sections are to Articles and Sections contained in this Agreement unless a different document is expressly specified.

Section 18.14 Exhibits. Unless otherwise specified herein, each Exhibit referred to in this Agreement is attached hereto, and each such Exhibit (other than Exhibits that are to be separately executed and delivered as Documents) is hereby incorporated by reference and made a part hereof as if fully set forth herein.

Section 18.15 Attorneys’ Fees. In the event any party brings an action to enforce or interpret any of the provisions of this Agreement, the “prevailing party” in such action shall, in addition to any other recovery, be entitled to its reasonable attorneys’ fees and expenses arising from such action and any appeal or any bankruptcy action related thereto, whether or not such matter proceeds to court. For purposes of this Agreement, “prevailing party” shall mean, in the case of a Person asserting a claim, such Person is successful in obtaining substantially all of the relief sought, and in the case of a Person defending against or responding to a claim, such Person is successful in denying substantially all of the relief sought.

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Section 18.16 Waiver of Jury Trial. EACH PARTY HEREBY WAIVES TRIAL BY JURY IN ANY PROCEEDINGS BROUGHT BY ANY OTHER PARTY IN CONNECTION WITH ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE TRANSACTION, THIS AGREEMENT, SELLER’S INTEREST, THE FACILITIES OR THE RELATIONSHIP OF THE PARTIES HEREUNDER. THE PROVISIONS OF THIS SECTION SHALL SURVIVE THE CLOSING (AND NOT BE MERGED THEREIN) OR ANY EARLIER TERMINATION OF THIS AGREEMENT.

Section 18.17 Facsimile and PDF Signatures. Signatures to this Agreement transmitted by telecopy or by electronic mail in PDF format shall be valid and effective to bind the party so signing. Each party agrees to promptly deliver an execution original to this Agreement with its actual signature to the other parties, but a failure to do so shall not affect the enforceability of this Agreement, it being expressly agreed that each party to this Agreement shall be bound by its own telecopied signature or signature transmitted by electronic mail in PDF format and shall accept the telecopied signature or signature transmitted by electronic mail in PDF format of each other party to this Agreement.

Section 18.18 Informational Meetings. Transferor and Transferee each agree to hold meetings with the other party at reasonable times and upon reasonable notice to review and discuss the status of this Agreement and the Refinancing. Such meetings shall be held at the corporate headquarters of Transferor or Transferee or by telephone, as agreed to by the parties.

[SIGNATURES FOLLOW ON NEXT PAGE]

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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed as of the date first written above.

TRANSFEROR:
SUNRISE SENIOR LIVING INVESTMENTS, INC., a Virginia corporation
By:	/s/ Edward W. Burnett
Name:	Edward W. Burnett
Title:	Vice President
TRANSFEREE:
CHT PARTNERS, LP, a Delaware limited partnership
By:	CHT GP, LLC, a
	Delaware limited liability company,
	its general partner
By:	CNL Healthcare Trust, Inc., a
	Maryland corporation, managing
	member of general partner
By:	/s/ Holly Greer
	Name:	Holly Greer
	Title:	Senior Vice President
MANAGER
SUNRISE SENIOR LIVING MANAGEMENT, INC., a Virginia corporation
By:	/s/ Edward W. Burnett
Name:	Edward W. Burnett
Title:	Vice President

Executed for the purpose of acknowledging and agreeing

to the obligations of the Escrow Agent hereunder:

ESCROW AGENT

FIRST AMERICAN TITLE INSURANCE COMPANY
By:	/s/ Kara M. Grassi
Name:	Kara M. Grassi
Title:	V.P. and NCS-FL Underwriting Mgr

Schedule 1

Example Calculation of Quarterly Rate Differential

Exhibit A

Facilities; Facility Owners

Exhibit B

Refinancing Term Sheet

(See attached.)

Exhibit C

Prior Management Agreements and Prior Owner Agreements

Exhibit D

Form of Assignment and Assumption of Interest Agreement

(See attached.)

Exhibit E

Intentionally Omitted

Exhibit F

Transferor’s Non-Imputation Affidavit

Exhibit G

Intentionally Omitted

Exhibit H

Non-Foreign Status Affidavit

(See attached.)

Exhibit I

Form of JV Agreement

(See attached.)

Exhibit J

Form of Management Termination

(See attached.)

Exhibit K

Form of Owner Agreement Termination

(See attached.)

Exhibit L

Form of Termination of Manager Pooling Agreement

Exhibit M

Form of Operating Lease

(See attached.)

Exhibit N

Form of New Management Agreement

(See attached.)

Exhibit O

Form of Management Agreement Guaranty

(See attached.)

Exhibit P

Form of Manager Pooling Agreement

(See attached.)

Exhibit Q

Form of Delegation Agreement

(See attached.)

Exhibit R

Form of Contribution and Indemnification Agreement

(See attached.)

Exhibit S

Form of Mezz Loan Recognition/Comfort Letter

(See attached.)

EX-10.2

Exhibit 10.2

FIRST AMENDMENT TO TRANSFER AGREEMENT

THIS FIRST AMENDMENT TO TRANSFER AGREEMENT (this “First Amendment”) is dated as of the 25th day of June, 2012, by and among SUNRISE SENIOR LIVING INVESTMENTS, INC., a Virginia corporation (“Transferor”), CHT PARTNERS, LP, a Delaware limited partnership (“Transferee”), and SUNRISE SENIOR LIVING MANAGEMENT, INC., a Virginia corporation (“Manager”).

RECITALS:

A. Transferor, Transferee and Manager entered into that certain Transfer Agreement dated as of June 4, 2012 (the “Transfer Agreement”). All capitalized terms used in this First Amendment that are not otherwise defined in this First Amendment shall have the meanings ascribed to them in the Transfer Agreement.

B. Transferor, Transferee and Manager desire to amend the Transfer Agreement, all upon the terms and conditions set forth in this First Amendment.

NOW, THEREFORE, in consideration of the sum of TEN AND NO/100 DOLLARS ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Transferor, Transferee and Manager hereby covenant and agree as follows:

1. Conn. Ave. Facility Restructuring. As a result of certain tax related considerations resulting from the proposed Restructuring set forth in the Transfer Agreement, the parties have agreed it is in their respective best interest to revise the Restructuring steps and certain provisions of the Transfer Agreement as they pertain to the Conn. Ave. Facility as follows:

(a) Recital K of the Transfer Agreement is hereby amended to read as follows: “Transferor shall cause the Company, prior to Closing, to form the following six (6) new Delaware entities, which immediately following the Restructuring and Closing, shall be wholly owned by the Company: (i) Metaire LA Senior Living Owner, LLC, a Delaware limited liability company, (ii) Baton Rouge LA Senior Living Owner, LLC, a Delaware limited liability company , (iii) Gilbert AZ Senior Living Owner, LLC, a Delaware limited liability company , (iv) Lombard IL Senior Living Owner, LLC, a Delaware limited liability company, (v) Louisville KY Senior Living Owner, LLC, a Delaware limited liability company, and (vi) Santa Monica Assisted Living Owner, LLC, a Delaware limited liability company (each a “New Facility Owner” and collectively the “New Facility Owners”).

(b) Recital M of the Transfer Agreement is hereby amended to read as follows: “At Closing, immediately after the contribution of Transferor’s Interest to Newco, Transferor and Transferee intend to cause the Facility Owners (other than the Conn. Ave. Facility Owner) to transfer and convey to the applicable New Facility Owners, by Special Warranty Deed, fee simple title in and to the Real Property (the “Real Property Conveyance”).”

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(c) Recital V of the Transfer Agreement is hereby amended to read as follows: “At Closing, immediately after the termination of the Prior Management Agreements, Prior Owner Agreements and the Prior Pooling Agreements, Transferor and Transferee intend to cause the Facility Owners and Facility Lessees to execute and deliver the Operating Leases (except with respect to the Conn. Ave. Facility for which there shall be no Facility Lessee or Operating Lease), New Management Agreements and Manager Pooling Agreement (each as hereinafter defined) and Manager intends to execute and deliver such New Management Agreements and Manager Pooling Agreement and Transferee intends to execute and deliver the Management Agreement Guaranties.”

(d) Section 14.03(a) of the Transfer Agreement is hereby amended to read as follows: “Deed Conveyance of Real Property. Upon the occurrence of the Closing and immediately prior to the transfer of the Pool Companies, Conn. Ave. Facility Owner and Santa Monica LP. from the Company to TRS, Transferor and Transferee shall cause the Facility Owners (other than Conn. Ave. Facility Owner) to transfer and convey to the applicable New Facility Owner, fee simple title in and to the Real Property (the “Deed Transfers”). The Deed Transfers shall be made by special warranty deed in form customary for the jurisdiction in which the applicable Real Property is located and reasonably approved by Transferor and Transferee, subject to changes requested by Lender and approved by Transferor and Transferee in their reasonable discretion. Each Facility Owner (other than Conn. Ave. Facility Owner) shall further assign, transfer and convey to the applicable New Facility Owner, all right, title and interest of such Facility Owner in and to any and all tangible and intangible personal property relating directly or indirectly to the applicable Real Property and/or Facility. Such assignment, transfer and conveyance of personal property shall be made by bill of sale in form reasonably approved by Transferor and Transferee, subject to changes requested by Lender and approved by Transferor and Transferee in their reasonable discretion.”

(e) Section 14.03(c) of the Transfer Agreement is hereby amended to read as follows: “Management Agreement. Upon the occurrence of the Closing, Manager shall, and Transferor and Transferee shall cause each Facility Lessee and Conn. Ave. Facility Owner to, enter into a Management Agreement for the management and marketing services of the Facilities substantially in the form attached hereto as Exhibit N (each, a “New Management Agreement”), subject to changes requested by the Lender and approved by Transferor and Transferee in their reasonable discretion.”

(f) Section 14.03(e) of the Transfer Agreement is hereby amended to read as follows: “Manager Pooling Agreement. Upon the occurrence of the Closing, Manager shall, and Transferor and Transferee shall cause Newco and each of the Facility Lessees and Conn. Ave. Facility Owner, to enter into the Manager

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Pooling Agreement substantially in the form attached hereto as Exhibit P (the “Manager Pooling Agreement”), subject to changes requested by the Lender and approved by Transferor and Transferee in their reasonable discretion, to pool revenues and expenses of the Facilities leased by such Facility Lessee and owned by Conn. Ave. Facility Owner for purposes of, among other things, netting such revenues at one Facility against expenses at the other Facilities leased by such Facility Lessee and/or owned by Conn. Ave. Facility Owner.

The parties further agree to amend or modify the Restructuring Documents, as may be necessary or required, and as are mutually agreed to by the parties, in order to reflect the foregoing revised Restructuring Steps.

2. Sunrise of Louisville Facility Transfer. As a result of certain tax related considerations resulting from the proposed Restructuring set forth in the Transfer Agreement, with respect to the Facility known as “Sunrise of Louisville” (the “Louisville Facility”), the parties have agreed it is in their respective interest to alter the Restructuring steps with respect to the Louisville Facility such that the deed transfer and conveyance is structured as a “tri-party deed” transfer and conveyance, in form and substance which is customary and standard in the State of Kentucky for such purpose, whereby the applicable Facility Owner shall transfer and convey its interest in the Louisville Facility to the Company and the Company shall simultaneously transfer and convey its interest in the Louisville Facility to the applicable New Facility Owner.

3 Ratification and Confirmation. Except as expressly modified herein, the Transfer Agreement shall otherwise be unchanged, shall remain in full force and effect, and is hereby ratified and confirmed in all respects.

4. Counterparts/Electronic Signatures. In order to expedite the execution and delivery of this First Amendment by the parties hereto, this First Amendment may be executed in one or more counterparts and it shall not be necessary that the signature of, or on behalf o, each party, or that the signatures of all persons so required to bind any party, appear on each counterpart, but it shall be sufficient if the signature of, or on behalf of, each party, or that the signatures of the persons so required to bind any party, be one or more of such counterparts. All counterparts shall collectively constitute a single agreement. Furthermore, facsimile or electronic signatures may be used in place of original signatures on this First Amendment. Each of the parties hereto intend to be bound by any signatures delivered via facsimile or other electronically transmitted means, and are aware that the other party will rely on any such facsimile or electronic signatures, and hereby waive any defenses to the enforcement of the terms of this First Amendment based on the form of signature.

[The Remainder Of This Page Is Intentionally Left Blank]

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IN WITNESS WHEREOF, each of the parties hereto has caused this First Amendment to be executed as of the date first written above.

TRANSFEROR:
SUNRISE SENIOR LIVING INVESTMENTS, INC., a Virginia corporation
By:	/s/ Edward W. Burnett
Name:	Edward W. Burnett
Title:	Vice President
TRANSFEREE:
CHT PARTNERS, LP, a
Delaware limited partnership
By:	CHT GP, LLC, a
	Delaware limited liability
	company, its general partner
By:	CNL Healthcare Trust, Inc., a Maryland corporation,
	managing member of general partner
By:	/s/ Holly Greer
Name:	Holly Greer
Title:	Senior Vice President
MANAGER
SUNRISE SENIOR LIVING MANAGEMENT, INC., a Virginia corporation
By:	/s/ Edward W. Burnett
Name:	Edward W. Burnett
Title:	Vice President

EX-10.3

Exhibit 10.3

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

OF

CHTSUN PARTNERS IV, LLC

THE INTERESTS OF THE MEMBERS ISSUED UNDER THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE OR THE DISTRICT OF COLUMBIA. NO RESALE OR TRANSFER OF AN INTEREST BY A MEMBER IS PERMITTED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT AND ANY APPLICABLE FEDERAL OR STATE SECURITIES LAWS, AND ANY VIOLATION OF SUCH PROVISIONS COULD EXPOSE THE SELLING OR TRANSFERRING MEMBER AND THE COMPANY TO LIABILITY.

Dated as of June 29, 2012

TABLE OF CONTENTS

		Page
ARTICLE 1	DEFINITIONS		1
1.1	Definitions		1
1.2	General Interpretive Principles		17
ARTICLE 2	THE COMPANY AND ITS BUSINESS		18
2.1	Company Name		18
2.2	Term		18
2.3	Filing of Certificate and Amendments		18
2.4	Business; Scope of Members’ Authority		18
2.5	Principal Office; Registered Agent		18
2.6	Authorized Persons		19
2.7	Representations by Members		19
2.8	Organization Expenses		19
2.9	Opt-in to Article 8		19
2.10	Securities Laws Restrictions		21
2.11	Separateness Covenants		21
ARTICLE 3	MANAGEMENT OF COMPANY BUSINESS		24
3.1	Appointment of Managing Member		24
3.2	Duties of Managing Member		24
3.3	Bank Accounts		25
3.4	Reimbursement for Costs and Expenses		25
3.5	Major Decisions		25
ARTICLE 4	RIGHTS AND DUTIES OF MEMBERS		25
4.1	Members Shall Not Have Power to Bind Company		25
4.2	Other Activities of the Members		25
4.3	Indemnification		26
4.4	Dealing with Members		27
4.5	Use of Company Assets		27
4.6	Designation of Tax Matters Member		27
4.7	OFAC; Not Foreign Person; Not Prohibited Person		28
4.8	Management Fees and OD Loans		28
ARTICLE 5	BOOKS AND RECORDS; REPORTS		28
5.1	Books and Records		28
5.2	Availability of Books and Records; Return of Books and Records		29
5.3	Reports and Statements		29
5.4	Accounting Expenses		29
5.5	Budgets		30
ARTICLE 6	CAPITAL CONTRIBUTIONS, LOANS AND LIABILITIES		30
6.1	Initial Capital Contributions of the Members		30
6.2	[Intentionally Omitted]		31

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6.3	Capital Calls	31
6.4	Reimbursements	31
6.5	Member Loans for Failure to Fund Capital Contributions	32
6.6	Capital of the Company	33
6.7	Limited Liability of Members	33
6.8	Refinancing	33
6.9	Mezz Loan	33
ARTICLE 7	CAPITAL ACCOUNTS, PROFITS AND LOSSES AND ALLOCATIONS	34
7.1	Capital Accounts	34
7.2	General Allocation Rules	36
7.3	Special Allocations	36
7.4	Income Tax Elections	39
7.5	Income Tax Allocations	39
7.6	Transfers During Fiscal Year	40
7.7	Election to be Taxed as Association	40
7.8	Assignees Treated as Members	40
ARTICLE 8	DISTRIBUTIONS OF NET OPERATING CASH FLOW AND CAPITAL PROCEEDS	40
8.1	Distributions of Net Operating Cash Flow	40
8.2	Distribution of Capital Proceeds	41
8.3	Distribution Calculations	42
8.4	Repayment of Member Loans, Reconciliation Amounts and Other Payments	42
8.5	Liquidation	43
8.6	Sunrise Distribution Amount	43
ARTICLE 9	DISPOSITION OF INTERESTS	43
9.1	Limitations on Assignments of Interests by Members	43
9.2	Assignment Binding on Company	43
9.3	Substituted Members	44
9.4	Acceptance of Prior Acts	44
9.5	Permitted Transfers	44
ARTICLE 10	DISSOLUTION OF THE COMPANY; WINDING UP AND DISTRIBUTION OF ASSETS	47
10.1	Dissolution	47
10.2	Winding Up	48
10.3	Distribution of Assets	48
ARTICLE 11	AMENDMENTS	49
11.1	Amendments	49
11.2	Additional Members	49
11.3	Documentation	49

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ARTICLE 12	BUY-SELL; PURCHASE OPTION; RIGHT OF FIRST OFFER	49
12.1	Purchase Option	49
12.2	Buy Sell	51
12.3	Right of First Offer	52
12.4	INTENTIONALLY OMITTED	53
12.5	Closing	53
12.6	Release from Guaranties	55
12.7	Upon Termination of Management Agreement	55
12.8	Enforcement	55
12.9	Refinancing	55
ARTICLE 13	MISCELLANEOUS	56
13.1	Further Assurances	56
13.2	Notices	56
13.3	Headings and Captions	57
13.4	Variance of Pronouns	58
13.5	Counterparts	58
13.6	Governing Law; Litigation, Jurisdiction and Waiver of Jury Trial	58
13.7	Arbitration	58
13.8	Partition	60
13.9	Invalidity	60
13.10	Successors and Assigns	60
13.11	Entire Agreement	60
13.12	Waivers	61
13.13	No Brokers	61
13.14	Confidentiality	61
13.15	No Third Party Beneficiaries	61
13.16	Power of Attorney	61
13.17	Invalidity	61
13.18	Construction of Documents	62

Schedule 1.1	List of Facilities
Schedule 1.2	Quarterly Interest Rate Differential Amounts
Schedule 1.3	Mezz Loan Documents
Schedule 3.5	Major Decisions
Schedule 6.1	Percentage Interests of the Members
Exhibit A	Approved Budget
Exhibit B	Indemnification and Contribution Agreement
Exhibit C	Share Certificate

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THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) OF CHTSUN PARTNERS IV, LLC, a Delaware limited liability company (the “Company”) is entered into effective as of June 29, 2012 (the “Effective Date”), by and among Sunrise Senior Living Investments, Inc., a Virginia corporation (“Sunrise”), and CHT SL IV Holding, LLC, a Delaware limited liability company (“CHT”).

RECITALS

WHEREAS, the Company was formed by Sunrise, as the sole member, pursuant to a Limited Liability Company Agreement dated as of May 22, 2012 (the “Original Agreement”) and a Certificate of Formation was filed with the Secretary of State of the State of Delaware on May 22, 2012.

WHEREAS, pursuant to the Transfer Agreement (as hereinafter defined), the Company has acquired one hundred percent (100%) of the membership interests in Sun IV LLC, a Delaware limited liability company.

WHEREAS, the Members desire to amend and restate the terms of the Original Agreement, to reflect, among other items, the admission of CHT as a Member, and the agreements between the Members with respect to the Company in connection therewith.

NOW, THEREFORE, in order to carry out their intent as expressed above and in consideration of the mutual agreements hereinafter contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby amend and restate the Original Agreement in its entirety, as follows:

ARTICLE 1

DEFINITIONS

1.1 Definitions. As used in this Agreement, the following terms shall have the meanings set forth below, which meanings shall be applicable equally to the singular and plural of the terms defined:

“AAA” shall have the meaning set forth in Section 13.7(a).

“Acceptance Notice” shall have the meaning set forth in Section 12.3(a).

“Accounting Period” shall mean and refer to a calendar month.

“Act” shall mean the Delaware Limited Liability Company Act (6 Del. C. §18-101 et seq.), as amended from time to time.

“Adjusted Basis” shall mean the basis for determining gain or loss for federal income tax purposes from the sale or other disposition of property, as defined in Section 1011 of the Code.

“Adjusted Capital Account Deficit” shall mean, with respect to any Member, the deficit balance, if any, in such Member’s Capital Account as of the end of the relevant Fiscal Year, after giving effect to the following adjustments:

(a) Credit to such Capital Account any amounts which such Member is obligated to restore or is deemed to be obligated to restore pursuant to Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

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(b) Debit to such Capital Account the items described in Sections 1.704-1(b)(2)(ii)(d)(4) (reasonably expected adjustments for depletion allowances), 1.704-1(b)(2)(ii)(d)(5) (certain other reasonably expected allocations of loss or deduction), and 1.704-1(b)(2)(ii)(d)(6) (reasonably expected distributions) of the Regulations.

The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently therewith.

“Affiliate” means a Person, which controls, is controlled by, or is under common control with another Person. For the purposes of this definition, “control” means the power to direct the management and policies of a Person, directly or indirectly, whether through the ownership of voting securities or other beneficial interest, by contract or otherwise; and the terms “controlling” and “controlled” have the meanings correlative to the foregoing. A Person shall not be deemed to be under common “control” with another Person solely based on the fact that one or more Person(s) serve as a director of both Persons.

“Affiliate Guaranties” or “Affiliate Guaranty” means a customary indemnity or carve-out guaranty, (or guaranties) or similar limited recourse undertakings (that may spring into full recourse in certain limited carve-out events) made by Sunrise Guarantor and/or CHT Guarantor for the benefit of Lender relating to the Refinancing (including, without limitation, with respect to each Facility (a) a recourse liabilities guaranty made by Sunrise Guarantor and CHT Guarantor for the benefit of Lender, dated as of the date hereof; and (b) an environmental and/or ERISA indemnity agreement, as applicable, made by Sunrise Guarantor, CHT Guarantor and the applicable Facility Entity and Operating Lessee for the benefit of Lender, dated as of the date hereof) or under any future refinancing approved by all the Members pursuant to Section 3.5 of this Agreement.

“Agreement” shall mean this Amended and Restated Limited Liability Company Agreement of the Company, as it may hereafter be amended or modified from time to time.

“Aggregate Quarterly Interest Rate Differential Amount” shall have the meaning set forth in Section 9.5(a)(iii).

“Amended and Restated Loan Agreement” means that certain Amended and Restated Loan Agreement, dated as of the date hereof, among the Facility Entities, Operating Lessees, and Lender, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Appointed Arbitrator” shall have the meaning set forth in Section 13.7(b).

“Approved Budget” shall have the meaning set forth in a Management Agreement.

“Arbitration Notice” shall have the meaning set forth in Section 13.7(b).

“Arbitration Proceeding” shall have the meaning set forth in Section 13.7(a).

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“Assignee” shall mean a Person to whom an Interest has been transferred in accordance with this Agreement and who has not been admitted as a Member.

“Bankruptcy” shall mean, with respect to the affected party, (a) the entry of an order for relief under the Bankruptcy Code, (b) the admission by such party of its inability to pay its debts as they mature, (c) the making by it of an assignment for the benefit of creditors, (d) the filing by it of a petition in bankruptcy or a petition for relief under the Bankruptcy Code or any other applicable federal or state bankruptcy or insolvency statute or any similar law, (e) the application by such party for the appointment of a receiver for the assets of such party, (f) the filing of an involuntary Bankruptcy petition against it that is not dismissed for 60 or more days, or (g) the imposition of a judicial or statutory lien on all or a substantial part of its assets. With respect to a Member, this definition of Bankruptcy supersedes the definition of Bankruptcy set forth in Sections 18-101(1) and 18-304 of the Act.

“Bankruptcy Code” shall mean Title 11 of the United States Code, as amended from time to time.

“Business Day” shall mean any day other than (a) a Saturday or Sunday and (b) a day on which federally insured depositary institutions in the State of New York are authorized or obligated by law, governmental decree or executive order to be closed.

“Buy-Sell Closing Date” shall have the meaning set forth in Section 12.2(c).

“Buy-Sell Notice” shall have the meaning set forth in Section 12.2(a).

“Buy-Sell Price” shall have the meaning set forth in Section 12.2(a).

“Buy-Sell Seller” shall have the meaning set forth in Section 12.2(c).

“Capital Account” when used in respect of any Member shall mean the Capital Account maintained for such Member in accordance with Section 7.1, as said Capital Account may be increased or decreased from time to time pursuant to the terms of Section 7.1.

“Capital Call” shall mean any written notice given to the Members pursuant to Article 6, in accordance with the requirements of Section 13.2, requesting a Capital Contribution that is required to be made by the Members pursuant to said Article 6.

“Capital Contribution” when used with respect to any Member, shall mean (i) the initial Capital Contribution of such Member as set forth on Schedule 6.1 attached hereto, and (ii) any additional capital contributed to the Company by such Member (and, for clarification, shall not include any consideration paid by a Member to another Member for its Interest).

“Capital Proceeds” shall mean funds of the Company arising from a Capital Transaction, net of the actual costs incurred by the Company with third parties in consummating the Capital Transaction.

“Capital Transaction” shall mean any of the following: (a) a sale, exchange, transfer, assignment or other disposition of all or a portion of any Company Asset other than (i) tangible personal property that is not sold or transferred in connection with the sale or transfer of real property or (ii) a leasehold interest in real property that is otherwise sold or transferred in the ordinary course

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of business; (b) any condemnation or deeding in lieu of condemnation of all or a portion of any Company Asset; (c) any financing or refinancing of any Company Asset; (d) the receipt of proceeds due to any fire or other casualty to any Company Asset; and (e) any other transaction involving Company Asset, the proceeds of which, in accordance with GAAP, are considered to be capital in nature. For purposes of distributions under Section 8.2, net proceeds from a Capital Transaction shall only include those distributions to be made to the Members under this Agreement after any third party payments relating to the Capital Transaction have been made.

“Carrying Value” shall mean, with respect to any asset, the Adjusted Basis of the asset, except as follows:

(a) the initial Carrying Value of an asset contributed by a Member to the Company shall be the gross fair market value of the asset, as determined by the Managing Member at the time the asset is contributed;

(b) The Carrying Values of the Company’s assets shall be adjusted to equal their respective gross fair market values, as determined by the Managing Member as of the following times: (i) the acquisition of an additional interest in the Company by any new or existing Assignee or Member in exchange for more than a de minimis Capital Contribution; (ii) the distribution by the Company to a Member or an Assignee of more than a de minimis amount of property as consideration for all or part of a Member’s Interest or an Assignee’s economic rights; and (iii) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); but adjustments pursuant to clauses (i) and (ii) above shall be made only if the Managing Member reasonably determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members in the Company;

(c) The Carrying Value of an asset of the Company distributed to a Member shall be adjusted to equal the gross fair market value of the asset on the date of distribution as determined by the Managing Member; and

(d) The Carrying Values of the Company’s assets shall be increased (or decreased) to reflect any adjustments to the Adjusted Basis of those assets pursuant to Sections 734(b) or 743(b) of the Code, but only to the extent that those adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-l(b)(2)(iv)(m); but the Carrying Values shall not be adjusted pursuant to this clause (d) to the extent the Managing Member determines that an adjustment pursuant to clause (b) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this clause (d).

If the Carrying Value of an asset is determined or adjusted pursuant to clauses (a), (b) or (d), such Carrying Value shall thereafter be adjusted by the Depreciation taken into account with respect to the asset for purposes of computing Profit and Loss.

“Certificate of Formation” shall mean the Certificate of Formation of the Company filed with the Secretary of State of the State of Delaware on May 22, 2012, as the same may hereafter be amended and/or restated from time to time.

“Change of Control Purchase Option” shall have the meaning set forth in Section 12.1(a).

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“Change of Control Purchase Option Closing Date” shall have the meaning set forth in Section 12.1(b).

“Change of Control Purchase Option Notice” shall have the meaning set forth in Section 12.1(a).

“Change of Control Purchase Option Price” shall have the meaning set forth in Section 12.1(a).

“CHT” shall have the meaning set forth in the preamble of this Agreement, and shall include any of its assignees or transferees to the extent permitted in this Agreement, but only so long as any such Person continues in its capacity as a Member in the Company.

“CHT Guarantor” shall mean CHT REIT or another Affiliate of CHT acceptable to Lender.

“CHT Liquidity Event” means any merger, reorganization, business combination, share exchange, acquisition by any Person or related group of Persons of beneficial ownership of all or substantially all of the equity shares of CHT REIT in one or more related transactions, or other similar transaction involving CHT REIT pursuant to which CHT REIT’s stockholders receive for their equity shares, as full or partial consideration, cash, listed or non-listed equity securities or combination thereof, or a sale of all or substantially all of the assets of CHT REIT.

“CHT Person” shall mean CHT or an Affiliate of CHT.

“CHT Recourse Claim” shall mean a Claim made under an Affiliate Guaranty to the extent resulting from gross negligence, willful misconduct or fraud of CHT or any Affiliate of CHT.

“CHT REIT” shall mean CNL Healthcare Trust, Inc., a Maryland corporation.

“Claim” shall mean any claim or demand for payment made by Lender to a Sunrise Guarantor or CHT Guarantor under any of the Affiliate Guaranties.

“Closing Date” shall have the meaning set forth in Section 12.5(a).

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, or any corresponding provision(s) of succeeding law.

“Company” shall have the meaning set forth in the preamble of this Agreement.

“Company Assets” shall mean all right, title and interest of the Company in and to all or any portion of the assets of the Company and any property acquired in exchange therefor or in connection therewith.

“Company Minimum Gain” shall have the same meaning as the term “partnership minimum gain” set forth in Sections 1.704-2(b)(2) and 1.704-2(d) of the Regulations.

“Company Year” shall mean a twelve (12) month period starting on the first day of the month immediately following the month in which the Effective Date occurs or each anniversary thereof and ending on the day immediately preceding the following twelve (12) month period.

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“Competitor” shall mean any Person which is regularly engaged in the business of directly or indirectly operating or managing real estate that (i) either directly or indirectly, operates or manages a brand of retirement communities totaling at least ten (10) retirement communities and/or (ii) either directly or indirectly, operates or manages a group of retirement communities totaling at least ten (10) retirement communities that are not affiliated with a brand but that are marketed and operated as a collective group. Notwithstanding the foregoing, the Members agree that the term “Competitor” shall specifically exclude any entity that operates or is qualified as a Real Estate Investment Trust under applicable United States state and federal laws, rules and regulations.

“Confidential Information” shall have the meaning set forth in Section 13.14.

“Connecticut and Santa Monica Facilities” shall mean the Connecticut Avenue Facility and the Facility known as Sunrise of Santa Monica described on Schedule 1.1 attached hereto.

“Connecticut Avenue Facility” means the Facility known as Sunrise of Connecticut Avenue described on Schedule 1.1 attached hereto.

“Connecticut Avenue Facility Owner” means Sunrise Connecticut Avenue Assisted Living Owner, L.L.C., a Virginia limited liability company (formerly known as Sunrise Connecticut Avenue Assisted Living Owner, L.L.C.), the fee owner of the Connecticut Avenue Facility.

“Connecticut/Santa Monica Financing” means the existing mortgage indebtedness secured by the Connecticut and Santa Monica Facilities issued on February 28, 2012 as evidenced by that certain Loan Agreement and related deeds of trust and additional loan documents, dated on or about February 28, 2012, made by Connecticut Avenue Facility Owner and AL Santa Monica Senior Housing, LP in favor of Lender, each as amended, restated or otherwise modified by that certain Amended and Restated Loan Agreement, amended and restated deeds of trust, and additional loan documents, dated as of the date hereof.

“Connecticut/Santa Monica Loan Documents” shall mean the documents evidencing the Connecticut/Santa Monica Financing, and any future refinancing thereof.

“Contributing Member” shall have the meaning set forth in Section 6.5.

“Costs” shall have the meaning set forth in Section 4.3(a).

“Depreciation” shall mean, for each Fiscal Year, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such Fiscal Year, except that if the Carrying Value of an asset differs from its Adjusted Basis at the beginning of the Fiscal Year, Depreciation shall be an amount which bears the same ratio to the beginning Carrying Value as the federal income tax depreciation, amortization or other cost recovery deduction for the Fiscal Year bears to such beginning Adjusted Basis; but if the Adjusted Basis of an asset at the beginning of a Fiscal Year is zero, Depreciation shall be determined with reference to the beginning Carrying Value using any reasonable method selected by the Tax Matters Member.

“Effective Date” shall have the meaning set forth in the Preamble.

“11% Cumulative Return” means, (i) for CHT, as of any date, the amount, if any, that would be required to be distributed on such date so that the aggregate distributions to CHT pursuant to Section 8.1(a)(i), Section 8.1(b), Section 8.2(a)(i) and Section 8.2(b)(iii) provide a cumulative,

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annually compounded return of 11% per annum on CHT’s Capital Contributions to the Company, and (ii) for Sunrise, as of any date, the amount, if any, that would be required to be distributed on such date so that the aggregate distributions to Sunrise pursuant to Section 8.1(a)(ii), Section 8.1(b), and Section 8.2(a)(ii) provide a cumulative, annually compounded return of 11% per annum on Sunrise’s Capital Contributions to the Company. Such amount will be calculated on the basis of the actual number of days elapsed from and including the date on which each Capital Contribution is accepted by the Company to and including the dates that distributions constituting a return of such Capital Contributions were made.

“Eligibility Requirements” means, with respect to any Person, that such Person (i) has total assets (in name or under management) in excess of $500,000,000 and (ii) (except with respect to a pension advisory firm or similar fiduciary) capital/statutory surplus, market capitalization or shareholder’s equity of at least $250,000,000.

“Emergency Expenses” shall have the meaning set forth in a Management Agreement.

“EO13224” shall have the meaning set forth in Section 4.7.

“Escrow Agent” shall have the meaning set forth in Section 9.5(a)(iii).

“Escrow Agreement” shall have the meaning set forth in Section 9.5(a)(iii).

“Escrow Funds” shall have the meaning set forth in Section 9.5(a)(iii).

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Excluded Property” shall mean, with respect to each Facility: (a) any right, title or interest in the name “Sunrise” or “Sunrise Senior Living,” any combination or variation thereof or any other trademark or trade name used by Sunrise or its Affiliates, (b) all property owned by Sunrise or any of its Affiliates, not normally located at the Facility and used, but not exclusively, in connection with the development of the Facilities; and (c) all items, tangible or intangible, relating to a Facility which Sunrise or any of its Affiliates reasonably considers proprietary, including, without limitation, any item with the Sunrise name or logo imprinted on it.

“Facility” shall mean each senior living facility and assisted living facility listed on Schedule 1.1 and shall include all real property, including, without limitation, the Improvements and related personal property comprising each such Facility (and shall exclude any Excluded Property) and owned by a Facility Entity.

“Facility Documents” shall mean, with respect to a particular Facility, (a) a Management Agreement, (b) the Manager Pooling Agreement, (c) with respect to each Facility other than the Connecticut Avenue Facility, an Operating Lease and (d) all other agreements relating to the Facility.

“Facility Entity” shall mean a limited liability company or limited partnership Subsidiary which owns the fee interest in, or is the ground lessee of, a Facility, including, without limitation, the Connecticut Avenue Facility Owner and any Subsidiary formed by the Company pursuant to this Agreement for the purpose of acquiring, owning, developing, financing, constructing, operating and/or selling a Facility.

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“Facility Expenses” shall have the meaning set forth in a Management Agreement.

“Facility Manager” shall mean Sunrise Senior Living Management, Inc., a Virginia corporation, or any successor manager under the Management Agreements.

“FF&E Estimate” shall have the meaning set forth in a Management Agreement.

“Fiscal Year” shall mean the fiscal year of this Company, which shall be the calendar year; provided that the first Fiscal Year of the Term shall commence on the Effective Date and shall end on the last day of the calendar year in which the Effective Date occurs and the last Fiscal Year of the Term shall end on the last day of the Term and shall commence on the first day of the calendar year in which such last day occurs.

“Five-Pack Facilities” shall mean the following Facilities described on Schedule 1.1 attached hereto: (i) Sunrise of Metairie , (ii) Sunrise at Siegen, (iii), Sunrise of Gilbert, (iv) Sunrise of Louisville, and (v) Sunrise at Fountain Square.

“Five-Pack Financing” means the new mortgage indebtedness secured by the Five-Pack Facilities, issued on or about the Effective Date, as evidenced by the Amended and Restated Loan Agreement and certain additional loan documents made by the respective Facility Entities and Operating Lessees of the Five-Pack Facilities with respect to the Five-Pack Financing as of the date hereof.

“Five-Pack Loan Documents” shall mean the documents evidencing the Five-Pack Financing, and any future refinancing thereof.

“GAAP” shall mean generally accepted accounting principles in the United States of America.

“Gross Revenues” shall have the meaning set forth in a Management Agreement.

“Improvements” shall mean all structures and buildings located on the Property.

“Independent Accountant” shall have the meaning set forth in Section 12.1(c).

“Indemnified Person” shall have the meaning set forth in Section 4.3(a).

“Index” shall have the meaning set forth for such term in a Management Agreement.

“Initial Arbitrator” shall have the meaning set forth in Section 13.7(b).

“Interest” shall mean the entire limited liability company interest of a Member in the Company at any particular time, including, without limitation, the right of such Member to any and all benefits to which a Member may be entitled as provided in this Agreement, together with the obligations of such Member to comply with all the terms and provisions of this Agreement. For purposes of clarity, the Interest of CHT shall include CHT’s rights and obligations as Managing Member hereunder.

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“Internal Rate of Return” shall mean, the internal rate of return calculated by using a “XIRR” function using exact dates for all contributions and disbursements made by or to the Members. Any payments received from a Non-Contributing Member to repay a Member Loan shall not be included in the internal rate of return calculation.

“IRS” shall mean the Internal Revenue Service and any successor agency or entity thereto.

“Lender” shall mean The Prudential Insurance Company of America, a New Jersey corporation, or the lender under any future refinancing.

“Lien” shall mean any mortgage, deed of trust, deed to secure debt, lien (statutory or other), pledge, hypothecation, assignment, preference, priority, security interest, or any other encumbrance or charge on or affecting real or personal property, or any portion thereof, or any interest therein (including, without limitation, any conditional sale or other title retention agreement, any sale-leaseback, any financing lease having a similar economic effect to any of the foregoing, the filing of any financing statement or other similar instrument under the UCC or any comparable law of any jurisdiction, domestic or foreign, and mechanics’, materialmen’s and any other similar lien or encumbrance).

“Loan Documents” shall mean, collectively, the Connecticut/Santa Monica Loan Documents and the Five-Pack Loan Documents.

“Major Decisions” shall have the meaning set forth in Section 3.5.

“Management Agreement” shall mean (i) with respect to the Connecticut Avenue Facility, a Management Agreement among the Company, Facility Manager and Connecticut Avenue Facility Owner, and (ii) with respect to each Facility other than the Connecticut Avenue Facility, a Management Agreement among the Company, Facility Manager and the applicable Operating Lessee, each such Management Agreement described in clause (i) or (ii) having been executed or to be executed in connection with the management of the Facility, as it may hereafter be amended or modified from time to time.

“Management Agreement Guaranty” shall mean that certain Guaranty by the Company in favor of the Facility Manager, dated as of the Effective Date, as it may hereafter be amended or modified from time to time.

“Manager Pooling Agreement” shall mean that certain Manager Pooling Agreement by and among all of the Operating Lessees, Connecticut Avenue Facility Owner, the Facility Manager and the Company for the pooled management of the Facilities, dated as of the Effective Date, as it may hereafter be amended or modified from time to time.

“Managing Member” shall mean CHT or any other Member that succeeds CHT in its role as managing member of the Company pursuant to and in accordance with the terms hereof.

“Mandatory Capital Contribution” shall have the meaning set forth in Section 6.3.

“Material Contract” shall mean any contract, lease, license or other agreement pursuant to which the Company is obligated to pay or expend more than $50,000 in any Fiscal Year.

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“Member” shall mean each of CHT, Sunrise and the Managing Member, and any Substituted Member who is admitted as a member of the Company after the Effective Date.

“Member Loan” shall have the meaning set forth in Section 6.5.

“Member Loan Rate” shall mean five percent (5%) per annum, compounded annually.

“Member Minimum Gain” shall mean the amount, with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations Section 1.704-2(i)(3).

“Member Nonrecourse Debt” shall have the same meaning as the term “partner nonrecourse debt” set forth in Regulations Section 1.704-2(b)(4).

“Member Nonrecourse Deductions” shall have the same meaning as “partner nonrecourse deductions” set forth in Regulations Section 1.704-2(i)(1) and (2). The amount of Member Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a Fiscal Year equals the excess, if any, of the net increase, if any, in the amount of Member Minimum Gain attributable to such Member Nonrecourse Debt during that Fiscal Year over the aggregate amount of any distributions during that Fiscal Year to the Member that bears the economic risk of loss for such Member Nonrecourse Debt to the extent such distributions are from the proceeds of such Member Nonrecourse Debt and are allocable to an increase in Member Minimum Gain attributable to such Member Nonrecourse Debt, determined according to the provisions of Regulations Section 1.704-2(i)(2).

“Mezz Lender” shall mean RCG LV DEBT IV NON-REIT ASSETS HOLDINGS, LLC, a Delaware limited liability company, having an address at 7 Penn Plaza, Suite 512, New York, New York 10001, together with its successors and assigns, successors and assigns, or the mezzanine lender under any future mezzanine refinancing permitted in accordance with the terms of this Agreement (including, without limitation, Section 9.5(a) hereof).

“Mezz Loan” shall mean the principal amount of, accrued and unpaid interest thereon, and any and all obligations for late charges, default interest, exit fees, prepayment or yield maintenance charges, protective advances, expenses or fees, legal fees and similar items and all other obligations of CHT to the Mezz Lender under and pursuant to, that certain loan entered into on or about the Effective Date and evidenced by the Mezz Loan Documents and secured by CHT’s Interest.

“Mezz Loan Documents” shall mean the documents evidencing the Mezz Loan listed and described on Schedule 1.3 attached hereto, and any future refinancing thereof permitted in accordance with the terms of this Agreement (including, without limitation, Section 9.5(a) hereof).

“Net Operating Cash Flow” for any month or Fiscal Year, shall mean the excess, if any, of (a) the sum of (i) the amount of all cash receipts of the Company during such month or Fiscal Year from whatever source plus (ii) any working capital or any reserves in the form of cash of the Company existing at the start of such month or Fiscal Year less (b) the sum of (i) all cash amounts paid or payable (without duplication) in that period on account of any expense incurred in connection

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with the Company’s business plus (ii) any cash reserves the Managing Member determines may be required for the working capital, capital expenditures and future needs of the Company or any Facility Entity. Net Operating Cash Flow shall exclude Capital Proceeds.

“Non-Contributing Member” shall have the meaning set forth in Section 6.5.

“Non-Discretionary Items” shall mean (i) real estate taxes, (ii) insurance premiums, (iii) regular payments of debt service and any reserve amounts due under the Refinancing or any future refinancing thereof (but excluding the principal amount of such indebtedness at the maturity date of such Refinancing, as the same may be accelerated), (iv) amounts necessary to pay judgments or liens against (a) the Company, (b) any of the Company assets, (c) any of the Subsidiaries or (d) any Subsidiary’s assets (including, without limitation, the Property), and which, in each case, have been finally adjudicated, (v) any amounts required to be withheld pursuant to Section 1446 of the Code (or similar provisions of state or local law), (vi) amounts currently due and payable, or to become due and payable within thirty (30) days, under any leases, service contracts or other agreements or contractual obligations (to the extent not entered into in violation of this Agreement) to which the Company or any of the Subsidiaries is a party or obligor, whether or not the same are categorized for accounting purposes as ordinary operating expenses or capital improvements, and (vii) other amounts that are required to be paid in the event of an emergency.

“Nonrecourse Deductions” shall have the meaning set forth in Regulations Section 1.704-2(b)(1). The amount of Nonrecourse Deductions for a Fiscal Year equals the excess, if any, of the net increase, if any, in the amount of Company Minimum Gain during that Fiscal Year over the aggregate amount of any distributions during that Fiscal Year of proceeds of a Nonrecourse Liability that are allocable to an increase in Company Minimum Gain, determined according to the provisions of Section 1.704-2(c) of the Regulations.

“Nonrecourse Liability” shall have the meaning set forth in Sections 1.704-2(b)(3) and 1.752-1(a)(2) of the Regulations.

“Non-Transferor Member” shall have the meaning set forth in Section 12.3(a).

“Objection Notice” shall have the meaning set forth in Section 13.7(b).

“OD Loans” shall have the meaning set forth in a Management Agreement.

“OFAC” shall have the meaning set forth in Section 4.7.

“Offer Amount” shall have the meaning set forth in Section 12.2(a).

“Offeree” shall have the meaning set forth in Section 12.2(a).

“Offeror” shall have the meaning set forth in Section 12.2(a).

“Operating Lease” shall mean, with respect to each Facility other than the Connecticut Avenue Facility, that certain lease agreement by and between a Facility Entity and an Operating Lessee.

“Operating Lessee” shall mean each of the following Subsidiaries of the Company: (i) CHTSun Two Metairie LA Senior Living, LLC, a Delaware limited liability company, (ii)

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CHTSun Gilbert AZ Senior Living, LLC, a Delaware limited liability company, (iii) CHTSun Baton Rouge LA Senior Living, LLC, a Delaware limited liability company, (iv) CHTSun Three Lombard IL Senior Living, LLC, a Delaware limited liability company (v) Sunrise Louisville KY Senior Living, LLC, a Kentucky limited liability company, and (vi) AL Santa Monica Senior Housing, LP, a Delaware limited partnership.

“Option Price” shall have the meaning set forth in Section 12.1(c).

“Organizational Document” shall mean, with respect to any Person: (a) in the case of a corporation, such Person’s certificate of incorporation and by-laws, and any shareholder agreement, voting trust or similar arrangement applicable to any of such Person’s authorized shares of capital stock; (b) in the case of a partnership, such Person’s certificate of limited partnership, partnership agreement, voting trusts, statement of qualification or similar arrangements applicable to any of its partnership interests; (c) in the case of a limited liability company, such Person’s certificate of formation or articles of organization, limited liability company operating agreement or other document affecting the rights of holders of limited liability company interests; or (d) in the case of any other legal entity, such Person’s organizational documents and all other documents affecting the rights of holders of equity interests in such Person.

“Original Agreement” shall have the meaning set forth in the Recitals.

“Partially Adjusted Capital Account” shall mean, with respect to any Member for any Fiscal Year, the Capital Account balance of such Member at the beginning of such period, adjusted as set forth in the definition of Capital Account for all contributions and distributions during such period and all special allocations pursuant to Section 7.3 with respect to such period but before giving effect to any allocation with respect to such period pursuant to Section 7.2.

“Payment Amount” shall mean, as applicable, (i) Ten Million Six Hundred Thousand and 00/100 Dollars ($10,600,000.00) if the Change of Control Purchase Option Closing Date occurs at any time prior to the end of the sixth month of the first Company Year, (ii) Eleven Million Four Hundred Thousand and 00/100 Dollars ($11,400,000.00) if the Change of Control Purchase Option Closing Date occurs at any time from and after the beginning of the seventh month of the first Company Year through and including the last day of the first Company Year, (iii) Seventeen Million Seven Hundred Thousand and 00/100 Dollars ($17,700,000.00) if the Change of Control Purchase Option Closing Date occurs at any time from and after the beginning of the second Company Year through and including the last day of the sixth month of the second Company Year, and (iv) Eighteen Million Five Hundred Thousand and 00/100 Dollars ($18,500,000.00) if the Change of Control Purchase Option Closing Date occurs at any time from and after the beginning of the seventh month of the second Company Year through and including the last day of the second Company Year.

“Percentage Interest” shall mean, with respect to any Member, the percentage interest listed for each Member in Schedule 6.1, as the same may be adjusted pursuant to the terms of this Agreement.

“Person” shall mean any individual, partnership, corporation, limited liability company, trust or other legal entity.

“Pool Subsidiaries” shall have the meaning set forth in Section 2.11(e).

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“Pooled OD Loans” shall have the meaning set forth in the Manager Pooling Agreement.

“Prohibited Person” shall have the meaning set forth in Section 4.7.

“Profits and Losses” shall mean, for each Fiscal Year or other period, an amount equal to the Company’s taxable income or loss for such year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:

(a) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses shall be added to such taxable income or loss;

(b) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses, shall be subtracted from such taxable income or loss;

(c) In the event the Carrying Value of any Company asset is adjusted pursuant to subparagraph (b) or subparagraph (c) of the definition of Carrying Value herein, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profits or Losses;

(d) Gain or loss resulting from any disposition of Company property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Carrying Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Carrying Value;

(e) In lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year or other period, computed in accordance with the terms of this Agreement; and

(f) Notwithstanding any other provision of this Agreement, any items which are specially allocated pursuant to Section 7.3 shall not be taken into account in computing Profits or Losses. In addition, any items which are specially allocated pursuant to Sections 7.2(a) or 7.2(b) shall not be taken into account in computing Profits and Losses for purposes of Section 7.2(c).

“Prohibited Transferee” shall mean (a) a Competitor of Sunrise, (b) HCP, (c) Ventas, or (d) any Person (including any Person directly or indirectly controlling, controlled by or under common control with a Person) which: (i) has been convicted of, or plead guilty to, a felony, (ii) entitled to sovereign immunity, (iii) is involved (or has been involved within the preceding five (5) years) in a material litigation adverse to Sunrise or an Affiliate of Sunrise, (iv) within the preceding five (5) years, has filed a petition under any insolvency statute, made a general assignment for the benefit of its creditors, commenced a proceeding for the appointment of a receiver, trustee, liquidator or conservator, filed a petition seeking reorganization or liquidation or similar relief under any applicable law or statute, or has been subject to any of foregoing, or (v) is a Prohibited Person.

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“Property” shall mean the real property owned by any Facility Entity and upon which a Facility has been constructed.

“Proposed Budget” shall have the meaning set forth in Section 5.5.

“Purchase Option Closing Date” shall have the meaning set forth in Section 12.1(d).

“Purchase Option Lockout Period” shall have the meaning set forth in Section 12.1(c).

“Purchase Option Notice” shall have the meaning set forth in Section 12.1(c).

“Purchase Option Termination Date” shall have the meaning set forth in Section 12.1(c).

“Purchaser” shall have the meaning set forth in Section 12.5(a).

“Qualified Transferee” shall mean any of (A) Sunrise or an Affiliate of Sunrise, (B) RCG Longview Debt Fund IV, L.P. or an Affiliate thereof, or (C) a Person satisfactory to Sunrise (not to be unreasonably withheld, delayed or conditioned) that satisfies each of the following conditions: (i) such Person is not a Prohibited Transferee; (ii) such Person, together with its Affiliates, satisfies the Eligibility Requirements; and (iii) such Person either (a) is engaged in the business of making loans secured by, or owning, commercial real estate assets substantially similar to the Facilities (including mezzanine loans with respect to commercial real estate assets substantially similar to the Facilities), or (b) derives a material portion of its revenue from, and maintains an investment portfolio of interests in, entities engaged in the ownership of commercial real estate assets substantially similar to the Facilities.

“Quarterly Interest Rate Differential Amount” shall mean, with respect to any particular calendar quarter, the amount specified opposite such calendar quarter on Schedule 1.2 attached hereto, as the same may be hereafter adjusted pursuant to and in accordance with Section 8.3(b) hereof.

“Refinancing” shall mean, collectively, the Five-Pack Financing and the Connecticut/Santa Monica Financing.

“Regulations” shall mean the permanent and temporary regulations, and all amendments, modifications and supplements thereof, from time to time promulgated by the Department of the Treasury under the Code.

“Rejection Notice” shall have the meaning set forth in Section 12.3(a).

“Reply Notice” shall have the meaning set forth in Section 12.2(b).

“Resident Agreement Documents” means the resident agreements with respect to the residents of the Facilities approved by the Members as of the Effective Date.

“Restricted Transferee” shall have the meaning set forth in Section 9.5.

“ROFO Amount” shall have the meaning set forth in Section 12.3(a).

“ROFO Closing Date” shall have the meaning set forth in Section 12.5(a).

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“ROFO Recipient” shall have the meaning set forth in Section 12.5(a).

“Secondary Arbitrator” shall have the meaning set forth in Section 13.7(b).

“Secondary Objection Notice” shall have the meaning set forth in Section 13.7(b).

“Seller” shall have the meaning set forth in Section 12.5(a).

“Selling Amount” shall have the meaning set forth in Section 12.2(a).

“Subsidiary” shall mean any entity in which the Company holds any ownership interests, whether directly or indirectly through one or more Persons.

“Substituted Member” shall mean any Person admitted to the Company as a Member pursuant to the provisions of Section 9.3.

“Sunrise” shall have the meaning set forth in the preamble of this Agreement, and shall include any of its assignees or transferees to the extent permitted in this Agreement, but only so long as any such Person continues in its capacity as a Member in the Company.

“Sunrise Change of Control Event” shall mean the occurrence of any of the following: (i) the acquisition by any “person” or “group” (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision), directly or indirectly, of 50% or more of the total voting power of the securities of Sunrise or any direct or indirect parent thereof; (ii) the consummation of a reorganization, merger or consolidation of Sunrise or any direct or indirect parent thereof with any Person (a “Business Combination”), in each case, in which the shareholders of Sunrise or such Affiliate, as the case may be, retain, directly or indirectly, less than 50% of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns Sunrise, such direct or indirect parent, or all or substantially all of the Sunrise’s or such direct or indirect parent’s assets either directly or through one or more subsidiaries), or (iii) the sale, lease, transfer or other conveyance, in one or a series of related transactions, of all or substantially all of the assets of Sunrise, or any direct or indirect parent thereof, and their respective subsidiaries, taken as a whole, to any person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision).

“Sunrise Contributed Interests” shall mean Sunrise’s 100% direct ownership interest in Sun IV LLC, a Delaware limited liability company.

“Sunrise Distribution Amount” shall have the meaning set forth in Section 6.1(a).

“Sunrise Guarantor” shall mean Sunrise or another Affiliate of Sunrise acceptable to Lender.

“Sunrise Person” shall mean Sunrise or an Affiliate of Sunrise.

“Sunrise Purchase Option” shall have the meaning set forth in Section 12.1(c).

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“Sunrise Recourse Claim” shall mean a Claim made under an Affiliate Guaranty to the extent resulting from the gross negligence, willful misconduct or fraud of a Sunrise Guarantor or any Affiliate of a Sunrise Guarantor. 

“Target Capital Account” shall mean, with respect to any Member for any Fiscal Year or other period, an amount (which may be either a positive or negative balance) equal to (a) the hypothetical distribution (if any) such Member would receive if all Company assets, including cash, were sold for cash equal to their Carrying Values (taking into account any adjustments to Carrying Values for such period), all Company liabilities were satisfied in cash according to their terms (limited, with respect to each Nonrecourse Liability of the Company, to the Carrying Values of the assets securing such liability), and the net proceeds of such sale to the Company (after satisfaction of said liabilities) were distributed in full pursuant to Section 10.3 on the last day of such period, minus (b) the sum of (i) such Member’s share of Company Minimum Gain and Member Minimum Gain immediately prior to such deemed sale, plus (ii) the amount, if any, which such Member is obligated to contribute to the capital of the Company pursuant to the terms of this Agreement as of the last day of such period (but only to the extent such capital contribution obligation has not been taken into account in determining such Member’s share of Member Minimum Gain).

“Tax Matters Member” shall mean the Managing Member.

“Term” shall have the meaning set forth in Section 2.2.

“Third Party Costs and Expenses” shall mean, with respect to each Claim made against a Sunrise Guarantor or a CHT Guarantor, as applicable, the reasonable third party costs and expenses actually incurred by a Sunrise Guarantor or a CHT Guarantor, as applicable, in connection with such Claim, including, without limitation, reasonable costs and expenses (including legal fees and expenses) of settlement discussions, litigation, arbitration, mediation or other proceedings relating to the Claim.

“Total Capital Contribution” shall mean, with respect to any Member, the Initial Capital Contributions and all additional Capital Contributions made by such Member.

“Transfer” shall mean, with respect to a specified interest, any transfer, sale, pledge, hypothecation, encumbrance, assignment or other disposition of any sort, voluntary or involuntary, whether by operation of law or otherwise, of all or any portion of such interest, or any agreement or arrangement to do any of the foregoing.

“Transfer Agreement” means that certain Transfer Agreement dated as of June 4, 2012 by and among Sunrise, CHT Partners, LP, a Delaware limited partnership, and Facility Manager, as amended by that certain letter agreement dated as of June 4, 2012 and that certain First Amendment to Transfer Agreement dated as of June 25, 2012.

“Transfer Expenses” mean any customary transaction expenses in connection with a sale of the Facilities, including, without limitation, brokerage commissions, transfer taxes, loan prepayment fees and other costs, to the extent the same are saved in the proposed Transfer between the Members; such expenses to be reasonably determined by an independent accountant of the Company in a manner consistent with then customary market practices for properties similar to the Facilities and to be allocated equitably among the Members in accordance with their Percentage Interests.

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“Transfer Notice” shall have the meaning set forth in Section 12.3(a).

“Transfer Price” shall have the meaning set forth in Section 12.3(a).

“Transfer Price Notice” shall have the meaning set forth in Section 12.3(a).

“Transferor Member” shall have the meaning set forth in Section 12.3(a).

“UCC” shall mean the Uniform Commercial Code as in effect in the State of Delaware, as amended from time to time, or any corresponding provision(s) of succeeding law.

“Venue” shall have the meaning set forth in Section 13.7(a).

1.2 General Interpretive Principles.

(a) All references to sections, schedules and exhibits are to sections, schedules and exhibits in or to this Agreement unless otherwise specified.

(b) Unless otherwise specified, the words hereof, herein and hereunder and words of similar import will refer to this Agreement as a whole and not to any particular provision of this Agreement.

(c) If the context requires, the use of any gender will also refer to any other gender, and the use of either number will also refer to the other number. The word including is not exclusive; if exclusion is intended, the word comprising is used instead. The word or will be construed to mean and/or unless the context clearly prohibits that construction.

(d) All terms that are defined by the UCC have the same meanings assigned to them by the UCC, unless (and to the extent) they are varied by this Agreement.

(e) All accounting terms not specifically defined have the meanings determined by reference to GAAP.

(f) Unless the context prevents this construction, a reference to a Facility will be construed to refer to all or any portion of the Facility.

(g) The term mortgage shall mean a mortgage, deed of trust, deed to secure debt or similar instrument, as applicable, and mortgagee means the secured party under a mortgage.

(h) The term deemed means conclusively presumed. The absence of a conclusive presumption does not mean that a particular circumstance does not exist or that a particular condition is not satisfied; it just means that there is no conclusive presumption.

(i) The term presumed means presumed subject to rebuttal and the burden of proof is on the Person seeking to rebut the fact presumed.

(j) All yields and interest rates will be calculated on a the basis of a 360-day year.

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(k) Any consent required by a Member that is described in this Agreement as not to be unreasonably withheld shall mean that such consent shall not be unreasonably withheld, conditioned or delayed.

ARTICLE 2

THE COMPANY AND ITS BUSINESS

2.1 Company Name. The business of the Company shall be conducted under the name of “CHTSun Partners IV, LLC” in the State of Delaware and under such name or such assumed names as the Managing Member deems necessary or appropriate to comply with the requirements of any other jurisdiction in which the Company may be required to qualify.

2.2 Term. The term of the Company shall have commenced on the date of the filing of the Certificate of Formation with the State of Delaware and shall continue in full force and effect until the date that is the later of (a) the thirty (30) year anniversary of the Effective Date or (b) the date on which the term of the last Management Agreement expires, including any renewals thereof, unless sooner terminated as hereinafter provided (“Term”).

2.3 Filing of Certificate and Amendments. The Certificate of Formation was filed with the Secretary of State of the State of Delaware. The Managing Member hereby agrees to cause the execution and filing of any required amendments to the Certificate of Formation and shall do all other acts requisite for the constitution of the Company as a limited liability company pursuant to the laws of the State of Delaware or any other applicable law.

2.4 Business; Scope of Members’ Authority.

(a) The Company is formed for the purpose of (i) directly or through Subsidiaries, engaging in the acquisition, ownership, development, financing, construction, management and sale of senior living facilities throughout the United States, and (ii) transacting any and all lawful business that is incident, necessary or appropriate to accomplish the foregoing.

(b) Except as otherwise expressly and specifically provided in this Agreement, no Member shall have the authority to bind, to act for, or to assume any obligation or responsibility on behalf of, the Company or any other Member. Neither the Company nor any Member shall, by virtue of executing this Agreement, be responsible or liable for any indebtedness or obligation of any other Member incurred or arising either before or after the Effective Date of this Agreement, except, as to the Company, as to those joint responsibilities, liabilities, indebtedness, or obligations expressly assumed by the Company as of the Effective Date or incurred after the Effective Date pursuant to and as limited by the terms of this Agreement.

2.5 Principal Office; Registered Agent. The principal office of the Company shall initially be at the offices of CHT at c/o CNL Healthcare Trust, Inc., 450 South Orange Avenue, Orlando, Florida 32801 or such other place as the Members may from time to time determine. The registered agent and the registered address, respectively, of the Company shall be National Registered Agents, Inc. at c/o National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, Delaware 19904. The Managing Member may elect to change the Company’s registered agent and the Company’s registered and principal offices by complying with the relevant requirements of the Act.

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2.6 Authorized Persons. The Person who executed, delivered and filed the Certificate of Formation with the Office of the Delaware Secretary of State is an authorized person within the meaning of the Act, and upon the filing of the Certificate of Formation with the Office of the Delaware Secretary of State, his or her powers as an authorized person ceased. The Managing Member is hereby designated as an “authorized person” within the meaning of the Act. Any one of such authorized persons is hereby authorized to execute, deliver and file any other certificates or documents (and any amendments and/or restatements thereof) on behalf of the Company. The existence of the Company as a separate legal entity shall continue until cancellation of the Certificate of Formation as provided in the Act.

2.7 Representations by Members. Each Member represents, warrants, covenants and acknowledges that (a) it is a corporation, limited liability company or limited partnership duly organized or formed and is in good standing in the jurisdiction in which it has been organized or formed, (b) it has the power and authority to authorize the execution, delivery and performance of this Agreement, (c) it has been duly authorized and is otherwise duly qualified to purchase and hold its Interest and to execute and deliver this Agreement and all other instruments executed and delivered on behalf of it in connection with the acquisition of its Interest, (d) the person or persons executing and delivering this Agreement on behalf of a Member are duly authorized to do so, (e) the consummation of such transactions will not result in a breach or violation of, or a default under, its charter or bylaws, if such Member is a corporation, or its certificate of limited partnership or its partnership agreement, if such Member is a partnership, or its operating agreement if such Member is a limited liability company, or any existing agreement by which it or any of its assets are bound, and (f) this Agreement is a valid and binding agreement on the part of such Member enforceable in accordance with its terms against such Member, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors and general principles of equity.

2.8 Organization Expenses. Each Member shall bear the costs of its own legal counsel and other professional advisors in connection with the negotiation of this Agreement. All out-of-pocket expenses that have been incurred by or on behalf of the Company by a Sunrise Person or a CHT Person on or prior to the Effective Date shall be expenses of the Company; provided, that, the Members acknowledge that certain expenses incurred prior to the Effective Date shall be governed in accordance with the Transfer Agreement.

2.9 Opt-in to Article 8.

(a) Each limited liability company interest in the Company shall constitute a “security” within the meaning of, and be governed by, (i) Article 8 of the Uniform Commercial Code (including Section 8-102(a)(15) thereof) as in effect from time to time in the States of Delaware (the “DEUCC”) and Florida (as the Company hereby “opts-in” to such provisions), and (ii) the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995. Each Member hereby agrees that its interest in the Company shall for all purposes be personal property. Each Member has no interest in specific Company property.

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(b) The Company shall maintain books for the purposes of registering the transfer of the limited liability company interests of the Company. Notwithstanding anything in this Agreement to the contrary, the transfer of limited liability company interests in the Company requires the delivery of an endorsed Share Certificate (as defined below) and recordation of such transfer in the books and records of the Company.

(c) Upon the issuance of limited liability company interests in the Company to any Person in accordance with the provisions of this Agreement, the Company shall issue one or more non-negotiable certificates in the name of such Person substantially in the form of Exhibit C attached hereto (a “Share Certificate”), which evidences the ownership of the limited liability company interests in the Company of such Person. Each such Share Certificate shall be denominated in terms of the percentage of the limited liability company interests in the Company evidenced by such Share Certificate and shall be signed by an appropriate officer of Managing Member on behalf of the Company. Each Share Certificate shall bear a legend stating the language set forth in the first sentence of clause (a) of this Section 2.9. Additionally, each Share Certificate shall contain the following legend: “THE TRANSFER OF THIS SHARE CERTIFICATE AND THE LIMITED LIABILITY COMPANY INTEREST REPRESENTED HEREBY IS RESTRICTED AS DESCRIBED IN THE LIMITED LIABILITY COMPANY AGREEMENT.”

(d) The Company shall issue a new Share Certificate in place of any Share Certificate previously issued if the holder of the limited liability company interests in the Company represented by such Share Certificate, as reflected on the books and records of the Company:

(i) makes proof by affidavit, in form and substance satisfactory to the Company, that such previously issued Share Certificate has been lost, stolen or destroyed;

(ii) requests the issuance of a new Share Certificate before the Company has notice that such previously issued Share Certificate has been acquired by a purchaser for value in good faith and without notice of an adverse claim;

(iii) if requested by the Company, delivers to the Company a bond, in form and substance satisfactory to the Company, with such surety or sureties as the Company may direct, to indemnify the Company against any claim that may be made on account of the alleged loss, destruction or theft of the previously issued Share Certificate; and

(iv) satisfies any other reasonable requirements imposed by the Company.

(e) Upon a Member’s transfer in accordance with the provisions of this Agreement of any or all limited liability company interests in the Company represented by a Share Certificate, the transferee of such limited liability company interests in the Company shall deliver such Share Certificate to the Company for cancellation (executed by the transferor on the reverse side thereof), and the Company shall thereupon issue a new Share Certificate to such transferee for the percentage of limited liability company interests in the Company being transferred and, if applicable, cause to be issued to such Member a new Share Certificate for that percentage of limited liability company interests in the Company that were represented by the canceled Share Certificate and that are not being transferred.

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(f) Notwithstanding any provision of this Agreement to the contrary, to the extent that any provision of this Agreement is inconsistent with any non-waivable provision of Article 8 of the DEUCC, such provision of Article 8 of the DEUCC shall control.

2.10 Securities Laws Restrictions. The Interests have not been registered under the Securities Act of 1933, as amended, or under the securities laws of the State of Delaware or any other jurisdiction. Consequently, the Interests may not be sold, Transferred, assigned, pledged, hypothecated or otherwise disposed of, except in accordance with the provisions of such laws and this Agreement.

2.11 Separateness Covenants. Notwithstanding anything to the contrary contained herein or in any other document governing the formation, management or operation of the Company, for so long as the Connecticut/Santa Monica Financing or the Five-Pack Financing remains outstanding and not discharged in full, the following shall govern: Except as provided below with respect to Operating Lessees, (a) the Company shall not own any assets in addition to its indirect or direct ownership interest in the Pool Subsidiaries, other than any cash, investment accounts (provided that the liability associated with any such investment account shall be limited to the assets contained in such account) or personal property used in connection with such ownership, as applicable, and (b) the Facilities shall generate substantially all of the gross income of the Company and there shall be no substantial business being conducted by the Company, either directly or indirectly, other than the business of owning, operating and maintaining indirectly the Facility Entities and the Facilities and the activities incidental thereto. Notwithstanding the foregoing, Operating Lessees may own its leasehold interest in all the Facilities and any personal property associated therewith;

(b) The Company shall not (i) liquidate or dissolve (or suffer any liquidation or dissolution), terminate, or otherwise dispose of, directly, indirectly or by operation of law, all or substantially all of its assets; (ii) reorganize or change its legal structure without Lender’s prior written consent (not to be unreasonably withheld), except as otherwise expressly permitted under the Loan Documents; (iii) change its name, address, or the name under which it conducts its business without promptly notifying Lender; (iv) enter into or consummate any merger, consolidation, sale, transfer, assignment, liquidation, or dissolution involving any or all of the assets of the Company or general partner or any managing member of the Company; or (v) enter into or consummate any transaction or acquisition, merger or consolidation or otherwise acquire by purchase or otherwise all or any portion of the business or assets of, or any stock or other evidence of beneficial ownership of, any Person;

(c) The Company shall not incur any secured or unsecured debt except for (i) the Connecticut/Santa Monica Financing and the Five-Pack Financing, (ii) Permitted Capital Leases (as defined in the Amended and Restated Loan Agreement), (iii) customary and reasonable short term trade payables obtained and repaid in the ordinary course of its business, and (iv) unsecured loans whose proceeds shall be used solely for the benefit of the Facility and the Facility Entities and which do not exceed, in the aggregate at any given time, the amount of Ten Million and No/100 Dollars ($10,000,000.00);

(d) The Company shall not amend, modify or otherwise change its Certificate of Formation or this Agreement in any material term or manner, or in a manner which adversely affects the Company’s existence as a single purpose entity or the Company’s compliance with the Loan Documents;

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(e) To the extent that the Company requires an office, it shall maintain its principal executive office and telephone and facsimile numbers separate from that of any Affiliate of same (other than the Pool Subsidiaries) and shall conspicuously identify such office and numbers as its own or shall allocate by written agreement fairly and reasonably any rent, overhead and expenses for shared office space. For the purposes of this Section 2.11, “Pool Subsidiaries” shall mean the Facility Entities, the Operating Lessees, Sun IV, LLC, a Delaware limited liability company, CHT SL IV TRS Corp., a Delaware corporation, CHTSun Two Pool Two, LLC, a Delaware limited liability company, CHTSun Three Pool One, LLC, a Delaware limited liability company, Santa Monica AL, LLC, a Delaware limited liability company, Santa Monica GP, LLC, a Delaware limited liability company, and any other Subsidiaries expressly permitted under the Loan Documents;

(f) To the extent that the Company uses stationery, invoices and checks, it shall use its own separate stationery, invoices and checks;

(g) The Company shall maintain correct and complete financial statements, accounts, books and records and other entity documents separate from those of any Affiliate of same or any other person or entity (other than the Subsidiaries), except that the Company’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that the Company is properly reflected and treated as a separate legal entity;

(h) To the extent the Company has bank accounts, it shall maintain its own separate bank accounts, and shall maintain correct, complete and separate books of account;

(i) The Company shall file or cause to be filed its own separate tax returns, or if applicable, consolidated tax returns;

(j) The Company shall hold itself out to the public (including any of its Affiliates’ creditors) under its own name and as a separate and distinct entity and not as a department, division or otherwise of any Affiliate of same;

(k) The Company shall observe all customary formalities regarding its existence, including holding meetings and maintaining current and accurate minute books separate from those of any Affiliate of same;

(l) The Company shall hold title to its assets in its own name and act solely in its own name and through its own duly authorized officers and agents. No Affiliate of same shall be appointed or act as agent of the Company, other than, if applicable, Operating Lessees as operators or Facility Manager as property manager with respect to the Facilities;

(m) The Company shall make investments in the name of the Company directly by the Company or on its behalf by brokers engaged and paid by the Facility Entities, Operating Lessees or their respective agents;

(n) Except as expressly required by Lender in connection with the Connecticut/Santa Monica Financing or the Five-Pack Financing and in writing or pursuant to the Management Agreement Guaranty, the Company shall not guarantee or otherwise agree to be liable for (whether conditionally or unconditionally), pledge or assume or hold itself out or permit itself to be held out as having guaranteed, pledged or assumed any liabilities or obligations of any partner

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(whether limited or general), member, shareholder or any Affiliate of the Company, as applicable, or any other party (other than of the Pool Subsidiaries, to the extent of indebtedness permitted under the Loan Documents), except in connection with the Permitted Member Loans (as defined in the Amended and Restated Loan Agreement) and Permitted Capital Leases; nor shall it make any loan (other than to (i) Pool Subsidiaries that are not Facility Entities or Operating Lessees and (ii) any Facility Entities or Operating Lessees to the extent that such loans qualify as Permitted Member Loans under Section 5.01(h) of the Amended and Restated Loan Agreement);

(o) The Company shall use commercially reasonable efforts to remain solvent and shall pay its own debts and liabilities out of its own funds and assets (to the extent of such funds and assets) as the same shall become due; provided, however, the foregoing shall not require any Member to make additional capital contributions to the Company;

(p) The Company shall separately identify, maintain and segregate its assets;

(q) The Company’s funds (i) shall be deposited or invested in the Company’s name, (ii) shall not be commingled with the funds of any Affiliate of the Company or any other person or entity except as may be required in connection with the Manager Pooling Agreement and (iii) shall be used only for the business of Company (including distributions of available funds);

(r) The Company shall maintain any accounts it uses in its own name and with its own tax identification number, separate from those of any Affiliate of same or any other person or entity (other than the Pool Subsidiaries);

(s) The Company shall maintain its assets in such a manner that it is not costly or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate of same or other Person;

(t) The Company shall pay or cause to be paid its own liabilities and expenses of any kind, including but not limited to salaries of its employees, if any, only out of its own separate funds and assets;

(u) The Company shall reflect its ownership interest in all data and records (including computer records) used by any Facility Entity, Operating Lessees or any Affiliate of same;

(v) The Company shall not invest any of its funds in securities issued by, nor shall the Company acquire the indebtedness or obligation of, any Affiliate of same (other than the Pool Subsidiaries); and

(w) The Company shall maintain an arm’s length relationship with each of its Affiliates and may enter into contracts or transact business with its Affiliates only on commercially reasonable terms that are no less favorable to the Company than is obtainable in the market from a person or entity that is not an Affiliate of same (other than the Pool Subsidiaries); provided, however, the Company shall be permitted to enter into the Manager Pooling Agreement and Management Agreements.

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ARTICLE 3

MANAGEMENT OF COMPANY BUSINESS

3.1 Appointment of Managing Member. CHT will be the initial Managing Member of the Company with the rights and responsibilities set forth in this Agreement. The rights of the Managing Member may not be assigned to any other Person whether voluntarily or by operation of law. The duties of the Managing Member may not be delegated to any other Person whether voluntarily or by operation of law. Nothing in the preceding sentence is intended to prohibit or restrict the Managing Member from engaging a Sunrise Person, accountants, lawyers and other professional and independent service providers for the purpose of performing services for the Company.

3.2 Duties of Managing Member. Subject to obtaining the unanimous consent of the Members to all Major Decisions as set forth in Section 3.5, the Managing Member will have the authority and the duty to manage the Company and implement the purposes of the Company in accordance with the terms of this Agreement acting in a prompt and businesslike manner, and exercising such care and skill as a prudent owner with sophistication and experience in owning, operating and managing facilities similar to the Facilities would exercise in dealing with its own facility. The Managing Member will devote such time to the Company and its business as is reasonably necessary to conduct the operations of the Company and to carry out the Managing Member’s responsibilities. Subject to Section 2.11 and Section 3.5 the Managing Member shall have the following rights and authority to act on behalf of the Company:

(a) To execute any contracts on behalf of the Company.

(b) To form Subsidiaries, including, without limitation, the Facility Entities and Operating Lessees.

(c) To collect revenues generated by the Company and to pay all expenses of the Company as permitted under this Agreement.

(d) To establish, maintain and draw upon checking, savings and other accounts in the name of the Company as provided in Section 3.3.

(e) To make any tax elections to be made by the Company.

(f) To use a trade name in the operation of the Company.

(g) To enter into, or cause its Subsidiaries to enter into, all Facility Documents.

(h) To take all actions reasonably necessary to cause the Facility Manager to maintain in full force and effect all licenses, permits, approvals and insurance required for the construction, operation and maintenance of the Facilities.

(i) To take all other actions reasonably necessary to implement the purposes of the Company.

(j) To do any and all of the foregoing upon such terms and conditions as the Managing Member in its reasonable discretion determines to be necessary, desirable or appropriate.

The Managing Member may delegate any of the above responsibilities and obligations to any other Member of the Company upon reasonable advance notice, provided that such Member agrees to such delegation.

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3.3 Bank Accounts. The Company will maintain separate bank accounts in such banks as the Managing Member may designate exclusively for the deposit and disbursement of the funds of the Company. All funds of the Company shall be promptly deposited in such accounts. The Managing Member from time to time shall authorize signatories for such accounts.

3.4 Reimbursement for Costs and Expenses. Subject to the terms of the Approved Budget, the Managing Member will fix the amounts, if any, which the Company will reimburse each Member for any costs and expenses incurred by such Member on behalf and for the benefit of the Company; provided, however, that except as otherwise provided herein or in any separately-executed agreement relating to the business and operation of the Company, no overhead or general administrative expenses of any Person other than the Company itself shall be allocated to the operation of the Company. The Managing Member in its capacity as Managing Member and not in its capacity as a Member shall not be entitled to any fee or compensation for performing its duties and obligations under this Agreement.

3.5 Major Decisions. All of the actions listed on Schedule 3.5 (“Major Decisions”), shall require the written approval of all Members, which approval shall be in the sole discretion of each Member. If a dispute or deadlock arises with respect to a Major Decision, the Members shall attempt to resolve such dispute during a sixty (60) day meet, confer and cooling off period (the “Cooling Off Period”), upon the expiration of which without resolution the Members shall submit the Major Decision to arbitration in accordance with the provisions of Section 13.7. Either party may initiate arbitration. Any Member may propose a Major Decision by sending written notice in accordance with Section 13.2 requesting the approval of such Major Decision; if a Member fails to respond to such request after five (5) Business Days from receipt of the notice (or such longer time as expressly provided for in the notice), the proposing Member shall send another written notice to the other Member and if such Member fails to respond to such second request after five (5) Business Days from receipt of the notice (or such longer time as expressly provided for in the notice), such Member will be deemed to have approved the Major Decision set forth in such notice. If CHT approves, or is deemed to approve, a Major Decision proposed by Sunrise pursuant to this Section 3.5, CHT, in its capacity as Managing Member, shall be obligated to carry out the action that constitutes such Major Decision.

ARTICLE 4

RIGHTS AND DUTIES OF MEMBERS

4.1 Members Shall Not Have Power to Bind Company. Except as set forth in Section 3.2 in its capacity as Managing Member (if applicable), no Member, acting solely in its capacity as a Member, shall transact business for the Company nor shall any Member, acting solely in its capacity as a Member, have the power or authority to sign, act for or bind the Company.

4.2 Other Activities of the Members.

(a) Each of the Members acknowledges that the Members will continue to pursue their separate business opportunities outside of the Company and the Facilities. Each Member is free to pursue all such activities and may engage in or possess an interest in any other business venture or

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ventures of any nature and description and in any vicinity whatsoever, independently or with others, including, without limitation, the ownership, development, financing, leasing, operation, management, syndication, brokerage, subdivision or sale of real property or senior living facilities and related services, and neither the Company nor any other Member shall have any rights in and to such independent ventures or to income or profits derived therefrom.

(b) Each Member may engage or invest in any other activity or venture or possess any interest therein independently or with others. None of the Members, the Company or any other Person employed by, related to or in any way affiliated with any Member or the Company shall have any duty or obligation to disclose or offer to the Company or the other Members, or obtain for the benefit of the Company or the other Members, any other activity or venture or interest not made with respect to the Company or any Facility. None of the Company, the Members, the creditors of the Company or any other Person having any interest in the Company shall have any claim, right or cause of action against any Member or any other Person employed by, related to or in any way affiliated with, any Member (i) by reason of any direct or indirect investment or other participation, whether active or passive, in any such activity or venture or interest therein, or (ii) any right to any such activity or venture or interest therein or the income or profits derived therefrom.

4.3 Indemnification.

(a) In the event that the Members (including the Managing Member), or any of their direct or indirect partners, directors, officers, stockholders, employees, incorporators, agents, affiliates or controlling Persons (an “Indemnified Person”), become involved, in any capacity, in any threatened, pending or completed action, proceeding or investigation, in connection with any matter arising out of or relating to the Company’s business or affairs, the Company will periodically reimburse such Indemnified Person for its reasonable legal and other expenses (including, without limitation, the cost of any investigation and preparation) incurred in connection therewith, provided that such Indemnified Person shall promptly repay to the Company the amount of any such reimbursed expenses paid to it if it shall ultimately be determined that such Indemnified Person is not entitled to be indemnified by the Company in connection with such action, proceeding or investigation as provided in the exception contained in the next succeeding sentence. To the fullest extent permitted by law, the Company also will defend, indemnify and hold harmless an Indemnified Person against any losses, claims, damages, liabilities, obligations, penalties, actions, judgments, suits, proceedings, costs, expenses and disbursements of any kind or nature whatsoever, including, without limitation, reasonable attorney’s fees and costs (collectively, “Costs”) to which such an Indemnified Person may become subject in connection with any matter arising out of or in connection with the Company’s business or affairs, except to the extent that any such Costs result solely from the gross negligence, fraud, or willful misconduct of such Indemnified Person. If for any reason (other than the gross negligence, fraud, or willful misconduct of such Indemnified Person) the foregoing indemnification is unavailable to such Indemnified Person, or insufficient to hold it harmless, then the Company shall contribute to the amount paid or payable by such Indemnified Person as a result of such Costs in such proportion as is appropriate to reflect not only the relative benefits received by the Company on the one hand and such Indemnified Person on the other hand but also the relative fault of the Company and such Indemnified Person, as well as any relevant equitable considerations. The reimbursement, indemnity and contribution obligations of the Company under this Section 4.3 shall be in addition to any liability which the Company may otherwise have to any Indemnified Person and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company and any Indemnified Person. The reimbursement, indemnity and contribution obligations of the Company under this Section 4.3 shall be limited to the Company Assets, and no Member shall have any personal liability on account thereof. The foregoing provisions shall survive any termination of this Agreement.

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(b) To the fullest extent permitted by law, each Member shall defend and indemnify the Company and the other Members against, and shall hold it and them harmless from, any Costs as and when incurred by the Company or the other Members in connection with or resulting from such indemnifying Member’s gross negligence, fraud, or willful misconduct.

(c) In addition to and not in limitation of any other indemnification obligations set forth in this Agreement, each Member shall indemnify the other with respect to: (i) any representations and warranties made in the Loan Documents by the borrower thereunder which are made based upon the knowledge of the borrower thereunder; or (ii) any absolute representations and warranties made in the Loan Documents by the borrower thereunder of which the borrower has knowledge to be incorrect and, in each of the foregoing, (i) and (ii), that (A) are untrue but not known to the indemnified Member at the closing of the Refinancing to be untrue, (B) can not be cured within the cure period allowed in the Loan Documents with commercially reasonable efforts, and (C) result in an event of default or other liability to the Member being indemnified. As used in this Section 4.3(c), the term “knowledge” and “known” shall mean, (x) with respect to Sunrise (or with respect to the borrower in the Loan Documents under subclause (i) above), the current, actual (not constructive, imputed or implied) knowledge, after due inquiry, of Greg Neeb, Philip Kroskin, Edward Burnett and Jerry Liang, and (y) with respect to CHT, the current, actual (not constructive, imputed or implied) knowledge, after due inquiry, of Stephen H. Mauldin. and Joseph T. Johnson.

4.4 Dealing with Members. The fact that a Member, an Affiliate of a Member, or any officer, director, employee, member, partner, consultant or agent of a Member or an Affiliate, is directly or indirectly interested in or connected with any Person employed by the Company to render or perform a service, or from or to whom the Company may buy or sell any property or have other business dealings, shall not prohibit a Member from employing such Person or from dealing with him or it on customary terms and at competitive rates of compensation, and neither the Company, nor any of the other Members shall have any right in or to any income or profits derived therefrom by reason of this Agreement.

4.5 Use of Company Assets. No Member shall make use of the Company Assets or any other funds or property of the Company, or assign its rights to specific Company property, other than for the business or benefit of the Company.

4.6 Designation of Tax Matters Member. The Tax Matters Member shall act as the “tax matters member” of the Company as provided in the regulations pursuant to Section 6231 of the Code. Each Member hereby approves of such designation and agrees to execute, certify, acknowledge, deliver, swear to, file and record at the appropriate public offices such documents as may be deemed necessary or appropriate to evidence such approval. To the extent and in the manner provided by applicable Code sections and regulations thereunder, the Tax Matters Member (a)shall furnish the name, address, profits interest and taxpayer identification number of each Member to the IRS and each Member shall provide such information to the Tax Matters Member upon request and (b)shall inform each Member of administrative or judicial proceedings for the adjustment of Company items required to be taken into account by a Member for income tax purposes. Each Member hereby reserves all rights under applicable law, including, without limitation, the right to retain independent counsel of its choice at its expense (which counsel shall receive the full cooperation of the Tax Matters Member).

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4.7 OFAC; Not Foreign Person; Not Prohibited Person. No Member is a “foreign person” within the meaning of Section 1445(f)(3) of the Code. Each Member represents and warrants that it is not or will not be an entity or person (a)that is listed in the Annex to, or is otherwise subject to the provisions of Executive Order 13224 issued on September 24, 2001 (“EO13224”), (b)whose name appears on the United States Treasury Department’s Office of Foreign Assets Control (“OFAC”) most current list of “Specifically Designated National and Blocked Persons” (which list may be published from time to time in various mediums including, without limitation, the OFAC website, http:www.treas.gov/ofac/t11sdn.pdf), (c)who commits, threatens to commit or supports “terrorism”, as that term is defined in EO13224, or (d)who is otherwise affiliated with any entity or person listed above (any and all parties or persons described in clauses [a] – [c] above are referred to as a “Prohibited Person”). Each Member represents, warrants and covenants that it will not (e)knowingly conduct any business, nor engage in any transaction or dealing, with any Prohibited Person, including, without limitation, knowingly making or receiving any contribution of funds, goods, or services, to or for the benefit of a Prohibited Person in violation of applicable laws, or knowingly selling or otherwise Transferring an interest in itself to any Prohibited Person or (f)knowingly engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in EO13224. The Members agree to deliver (from time to time) to the Managing Member any such certification or other evidence as may be reasonably requested by the Managing Member, confirming that (g)no Member is a Prohibited Person and (h)no Member has knowingly engaged in any business, transaction or dealings with a Prohibited Person, including, without limitation, knowingly making or receiving any contribution of funds, goods, or services, to or for the benefit of a Prohibited Person in violation of applicable laws.

4.8 Management Fees and OD Loans. The Members consent to the execution by the Company of (i) the Management Agreements and Manager Pooling Agreement, pursuant to which Facility Manager will receive certain fees and may make OD Loans or Pooled OD Loans to the Facilities as more specifically described in the Management Agreements and the Manager Pooling Agreement, and (ii) a guaranty made in favor of Facility Manager, pursuant to which the Company will guaranty to Facility Manager the payment and performance obligations of the Operating Lessees and Connecticut Avenue Facility Owner under the Management Agreements and the Manager Pooling Agreement.

ARTICLE 5

BOOKS AND RECORDS; REPORTS

5.1 Books and Records. At all times during the continuance of the Company, the Managing Member, or such other Member as the Managing Member designates in accordance with the last sentence of Section 3.2, shall (a) keep or cause to be kept true and complete books and records, including corporate and governance documents, of the Company and its Subsidiaries in which shall be entered each transaction of the Company and its Subsidiaries and (b) maintain and keep in good order the Organizational Documents of the Company and its Subsidiaries and monitor corporate housekeeping issues relating to the Company and its Subsidiaries. Such books and records shall be kept on the basis of the Fiscal Year in accordance with the accrual method of accounting, and shall reflect all transactions of the Company in accordance with GAAP.

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5.2 Availability of Books and Records; Return of Books and Records. All of the books and records referred to in Section 5.1 (which shall include an executed copy of this Agreement, the Certificate of Formation, and any amendments thereto) shall at all times be maintained at the principal office of the Company or such other location as the Managing Member shall reasonably approve (which other location, upon such approval, shall be communicated to all of the Members), and shall be open to the inspection and examination of the Members or their representatives during reasonable business hours upon reasonable prior notice to the Managing Member.

5.3 Reports and Statements. Subject to the terms of Section 3.5, the Managing Member, or such other Member as the Managing Member designates in accordance with the last sentence of Section 3.2, shall be responsible for determining the need for independent accountants, selecting the Company’s independent accountant’s, if any, and for preparing or overseeing the Company’s independent accountants in the preparation of all federal, state and local tax returns required to be filed. The Managing Member shall, or, in the Managing Member’s sole discretion, such other Member as the Managing Member designates, shall cause the accountants to deliver to the Members completed IRS Schedules K-1 promptly upon receipt from the independent accountants. Each Member shall notify the other Members upon receipt of any notice of tax examination of the Company by federal, state or local authorities. The Managing Member shall, or in the Managing Member’s sole discretion, such other Member as the Managing Member designates shall deliver to the Company: (a) not later than the fifteenth (15th) day of each month monthly consolidated balance sheets and income statements for the Company prepared in accordance with GAAP; (b) not later than the fifteenth (15th) day of each month, trial balances for the preceding month and year-to-date for: (i) the Company and each Subsidiary; (ii) each “Taxable REIT Subsidiary” (as defined by the Code) owned by the Company or any Subsidiary, (iii) each entity owned by any “Taxable REIT Subsidiary” that is owned by the Company or any Subsidiary, and (iv) each of the Facility Entities owned by the Company or any Subsidiary; (c) not later than fifteen (15) days after the end of each quarter, information (including detailed depreciation and basis information) in a format reasonably requested by CHT to be used by CHT, or a consultant engaged by CHT, to compute the earnings and profits of the Company; (d) not later than sixty (60) days after the end of each Company Year, annual consolidated balance sheets and income statements for the Company prepared in accordance with GAAP; (e) not later than March 20^th following the end of each Company Year, annual audited consolidated financial statements for the Company prepared in accordance with GAAP, provided, however, that the Managing Member (or such other Member as the Managing Member designates) shall use its best efforts to deliver such annual audited consolidated financial statements by March 15^th following the end of each Company Year; and (f) all documentation and calculations necessary for the Company’s independent accountants to prepare the Company’s federal tax return and K-1’s on or before May 1^st of each year. In addition to, and not in limitation of the foregoing, the Managing Member shall, or in the Managing Member’s sole discretion, such other Member as the Managing Member designates shall have the responsibility to monitor and manage the Company’s debt compliance, cash management functions and annual independent audit. The Managing Member shall be responsible for determining, pursuant to and as required under Section 3.1(a) of each Operating Lease, whether any Excess Rent (as defined in each Operating Lease) shall be deemed not to accrue or otherwise be payable as rent under any Operating Lease, which determination shall be subject to the approval of the other Members.

5.4 Accounting Expenses. All out-of-pocket expenses payable to Persons that are retained in accordance with the terms of this Agreement in connection with the keeping of the books and records of the Company and the preparation of audited or unaudited financial statements and federal, state and local tax and information returns required to implement the provisions of this

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Agreement or required by any governmental authority with jurisdiction over the Company shall be borne by the Company as an ordinary expense of its business; provided, however, that any financial or other reporting or responsibility required of the Company because a Member is an Affiliate of a public company shall be borne by such Member.

5.5 Budgets. Attached hereto as Exhibit A is the Approved Budget for the current fiscal year. In each subsequent fiscal year, the Managing Member shall deliver to the other Members promptly upon receipt from the Facility Manager, a draft annual operations budget for the next fiscal year for each Facility in the form attached as Exhibit D to the Management Agreement for the ensuing calendar year (the “Proposed Budgets”). The Proposed Budget shall be considered by the Members and a final annual operations budget shall be approved based on the Proposed Budget which shall become an Approved Budget in accordance with the requirements of the Management Agreement for such Facility. If there is a delay in the finalization of a new Approved Budget, or if the Proposed Budget is not approved as aforesaid, the Company shall require the Facility Manager to operate the Facility pursuant to the Approved Budget for the prior fiscal year for the Facility increased by the greater of (A) three and one-half of one percent (3.5%) or (B) any increase in the Index, until the Proposed Budget is approved by the Members. The amount of the Index increase for each fiscal year shall be determined by multiplying the Approved Budget for the previous Fiscal Year by a fraction, the numerator of which shall be (i) the Index most recently published immediately prior to the next fiscal year, minus (ii) the Index most recently published immediately prior to the immediately preceding fiscal year, and the denominator of which shall be the Index most recently published immediately prior to the immediately preceding fiscal year. Mathematically, the Index increase calculation may be expressed as (current Index – last year Index) last year Index. If consensus cannot be reached among the Members as to the Proposed Budget within sixty (60) days of the Members’ receipt of the Proposed Budget, then the Members shall submit the Proposed Budget to arbitration pursuant to Section 13.7, for a determination as to any items contained in the Proposed Budget which remain in dispute. Either party may initiate arbitration. Managing Member shall use commercially reasonable efforts to adhere to the Approved Budgets, it is understood, however, that the Approved Budgets are only projections by Managing Member of estimated results and that various circumstances such as, but not limited to, the cost of labor, material, services and supplies, casualty, operation of law, or economic and market conditions may make achievement of the Approved Budgets impracticable or not obtainable.

ARTICLE 6

CAPITAL CONTRIBUTIONS, LOANS

AND LIABILITIES

6.1 Initial Capital Contributions of the Members. The initial Capital Contributions of the Members are set forth on Schedule 6.1 attached to this Agreement, made as follows:

(a) CHT has contributed Fifty-Six Million Seven Hundred Thirty-Eight Thousand Six Hundred Ninety-Nine and 98/100 Dollars ($56,738,699.98) in cash to the Company, of which the Company has used (i) to make a distribution to Sunrise in the amount of Five Million and 00/100 Dollars ($5,000,000.00) (the “Sunrise Distribution Amount”), (ii) a portion of, together with certain proceeds from the Refinancing, to repay the mortgage financing that encumbered the Five-Pack Facilities immediately prior to the Five Pack Financing, and (iii) a portion of to pay for other closing costs; and

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(b) Sunrise has contributed the Sunrise Contributed Interests to the Company for which Sunrise shall receive a Capital Account credit of Forty-Six Million Three Hundred Eighty-Two Thousand Eight Hundred Seventy-Two and 57/100 Dollars ($46,382,872.57).

6.2 [Intentionally Omitted].

6.3 Capital Calls. Any Member may, at any time or times, require all Members upon the giving of a Capital Call, and all Members hereby agree, to make additional Capital Contributions to the Company for the purpose of curing an event of default or a default which with the passage of time will ripen into an event of default or will give rise to the exercise of a remedy by the Lender under the Refinancing or any future refinancing approved by all the Members pursuant to Section 3.5 of this Agreement (other than the repayment of the principal amount of the Refinancing or any future refinancing approved by all the Members pursuant to Section 3.5 of this Agreement at the maturity of the Refinancing or any future refinancing approved by all the Members pursuant to Section 3.5 of this Agreement, as the same may be accelerated), or for the purpose of funding Non-Discretionary Items (such Capital Contributions, the “Mandatory Capital Contributions”). All additional Capital Contributions other than the Mandatory Capital Contributions shall be a Major Decision subject to the mutual agreement of the Members in accordance with Section 3.5 hereof. Upon a Capital Call, provided such Capital Call is with respect to a Mandatory Capital Contribution or an additional Capital Contribution agreed upon by the Members in accordance with Section 3.5, each Member shall contribute as a Capital Contribution such Member’s pro rata portion of the aggregate amount specified in the Capital Call based on such Member’s Percentage Interest set forth on Schedule 6.1 hereto, other than payments for costs and expenses to be paid by a Member pursuant to Section 4.3(b). The Capital Calls shall be given no less than ten (10) Business Days in advance of the date the Capital Contribution specified in such Capital Call is to be made. The Members acknowledge and agree that funds from Capital Contributions will be distributed to the Facility Owners and Facility Lessees for the purposes set forth in this Section 6.3.

6.4 Reimbursements.

(a) Except as provided in Sections 6.4(b) below, the Company shall reimburse each Sunrise Guarantor and CHT Guarantor, as applicable, for (i) all amounts paid by a Sunrise Guarantor or CHT Guarantor in respect of a Claim made by Lender under an Affiliate Guaranty and (ii) Third Party Costs and Expenses incurred by a Sunrise Guarantor or CHT Guarantor in respect of the Claim. The Company shall make such reimbursement from time to time, within fifteen (15) days after receipt of a demand from a Sunrise Guarantor or CHT Guarantor, as applicable, together with reasonable documentation substantiating the amount of the request. The Managing Member shall notify the Members of the amount of funds required to pay the demand from the Sunrise Guarantor or CHT Guarantor, as applicable, and shall provide the Members with reasonable documentation substantiating the amount of the request, and each Member’s required contribution amount. The Members shall fund the amount called for within ten (10) Business Days after notice is given.

(b) The Company shall have no reimbursement obligation with respect to a Sunrise Recourse Claim or CHT Recourse Claim.

(c) Notwithstanding the foregoing, (a) CHT shall reimburse each Sunrise Guarantor for one hundred percent (100%) of (i) all amounts paid by a Sunrise Guarantor in respect of a CHT Recourse Claim made by Lender under an Affiliate Guaranty and (ii) Third Party Costs and Expenses incurred by a Sunrise Guarantor in respect of a CHT Recourse Claim and (b) Sunrise shall

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reimburse each CHT Guarantor for one hundred percent (100%) of (i) all amounts paid by a CHT Guarantor in respect of a Sunrise Recourse Claim made by Lender under an Affiliate Guaranty and (ii) Third Party Costs and Expenses incurred by a CHT Guarantor in respect of a Sunrise Recourse Claim. CHT and Sunrise shall make such reimbursement from time to time, within ten (10) Business Days after demand from the Sunrise Guarantor or CHT Guarantor, as applicable, together with reasonable documentation substantiating the amount of the request.

6.5 Remedies for Failure to Fund Capital Contributions.

(a) If any Member shall fail to timely make a Capital Contribution required pursuant to Section 6.3 in the amount and within the time period specified in the Capital Call notice (such Member is hereinafter referred to as a “Non-Contributing Member”), the Managing Member shall give written notice in accordance with the requirements of Section 13.2 of such failure to all other Members and any other Member or Members may fund all or part of such Capital Contribution on behalf of such Non-Contributing Member (each such funding Member is hereinafter referred to as a “Contributing Member”). Any amounts funded by a Contributing Member on behalf of a Non-Contributing Member shall be made directly to the Company but shall be treated as (a) a recourse demand loan made by the Contributing Member to the Non-Contributing Member (the “Member Loan”), bearing interest at the lower of (i) the rate of return to which the Contributing Member is entitled pursuant to Section 8.1 at the time such Member Loan is made, plus the Member Loan Rate, and (ii) the maximum rate permitted by applicable law, followed by (b) a capital contribution by such Non-Contributing Member to the Company. If and to the extent permitted under the terms of the Loan Documents, the Member Loan will be secured by a UCC security interest in the Non-Contributing Member’s Interest (which the Non-Contributing Member hereby grants) and any transferee of the Non-Contributing Member’s Interest will take that Interest subject to the lien. In addition, the lien of such UCC security interest shall be superior-in-interest to the lien of any pledge or other encumbrance granted by the Non-Contributing Member with respect to its Interest pursuant to and in accordance with Section 9.5 hereof. The Member Loan (to the extent of unpaid principal and interest) shall be payable within thirty (30) days after written demand by the Contributing Member and shall be repaid (x) directly by the Company on behalf of the Non-Contributing Member to the Contributing Member from Net Operating Cash Flow or Capital Proceeds otherwise distributable to the Non-Contributing Member as further provided in Section 8.4, and (y) to the extent outstanding, upon any Transfer of any part of the Non-Contributing Member’s Interest. Any Net Operating Cash Flow or Capital Proceeds used to repay the Member Loan shall be applied first to interest and then to principal. The Member Loan may, at the election of the Contributing Member, be evidenced by a promissory note, and the Contributing Member is hereby granted an irrevocable power of attorney, coupled with an interest, to execute and deliver that promissory note on behalf and in the name of the Non-Contributing Member. The failure of a Contributing Member or Non-Contributing Member to execute the promissory note will not invalidate or otherwise affect the enforceability of, or amounts owing under, any Member Loan.

(b) Notwithstanding anything in Section 6.5(a) to the contrary, if the terms of the Loan Documents prohibit treating all or any portion of a Capital Contribution contributed by a Contributing Member on behalf of a Non-Contributing Member as a Member Loan, and any Member shall fail to timely make a Capital Contribution required pursuant to Section 6.3 in the amount and within the time period specified in the Capital Call notice, the Managing Member

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shall give written notice in accordance with the requirements of Section 13.2 of such failure to all other Members and any other Member or Members may fund all or part of such Capital Contribution on behalf of such Non-Contributing Member as a Capital Contribution to the Company. Any amounts funded by the Contributing Member on behalf of a Non-Contributing Member shall be made directly to the Company (and shall not be treated as a Member Loan). In such an event, (X) the Capital Account of such Contributing Member shall be increased by two (2) times the aggregate amount of all Capital Contributions funded by such Contributing Member on behalf of itself and on behalf of the Non-Contributing Member with respect to the Capital Call in question, and (Y) the Contributing Member’s Percentage Interest shall be increased and the Non-Contributing Member’s Percentage Interest shall be reduced each proportionately based on such increase of the Contributing Member’s Capital Account.

6.6 Capital of the Company. The capital of the Company shall be the sum of the Members’ Capital Contributions. Except as otherwise provided in this Agreement, no Member shall be entitled to withdraw or receive any interest on, or return of, all or any part of its Capital Contribution or to receive Company Assets in return for its Capital Contribution.

6.7 Limited Liability of Members. No Member shall be bound by, or be personally liable for, the expenses, liabilities, indebtedness or obligations of the Company. The liability of each Member shall be limited solely to the amount of its Capital Contribution; provided, however, after a Member has received a distribution from the Company, such Member may be liable to the Company for the amount of the distribution but only to the extent required by this Agreement or by the Act. Nothing in this Agreement shall be construed to create liability of any Member in excess of the amount of its Capital Contribution except for gross negligence, fraud, or willful misconduct by such Member.

6.8 Refinancing.

(a) Non-Recourse; Carve-out Guaranties The Refinancing is secured by the Facilities and is non-recourse to the Company and to the Members, except as otherwise expressly set forth in the documents evidencing such Refinancing, provided that a Sunrise Guarantor and a CHT Guarantor will be jointly and severally responsible for certain obligations as set forth in any Affiliate Guaranties. Sunrise and CHT shall cause Sunrise Guarantor and CHT Guarantor, respectively, to the extent required by the Lender, to issue any Affiliate Guarantees, in forms acceptable to Sunrise and CHT in their sole discretion. CHT, Sunrise and the Company and the CHT Guarantor and Sunrise Guarantor have entered into an Indemnification and Contribution Agreement on the date hereof in the form attached hereto as Exhibit B.

6.9 Mezz Loan.

(a) Sunrise and CHT acknowledge that CHT will obtain the Mezz Loan. In connection therewith, the Mezz Lender shall have the right to acquire, directly or indirectly, CHT’s Interest in connection with the exercise of its rights under the Mezz Loan Documents in the event of a default thereunder, in accordance with the provisions of Sections 6.9(b).

(b) The Mezz Lender shall provide copies to Sunrise of any notices of default delivered to CHT under the Mezz Loan Documents and any notices delivered to CHT with respect to such Mezz Lender’s intent to accelerate the term of the Mezz Loan and to foreclose upon CHT’s

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Interest (the “Acceleration Notice”). Sunrise shall have the option to purchase the Mezz Loan from the Mezz Lender (the “Mezz Loan Purchase Option”) for a purchase price equal to the aggregate amount of all obligations of CHT outstanding under the Mezz Loan, including without limitation obligations for principal, interest, late charges, default interest, exit fees, prepayment or yield maintenance charges, protective advances, expenses or fees, legal fees and similar items and all other obligations of CHT thereunder (the “Mezz Loan Purchase Price”) exercisable by delivering written notice thereof to the Mezz Lender within ten (10) days of Sunrise’s receipt of the Acceleration Notice, which notice shall specify the date upon which the closing of such purchase shall take place. If Sunrise does not exercise the Mezz Loan Purchase Option or fails to deliver such notice within such 10-day period and the Mezz Lender schedules a foreclosure sale of on CHT’s Interest, then (i) the Mezz Lender shall give reasonable prior notice to Sunrise of any such foreclosure sale by the Mezz Lender with respect to CHT’s Interest, and (ii) the Mezz Lender shall only be permitted to sell, transfer or otherwise convey such interest to a Qualified Transferee. Provided that the holder of CHT’s interest following a foreclosure, sale or other transfer of CHT’s Interest is a Qualified Transferee, such holder shall automatically be admitted as a Member of the Company upon such foreclosure, sale or other transfer, with all of the rights and obligations of CHT; except that such Qualified Transferee shall not be the Managing Member and Sunrise shall become the Managing Member. The Company acknowledges that the pledge of CHT’s Interests in the Company made by CHT in connection with the Mezz Loan Documents between CHT, as pledgor, and the Mezz Lender shall be a pledge not only of profits and losses of the Company, but also a pledge of all rights and obligations of the CHT; except that, the Mezz Lender (or such other Qualified Transferee to whom CHT’s Interest may be transferred or conveyed) shall not be the Managing Member. Upon a foreclosure, sale or other transfer of CHT’s Interests in the Company pursuant to and in accordance with the terms of the Mezz Pledge Agreement and this Section 6.9(b), the successor member shall be subject to all of the terms and conditions contained in this Agreement (except that Sunrise, and not the Mezz Lender, shall be the Managing Member), including, without limitation, those set forth in Article 9 and Article 12 hereof. Each of the pledge of CHT’s Interests in the Company by CHT and the foreclosure thereon by the Mezz Lender is, subject to the terms and conditions herein, permitted hereby and shall not cause CHT to cease to be a Member of the Company.

ARTICLE 7

CAPITAL ACCOUNTS, PROFITS

AND LOSSES AND ALLOCATIONS

7.1 Capital Accounts.

(a) The Capital Accounts of Sunrise and CHT established hereunder shall be initially set forth on Schedule 6.1.

(b) The Capital Accounts of the Members shall be set forth on Schedule 6.1. A separate Capital Account shall be maintained for each Member in accordance with the rules of Treasury Regulations Section 1.704-1(b)(2)(iv), and this Section 7.1 shall be interpreted and applied in a manner consistent therewith. Whenever the Company would be permitted to adjust the Capital

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Accounts of the Members pursuant to Treasury Regulation 1.704-1(b)(2)(iv)(f) to reflect revaluations of the Company, the Company may so adjust the capital accounts of the Members. In the event that the Capital Accounts of the Members are adjusted pursuant to Treasury Regulation 1.704-1(b)(2)(iv)(f) to reflect revaluations of any of the Company’s assets or property, (i) the Capital Accounts of the Members shall be adjusted in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g) for allocations of depreciation, depletion, amortization and gain or loss, as computed for book purposes, with respect to such assets or property, (ii) the Member’s distributive shares of depreciation, depletion, amortization and gain or loss, as computed for tax purposes, with respect to such assets or property shall be determined so as to take account of the variation between the adjusted tax basis and the book value of such assets or property in the same manner as under IRC Section 704(c), and (iii) the amount of upward and/or downward adjustments to the book value of the Company property shall be treated as income, gain, deduction and/or loss for purposes of applying the allocation provisions of this Section. In the event that Code Section 704(c) applies to any Company property, the Capital Accounts of the Members shall be adjusted in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g) for allocations of depreciation, depletion, amortization and gain and loss, as computed for book purposes with respect to such Company property.

(c) Each Member’s Capital Account shall be maintained in accordance with the following provisions:

(i) Each Member’s Capital Account shall be credited with the amounts of such Member’s Capital Contributions, such Member’s distributive share of Profits and any items in the nature of income or gain which are specially allocated to the Member pursuant to this Article 7, and the amount of any liabilities of the Company assumed by such Member or which are secured by any property distributed by the Company to such Member;

(ii) Each Member’s Capital Account shall be charged with the amounts of cash and the Carrying Value of any property distributed by the Company to such Member pursuant to any provision of this Agreement, such Member’s distributive share of Losses and any items in the nature of expenses or losses which are specially allocated to the Member pursuant to this Article 7, and the amount of any liabilities of such Member assumed by the Company or which are secured by any property contributed by such Member to the Company.

(iii) If all or a portion of a Member’s Interest is Transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the Transferred Interest; and

(iv) In determining the amount of any liability for purposes of this Section 7.1(b), Section 752(c) of the Code and any other applicable provisions of the Code and Regulations shall be taken into account.

This Section 7.1(b) and other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner consistent with such Regulations. If the Managing Member determines that it is prudent to modify the manner in which the Capital Accounts, or any charges or credits thereto (including charges or credits relating to liabilities which are secured by contributions or distributed property or which are assumed by the Company or by Members), are computed in order to comply with such Regulations, the Managing Member may make such modification, but only if it is not likely to have a material effect on the amounts to be distributed to any Member pursuant to Section 8.1, Section 8.2 or Section 10.3 upon the dissolution of the Company. The Managing Member also shall (c) make any adjustments that may be necessary or appropriate to maintain equality between the Capital Accounts of the Members and the amount of capital reflected on the Company’s balance

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sheet, as computed for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q), and (d) make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Regulations Section 1.704-1(b).

7.2 General Allocation Rules.

After giving effect to the special allocations set forth in Section 7.3, all Profits and Losses (and to the extent necessary, as set forth in clauses (a), (b) and (c) of this Section 7.2, items of gross income, gain, expense and loss) of the Company shall be allocated to the Members as follows:

(a) If the Company has Profits for any Fiscal Year (determined prior to giving effect to this clause (a)), each Member whose Partially Adjusted Capital Account is greater than its Target Capital Account shall be allocated, proportionately, items of Company expense or loss for such Fiscal Year equal to the difference between its Partially Adjusted Capital Account and Target Capital Account. If the Company has insufficient items of expense or loss for such Fiscal Year to satisfy the previous sentence with respect to all such Members, the available items of expense or loss shall be allocated among such Members in proportion to such differences.

(b) If the Company has Losses for any Fiscal Year (determined prior to giving effect to this clause (b)), each Member whose Partially Adjusted Capital Account is less than its Target Capital Account shall be allocated, proportionately, items of Company gain or income for such Fiscal Year equal to the difference between its Partially Adjusted Capital Account and Target Capital Account. If the Company has insufficient items of income or gain for such Fiscal Year to satisfy the previous sentence with respect to all such Members, the available items of income or gain shall be allocated among such Members in proportion to such differences.

(c) Any remaining Profits or Losses (as computed after giving effect to clauses (a) and (b) of this Section 7.2) shall be allocated among the Members so as to reduce, proportionately, the differences between their respective Partially Adjusted Capital Accounts and Target Capital Accounts for the period under consideration. To the extent possible, each Member shall be allocated a pro rata share of all Company items allocated pursuant to this clause (c). No portion of such Profits, if any, shall be allocated to a Member whose Partially Adjusted Capital Account for the period under consideration is greater than its Target Capital Account for such period; and no portion of such Losses, if any, shall be allocated to a Member whose Target Capital Account for the period under consideration is greater than its Partially Adjusted Capital Account for such period.

7.3 Special Allocations. The following special allocations shall be made in the following order and priority:

(a) Company Minimum Gain Charge-back. Notwithstanding any other provision of this Article 7, if there is a net decrease in Company Minimum Gain during any Company Fiscal Year, each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Member’s share of the net decrease in Company Minimum Gain, determined in accordance with Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Sections 1.704-2(f)(6) and 1.704-2(j)(2) of the Regulations. This Section 7.3(a) is intended to comply with the minimum gain charge-back requirement in Section 1.704-2(f) of the Regulations and shall be interpreted consistently therewith.

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(b) Member Minimum Gain Charge-Back. Notwithstanding any other provision of this Article 7 except Section 7.3(a), if there is a net decrease in Member Minimum Gain attributable to a Member Nonrecourse Debt during any Company Fiscal Year, each Member who has a share of the Member Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Member’s share of the net decrease in Member Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Sections 1.704-2(i)(4) and 1.704-2(j)(2) of the Regulations. This Section 7.3(b) is intended to comply with the minimum gain charge-back requirement in Section 1.705-2(i)(4) of the Regulations and shall be interpreted consistently therewith.

(c) Qualified Income Offset. In the event any Member unexpectedly receives any adjustments, allocations, or distributions described in the Regulations Section 1.704-1(b)(2)(ii)(d)(4) (adjustments for depletion), 1.704-1(b)(2)(ii)(d)(5) (other loss or deduction), or 1.704-1(b)(2)(ii)(d)(6) (reasonably expected distributions), items of Company income and gain shall be specially allocated to each such Member in any amount and manner sufficient to eliminate, to the extent required by the Regulations, the Adjusted Capital Account Deficit of such Member as quickly as possible, provided that an allocation pursuant to this Section 7.3(c) shall be made only if and to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Article 7 have been tentatively made as if this Section 7.3(c) were not in the Agreement.

(d) Gross Income Allocation. In the event any Member has a deficit Capital Account at the end of any Company Fiscal Year which is in excess of the sum of (i)the amount such Member is obligated to restore pursuant to any provision of this Agreement and (ii)the amount such Member is deemed to be obligated to restore pursuant to Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Member shall be specially allocated items of Company income and gain in the amount of such excess as quickly as possible, provided that an allocation pursuant to this Section 7.3(d) shall be made only if and to the extent that such Member would have a deficit Capital Account in excess of such sum after all other allocations provided for in this Article 7 have been tentatively made as if this Section 7.3(d) and Section 7.3(c) were not in the Agreement.

(e) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year shall be allocated between the Members in proportion to their respective Percentage Interests.

(f) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any Fiscal Year or other period shall be specially allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Regulations Section 1.704-2(i)(1).

(g) Code Section 754 Adjustments. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Sections 734(b) or 743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,

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the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Regulations.

(h) Reversal of Regulatory Allocations.

(i) The “Regulatory Allocations” consist of the “Basic Regulatory Allocations,” as defined in Section 7.3(h)(ii), the “Nonrecourse Regulatory Allocations,” as defined in Section 7.3(h)(iii), and the “Member Nonrecourse Regulatory Allocations,” as defined in Section 7.3(h)(iv).

(ii) The “Basic Regulatory Allocations” consist of allocations pursuant to Section 7.3(c), 7.3(d) and 7.3(g). Notwithstanding any other provision of this Agreement, other than the Regulatory Allocations, the Basic Regulatory Allocations shall be taken into account in allocating items of income, gain, loss and deduction among the Members so that, to the extent possible, the net amount of such allocations of other items and the Basic Regulatory Allocations to each Member shall be equal to the net amount that would have been allocated to each such Member if the Basic Regulatory Allocations had not occurred. For purposes of applying the foregoing sentence, allocations pursuant to this Section 7.3(h)(ii) shall only be made with respect to allocations pursuant to Section 7.3(g) to the extent the Managing Member reasonably determines that such allocations will otherwise be inconsistent with the economic agreement among the parties to this Agreement.

(iii) The “Nonrecourse Regulatory Allocations” consist of all allocations pursuant to Sections 7.3(a) and 7.3(e). Notwithstanding any other provision of this Agreement, other than the Regulatory Allocations, the Nonrecourse Regulatory Allocations shall be taken into account in allocating items of income, gain, loss and deduction among the Members so that, to the extent possible, the net amount of such allocations of other items and the Nonrecourse Regulatory Allocations to each Member shall be equal to the net amount that would have been allocated to each such Member if the Nonrecourse Regulatory Allocations had not occurred. For purposes of applying the foregoing sentence, (A) no allocations pursuant to this Section 7.3(h)(iii) shall be made prior to the Company Fiscal Year during which there is a net decrease in Company Minimum Gain, and (B) allocations pursuant to this Section 7.3(h)(iii) shall be deferred with respect to allocations pursuant to Section 7.3(e) to the extent the Managing Member reasonably determines that such allocations are likely to be offset by subsequent allocations pursuant to Section 7.3(a).

(iv) The “Member Nonrecourse Regulatory Allocations” consist of all allocations pursuant to Section 7.3(b) and 7.3(f). Notwithstanding any other provision of this Agreement, other than the Regulatory Allocations, the Member Nonrecourse Regulatory Allocations shall be taken into account in allocating items of income, gain, loss and deduction among the Members so that, to the extent possible, the net amount of such allocations of other items and the Member Nonrecourse Regulatory Allocations to each Member shall be equal to the net amount that would have been allocated to each such Member if the Member Nonrecourse Regulatory Allocations had not occurred. For purposes of applying the foregoing sentence, (A) no allocations pursuant to this Section 7.3(h)(iv) shall be made with respect to allocations pursuant to Section 7.3(f) relating to a particular Member Nonrecourse Debt prior to the Company Fiscal Year during which there is a net decrease in Member Minimum Gain attributable to such Member Nonrecourse Debt, and then only to the extent necessary to avoid any potential economic distortions caused by such net decrease in Member Minimum Gain, and (B) allocations pursuant to this Section 7.3(h)(iv) shall be deferred with

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respect to allocations pursuant to Section 7.3(f) relating to a particular Member Nonrecourse Debt to the extent the Managing Member reasonably determined that such allocations are likely to be offset by subsequent allocations pursuant to Section 7.3(b).

(v) The Managing Member shall have reasonable discretion, with respect to each Company Fiscal Year, to (A) apply the provisions of Sections 7.3(h)(ii), 7.3(h)(iii) and 7.3(h)(iv) in whatever order is likely to minimize the economic distortions that might otherwise result from the Regulatory Allocations, and (B) divide all allocations pursuant to Sections 7.3(h)(ii), 7.3(h)(iii) and 7.3(h)(iv) among the Members in a manner that is likely to minimize such economic distortions.

7.4 Income Tax Elections. In the event of a Transfer of all or part of a Member’s Interest (or of the interest of a partner in a partnership which is a Member) because of death or sale, the Company shall, if requested by the transferee, make the election described in Section 754 of the Code.

7.5 Income Tax Allocations.

(a) Except as otherwise provided in Section 7.5(c), for purposes of Sections 702 and 704 of the Code, or the corresponding sections of any future Federal internal revenue law, or any similar tax law of any state or other jurisdiction, the Company’s profits, gains and losses for Federal income tax purposes, and each item of income, gain, loss or deduction entering into the computation thereof, shall be allocated among the Members in the same proportions as the corresponding “book” items are allocated pursuant to this Section.

(b) If any portion of the Profit from a Capital Transaction allocated among the Members pursuant to Section 7.5(a) is characterized as ordinary income under the recapture provisions of the Code or is subject to a different rate of tax under the Code, each Member’s distributive share of taxable gain from the sale of the property that gave rise to such Profit (to the extent possible) shall include a proportionate share of the recapture income or income that is subject to a different rate of tax equal to that Member’s share of prior cumulative depreciation deductions with respect to the property that give rise to the recapture income or the income that is subject to a different rate of tax except to the extent otherwise required by Regulations Sections 1.1245-1(e) and 1.1250-1(f).

(c) Each item of taxable income, gain, loss or deduction attributable to (i)any property (other than cash) contributed by a Member to the Company, and (ii)any other property of the Company the Carrying Value of which has been adjusted pursuant to clause (iii)of the definition of Carrying Value, shall be allocated among the Members in accordance with Section 704(c) of the Code, using such method permitted by Section 704(c) of the Code and the Regulations thereunder as may be selected by the Managing Member, with the approval of Sunrise, so as to take into account the variation, at the time of contribution or adjustment to Carrying Value, between the Adjusted Basis and the Carrying Value of such property, as required by Regulations Section 1.704-1(b)(4)(i) and Section 1.704-3.

(d) Solely for purposes of determining a Member’s proportionate share of the “excess nonrecourse liabilities” of the Company within the meaning of Regulations Section 1.752-3(a)(3), the Members’ interests in Company profits shall be in proportion to their respective Percentage Interests.

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(e) To the extent permitted by Sections 1.704-2(h)(3) and 1.704-2(i)(6) of the Regulations, the Members shall endeavor to treat distributions of Net Operating Cash Flow or Capital Proceeds as having been made from the proceeds of a Nonrecourse Liability or a Member Nonrecourse Debt only to the extent that such distributions would cause or increase an Adjusted Capital Account Deficit for any Member.

7.6 Transfers During Fiscal Year. In the event of the Transfer of all or any part of a Member’s Interest (in accordance with the provisions of this Agreement) at any time other than the end of a Fiscal Year, the share of Profit or Loss (in respect of the Interest so Transferred) shall be allocated between the transferor and the transferee in the same ratio as the number of days in the Fiscal Year before and after such Transfer. The prior sentence shall not apply to Profit or Loss from Capital Transactions or to other extraordinary nonrecurring items. Such amounts shall be allocated between the transferor and transferee based on the date of closing of the sale or on the date the gain is realized or the loss incurred, as the case may be.

7.7 Election to be Taxed as Association. The Company shall be treated as a partnership for federal income tax purposes. No Member or Managing Member shall cause the Company to elect to be treated other than as a partnership for federal income tax purposes in accordance with Regulations Section 301.7701-3(c), unless such election is approved in writing by all Members. If at any time the Company has just one Member, it shall be disregarded as a separate entity for federal, state and local tax purposes. The Managing Member, in the Managing Member’s reasonable discretion, shall have the authority to elect to treat any subsidiary of the Company that is a corporation as a “Taxable REIT Subsidiary”.

7.8 Assignees Treated as Members. For all purposes of this Article 7, but for no other purpose, an Assignee shall be treated as a Member and each reference in this Article 7 to the Members shall be deemed to include Assignees.

ARTICLE 8

DISTRIBUTIONS OF NET OPERATING CASH FLOW

AND CAPITAL PROCEEDS

8.1 Distributions of Net Operating Cash Flow. Net Operating Cash Flow distributed shall be reasonably adjusted within 30 days after the end of the last calendar quarter of each Company Year (and to the extent necessary the Members agree to make appropriate adjustments among themselves) to ensure that the amount distributable to each of the Members for the entire Company Year is equal to the amounts each of the Members would have received under Section 8.1 if the Net Operating Cash Flow was determined for the entire Company Year and was distributed in a single disbursement as of the end of each Company Year (such adjustments, for example, shall take into account any increased yield a Member receives as a result of receiving distributions quarterly instead of annually). Distributions of Net Operating Cash Flow shall be made to the Members within thirty (30) days after the close of each calendar quarter (unless (x) such distribution is not in compliance with law or (y) such distribution would result in a breach of any covenants or undertakings provided by the Company (including covenants or undertakings provided for third party financing) or would, in the opinion of the Members, acting reasonably, be likely to do so during the following twelve (12) months), in the following order of priority:

(a) For the first through seventh Company Years:

(i) First, to CHT, until CHT has received an 11% Cumulative Return, compounded annually, on CHT’s Total Capital Contribution;

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(ii) Second, to Sunrise, until Sunrise has received an 11% Cumulative Return, compounded annually, on Sunrise’s Total Capital Contribution;

(iii) Thereafter, the balance, if any, to the Members pro-rata in accordance with their respective Percentage Interests.

(b) Following the seventh Company Year, to the Members pro-rata in accordance with their respective Percentage Interests.

8.2 Distribution of Capital Proceeds. Capital Proceeds shall be distributed promptly after a Capital Transaction (unless (x) such distribution is not in compliance with law or (y) such distribution would result in a breach of any covenants or undertakings provided by the Company (including covenants or undertakings provided for third party financing) or would, in the opinion of the Members, acting reasonably, be likely to do so during the following twelve (12) months) in the following order of priority:

(a) In the event of a Capital Transaction in the first through seventh Company Years:

(i) First, to CHT, until CHT has received an 11% Cumulative Return, compounded annually, on CHT’s Total Capital Contribution after taking into account all amounts previously distributed to CHT;

(ii) Second, (x) to Sunrise and CHT, pro-rata in accordance with their respective Percentage Interests, until one Member has received an 13% Internal Rate of Return on its Total Capital Contribution after taking into account all amounts previously distributed to such Member, then (y) 100% to the other Member until such other Member has received an 13% Internal Rate of Return on its Total Capital Contribution after taking into account all amounts previously distributed to such Member (including, without limitation, amounts distributed under subsection (x) of this Section 8.2(a)(ii)). The 13% Internal Rate of Return shall be compounded annually;

(iii) Thereafter, the balance, if any, to Sunrise.

(b) If the Capital Transaction occurs after the seventh Company Year:

(i) First, to CHT, until CHT has received an 11% Cumulative Return, compounded annually, on CHT’s Total Capital Contribution attributable to years one (1) through seven (7) of the Company, after taking into account all amounts previously distributed to CHT;

(ii) Second, (x) to Sunrise and CHT, pro-rata in accordance with their respective Percentage Interests, until one Member has received an 13% Internal Rate of Return on its Total Capital Contribution after taking into account all amounts previously distributed to such Member, then (y) 100% to the other Member until such other Member has received an 13% Internal Rate of Return on its Total Capital Contribution after taking into account all amounts previously distributed to such Member (including, without limitation, amounts distributed under subsection (x) of this Section 8.2(b)(ii)). The 13% Internal Rate of Return shall be compounded annually;

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(iii) Thereafter, the balance, if any, 50% to CHT and 50% to Sunrise.

8.3 Distribution Calculations.

(a) In applying the terms of Section 8.1 and Section 8.2, (i) references to relative Percentage Interests or relative Capital Contributions will be those in effect at the time of the distribution, (ii) until a particular priority has been satisfied in full, no amounts will be distributable under any junior priority, and (iii) all amounts distributable under a particular priority will be prorated among the Members in the manner specified within that priority, and the method of proration applied to each dollar distributable in that priority will be the same until that priority is satisfied in full.

(b) With respect to any distributions to be made to CHT pursuant to and in accordance with the terms of Section 8.1 and Section 8.2 hereof, CHT acknowledges and agrees that the Quarterly Interest Rate Differential Amounts applicable to the period to which such distribution relates shall not actually be paid to CHT but shall be deemed to have been distributed to CHT as cash on a first dollar basis. Sunrise and CHT each acknowledge and agree that in the event that following the execution of this Agreement, either (i) the actual interest rate payable under the Five-Pack Financing is reduced such that the same is less than 5.25% or (ii) the borrowers under the Five-Pack Financing shall make a partial prepayment of the outstanding principal amount owed to the Lender thereunder, then the Quarterly Interest Rate Differential Amounts shall be adjusted in accordance with the methodology described in Section 14.01(c) of the Transfer Agreement such that the same shall be calculated based upon such reduced interest rate and/or the then outstanding principal balance under the Five-Pack Financing, as applicable, it being understood and agreed that in the event of a reduction in the actual interest rate payable under the refinancing of the Five-Pack Facilities following the Closing Date, the interest rate differential for purposes of recalculating the Quarterly Interest Rate Differential Amounts shall be the new reduced interest rate and the Stated Rate. By way of example only, assuming a Stated Rate of 5.10%, in the event the actual interest rate payable under the refinancing of the Five-Pack Facilities is reduced following the Closing Date to a rate that is equal to or less than 5.10%, no Quarterly Interest Rate Differential Amounts would be due and payable thereafter. The “Stated Rate” shall mean that certain rate described in Section 14.01(c) of the Transfer Agreement.

8.4 Repayment of Member Loans, Reconciliation Amounts and Other Payments.

(a) Notwithstanding anything to the contrary in Section 8.1 and Section 8.2, if as a result of a Member Loan, any Member becomes a Non-Contributing Member, then any distributions that would otherwise be payable to the Non-Contributing Member pursuant to Section 8.1 or Section 8.2 will instead be paid to the Contributing Member or Members, first to pay any accrued interest and then to pay the principal amount thereof until such Member Loan (including any accrued and unpaid interest) is repaid in full and such amounts will not be deemed to have passed through the distribution waterfalls set forth in Section 8.1 and Section 8.2. If there are two or more Contributing Members with respect to the Member Loan to a Non-Contributing Member, distributions under Section 8.1 or Section 8.2 will be made pro rata to each Contributing Member in proportion to the relative principal amount of Member Loans (including accrued and unpaid interest) that each Contributing Member has outstanding as a percentage of total outstanding Member Loans

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made to the Non-Contributing Member by all Contributing Members. Any distributions paid to a Contributing Member(s) pursuant to this Section 8.4(a) in respect of a Member Loan will, for tax allocation and all other purposes of this Agreement, be treated as if they had been distributed to the Non-Contributing Member, not the Contributing Member or Members.

(b) If any amount that is to be paid by a Member pursuant to Section 4.3(b) has not been paid by a Member, any distributions that would otherwise be payable to the Member will instead be used first to pay the payment of any reconciliation amount owed by a Member to the Company that has not been paid pursuant to Section 4.3(b) and such amounts will not be deemed to have passed through the distribution waterfalls set forth in Section 8.1 and Section 8.2.

8.5 Liquidation. Subject to the terms of Sections 8.2(a) and (b), in the event of the sale or other disposition of all or substantially all of the Company Assets, the Company shall be dissolved and the proceeds of such sale or other disposition shall be distributed in liquidation as provided in Article 10, except that to the extent that the Company receives a purchase money note or notes in exchange for all or a portion of such assets, the Company shall continue until such purchase money note or notes have been paid in full.

8.6 Sunrise Distribution Amount. Notwithstanding anything to the contrary contained herein, the Members acknowledge and agree that Sunrise is entitled to receive the Sunrise Distribution Amount, which amount was distributed by the Company to Sunrise from CHT’s initial Capital Contribution immediately following the Company’s receipt thereof.

ARTICLE 9

DISPOSITION OF INTERESTS

9.1 Limitations on Assignments of Interests by Members. Except as set forth in this Article 9 and other than (i) Transfers by Sunrise or CHT to their respective Affiliates, (ii) transfers of a minority equity interest in CHT to CNL Lifestyle Properties, Inc., a Maryland corporation, (iii) Transfers between Sunrise and CHT, or (iv) pledges of, or security or similar interests in the Interests as may be required by the Lenders to the Company or, with respect to pledges of CHT’s Interest only, the Mezz Lender, which in each case shall be subject to the terms and conditions of the Refinancing and, with respect to pledges of CHT’s Interest only, the Mezz Loan Documents, no Member shall have the right to Transfer all or any portion of its Interest without the consent of the other Members in their sole discretion. Notwithstanding anything to the contrary herein, in no event may CHT Transfer all or any portion of its Interest unless all necessary consents and approvals are received from the applicable governmental authority with respect to the licensure of the Facilities. Any transfer tax or similar tax imposed on Sunrise or CHT relating to a transaction pursuant to Article 9 will be paid or caused to be paid by that Member (and the Member will indemnify the Company for any such transfer tax or similar tax).

9.2 Assignment Binding on Company. No Transfer of all or any part of the Interest of a Member permitted to be made under this Agreement shall be binding upon the Company unless and until a duplicate original of such assignment or instrument of transfer, duly executed and acknowledged by the assignor or transferor, has been delivered to the Company, and such instrument evidences (i) the written acceptance by the assignee of all of the terms and provisions of this Agreement and (ii) the assignee’s representation that such assignment was made in accordance with

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all applicable laws and regulations. In addition, a Person to whom a Transfer may be made pursuant to this Article 9, may also be required, in the discretion of the Members, and as a condition precedent to its becoming a transferee, to make certain representations, warranties and covenants including, without limitation, representations as to its net worth, sophistication and investment intent.

9.3 Substituted Members.

(a) Members who assign all their Interests pursuant to an assignment or assignments permitted under this Agreement shall cease to be Members of the Company except that unless and until a Substituted Member is admitted in its stead, the assigning Member shall not cease to be a Member of the Company under the Act and shall retain the rights and powers of a Member under the Act and pursuant to this Agreement, provided that such assigning Member may, prior to the admission of a Substituted Member, assign its economic interest in its Interest, to the extent otherwise permitted under this Article 9. Any Person who is an assignee of any portion of the Interest of a Member and who has satisfied the requirements of Section 9.1 and Section 9.2 shall become a Substituted Member only when (i) the Managing Member has entered such assignee as a Member on the books and records of the Company, which the Managing Member is hereby directed to do upon satisfaction of such requirements, and (ii) such assignee shall have paid all reasonable legal fees and filing costs in connection with the substitution as a Member.

(b) Any Person who is an assignee of any of the Interest of a Member but who does not become a Substituted Member and desires to make a further assignment of any such Interest, shall be subject to all the provisions of this Article 9 to the same extent and in the same manner as any Member desiring to make an assignment of its Interest.

9.4 Acceptance of Prior Acts. Any Person who becomes a Member, by becoming a Member, accepts, ratifies and agrees to be bound by all actions duly taken pursuant to the terms and provisions of this Agreement by the Company prior to the date it became a Member and, without limiting the generality of the foregoing, specifically ratifies and approves all agreements and other instruments as may have been executed and delivered on behalf of the Company prior to said date and which are in force and effect on said date.

9.5 Permitted Transfers.

(a) Notwithstanding anything to the contrary herein, subject to the terms and conditions of the Refinancing and the Mezz Loan, the following Transfers shall be deemed “Permitted Transfers” and shall not require the consent of the other Member, provided however that any Permitted Transfer by CHT shall be subject to the Sunrise Purchase Option and the Change of Control Purchase Option and, subject to Section 9.5(b) below, the transfer restrictions described in Section 9.5(a)(iii).

(i) any Member may pledge its Interest to a commercial lender in connection with a financing for the benefit of such Member or its Affiliates (other than the Refinancing); provided that any such pledge would not contravene the terms and conditions of the Loan Documents; and provided further however, that the definitive loan documentation with such lender, including the Mezz Loan Documents with respect to the Mezz Loan, shall provide that: (i) such lender acknowledges and agrees that such pledge, and the lien and security interest created thereby, shall be subject and subordinate to any lien and security interest on such Member’s Interest (whether then existing or thereafter created) which secures a Member Loan made to such Member,

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and such lender shall covenant and agree to duly execute and deliver such documents that may be reasonably requested by the Contributing Member to evidence such subordination, and (ii) such lender shall provide a copy to both Members hereunder of any notice with respect to such lender’s intent to realize upon the pledged Interest after an event of default under such financing, and the Member which is not subject to the financing shall have the same period as provided to the defaulting Member under the applicable loan documents to remedy or cause to be remedied the defaults specified in such notice (to the extent such defaults are capable of being remedied by such Member). All sums expended by a Member to cure the loan defaults of a defaulting Member under this Section 9.5(a)(i) shall be treated as a Member Loan hereunder. In the event the applicable defaults are not so cured and the lender realizes upon the defaulting Member’s Interest, such realization shall be a permitted Transfer hereunder. Each Member acknowledges and agrees that the Company shall not be required to bear any costs or expenses in connection with a financing of the type described in this Section 9.5(a)(i) (including, without limitation, any fees, costs or expenses payable to any Lender on account of such financing), and all such costs and expenses shall be borne solely by the Member to whom (or to the Affiliate of whom) such financing is made. In no event shall any such costs or expenses incurred by a Member pursuant to and in accordance with the immediately prior sentence entitle such Member to a Capital Account credit hereunder.

(ii) Sunrise and its successors and assigns may sell all or any portion of its Interest subject to the right of first offer in favor of CHT, on the terms set forth in Section 12.3 hereof; provided however, that with respect to the voting rights of any third party purchaser of a portion of the Sunrise Interest, such rights will be exercised by Sunrise on behalf of such purchaser as if Sunrise retained 100% of its Interest.

(iii) CHT and its successors and assigns may, subject to the right of first offer in favor of Sunrise on the terms set forth in Section 12.3 hereof, assign or sell all or a portion of its Interest to a REIT sponsored by CNL Financial Group, Inc., a Florida corporation, or its Affiliates, provided that such entity (A) has total assets in excess of Two Hundred Million Dollars ($200,000,000), (B) has as its advisor (pursuant to an advisory agreement as to management, acquisition, advisory and administrative services) an Affiliate of CNL Financial Group, LLC, a Florida limited liability company, (C) is not known in the community as being of bad moral character, and (D) is not in control of or is controlled by any one or more persons who have been convicted of a felony involving turpitude in any state or federal court. In connection with an assignment or sale of all of CHT’s Interest pursuant to and in accordance with the terms of this Section 9.5(a)(iii), CHT may elect, in its sole and absolute discretion, by written notice given to Sunrise not less than five (5) days prior to such sale or transfer, (I) to pay to Sunrise on the date of the closing of such assignment or sale an amount equal to the aggregate sum of all future Quarterly Interest Rate Differential Amounts applicable to each quarter occurring from and after the date of the closing of such sale or assignment, as such amounts are set forth on Schedule 1.2 as in effect as of the date the closing of such sale (the “Aggregate Quarterly Interest Rate Differential Amount”), or (II) to fund the Aggregate Quarterly Interest Rate Differential Amount on the date of the closing of such assignment or sale to a Person mutually agreed to by CHT and Sunrise (the “Escrow Agent”) to be held in escrow pursuant to the terms of an escrow agreement the form of which shall be mutually agreed to by CHT and Sunrise prior to CHT’s funding such amount (the amount held pursuant to such escrow agreement, the “Escrow Funds”), but which Escrow Agreement shall provide that (x) the Escrow Agent shall disburse to Sunrise, within thirty (30) days after the close of each calendar quarter, a portion of the Escrow Funds equal to the Quarterly Interest Rate Differential Amount applicable to such quarter, for so long as the Quarterly Interest Rate Differential Amount would have

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been deemed distributed to CHT under this Agreement if CHT had remained a Member of the Company, (y) in the event Sunrise elects to prepay all or any portion of the Five Pack Financing, then the Escrow Agent shall disburse to Sunrise an amount equal to that portion of any prepayment fee, penalty, premium or other similar charge that is payable to the Lender in connection with such prepayment to the extent the same is attributable to the interest rate under the Five Pack Financing being an interest rate greater than 4.95%, and in the event there are insufficient Escrow Funds to satisfy such disbursement requirement, then CHT shall pay to Sunrise any such deficiency within five (5) Business Days of receiving an invoice therefor, and (z) in the event the Five Pack Financing has been prepaid in full or in a sufficient amount such that following such prepayment no Quarterly Interest Rate Differential Amounts would have been deemed to be paid to CHT hereunder if CHT had remained a Member of the Company, then following Sunrise’s receipt of any such amounts required to be paid pursuant to sub-clause (y) above, any remaining Escrow Funds shall be returned by the Escrow Agent to CHT (such an escrow Agreement satisfying the foregoing conditions, including, without limitation, that it is in form mutually agreed to by CHT and Sunrise, is referred to herein as an “Escrow Agreement”). If CHT timely makes the payment of the Aggregate Quarterly Interest Rate Differential Amount in full in either the manner described in clause (I) or clause (II) above, then Section 8.3(b) hereof shall be deemed to be null and void and of no further force and effect from and after the date of such payment. If CHT fails to timely to make such payment as aforesaid, it is understood and agreed that any transferee of CHT’s interest pursuant to the terms of this Section 9.5(a)(iii) would be subject to the terms and conditions of Section 8.3(b) hereof.

(iv) CHT and its successors and assigns may, from and after the second Company Year and subject to the right of first offer in favor of Sunrise on the terms set forth in Section 12.3 hereof, sell all or a portion of its Interest to any party that is not (A) a Competitor of Sunrise or (B) HCP, Inc., a Maryland corporation (“HCP”), or Ventas, Inc., a Delaware corporation (“Ventas”) or their respective Affiliates and successors (such Persons referenced in clauses (A) and (B), each a “Restricted Transferee”); provided however, that with respect to the voting rights of any third party purchaser of a portion of the CHT Interest, such rights will be exercised by CHT on behalf of such purchaser as if CHT retained 100% of its Interest. In connection with a sale of all of CHT’s Interest pursuant to and in accordance with the terms of this Section 9.5(a)(iv), CHT may elect, in its sole and absolute discretion, by written notice given to Sunrise not less than five (5) days prior to such sale or transfer, (I) to pay to Sunrise on the date of the closing of such sale the Aggregate Quarterly Interest Rate Differential Amount, or (II) to fund the Escrow Funds on the date of the closing of such sale to an Escrow Agent to be held in escrow pursuant to the terms of an Escrow Agreement. If CHT timely makes the payment of the Aggregate Quarterly Interest Rate Differential Amount in full in either the manner described in clause (I) or clause (II) above, then Section 8.3(b) hereof shall be deemed to be null and void and of no further force and effect from and after the date of such payment. If CHT fails to timely to make such payment as aforesaid, it is understood and agreed that any transferee of CHT’s interest pursuant to the terms of this Section 9.5(a)(iv) would be subject to the terms and conditions of Section 8.3(b) hereof.

(b) Indirect Transfers of CHT’s Interest shall be subject to the restrictions set forth in Section 9.1, provided, however, that notwithstanding anything else contained in this agreement, CHT may sell its Interest without receiving the prior written consent of Sunrise in connection with a CHT Liquidity Event, provided that the transferee of CHT REIT’s assets in accordance with such Liquidity Event is not a Restricted Transferee; provided further however that, from and after such CHT Liquidity Event, (i)the restriction on sales of CHT’s Interest by the

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successor to CHT in connection with such CHT Liquidity Event to HCP or Ventas or their respective Affiliates and successors shall continue only for a period to expire on the later of (y) two (2) years following such CHT Liquidity Event or (z) two (2) years following the expiration of the Purchase Option Lockout Period and (ii)notwithstanding the provisions of Section 12.1(c), if such CHT Liquidity Event (other than a CHT Liquidity Event constituting an initial public offering of the shares of CHT or any Affiliate thereof) occurs prior to the expiration of the Purchase Option Lockout Period, Sunrise shall have the right to exercise the Sunrise Purchase Option as of the date of such CHT Liquidity Event. For purposes of clarification, the restriction on sales of the CHT Interest to Competitors of Sunrise following a CHT Liquidity Event shall not expire.

ARTICLE 10

DISSOLUTION OF THE COMPANY;

WINDING UP AND DISTRIBUTION OF ASSETS

10.1 Dissolution.

(a) Subject to Section 2.11(b), the Company shall be dissolved and its affairs shall be wound up only upon the first to occur of the following:

(i) the entry of a decree of judicial dissolution under Section 18-802 of the Act;

(ii) the termination of the legal existence of the last remaining Member of the Company or the occurrence of any other event which terminates the continued membership of the last remaining Member of the Company in the Company unless the business of the Company is continued in a manner permitted by this Agreement or the Act. Upon the occurrence of any event that causes the last remaining member of the Company to cease to be a member of the Company, to the fullest extent permitted by law, the personal representative of such member is hereby authorized and directed to, and shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of such Member in the Company, agree in writing (A) to continue the Company and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a Substituted Member of the Company, effective as of the occurrence of the event that terminated the continued membership of the last remaining Member of the Company in the Company;

(iii) a Capital Transaction effecting the sale, exchange, transfer, assignment or other disposition, directly or indirectly, of all of the Facilities and receipt of the final payment of any installment obligation received as a result of any such Capital Transaction;

(iv) the written direction of all of the Members; or

(v) the later of (A) the thirtieth (30^th) anniversary of the Effective Date and (B) the date on which the term of the last Management Agreement expires, including any renewals thereof.

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(b) No Member shall have the right to (i)withdraw or resign as a Member of the Company, (ii)redeem, or otherwise require redemption of, its Interest or any part thereof or (iii)to the fullest extent permitted by law, dissolve itself voluntarily.

(c) Notwithstanding any other provision of this Agreement, the Bankruptcy of any of the Members shall not cause said Member to cease to be a Member of the Company and upon the occurrence of such an event, the business of the Company shall continue without dissolution. To the fullest extent permitted by law, the Company shall not be dissolved or terminated solely by reason of the Bankruptcy, removal, withdrawal, dissolution or admission of any Member.

10.2 Winding Up.

(a) In the event of the dissolution of the Company pursuant to Section 10.1(a), the Managing Member may wind up the Company’s affairs.

(b) Upon dissolution of the Company and until the filing of a certificate of cancellation of the Certificate of Formation as provided in the Act, the Managing Member or a liquidating trustee, as the case may be, may, in the name of, and for and on behalf of, the Company, prosecute and defend suits, whether civil, criminal or administrative, gradually settle and close the Company’s business, dispose of and convey the Company’s property, discharge or make reasonable provision for the Company’s liabilities, and distribute to the Members in accordance with Section 10.3 any remaining assets of the Company, all without affecting the liability of Members and without imposing liability on any liquidating trustee.

(c) Upon the completion of winding up of the Company, the Managing Member or liquidating trustee, as the case may be, shall file a certificate of cancellation of the Certificate of Formation in the Office of the Secretary of State of the State of Delaware as provided in the Act. The existence of the Company as a separate legal entity shall continue until cancellation of the Certificate as provided in the Act.

10.3 Distribution of Assets. Upon the winding up of the Company, the Company Assets shall be distributed in the following priority:

(a) to the satisfaction of debts and liabilities of the Company owed to creditors (whether by payment or the making of reasonable provision for payment thereof), in order of priority as provided by law, other than debts and liabilities owed to Members, including, without limitation, Member Loans, including to the payment of expenses of the liquidation and to the setting up of any reserves that the Managing Member or the liquidating trustee, as the case may be, shall determine are reasonably necessary for any contingent, conditional or non-matured liabilities or obligations of the Company or the Members;

(b) to the satisfaction of debts and liabilities of the Company owed to Members; and

(c) to the Members in accordance with provisions of Section 8.2(a) or Section 8.2(b) as if such distribution was a distribution of Capital Proceeds.

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ARTICLE 11

AMENDMENTS

11.1 Amendments. This Agreement may only be modified, altered, supplemented or amended (i) with the prior written approval of Lender if required pursuant to Section 2.11(d), and (ii) pursuant to a written agreement executed and delivered by all of the Members.

11.2 Additional Members. Notwithstanding Section 11.1, if this Agreement shall be amended as a result of adding or substituting a Member, the amendment to this Agreement shall be signed by all of the Members and by the Person to be added or substituted and by the assigning Member, if any.

11.3 Documentation. In making any amendments, the Managing Member shall prepare and file for recordation such documents and certificates as shall be required to be prepared and filed.

ARTICLE 12

BUY-SELL; PURCHASE OPTION; RIGHT OF FIRST OFFER

12.1 Purchase Option.

(a) If during the first or second Company Year a Sunrise Change of Control Event occurs, Sunrise or its successor, as applicable, shall have the option to purchase, exercisable in such party’s sole discretion, one hundred percent (100%) of CHT’s Interest in the Company (such option, the “Change of Control Purchase Option”). The Change of Control Purchase Option shall be exercisable by Sunrise or its successor, as applicable, delivering prior written notice to CHT within ninety (90) days following the date upon which a Sunrise Change of Control Event occurs (the “Change of Control Purchase Option Notice”) in accordance with the requirements of Section 13.2. If Sunrise or its successor, as applicable, exercises the Change of Control Purchase Option, CHT will be paid a purchase price equal to the sum of (x) the applicable Payment Amount, plus (y) the amount of CHT’s Total Capital Contribution, less (i) all amounts previously distributed to CHT pursuant to and in accordance with Sections 8.1(a)(i) and 8.2(a)(i) hereof, and (ii) provided if Section 8.3(b) hereof has not been deemed to be of no further force and effect pursuant to Section 9.5(a)(iii) or Section 9.5(a)(iv) above, an amount equal to the aggregate sum of all future Quarterly Interest Rate Differential Amounts applicable to each quarter occurring from and after the date of the closing of such purchase, as such amounts are set forth on Schedule 1.2 as in effect as of the date the closing of such purchase (the “Change of Control Purchase Price”). For purposes of calculating the Change of Control Purchase Price, any amounts paid to CHT by Sunrise with respect to any claim for breach of obligations, representations or warranties of Sunrise under the Transfer Agreement in accordance with the terms thereof, whether in settlement of such claim or pursuant to a judgment issued against Sunrise or the Company in connection with such claim or otherwise, shall be credited at closing against the Change of Control Purchase Price. For purposes of clarity, the Change of Control Purchase Option shall apply to CHT’s Interest in the Company but not to any interest in CHT.

(b) The closing of the Transfer of CHT’s Interest in accordance with the Change of Control Purchase Option shall be in accordance with Section 12.5 below and shall take place on the date that is no earlier than thirty (30) days and no later than ninety (90) days after CHT receives

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the Change of Control Purchase Option Notice (or if such day is not a Business Day, the first Business Day thereafter), unless Sunrise or its successor, as applicable, and CHT mutually agree to an earlier or later closing date (the “Change of Control Purchase Option Closing Date”). At the closing, CHT shall transfer its Interest free and clear of all Liens and withdraw as Managing Member in consideration of its receipt of the Change of Control Purchase Price by wire transfer of immediately available funds. The Members shall not invoke the provisions of Section 12.2 or Section 12.3 during any period when the Change of Control Purchase Option has been invoked but closing thereunder has not yet occurred. During the period commencing upon the issuance of the Change of Control Purchase Option Notice and ending on the Change of Control Purchase Option Closing Date, all decisions regarding the management and operations of the Company, whether or not such decisions are Major Decisions, shall be decided jointly between the Members.

(c) From and after the expiration of the third Company Year (the period beginning on the Effective Date and ending upon the expiration of the third Company Year referred to herein as the “Purchase Option Lockout Period”), subject to Section 9.5(b), Sunrise shall have the option to purchase, exercisable in Sunrise’s sole discretion, one hundred percent (100%) of CHT’s Interest in the Company (such option, the “Sunrise Purchase Option”). The Sunrise Purchase Option shall be exercisable upon not less than ninety (90) days prior written notice to CHT (the “Purchase Option Notice”) in accordance with the requirements of Section 13.2 (which notice may be exercised prior to the expiration of the Purchase Option Lockout Period), provided, however, that the Sunrise Purchase Option shall no longer be exercisable after the seventh Company Year (the “Purchase Option Termination Date”). If Sunrise exercises the Sunrise Purchase Option, CHT will be paid a purchase price equal to the amount necessary to return to CHT a 13% Internal Rate of Return on CHT’s Total Capital Contributions, after taking into account all amounts previously distributed to CHT, provided, however, that if Section 8.3(b) hereof has not been deemed to be of no further force and effect pursuant to Section 9.5(a)(iii) or Section 9.5(a)(iv) above, such purchase price shall be reduced by an amount equal to the aggregate sum of all future Quarterly Interest Rate Differential Amounts applicable to each quarter occurring from and after the date of the closing of such purchase, as such amounts are set forth on Schedule 1.2 as in effect as of the date the closing of such purchase (the “Option Price”). The Option Price shall be calculated jointly by CHT and Sunrise. In the event the parties fail to agree on the Option Price within five (5) Business Days from the receipt by CHT of the Purchase Option Notice, then the Option Price shall be calculated by an accounting firm jointly agreed upon by the Members (the “Independent Accountant”) and the Members hereby acknowledge that they shall give preference to one of the following accounting firms as the Independent Accountant: Ernst & Young, PricewaterhouseCoopers, KPMG, or Deloitte Touche, within eight (8) Business Days of CHT’s receipt of the Purchase Option Notice, and such accountant shall notify Sunrise and CHT of such amounts in writing upon such calculation. For purposes of calculating the Option Price, as applicable, any amounts paid to CHT by Sunrise with respect to any claim for breach of obligations, representations or warranties of Sunrise under the Transfer Agreement in accordance with the terms thereof, whether in settlement of such claim or pursuant to a judgment issued against Sunrise or the Company in connection with such claim or otherwise, shall be credited at closing against the Option Price. For purposes of clarity, the Sunrise Purchase Option shall apply to CHT’s Interest in the Company but not to any interest in CHT.

(d) The closing of the Transfer of CHT’s Interest in accordance with the Sunrise Purchase Option shall be in accordance with Section 12.5 below and shall take place not earlier than ninety (90) days after CHT receives the Purchase Option Notice, unless Sunrise and CHT mutually agree to an earlier closing date (the “Purchase Option Closing Date”). At the closing, CHT shall transfer its Interest free and clear of all Liens and withdraw as Managing Member in consideration of

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its receipt of the Option Price, as applicable, by wire transfer of immediately available funds. The Members shall not invoke the provisions of Section 12.2 or Section 12.3 during any period when the Sunrise Purchase Option has been invoked but closing thereunder has not yet occurred. During the period commencing upon the issuance of the Purchase Option Notice and ending on the Purchase Option Closing Date, all decisions regarding the management and operations of the Company, whether or not such decisions are Major Decisions, shall be decided jointly between the Members.

(e) Sunrise or its successor, as applicable, agrees to cooperate with CHT to accommodate CHT in effectuating a like kind exchange (an “Exchange”) under Section 1031 of the Code in connection with the purchase and sale of CHT’s Interest pursuant to a Sunrise Change of Control Event occurring during the twenty-four (24) month period following the Effective Date, provided that: (i) the Change of Control Purchase Option Closing Date shall not be delayed or affected by reason of the Exchange nor shall consummation or accomplishment of an Exchange be a condition precedent or condition subsequent to CHT’s obligations under this Agreement and CHT’s failure or inability to consummate an exchange for any reason or for no reason at all shall not be deemed to excuse or release CHT from its obligations under this Agreement; (ii) CHT shall effect its Exchange through an assignment of this Agreement, or its rights under this Agreement, to a qualified intermediary, but such assignment shall not release CHT from any of its obligations to Sunrise (or its successor, as applicable), under this Agreement, (iii) Sunrise, or its successor, as applicable, shall not be required to take an assignment of the purchase agreement for the relinquished or replacement property or be required to acquire or hold title to any real property for purposes of consummating an Exchange desired by CHT; and (iv) CHT shall pay any additional costs that would not otherwise have been incurred by Sunrise, or its successor, as applicable, had CHT not consummated the transaction through an Exchange. Sunrise, or its successor, as applicable, shall not by this Agreement or acquiescence to an Exchange desired by CHT have its rights under this Agreement affected or diminished in any manner or be responsible for compliance with or be deemed to have warranted to CHT that its Exchange in fact complies with Section 1031 of the Code.

(f) Sunrise acknowledges and agrees that in the event that the Company is required to make any additional payments to the Lender on account of the occurrence of a Sunrise Change of Control Event, then Sunrise shall reimburse CHT for its pro rata share, based on CHT’s Percentage Interest, of any such payments actually paid to the Lender by the Company.

12.2 Buy Sell.

(a) At any time from and after the Purchase Option Termination Date, provided Sunrise has not exercised the Change of Control Purchase Option or the Sunrise Purchase Option on or before such Purchase Option Termination Date, either Member (the “Offeror”) may give to the other Member (the “Offeree”) a written notice in accordance with the requirements of Section 13.2 (a “Buy-Sell Notice”) stating the Offeror’s determination of the price for the assets of the Company if the Company was sold to a third party purchaser for fair market value, free and clear of all liabilities, (the “Buy-Sell Price”), and stating that the Offeror will either (i) pay to the Offeree in exchange for all the Offeree’s Interest an amount (the “Offer Amount”) equal to the cash amount that the Offeree would have received in respect of the Offeree’s Interest pursuant to Section 8.2, net of the Transfer Expenses, in the event of a Capital Transaction of the type described in Section 10.1(a) above on the date of delivery of the Buy-Sell Notice for a sales price equal to the Buy-Sell Price or (ii) sell all the Offeror’s Interest to the Offeree in exchange for an amount (the “Selling Amount”) equal to the cash amount Offeror would have received pursuant to Section 8.2, net of the Transfer Expenses, in the event of a Capital Transaction of the type described in Section 10.1(a) above on the date of delivery

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of the Buy-Sell Notice for a sales price equal to the Buy-Sell Price. The Offer Amount and Selling Amount shall be calculated by an independent accountant acting on behalf of the Company within three (3) Business Days of the issuance of the Buy-Sell Notice, and such accountant shall notify both the Offeror and Offeree of such amounts in writing upon such calculation.

(b) The Offeree shall have a period of thirty (30) days after its receipt of the Buy-Sell Notice within which to give the Offeror written notice in accordance with the requirements of Section 13.2 (the “Reply Notice”) whether the Offeree shall (i) sell its Interest to the Offeror for the Offer Amount or (ii) buy the Offeror’s Interest for the Selling Amount. In the event that the Reply Notice is not so given prior to the expiration of the thirty (30) day period, the Offeree shall be deemed to have accepted the offer to sell its entire Interest to the Offeror for the Offer Amount. Within ten (10) Business Days after the receipt or deemed receipt of the Reply Notice, the purchaser of the Interest shall deliver a ten percent (10%) cash deposit to the selling party.

(c) Closing of the Transfer of the Offeror’s or Offeree’s Interest in accordance with the Offeree’s election will take place within one hundred twenty (120) days after receipt or deemed receipt by the Offeror of the Reply Notice, unless the selling and the purchasing party mutually agree to an earlier closing date (the “Buy/Sell Closing Date”). At the closing, the selling Member (the “Buy/Sell Seller”) shall transfer its Interest free and clear of all Liens in consideration of its receipt by wire transfer of the purchase price on the terms and conditions set forth in Section 12.4 below. Should either Member default in its obligation to close when it is obligated to do so, (i)the defaulting purchasing party shall forfeit the deposit, (ii) the defaulting Member shall have no further ability to invoke the provisions of this Section 12.2 and (iii) the non-defaulting Member (A) shall have the right to buy the defaulting Member’s Interest for a Buy-Sell Price that shall be reduced by ten percent (10%), which right shall continue for a period of thirty (30) days following the default of the defaulting purchasing party and (B) shall be entitled to specific performance of such obligation. If the non-defaulting Member exercises the right set forth in the foregoing clause (iii), the closing of the purchase of the defaulting Member’s Interest shall occur subject to and in accordance with the provisions of Section 12.5. Notwithstanding anything to the contrary contained herein, in the event CHT is the Buy/Sell Seller and provided Section 8.3(b) hereof has not been deemed to be of no further force and effect pursuant to Section 9.5(a)(ii) or Section 9.5(a)(iv) above, the purchase price that would have otherwise been payable to CHT under this Section 12.2 shall be reduced by an amount equal to the aggregate sum of all future Quarterly Interest Rate Differential Amounts applicable to each quarter occurring from and after the date of the closing of such purchase, as such amounts are set forth on Schedule 1.2 as in effect as of the date the closing of such purchase.

12.3 Right of First Offer.

(a) Subject to the terms and conditions of Article 9 of this Agreement and notwithstanding anything to the contrary contained herein, if, at any time, (i) Sunrise intends to sell all or a portion of its Interest pursuant to Section 9.5(a)(ii), or (ii) CHT intends to sell all or a portion of its Interest pursuant to Section 9.5(a)(iii), such Member (the “Transferor Member”) shall give a notice (“Transfer Notice”) to the other Member (the “Non-Transferor Member”) that the Transferor Member intends to Transfer such portion of its Interest to a third party and, upon receipt of such Transfer Notice the Non-Transferor Member shall determine a price for the assets of the Company if the Company was sold to a third party purchaser for fair market value, free and clear of all liabilities (the “Transfer Price”). Within ten (10) Business Days of receipt of the Transfer Notice, the Non-Transferor Member shall notify the Transferor Member as to its determination of the Transfer Price (the “Transfer Price Notice”). Upon receipt of such Notice, the Transferor Member shall either

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accept or reject the Transfer Price. If the Transfer Price is accepted, the Transferor Member shall so notify the Non-Transferor Member (“Acceptance Notice”) and within three (3) Business Days of acceptance, the Independent Accountant acting on behalf of the Company shall determine the cash amount (the “ROFO Amount”) that the Transferor Member would have received in respect of such portion of the Transferor Member’s Interest pursuant to Section 8.2, net of the Transfer Expenses, in the event of a Capital Transaction of the type described in Section 10.1(a) above on the date of delivery of the Transfer Notice for a sales price equal to the Transfer Price, and shall notify the Transferor Member and Non-Transferor Member of the same. Upon delivery and acceptance of the ROFO Amount, the Non-Transferor Member shall purchase the Transferor Member’s Interest in accordance with the provisions of Section 12.5 of this Agreement. Notwithstanding the foregoing or anything to the contrary contained herein, if CHT is the Transferor Member and Section 8.3(b) has not been deemed to be of no further force and effect pursuant to Section 9.5(a)(ii) or Section 9.5(a)(iv) above, then the amount payable to CHT for the purchase of its Interest under this Section 12.3(a) shall equal (i) the ROFO Amount less (ii) an amount equal to the aggregate sum of all future Quarterly Interest Rate Differential Amounts applicable to each quarter occurring from and after the date of such purchase, as such amounts are set forth on Schedule 1.2 as in effect as of the date the closing of such purchase. If the Transfer Price is rejected, the Transferor Member shall so notify the Non-Transferor Member (“Rejection Notice”) and the Transferor Member shall be free to sell its Interest to any third party in accordance with Section 12.3(b) of this Agreement. The failure of a Transferor Member to deliver either an Acceptance Notice or a Rejection Notice within such period of time shall be deemed to be the delivery by such Non-Transferor Member of a Rejection Notice. If the Non-Transferor Member fails to deliver a Transfer Price Notice within the time period set forth herein, the Transferor Member shall be free to sell its Interest to any third party.

(b) Subject to the restrictions of Section 9.5, the Transferor Member shall at all times be free to negotiate with any prospective third party purchasers of its Interest and, if no Acceptance Notice has been timely delivered to any Non-Transferor Member, the Transferor Member may sell all or a portion of its Interest to a bona fide third-party purchaser (the “Third Party Purchaser”) for an amount that is at least ninety five percent (95%) of the ROFO Amount and upon other material terms no more favorable to such Third Party Purchaser than were the material terms offered by the Non-Transferor Member, provided that (i) such purchase price is payable in immediately available funds, (ii) the Transferor Member and the Third Party Purchaser enter into a contract of sale not later than ninety (90) days after the date the Rejection Notices were delivered or deemed delivered and (iii) the Transferor Member and the Third Party Purchaser close the Transfer at any time within one hundred twenty (120) days after the date the Rejection Notices were delivered or deemed delivered, on the terms and conditions set forth in Section 12.5 below. In such case, the Third Party Purchaser shall become a Member hereunder; provided however, that with respect to the voting rights of the Third Party Purchaser, if less than 100% percent of the Interest of a Member is transferred to a Third Party Purchaser, such rights will be exercised by the Transferor Member on behalf of the Third Party Purchaser as if the Transferor Member retained 100% of its Interest.

12.4 [INTENTIONALLY OMITTED]

12.5 Closing.

(a) At the closing on (i) the date of the closing of the purchase by the Non-Transferor Member or the Third Party Purchaser, (as applicable, the “ROFO Recipient”), of the Transferor Member’s Interests which is the subject of a the right of first offer in accordance with Section 12.3 above (the “ROFO Closing Date”), (ii) the Purchase Option Closing Date or the Change

53

of Control Purchase Option Closing Date in accordance with Section 12.1 above, or (iii) the Buy/Sell Closing Date in accordance with Section 12.2 above, (as the case may be, the “Closing Date”) the Transferor Member (on the ROFO Closing Date), CHT (on the Purchase Option Closing Date or the Change of Control Purchase Option Closing Date) or Buy/Sell Seller (on the Buy/Sell Closing Date), respectively, (as the case may be, the “Seller”), shall execute and deliver to the ROFO Recipient, Sunrise (or its successor, as applicable), or Buy/Sell Purchaser, respectively (as the case may be, the “Purchaser”), an assignment of the Seller’s Interest (or with respect to the ROFO Closing Date, such portion of such Seller’s Interest which is subject to the assignment) (which assignment shall warrant Seller’s ownership of the Interest being sold to be free and clear of all liens and other encumbrances) and such other instruments as the Purchaser may reasonably require, to give it good and lien free title to all of the Seller’s right, title and interest in the Company, subject to the terms of this Agreement. If the Purchaser has elected to have the Seller convey the Seller’s Interest to a designee or nominee of the Purchaser, the Company shall thereafter continue. In such event, the Purchaser and the Company shall indemnify the Seller against claims and liabilities of the Company arising after the date of such conveyance.

(b) On the Closing Date, the Purchaser shall, at its option, (i) obtain a full release of the Seller (or a partial release in the event the Seller continues to be a Member after the Closing Date in connection with the sale of a partial Interest to the Third Party Purchaser) from all liability, direct or contingent, by all holders of all Company and/or Subsidiary debts, obligations or claims against the Seller for which the Seller is or may be personally liable with respect to the period from and after the Closing Date, except for any debts, obligations or claims which are fully insured by public liability insurer(s) reasonably acceptable to the Seller; or (ii) cause all such debts, obligations or claims to be paid in full on the Closing Date.

(c) In the event of a contemplated transfer to take place pursuant to Section 12.1, Section 12.2 or Section 12.3 of this Agreement, the Seller shall be entitled to receive distributions of available cash for the period ending at 11:59 p.m. of the day immediately preceding the Closing Date. All provisions allocating profits, losses, gains, deductions and credits for tax purposes shall remain in effect through the Closing Date.

(d) The Managing Member is hereby authorized to execute and deliver all documents, instruments and agreements deemed necessary or desirable by the Managing Member in its reasonable discretion to consummate the sale of the applicable Interest on the terms required by this Agreement to a Third Party Purchaser. If any Member is required to execute any such documents, instruments or agreements, such Member shall execute the same upon the request of the Managing Member so long as the same are on terms and conditions which are reasonable and customary and do not increase the liability of such Member in such Member’s reasonable discretion.

(e) If a Facility or Facilities are damaged by fire or other casualty or if any Person possessing the right of eminent domain shall give notice of an intention to take or acquire any part of a Facility or the underlying Property of such Facilities, and such notice is given between the date of election or deemed election by the Purchaser, and the Closing Date (if any), the following shall apply:

(i) If the Facility or Facilities are not substantially damaged (which shall be deemed to mean damage, the repair of which is reasonably estimated to cost no greater than $15,000,000.00, in the aggregate, with respect to all Facilities), then the Purchaser (if any) shall be required to complete the transaction and the insurance proceeds or the relevant part thereof shall be

54

retained by the Company and the Seller (if any) shall not be entitled to any portion thereof and shall credit Purchaser for Seller’s pro rata share (based on the Seller’s Percentage Interest immediately prior to the Closing Date) of any deductible.

(ii) If the Facility or Facilities are substantially damaged (which shall mean a casualty the repair of which is reasonably estimated to cost more than $15,000,000.00, in the aggregate, with respect to all Facilities), or if a taking of a Facility or Facilities worth at least $15,000,000.00, in the aggregate, with respect to all Facilities, shall occur, then the Purchaser shall have the option to either (a) accept the Facilities in an “as is” condition in which event any insurance or condemnation proceeds, settlements and awards or the relevant part thereof shall be retained by the Company and the Seller shall not be entitled to any portion thereof and shall credit Purchaser for Seller’s pro rata share (based on the Seller’s Percentage Interest immediately prior to the Closing Date) of any deductible, or (b) cancel the purchase.

(iii) From and after the determination of the Closing Date, but prior to such Closing Date, provided that the purchase has not been canceled by the Purchaser pursuant to Section 12.5(e)(ii), the Company shall not settle any claim relating to a casualty that damages the Facilities or a taking or acquisition of the Facilities without the prior consent of the Purchaser.

(iv) In the event that the purchase is canceled by the Purchaser pursuant to the above provisions, this Agreement shall remain in effect and continue to be binding on the parties and either Member shall thereafter have the right to continue to exercise its respective rights under Section 12.1, Section 12.2 and Section 12.3 above.

12.6 Release from Guaranties. As a condition to the buyout of a Member pursuant to the foregoing Sections 12.1 through 12.3, such Member and all of its Affiliates shall be released from the obligation to guarantee any of the obligations of the Company or any of its Subsidiaries or Affiliates under any financing. If either Member is the selling party, the other Member shall, at its expense, secure the release from all lenders (without releasing any claim the Company may have against the applicable guarantor) of outstanding Affiliate Guaranties executed by the applicable Sunrise Guarantor or CHT Guarantor or their respective Affiliates (other than obligations accrued prior to the transfer under any customary recourse carve-out guarantees) and, to the extent required, obtain the consent of all lenders to the buy-out of such Member (or cause the applicable loans to be repaid at closing).

12.7 Upon Termination of Management Agreement. Notwithstanding the time limitations in Section 12.1 above, if all but not less than all of the Management Agreements are terminated for any reason prior to the Purchase Option Termination Date, Sunrise and CHT shall have the right to initiate the buy-sell options set forth in Section 12.2 prior to the Purchase Option Termination Date.

12.8 Enforcement. It is expressly agreed that the remedy at law for breach of the obligations of the Members set forth in this Article XII is inadequate in view of (a) the complexities and uncertainties in measuring the actual damage to be sustained by reason of the failure of a Member to comply fully with such obligations, and (b) the uniqueness of the Company business and the Member’s relationships. Accordingly, each of such obligations shall be, and is hereby expressly made, enforceable by a specific performance.

12.9 Refinancing. The terms and provisions of this Article XII shall be subject to the terms and conditions of the Refinancing.

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ARTICLE 13

MISCELLANEOUS

13.1 Further Assurances. Each party to this Agreement agrees to execute, acknowledge, deliver, file and record such further certificates, amendments, instruments and documents, and to do all such other acts and things, as may be required by law or as, in the reasonable judgment of the Managing Member, may be necessary or advisable to carry out the intent and purpose of this Agreement so long as such acts and things do not increase the obligations or diminish the rights of any of the Members.

13.2 Notices.

(a) Any and all notices, including any demands, consents, approvals, offers, elections and other communications required or permitted under this Agreement shall be deemed adequately given if in writing, addressed to the recipient of the notice at the addresses set forth below (or to such other addresses as the parties may specify by due notice to the others parties) and if delivered either (a) in hand, in which case it will be deemed delivered on the date of delivery or on the date delivery was refused by the addressee, (b) by United States mail, postage prepaid, registered or certified, with return receipt requested, in which case it will be deemed delivered on the date of delivery as established by the return receipt (or the date on which the return receipt confirms that acceptance of delivery was refused by the addressee), (c) by Federal Express or similar expedited commercial carrier, with all freight charges prepaid, in which case it will be deemed delivered on the date of delivery as established by the courier service confirmation (or the date on which the courier service confirms that acceptance of delivery was refused by the addressee), or (d) by facsimile transmission with a hard copy to follow by any of the other methods above, in which case it will be deemed delivered on the day and at the time indicated in the sender’s automatic acknowledgment. If a notice is sent to a party, then copies of such notice under this Section shall also be sent by the same delivery method to the copy recipients. Whenever under this Agreement a notice is required to be delivered on a day which is not a Business Day or is required to be delivered on or before a specific day which is not a Business Day, the day of required delivery shall automatically be extended to the next Business Day. All such notices shall be addressed as follows:

To CHT or the Managing	c/o CHT Partners, LP
Member:	CNL Center at City Commons
	450 South Orange Ave.
	Orlando, Florida 32801
	Attn.:  Joseph T. Johnson, SVP and CFO and
	Holly Greer, SVP and General Counsel
	Telecopy No.:	407-540- 2544
	Telephone No.:	407-540-7618 (Johnson)
		407-540-7546 (Greer)

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With a copy to:	Lowndes, Drosdick, Doster, Kantor & Reed, PA 215 North Eola Drive Orlando, Florida 32801 Attn.:  Peter E. Reinert, Esq. Telecopy No.:  407-843-4444 Telephone No.:  407-418-6291
To Sunrise:	c/o Sunrise Senior Living, Inc. 7900 Westpark Drive, Suite T-900 McLean, Virginia 22102 Attn:  Chief Investment & Administrative Officer Telecopy No.: :  (703) 744-1601 Telephone No.:   (703) 854-0683
With a copy to:	c/o Sunrise Senior Living, Inc. 7900 Westpark Drive, Suite T-900 McLean, Virginia 22102 Attention:  General Counsel Telecopy No.:  (703) 854-0334 Telephone No.:   (703) 744-1601
With a copy to:	Willkie Farr & Gallagher LLP 787 Seventh Avenue New York, New York 10019 Attention:  Eugene A. Pinover Telecopy No.:  (212) 728-9254 Telephone No.:   (212) 728-8254 E-mail: epinover@willkie.com

(b) Notices, demands, requests, consents, approvals, offers, elections and other communications given by an attorney named below on behalf of its client and sent to the other party to this Agreement in the manner set forth in this Section shall have the same effect as if given by a party to this Agreement. Notwithstanding anything to the contrary contained in this Agreement, it is understood that notices to each party’s outside counsel shall be given as a courtesy only and failure to provide such notice shall not in any way affect or diminish the validity of the notice given to any party under this Agreement. By notice given as provided in this Section, the parties to this Agreement and their respective successors and assigns shall have the right from time to time and at any time during the Term to change their respective addresses effective five (5) Business Days after the date of receipt by the other parties of such notice and each party shall have the right to specify as its address any other address within the United States of America.

13.3 Headings and Captions. All headings and captions contained in this Agreement and the table of contents hereto are inserted for convenience only and shall not be deemed a part of this Agreement.

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13.4 Variance of Pronouns. All pronouns and all variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or entity may require.

13.5 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one Agreement. The submission of a signature page transmitted by facsimile (or similar electronic transmission facility) shall be considered as an “original” signature page for purposes of this Agreement so long as the original signature page is thereafter transmitted by mail or by other delivery service and the original signature page is substituted for the facsimile signature page in the original and duplicate originals of this Agreement.

13.6 Governing Law; Litigation, Jurisdiction and Waiver of Jury Trial.

(a) This Agreement will be governed by, and construed in accordance with, the laws of the State of Delaware without regard to conflict of laws principles.

(b) For the purposes of any suit, action or proceeding involving this Agreement, the parties each hereby expressly and irrevocably submits to the jurisdiction of all federal and state courts sitting in the Commonwealth of Virginia and the State of Florida which courts shall have jurisdiction over any such suit, action or proceeding commenced by any party. The parties consent to service of process, wherever made, by certified mail return receipt requested, personal service or any other method permitted by applicable law and the rules of the applicable court. In furtherance of such agreement, the parties agree, upon the request of any party, to discontinue (or agree to the discontinuance of) any such suit, action or proceeding pending in any other jurisdiction.

(c) Each party hereby irrevocably waives any objection that either party may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement brought in any federal or state court sitting in the Commonwealth of Virginia or the State of Florida and hereby further irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

(d) If for any reason, the state and federal courts sitting in the Commonwealth of Virginia or the State of Florida refuse to exercise jurisdiction over the proceeding or any party, then litigation as permitted herein may be brought in any court of competent jurisdiction in the United States of America.

(e) EACH PARTY HEREBY WAIVES, IRREVOCABLY AND UNCONDITIONALLY, TRIAL BY JURY IN ANY ACTION BROUGHT ON, UNDER OR BY VIRTUE OF OR RELATING IN ANY WAY TO THIS AGREEMENT OR ANY OF THE DOCUMENTS EXECUTED IN CONNECTION HEREWITH, THE FACILITY, OR ANY CLAIMS, DEFENSES, RIGHTS OF SET-OFF OR OTHER ACTIONS PERTAINING HERETO OR TO ANY OF THE FOREGOING.

13.7 Arbitration.

(a) Any dispute with respect to the matters described in Sections 3.5 and 5.5 under this Agreement for which arbitration in accordance with Section 13.7 is expressly provided shall be determined by binding arbitration proceeding (the “Arbitration Proceeding”) administered by

58

the American Arbitration Association (“AAA”) under its Commercial Arbitration Rules and Expedited Procedures, in effect at the time of the demand for arbitration, provided, however, that to the extent any provision of this Section modifies, adds to, or is inconsistent with any provisions of those rules and procedures, the provisions of this Section shall control. Arbitration will be conducted before a single arbitrator in Washington, D.C., Alexandria, VA, McLean, VA, Bethesda, MD, or Orlando, FL (the “Venue”). The parties hereby acknowledge and agree that the party which did not initiate the Arbitration Proceeding shall have the right to elect the Venue in its sole discretion, which shall be binding on both parties. The choice of law provisions set forth in Section 13.6 shall apply in any such Arbitration Proceeding. Any dispute, disagreement, or controversy arising out of or relating to this Agreement for which arbitration is not expressly provided as the means of resolution may be resolved by litigation as provided in Section 13.6 or by other lawful means.

(b) The party desiring arbitration shall provide written notice in accordance with the requirements of Section 13.2 to the other party (the “Arbitration Notice”) indicating (i) the matter in controversy and (ii) the name, contact information and professional resume of the proposed arbitrator meeting the requirements for a qualified and independent arbitrator set forth in Section 13.7(c) (“Initial Arbitrator”) to arbitrate such matter in controversy. If the party receiving the Arbitration Notice rejects the Initial Arbitrator set forth in the Arbitration Notice it shall object by written notice in accordance with the requirements of Section 13.2 (“Objection Notice”) delivered to the other party within seven (7) Business Days of the receipt of the Arbitration Notice. The Objection Notice shall contain the name, contact information and professional resume of a different arbitrator meeting the requirements for a qualified and independent arbitrator set forth in Section 13.7(c) (“Secondary Arbitrator”) to arbitrate the matter in controversy set forth in the Arbitration Notice. If the party receiving the Objection Notice rejects the Secondary Arbitrator, it shall object in writing (“Secondary Objection Notice”) to the other party within seven (7) Business Days after the receipt of the Objection Notice. If neither the Initial Arbitrator nor the Secondary Arbitrator is accepted by the parties, the party which delivered the Arbitration Notice shall instruct the Initial Arbitrator and the Secondary Arbitrator to agree, within five (5) Business Days after receipt of the Secondary Objection Notice, upon an arbitrator (“Appointed Arbitrator”) meeting the requirements for a qualified and independent arbitrator set forth in Section 13.7(c). If they agree upon an Appointed Arbitrator who is prepared to act as the Appointed Arbitrator, the Initial Arbitrator and Secondary Arbitrator shall deliver written notice of the name, contact information and professional resume of the Appointed Arbitrator to each party simultaneously. The appointment of the Appointed Arbitrator shall be a final decision, which shall not be subject to objection by either party, unless either party to this Agreement within five (5) Business Days after such selection of an Appointed Arbitrator, gives written notice in accordance with the requirements of Section 13.2 of this Agreement to the other party, in writing, that such Appointed Arbitrator fails to meet the requirements for a qualified and independent arbitrator set forth in Section 13.7(c) and provides specific information in such written notice as to the reasons why such failure exists.

(c) In the event the Initial Arbitrator and the Secondary Arbitrator cannot agree on an Appointed Arbitrator or if such appointed Arbitrator is unwilling to act as the Appointed Arbitrator or if either party objects to the Appointed Arbitrator within five (5) Business Days after the selection of such Appointed Arbitrator, as permitted in this Section 13.7, then either party may petition the AAA (or any successor body of similar function) to appoint an arbitrator within five (5) Business Days of such petition using the following criteria: such arbitrator shall be (i) with respect to physical property matters, a licensed professional engineer or registered architect having at least ten (10) years experience in the design or construction of similar senior housing facilities, (ii) with respect to financial matters, a partner in a “Big Four Accounting Firm” with at least ten (10) years

59

experience with the type of matter in dispute, (iii) with respect to property management issues, an individual who shall have had at least ten (10) years experience managing similar senior housing facilities in the market place for the matter in dispute and (iv) be neutral and shall have had no prior notice, information or discussions concerning such controversy and shall not be employed by or associated with either party or any Affiliate of either of them, or any of their respective agents or affiliates at such time or for the previous ten (10) years. If the dispute involves more than one type of matter, then the Appointed Arbitrator may be (v) an individual with expertise in any one of the types of matters in dispute, or (vi) a retired judge.

(d) The Arbitration Proceedings shall commence fifteen (15) Business Days after the engagement or appointment of the appropriate arbitrator pursuant to this Section 13.7. The arbitrator shall make a determination within ten (10) Business Days after conclusion of the Arbitration Proceeding.

(e) The costs and expenses of an Arbitration Proceeding including the administrative fees and costs, expert fees and the arbitrator’s fees and costs, shall be shared equally by CHT and Sunrise, and each party shall bear its own counsel, expert, administrative fees and other professional fees and expenses with respect to such Arbitration Proceeding; provided, however, that the Appointed Arbitrator may (but shall not be required to), in the exercise of his/her best judgment, assess one party for a part or all of the costs of the other party, including, without limitation, the costs of the Arbitration Proceeding.

(f) Any arbitrator’s final decision and award shall be in writing, shall be binding on the parties and shall be non-appealable, and counterpart copies thereof shall be delivered to both parties. A judgment or order based upon such award may be entered in any court of competent jurisdiction. All actions necessary to implement the decision of the arbitrator shall be undertaken as soon as possible, but in no event later than three (3) Business Days after the rendering of such decision.

13.8 Partition. The Members hereby agree that no Member nor any successor-in-interest to any Member shall have the right to have the property of the Company partitioned, or to file a complaint or institute any proceeding at law or in equity to have the property of the Company partitioned, and each Member, on behalf of himself, his successors, representatives, heirs and assigns, hereby waives any such right.

13.9 Invalidity. Every provision of this Agreement is intended to be severable. The invalidity and unenforceability of any particular provision of this Agreement in any jurisdiction shall not affect the other provisions of this Agreement, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted.

13.10 Successors and Assigns. This Agreement shall be binding upon the parties hereto and their respective successors, executors, administrators, legal representatives, heirs and legal assigns and shall inure to the benefit of the parties hereto and, except as otherwise provided in this Agreement, their respective successors, executors, administrators, legal representatives, heirs and legal assigns.

13.11 Entire Agreement. This Agreement supersedes all prior agreements among the parties with respect to the subject matter of this Agreement and contains the entire Agreement among the parties with respect to such subject matter.

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13.12 Waivers. No waiver of any provision of this Agreement by any party hereto shall be deemed a waiver by any other party nor shall any such waiver by any party be deemed a continuing waiver of any matter by such party. No amendment, modification, supplement, discharge or waiver of this Agreement shall require the consent of any Person not a party to this Agreement.

13.13 No Brokers. Each of the Members hereto represents and warrants to each other that there are no brokerage commissions or finders’ fees (or any basis therefor) resulting from any action taken by such Member or any Person acting or purporting to act on their behalf upon entering into this Agreement. Each Member agrees to defend, indemnify and hold harmless each other Member for all costs, damages or other expenses, including, without limitation, reasonable attorneys’ fees and expenses, arising out of any misrepresentation made in this Section 13.13.

13.14 Confidentiality. Each Member agrees not to disclose or permit the disclosure of any of the terms of this Agreement or of any other confidential, non-public or proprietary information relating to the Company Assets or business (collectively, “Confidential Information”), provided that such disclosure may be made (a) to any Affiliate or other Person who is a partner, officer, director or employee of such Member or Affiliate or counsel to or accountants of such Member solely for their use and on a need-to-know basis, provided that such Persons are notified of the Member’s confidentiality obligations pursuant to this Agreement, (b) with the consent of the other Members, (c) subject to the next paragraph, pursuant to a subpoena or order issued by a court, arbitrator or governmental body, agency or official or (d) to any lender providing financing to the Company.

In the event that a Member shall receive a request to disclose any Confidential Information under a subpoena or order such Member shall (e) promptly notify the other Members thereof, (f) consult with the other Members on the advisability of taking steps to resist or narrow such request and (g) if disclosure is required or deemed advisable, cooperate with any of the other Members in any attempt it may make to obtain an order or other assurance that confidential treatment will be accorded the Confidential Information that is disclosed.

13.15 No Third Party Beneficiaries. This Agreement is not intended and shall not be construed as granting any rights, benefits or privileges to any Person not a party to this Agreement.

13.16 Power of Attorney. Subject to Section 3.5, each of the undersigned does hereby constitute and appoint Managing Member as its true and lawful representative and attorney-in-fact, in its name, place, and stead to make, execute, sign, and file any amendment to the Certificate of Formation of the Company required because of an amendment to this Agreement or in order to effectuate any change in the membership of the Company, and all such other instruments, documents, and certificates which may from time to time be required by the laws of the United States of America, the State of Delaware, or any other state in which the Company shall determine to do business, or any political subdivision or agency thereof, to effectuate, implement, and continue the valid and subsisting existence of the Company, or in connection with any state tax filings of the Company. The power of attorney granted hereby is coupled with an interest and shall (a)continue in full force and effect notwithstanding the subsequent death, incapacity, dissolution, termination, or Bankruptcy of the Member granting the same or the Transfer of all or any portion of such Member’s Interest, and (b)extend to such Member’s successors, assigns, and legal representatives.

13.17 Invalidity. The provisions of this Section 13.17 were negotiated in good faith by the parties to this Agreement, and the parties agree that such provisions are reasonable and are not more restrictive than necessary to protect the legitimate interests of the parties hereto. It is the intention of

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the parties to this Agreement that if any of the restrictions or covenants contained herein is held to be for a length of time that is not permitted by applicable law, or is any way construed to be too broad or to any extent invalid, such provision shall not be construed to be null, void and of no effect, but to the extent such provision would be valid or enforceable under applicable law, a court of competent jurisdiction shall construe and interpret or reform such provision to provide for a restriction or covenant having the maximum time period and other provisions (not greater than those contained herein) as shall be valid and enforceable under applicable law.

13.18 Construction of Documents. The parties acknowledge that they were represented by separate and independent counsel in connection with the review, negotiation and drafting of this Agreement and that this Agreement shall not be subject to the principle of construing its meaning against the drafter.

[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Amended and Restated Limited Liability Company Agreement effective as of the Effective Date.

MEMBERS:
SUNRISE SENIOR LIVING INVESTMENTS, INC., a Virginia corporation
By:	/s/ Edward W. Burnett
	Name: Edward W. Burnett
	Title: Vice President
CHT SL IV HOLDING, LLC, a Delaware limited liability company
By:	/s/ Joshua J. Taube
	Name: Joshua J. Taube
	Title: Vice President

[Signature Page to JV Agreement]

Schedule 1.1

Properties

Name of Property	Street Address	City	ST	Zip
Sunrise of Metairie	3732 West Esplanade Ave S	Metairie	LA	70002
Sunrise at Siegen	9351 Siegen Lane	Baton Rouge	LA	70810
Sunrise of Gilbert	580 South Gilbert Road	Gilbert	AZ	85296
Sunrise of Louisville	6700 Overlook Drive	Louisville	KY	40241
Sunrise at Fountain Square	2210 Fountain Square Drive	Lombard	IL	60148
Sunrise of Santa Monica	1312 15th Street	Santa Monica	CA	90404
Sunrise of Connecticut Avenue	5111 Connecticut Avenue, NW	Washington	DC	20008

Schedule 1.2

Quarterly Interest Rate Differential Amounts

(See Attached)

Schedule 1.3

Mezz Loan Documents

1. Recognition Agreement, dated as of the Effective Date, between CHT, Sunrise and Mezz Lender.

2. Promissory Note (Mezzanine Loan), dated as of the Effective Date, executed and made by CHT to and in favor of Mezz Lender in the principal amount of $40,000,000.00.

3. Mezzanine Loan Agreement, dated as of the Effective Date, between CHT and Mezz Lender.

4. Mezzanine Guaranty, dated as of the Effective Date, executed by CHT REIT in favor of Mezz Lender.

5. Mezzanine Environmental Indemnity Agreement, dated as of the Effective Date, executed by CHT and CHT REIT in favor of Mezz Lender.

6. Assignment of Net Equity Raise, dated as of the Effective Date, executed by CHT REIT in favor of Mezz Lender.

7. Pledge and Security Agreement, dated as of the Effective Date, executed by CHT to and for the benefit of Mezz Lender, pledging CHT’s Interest in the Company, and that certain Acknowledgement and Consent of Pledge executed by the Company to and for the benefit of Mezz Lender.

8. That certain Intercreditor Agreement between Lender and Mezz Lender.

9. That certain (UCC-1) Financing Statement evidencing Mezz Lender’s security interests in the CHT’s Interest in the Company.

Schedule 3.5

Major Decisions

(a) Any sale, mortgage, financing or refinancing of any material Company Assets, Facility, Facility Entity, any Subsidiary, or any interest in any material Company Asset, Facility, Facility Entity, any Subsidiary, or any lease of any Facility not permitted under the Management Agreement; however, the Managing Member may make incidental sales, exchanges, conveyances, of personal property at the Facility which may be disposed of or replaced due to wear and tear or obsolescence or otherwise in the ordinary course of business, subject to the provisions of Article 9 (Disposition of Interests) of this Agreement.

(b) Invest in or acquire any real property, or any direct or indirect beneficial ownership interest therein by the Company or any Subsidiary.

(c) Make any expenditure or incur any obligation by or for any Facility Entity which is not provided for in an Approved Budget or otherwise permitted to be incurred under the applicable Facility Documents of a Facility other than increased insurance costs, taxes, utility costs and debt service payments; however, if actions are needed to satisfy any Emergency Requirements with respect to any Facility, the Managing Member may make such expenditures as may be necessary to alleviate such situation even if such expenditures are not provided for, or exceed the amount provided for, in an Approved Budget or the FF&E Estimate, and the Managing Member shall promptly notify the other Members of the event giving rise to such repairs and the actions taken with respect thereto.

(d) File any petition or consent to the filing of any petition that would subject the Company, any Facility Entity or other Subsidiary to a Bankruptcy, or make any assignment for the benefit of creditors by the Company, any Facility Entity or other Subsidiary.

(e) Approve all Proposed Budgets and finalize Approved Budgets, Capital Budgets and FF&E Reserve Estimates.

(f) Approve operating and marketing budgets and business narrative as required to be approved by a Facility Entity pursuant to its Management Agreement;

(g) Approve Material Contracts unless such agreements have been approved as part of the Approved Budget.

(h) Dissolve, liquidate or otherwise terminate the Company or any Subsidiary, except pursuant to the provisions of Article 10 of this Agreement.

(i) To terminate the Management Agreement if the amount of the insurance deductibles and other uninsured out of pocket expenses of the applicable Facility Lessee in connection with the repair and/or replacement of a Facility subject to a Major Casualty (as defined in the Management Agreements) are in the aggregate higher than Five Million Dollars ($5,000,000) in accordance with Section 12.4(b) of the Management Agreements;

(j) To determine “fair market value” in connection with the Facility Manager’s purchase of a Facility in accordance with Section 12.4(c) of the Management Agreements.

(k) Subject to Sections 12.04 and 12.05 of the applicable Management Agreement, to fairly determine the use of the award in the accordance with the Management Agreement resulting from a partial condemnation of the Property or settlement in lieu thereof or the proceeds of an insurance claim resulting from a casualty to the Property, in both instances, in excess of Five Million Dollars ($5,000,000); provided that the parties acknowledge that a portion of the proceeds for business interruption insurance would apply to management fees that would have been payable to Facility Manager under the Manager Pooling Agreement.

(l) Change the status of the Company or Subsidiaries as a partnership for federal, state or local income tax purposes.

(m) Enter into any resident agreement at the Facilities on a form or terms different from the Resident Agreement Documents.

(n) Enter into any transaction or agreement, or modify or amend, or waive, any term of any new or existing transaction or agreement, with an Affiliate of CHT, or take any enforcement action with respect to such a transaction or agreement.

(o) Renew, refinance, discharge or otherwise modify the existing loan or the Refinancing or obtain, incur, renew, refinance, discharge or otherwise modify any other financing, and entering into, amending any loan document in connection with any such financing.

(p) Merge or consolidate the Company or any of its Subsidiaries with or into another entity or forming any new Subsidiary.

(q) Reconstitute the Company prior to the termination thereof following any dissolution of the Company.

(r) Take any other actions on behalf of the Company that are outside of the scope of authority granted to the Managing Member pursuant to this Agreement.

(s) Change the purpose of the Company or the Subsidiaries as set forth in this Agreement.

(t) Request any additional Capital Contributions (other than Mandatory Capital Contributions).

(u) With respect to any redevelopment, renovation or capital improvement of the Facility, including with respect to a casualty or condemnation, (a) approve the plans and specifications and material modifications thereto, (b) select the contractors and consultants, (c) approve the form and substance of the contracts with such contractors and consultants and (d) approve of any modification of, or change order under, any such contracts.

(v) Institute, settle or make any other material decision with respect to any lawsuit, claim, counterclaim or other legal proceeding by or against the Company, any Facility or any Subsidiary, including, without limitation, confessing a judgment against the Company or any Subsidiary, accepting the settlement, compromise or payment of any claim asserted against the Company or any Subsidiary or any of their respective property and assets, or asserted by the Company or any Subsidiary in respect of the foregoing.

(w) Change the name of the Company or any Subsidiary or otherwise modify the Organizational Documents of any Subsidiary.

(x) Issue any guaranties or indemnities by the Company or any Subsidiary of obligations of any Person whether or not in connection with the operation, improvement, management and maintenance of the Facilities.

(y) Settle any dispute with respect to tax certiorari proceedings with respect to a Facility.

(z) Make any decisions with respect to legal or tax matters which matters could have a material adverse effect upon the Company, any of its Subsidiaries, the Facilities or Sunrise, including, without limitation, any change to any allocation of profit and loss.

(aa) Exchange or subdivide, or grant any option with respect to, all or any portion of the Facilities, and acquire any option with respect to the purchase of any real property or granting or relocating any easements benefiting the Facilities, boundary line adjustments, road rights-of-way and other similar dispositions of non-leasehold interests in the Facilities.

(bb) Set a level of reserves to be maintained by the Company or any Subsidiary.

(cc) Select an accounting firm other than the so called “big four” accounting firms as the Company’s independent certified public accountants; removing or replacing the Company’s independent certified public accountants unless such removed firm is replaced by any other of the so called “big four” accounting firms; make any accounting decisions for the Company or any subsidiary in contradiction of the advice provided by the Company’s approved independent certified public accountants, and approving any financial statements within the agreed time period.

(dd) Reduce the insurance and fidelity bond coverages carried by the Company or any Subsidiary with respect to the Company or any Subsidiary and their respective assets, including, without limitation, the Facilities, below the greater of (x) the minimum coverages required by any loan documents and (y) the coverages in effect as of the date hereof, and (ii) increasing the deductible with respect to any insurance coverages to more than a specified threshold amount. At any time that CHT intends to increase the insurance and/or fidelity bond coverages, Sunrise may require replacement insurance and fidelity bond coverages to the extent that (a) such replacement insurance and fidelity bond coverages are available from an insurance company satisfactory to CHT and any lender at a lower premium than the premium for the insurance or fidelity bond coverages in effect as of the date that CHT intends to increase such coverages, (b) the deductible with respect to any such replacement coverages shall not exceed the deductible for the coverages that CHT intends to obtain and (c) the extent of the coverages provided by such replacement shall be equal to no less than the greater of (1) the coverages required by loan documents, and (2) the coverages in effect as of the date that CHT intends to increase such coverages.

(ee) Select any third-party consultants, including, without limitation, environmental consultants, attorneys or other professionals, to be employed or commissioned by the Company or any Subsidiary or on behalf of the Company or any Subsidiary, and the termination of any such third party, in each case to the extent related to any redevelopment, renovation or capital improvement of the Facilities.

(ff) Make cash or other property distributions to the Members (other than as expressly required or permitted under the terms of this Agreement and/or pursuant to an Approved Budget).

(gg) Other than with respect to the service agreements in effect as of the date hereof, cause the Company or any Subsidiary to enter into any service agreements, or assign, cancel, terminate, extend, or modify the same, unless such service agreement (A) either (x) has a term of one (1) year or less, or (y) is cancelable on not more than thirty (30) days’ notice without penalty and (B) is not in excess of the amount budgeted therefore.

(hh) Make any decision with respect to any environmental matters affecting the Facilities.

(ii) Make or agree to any changes to the zoning of the Facilities; and approve the terms and provisions of any restrictive covenants or easement agreements affecting the Facilities or any portion thereof.

(jj) Approve the admission to the Company or any Subsidiary of a successor or an additional member unless otherwise permitted to be admitted pursuant to this Agreement.

(kk) Make any change or modification to, or waive any provision of, the Operating Leases.

(ll) In the event of a termination of the Facility Manager in accordance with the Management Agreements, hire a new manager that is not an Affiliate of Sunrise.

SCHEDULE 6.1

Percentage Interests of the Members

Member	Percentage Interest			Initial Capital Contribution ($)
CHT SL IV Holding, LLC		55.0212	%	$	56,738,699.98
Sunrise Senior Living Investments, Inc.		44.9788	%	$	46,382,872.57

Exhibit A

Approved Budget

Exhibit B

Indemnification and Contribution Agreement

EX-10.4

Exhibit 10.4

MANAGEMENT AGREEMENT

For

SUNRISE OF CONNECTICUT AVENUE

Dated as of

June 29, 2012

Owner: Sunrise Connecticut Avenue Assisted Living Owner, L.L.C.

Manager: Sunrise Senior Living Management, Inc.

TABLE OF CONTENTS

		Page
ARTICLE I	DEFINITIONS		1
1.01.	Defined Terms		1
ARTICLE II	APPOINTMENT OF MANAGER AND PRIMARY GOAL OF AGREEMENT		14
2.01.	Appointment of Manager		14
2.02.	Goals		14
ARTICLE III	MANAGEMENT FEES		15
3.01.	Base Management Fee		15
ARTICLE IV	DUTIES AND RIGHTS OF MANAGER		15
4.01.	Authority of Manager; Right of Possession		15
4.02.	Marketing Services		15
4.03.	Management Duties		16
4.04.	Manager’s Home Office Employees		17
4.05.	Personnel Administration		18
4.06.	Purchasing		18
4.07.	Resident Agreements		18
4.08.	Ancillary Activities		18
4.09.	Notice of Licensure Issues		19
ARTICLE V	COLLECTIONS AND PAYMENTS; GROSS REVENUE DISTRIBUTION; OD LOAN; CREDITS AND COLLECTIONS; WORKING CAPITAL; IMPOSITIONS		19
5.01.	Collections and Payments		19
5.02.	Manager Pooling Agreement		19
5.03.	Distribution of Gross Revenues; OD Loan		19
5.04.	Credits and Collections		21
5.05.	Depositories for Funds		21
5.06.	Working Capital		22
5.07.	Impositions		22
ARTICLE VI	FINANCIAL RECORDS		23
6.01.	Accounting and Financial Records		23
6.02.	Reports		24
6.03.	Access; Audit		24
ARTICLE VII	ANNUAL OPERATING BUDGET		24
7.01.	Annual Operating Budget		24
ARTICLE VIII	ENVIRONMENTAL MATTERS		25
8.01.	Owner Responsibility and Indemnification		25
8.02.	Manager Responsibility and Indemnity		26
8.03.	Notice		27

- i -

8.04.	Obligation to Comply	27
ARTICLE IX	OTHER FINANCIAL MATTERS	27
9.01.	Charges	27
9.02.	Tax Status	27
9.03.	Employee Withholding	28
ARTICLE X	GENERAL COVENANTS AND OWNER AND MANAGER OBLIGATIONS	28
10.01.	Owner’s Obligations	28
10.02.	Manager’s Obligations	28
10.03.	Quiet Enjoyment	28
10.04.	Financing of the Facility	28
ARTICLE XI	REPAIRS, MAINTENANCE AND REPLACEMENTS	29
11.01.	Routine Repairs and Maintenance	29
11.02.	FF&E Reserve and Routine Expenditures	30
11.03.	Non-Routine Capital Expenditures	32
11.04.	Emergency Expenditures	33
11.05.	Owner to Provide Funds; Failure of Owner to Fund	33
11.06.	Liens Arising From Repairs and Alterations	34
ARTICLE XII	INSURANCE; DAMAGE; CONDEMNATION; FORCE MAJEURE	34
12.01.	General Requirements	34
12.02.	Blanket Policies	35
12.03.	Risk Management	35
12.04.	Damage and Repair	35
12.05.	Condemnation	36
12.06.	Licensure Issues	36
ARTICLE XIII	TERMINATION OF AGREEMENT	37
13.01.	General Termination; Termination by Parties	37
13.02.	Transition upon Termination	37
13.03.	Repayment of Operating Deficit Loan upon Termination	39
ARTICLE XIV	DEFAULTS	39
14.01.	Default by Manager	39
14.02.	Default by Owner	39
14.03.	Insolvency Default	40
14.04.	Remedies of Owner	40
14.05.	Remedies of Manager	40
14.06.	No Waiver of Default	40
14.07.	Termination Fee	40
14.08.	Failure to Pay	41
14.09.	Manager’s Right to Specific Performance for Owner’s Wrongful Termination	41
ARTICLE XV	LEGAL ACTIONS, INDEMNITIES, AND LIMITATION OF LIABILITY	42

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15.01.	Legal Actions	42
15.02.	Indemnities	42
15.03.	Limitation of Liability	43
ARTICLE XVI	REGULATORY AND CONTRACTUAL REQUIREMENTS	43
16.01.	Regulatory and Contractual Requirements	43
16.02.	Equal Employment Opportunity	44
16.03.	Equal Housing Opportunity	44
ARTICLE XVII	PROPRIETARY MARKS; INTELLECTUAL PROPERTY	44
17.01.	Proprietary Marks	44
17.02.	Ownership of Proprietary Marks	44
17.03.	Intellectual Property	44
17.04.	Trademark License	45
17.05.	Breach of Covenant	45
ARTICLE XVIII	MISCELLANEOUS PROVISIONS	45
18.01.	Additional Assurances	45
18.02.	Right to Inspect	45
18.03.	Estoppel Certificates	45
18.04.	Consents, Approval and Discretion	46
18.05.	No Brokerage	46
18.06.	Notices	46
18.07.	Severability	48
18.08.	Gender and Number	48
18.09.	Division and Headings	48
18.10.	Confidentiality of Information	48
18.11.	Right to Perform	49
18.12.	Assignment by Manager or Owner; Controlling Interest Sale; Facility Sale	49
18.13.	Entire Agreement; Amendment	53
18.14.	Relationship Between the Parties	53
18.15.	Force Majeure	53
18.16.	Subordination, Non-disturbance and Attornment Agreements	53
18.17.	Arbitration	54
18.18.	Cooperation	56
18.19.	Manager Pooling Agreement as Controlling Agreement	56
18.20.	Costs of Dispute	56
18.21.	Governing Law; Litigation, Jurisdiction and Waiver of Jury Trial	56
18.22.	Counterparts	57
18.23.	Contracting with Affiliates	57
18.24.	Parent Subordination	57
18.25.	Facility Name	58
18.26.	Parent and Owner Consents	58
18.27.	REIT Compliance	58

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LIST OF EXHIBITS

Exhibit A	Description of Real Property
Exhibit B-1	Facility Shared Services
Exhibit B-2	B-2 Direct Expenses
Exhibit C-1	Financial Reporting Requirements
Exhibit C-2	Form of Quarterly Certification
Exhibit D	Form of Proposed Budget
Exhibit E	Current Insurance Program

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MANAGEMENT AGREEMENT

THIS MANAGEMENT AGREEMENT (“Agreement”) is made as of June 29, 2012 (“Effective Date”) by and among SUNRISE SENIOR LIVING MANAGEMENT, INC., a Virginia corporation (“Manager”), SUNRISE CONNECTICUT AVENUE ASSISTED LIVING OWNER, L.L.C., a Virginia limited liability company (“Owner”), and CHTSUN PARTNERS IV, LLC, a Delaware limited liability company (“Parent”).

RECITALS:

A. Owner has a fee interest in that certain real property described in Exhibit A, attached hereto and made a part hereof, on which is constructed an assisted living facility, located in Washington, D.C. and known as Sunrise of Connecticut Avenue (hereinafter referred to as the “Facility”).

B. Owner wishes to appoint Manager as manager of the Facility and Manager desires to accept such appointment and manage the Facility.

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.01. Defined Terms. The following terms shall have the following meanings when used in the Agreement:

AAA. The term “AAA” is defined in Section 18.17.

Accountants. The term “Accountants” means Ernst & Young LLP, PricewaterhouseCoopers, Deloitte Touche Tohmatsu, and KPMG as selected by Owner and Manager, or such other firm of independent certified public accountants as may be approved by Owner and Manager.

Accounting Period. The term “Accounting Period” means and refers to a calendar month.

Affiliate. The term “Affiliate” means a Person, which controls, is controlled by, or is under common control with another Person. For the purposes of this definition, “control” means the power to direct the management and policies of a Person, directly or indirectly, whether through the ownership of voting securities or other beneficial interest, by contract or otherwise; and the terms “controlling” and “controlled” have the meanings correlative to the foregoing. A Person shall not be deemed to be under common “control” with another Person solely based on the fact that one or more Person(s) serve as a director of both Persons.

Agreement. The terms “Agreement” and this “Agreement” means this Management Agreement by and among Parent, Owner and Manager, and any amendments thereto as may be from time to time agreed to in writing by the parties.

Approved Budget. The term “Approved Budget” means the annual operating budget for the operation of the Facility approved by Owner in accordance with Article VII.

Arbitration Proceeding. The term “Arbitration Proceeding” is defined in Section 18.17.

Bad Debt. The term “Bad Debt” means the Facility’s accounts receivable deemed to be uncollectable and written off, and the allowance for bad debts per the Manager’s policy, as consistently applied within Manager’s System.

Base Management Fee. The term “Base Management Fee” is defined in Section 3.01.

Business Day. The term “Business Day” means any day other than Saturday, Sunday or any other day on which banks or savings and loan associations in New York, New York are not open for business.

Capital Budget. The term “Capital Budget” is defined in Section 11.03(a).

Capital Transaction. The term “Capital Transaction” means the sale, exchange or disposition of any of Owner’s property, the refinancing of any of Owner’s property or casualty damage to or condemnation of any of Owner’s property.

CHT. The term “CHT” is defined in Section 6.02.

CHT Partner. The term “CHT Partner” is defined in Section 14.08.

Collection Proceedings. The term “Collection Proceedings” is defined in Section 15.01.

Continuation Notice. The term “Continuation Notice” is defined in Section 18.12.

Controlling Interest. The term “Controlling Interest” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person.

Controlling Interest Sale. The term “Controlling Interest Sale” means any direct or indirect sale, assignment (other than a collateral assignment given in connection with a financing of the Facility), transfer or other disposition, for value or otherwise, voluntary or involuntary, by Owner or its Affiliate of a Controlling Interest in Owner. For purposes of this Agreement, a Controlling Interest Sale shall include any sale, assignment, transfer, or other disposition, for value or otherwise, voluntary or involuntary, in a single transaction or a series of related transactions. For the avoidance of any doubt, the sale, assignment or other disposition of any interest in Parent shall not be considered a Controlling Interest Sale for purposes of this Agreement.

Debt Service. The term “Debt Service” means the monthly payments of principal and interest payable on the note secured by or to be secured by the Facility Mortgage.

Downpayment. The term “Downpayment” is defined in Section 18.12(d).

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Effective Date. The term “Effective Date” is defined in the Preamble of this Agreement.

Emergency Expenditures. The term “Emergency Expenditures” is defined in Section 11.04.

Emergency Requirements. The term “Emergency Requirements” means any of the following events or circumstances: (1) an emergency threatening the Facility, or the life, safety or property of its residents, invitees or employees; (2) a Legal Requirement which if not complied with may subject Owner or Manager to financial liability; (3) a condition, the continuation of which may subject Owner or Manager to civil or criminal liability or may cause a default under any third party indebtedness of Owner, or (4) a Force Majeure event that prevents Manager from managing or operating the Facility pursuant to Manager’s Standards.

Environmental Law(s). The term “Environmental Law(s)” means: (1) the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq., as now or hereafter amended and the Resource Conservation and Recovery Act of 1976, as now or hereafter amended; (2) the regulations promulgated thereunder, from time to time; and (3) all federal, state, municipal and local laws, rules and regulations (now or hereafter in effect) dealing with the use, generation, treatment, management, storage, disposal or abatement of Hazardous Materials or protection of human health or the environment.

Escrow Agent. The term “Escrow Agent” means a nationally recognized title company reasonably acceptable to Manager.

Event of Default by Manager. The term “Event of Default by Manager” is defined in Section 14.01.

Event of Default by Owner. The term “Event of Default by Owner” is defined in Section 14.02.

Facility. The term “Facility” is defined in the recitals to this Agreement.

Facility Expenses.

(a) The term “Facility Expenses” means those costs and expenses that are directly related to the operation, maintenance, repair costs and staffing of the Facility, which expenses and payment of expenses shall be administered by Manager from the Facility’s Gross Revenues, including, without limitation:

• Costs of inventory and supplies used in the operation of the Facility;

• Costs payable to prevent, cure or correct any violation of federal, state or municipal laws, ordinances, regulations, restrictive covenants or orders or the rules of the applicable Board of Fire Underwriters with respect to the leasing, use, repair or maintenance of the Facility and any expense incurred in order to obtain or maintain any operating permits or licenses, including any registration fees and expenses and legal fees associated therewith;

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• Costs payable to make repairs and perform all maintenance and preventative maintenance and other routine property maintenance and upkeep services with respect to the Facility other than those paid from the FF&E Reserve;

• Costs payable for the collection of delinquent rentals collected through an attorney or collection agency and other costs required in connection with the enforcement of any lease or resident agreement with respect to the Facility (including, without limitation, legal fees, reasonable disbursements and moving and storage expenses for FF&E and personal property of Residents and/or lessees);

• Costs payable under service contracts to which Owner or Manager is a party with respect to the Facility;

• Costs payable to third parties for advertising and leasing expenses with respect to the Facility (including, but not limited to, promotions, printing and signs), or a pro rata share thereof where such advertising is for the benefit of the Facility and other facilities;

• Costs payable to third parties for auditing, tax preparation and accounting services with respect to the Facility, and reasonable attorneys’ fees incurred with respect to the Facility;

• All reasonable costs and fees of audit, legal, technical and other independent professionals who are retained by Manager to perform professional services (which for purposes of this paragraph shall exclude repair, maintenance and alterations work not of a professional nature) required or permitted hereunder; provided that, so long as the Facility is subject to the Manager Pooling Agreement, Manager will obtain Owner’s prior written consent with respect to any such proposed expenditures to the extent required under Section 5.3 of the Manager Pooling Agreement, unless such expenditures are necessary to satisfy Emergency Requirements, in which case Owner’s consent shall not be required provided that Manager provides Owner with prompt written notice of such expenditure;

• The reasonable cost and expense of technical consultants and operational experts who are employees of Manager or one of its Affiliates and who perform specialized services (that is, services not otherwise required to be provided by Manager hereunder for and in consideration of the fees payable hereunder) in connection with Facility work (including, but not limited to, regional office employees and employees of Sunrise Senior Living, Inc. or its Affiliates who assist with the Facility operations which includes an information technology help desk and a regional business manager); provided, however, that the costs and expenses so incurred shall only be Facility Expenses to the extent such costs and expenses are reasonable and competitively priced, as compared to similar work done by outside consultants or experts; and provided, further, so long as the Facility is subject to the Manager Pooling Agreement, Manager will obtain

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Owner’s prior written consent with respect to any such proposed expenditures to the extent required under Section 5.3 of the Manager Pooling Agreement, unless such expenditures are necessary to satisfy Emergency Requirements, in which case Owner’s consent shall not be required provided that Manager provides Owner with prompt written notice of such expenditure;

• Costs incurred by Manager for all personnel employed at the Facility or whose services are entirely allocable to the Facility, and for those personnel employed in part at the Facility and in part at other facilities, a reasonable share of costs of such personnel (determined by factors such as services rendered in a facility and operational complexities and percent of such personnel’s time spent in connection with the Facility), such costs to include salary and wages (including costs of processing, printing and mailing of payroll checks and W-2 forms), training programs, hiring expenses, payroll taxes, workers’ compensation, bonus compensation, incentive compensation, retirement plan payments, travel expenses and other benefits payable (including, for example, health insurance, dental insurance, life insurance and disability insurance) to such personnel;

• Costs payable to third parties for printed forms and supplies required for use at the Facility;

• Costs of all utilities serving the Facility;

• Costs payable to third parties for printed checks and bank account maintained by Owner or Manager in accordance with this Agreement with respect to the Facility;

• To the extent required to be carried by Manager pursuant to the terms of this Agreement, costs of insurance at the Facility which include: insurance premiums; the ultimate costs of self-insured losses and deductibles; claims administration costs; risk management costs; and other program costs including premium taxes, fronting fees, state Workers’ Compensation self-insurance assessments, collateral fees and surety bonds supporting self-insurance programs, and broker fees;

• Costs incurred to third parties incurred in order to prevent a breach under a lease or a Facility Mortgage;

• The Base Management Fee payable to Manager under the terms of this Agreement;

• Costs incurred by Manager for electronic data processing equipment, systems, software or services used at the Facility, including procurement, maintenance and upgrades;

• All Impositions described in Section 5.07;

• Costs incurred by Manager for comprehensive crime insurance or fidelity bonds for Facility employees; and

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• Any other costs, fees or expenses included in, and which Manager is authorized to incur in accordance with the terms and conditions set forth in this Agreement.

(b) Facility Expenses will include a proportionate share of Facility Shared Services used at the Facility. At Owner’s request, Manager shall provide Owner with an analysis of the formula and methodology employed by Manager in allocating the Facility Shared Services among the applicable facilities which allocation shall be a fair and reasonable formula based upon use by the other facilities within the Manager’s System (and Owner’s allocation of Facility Shared Services shall not be disproportionate as compared to Facility Shared Services used by other facilities within the Manager’s System). Facility Expenses will also include charges for services provided directly to the Facility by employees of Manager or Manager’s Affiliates who do not work at the Facility which services are set forth in Exhibit B-2 attached hereto. The amount, type, and cost of the Facility Shared Services that are necessary to maintain the Facility in accordance with Manager’s Standards and will be included in the Proposed Budget submitted to Owner pursuant to Article VII.

(c) Facility Expenses shall not include the following:

• Except as expressly agreed to by Owner, or included in the Approved Budget or as otherwise set forth above, costs incurred by Manager for salary and wages, payroll taxes, workers’ compensation, bonus compensation, incentive compensation, retirement plan payments, travel expenses and other benefits payable to Manager’s or Manager’s Affiliates’ corporate office employees or divisional or regional supervisor employees (including, without limitation, non-incentive stock option grants and any bonus compensation to such employees);

• Except as expressly agreed to by Owner as part of an annual request by Manager, costs incurred by Manager for in-house accounting and reporting systems, software or services furnished by Manager under this Agreement, as distinguished from third party accounting and reporting costs (as for example, the annual auditing costs of Accountants), which shall be Facility Expenses;

• Costs incurred by Manager for forms, papers, ledgers and other supplies, equipment, copying and telephone of any kind used in Manager’s office at any location other than the Facility;

• Except as expressly agreed to by Owner, costs incurred by Manager for political contributions;

• Costs attributable to losses which are covered by the indemnity obligations of Manager pursuant to Section 15.02(a) of this Agreement;

• Except to the extent included in an Approved Budget or as otherwise expressly agreed to by Owner, costs incurred by Manager for training and hiring expenses related to corporate office employees or divisional or regional supervisory employees, including but not limited to employment and employment agency fees;

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• Costs incurred by Manager for advertising expenses of Manager other than costs of marketing the Facility for lease or occupancy, or costs of employment ads for positions at the Facility;

• Costs incurred by Manager for any architect, engineer, or other professional advisor or consultant employed by Manager, as distinguished from cost for third parties engaged for the performance of such services, which shall be Facility Expenses;

• Costs incurred by Manager for dues of Manager or any of its employees in professional organizations or for any of Manager’s employees participating in industry conventions or meetings (except to the extent included in an Approved Budget or as otherwise specifically approved by Owner);

• Any insurance premiums and deductibles and real estate taxes payable by the Owner if Owner is making those payments directly rather than having Manager make those payments on Owner’s behalf; and

• Debt Service.

For purposes of consents required to be given by Owner as described in this definition of “Facility Expenses,” an approval by Owner given by e-mail from a person so authorized to give such consent as determined by Owner from time to time to Manager will be sufficient.

Facility Mortgage. The term “Facility Mortgage” means any mortgage, deed of trust or indemnity deed of trust recorded against all or any portion of the Facility as security for a secured loan.

Facility Sale. The term “Facility Sale” means any sale, assignment (other than a collateral assignment given in connection with a financing of the Facility), transfer or other disposition, for value or otherwise, voluntary or involuntary, of Owner’s title or other interest (or any part thereof) to the Facility (either fee or leasehold title, as the case may be). For purposes of this Agreement, a Facility Sale shall include (a) a lease (or sublease) of all or substantially all of the Facility to any Person, and (b) any sale, assignment, transfer, or other disposition of all or substantially all of the Facility, for value or otherwise, voluntary or involuntary, in a single transaction or a series of related transactions.

Facility Shared Services. The term “Facility Shared Services” shall mean (i) those expenses for goods or services that relate to the Facility and to other Facilities in Manager’s System which are set forth on Exhibit B-1, and (ii) expenses for such other services that are provided by Manager throughout the Manager’s System from time to time as reasonably approved by Owner in the Approved Budget, which charges shall not include general corporate overhead or general corporate operating expenses of Manger or its Affiliates.

FF&E. The term “FF&E” means furniture, furnishings, fixtures, soft goods, case goods, vehicles and equipment (including but not limited to telephone systems, facsimile machines, communications and computer systems hardware) located in or on or used exclusively in

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connection with the operation of the Facility but shall not include Household Replacements or any software. FF&E shall be and remain the property of Owner during the Term and upon the expiration or termination of this Agreement.

FF&E Estimate. The term “FF&E Estimate” is defined in Section 11.02(c).

FF&E Reserve. The term “FF&E Reserve” means the reserve established pursuant to Section 11.02(a). FF&E Reserve shall be and remain the property of Owner during the Term and upon the expiration or termination of this Agreement.

FF&E Reserve Balance. The term “FF&E Reserve Balance” means, as of any date, an amount equal to the difference between (1) the amount actually paid into the FF&E Reserve pursuant to Article V and (2) the amounts due to be paid into the FF&E Reserve pursuant to Article V. Any portion of the FF&E Reserve Balance remaining unpaid at the end of any Fiscal Year shall accrue and become payable as a portion of the FF&E Reserve for the subsequent Fiscal Year.

FF&E Reserve Payment. The term “FF&E Reserve Payment” is defined in Section 11.02(f).

Financing. The term “Financing” is defined in Section 10.04(a).

Fiscal Year. The term “Fiscal Year” means the calendar year.

FMV Determination Notice. The term “FMV Determination Notice” is defined in Section 12.04(c).

Force Majeure. The term “Force Majeure” is defined in Section 18.15.

GAAP. The term “GAAP” means “U.S. generally accepted accounting principles.”

Guaranty. The term “Guaranty” means that certain Guaranty dated as of the date hereof made by Parent in favor of Manager.

Governmental Authority. The term “Governmental Authority” means any federal, state, county or municipal government, or political subdivision thereof, any governmental agency, authority, board, bureau, commission, department, instrumentality, or public body, or any court or administrative tribunal.

Gross Revenues. The term “Gross Revenues” means for each Accounting Period, all revenues and receipts of every kind derived from operating the Facility and all departments and parts thereof, including, but not limited to: income (from both cash and credit transactions) from monthly occupancy fees, health care fees and ancillary services fees received pursuant to various agreements with residents of the Facility; interest received with respect to the monies in any operating account of the Facility; income from food and beverage, and catering sales; income from telephone charges; income from vending machines; and proceeds, if any, from business interruption or other loss of income insurance (to the extent such insurance either reimburses on the basis of gross revenues or otherwise covers all expenses including Manager’s fees), all

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determined on an accrual basis in accordance with GAAP consistently applied; provided, however, that Gross Revenues shall not include: (i) gratuities to employees at the Facility; (ii) federal, state or municipal excise, sales or use taxes or similar taxes imposed at the point of sale and collected directly from residents or guests of the Facility or included as part of the sales price of any goods or services, such as gross receipts or similar taxes; (iii) proceeds from the sale or disposition of FF&E or other capital assets (which proceeds will be deposited in the FF&E Reserve); (iv) interest received or accrued with respect to the monies in any reserve accounts of the Facility; (v) any cash refunds, rebates or discounts to residents of the Facility, or cash discounts and credits of a similar nature, given, paid or returned in the course of obtaining Gross Revenues or components thereof; (vi) proceeds from any sale of the Facility or any part thereof, or any other Capital Transaction; (vii) proceeds of any financing transaction affecting the Facility; (viii) security or resident fee deposits until such time as the same are applied to current fees and other charges due and payable; (ix) awards of damages, settlement proceeds and other payments received by Owner in respect of any litigation other than litigation to collect fees due for services rendered from the Facility; (x) proceeds of any condemnation; (xi) proceeds of any casualty insurance, other than loss of rents or business interruption insurance; (xii) payments under any policy of title insurance; (xiii) income derived from securities and other property acquired and held for investment; (xiv) income from services to the extent they are outsourced and (xv) contributions by Owner. Any Bad Debt, or any community fees or deposits that are refunded to a resident shall be credited against Gross Revenues during the Accounting Period in which such Bad Debt is recognized or such refunds are made, as the case may be, if such amounts were previously included in Gross Revenues. Any Bad Debt which is recognized but is later collected shall be added to Gross Revenues.

Hazardous Materials. The term “Hazardous Materials” is defined in Section 8.01.

Home Office Employees. The term “Home Office Employees” is defined in Section 4.04.

Household Replacements. The term “Household Replacements” means supply items, except for FF&E, used or held in storage for future use, as are customarily used on a daily basis and are necessary in connection with the operation of the Facility in accordance with the terms of this Agreement, including linen, china, glassware, silver, uniforms, and similar items, including food, beverages, medical supplies, soaps, shampoos or any other similar consumable product.

Impositions. The term “Impositions” is defined in Section 5.07(b).

Indemnitee. The term “Indemnitee” is defined in Section 8.02.

Index. The term “Index” means the Consumer Price Index: All Urban Consumers, (1982-84=100), All Items, U.S. City Average (CPI-U), as published by the United States Department of Labor, Bureau of Labor Statistics. If the Index is discontinued or otherwise revised during the Term, such other government index or computation with which it is replaced shall be used. If the Index is discontinued with no successor Index, another similar index with an appropriate conversion factor shall be substituted. If the Index is changed so that a base year other than 1982-84 is used, the Index shall be converted in accordance with the conversion factor published by the Bureau of Labor Statistics.

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Initial Arbitrator. The term “Initial Arbitrator” is defined in Section 18.17.

Insurance Program. The term “Insurance Program” is defined in Section 12.01.

Insurance Retention. The term “Insurance Retention” is defined in Section 13.02.

Intellectual Property. The term “Intellectual Property” means (1) all computer software developed and owned by Manager or an Affiliate of Manager; and (2) all manuals, instructions, policies, procedures and directives issued by Manager to its employees at the Facility regarding the procedures and techniques to be used in operation of the Facility. The term “Intellectual Property” shall include Proprietary Marks but does not include the data and information stored or maintained on the Intellectual Property.

Interest. The term “Interest” means the lower of (i) sixteen percent (16%) per annum or (ii) the highest interest permitted under applicable laws.

JV Agreement. The term “JV Agreement” is defined in Section 14.08.

Legal Requirements. The term “Legal Requirements” means any law, code, rule, ordinance, regulation, license, certificate or order of any Governmental Authority having jurisdiction over the business or operation of the Facility or the matters which are the subject of this Agreement, including any resident care or health care, building, zoning or use laws, ordinances regulations or orders, environmental protection laws, employment laws, occupational health and safety laws and fire department rules.

Loan Documents. The term “Loan Documents” is defined in Section 10.04(b).

Major Casualty. The term “Major Casualty” means any fire or other casualty that results in damage to the Facility to a greater extent than a Minor Casualty.

Management Agreement. The term “Management Agreement” means this Agreement and any Replacement Management Agreement.

Manager. The term “Manager” is defined in the Preamble of this Agreement.

Manager FMV Determination. The term “Manager FMV Determination” is defined in Section 12.04(c).

Manager Indemnitee(s). The terms “Manager Indemnitee” and “Manager Indemnitees” are defined in Section 8.01.

Manager Pooling Agreement. The term “Manager Pooling Agreement” means the Manager Pooling Agreement dated as of the date hereof by and among Manager, Owner along with tenants at certain other facilities managed by Manager, and Parent, as the same may be amended from time to time.

Manager Receivables. The term “Manager Receivables” is defined in Section 18.24.

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Manager’s Standards. The term “Manager’s Standards” means, from time to time, the (1) operational standards (for example, housekeeping, food service, activities, staffing levels, resident care and health care policies and procedures) and (2) the physical standards (for example, life safety equipment and policies and procedures, amounts and quality of FF&E, frequency of FF&E replacement) that are then implemented or in the process of being implemented at seventy-five percent (75%) or more of similarly situated, in Manager’s reasonable judgment, assisted living and/or independent living communities in Manager’s System, but in any event not less than the operational and physical standards of other senior living communities of similar size and market orientation; provided that in no event shall Manager’s Standards be permitted to fall below the operational and physical standards as in effect as of the Effective Date.

Manager’s System. The term “Manager’s System” means at any particular time the system or group of assisted living and/or independent living communities then owned and/or operated or managed by Manager (or one or more of its Affiliates).

Marketing Services. The term “Marketing Services” is defined in Section 4.02.

Minor Casualty. The term “Minor Casualty” means any fire or other casualty which results in damage to the Facility and/or its contents, and in the reasonable judgment of Manager the out-of-pocket expenses (to the extent not covered by insurance proceeds) of the “Repair and/or Replacement” equals or is less than One Million Dollars ($1,000,000) (excluding any required insurance deductibles). For purposes of this paragraph, “Repair and/or Replacement” shall mean the repair and/or replacement of the Facility and/or its contents to substantially the same condition as existed prior to the fire or other casualty resulting in damage to the Facility and its contents.

Monthly Reports. The term “Monthly Reports” is defined in Section 4.03(k).

Mortgagee. The term “Mortgagee” means the holder, from time to time, of a Facility Mortgage or any replacement of a Facility Mortgage.

Net Operating Income. The term “Net Operating Income” means, for each Accounting Period or Fiscal Year, as applicable, all Gross Revenues in excess of Facility Expenses. For purposes of calculating Net Operating Income, any capital expenditure (determined in accordance with GAAP) and FF&E Reserve necessary to operate and maintain the Facility shall not be included in the definition of Facility Expenses.

Non-Compliance Costs. The term “Non-Compliance Costs” is defined in Section 16.01(b).

Non-Routine Capital Expenditures. The term “Non-Routine Capital Expenditures” means all other capital projects and/or items not provided for in Section 11.02, including, without limitation, (i) renovations, replacements and maintenance to the Facility which are included in the Approved Budget and which are normally capitalized consistent with Manager’s Standards and GAAP such as flooring in common areas and full replacement of roofs and parking areas, and (ii) any other expenses necessary for alterations, improvements, renewals or replacements to the Facility building’s structure or exterior facade or to its mechanical, electrical, heating, ventilating, air conditioning, plumbing, or vertical transportation systems which are classified as capital expenditures under GAAP.

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OD Loan. The term “OD Loan” (Operating Deficit Loan) is defined in Section 5.03.

Offered Purchase Price. The term “Offered Purchase Price” is defined in Section 18.12(d).

Operating Year. The term “Operating Year” shall mean a twelve (12) month period commencing at midnight on January 1 and ending at 11:59 p.m. on December 31 of each calendar year during the Term.

Owner. The term “Owner” is defined in the Recitals of this Agreement.

Owner Indemnitee(s). The terms “Owner Indemnitee” and “Owner Indemnitees” are defined in Section 8.02.

Parent. The term “Parent” is defined in the Preamble of this Agreement.

Permitted Expenditure Limit. The term “Permitted Expenditure Limit” is defined within the definition of “Facility Expenses” in Section 1.01.

Person. The term “Person” means any individual, partnership, corporation, limited liability company, trust or other legal entity.

Proposed Budget. The term “Proposed Budget” is defined in Section 7.01.

Proprietary Marks. The term “Proprietary Marks” means all trademarks, trade names, symbols, logos, slogans, designs, insignia, emblems, devices, service marks and distinctive designs of buildings and signs, or combinations thereof, which are used to identify the Facility. The term “Proprietary Marks” shall also include all trade names, trademarks, symbols, logos, designs, etc, which are used in connection with the operation of the Facility during the Term. The term “Proprietary Marks” shall include all present and future Proprietary Marks, whether they are now or hereafter owned by Manager or any of its Affiliates, and whether or not they are registered under the laws of the United States or any other country.

Purchase Notice. The term “Purchase Notice” is defined in Section 18.12(d).

Qualified Broker. The term “Qualified Broker” is defined in Section 12.04(c).

Qualified Transferee. The term “Qualified Transferee” means (a) CNL Healthcare Trust, Inc., a Maryland corporation, provided that such entity (A) has total assets in excess of Two Hundred Million Dollars ($200,000,000), (B) has as its advisor (pursuant to an advisory agreement as to management, acquisition, advisory and administrative services) an Affiliate of CNL Financial Group, Inc., a Florida corporation, (C) is not known in the community as being of bad moral character, and (D) is not in control of or is controlled by any one or more persons who have been convicted of a felony involving turpitude in any state or federal court, (b) any other real estate investment trust, provided that such entity (A) has total assets in excess of Two

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Hundred Fifty Million Dollars ($250,000,000), (B) is not known in the community as being of bad moral character, and (C) is not in control of or is controlled by any one or more persons who have been convicted of a felony involving turpitude in any state or federal court, or (c) a bank, saving and loan association, investment bank, insurance company, trust company, commercial credit corporation, pension plan, pension fund or pension advisory firm, mutual fund, United States government entity or plan, investment company, money management firm or “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, as amended, or an institutional “accredited investor” within the meaning of Regulation D under the Securities Act of 1933, as amended which is regularly engaged in the business of directly or indirectly owning or operating real estate and which has total assets (in name or under management) in excess of Two Hundred Fifty Million Dollars ($250,000,000); provided that, in the case of subsection (c) of this definition, such Person (i) does not, either directly or indirectly, have an ownership interest (excluding that of a mere franchisee or a mere passive investor with a non-controlling interest) in a brand of retirement communities totaling at least ten (10) retirement communities, if such brand of retirement communities competes with Manager, (ii) does not, either directly or indirectly, have an ownership interest (excluding that of a mere franchisee or a mere passive investor with a non-controlling interest) in a group of retirement communities totaling at least ten (10) retirement communities that are not affiliated with a brand but that are marketed and operated as a collective group, if such group of retirement communities competes with Manager, (iii) is not affiliated with a brand or group described in (i) and (ii) above, (iv) is not known in the community as being of bad moral character, and (v) is not in control of or is controlled by any one or more persons who have been convicted of a felony involving turpitude in any state or federal court.

Replacement Management Agreement. The term “Replacement Management Agreement” shall mean a management agreement for the management of the Facility executed by Manager and a Person which replaces the Management Agreement in effect immediately prior to the replacement.

Residents. The term “Residents” is defined in Section 2.02.

Response. The term “Response” is defined in Section 18.12(d).

Routine Expenditures. The term “Routine Expenditures” is defined in Section 11.02.

Sale Notice. The term “Sale Notice” is defined in Section 18.12(b).

Sale Offer. The term “Sale Offer” is defined in Section 18.12(d).

Second Notice. The term “Second Notice” is defined in Section 12.04(c).

Software. The term “Software” means all computer software and accompanying documentation (including all future upgrades, enhancements, additions, substitutions and modifications thereof) that are owned or leased by Manager and used in connection with its operations at the Facility.

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Term. The “Term” shall begin on the Effective Date, and, unless sooner terminated, shall continue until the thirtieth (30^th) anniversary of the first day of the month immediately after the Effective Date.

Termination Date. The term “Termination Date” is defined in Section 14.07.

Termination Fee. The term “Termination Fee” is equal to the amount determined by multiplying (a) five (5) by (b) an amount equal to the aggregate of (i) the Base Management Fee payable to Manager during the twelve (12) month period preceding the Termination Date and (ii) if any Incentive Fee (as defined in the Manager Pooling Agreement) is payable to Manager on account of the pooled Facilities’ performance during the twelve (12) month period preceding the Termination Date, an amount equal to twenty-six and two tenths percent (26.2%) of the Incentive Fee payable to Manager on an annualized basis for such period.

Trademark License. The term “Trademark License” is defined in Section 17.04.

Venue. The term “Venue” is defined in Section 18.17.

ARTICLE II

APPOINTMENT OF MANAGER AND PRIMARY GOAL OF AGREEMENT

2.01. Appointment of Manager. Owner hereby appoints Manager and Manager hereby accepts appointment, subject to the terms and conditions of this Agreement, as the sole and exclusive manager for the daily operation and management of the Facility. Except as otherwise provided herein, Manager shall have responsibility and complete and full control and discretion in the operation, direction, management and supervision of the Facility in accordance with Manager’s Standards and the Approved Budget. Manager accepts said appointment and agrees to operate the Facility during the Term of this Agreement in accordance with the terms and conditions herein set forth.

2.02. Goals.

(a) It is the joint goal of Owner and Manager to:

(1) Establish and maintain programs to promote the most effective utilization of the Facility’s services;

(2) Provide quality services to residents of the Facility (the “Residents”) in a manner consistent with the form of resident agreement in use at the Facility and the Approved Budget (as hereinafter defined);

(3) Establish appropriate marketing programs and maintain a public image of excellence for the Facility;

(4) Maintain a sufficient number of well trained and quality staff at the Facility;

(5) Operate the Facility on a sound financial basis;

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(6) Institute a sound financial accounting system for the Facility;

(7) Institute adequate internal fiscal controls through proper budgeting, accounting procedures, and timely financial reporting;

(8) Establish sound billing and collection procedures and methods;

(9) Conform operations at the Facility to all applicable Legal Requirements, including without limitation, those pertaining to licensing; and

(10) Take such other steps as are necessary to provide high quality care to the Residents.

ARTICLE III

MANAGEMENT FEES

3.01. Base Management Fee. As compensation for the services to be rendered by Manager pursuant to this Agreement, during the Term, Owner hereby instructs Manager to pay itself, through retention or other means, on a monthly basis, in arrears, a management fee (the “Base Management Fee”) equal to six percent (6%) of Gross Revenues per month. The Base Management Fee will be paid in accordance with Section 5.03 by determining such fee from the Gross Revenues for the Accounting Period to which such Base Management Fee applies.

ARTICLE IV

DUTIES AND RIGHTS OF MANAGER

4.01. Authority of Manager; Right of Possession. Facility operations shall be under the exclusive supervision and control of Manager who, except as otherwise specifically provided in this Agreement and as set forth in the Approved Budget, shall be responsible for the proper and efficient operation of the Facility. Manager shall have discretion and control, in all matters relating to day-to-day management and operation of the Facility, including, without limitation, the following: fees and charges for providing accommodations, food services, care services, and related services to Residents and their guests; supervision of resident care; credit policies; food and beverage services; employment policies; executing, modifying and terminating licenses and concessions for commercial space within the Facility in accordance with Section 4.03 below (provided that the term of any such license or concession shall not extend beyond the Term of this Agreement); receipt, holding and disbursement of funds; maintenance of bank accounts; procurement of inventories, supplies and services; promotion and publicity; and, generally, all activities necessary for the operation of the Facility.

4.02. Marketing Services. Manager shall provide the following services (the “Marketing Services”):

(a) Direct the marketing efforts for the Facility.

(b) Plan and implement community outreach, public relations and special events programs.

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(c) Arrange and contract for all advertising and promotion of the Facility which Manager in its reasonable discretion deems necessary or appropriate for the operation of the Facility, to the extent the costs of such advertising and promotion are included in the Approved Budget.

4.03. Management Duties. As manager of the Facility, Manager shall, subject to adequate funds being available from Gross Revenues or otherwise provided by Owner, implement all aspects of the operation of the Facility in accordance with the terms of this Agreement, the Approved Budget and Manager’s Standards, and shall have responsibility and commensurate authority for all such activities. In addition to any other duties set forth in this Agreement, Manager shall, subject to adequate funds being available from Gross Revenues or otherwise provided by Owner:

(a) Enter into all contracts, leases and agreements required in the ordinary course of business for the supply, operation, maintenance and service of the Facility (including but not limited to food procurement, trash removal, pest control and elevator maintenance) and, subject to adequate funds being available from Gross Revenues or otherwise provided by Owner, pay the costs of all such services when due; provided that Owner’s consent shall be required, not to be unreasonably delayed, withheld or conditioned, for any leases for the occupancy of space at the Facility, except for resident agreements as permitted hereunder and leases permitted under Section 4.08 below which are in connection with services customarily provided at facilities of similar size and class as the Facility.

(b) Purchase inventories, provisions, food, supplies and other expendable items.

(c) Recruit, hire, supervise and train all employees to be employed at the Facility.

(d) Provide care to Residents of the Facility as provided for in the resident agreement agreed to by the parties.

(e) Set all resident fees and use its commercially reasonable efforts to collect such fees.

(f) Oversee and manage all day-to-day operations.

(g) Obtain, renew and maintain all licenses and permits necessary in order to operate the Facility in accordance with Legal Requirements and the terms of this Agreement.

(h) Establish and revise, as necessary, administrative policies and procedures including, without limitation, policies and procedures for the control of revenue and expenditures, for the purchase of Household Supplies and services, for the control of credit, and for the scheduling of maintenance.

(i) Make or install, or cause to be made or installed, in the name of Owner, all normal capital repairs, decorations, renewals, revisions, alterations, rebuilds, replacements, additions, and improvements in and to the Facility building and FF&E, in the ordinary course of

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business, that Manager deems necessary or appropriate for the proper operation and maintenance of the Facility in accordance with Manager’s Standards and otherwise in accordance with this Agreement and the Approved Budget.

(j) Except as otherwise provided in any Loan Documents, open and maintain the bank accounts as required by this Agreement.

(k) Prepare and deliver to Owner the Proposed Budget, the reports and financial statements required pursuant to Article VI (the “Monthly Reports”) and such other information as required by this Agreement.

(l) Plan, execute and supervise repairs and maintenance at the Facility.

(m) Procure and maintain insurance in accordance with Article XII.

(n) Operate the Facility in compliance with any Facility Mortgage, and, promptly after obtaining knowledge of the same, notify Owner of any notice of violations or default under any Facility Mortgage. Notwithstanding the foregoing sentence, so long as no Affiliate of Manager holds a direct or indirect ownership interest in Owner, Manager shall have the obligation to comply with the provisions of any Facility Mortgage only to the extent that Owner has provided written notice to Manager of the terms of the Facility Mortgage with which Owner requires Manager to comply with and such terms do not prevent Manager from operating the Facility in compliance with Legal Requirements and Manager’s Standards. In all events, Manager shall only have the obligation to comply with the provisions of any Facility Mortgage to the extent that there are sufficient funds available to Manager out of Gross Revenues or otherwise provided by Owner to cover the costs and expenses incurred by Manager in connection with the compliance by Manager with the terms of the Facility Mortgage.

(o) Conduct such other operations from time to time as may be required under this Agreement.

4.04. Manager’s Home Office Employees. As part of the provision of the services provided by Manager, Manager shall from time to time make its employees who are not working directly at the Facility (the “Home Office Employees”) available to the on-site management staff for consultation and advice related to the Facility (exclusive of the Facility Shared Services). Home Office Employees include Manager’s home office staff and staff at other facilities managed by Manager and its Affiliates with experience in areas such as accounting, budgeting, finance, human resources, construction, development, marketing, food service and purchasing. Owner may reasonably request such services, but the decision to provide Home Office Employees shall be within the reasonable discretion of Manager. Except as provided with respect to Facility Shared Services, which shall be a Facility Expense hereunder, the services of Home Office Employees shall be provided at no additional charge to Owner. Should Owner request a type, form or level of service that Home Office Employees do not provide in the normal course of operations to carry out the scope of services described in this Agreement and which do not constitute a Facility Shared Service hereunder, Manager shall (1) provide such services by Home Office Employees for an additional cost to be agreed to in advance by Manager and Owner, which cost shall be a Facility Expense, or (2) if such services cannot be

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provided by Manager’s Home Office Employees or if Manager and Owner cannot agree on the cost thereof, and Owner so directs Manager in writing, use commercially reasonable efforts to locate and contract for such services from outside consultants, the cost of which shall be a Facility Expense.

4.05. Personnel Administration. The personnel at the Facility shall be employed by Manager, and the salaries, costs and benefits of such employees shall be Facility Expenses. Manager shall be responsible for recruiting, hiring, training, promoting, assigning, supervising and discharging the personnel of the Facility and shall be responsible for the formulation, implementation, modification and administration of wage scales, rates of compensation, employee insurance, employee taxes, in-service training, attendance at seminars or conferences, staffing schedules, job descriptions and personnel policies with respect to the personnel of the Facility in accordance with the Approved Budget.

4.06. Purchasing. Manager shall use, on behalf of the Facility, such purchasing systems and procedures developed by or otherwise available to Manager for all items that are consistent with the Approved Budget. Any purchase by Manager made pursuant to or otherwise ancillary to this Agreement shall be made with Manager acting for and at the expense of the Facility or Owner. Owner acknowledges that Manager is not a merchant and thus is not making any representations or warranties with respect to the goods or services purchased by Manager for use at the Facility, implied or otherwise. In the event that Manager receives any competitive discounts or rebates due to its relationships with vendors, Manager covenants to allocate a fair and reasonable portion of any such discounts or rebates to the Facility in order to reduce Facility Expenses.

4.07. Resident Agreements. Owner acknowledges and agrees that it has received from Manager the forms of resident agreement, resident lease or resident occupancy agreement contemplated to be used by Manager at the Facility and has approved such forms. Manager shall act on behalf of Owner in executing resident agreements, resident leases and resident occupancy agreements and amendments and renewals thereof, substantially in the form of the form approved by Owner as of the Effective Date with any changes to such form as Manager may determine in its discretion to be necessary or desirable for the operation of the Facility, provided that such changes meet Legal Requirements and Manager’s Standards. Notwithstanding the immediately preceding sentence, in the event any changes to any resident agreement, resident lease or resident occupancy agreement would result in a materially adverse consequence to Owner, Manager shall obtain the approval of Owner in connection with such changes.

4.08. Ancillary Activities. Manager and/or its Affiliates shall have the right, to utilize the Facility for ancillary activities the revenues from which will not be included in Gross Revenues, so long as (i) any such ancillary activities are separately contracted for by Manager and/or its Affiliates and outside the scope of the assisted living and independent living services being provided to Residents in the Manager’s System (such as providing rehabilitation, hospice or other intensive care services to certain Residents), (ii) such ancillary activities are outside the scope of the services being provided to Residents on a usual basis, (iii) no such ancillary activities impair the health and safety of the Residents or the quality of services provided to them by Manager under this Agreement, (iv) Owner receives a fair market rental and reimbursement for any space or equipment in the Facility being utilized or utilities being consumed in

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connection therewith, (v) no employees of Manager whose salaries and benefits are being paid by Owner shall be utilized in the conduct of any ancillary activities and (vi) any such ancillary activities would not have a materially adverse economic impact on the Facility. The foregoing shall not prohibit employees at the Facility from making referrals to prospective Residents to more appropriate services, and receiving fees for such referrals to the extent referral fees are permitted under applicable federal, state and local laws, provided that Manager demonstrates to Owner’s reasonable satisfaction that such ancillary activities may be reasonably expected to provide long-term benefit to the business of the Facility. For example, but not by way of limitation, the referral of a prospective Resident to an at-home care program, where such prospective Resident is not yet in need of assisted living or independent living services, provides contact and marketing opportunities which encourage the individual to become a Resident on a later date when assisted living or independent living services are appropriate. No program shall be established where it is more beneficial to refer an individual to a different service than to have the individual become a Resident. In connection with the delivery of the Proposed Budget in accordance with Section 7.01 Manager shall deliver a written or oral notice to Owner describing Manager’s anticipated ancillary activities during the fiscal year to which the Proposed Budget pertains. If Owner believes that a proposed ancillary activity is in violation of this Section 4.08 and Owner refuses to consent to such ancillary activity, then Owner shall have the right to submit the dispute to Arbitration in accordance with Section 18.17.

4.09. Notice of Licensure Issues. If Manager receives a notice from a Governmental Authority which presents or reasonably would be expected to present a threat to the continued licensure of the Facility, Manager shall promptly provide Owner with a copy of such notice.

ARTICLE V

COLLECTIONS AND PAYMENTS; GROSS REVENUE DISTRIBUTION; OD LOAN;

CREDITS AND COLLECTIONS; WORKING CAPITAL; IMPOSITIONS

5.01. Collections and Payments. Manager shall be responsible for collecting all Gross Revenues and fees billed to Residents and for paying Facility Expenses as agreed in the Approved Budget.

5.02. Manager Pooling Agreement. So long as the Facility is subject to the Manager Pooling Agreement, in each Fiscal Year, Gross Revenues shall be distributed, to the extent available, as provided in the Manager Pooling Agreement and the provisions of Section 5.03 shall not apply.

5.03. Distribution of Gross Revenues; OD Loan.

(a) Distributions. For any period during which the Facility is not subject to the Manager Pooling Agreement, no later than the twentieth (20^th) day following the end of each Accounting Period, the following items shall be paid by Manager from Gross Revenues, to the extent cash, revenues and receipts derived from operating the Facility are on hand and available with respect to such Accounting Period, in the following order of priority:

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(1) pay Facility Expenses (including the Base Management Fee) payable during such Accounting Period,

(2) transfer into the FF&E Reserve those amounts required to be deposited into the FF&E Reserve pursuant to this Agreement, plus any FF&E Reserve Balance,

(3) pay Debt Service under the Facility Mortgage,

(4) pay any outstanding principal and accrued interest under any OD Loan,

(5) pay the remainder of the Gross Revenues, to Owner.

If and to the extent cash, revenues and receipts on hand and available are insufficient to satisfy the foregoing distribution, such deficiency shall be paid on the next distribution date on which cash, revenues and receipts on hand are sufficient to pay such distribution. In determining the amount of Gross Revenues available for distribution pursuant to Section 5.03(a), Manager shall use the accrual method of accounting. If at any time, including pursuant to the annual audit, Manager or Owner establishes that the distributions made pursuant to this subsection (a) with respect to a particular Accounting Period have not been correctly made, each party agrees that it will pay the appropriate amount to the other party to correct any mistakes; provided that there shall be no such obligation after the conclusion of two consecutive annual audits of the particular Accounting Period. All monthly distributions under this Section 5.03 shall initially be based upon the aggregate results anticipated as reflected in the Approved Budget for the Facility. If actual results vary from the Approved Budget, then Manager shall adjust the distributions of Gross Revenues based on its good faith estimate of anticipated results for the remainder of the full Fiscal Year, which estimate shall be based on actual year-to-date performance, and subject to ongoing cumulative reconciliation and repayment, if applicable, on a quarterly basis, to be conducted by Manager. For any period during which the Facility is not subject to the Manager Pooling Agreement, if the portion of Gross Revenues to be paid pursuant to Sections 5.03(a)(1), (2), (3), and (4) above is insufficient in any Fiscal Year to pay such amount in full for such Fiscal Year, any amount left unpaid shall accrue beyond such Fiscal Year and if Owner does not promptly fund such deficit as it relates to payments for Sections 5.03(a)(1), (2) and (3), Manager may (but shall have no obligation to) fund such deficit pursuant to an OD Loan.

(b) OD Loan. If, during any Accounting Period, Gross Revenues during such period are insufficient to pay the amounts set forth in Section 5.03(a)(1), (2) and (3) in full for such period, Owner shall fund any such shortfall within ten (10) days after notice from the Manager of such shortfall. If Owner shall fail to fund any such shortfall, such failure shall be an Event of Default by Owner under this Agreement. Nevertheless, Manager or an Affiliate of Manager shall have the right (but not the obligation) to advance the necessary funds to cover such shortfall and such funds shall be deemed to be a loan to Owner (the “OD Loan”). The OD Loan will initially bear no interest, will be unsecured and will be repayable by Owner to Manager or an Affiliate of Manager within thirty (30) days after written notice of the amount of the OD Loan is delivered to the Owner. Thereafter, if the OD Loan remains unpaid following the expiration of such thirty (30) day period, Manager shall have the right to withdraw an amount

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equal to the OD Loan (including accrued interest) pursuant to Section 5.03(a) above. In addition, Manager shall have the right, but not the obligation, to offset any unpaid OD Loan amounts against any amounts owed to Owner as a Cure Amount under Section 2.1(c) of the Manager Pooling Agreement. The outstanding principal amount of the OD Loan shall bear interest at the rate of Interest accruing from the 31st day after funding until its repayment based on a 360 day year for the actual number of days elapsed.

5.04. Credits and Collections. Manager shall install credit and collection policies and procedures, and Manager shall institute reasonable steps necessary to effectuate monthly billing by the Facility, and the collection of accounts and monies owed to the Facility. This also includes the institution of legal proceedings in the name of Owner, Manager and/or the Facility to collect such accounts or to enforce the rights of Owner or Manager as creditor under any contract in connection with the rendering of any service or the purchase of any goods, if necessary after Manager has used commercially reasonable efforts to collect such accounts, or to enforce such rights without the institution of such proceedings. Any and all reasonable costs and/or fees charged by a third party in connection with the collections and/or enforcement set forth in this Section shall be included in Facility Expenses.

5.05. Depositories for Funds.

(a) Manager shall maintain accounts and investments in such banks, savings and loan associations, and other financial institutions designated by Manager and reasonably approved by Owner. These accounts shall be in Manager’s name as agent for Owner, and withdrawals from such accounts shall be made solely by representatives of Manager whose signatures have been authorized to access the accounts, and the Manager shall be responsible for reimbursement of any amounts misappropriated from such accounts by its employees. These accounts shall be segregated from other of Manager’s accounts and investments. Manager shall maintain such balances therein as Manager shall deem appropriate, taking into account the cash flow management needs of the Facility and the disbursement from such accounts of such amounts of the Facility’s funds as Manager shall from time to time reasonably determine to be appropriate in the discharge of the responsibilities of Manager under this Agreement, as well as remaining in accordance with the Approved Budget. Any interest earned on the amounts in such funds (but not in the FF&E Reserve) shall be treated as Gross Revenues of the Facility. It is Owner’s responsibility to provide the funds needed to operate the Facility in a manner designed to meet the mutual goals of Owner and Manager set forth in Section 2.02 above, consistent with the terms of this Agreement. Upon Owner’s request, Manager shall provide to Owner a list of all bank accounts maintained by Manager with respect to the Facility. Reasonable petty cash funds shall be maintained at the Facility.

(b) Notwithstanding anything to the contrary contained herein, all accounts and investments maintained by Manager or Owner hereunder shall be subject to the terms and conditions of any Loan Documents. In the event of any conflict between the Loan Documents and this Agreement with respect to such accounts or investments, the Loan Documents shall govern.

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5.06. Working Capital.

(a) As used herein, “Working Capital” means assets which are reasonably necessary and used for the day-to-day operation of the Facility’s business, including, without limitation, amounts sufficient for the maintenance of petty cash funds, amounts deposited in operating bank accounts, receivables, prepaid expenses, and funds required to maintain inventories and pay all Facility Expenses as they become due, less accounts payable and accrued current liabilities. Owner shall be responsible for ensuring that Manager has sufficient Working Capital at all times for operation of the Facility in accordance with the Approved Budget and in accordance with Manager’s Standards.

(b) During the period that the Facility is subject to the Manager Pooling Agreement, the Manager Pooling Agreement shall apply for determining Working Capital needs of the Facility.

(c) Manager will manage the Working Capital of the Facility prudently and in accordance with the Approved Budget. During the period that the Facility is not subject to the Manager Pooling Agreement, if Manager reasonably determines that levels of Working Capital drop below levels generally consistent with Manager’s Standards and as are reasonably required to satisfy Manager’s Standards, Manager may submit to Owner an estimate of additional Working Capital needed, together with reasonable backup explaining the cause for such shortfall. Owner shall provide such additional Working Capital to Manager no later than fifteen (15) days after receipt of a written request for the same, and shall give notice to Manager within five (5) Business Days after receipt of such written request if Owner disputes the need for such additional Working Capital. In the event that Owner disputes Manager’s request for additional Working Capital, the dispute will be resolved exclusively by arbitration pursuant to Section 18.17. Either party may initiate such arbitration. Owner shall pay such disputed additional Working Capital to Manager to be held in escrow by Manager until such time as the arbitrator renders its decision and Owner shall disburse any undisputed amount directly to Manager to be used as additional Working Capital.

(d) Any Working Capital provided by Owner shall remain the property of Owner throughout the Term of this Agreement. Working Capital shall be available for use by Manager in accordance with this Agreement. Upon termination of this Agreement, Owner shall retain any of its unused Working Capital.

5.07. Impositions.

(a) All Impositions (defined below) which accrue during the Term of this Agreement (or are properly allocable to such Term under GAAP) shall be paid by Manager from Gross Revenues, as a Facility Expense, before any fine, penalty or interest is added thereto or lien placed upon the Facility or this Agreement, unless payment thereof is stayed; provided, however, that nothing herein shall impose upon Manager responsibility for funding payment of Impositions from Manager’s own funds. Owner shall within five (5) Business Days after the receipt of any invoice, bill, assessment, notice or other correspondence relating to any Imposition, furnish Manager with a copy thereof. Owner may initiate proceedings (or direct Manager to initiate proceedings) to contest any Imposition (in which case each party agrees to sign the required applications and otherwise cooperate with the other party in expediting the matter), and all reasonable costs of any negotiations or proceedings with respect to any such contest shall be paid from Gross Revenues and shall be a Facility Expense.

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(b) The term “Impositions” means all levies, taxes, assessments and similar charges, including, without limitation, the following: real estate taxes, sales taxes, goods and services taxes, all water, sewer or similar fees, rents, rates, charges, excises or levies, vault license fees or rentals; license fees; inspection fees and other authorization fees and other charges by a Governmental Authority of any kind or nature whatsoever, whether general or special, ordinary or extraordinary, foreseen or unforeseen, or hereinafter levied or assessed of every character (including all interest and penalties thereon), which at any time during or in respect of the Term of this Agreement may be assessed, levied, confirmed or imposed on Owner or Manager with respect to the Facility or the operation thereof, or otherwise in respect of or be a lien upon the Facility (including, without limitation, on any of the inventories or Household Replacements now or hereafter located therein). Impositions shall not include any of the following: (1) any income or franchise taxes payable by Owner or Manager, or (2) any franchise, corporate, estate, inheritance, succession, capital levy or transfer tax imposed on Owner, all of which shall be paid solely by the party against whom such expense was assessed, not from Gross Revenues or any other funds generated by or held with respect to the Facility. Notwithstanding the foregoing, any Impositions resulting from Manager’s gross negligence or willful misconduct, or fines or penalties imposed due to Manager’s failure to correct a noticed deficiency prior to the imposition of a fine (provided that reasonable notice and time to cure was given), or as a result of a repeat of a prior violation for which Manager was cited in the prior twelve (12) month period, shall be paid by Manager from its own funds and not as a Facility Expense, provided that Manager shall not be responsible for Impositions if Manager’s fault for such Impositions (i) is caused by an Event of Default by Owner, (ii) is caused by lack of funding by Owner, or (iii) is a result of the fact that Owner did not follow Manager’s recommendations for establishing sufficient funds in the Approved Budget. In the event that Manager and Owner disagree as to whether an Imposition is appropriate for reimbursement as a Facility Expense, the dispute will be resolved exclusively by arbitration pursuant to Section 18.17. Either party may initiate such arbitration.

ARTICLE VI

FINANCIAL RECORDS

6.01. Accounting and Financial Records. Manager shall, at its own expense, establish and administer accounting procedures and controls and systems for the development, preparation and safekeeping of records and books of accounting relating to the business and financial affairs of the Facility, including payroll, accounts receivable and accounts payable, and shall prepare monthly, quarterly and annual financial reports (including profit and loss statements) in accordance with the requirements of Exhibit C-1 attached hereto. Such interim reporting shall compare monthly and year-to-date results with the Approved Budgets. Manager shall prepare annual financial reporting in accordance with GAAP and reasonably cooperate with the Accountants in the annual audit. Manager shall also cooperate with Owner to provide any third-party lenders on the Facility with any reasonable Facility related financial information required by such third-party lenders under the terms of any loan secured by a Facility Mortgage, provided that Manager shall receive reasonable additional compensation for any different reporting formats required. If required by such third-party lenders, Manager shall certify such reports as true and correct in all material respects. The reasonable costs of the annual audit shall be a Facility Expense.

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6.02. Reports. In addition to the Monthly Reports, Manager shall keep Owner informed as to the financial status, condition, and operation of the Facility and as to any State or local reporting requirements in connection with the licenses and permits necessary for Manager to operate the Facility, with written reports and such other or special reports as Manager may from time to time determine are necessary or which Owner may reasonably request. From and after such time Sunrise Senior Living Investment, Inc. (“SSLII”) is no longer required to deliver to CHT SL IV Holding, LLC (“CHT”) a quarterly certification under that certain Delegation Agreement, dated as of the date hereof, between SSLII and CHT, Manager shall also provide Owner, within twenty (20) days following the end of each quarter during the Fiscal Year, a quarterly certification in the form set forth on Exhibit C-2 attached hereto. So long as Owner is indirectly owned by SSLII and/or CHT, Manager shall maintain a system of internal controls necessary for SSLII’s and CHT’s Sarbanes-Oxley certifications in the manner currently maintained by Manager.

6.03. Access; Audit. Owner shall have the right at least three (3) business days notice to Manager and at all reasonable times during the usual business hours of the Facility, to audit, examine and make copies of books of account maintained by Manager with respect to the Facility. Such right may be exercised through any agent or employee designated by Owner or by the Accountants. Further, at the end of the Term of this Agreement, or upon other termination of this Agreement, as provided herein, copies of all books and records kept for the Facility, including all records kept on electronic media, and accounts and funds belonging to each Facility, are to be promptly delivered to Owner in a form readable by generally available software. Manager shall have the right to locate any and all books of account and other records maintained by Manager with respect to the Facility either at Manager’s corporate office, located in McLean, Virginia or at the Facility. In the case of books of account and other records located at Manager’s corporate office, Manager shall make adequate space available to Owner at Manager’s corporate office to audit, examine and make copies of such books of account and other records, and Manager shall be under no obligation to relocate such records to the Facility for Owner’s review. In the event of any such audit, the final accounting shall be controlling over any interim accountings and the parties agree to make any necessary corrective financial adjustments determined by any such audit.

ARTICLE VII

ANNUAL OPERATING BUDGET

7.01. Annual Operating Budget. (a) Manager shall, within the time limits set forth on Exhibit C-1, deliver to Owner (i) a draft annual operations budget for the next Fiscal Year for the Facility in the form attached hereto as Exhibit D (the “Proposed Budget”), for Owner’s approval, (ii) an estimate, on an Accounting Period basis, of Gross Revenues and Facility Expenses, and (iii) an explanation of anticipated changes to resident charges, payroll rates and positions, non-wage cost increases, the proposed methodology and formula employed by Manager in allocating the cost of Facility Expenses, a line-item detail of any shared Facility Expenses, and all other factors differing from the then current Fiscal Year. The Proposed Budget shall be considered by the Owner and, upon consultation with Manager, a final annual operations

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budget (the “Approved Budget”) shall be approved based on the Proposed Budget. If there is a delay in the finalization of a new Approved Budget, or if the Proposed Budget is not approved as aforesaid, Manager shall operate the Facility pursuant to the prior Fiscal Year’s Approved Budget, increased by the greater of (i) three and one-half percent (3.5%) or (ii) any increase in the Index, until the Proposed Budget is approved by Owner. The amount of the Index increase for each Fiscal Year shall be determined by multiplying the Approved Budget for the previous Fiscal Year by a fraction, the numerator of which shall be (i) the Index most recently published immediately prior to the next Fiscal Year, minus (ii) the Index most recently published immediately prior to the immediately preceding Fiscal Year, and the denominator of which shall be the Index most recently published immediately prior to the immediately preceding Fiscal Year. Mathematically, the Index increase calculation may be expressed as (current Index - last year Index) ÷ last year Index. Provided that Manager is not an Affiliate of a Person holding a direct or indirect ownership interest in Owner, if consensus cannot be reached between the parties as to the Proposed Budget within sixty (60) days of Owner’s receipt of the Proposed Budget, the dispute will be resolved exclusively by arbitration pursuant to Section 18.17 (it being acknowledged that if Manager is an Affiliate of a Person holding a direct or indirect ownership interest in Owner, such dispute will be resolved subject to and in accordance with the JV Agreement). Either party may initiate such arbitration. Manager shall use commercially reasonable efforts to adhere to the Approved Budgets, it is understood, however, that the Approved Budget is only a projection by Manager of estimated results and that various circumstances such as, but not limited to, the cost of labor, material, services and supplies, casualty, operation of law, or economic and market conditions may make achievement of the Approved Budget impracticable or not obtainable. Except for expenditures necessary to satisfy any Emergency Requirements, Manager will secure Owner’s prior approval if actual aggregate annual expenditures exceed the aggregate annual expenditures set forth in the Approved Budget by more than 10% (the “Permitted Variance”). Notwithstanding the foregoing, Owner’s approval shall not be required if such excess actual aggregate annual expenditures (in excess of 10%) results in a Net Operating Income margin consistent with that in the Approved Budget for the applicable year. Notwithstanding anything contained herein to the contrary, any references to actions of Manager being “in accordance with the Approved Budget” or words of similar import shall mean the Approved Budget as adjusted by the Permitted Variance.

ARTICLE VIII

ENVIRONMENTAL MATTERS

8.01. Owner Responsibility and Indemnification. In the event of the discovery of non-compliance with any Environmental Law related to Hazardous Materials (as defined below) on any portion of the Facility during the Term of this Agreement, Owner shall promptly remedy such matter to achieve compliance, including if required the removal of such Hazardous Materials, together with all contaminated soil and containers and shall otherwise remedy the problem in accordance with all Environmental Laws, except Manager shall bear the costs of such remediation at its own cost and expense if and to the extent such problem is the result of Manager’s gross negligence or willful misconduct. Owner shall indemnify, defend and hold harmless Manager, its stockholders, members, partners, trustees, directors, officers, agents, employees and beneficiaries, and any of their respective successors or assigns with respect to their interest in the Facility (collectively, the “Manager Indemnitees” and, individually, a “Manager Indemnitee”) for, from and against any and all debts, liens, claims, causes of action,

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administrative orders or notices, fines, penalties, expenses, loss, costs, liability and damage (including, without limitation, engineers fees, attorneys’ fees and expenses and the cost of litigation) arising from the aforementioned non-compliance with Environmental Laws; and this indemnification obligation of Owner shall survive for one (1) year after termination of this Agreement. This duty includes, but is not limited to, costs associated with personal injury or property damage claims as a result of the presence of Hazardous Material in, upon or under the soil or ground water of the Facility in violation of any Environmental Law prior to the expiration or sooner termination of this Agreement. Owner shall undertake any litigation defense through its own legal counsel (at its sole cost and expense) of any indemnification duties arising from this Section 8.01. If Manager determines that the Manager Indemnitee’s interests in the outcome of such litigation conflicts with Owner’s interest, Manager shall have the right to participate in any litigation defense through its own legal counsel at Owner’s sole cost and expense, provided that Owner shall not be liable for any attorney fees incurred by Manager and Manager Indemnitees if it is determined by a judicial, administrative or arbitral proceeding that the presence of Hazardous Materials (which served as the basis of the Environmental Law violation) was caused by Manager’s gross negligence or willful misconduct (with no contributory negligence or willful misconduct on the part of Owner), in which case Manager shall be responsible for both its own and Owner’s legal costs and expenses incurred in connection with this Section 8.01. “Hazardous Materials” shall mean and include any substance or material containing one or more of any of the following: “hazardous material,” “hazardous waste,” “hazardous substance,” “regulated substance,” “petroleum,” “pollutant,” “contaminant,” or “asbestos” as such terms are defined in any applicable Environmental Law in such concentration(s) or amount(s) as may impose clean-up, removal, monitoring or other responsibility under the Environmental Laws, as the same may be amended from time to time, or which may present a significant risk of harm to Residents, invitees or employees of the Manager or the Facility. All costs and expenses of the aforesaid removal of Hazardous Materials from the Facility and of the aforesaid compliance with all Environmental Laws shall be paid as a Facility Expense or from the FF&E Reserve (and Owner shall promptly replenish the FF&E Reserve to the extent funds from the FF&E Reserve were used in connection with any such action). Any amounts paid to Manager pursuant to the indemnity set forth in this Section 8.01, shall be paid by Owner from its own funds not as a Facility Expense nor from the FF&E Reserve.

8.02. Manager Responsibility and Indemnity. To the extent not otherwise covered by insurance maintained by either Manager or Owner, Manager shall protect, indemnify and hold harmless Owner, its stockholders, members, partners, trustees, directors, officers, agents, employees and beneficiaries, and any of their respective successors or assigns with respect to their interest in the Facility (collectively, the “Owner Indemnitees” and, individually, a “Owner Indemnitee”) for, from and against any and all debts, liens, claims, causes of action, administrative orders or notices, fines, penalties, expenses, loss, costs, liability and damage (including, without limitation, engineers fees, attorneys’ fees and expenses and the cost of litigation) imposed upon, incurred by or asserted against any Owner Indemnitee resulting from, either directly or indirectly, the presence during the Term in, upon or under the soil or ground water of the Facility or any properties surrounding the Facility of any Hazardous Materials in violation of any Environmental Law, to the extent that any of the foregoing arises by reason of the gross negligence or willful misconduct of Manager, except to the extent the same also arises from the negligence or wrongful conduct of a third party or any other Owner Indemnitee. This duty includes, but is not limited to, costs associated with personal injury or property damage

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claims as a result of the presence prior to the expiration or sooner termination of this Agreement of Hazardous Materials in, upon or under the soil or ground water of the Facility in violation of any Environmental Law. Upon written notice from the indemnified party and any other of the Owner Indemnitees, Manager shall undertake any litigation defense through its own legal counsel (at its sole cost and expense) of any indemnification duties set forth under this Section 8.02. If Owner determines that the Owner Indemnitee’s interests in the outcome of such litigation conflicts with Manager’s interest, Owner shall have the right to participate in any litigation defense through its own legal counsel at the sole cost and expense of Manager, provided that Owner shall be liable for any and all attorney fees incurred by Manager and the Owner Indemnitees if it is determined by a judicial, administrative or arbitral proceeding that the presence of Hazardous Materials (which served as the basis of the Environmental Law violation) was not caused by Manager’s gross negligence or willful misconduct. The Owner and Indemnities, at their own expense, will cooperate fully with Manager. The indemnity obligation of Manager set forth in this Section 8.02 shall survive for one (1) year after termination of this Agreement.

8.03. Notice. Each party shall undertake reasonable efforts to notify the other party concerning the non-compliance of any Environmental Law or presence of any Hazardous Materials on or under the Facility of which the notifying party has knowledge; provided, however, that, except to the extent permitted by Section 18.10 below, the parties shall otherwise maintain such information confidential.

8.04. Obligation to Comply. Manager agrees to take all reasonable actions necessary to comply with all requests of lenders and insurers and with all Legal Requirements including implementing any and all remedial or preventative maintenance programs as circumstances may reasonably require to comply with any and all Environmental Laws. All such costs shall be paid as a Facility Expense to the extent they are typical and ordinary maintenance expenses, but if such costs are extraordinary in nature or should be properly treated as a capitalized expense, Owner shall bear such costs and shall promptly pay such expenses.

ARTICLE IX

OTHER FINANCIAL MATTERS

9.01. Charges. As part of the Approved Budget and at other times as determined by Manager, Manager will establish the overall rate structure of the Facility, including, without limitation, residency room charges, charges for all ancillary services, and charges for supplies, medication, and special services performed by Facility personnel. All such charges shall take into account the financial obligations of the Facility, the level of rates at other comparable facilities, and the importance of providing housing, services and care at a competitive rate, all considered in a manner most likely to achieve the goals set forth in Section 2.02 above.

9.02. Tax Status. Subject to the provisions of this Agreement, Manager shall use its reasonable efforts to cause the Facility to be operated in a manner to assure that Owner and the Facility receive all benefits of Federal, State, county, municipal and city or district tax exemptions and/or credits available thereto. Manager shall provide Owner reasonably available data in its possession, or otherwise reasonably available to Manager, relating to the Facility which Owner may need for the preparation of Federal and State tax returns. Manager shall

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provide such information upon request by Owner and in a timely manner so that Owner shall have sufficient time to prepare and file any necessary tax returns. Manager shall not be responsible for the preparation of any of Owner’s tax returns.

9.03. Employee Withholding. Manager shall use commercially reasonable efforts to comply with all applicable local, State and Federal requirements concerning the withholding of taxes from employee wages.

ARTICLE X

GENERAL COVENANTS AND OWNER AND MANAGER OBLIGATIONS

10.01. Owner’s Obligations. Owner hereby agrees to comply with all of the applicable provisions of this Agreement and to perform all obligations of Owner as otherwise set forth herein. Owner further agrees to take all steps reasonably necessary to facilitate Manager’s provision of management services hereunder in accordance with the terms of this Agreement and Manager’s Standards, and to ensure, consistent with the provisions herein, that Owner, and Owner’s employees and agents, provide necessary assistance and cooperation to Manager in connection therewith.

10.02. Manager’s Obligations. Manager hereby agrees to comply with all of the provisions in this Agreement and to perform all obligations of Manager as otherwise set forth herein.

10.03. Quiet Enjoyment. Owner covenants that, so long as Owner has not terminated this Agreement by reason of (a) an Event of Default by Manager under this Agreement, or (b) the exercise by Owner of any right of Owner to terminate this Agreement under any other Section of this Agreement, Manager shall quietly hold, occupy and enjoy the Facility throughout the Term hereof free from hindrance or ejection by Owner or other party claiming under, through or by right of Owner. Owner agrees to pay and discharge any payments and charges and, at its expense, to prosecute all appropriate actions, judicial or otherwise, necessary to assure such free and quiet occupancy except those resulting from any act or failure to act on the part of Manager in violation of this Agreement. Nothing set forth in the preceding sentence, however, shall be deemed to create a recourse obligation by Owner to pay any payment or charge pursuant to a contract that is otherwise, by its terms, non-recourse to Owner.

10.04. Financing of the Facility.

(a) Facility Mortgage. Manager shall use commercially reasonable efforts to cooperate with Owner, as may be reasonably requested by Owner, in its efforts to obtain financing or replacement financing (a “Financing”) for the Facility on favorable terms (e.g., providing prospective lender with information about Manager generally available to the public from a publicly traded company). Owner shall have the right to encumber all of the assets that comprise the Facility, any part thereof, or any interest therein, including the common elements on which the Facility is located, the Facility building and all improvements thereto and all FF&E and equipment and operating supplies placed in or used in connection with the operation of the Facility as contemplated in any Facility Mortgage that is entered into by Owner, provided that any Mortgagee under such Facility Mortgage grants reasonable non-disturbance to Manager,

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further provided that the Facility Mortgage shall not allow such Mortgagee to use any Working Capital or FF&E Reserve amounts to pay debt service on the Facility Mortgage as such Working Capital and FF&E Reserve amounts shall be used exclusively for the operation of the Facility.

(b) Owner Consent. If the loan documents executed in connection with a Financing or any subordination, non-disturbance and attornment agreement executed by Manager in connection with the Financing (the “Loan Documents”) contain provisions requiring Manager (upon default under the Financing or upon various other stipulated conditions) to pay certain amounts which are otherwise due to Owner under the Management Agreement (after the payment of Facility Expenses) to the lender or its designee (rather than to Owner), Owner hereby gives its consent to such provisions, which consent shall be deemed to be irrevocable until the entire Financing debt secured by the Facility has been discharged.

(c) Modification of Manager’s Obligations. The parties acknowledge that a lender under a proposed Financing may impose requirements on the operations of the Facility that exceed those or are different from those set forth in this Agreement or the Manager Pooling Agreement pursuant to the terms and conditions of the Loan Documents. Manager shall comply with those obligations under the Loan Documents that are within the scope of Manager’s duties under this Agreement or the Manager Pooling Agreement, and execute an amendment to this Agreement or the Manager Pooling Agreement reflecting any additional obligations or duties required by the Loan Documents but only to the extent that (i) any additional duties or obligations shall be subject to Manager’s reasonable ability to perform, (ii) no budgetary or other restriction which might be imposed by any lender shall in any way impair Manager’s ability to maintain all appropriate licenses for the Facility nor expose Manager to any potential liability for inadequate care, (iii) adequate funds are provided to Manager (either by the Facility’s cash flow or by Owner), and (iv) such additional duties or obligations do not diminish the formula for the fees or reimbursements becoming due to Manager under this Agreement or the Manager Pooling Agreement and do not otherwise (A) adversely affect Manager’s rights and interests under this Agreement or the Manager Pooling Agreement or (B) create any additional liabilities or obligations on the part of Manager under this Agreement or the Manager Pooling Agreement.

ARTICLE XI

REPAIRS, MAINTENANCE AND REPLACEMENTS

11.01. Routine Repairs and Maintenance. Manager shall maintain the Facility in good repair and condition and in conformity with applicable Legal Requirements (or in conformity with Manager’s Standards, if higher), and shall make or cause to be made such routine maintenance, repairs and minor alterations, and Emergency Expenditures which are not capitalized under GAAP, the cost of which can be expensed under GAAP, as it, from time to time, deems necessary for such purposes. The cost of such maintenance, repairs and alterations shall be paid from Gross Revenues and treated as a Facility Expense in determining Net Operating Income. All repairs shall be made in a good, workmanlike manner, consistent with Manager’s Standards, in accordance with all applicable Legal Requirements relating to such work.

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11.02. FF&E Reserve and Routine Expenditures.

(a) FF&E Reserve. Manager, on behalf of Owner, shall establish an interest bearing reserve account (the “FF&E Reserve”) at a bank designated by Owner to cover the cost of the following (collectively “Routine Expenditures”). All interest earned on the funds in the FF&E Reserve shall be added to and shall remain a part of the FF&E Reserve. Such account shall be established in Owner’s name and control for the purposes set forth in this Agreement. All funds in the FF&E Reserve, all interest earned thereon and all property purchased with funds from the FF&E Reserve shall be and shall remain the property of Owner:

(1) Replacements, renewals and additions to the Facility’s FF&E as required to meet Manager’s Standards and Legal Requirements; and

(2) Certain routine refurbishments to the Facility buildings as required to meet Manager’s Standards and Legal Requirements and which are normally capitalized under GAAP such as exterior and interior repainting, resurfacing building walls, floors, roofs and parking areas, but which are not Non-Routine Capital Expenditures.

(b) Throughout the Term, Manager shall transfer into the FF&E Reserve one twelfth (1/12) of the FF&E Reserve Payment each Accounting Period.

(c) Manager shall submit by November 30^th of each Fiscal Year an estimate (the “FF&E Estimate”) of the expenditures necessary for (i) replacements, renewals and additions to the Facility’s FF&E described in Section 11.02(a)(1), and (ii) repairs to the Facility of the nature described in Section 11.02(a)2, during the ensuing Fiscal Year, and shall submit such FF&E Estimate to Owner for its review. Manager will at all times give good faith consideration to Owner’s suggestions regarding any FF&E Estimate. In the event that such FF&E Estimate projects a deficit in the FF&E Reserve, Owner and Manager will work together in good faith to prepare an alternate estimate which will reduce or eliminate such deficit, but also take into account the needs of the Facility. All expenditures from the FF&E Reserve will be both reasonable and necessary, given the objective that the Facility will be maintained and operated in accordance with Manager’s Standards.

(d) Manager shall from time to time make such (1) replacements, renewals and additions to the Facility’s FF&E described in Section 11.02(a)(1), and (2) repairs to the Facility of the nature described in Section 11.02(a)(2), as it deems necessary, provided that Manager shall not expend more than the balance in the FF&E Reserve without the prior approval of Owner. Manager will endeavor to follow the applicable FF&E Estimate, but shall be entitled to depart therefrom, in its reasonable discretion, provided that (A) such departures from the applicable FF&E Estimate result from circumstances which could not reasonably have been foreseen at the time of the submission of such FF&E Estimate or (B) such departures from the applicable FF&E Estimate result from circumstances which require prompt repair and/or replacement or are necessary to comply with Legal Requirements or Emergency Requirements. Following any such departures that exceed the FF&E Estimate by more than ten percent (10%) in the aggregate, Manager shall submit to Owner a revised FF&E Estimate for the balance of the Fiscal Year for Owner’s approval, not to be unreasonably withheld. At the end of each Fiscal Year, any amounts remaining in the FF&E Reserve shall be retained in the FF&E Reserve and shall be carried forward to the next Fiscal Year.

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(e) Upon a sale of the Facility, funds in the FF&E Reserve will not be affected (or, if withdrawn, Owner will require that funds in the FF&E Reserve will be replaced by the purchaser of the Facility) and all dispositions of such funds (both before and after such sale of the Facility) will continue to be made exclusively pursuant to the provisions of this Agreement. Proceeds from the sale of FF&E no longer necessary to the operation of the Facility shall be deposited in the FF&E Reserve, as shall any interest which accrues on amounts placed in the FF&E Reserve. Neither (i) proceeds from the disposition of FF&E, nor (ii) interest which accrues on amounts held in the FF&E Reserve, shall either (x) result in any reduction in the required contribution to the FF&E Reserve set forth in subsection (b) above or (y) be included in Gross Revenues. Manager shall be authorized to lease (rather than purchase) shuttle vans, postal machines, photocopiers and other office equipment. Lease payments with respect to such leases shall be paid from Gross Revenues and will be a Facility Expense if it is an operating lease; if it is a capital lease, lease payments shall be paid from the FF&E Reserve. It is understood that Manager shall not be required to guarantee or otherwise stand behind any lease obligations of Owner.

(f) FF&E Reserve Payments. The amount of the annual FF&E Reserve payment (the “FF&E Reserve Payment”) shall be One Thousand Dollars ($1,000.00) per unit per annum during the period commencing on the Effective Date and ending on the day immediately preceding the first anniversary of the Effective Date. On each anniversary of the Effective Date (each, an “Adjustment Date”), the FF&E Reserve Payment shall be increased by any increase in the Index during the preceding 12 month period, as determined calculating a fraction, the numerator of which shall be (A) the Index most recently published immediately prior to the particular Operating Year in question, minus (B) the Index most recently published immediately prior to the immediately preceding Operating Year, and the denominator of which shall be the Index most recently published immediately prior to the immediately preceding Operating Year. Mathematically, the Index increase calculation may be expressed as (current Index - last year Index) ÷ last year Index.

(g) The FF&E Reserve Payment which is described in 11.02(f) is an estimate based upon Manager’s prior experience with other comparable retirement communities. As the Facility ages, this FF&E Reserve Payment may not be sufficient to keep the FF&E Reserve at the levels necessary to make the replacements, renewals or additions to the Facility’s FF&E described in Section 11.02(a)(1), or to make the refurbishments to the Facility of the nature described in Section 11.02(a)2, which are required to maintain the Facility in accordance with Manager’s Standards. If any FF&E Estimate which is prepared in accordance with 11.02(c) would require funding in excess of the FF&E Reserve Payment which is set forth in 11.02(f) above, Owner may either:

(1) Agree to increase the FF&E Reserve Payment set forth in 11.02(f) up to the level set forth in the FF&E Estimate, in order to provide the additional funds required, such increases to be treated as Facility Expenses,

(2) Make a lump-sum contribution to the FF&E Reserve in the necessary amount to increase the FF&E Reserve to a level sufficient to fund the items in the FF&E Estimate; or

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(3) Provide Manager in writing with the specific reasons for its disapproval and election to not increase the FF&E Reserve Payment pursuant to Section 11.02(g)(1) or make a lump-sum contribution to the FF&E Reserve pursuant to Section 11.02(g)(2) within thirty (30) days. Thereafter, in the fifteen (15) day period following Manager’s receipt of Owner’s disapproval, the parties will attempt to resolve in good faith the objections so specified by Owner. Provided that Manager is not an Affiliate of a Person holding a direct or indirect ownership interest in Owner, in the event that one or more of such objections have not been resolved as of the end of such fifteen (15) day period, any such matter shall be submitted to arbitration pursuant Section 18.17 (it being acknowledged that if Manager is an Affiliate of a Person holding a direct or indirect ownership interest in Owner, such dispute will be resolved subject to and in accordance with the JV Agreement). The foregoing notwithstanding, Manager may proceed with the implementation of any portion of its assessment and recommendations that is not subject to dispute.

If Owner elects not to agree to either option (1), (2) or (3) above, or Owner does not respond with respect to either option within thirty (30) days after submission of the FF&E Estimate (or, if Owner has elected option (2), if Owner fails to fund the required amount within a thirty (30) days of Manager’s request therefor), such failure shall constitute an Event of Default by Owner and Manager may (in addition to any other rights and remedies available to it), treat such failure to fund as an election by Owner of the option set forth in 11.02(g)(1) above. In addition, the placing of any restrictions on the expenditure by Manager of funds from the FF&E Reserve other than as set forth in this Article XI or in Article 7 (including, without limitation, restrictions resulting from (a) any litigation involving Owner or the Facility or (b) a foreclosure) shall constitute and Event of Default by Owner.

11.03. Non-Routine Capital Expenditures.

(a) Capital Budget. Manager shall prepare an annual estimate (the “Capital Budget”) of Non-Routine Capital Expenditures. Manager shall submit such Capital Budget to Owner for Owner’s approval no later than December 15^th of each Fiscal Year. Owner shall not unreasonably withhold its consent with respect to such Non-Routine Capital Expenditures which are: (1) required, in Manager’s reasonable judgment, to keep the Facility in a competitive, efficient and economical operating condition to meet Manager’s Standards, (2) reasonably required to achieve material compliance with any applicable Legal Requirements or in accordance with Manager’s Standards (if Manager’s Standards are higher than the Legal Requirements), or (3) refurbishments or replacements of portions of the Facility with respect to which it is no longer reasonably prudent to perform only routine maintenance in order to keep the Facility in good condition and repair, consistent with Manager’s Standards. In the event Owner disapproves any portion of such Capital Budget that requires Owner’s consent, Owner will provide Manager in writing with the specific reasons for its disapproval within thirty (30) days of the date of submission of the Capital Budget to Owner. Thereafter, in the twenty-five (25) day period following Manager’s receipt of Owner’s disapproval, the parties will attempt to resolve in good faith any objections so specified by Owner. Provided that Manager is not an Affiliate of a Person holding a direct or indirect ownership interest in Owner, in the event one or more of such objections have not been resolved as of the end of such twenty-five (25) day period, the dispute will be resolved exclusively by arbitration pursuant to Section 18.17 and

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either party may initiate such arbitration (it being acknowledged that if Manager is an Affiliate of a Person holding a direct or indirect ownership interest in Owner, such dispute will be resolved subject to and in accordance with the JV Agreement). Pending a final resolution, Manager may proceed with the implementation of any portion of such Capital Budget that is not subject to dispute.

(b) The cost of all Non-Routine Capital Expenditures shall be paid from the FF&E Reserve as set forth in the FF&E Estimate (subject to the Permitted FF&E Reserve Variance). If and to the extent amounts in the FF&E Reserve are insufficient to satisfy the cost of such Non-Routine Capital Expenditures, Owner shall be solely responsible for the amount of such shortfall. The failure of Owner to fulfill its obligations under this Section within thirty (30) days of Manager’s request therefor shall constitute an Event of Default by Owner.

11.04. Emergency Expenditures. Notwithstanding anything to the contrary in this Article XI, Manager shall be authorized to take appropriate remedial action (including making any necessary expenditures from the FF&E Reserve for capital items or exceeding the maintenance and repairs budget for non-capital Emergency Expenditures), without receiving Owner’s prior approval, to remedy or respond to any Emergency Requirements (provided that Manager shall give Owner notice of any such remedial action that requires more than a de minimis expenditure of funds from the FF&E Reserve or exceeds the repairs and maintenance budget) (hereinafter “Emergency Expenditures”). Manager shall, as soon as reasonably practical under the circumstances, notify Owner of any action that it may have taken and any costs it may have paid or incurred utilizing the FF&E Reserve under this Section 11.04 and shall cooperate with Owner in the pursuit of any such action and shall have the right to participate therein. Owner shall reimburse Manager for any such costs incurred by Manager in connection with any such remedial action (and shall replenish the FF&E Reserve of the Facility, to the extent funds from the FF&E Reserve were used in connection with any such remedial action) within thirty (30) days after Owner’s receipt of written notice from Manager of the amount of such costs.

11.05. Owner to Provide Funds; Failure of Owner to Fund.

(a) Owner shall timely provide sufficient funds required to be provided under this Article XI, as they are incurred or become due. This obligation shall continue throughout the Term without regard to the sufficiency of Gross Revenues, or the existence of any Event of Default by Manager hereunder. With respect to expenditures under 11.02, it is anticipated that this obligation will be met by Manager, on Owner’s behalf, paying Facility Expenses, first from Gross Revenues as made available to Manager for such purpose, then from available Working Capital, then, if such funds are insufficient, from funds provided by Owner. Notwithstanding Section 5.03(d), it is specifically agreed that Manager has no obligation hereunder to provide either funds or its credit for the benefit of Owner for the Facility. However, the parties acknowledge that Residents, employees, contractors, suppliers and other third parties doing business with the Facility may rely upon the credit, good name, and reputation of Manager. Therefore, timely compliance by Owner of its obligations under this Article XI is material in every respect and time is of the essence.

(b) An unreasonable failure or refusal by Owner to fund the amounts required to be funded under this Article XI within a thirty (30) day period after Manager’s request

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therefor shall be an Event of Default by Owner and shall entitle Manager to terminate this Agreement and to exercise Manager’s remedies under Article XIV. Such termination shall be evidenced by a written notice to Owner, which notice shall be delivered to Owner no later than ninety (90) days after the expiration of the thirty (30) day period described in the preceding sentence. The effective date of such termination shall be the date stated by Manager in such notice, provided that such effective date shall be no less than sixty (60) days after the date of such notice.

11.06. Liens Arising From Repairs and Alterations. Manager and Owner shall use commercially reasonable efforts to prevent any liens from being filed against the Facility which arise from any maintenance, repairs, alterations, improvements, renewals or replacements in or to the Facility. Each of Manager and Owner shall cooperate fully in obtaining the release of any such liens, and the costs thereof, if the lien was not occasioned by the fault of either party, shall be treated the same as the cost of the matter to which it relates. If the lien arises as a result of the fault of either party, then the party at fault shall bear the cost of obtaining the lien release.

ARTICLE XII

INSURANCE; DAMAGE; CONDEMNATION; FORCE MAJEURE

12.01. General Requirements.

(a) Manager, in Manager’s name, shall negotiate with independent insurance companies of recognized responsibility, a contract or contracts for, and keep in full force and effect, all policies of insurance of the type, extent, amount and cost of coverage which will be provided to Owner and otherwise consistent with sound management of the Facility and market availability, insuring Owner, Manager and the Facility against the risks customarily insured against for such a facility (the “Insurance Program”). The cost of the Insurance Program shall be included in the Approved Budget and the Annual Operating Budget as a Facility Expense. As of the date of this Agreement, the current coverages maintained under the Insurance Program are set forth in Exhibit E attached hereto. If Owner desires to increase the insurance coverage set forth in Exhibit E attached, Owner shall notify Manager of its request and Manager will purchase additional insurance provided that Owner timely provides Manager the required funds to purchase such additional insurance if there is insufficient funds from the Facility to pay for such additional expense. Manager shall obtain Owner’s consent prior to decreasing the insurance coverage set forth in Exhibit E attached.

(b) The amount of any insurance deductibles paid by Owner (or by Manager on Owner’s behalf out of Gross Revenues) shall be a Facility Expense. Neither Manager nor its Affiliates shall be required to pledge their credit in order to obtain any letters of credit issued to the insurance carriers in connection with any insurance policies.

(c) As soon as practicable following the issuance of any policy of insurance required hereby, Manager shall provide Owner with a certificate or certificates evidencing that policy. Any policy in the Insurance Program may be cancelled or materially changed only upon not less than ninety (90) days prior written notice by the insurer to the Named Insured. Such changes will be discussed with the Owner.

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12.02. Blanket Policies. All insurance described in Section 12.01 may be obtained by Manager by endorsement or equivalent means under its blanket insurance policies, provided that such blanket policies substantially fulfill the requirements specified herein.

12.03. Risk Management. One of the responsibilities of the Manager shall be to provide risk management oversight at the Facility.

12.04. Damage and Repair. The following provisions shall apply in the event the Facility is damaged by a Major Casualty or a Minor Casualty, subject to the requirements of any Facility Mortgage as to which Owner has complied with the terms of Section 4.03(n).

(a) Minor Casualty. If, during the Term, the Facility is damaged by a Minor Casualty, Manager shall, with all reasonable diligence, proceed to process the claim with the applicable insurance carriers, including settling such claim, and to make the necessary arrangements with appropriate contractors and suppliers to repair and/or replace the damaged portion of the Facility. Owner’s consent shall not be needed for Manager to perform any of the foregoing, all of which shall be performed in accordance with Manager’s reasonable judgment; provided, however, that the parties agree that the standard for such repair and/or replacement shall be to repair and/or replace the damaged portion of the Facility to levels of quality and quantity that are equal to those that existed with respect to such portion of the Facility prior to the occurrence of the damage at issue. Owner agrees to sign promptly any documents which are necessary to process and/or adjust the claim with the insurance carriers, as well as any contracts with such contractors and/or suppliers. Manager shall be entitled to receive a construction management fee equal to five percent (5%) of the total cost of all work undertaken pursuant to this Section, provided that the same is payable from insurance proceeds covering the cost of such repairs and/or replacements.

(b) Major Casualty. If, during the Term, the Facility suffers a Major Casualty, Owner shall, at its cost and expense and with all reasonable diligence, repair and/or replace the damaged portion of the Facility to the same condition as existed previously. Manager shall have the right to discontinue operating the Facility to the extent it deems necessary to comply with applicable Legal Requirements or as necessary for the safe and orderly operation of the Facility in accordance with Manager’s Standards. To the extent available, proceeds from any casualty insurance shall be applied to such repairs and/or replacements. If Owner fails to so promptly commence (no later than 30 days after receipt of the insurance proceeds) and complete the repairing and/or replacement of the Facility so that it shall be substantially the same as it was prior to such damage or destruction, such failure shall be an Event of Default by Owner. The Owner agrees to use commercially reasonable efforts to ensure that any Facility Mortgage shall include a provision permitting the Owner to use casualty insurance proceeds to complete the repairing and/or replacement of the Facility so that it shall be substantially the same as it was prior to the damage or destruction. If (i) the Owner is unable to obtain such entitlements and/or other approvals of a Governmental Authority as may be necessary to undertake such repair and/or replacement after Owner’s prompt and good faith efforts to obtain such entitlements and/or approvals, or (ii) the amount of the insurance deductibles and other uninsured out of pocket expenses of Owner in connection with the repair and/or replacement of the Facility pursuant to this subsection (b) are in the aggregate higher than Five Million Dollars ($5,000,000) (the “Cost Limit”) with respect to a particular casualty as shown by good faith estimates

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delivered to the Manager and Owner does not wish to pay for the amounts above the Cost Limit, then either party may terminate this Agreement upon thirty (30) days’ written notice to the other party. Such notice must be sent within thirty (30) days after the date of the Major Casualty.

12.05. Condemnation. The following provisions shall apply in the event all or a portion of the Facility is taken in any eminent domain, condemnation, compulsory acquisition, or similar proceeding by any competent authority for any public or quasi-public use or purpose, subject to the requirements of any Facility Mortgage as to which Owner has complied with the terms of Section 4.03(n).

(a) In the event all or substantially all of the Facility shall be taken in any eminent domain, condemnation, compulsory acquisition, or similar proceeding by any competent authority for any public or quasi-public use or purpose, or in the event a portion of the Facility shall be so taken, but the result is that it is unreasonable to continue to operate the Facility in accordance with the standards required by this Agreement, this Agreement shall terminate effective as of the date of such taking or similar proceeding. Owner and Manager shall each have the right to initiate such proceedings as they deem advisable to recover any damages to which they may be entitled.

(b) In the event a portion of the Facility shall be taken by the events described in Section 12.05(a), or the entire Facility is affected but on a temporary basis, and the result is not to make it unreasonable to continue to operate the Facility, this Agreement shall not terminate. However, so much of any award for any such partial taking or condemnation as shall be necessary to render the Facility equivalent to its condition prior to such event shall be used by Owner for such purpose; and Manager shall have the right to discontinue operating the Facility or portion of the Facility to the extent it deems necessary for the safe and orderly operation of the Facility.

(c) Provided that Manager is not an Affiliate of a Person holding a direct or indirect ownership interest in Owner, in the event of any proceedings described in Section 12.05(a) or 12.05(b), and if Owner and Manager cannot agree on a fair and equitable apportionment of any such award, the dispute shall be submitted by either party to arbitration pursuant to Section 18.17 (it being acknowledged that if Manager is an Affiliate of a Person holding a direct or indirect ownership interest in Owner, such dispute will be resolved subject to and in accordance with the JV Agreement).

12.06. Licensure Issues.

(a) The expiration, withdrawal or revocation of any license which is material to the operation of the Facility in accordance with Manager’s Standards, where such expiration, withdrawal or revocation: (1) is not due to either an Event of Default by Manager or an Event of Default by Owner; and (2) is not otherwise within the reasonable control of either Manager or Owner, shall not be either an Event of Default by Manager or an Event of Default by Owner under Article XIV of this Agreement. Manager and Owner shall each, in good faith, use all commercially reasonable efforts (including the diligent pursuit of all available appeals), during the period of one hundred twenty (120) days after the date of such withdrawal or revocation, to have such License reinstated. If, notwithstanding such efforts, such license is not reinstated prior

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to the expiration of the aforesaid period of one hundred twenty (120) days, either Owner or Manager shall have the right, at its option, to terminate this Agreement upon no less than thirty (30) days’ notice to the other party; provided, however, that the terminating party must deliver such notice of termination to the other party by no later than ninety (90) days after the expiration of such one hundred twenty (120) day period; and provided further, that no such termination shall be effective if, prior to the effective date of such termination, such License is reinstated or such expiration, withdrawal or revocation of such License is stayed.

(b) If an order, judgment or directive by a court or administrative body is issued in connection with any litigation involving Owner, which restricts or prevents Manager, in a material adverse manner, from operating the Facility in accordance with Manager’s Standards, Manager shall be entitled, at its option, to terminate this Agreement upon sixty (60) days’ notice. If Owner and Manager disagree whether the order, judgment or directive of the court or administrative body prevents Manager, in a material adverse manner, from operating the Facility in accordance with Manager’s Standards, the parties will submit the matter to arbitration for determination in accordance with the provisions of Section 18.17 of this Agreement.

ARTICLE XIII

TERMINATION OF AGREEMENT

13.01. General Termination; Termination by Parties.

(a) This Agreement shall automatically terminate at the end of the Term. Manager shall be compensated for its services through the date of termination, but shall not be entitled to any Termination Fee upon the natural expiration of the Term.

(b) Manager may terminate this Agreement, subject to the provisions of Section 14.05 and in addition to any other rights expressly set forth in this Agreement, if there is an Event of Default by Owner and may be entitled to a Termination Fee.

(c) Owner may terminate this Agreement, subject to the provisions of Section 14.04, and in addition to any other rights expressly set forth in this Agreement, if there is an Event of Default by Manager, in which event a Termination Fee shall not be owed to Manager provided that such Event of Default was not caused by a prior Event of Default by Owner. In the event Manager asserts that the Event of Default was caused by a prior Event of Default by Owner, the parties will attempt to resolve in good faith the objections so specified by Manager for a period of thirty (30) days. In the event the parties have not resolved Manager’s objections as of the end of such thirty (30) day period, any such dispute shall be submitted to arbitration pursuant Section 18.17 of this Agreement.

13.02. Transition upon Termination. The following provisions shall apply in the event of any termination or expiration of this Agreement:

(a) Upon termination of this Agreement for any reason, for a period of ninety (90) days thereafter Manager agrees to reasonably cooperate in transferring operational control of the Facility to Owner or a successor manager. Such cooperation shall include but not be limited to:

(1) the transfer of computer data in non-proprietary machine readable format and the transfer of any documents housed in Manager’s corporate headquarters relating to the Facility (or copies of such documents if Manager is required by law to maintain the originals);

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(2) the removal or covering of all signage on the Facility bearing the Sunrise name or trademark within thirty (30) days of such termination, it being agreed that Manager shall use reasonable care during any such removal and shall, at Manager’s sole cost and expense, repair any damage to the Facility caused by such removal;

(3) within One Hundred Twenty (120) days after the last day of the month in which the effective date of termination occurs, the preparation of a final accounting of Facility operations in accordance with the requirements of the annual financial statements specified on Exhibit C-1, and the disbursement to Owner of funds held by Manager on behalf of Owner, including, without limitation, the FF&E Reserve; and

(4) the peaceful vacation and surrender of the Facility to Owner upon the effective date of termination, it being agreed that Manager shall leave the premises in a clean and orderly condition.

(b) Manager shall (to the extent permitted by law) assign to Owner or to the new manager all operating licenses and permits for the Facility which have been issued in Manager’s name; provided that if Manager has expended any of its own funds in the acquisition of any of such licenses or permits, Owner shall reimburse Manager therefor if it has not done so already. Additionally, so as to avoid any disruption or delay of any services or amenities at the Facility, if licenses or permits held in Manager’s name cannot be transferred or cannot be transferred immediately to Owner or the successor manager, Manager will continue to provide management services to Owner under an interim management arrangement with Owner or the successor manager, in form and substance reasonably acceptable to Manager, but in any event no less favorable to Manager than this Agreement, until the completion of the assignment of licenses and permits, or the issuance of a replacement licenses or permits, or until the parties otherwise agree.

(c) After Manager shall have received all amounts due to Manager under this Agreement, Manager shall turn over, assign and transfer to Owner:

(1) All Facility assets, including all cash in Manager’s custody and control, whether segregated or commingled with the monies of Manager and/or other parties, which has been generated in connection with or arising from operations of the Facility;

(2) All coupons, instruments for the payment of money, certificates of deposit, accounts receivable or other contract rights or intangible personal property arising in connection with the operation of the Facility;

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(3) All equipment, supplies, keys, locks, safe combinations, computer passwords, telephone and fax numbers associated with the Facility, alarm access codes, and key cards; and

(4) All of Owner’s non-proprietary books and records respecting the Facility, and all contracts, leases, and other documents respecting the Facility and which are in custody or control of Manager (and Owner or the successor manager shall assume all contracts made in accordance with this Agreement).

13.03. Repayment of Operating Deficit Loan upon Termination. Upon termination of this Agreement for any reason, any and all amounts due to Manager under the OD Loan shall become immediately due and payable, whether such amounts are otherwise due and payable at such time and Manager shall have the right to offset any amounts outstanding under the OD Loan (including accrued but unpaid interest) against any amounts held by Manager on behalf of Owner as FF&E Reserve, Working Capital or Non-Routine Capital Expenditures.

ARTICLE XIV

DEFAULTS

14.01. Default by Manager. Manager shall be deemed to be in default (each, an “Event of Default by Manager”) under this Agreement (a) in the event Manager shall fail to keep, observe or perform any material covenant, agreement, term or provision of this Agreement to be kept, observed or performed by Manager, and such default shall continue (1) for a period of ten (10) Business Days after Manager receives written notice from Owner specifying the default in the case of monetary defaults or (2) for a period of thirty (30) days after Manager receives written notice from Owner in the case of non-monetary defaults; provided, however, that if such non-monetary default cannot be cured within such thirty (30) day period, then Manager shall be entitled to such additional time as is reasonable under the circumstances to cure such default, provided Manager is capable of curing same, has proceeded to commence cure of such default within said period, and thereafter diligently prosecutes the cure to completion, or (b) any of the events in Section 14.03 occurs with respect to Manager.

14.02. Default by Owner. Owner shall be deemed to be in default (each, an “Event of Default by Owner”) under this Agreement (a) in the event Owner shall fail to keep, observe or perform any material covenant, agreement, term or provision of this Agreement to be kept, observed or performed by Owner, to the extent such default continues (1) for a period of ten (10) Business Days after written notice thereof by Manager to Owner in the case of monetary defaults or (2) for a period of thirty (30) days after written notice thereof by Manager to Owner in the case of non-monetary time defaults; provided, however, if such default cannot be cured within such thirty (30) day period, then Owner shall be entitled to such additional time as is reasonable under the circumstances to cure such default, provided that Owner is capable of curing same, has proceeded to commence cure of such default within said period, and thereafter diligently prosecutes the cure to completion, (b) any of the events in Section 14.03 occurs with respect to Owner or (c) if Owner elects to close the Facility or substantial portion of the Facility for any reason other than a casualty or condemnation event if expressly permitted under this Agreement.

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14.03. Insolvency Default. The occurrence of any of the following shall constitute a default hereunder:

(a) Either party files a voluntary petition in bankruptcy or insolvency or a petition for reorganization under any bankruptcy law, or the admission of either party that it is unable to pay its debts as they become due; or

(b) Either party consents to an involuntary petition in bankruptcy or fails to vacate, within ninety (90) days from the date of entry thereof, any order approving an involuntary petition by either party; or

(c) Any court of competent jurisdiction enters an order, judgment or decree adjudicating either party as bankrupt or insolvent or approving a petition seeking reorganization or appointing a receiver, trustee or liquidator of a substantial part of such party’s assets, and such order, judgment or decree’s continuing unstayed and in effect for an aggregate of sixty (60) days (whether or not consecutive).

14.04. Remedies of Owner. Upon the occurrence of an Event of Default by Manager as specified in Section 14.01 of this Agreement (as such Event of Default by Manager may occur upon the expiration of any applicable cure period provided by this Agreement), Owner shall be entitled to exercise its rights at law or in equity, including the right to terminate this Agreement without payment of a Termination Fee or to compel specific performance of Manager’s obligations hereunder.

14.05. Remedies of Manager. Upon the occurrence of an Event of Default by Owner as specified in Section 14.02 of this Agreement (as such Event of Default by Owner may occur upon the expiration of any applicable cure period provided by this Agreement), Manager shall be entitled either: (a) to specific performance of Owner’s obligations under this Agreement or (b) to terminate this Agreement and to recover the Termination Fee.

14.06. No Waiver of Default. The failure of Owner or Manager to seek remedy for any violation of, or to insist upon the strict performance of, any term or condition of this Agreement shall not prevent a subsequent act by Owner or Manager which would have originally constituted a violation of this Agreement by Owner or Manager, from having all the force and effect of an original violation. Owner or Manager may waive any breach or threatened breach by Owner or Manager of any term or condition herein contained. The failure by Owner or Manager to insist upon the strict performance of any one of the terms or conditions of this Agreement or to exercise any right, remedy or election herein contained or permitted by law shall not constitute or be construed as a waiver or relinquishment for the future of such term, condition, right, remedy or election, but the same shall continue and remain in full force and effect. All rights and remedies that Owner or Manager may have at law, in equity or otherwise for any breach of any term or condition of this Agreement, shall be distinct, separate and cumulative rights and remedies and no one of them, whether or not exercised by Owner or Manager, shall be deemed to be in exclusion of any other right or remedy of Owner or Manager.

14.07. Termination Fee. If Owner fails to pay the Termination Fee in full within thirty (30) days after the Termination Date, then Manager shall have the right (without affecting

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Manager’s other remedies under this Agreement) to withhold the amount of such fee from the FF&E Reserve, the Working Capital funds or any other funds of Owner held by or under the control of Manager. The “Termination Date” shall mean the date of termination of this Agreement specified in any notice of termination given by Manager pursuant to the exercise by Manager of any termination right hereunder.

14.08. Failure to Pay. Upon the failure of either party to make any payment required to be made in accordance with the terms of this Agreement as of the due date which is specified in this Agreement, and the continuance of such failure for five (5) Business Days after written notice thereof, the amount owed to the non-defaulting party shall accrue interest at a rate equal to (a) if CHT or an Affiliate or successor thereof (“CHT Partner”) holds a direct or indirect ownership interest in Owner, five percent (5%) plus the rate of return then payable to CHT Partner under Section 8.1 of the Amended and Restated Limited Liability Company Agreement of Parent (the “JV Agreement”) (or the highest interest permitted under applicable law if that is lower) or (b) if CHT Partner does not hold a direct or indirect ownership interest in Owner, eighteen percent (18%) (or the highest interest permitted under applicable law if that is lower, in each case from and after the date on which such payment was originally due to the non-defaulting party until such payment is made.

14.09. Manager’s Right to Specific Performance for Owner’s Wrongful Termination. Owner hereby acknowledges that (a) Manager has an interest in this Agreement beyond the fees Manager will earn pursuant to the provisions of this Agreement, (b) the termination of this Agreement by Owner when Owner is not entitled to terminate this Agreement pursuant to the provisions of this Agreement will be injurious to Manager’s business conducted beyond Owner’s Facility, and will damage Manager’s Proprietary Marks, (c) Manager’s Proprietary Marks are unique, Manager’s exclusive rights of possession under this Agreement are unique, the Facility is unique and Manager is entitled to an exclusive license to operate Manager’s business at the Facility and to promote Manager’s Proprietary Marks at the Facility, which license is irrevocable except pursuant to the express provisions of this Agreement, (d) it would be impossible to calculate the damages that Manager would sustain if Owner terminated this Agreement when Owner is not entitled to terminate this Agreement pursuant to the provisions of this Agreement, and (e) the remedy of specific performance of Owner’s obligations under this Agreement is fair, equitable and practicable. Accordingly, Owner agrees that for as long as Manager is an Affiliate of Sunrise Senior Living, Inc. (X) Owner shall not breach this Agreement by terminating, or purporting to terminate, this Agreement when Owner has no right to terminate this Agreement pursuant to the provisions of this Agreement, and (Y) Owner consents to the issuance by any court of competent jurisdiction of injunctive relief prohibiting Owner from terminating, or purporting to terminate, this Agreement or from evicting Manager from the Facility, and Owner consents to the award by a court of competent jurisdiction of specific performance of the obligations of Owner under this Agreement, without the requirement for posting of any bond. Notwithstanding the foregoing, if Manager receives the Termination Fee (as set forth in Section 14.07 above), Manager waives any and all other rights to seek damages with respect to the termination of this Agreement, including, but not limited to, the right to sue for specific performance.

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ARTICLE XV

LEGAL ACTIONS, INDEMNITIES, AND LIMITATION OF LIABILITY

15.01. Legal Actions. Manager shall have the right to institute or defend, in the name of Owner, any legal action affecting the Facility and take any actions, in the name of Owner, necessary to protest or litigate to a final decision in any appropriate court or forum, any violation, order, rule, or regulation affecting the Facility. Owner shall assist and cooperate with Manager in the defense or prosecution of any such action. All actions arising out of the operation of the Facility and not attributable to the gross negligence or willful misconduct of Manager, and any and all legal actions or proceedings to collect charges, third party payments, rents, or other incomes for Manager, Owner or the Facility (“Collection Proceedings”), or to lawfully evict or dispossess Residents or other Persons in possession thereunder, or to lawfully cancel, modify, or terminate any lease, license, or concession agreement in the event of breach or default thereof, or to defend any action brought against Owner, the Facility or Manager in connection with the Facility, shall be paid out of Gross Revenues and be treated as Facility Expenses. Manager shall provide written notice to Owner of all actions arising out of the operation of the Facility except for Collection Proceedings.

15.02. Indemnities.

(a) By Manager. Manager will defend, indemnify and hold Owner and any of its Affiliates, and their respective directors, officers, shareholders, members, employees and agents harmless from and against any and all claims, losses, expenses (including reasonable attorney fees), costs, suits, actions, proceedings, demands or liabilities that are asserted against, or sustained or incurred by them as a result of, or in connection with, Manager’s gross negligence, fraud, or willful misconduct in the performance of Manager’s duties under this Agreement.

(b) By Owner. Owner will defend, indemnify, and hold Manager, and any of its Affiliates, and their respective directors, officers, shareholders, employees and agents harmless, from and against any and all claims, expenses (including reasonable attorney fees), losses, costs, suits, actions, proceedings, demands, or liabilities that are asserted against, or sustained or incurred by them as a result of, or in connection with, the performance of Manager’s duties under this Agreement or otherwise while acting within the scope of this Agreement except to the extent that such claims, losses, expenses (including reasonable attorney fees), costs, suits, actions, proceedings, demands or liabilities are a result of Manager’s gross negligence, fraud, or willful misconduct in the performance of Manager’s duties under this Agreement.

(c) Recovery upon an indemnity contained in this Agreement shall be reduced dollar-for-dollar by any applicable insurance collected by the indemnified party with respect to the claims covered by such indemnity.

(d) The indemnities contained in this Section 15.02 shall survive for a period of one (1) year after the termination of this Agreement.

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15.03. Limitation of Liability.

(a) Limitation of Liability. Notwithstanding any other provisions of this Agreement to the contrary, the maximum liability of Manager to Owner (but not to any third party or any third party claim passed through Owner to Manager) for any breach of this Agreement or for any claims arising hereunder shall be limited to the amount of insurance carried by Manager pursuant to Article XII hereinabove and the amount of the Base Management Fees paid as of the date of such breach or claim.

(b) Standard of Care. Manager agrees to use its commercially reasonable efforts to exercise, with respect to all services provided by Manager under or pursuant to this Agreement, a high and qualified standard of care, skill, and diligence in accordance with Manager’s Standards.

(c) Non-Recourse. To the maximum extent permitted by applicable law, no member, partner, shareholder, officer, director, employee or agent of any party to this Agreement shall have any personal liability with respect to the liabilities or obligations of such party under this Agreement or any document executed by such party pursuant to this Agreement.

ARTICLE XVI

REGULATORY AND CONTRACTUAL REQUIREMENTS

16.01. Regulatory and Contractual Requirements.

(a) Manager shall use commercially reasonable efforts to cause all things to be done in and about the Facility reasonably necessary to comply with the requirements of any applicable Legal Requirement, or order of any Governmental Authority or quasi-governmental regulatory body or agency, or board of fire underwriters respecting the use of the Facility or the construction, maintenance, or operation thereof. Manager shall use commercially reasonable efforts to obtain and maintain all Federal, State and county permits and licenses needed for its management of a licensed assisted living and/or independent living (as applicable) facility providing personal care services in the State. Owner agrees upon request by Manager to sign promptly and without charge applications for licenses, permits or other instruments necessary for operation of the Facility in accordance with Legal Requirements and to provide such information and perform such acts relative to the ownership of the Facility as are required by law, regulation or practice of a Governmental Authority in order for Manager to obtain and/or maintain any license, permit, instrument, certificate, certification or approval with respect to the operation of the Facility in accordance with the terms of this Agreement. Manager shall keep its corporate organization in good standing in the State and shall maintain all corporate permits and licenses required by the State.

(b) The parties understand and agree that certain deficiencies or situations of non-compliance with various Legal Requirements (such as building codes, OSHA, ADA, health care regulations and the like) are likely to occur from time to time in the normal course of business operations. Such occurrences will not constitute a breach or Event of Default by Manager hereunder, provided that, (a) they are not materially beyond the general experience of similar facility operations located in the State in terms of scope, seriousness, or frequency, and (b) Manager takes all reasonable actions in a timely manner to cure such deficiencies or situations of non-compliance. The costs (including fines for non-compliance) of curing such

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deficiencies or circumstances of non-compliance (collectively, “Non-Compliance Costs”) shall constitute Facility Expenses unless incurred by reason of Manager’s willful misconduct or gross negligence. Any Non-Compliance Costs resulting from Manager’s willful misconduct or gross negligence shall be paid by Manager from its own funds and not as a Facility Expense. So long as Manager is not an Affiliate of a Person holding a direct or indirect an ownership interest in Owner, then in the event that Manager and Owner disagree as to whether a Non-Compliance Cost is appropriate for reimbursement as a Facility Expense, the disagreement will be resolved exclusively by arbitration pursuant to Section 18.17 and either party may initiate such arbitration (it being acknowledged that if Manager is an Affiliate of a Person holding a direct or indirect ownership interest in Owner, such dispute will be resolved subject to and in accordance with the JV Agreement).

16.02. Equal Employment Opportunity. Without limitation of any provision set forth herein, Owner and Manager expressly agree to abide by any and all applicable Federal and/or State equal employment opportunity statutes, rules and regulations, including, without limitation, Title II of the Civil Rights Act of 1964, the Equal Pay Act of 1963, the National Labor Relations Act, the Fair Labor Standard Act, the Rehabilitation Act of 1983, and the Occupational Safety and Health Act of 1970, all as may be from time to time modified or amended.

16.03. Equal Housing Opportunity. Without limitation of any provision set forth herein, Owner and Manager expressly agree to abide by any and all applicable Federal and/or State equal housing opportunity statutes, rules and regulations, all as may be from time to time modified or amended.

ARTICLE XVII

PROPRIETARY MARKS; INTELLECTUAL PROPERTY

17.01. Proprietary Marks. During the Term of this Agreement, the Facility may be known as a “Sunrise” Facility, with such additional identification as may be necessary and agreed to by Owner and Manager to provide local identification. If the name of Manager’s System is changed, Manager shall have the right (with Owner’s written consent, which shall not be unreasonably withheld) to change the name of the Facility to conform thereto.

17.02. Ownership of Proprietary Marks. The Proprietary Marks shall in all events remain the exclusive property of Manager, and nothing contained herein shall confer on Owner the right to use the Proprietary Marks. Upon termination of this Agreement, any use of or right to use the Proprietary Marks by Owner shall cease forthwith and Owner shall promptly remove, at Manager’s expense, from the Facility any signs or similar items that contain the Proprietary Marks. If Owner has not removed such signs or similar items promptly upon termination, Manager shall have the right to remain at the Facility as long as is necessary for Owner to do so. The right to use such Proprietary Marks belongs exclusively to Manager, and the use thereof inures to the benefit of Manager whether or not the same are registered and regardless of the source of the same.

17.03. Intellectual Property. All Intellectual Property shall at all times be proprietary to Manager or its Affiliates, and shall be the exclusive property of Manager or its Affiliates. During the Term of this Agreement, Manager shall be entitled to take all reasonable steps to ensure that the Intellectual Property remains confidential. Upon termination, all Intellectual Property shall be removed from the Facility by Manager, without compensation to Owner.

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17.04. Trademark License. Manager hereby grants to Owner a non-exclusive right and license (“Trademark License”) to use “Sunrise” solely as part of the name of the Facility. Owner shall not be permitted to use “Sunrise” in connection with the identification or operation of any other business or property, or at any other location, except as may otherwise be provided in other agreements between Owner and Manager (or one of its Affiliates). Owner acknowledges and agrees that Manager (or one of its Affiliates) is the owner of all right, title, and interest in and to “Sunrise” and the goodwill associated with and symbolized by that mark. Owner’s use of “Sunrise” and its derivatives pursuant to this Trademark License shall not give Owner any ownership, apart from this Trademark License, to “Sunrise,” and that all goodwill arising from Owner’s use of “Sunrise” shall inure solely to Manager’s benefit. This Trademark License shall immediately terminate upon termination or expiration of this Agreement.

17.05. Breach of Covenant. Manager and/or its Affiliates shall be entitled, in case of any breach of the covenants of this Article XVII by Owner or others claiming through it, to injunctive relief and to any other right or remedy available at law. Article XVII shall survive termination.

ARTICLE XVIII

MISCELLANEOUS PROVISIONS

18.01. Additional Assurances. The provisions of this Agreement shall be self-operative and shall not require further agreement by the parties except as may be herein specifically provided to the contrary; provided, however, at the request of either party, the party requested shall execute such additional instruments and take such additional acts as the requesting party may deem necessary to effectuate this Agreement.

18.02. Right to Inspect. Owner or its agents shall have access to the Facility at any and all reasonable times for the purpose of inspection or showing the Facility to prospective purchasers, investors, tenants, or mortgagees.

18.03. Estoppel Certificates. Each party to this Agreement shall at any time and from time to time, upon not less than thirty (30) day’s prior notice from the other party, execute, acknowledge and deliver to such other party, or to any third party specified by such other party, a statement in writing: (a) certifying that this Agreement is unmodified and in full force and effect (or if there have been modifications, that the same, as modified, is in full force and effect and stating the modifications); (b) stating whether or not to the best knowledge of the certifying party: (x) there is a continuing default by the non-certifying party in the performance or observation of any covenant, agreement or condition contained in this Agreement; or (y) there shall have occurred any event which, with the giving of Notice or the passage of time or both, would become such a default, and, if so, specifying such default or occurrence of which the certifying party may have knowledge; and (c) stating such other information as the non-certifying party may reasonably request. Such statement shall be binding upon the certifying party and may be relied upon by the non-certifying party and/or such third party specified by the non-certifying party as aforesaid. The obligations set forth in this Section 18.03 shall survive

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termination (that is, each party shall, on request, within the time period described above, execute and deliver to the non-certifying party and to any such third party a statement certifying that this Agreement has been terminated).

18.04. Consents, Approval and Discretion. Except as expressly provided herein to the contrary, whenever this Agreement requires any consent or approval to be given by either party or either party must or may exercise discretion, the parties agree that such consent or approval shall not be unreasonably withheld or delayed and such discretion shall be reasonably exercised in good faith.

18.05. No Brokerage. Each party represents to the other that it has not engaged a broker in connection with this transaction, and agrees to defend, indemnify, and hold the other party harmless from any claim made by a broker through the indemnifying party.

18.06. Notices. Any and all notices, including any demands, consents, approvals, offers, elections and other communications required or permitted under this Agreement shall be deemed adequately given if in writing, addressed to the recipient of the notice at the addresses set forth below (or to such other addresses as the parties may specify by due notice to the others parties) and if delivered either (a) in hand, in which case it will be deemed delivered on the date of delivery or on the date delivery was refused by the addressee, (b) by United States mail, postage prepaid, registered or certified, with return receipt requested, in which case it will be deemed delivered on the date of delivery as established by the return receipt (or the date on which the return receipt confirms that acceptance of delivery was refused by the addressee), (c) by Federal Express or similar expedited commercial carrier, with all freight charges prepaid, in which case it will be deemed delivered on the date of delivery as established by the courier service confirmation (or the date on which the courier service confirms that acceptance of delivery was refused by the addressee), or (d) by facsimile transmission with a hard copy to follow by any of the other methods above, in which case it will be deemed delivered on the day and at the time indicated in the sender’s automatic acknowledgment. If a notice is sent to a party, then copies of such notice under this Section shall also be sent by the same delivery method to the copy recipients. Whenever under this Agreement a notice is required to be delivered on a day which is not a Business Day or is required to be delivered on or before a specific day which is not a Business Day, the day of required delivery shall automatically be extended to the next Business Day. All such notices shall be addressed as follows:

Owner or Parent:	c/o CNL Healthcare Trust, Inc. CNL Center at City Commons 450 South Orange Ave Orlando, Florida 32801 Attention: Joseph T. Johnson, SVP and CFO and         Holly Greer, SVP and General Counsel Facsimile: (407) 540- 2544
Copy to:	Sunrise Senior Living, Inc. 7900 Westpark Drive, Suite T-900 McLean, Virginia 22102 Attention: General Counsel Facsimile: (703) 854-0334

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Copy to:	Willkie Farr & Gallagher 787 Seventh Avenue New York, New York 10019 Attention: Eugene A. Pinover Facsimile: (212) 728-9254
and a copy to:	Lowndes, Drosdick, Doster, Kantor & Reed, P.A. 215 N. Eola Drive P O Box 2809 Orlando, Florida 32801 Attention: Peter L. Lopez, Esq. Facsimile: 407 843-4444
Manager:	Sunrise Senior Living Management, Inc. 7900 Westpark Drive, Suite T-900 McLean, Virginia 22102 Attn: Chief Operating Officer Facsimile: (703) 744-1628
Copy to:	c/o Sunrise Senior Living, Inc. 7900 Westpark Drive, Suite T-900 McLean, Virginia 22102 Attention: General Counsel Facsimile: (703) 854-0334
Copy to:	c/o CNL Healthcare Trust, Inc. CNL Center at City Commons 450 South Orange Ave Orlando, Florida 32801 Attention: Joseph T. Johnson, SVP and CFO and         Holly Greer, SVP and General Counsel Facsimile: (407) 540- 2544
Copy to:	Willkie Farr & Gallagher 787 Seventh Avenue New York, New York 10019 Attention: Eugene A. Pinover Facsimile: (212) 728-9254

By notice given as provided in this Section, the parties to this Agreement and their respective successors and assigns shall have the right from time to time to change their respective addresses effective five (5) Business Days after the date of receipt by the other parties of such notice and each party shall have the right to specify as its address any other address within the United States of America.

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18.07. Severability. If any term or provision of this Agreement or the application thereof to any Person or circumstance is held to be invalid or unenforceable for any reason, the remainder of this Agreement, or the application of such term or provision to Persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law.

18.08. Gender and Number. Whenever the context of this Agreement requires, the gender of all words herein shall include the masculine, feminine, and neuter, and the number of all words herein shall include the singular and plural.

18.09. Division and Headings. The divisions of this Agreement into sections and subsections and the use of captions and headings in connection therewith are solely for convenience and shall have no legal effect whatsoever in construing the provisions of this Agreement.

18.10. Confidentiality of Information. Manager and Owner agree to keep confidential and not to use or to disclose to others, except as expressly consented to in writing by the other party, any and all of their respective secrets or confidential technology, proprietary information, customer lists, or trade secrets, or any confidential matter or confidential items ascertained through their association with each other; provided, however, that either party may disclose the existence and/or terms and conditions of this Agreement without the consent of the other party (i) to any Mortgagee, (ii) to either party’s directors, officers, members, partners, employees, legal counsel, accountants, engineers, architects, financial advisors and similar professionals and consultants to the extent such party deems it necessary or appropriate (and such party shall inform each of the foregoing parties of the obligations of each party under this Section 18.10 and shall secure the agreement of such parties to be bound by the terms hereof), (iii) if so required by law or applicable regulation other than laws or regulations regarding securities, so long as such party first provides a copy of any written request for disclosure to the other party and consults with such other party with respect to the content of the disclosure and (iv) if so required by applicable securities laws or regulations so long as such party provides copies of such disclosures to the other party. Manager and Owner further agree that should Manager leave the active service of Owner, Manager will turn over to Owner any and all Facility information of any kind, subject to compliance with HIPAA and similar privacy regulations, and in any case excluding Manager’s Intellectual Property, reasonably necessary for Owner or a new manager to continue to operate the Facility, including but not limited to information of any kind pertaining to Residents of the Facility, business, sales, financial condition or products and Owner will return to Manager any and all of Manager’s confidential information obtained by Owner. All funds related to and accounts opened on behalf of the Facility also will be returned to Owner. Notwithstanding any terms or conditions in this Agreement to the contrary, but subject to restrictions reasonably necessary to comply with federal or state securities laws, any person may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided relating to such tax treatment and tax structure. For the avoidance of doubt, this authorization is not intended to permit disclosure of the names of, or other identifying information regarding, the participants in the transaction, or of any information or the portion of any materials not relevant to the tax treatment or tax structure of the transaction.

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18.11. Right to Perform. In the event that Owner or Manager shall fail to perform any duty or fulfill any obligation hereunder to the material detriment of the other, Owner or Manager, in addition to any rights or remedies available to it under law, shall have the right, but not the obligation, after notice and the expiration of all applicable cure periods, to perform any such duty or fulfill any such obligation, but in no way obligating the party beyond any termination period allowable hereunder.

18.12. Assignment by Manager or Owner; Controlling Interest Sale; Facility Sale.

(a) Assignment. Manager shall have the right to assign this Agreement to an Affiliate of Manager after fifteen (15) days written notice to Owner. Manager shall not have the right to assign this Agreement to any non-Affiliate without Owner’s prior written permission, which permission may be granted or withheld in Owner’s sole and absolute discretion. Owner shall not have the right to assign this Agreement without Manager’s prior written permission, which permission may be granted or withheld in Manager’s sole and absolute discretion; provided, however, that if this Agreement is assigned to the purchaser of the Facility in connection with the sale of the Facility in accordance with this Section 18.12, then the assignee (as Owner) of this Agreement shall also execute a counterpart of this Agreement and become party to this Agreement; further provided, however, that the Owner selling the Facility shall not be released of its obligations under this Agreement arising prior to the date of execution of this Agreement by its assignee. This Agreement will be binding upon, and will inure to the benefit of, any permitted successor, assign, grantee or transferee of the assignor.

(b) Controlling Interest Sale or Facility Sale to a Qualified Transferee.

(1) If Parent or an Affiliate of Parent intends to enter into a Controlling Interest Sale with a Person (including an Affiliate of Owner or Parent) that is a Qualified Transferee, then prior to entering into the Controlling Interest Sale Parent or such Affiliate shall deliver to Manager a notice of its intent to sell the Controlling Interest (the “Sale Notice”) together with evidence that the proposed transferee is a Qualified Transferee and the provisions of Section 18.12(d) shall apply.

(2) If Owner intends to enter into a Facility Sale with a Person (including an Affiliate of Owner or Parent) that is a Qualified Transferee, then prior to entering into the Facility Sale, Owner shall deliver to Manager a Sale Notice of its intent to sell the Facility together with evidence that the proposed transferee is a Qualified Transferee and the provisions of Section 18.12(d) shall apply.

(3) If Manager does not exercise its right of first offer pursuant to Section 18.12(d) to the extent available, then Parent, its Affiliate or Owner, as applicable, shall require, as a condition to the closing of the Controlling Interest Sale or Facility Sale, as applicable, to a Qualified Transferee that: (1) the Qualified Transferee and Manager either: (i) enter into an assignment of this Agreement, or (ii) enter into a Replacement Management Agreement (under the same terms and conditions as the then current Management Agreement except that the term of any such Replacement Management Agreement shall consist only of the balance of the term remaining under the then current Management Agreement), (2) the Qualified Transferee replace the FF&E Reserve and the

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Working Capital required under the then current Management Agreement, and (3) the Qualified Transferee provide for a replacement guarantor under the Guaranty reasonably acceptable to Manager. Manager shall be obligated to enter with the Qualified Transferee at the closing of the Controlling Interest Sale or Facility Sale either into (x) an assignment of the then current Management Agreement, or (y) enter into a Replacement Management Agreement as set forth in Section 18.12(b)(2)(ii) above.

(c) Controlling Interest Sale or Facility Sale to a Non-Qualified Transferee.

(1) If Parent or an Affiliate of Parent intends to enter into a Controlling Interest Sale with a Person (including an Affiliate of Owner or Parent) that is not a Qualified Transferee, then prior to entering into the Controlling Interest Sale Parent or such Affiliate shall deliver to Manager a Sale Notice of its intent to sell the Controlling Interest and the provisions of Section 18.12(d) shall apply.

(2) If Owner intends to enter into a Facility Sale with a Person (including an Affiliate of Owner or Parent) that is not a Qualified Transferee, then prior to entering into the Facility Sale, Owner shall deliver to Manager a Sale Notice of its intent to sell the Facility and the provisions of Section 18.12(d) shall apply.

(3) If Parent or its Affiliate intends to enter into a Controlling Interest Sale with a Person (including an Affiliate of Owner or Parent) that is not a Qualified Transferee or if the Owner intends to enter into a Facility Sale to a Person (including an Affiliate of Owner or Parent) that is not a Qualified Transferee, and Manager does not exercise its right of first offer pursuant to Section 18.12(d) to the extent available, then Manager shall have the right to elect, at its sole discretion, to continue the operation of the Facility under the then current Management Agreement or to terminate the then current Management Agreement and receive the Termination Fee at the closing of such Controlling Interest Sale or Facility Sale. Manager shall notify Owner or Parent or its Affiliate, as applicable, within thirty (30) days after receipt of the Sale Notice with respect to a Controlling Interest Sale or Facility Sale, as applicable, of its desire to continue to operate the Facility under the then current Management Agreement (the “Continuation Notice”). If Manager does not deliver a Continuation Notice within the thirty (30) day period, it is deemed to have elected to terminate the then current Management Agreement and receive the Termination Fee at the closing. If Manager delivers a Continuation Notice within the thirty (30) day period, then Parent, its Affiliate or Owner, as applicable, shall require, as a condition to the closing of the Controlling Interest Sale or the Facility Sale, that the new owner of the Facility enter into an assignment of the then current Management Agreement or (ii) enter into a Replacement Management Agreement (under the same terms and conditions as the then current Management Agreement except that the term of any such Replacement Management Agreement shall consist only of the balance of the term remaining under the then current Management Agreement), (2) replace the FF&E Reserve and the Working Capital required under the then current Management Agreement, and (3) provide for a replacement guarantor under the Guaranty reasonably acceptable to Manager. Parent or its Affiliate shall not close a Controlling Interest Sale or Owner shall not close a Facility Sale until the later of (x) the date on which Manager and the Controlling Interest

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purchaser have agreed on the form of the Replacement Management Agreement and the replacement guarantor, if a Continuation Notice was delivered, and (y) the expiration of the thirty (30) day period for the delivery of the Continuation Notice if no Continuation Notice is delivered.

(d) Manager’s Right of First Offer. If Owner intends to enter into a Facility Sale or Parent or its Affiliate intends to enter into a Controlling Interest Sale with any Person (including an Affiliate of Owner or Parent) and no Person with a direct or indirect ownership interest in Owner is then an Affiliate of Manager, then Owner shall provide notice to Manager and Manager shall have a right of first offer to purchase the Facility upon the terms set forth below.

(1) Owner shall provide Manager with written notice (within the Sale Notice or otherwise) of its intent to enter into the Facility Sale or Parent’s or its Affiliate’s intent to enter into a Controlling Interest Sale, and Manager shall have ten (10) Business Days following receipt of such notice to deliver a written offer to Owner and Parent or its Affiliates (the “Purchase Notice”) with the price offered by Manager for the purchase of the Facility (“Offered Purchase Price”). Owner or Parent or its Affiliates, as applicable, shall respond to Manager within five (5) Business Days after receipt of the Purchase Notice whether or not it accepts the Offered Purchase Price (the “Response”). If the Owner or Parent or its Affiliate, as applicable, accepts the Offered Purchase Price within the five (5) Business Days’ period, then Manager shall deliver to Owner and Parent or its Affiliate within ten (10) Business Days after the Response is received, a proposed draft purchase agreement, and will deposit with the Escrow Agent in cash an amount equal to the lesser of (i) five percent (5%) of the Offered Purchase Price, or (ii) $500,000 (the “Downpayment”) within three (3) Business Days after execution of the purchase agreement. If Owner fails to deliver the Response within the five (5) Business Days’ period, Owner shall be deemed to have accepted the Offered Purchase Price. If the Response specifies that Owner or Parent or its Affiliate, as applicable, does not accept the Offered Purchase Price, then Owner shall have the right to market the Facility, but shall continue to be bound by the provisions of subsection 18(d)(4) below.

(2) The Escrow Agent shall hold the Downpayment in an interest bearing account pursuant to a written agreement among Owner, Manager and the Escrow Agent, which agreement shall be satisfactory to such parties in the exercise of their respective reasonable discretion and shall provide, among other things, that the Escrow Agent shall not commingle the Downpayment with any other funds. In the event of a closing of a Facility Sale to Manager pursuant to the terms of this Section 18.12(d), the Downpayment, together with any interest earned thereon, shall be credited against the Offered Purchase Price. If Manager shall fail to purchase the Facility in compliance with its obligations under this Section 18.12(d), the Purchase Notice shall be deemed revoked and the Downpayment, and any interest thereon, shall be paid to Owner by the Escrow Agent promptly following written request therefor as Owner’s sole and exclusive remedy and Section 18.12(d) shall apply. If the purchase agreement is terminated by Manager in accordance with any allowable periods for termination as set forth in the purchase agreement, then the Downpayment shall be returned to Manager and the Purchase Notice shall thereafter be deemed revoked, with no liability to Manager therefor and Section

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18.12(b)(3) shall apply. If Owner shall default in any of its obligations under this Section 18.12(d), the Downpayment, and any interest earned thereon, shall be returned to Manager promptly following written request therefor, and Manager may pursue an action for specific performance or any other remedy available to it by law. Upon acceptance or deemed acceptance of the Offered Purchase Price by Owner as aforesaid, (i) a binding contract shall be deemed to exist between Owner and Manager with respect to the purchase and sale of the Facility, and (ii) Manager and Owner shall use good faith efforts to negotiate a definitive agreement for the closing of the purchase and sale to be held at the principal place of business of Manager (or as otherwise may be agreed to by the parties) on a Business Day selected by Manager not less than thirty (30) days and not more than one hundred twenty (120) days from Owner’s receipt of the Purchase Notice. Manager shall pay the Offered Purchase Price (less the Downpayment and any interest earned thereon) by wire transfer of immediately available federal funds to an account (or account(s)) designated in writing by Owner. Each party shall pay its own costs and expenses in connection with the conveyance of the Facility to Manager pursuant to this Section 18.12(d). Any transfer, deed, documentary, stamp or similar tax due in connection with a sale of the Facility pursuant to this Section 18.12(d) shall be shared equally by Manager and Owner. If the Manager and the Owner are unable to negotiate a definitive agreement for the closing of the purchase and sale of the Facility as set forth in this paragraph, then the dispute will be resolved exclusively by arbitration pursuant to Section 18.17 of this Agreement. Either party may initiate such arbitration.

(3) If (x) Manager does not timely deliver a Purchase Notice or (y) the Manager states in its Purchase Notice that it does not exercise its option purchase the Facility, or (z) Manager’s Purchase Notice is deemed to have been revoked in accordance with Section 18.12(d)(2) or if Owner or Parent or its Affiliate rejects Manager’s Offered Purchase Price within the applicable time period, Owner or Parent or its Affiliate are authorized for three hundred sixty-five (365) days following the deadline for receipt of such Purchase Notice to accept any offer for the purchase of the Facility or a Controlling Interest without further offer to the Manager which complies with the specifications set forth in items (i) and (ii) below (a “Sale Offer”), provided that any Facility Sale or Controlling Interest Sale, as applicable, shall remain subject to the provisions of Section 18.12(a).

(i) The Sale Offer must be an all cash offer for the purchase of the Facility or the Controlling Interest, as applicable, in an amount not less than 105% of the Offered Purchase Price; and

(ii) The Sale Offer must provide for the closing of the purchase of the Facility or the Controlling Interest, as applicable, not sooner than thirty (30) days nor later than three hundred sixty-five (365) days after (A) if Manager failed to deliver a Purchase Notice, the date which is thirty (30) days after receipt of the Sale Notice by Manager, (B) if Manager delivered a Purchase Notice and same was deemed to have been revoked, the date of the deemed revocation of the Purchase Notice or (C) if Manager delivered the Purchase Notice but the Offered Purchase Price was rejected in the Response, the date the Response was received by Manager.

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(4) If Owner or Parent or its Affiliate fails to close the Facility Sale or the Controlling Interest Sale pursuant to the requirements of (as applicable) subsection 18.12(d)(3) or if the Sale Offer does not comply with the provisions of Section 18.12(d)(3)(i)-(ii), then any further Facility Sale or a Controlling Interest Sale shall be again subject to the provisions of this Section 18.12(d).

18.13. Entire Agreement; Amendment. This Agreement supersedes all prior drafts and discussions relating to this Agreement. This Agreement constitutes one (1) agreement and shall be construed and interpreted in light of all such other agreements between the parties including, but not limited to, the Manager Pooling Agreement. All prior representations or agreements not expressly incorporated herein, whether written or verbal, are superseded, and no changes in or additions to this Agreement shall be recognized unless and until made in writing and signed by both parties hereto.

18.14. Relationship Between the Parties. The relationship between Owner and Manager pursuant to this Agreement shall not be one of general agency, but shall be that of Owner with Manager being an independent contractor; provided, however, that Manager shall have the authority to bind the Owner with respect to third parties to the extent Manager is performing its obligations under this Agreement or as otherwise authorized by Owner. Neither this Agreement nor any agreements, instruments, documents or transactions contemplated hereby shall in any respect be interpreted, deemed or construed as making Owner a partner or joint venturer with Manager or as creating any similar relationship or entity, and each party agrees that it will not make any contrary assertion, contention, claim or counterclaim in any action, suit or other legal proceeding involving the other. Owner hereby grants an irrevocable power of attorney to the Manager to act on behalf of Owner vis-a-vis third parties as necessary in connection with the performance of Manager’s obligations under this Agreement.

18.15. Force Majeure. As used in this Agreement, the term “Force Majeure” shall mean any failure to perform an obligation under this Agreement when the party so obligated is prevented from so performing by (i) Acts of God, (ii) strike, lockouts, actions of labor unions or other labor trouble, (iii) sabotage, (iv) fire or casualty, (v) order or regulation of or by any Governmental Authority (other than orders or regulations of a Governmental Authority resulting from the obligated party’s non-compliance with typical and ordinary health, licensing and construction laws, rules or regulations), (vi) acts or omissions of any Governmental Authority (including delays in obtaining any required licenses, permits or approvals, provided such permits were timely and accurately submitted to the applicable Governmental Authority), (vii) war (declared or undeclared), acts of terrorism, riot, acts of the public enemy or other civil commotion, (vii) rebellions, riots, insurrections or sabotage, (ix) shortage of labor, materials or supplies; provided, however, that the lack of financial resources or a failure to comply with existing laws shall never be excused.

18.16. Subordination, Non-disturbance and Attornment Agreements.

(a) At such time that Manager receives from Mortgagee an executed and recordable subordination, non-disturbance and attornment agreement in a form acceptable to Manager in its sole discretion, this Agreement and any extensions, renewals, replacements or modifications thereto, and all rights and interests of Manager in the Facility, shall be subject and subordinate to any Facility Mortgage.

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(b) If the loan documents secured by the Facility Mortgage, or any subordination, non-disturbance and attornment agreement executed by Manager contains provisions requiring Manager (upon default under the Facility Mortgage, or upon various other stipulated conditions) to pay certain amounts which are otherwise due to Owner under this Agreement (after the payment of Facility Expenses) to the Mortgagee or its designee (rather than to Owner), Owner hereby gives its consent to such provisions, which consent shall be deemed to be irrevocable until the entire debt secured by the Facility Mortgage has been discharged.

18.17. Arbitration.

(a) Any dispute, disagreement, or controversy arising out of this Agreement for which arbitration in accordance with this Section 18.17 is expressly provided shall be resolved by arbitration (the “Arbitration Proceeding”) administered by the American Arbitration Association (“AAA”) under its Commercial Arbitration Rules and Expedited Procedures, in effect at the time of the demand for arbitration, provided, however that to the extent any provision of this Section modifies, adds to, or is inconsistent with any provisions of those rules and procedures, the provisions of this Section shall control. The arbitration will be conducted before a single arbitrator in Washington, D.C., Alexandria, VA, McLean, VA, Bethesda, MD or Orlando, FL (the “Venue”). The parties hereby acknowledge and agree that the party which did not initiate the Arbitration Proceeding shall have the right to elect the Venue in its sole discretion, which shall be binding on both parties. The choice of law provisions set forth in Section 18.21 shall apply in any such Arbitration Proceeding. Any dispute, disagreement, or controversy arising out of or relating to this Agreement for which arbitration is not expressly provided as the means of resolution may be resolved by litigation as provided in Section 18.21 or by other lawful means. Notwithstanding anything to the contrary contained herein, so long as the JV Agreement is in effect and Manager is an Affiliate of a Person holding a direct or indirect ownership interest in Owner, any dispute, disagreement or controversy arising out of this Agreement which also constitutes a dispute as to a Major Decision (as defined in the JV Agreement) under the JV Agreement shall not be submitted to an Arbitration Proceeding hereunder, but rather shall be resolved pursuant to and in accordance with the terms and conditions of the JV Agreement, and Manager and Owner agree that such resolution shall be binding.

(b) The party desiring arbitration shall provide written notice to the other party (the “Arbitration Notice”) indicating (1) the matter in controversy and (2) the name, contact information and professional resume of the proposed arbitrator meeting the requirements for a qualified and independent arbitrator set forth in Section 18.17(c) (“Initial Arbitrator”) to arbitrate such matter in controversy. If the party receiving the Arbitration Notice rejects the Initial Arbitrator set forth in the Arbitration Notice it shall object in writing (“Objection Notice”) delivered to the other party within seven (7) Business Days of the receipt of the Arbitration Notice. The Objection Notice shall contain the name, contact information and professional resume of a different arbitrator meeting the requirements for a qualified and independent arbitrator set forth in Section 18.17(c) (“Secondary Arbitrator”) to arbitrate the matter in controversy set forth in the Arbitration Notice. If the party receiving the Objection Notice rejects

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the Secondary Arbitrator, it shall object in writing (“Secondary Objection Notice”) to the other party within seven (7) Business Days after the receipt of the Objection Notice. If neither the Initial Arbitrator nor the Secondary Arbitrator is accepted by the parties, the party which delivered the Arbitration Notice shall instruct the Initial Arbitrator and the Secondary Arbitrator to agree, within five (5) Business Days after receipt of the Secondary Objection Notice, upon an arbitrator (“Appointed Arbitrator”) meeting the requirements for a qualified and independent arbitrator set forth in Section 18.17(c). If they agree upon an Appointed Arbitrator who is prepared to act as the Appointed Arbitrator, the Initial Arbitrator and Secondary Arbitrator shall deliver written notice of the name, contact information and professional resume of the Appointed Arbitrator to each party simultaneously. The appointment of the Appointed Arbitrator shall be a final decision, which shall not be subject to objection by either party, unless either party within five (5) Business Days after such selection of an Appointed Arbitrator, notifies the other party, in writing, that such Appointed Arbitrator fails to meet the requirements for a qualified and independent arbitrator set forth in Section 18.17(c) and provides specific information in such written notice as to the reasons why such failure exists.

(c) In the event the Initial Arbitrator and the Secondary Arbitrator cannot agree on an Appointed Arbitrator or if such appointed Arbitrator is unwilling to act as the Appointed Arbitrator or if either party objects to the Appointed Arbitrator within five (5) Business Days after the selection of such Appointed Arbitrator, as permitted in this Section 18.17, then either party may petition the AAA (or any successor body of similar function) to appoint an arbitrator within five (5) Business Days of such petition using the following criteria: such arbitrator shall be (1) with respect to physical property matters, a licensed professional engineer or registered architect having at least ten (10) years experience in the design or construction of similar senior housing facilities, (2) with respect to financial matters, a partner in a “Big Four Accounting Firm” with at least ten (10) years experience with the type of matter in dispute, (3) with respect to property management issues, an individual who shall have had at least ten (10) years experience managing similar senior housing facilities and (4) be neutral and shall have had no prior notice, information or discussions concerning such controversy and shall not be employed by or associated with either party or any Affiliate of either of them, or any of their respective agents or affiliates at such time or for the previous ten (10) years. If the dispute involves more than one type of matter, then the Appointed Arbitrator may be (X) an individual with expertise in any one of the types of matters in dispute, or (Y) a retired judge.

(d) The Arbitration Proceedings shall commence fifteen (15) Business Days after the engagement or appointment of the appropriate arbitrator pursuant to this Section 18.17. The arbitrator shall make a determination within ten (10) Business Days after conclusion of the Arbitration Proceeding.

(e) The costs and expenses of an Arbitration Proceeding including administrative fees and costs, expert fees and the arbitrator’s fees and cost, shall be shared equally by Owner and Manager, and each party shall bear its own counsel, expert, administrative fees and other professional fees and expenses with respect to such Arbitration Proceeding; provided, however, that the Appointed Arbitrator may (but shall not be required to), in the exercise of his/her best judgment, assess one party for a part or all of the costs of the other party, including the costs of the Arbitration Proceeding.

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(f) Any arbitrator’s final decision and award shall be in writing and delivered by the parties in an expedited manner, shall be binding on the parties and shall be non-appealable, and counterpart copies thereof shall be delivered to both parties. A judgment or award rendered by the arbitrator may be entered in any court of competent jurisdiction. All actions necessary to implement the decision of the arbitrator shall be undertaken as soon as possible, but in no event later than three (3) Business Days after the rendering of such decision.

18.18. Cooperation. Should any claim, demand, suit or other legal proceeding be made or instituted by either party which arises out of any of the matters relating to this Agreement, each party shall give the other all non-privileged and pertinent information possessed by or under the control of such party and reasonable assistance in the defense or other disposition thereof. In addition, in each instance where Manager’s performance under this Agreement is dependant on receiving the cooperation of Owner, Owner shall promptly cooperate and provide Manager with such requested assistance.

18.19. Manager Pooling Agreement as Controlling Agreement. The Manager Pooling Agreement is intended to modify and amend this Agreement. If there is any conflict or inconsistency between the terms of this Agreement and the terms of the Manager Pooling Agreement, then the terms of the Manager Pooling Agreement shall supersede and control in all respects.

18.20. Costs of Dispute. In any legal action or proceeding arising out of this Agreement, other than an Arbitration Proceeding, the successful or prevailing party or parties therein will be entitled to recover from the other party or parties reasonable attorney’s fees and other costs incurred in that action or proceeding, including those related to appeal of any such action. The recovery of attorney’s fees and costs will be in addition to any other relief to which the successful or prevailing party or parties may be entitled.

18.21. Governing Law; Litigation, Jurisdiction and Waiver of Jury Trial.

(a) This Agreement will be governed by, and construed in accordance with, the laws of the Commonwealth of Virginia without regard to conflict of laws principles.

(b) For the purposes of any suit, action or proceeding involving this Agreement, the parties each hereby expressly and irrevocably submits to the jurisdiction of all federal and state courts sitting in the Commonwealth of Virginia which courts shall have the exclusive jurisdiction over any such suit, action or proceeding commenced by any party. The parties consent to service of process, wherever made, by certified mail return receipt requested, personal service or any other method permitted by applicable law and the rules of the applicable court. In furtherance of such agreement, the parties agree, upon the request of any party, to discontinue (or agree to the discontinuance of) any such suit, action or proceeding pending in any other jurisdiction.

(c) Each party hereby irrevocably waives any objection that either party may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement brought in any federal or state court sitting in the Commonwealth of Virginia and hereby further irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

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(d) If for any reason, the state and federal courts sitting in the Commonwealth of Virginia refuse to exercise jurisdiction over the proceeding or any party, then litigation as permitted herein may be brought in any court of competent jurisdiction in the United States of America.

(e) EACH PARTY HEREBY WAIVES, IRREVOCABLY AND UNCONDITIONALLY, TRIAL BY JURY IN ANY ACTION BROUGHT ON, UNDER OR BY VIRTUE OF OR RELATING IN ANY WAY TO THIS AGREEMENT OR ANY OF THE DOCUMENTS EXECUTED IN CONNECTION HEREWITH, THE FACILITY, OR ANY CLAIMS, DEFENSES, RIGHTS OF SET-OFF OR OTHER ACTIONS PERTAINING HERETO OR TO ANY OF THE FOREGOING.

18.22. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute but one and the same instrument.

18.23. Contracting with Affiliates. Manager shall be entitled to contract with companies that are Affiliates (or companies in which Manager has an ownership interest if such interest is not sufficient to make such company an Affiliate) to provide goods and/or services to the Facility; provided that the prices and/or terms for such goods and/or services are at a fair market price. Additionally, Manager may contract for the purchase of goods and services for the Facility with third parties that have other contractual relationships with Manager and its Affiliates, so long as the prices and terms are at a fair market price. Manager shall fully disclose to Owner any material interest of Manager and/or its Affiliate in any vendor and Manager shall establish to Owner’s reasonable satisfaction that any such purchase contracts were made at fair market prices. In determining, pursuant to the foregoing, whether such prices and/or terms are at a fair market price, they will be compared to the prices and/or terms which would be available from reputable and qualified parties for goods and/or services of similar quality, and the goods and/or services which are being purchased shall be grouped in reasonable categories, rather than being compared item by item. Any dispute as to whether prices and/or terms are at a fair market price shall be referred to arbitration pursuant to Section 18.17. The price paid may include overhead and the allowance of a reasonable return to Manager and its Affiliates (or companies in which Manager has an ownership interest if such interest is not sufficient to make such company an Affiliate).

18.24. Parent Subordination. Parent and Owner acknowledge and agree that payment of any fees or other amounts, including the Termination Fee, payable to Manager under this Agreement or the Manager Pooling Agreement (the “Manager Receivables”) shall be senior to the payment of any distributions or other payments to Parent (including, without limitation, reimbursement payments to Parent for Parent’s satisfaction of any Guaranteed Obligations (as defined in the Guaranty)) and Parent hereby subordinates its right to receive any distributions or other payments from Owner to Manager’s right to the Manager Receivables.

- 57 -

18.25. Facility Name. Owner and Parent hereby agree that during the term of the Management Agreement, Manager shall have the right, in its sole discretion, to publicly designate the Facility governed thereunder a “Sunrise” community, with such additional identification to provide local identification.

18.26. Parent and Owner Consents. Manager shall be entitled to rely fully and act upon all approvals, consents, authorizations and elections made by Owner under this Agreement, without any obligation whatsoever to make inquiry of Parent or seek confirmation that Parent has provided its authorization, or approval, written or otherwise, to such Owner action and Manager shall not be required to grant any additional time for Parent to instruct Owner with respect to such matters.

18.27. REIT Compliance.

(a) Manager shall provide Owner written notice any time Manager or any of its Affiliates acquires any of the shares of CNL Lifestyle Properties, Inc., or CNL Healthcare Trust, Inc. (each, a “REIT”), and in any event neither Manager nor any of Manager’s Affiliates shall own, at any time during the Term, more than thirty-five percent (35%) of the shares of either REIT.

(b) Manager shall at all times qualify as an “eligible independent contractor” as defined in Section 856(d) of the Internal Revenue Code. In the event that Owner reasonably concludes that the terms of this Agreement will have an effect as to cause rent under Owner’s lease of the Facility to fail to qualify as “rents from real property” within the meaning of Section 856(d) of the Internal Revenue Code, Manager hereby agrees to enter into an amendment to this Agreement as proposed by Owner modifying such terms in such a way as to cause rent under Owner’s lease of the Facility to so qualify as “rents from real property” in the reasonable opinion of Owner and its counsel, provided, however, no such modifications shall affect the amount of management fees or the practical realization of the rights and benefits of the Manager hereunder.

[Signatures Commence on Following Page]

- 58 -

IN WITNESS WHEREOF, the parties hereto have caused this Management Agreement to be executed under seal by their duly authorized offices, all as of the Effective Date.

OWNER:
SUNRISE CONNECTICUT AVENUE ASSISTED LIVING OWNER, L.L.C., a Virginia limited liability company
By:	/s/ Joshua J. Taube
	Name:	Joshua J. Taube
	Title:	Vice President

[Signatures continue on following page]

[Signature page to Management Agreement: Sunrise of Connecticut Avenue]

MANAGER:
SUNRISE SENIOR LIVING MANAGEMENT, INC., a Virginia corporation
By:	/s/ Edward W. Burnett
	Name:	Edward W. Burnett
	Title:	Vice President

[Signatures continue on following page]

[Signature page to Management Agreement: Sunrise of Connecticut Avenue]

PARENT:
CHTSUN PARTNERS IV, LLC, a Delaware limited liability company
By:	CHT SL IV HOLDING, LLC,
	a Delaware limited liability company.
	Managing Member
By:	/s/ Joshua J. Taube
	Name:	Joshua J. Taube
	Title:	Vice President

[Signature page to Management Agreement: Sunrise of Connecticut Avenue]

EXHIBIT A

DESCRIPTION OF REAL PROPERTY

All of those lots or parcels of land located in the District of Columbia and more particularly described as follows:

Lot 162 in Square 1989 in a subdivision made by Sunrise Connecticut Avenue Assisted Living, LLC, and others, as per plat recorded in Liber No. 194 at folio 37 among the Records of the Office of the Surveyor for the District of Columbia.

EXHIBIT B-1

FACILITY SHARED SERVICES

Accounts Payable Processing	Referral Fees - MIS
AOD Billing System	Regional Facilities Expense
Business Managers	Resident Billing Support
Clinical System	Resident Billing System
Connectivity-Shared	Sales System
Cost Report Expense	Sales Training - EBD
Engagement Surveys	Sales Training - Focus
Learning Delivery and Implementation	Sales Training- Excellence in Selling
Learning Design and Development	Sales Training- Selling Skills
Learning Logistics and Administration	Skilled Nursing
Medicare Billing	Tax Advice - Shared
Memory Care Training	Technology Help Desk
Payroll Staff, Training & Communication	Time & Attendance System
Recruitment Marketing and Advertising	Med Management

B-1-1

EXHIBIT B-2

DIRECT EXPENSES

Audit Expense	Payroll Charge
Bank Service Charges	Predictive Index
Connectivity-Direct	Preventative Maintenance System
Desktop Software Licensing	Referral Subscriptions - APFM
Emergency Resources	Resident Bill Print & Delivery
E-Newsletter	TALX
Horizon	Tax Compliance - Direct
Internet Marketing	Training Materials-Liberty
Mystery Shop	Website
Learning Management System	Yellow Pages

B-2-1

EXHIBIT C-1

FINANCIAL REPORTING REQUIREMENTS

Schedule of Reporting
General Description	Detailed Description	Due Date	Monthly	Quarterly	Annually
Financial Reporting
Financial Statements (balance sheet, income statement and trial balance)	Sunrise’s standard format	15th	X
Cash Flow (Non GAAP)		15th	X
Capital Expenditures	Sunrise’s standard format	15th	X
Insurance Claims		15th	X
Accounts Receivable Aging		15th	X
Distribution Schedule	Actual	15th	X
Captive Insurance Company Financials (audited)	Annually	(June 30th)			X
Occupancy Report	Flash Report	15th	X
Variance Report		15th	X
Partners’ K-1’s	Un-audited	60 Days
Audit	Final	March 20th (Manager to use best efforts to deliver by March 15th)
Tax Returns	Un-audited	90 Days
Rent Roll		15th	X
Budgets
Property Annual Operating Budget	Draft	Nov 30th			X
Property Annual Operating Budget	Final	Dec 15th			X
Budget to Include:
Narrative with operating objectives and assumptions		Dec 15th
Competitive Set Analysis	Annual Update	Dec 15th
Real Estate Tax Summary		Dec 15th
Capital Expenditures	1 year forecast	Dec 15th
Distribution Projection		Dec 15th

C-1-1

EXHIBIT C-2

QUARTERLY CERTIFICATION

1. Except to set forth on Exhibit A to this Quarterly Certification, to Manager’s knowledge, the consolidated income statement and balance sheet (the “Reports”) of CHTSun Partners IV, LLC (the “Partnership”) delivered on              fairly present in all material respects the financial position and results of operations of the Partnership at the dates and for the periods presented in the Reports, with respect to the matters addressed by such Reports, all in accordance with United States generally accepted accounting principles consistently applied (subject to normal year end adjustments).

2. Except as set forth on Exhibit A to this Quarterly Certification, Manager is not aware of any significant deficiencies or material weaknesses in Manager’s design or operation of internal control over financial reporting which are reasonably likely to adversely affect Manager’s ability to record, process, summarize and report financial information with respect to the Partnership.

3. Except as set forth on Exhibit A to this Quarterly Certification, Manager is not aware of any material fraud that involves management or other employees who have a significant role in Manager’s internal control over financial reporting.

C-2-1

EXHIBIT D

Form of Proposed Budget

Occupancy %

All Departments

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Year Total

Total Revenue ADR

All Departments

Margin

All Departments

Total Resident Fees

All Departments

Total Extended Care

Incontinence Management

Medication Management

Care Revenue

Ancillary and Therapy

Community Fee

Other Revenue

Rental Income-Affiliate

Revenue

Total Cost of Sales

Net Revenue

Productive Labor

Non Productive Labor

PR Tax & Benefits

Total Labor

Resident Food Cost

Utilities

Repairs and Maintenance

Paint Vinyl Sealing Coating

Workers Comp - Insurance

Insurance

Supplies Expense

Referral Fee Costs

Marketing and Advertising

Bad Debt Write-Offs

Contract Labor

Key Controllable Operating Expense

Legal, Professional Fees and Consulting

Non Resident Food Cost

Program Costs
Telecommunications
Technology
Other Non-Op Income (Expense)
Travel Cost
Auto and Equipment
Business Office Cost
Employee Cost
Other Department Controllables
Operating Expense
NOI
Net Income
Stats MoveIns	All Departments
Occupancy %	Total Assisted Living
Occupancy %	Total Reminiscence
Occupancy %	Total Independent Living
Occupancy %	Total Health Care
Occupancy %	All Departments
Avg Number of Residents	All Departments
Resident Days	All Departments
Resident Days Capacity	All Departments
Units Occupied (Avg Monthly Balance-Units)	All Departments
Unit Capacity	All Departments
Unit Occupancy %	All Departments
Total Revenue ADR	All Departments
Net Resident Fees ADR	Total Assisted Living
Net Resident Fees ADR	Total Reminiscence
Net Resident Fees ADR	Total Independent Living
Net Resident Fees ADR	Total Health Care
Net Resident Fees ADR	All Departments
Extended Care ADR	All Departments
Margins
Cost of Sales
Productive Labor
Non Productive Labor
PR Tax & Benefits

Total Labor

Res. Food Cost

Utilities

R&M

Paint Vinyl Sealing Coating

Worker’s Comp

Insurance

Supplies

Referrals

Marketing

Key Controllables

Other Controllable

House Profit

Mgmt Fee

Non-Dept

Occupancy %	All Departments	Working	Working	Working	Working	Working	Working			Working	Working
Total Revenue ADR	All Departments	Q1	Q2	Q3	Q4	Year Total	Year Total			Year Total	Year Total
Margin	All Departments	2011	2011	2011	2011	2011	2010			2010	2009
		Budget	Budget	Budget	Budget	Budget	Forecast	$ Var	% Var	Budget	Actual
Total Resident Fees	All Departments
Care Revenue
Ancillary and Therapy
Community Fee
Other Revenue
Rental Income-Affiliate
Revenue
Total Cost of Sales
Net Revenue
Productive Labor
Non Productive Labor
PR Tax & Benefits
Total Labor
Resident Food Cost
Utilities
Repairs and Maintenance
Paint Vinyl Sealing Coating
Workers Comp - Insurance
Insurance
Supplies Expense
Referral Fee Costs
Marketing and Advertising
Bad Debt Write-Offs
Contract Labor

Key Controllable Operating Expense
Legal, Professional Fees and Consulting
Non Resident Food Cost
Program Costs
Telecommunications
Technology
Other Non-Op Income (Expense)
Travel Cost
Auto and Equipment
Business Office Cost
Employee Cost
Other Department Controllables
Operating Expense
House Profit
Non Department Expense
Total Operating Expenses
NOI
Investment Factors
Net Income
Stats MoveIns	All Departments
Occupancy %	All Departments
Avg Number of Residents	All Departments
Resident Days	All Departments
Resident Days Capacity	All Departments
Unit Occupancy %	All Departments

Total Revenue ADR	All Departments
Net Resident Fees ADR	All Departments
Extended Care ADR	All Departments
Margins
Cost of Sales
Productive Labor
Non Productive Labor
PR Tax & Benefits
Total Labor
Res. Food Cost
Utilities
R&M
Paint Vinyl Sealing Coating
Worker’s Comp
Insurance
Supplies
Referrals
Marketing
Key Controllables
Other Controllable
House Profit
Mgmt Fee
Non-Dept
NOI

EXHIBIT E

CURRENT INSURANCE PROGRAM

The parties hereto mutually agree that the insurance requirements listed below shall be subject to reasonable availability of such insurance in the marketplace at time of procurement.

All insurers must have an A.M. Best rating of A-/VII or better. Certificates of insurance for all coverages will be issued as soon as practicable after renewal terms have been finalized.

Article I Lines of Insurance

1.01 Property Insurance

Coverage is full replacement cost value of the facility, including business interruption under a $250,000,000 blanket limit. The values associated with each property will be reviewed annually.

California Earthquake Coverage - $50,000,000 in blanket limits

National Flood Insurance Program (NFIP) coverage on all locations in Special Flood Hazard Areas as defined by FEMA.

1.02 Commercial General and Professional Liability Insurance

$11,000,000 per occurrence

$11,000,000 annual aggregate

$21,000,000 policy period aggregate

Aggregate does not apply on a per location basis

1.03 Automobile Liability

$2,000,000 Combined Single Limit Each Accident

Automobile Physical Damage – Actual Cash Value

1.04 Workers’ Compensation (statutory limits) and Employers Liability Insurance

$2,000,000 each employee

$2,000,000 each accident

$2,000,000 policy limit

1.05 Excess Liability

Employer’s Liability and Automobile Liability:

$10,000,000 per Loss, $20,000,000 Annual Aggregate excess of $2,000,000 Each Accident and Employer’s Liability only Policy Aggregate

E-1

General and Professional, Employer’s and Automobile Liability

$40,000,000 per Occurrence excess of $11,000,000 per Occurrence (GL/PL) and $12,000,000 Per Loss (EL/Auto)

$40,000,000 Annual Aggregate excess of $11,000,000 Annual Aggregate, $21,000,000 Policy Period Aggregate (GL/PL) and $12,000,000 Per Loss, $20,000,000 Annual Aggregate (EL/Auto)

General, Employer’s Liability and Automobile Liability Only

$50,000,000 per Occurrence excess of $51,000,000 per Occurrence (GL) and $52,000,000 per Occurrence (EL/Auto)

$50,000,000 Annual Aggregate excess of $51,000,000 Annual Aggregate, $61,000,000 Policy Aggregate, (GL/PL ) and $52,000,000 Annual Aggregate (EL/Auto)

1.06 Employment Practices Liability

$10,000,000 per occurrence

$10,000,000 aggregate

Article II Insurance Cost Allocation

Section 2.01 The cost associated with the insurance program, including projected ultimate losses within deductible layers or self-insured retentions and premiums, will be allocated to all facilities operated by Sunrise Senior Living Management, Inc. (“Manager”) at the time of the Manager’s Insurance Program renewal date. The allocations will be determined based on the following:

Property	Rate per $100 of Value
GL/PL	Rate per Resident Capacity, by State, Bed Type, and Loss Experience
Excess Liability	Rate per Resident Capacity
Automobile	Rate per Vehicle
Crime	Rate per Facility Employee/Payroll
California Earthquake	Allocated to facilities based on Risk of Zone
Flood	Allocated to facilities based on Risk of Zone
Workers’ Compensation	Rate per $100 of Facility Payroll by State, Class Code, and Loss Experience
Employment Practices Liability	Rate per Payroll

E-2

Article III Financial Responsibility

Section 3.01 For those lines of coverage to which a policy deductible or self-insured retention applies, each Facility will be responsible for the cost of a portion of the deductible or self-insured retention based on the projected ultimate loss estimate. The projected ultimate loss estimate will be derived using a third party actuarial analysis of Manager’s loss experience and other external factors, including but not limited to, inflation and increased litigation.

Within the projected ultimate loss estimate, each Facility will be responsible for a deductible of up to $25,000 per occurrence or the amount of the per occurrence deductible or self-insured retention under the insurance policy, if less (the “Facility deductible”). Manager reserves the right to adjust the Facility deductible by line of insurance coverage for certain high-risk jurisdictions. Such Facility deductible will be paid as a Facility expense as the Manager pays losses for the occurrence, up to the Facility deductible limit.

Section 3.02 In the event that any of the required insurance placements are provided on a claims made basis, the Manager will provide an extended reporting period coverage or “tail”, reasonably available in the commercial insurance market for each such coverage or coverages, but in no event less than two years after the expiration of such coverage. The cost of such tail coverage will be treated as a Facility Expense.

Section 3.03 Upon Termination or sale of Facility by Owner, an escrow fund in an amount reasonably acceptable to the Manager shall be established from the proceeds of Gross Revenues (or, if such Gross Revenues are not sufficient, with funds provided by the Owner) to cover the amount of any Facility deductible and all other cost and expense which shall eventually have to be paid by either the Owner or Manager with respect to pending or contingent claims, including those that arise after Termination from causes arising during the Term of this Agreement. Upon the final disposition of all such pending or contingent claims, any unexpected funds remaining in such escrow shall be paid to Owner. Operating Profit for the final Fiscal Year shall be recalculated as a result of any claims paid and Manager and Owner shall each pay to the other such amounts as may be required as a result of such adjustment.

E-3

EX-10.5

Exhibit 10.5

AMENDED AND RESTATED

LOAN AGREEMENT

Dated as of June 29, 2012

among

SANTA MONICA ASSISTED LIVING OWNER, LLC,

AL SANTA MONICA SENIOR HOUSING, LP,

SUNRISE CONNECTICUT AVENUE ASSISTED LIVING OWNER, L.L.C.,

GILBERT AZ SENIOR LIVING OWNER, LLC,

CHTSUN TWO GILBERT AZ SENIOR LIVING, LLC,

METAIRIE LA SENIOR LIVING OWNER, LLC,

CHTSUN TWO METAIRIE LA SENIOR LIVING, LLC,

BATON ROUGE LA SENIOR LIVING OWNER, LLC,

CHTSUN TWO BATON ROUGE LA SENIOR LIVING, LLC,

LOMBARD IL SENIOR LIVING OWNER, LLC,

CHTSUN THREE LOMBARD IL SENIOR LIVING, LLC,

LOUISVILLE KY SENIOR LIVING OWNER, LLC,

and SUNRISE LOUISVILLE KY SENIOR LIVING, LLC

as Borrowers,

and

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,

as Lender

Deal Name:	CHT REIT Portfolio
Loan Numbers:	706108716 – 706108717 and
	706108866 – 706108870

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

TABLE OF CONTENTS

			Page
ARTICLE I - OBLIGATIONS AND PAYMENTS				3
	Section 1.01	Obligations		3
	Section 1.02	Documents		3
	Section 1.03	Loan Payments		3
	Section 1.04	Late Payment and Default Interest		4
	Section 1.05	Application of Payments		5
	Section 1.06	Prepayment		5
	Section 1.07	Treatment of Payments		7
	Section 1.08	Unconditional Payment		7
	Section 1.09	Certain Waivers		7
	Section 1.10	Additional Defined Terms		7
ARTICLE II - REPRESENTATIONS AND WARRANTIES				12
	Section 2.01	Title, Legal Status and Authority		12
	Section 2.02	Validity of Documents		12
	Section 2.03	Litigation		12
	Section 2.04	Status of Property		13
	Section 2.05	Tax Status of Borrower		14
	Section 2.06	Bankruptcy and Equivalent Value		14
	Section 2.07	Disclosure		15
	Section 2.08	Illegal Activity		15
	Section 2.09	OFAC Lists		15
	Section 2.10	Property as Single Asset		16
	Section 2.11	Representations and Warranties Relating to Leases, Rents and Other Matters		16
ARTICLE III - COVENANTS AND AGREEMENTS				17
	Section 3.01	Payment and Performance of Obligations		17
	Section 3.02	Continuation of Existence		17
	Section 3.03	Taxes and Other Charges		18
	Section 3.04	Defense of Title, Litigation, and Rights under Documents		19
	Section 3.05	Compliance with Laws and Operation and Maintenance of Property		19
	Section 3.06	Insurance		21
	Section 3.07	Damage and Destruction of Property		25
	Section 3.08	Condemnation		26
	Section 3.09	Liens and Liabilities		28
	Section 3.10	Tax and Insurance Deposits; Other Deposits		28
	Section 3.11	ERISA		29
	Section 3.12	Environmental Representations, Warranties, and Covenants		30
	Section 3.13	Electronic Payments		32
	Section 3.14	Inspection		33
	Section 3.15	Records, Reports, and Audits		33
	Section 3.16	Certificates		34
	Section 3.17	Full Performance Required; Survival of Warranties		35
	Section 3.18	Additional Security		35

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

i

	Section 3.19	Further Acts	36
	Section 3.20	Compliance with Anti-Terrorism Regulations	36
	Section 3.21	Compliance with Property as Single Asset	37
	Section 3.22	Separateness Covenants/Covenants with Respect to Indebtedness, Operations and Fundamental Changes of Borrower	37
	Section 3.23	Leasing Restrictions	41
	Section 3.24	Covenants Relating to Leases and Rents	42
	Section 3.25	Tax Status of Borrower	43
	Section 3.26	Illegal Activity	43
ARTICLE IV - ADDITIONAL ADVANCES; EXPENSES; SUBROGATION			43
	Section 4.01	Expenses and Advances	43
	Section 4.02	Subrogation	44
ARTICLE V - SALE, TRANSFER, OR ENCUMBRANCE OF THE PROPERTY			44
	Section 5.01	Due-on-Sale or Encumbrance	44
	Section 5.02	Partial Release	46
	Section 5.03	Substitution of Collateral	49
	Section 5.04	One-Time Transfer	52
	Section 5.05	Permitted Transfers Without Fee	54
	Section 5.06	Merger of SSLI or Divestiture by SSLI	55
ARTICLE VI - DEFAULTS AND REMEDIES			57
	Section 6.01	Events of Default	57
	Section 6.02	Remedies	60
	Section 6.03	Expenses	60
	Section 6.04	Agreement to Cooperate in Orderly Transition	60
ARTICLE VII - SECURITY AGREEMENT			60
	Section 7.01	Security Agreement	60
ARTICLE VIII - LIMITATION ON PERSONAL LIABILITY AND INDEMNITIES			61
	Section 8.01	Limited Recourse Liability	61
	Section 8.02	Full Recourse Liability	63
	Section 8.03	General Indemnity	65
	Section 8.04	Transaction Taxes Indemnity	65
	Section 8.05	ERISA Indemnity	65
	Section 8.06	Environmental Indemnity	65
	Section 8.07	Duty to Defend, Costs and Expenses	65
	Section 8.08	Recourse Obligation and Survival	66
ARTICLE IX - ADDITIONAL PROVISIONS			66
	Section 9.01	Usury Savings Clause	66
	Section 9.02	Notices	67
	Section 9.03	Sole Discretion of Lender	67
	Section 9.04	Applicable Law and Submission to Jurisdiction	67
	Section 9.05	Construction of Provisions	68
	Section 9.06	Transfer of Loan	68
	Section 9.07	Miscellaneous	69

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

ii

	Section 9.08	Entire Agreement	70
	Section 9.09	WAIVER OF TRIAL BY JURY	70
	Section 9.10	Advertisement	70
	Section 9.11	Performance of Covenants by Operators	71
ARTICLE X - ADDITIONAL SPECIAL PROVISIONS			71
	Section 10.01	Cash Management	71
	Section 10.02	Post-Closing Obligations	71
	Section 10.03	Provisions Concerning Trustees Under Deeds of Trust	71
	Section 10.04	State Specific Environmental Provisions	71
	Section 10.05	Additional State-Specific Provisions	72
	Section 10.06	Cross Default, Cross-Collateralization and Notice Provisions	73
ARTICLE XI - HEALTHCARE PROVISIONS			73
	Section 11.01	Representations and Warranties of Borrowers	73
	Section 11.02	Covenants of Borrowers	76
ARTICLE XII - CHTSUN PROVISIONS			81
	Section 12.01	Compliance with Property as Single Asset	81
	Section 12.02	Separateness Covenants/Covenants with Respect to Indebtedness, Operations and Fundamental Changes of CHTSun	81
	Section 12.03	Additional Covenants	84

EXHIBITS

Exhibit A – Legal Description of Land

Exhibit B – Description of Personal Property Security

Exhibit C – Permitted Encumbrances

Exhibit D – Individual Properties and Allocated Loan Amounts

Exhibit E – List of Borrowers, Borrowers’ Addresses and Borrowers’ Tax Identification Numbers

Exhibit F – Principal and Interest Payments and Daily Charges Due Under Each Note

Exhibit G – List of Post-Closing Obligations

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

iii

DEFINITIONS

The terms set forth below are defined in the following sections of this Amended and Restated Loan Agreement:

Accounting Period	Section 1.10(a)
Act	Section 3.22(x)
Action	Section 9.04
Additional Borrowers	Recitals, Section 2
Additional Funds	Section 3.07(c)
Additional Loans	Recitals, Section 2
Affecting Borrower’s Individual Property	Section 3.12(a)
Affiliate	Section 3.22, Section 11.01
Agreement	Preamble
Allocated Loan Amount	Section 1.10(b)
Allocated Loan Amounts	Section 1.10(b)
Anti-Terrorism Regulations	Section 3.20(b)
Assessments	Section 3.03(a)
Assignment	Section 1.10(c)
Assignments	Section 1.10(d)
Award	Section 3.08(b)
Bad Debt	Section 1.10(e)
Balance	Section 1.03(a)
Borrower	Preamble
Borrowers	Preamble
Borrower’s Account	Section 1.04(c)
Business Day	Section 1.04(b)
Capital Transaction	Section 1.10(f)
CCP	Section 11.02(f)
CHT REIT	Section 5.01
CMS	Section 11.01(a)(ii)
CHT Entity	Section 5.01
CHT Sun	Section 5.01(h)
CON	Section 11.01(a)(iii)
Control, Controlled or Controlling	Section 3.22
Costs	Section 4.01
Creditors Rights Laws	Section 3.22(y)
Cross Collateral Assignment of Leases	Section 1.10(g)
Cross Collateral Assignments	Section 1.10(h)
Cross Collateral Documents	Section 1.10(i)
Cross Collateral Mortgage	Section 1.10(j)
Cross Collateral Mortgages	Section 1.10(k)
Daily Charge	Section 1.04(a)
Damage	Section 3.07(a)
Debt Service Coverage Ratio	Section 5.02
Debt Yield	Section 5.04
Default Rate	Section 1.04(b)
Deposits	Section 3.10(a)
Discount Rate	Section 1.06

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

i

Documents	Section 1.02
Due Date	Section 1.03(c)
Environmental Indemnity	Section 1.10(l)
Environmental Indemnities	Section 1.10(m)
Environmental Law	Section 3.12(a)
Environmental Liens	Section 3.12(b)
Environmental Report	Section 3.12(a)
ERISA	Section 3.11(a)
ERISA Indemnity	Section 1.10(n)
ERISA Indemnities	Section 1.10(o)
Event of Default	Section 6.01
Exculpated Parties	Section 8.01
Executive Order 13224	Section 2.09
Exiting Property	Section 5.03
FF&E	Section 3.05(g)
FHA Act	Section 2.04(i)
First Notice	Section 3.15(c)
Flood Acts	Section 2.04(a)
Full Replacement Cost	Section 3.06(a)
Funding Date	Section 1.03(a)
GAAP	Section 3.15(a)(ii)
Governmental Authority	Section 11.01(a)(iv)
Grace Period	Section 6.01(c)
Gross Revenue	Section 2.11
Hazardous Materials	Section 3.12(a)
Healthcare Laws	Section 11.01(a)(v)
Healthcare Permit	Section 11.01(a)(vi)
HIPAA	Section 11.01(a)(vii)
HIPAA Compliant	Section 11.01(a)(viii)
Impositions	Section 3.10(a)
Improvements	Section 2.01
Indemnified Parties	Section 8.03
Indemnify	Section 8.03
Individual Beneficiaries	Section 2.09
Individual Loan	Recitals, Section 5
Individual Loan Documents	Section 1.02
Individual Property	Section 1.10(p)
Individual Shareholders	Section 2.09
Insurance Premiums	Section 3.10(a)
Instrument	Section 1.10(q)
Instruments	Section 1.10(r)
Investors	Section 9.06(a)
Land	Section 2.01
Late Charge	Section 1.04(a)
Laws	Section 3.05(c)
Lender	Preamble
Lender Affiliates	Section 9.10
Liability Policy Notice	Section 3.06(c)
Lien	Section 1.10(s)

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

ii

LLC Agreement	Section 3.22(x)
LLC Borrower	Section 3.22(x)
Loan	Recitals, Section 5
Loan to Value Ratio	Section 5.02
Losses	Section 8.03
Management Gross Revenues	Section 1.10(t)
Manager Pooling Agreement	Section 3.21
Maturity	Section 1.03(d)
Maturity Date	Section 1.03(d)
MBA Form	Section 3.06(d)
Medicaid	Section 11.01(a)(ix)
Medicare	Section 11.01(a)(x)
Member	Section 3.22(x)
Mezzanine Borrower	Section 5.07
Mezzanine Collateral	Section 5.07
Mezzanine ICA	Section 5.07
Mezzanine Lender	Section 5.07
Mezzanine Loan	Section 5.07
Microbial Matter	Section 3.12(a)
Minor Commercial Leases	Section 2.11
Net Proceeds	Section 3.07(d)
NOI	Section 5.02
Note	Section 1.10(v)
Notes	Section 1.10(w)
Note Rate	Section 1.03(a)
Notice	Section 9.02
O&M Plan	Section 3.12(b)
Obligations	Section 1.01
OFAC	Section 2.09
OFAC Indemnity	Section 8.01(a)
OFAC Lists	Section 2.09
OFAC Violation	Section 3.20(c)
Operator	Section 1.10(x)
Operators	Section 1.10(y)
Organization State	Section 2.01
Original Borrowers	Recitals, Section 1
Original Loan Agreement	Recitals, Section 1
Original Loans	Recitals, Section 1
Owner	Section 1.10(z)
Owners	Section 1.10(aa)
Parent	Section 5.03(h)
Partial Release	Section 5.02
PCBs	Section 3.12(a)
Permits	Section 11.01(a)(xi)
Permitted Capital Leases	Section 11.02(h)
Permitted Encumbrances	Section 2.01
Permitted Member Loan	Section 5.01(h)
Permitted Member Loans	Section 5.01(h)
Permitted Transfer	Section 5.01(a)

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

iii

Pool Obligations	Section 1.10(bb)
Pool Subsidiaries	Section 11.02(d)
Prepayment Premium	Section 1.06
Present Value of the Loan	Section 1.06
Principal Payment Amount	Section 5.02(d)
Property	Section 1.10(cc)
Property Manager	Section 1.10(dd)
Property Manager’s System	Section 1.10(ee)
Property Payables	Section 3.09
Property State	Section 2.01
PTE	Section 3.11(a)
Qualified Manager	Section 5.04(m)
Rating Agency	Section 9.06(a)
Recourse Documents	Section 1.10(ff)
Recourse Guarantors	Section 1.10(gg)
Recourse Liabilities Guaranty	Section 1.10(hh)
Recourse Liabilities Guaranties	Section 1.10(ii)
Recourse Parties	Section 8.01
Release	Section 3.12(a)
Release Administrative Fee	Section 5.02(h)
Release Price	Section 5.02(d)
Release Property	Section 5.02
Rent Loss Proceeds	Section 3.07(c)
Rent Roll	Section 2.11
Resident Agreements	Section 11.01(a)(xii)
Restoration	Section 3.07(a)
Revenue Code	Section 2.05
Second Notice	Section 3.15(c)
Securities	Section 9.06(a)
Security Agreement	Section 7.01
Security Deposit	Section 8.01(j)
Senior Living Facility	Exhibit B
Single Impacted Individual Property	Section 8.01(o)
Single Impacted Individual Property Exception	Section 8.01(o)
Special Member	Section 3.22(x)
SSLI	Section 3.15(a)(ii)
SSLI Entity	Section 5.01(f)
SSLI Merger	Section 18
SSLI Real Estate Divestiture	Section 18
SSLI Survivor	Section 5.01
SSLII	Section 5.01(h)
Sub-Acute Unit	Section 11.02(g)
Substitute Property	Section 5.03
Substitute Property Owner	Section 5.03(h)
Substitution	Section 5.03
Substitution Administrative Fee	Section 5.03(o)
Supplemental Guaranty	Recitals
TADS	Section 5.02
Taking	Section 3.08(a)

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

iv

Termination Fee	Section 8.01(j)
Third Party Payor	Section 11.01(a)(xiii)
Third Party Payor Programs	Section 11.01(a)(xiv)
Transaction Taxes	Section 3.03(c)
Transfer of Possession Date	Section 8.01(b)
Treasury Rate	Section 1.06
TRICARE	Section 11.01(a)(xv)
Trustee	Recitals, Section 7
U.C.C.	Section 2.02
Violation	Section 3.11(c)

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

v

AMENDED AND RESTATED LOAN AGREEMENT

THIS AMENDED AND RESTATED LOAN AGREEMENT (this “Agreement”) is made as of the 29th day of June, 2012, by and among GILBERT AZ SENIOR LIVING OWNER, LLC, a Delaware limited liability company (“Gilbert Owner”), CHTSUN TWO GILBERT AZ SENIOR LIVING, LLC, a Delaware limited liability company (“CHTSun Gilbert”), METAIRIE LA SENIOR LIVING OWNER, LLC, a Delaware limited liability company (“Metairie Owner”), CHTSUN TWO METAIRIE LA SENIOR LIVING, LLC, a Delaware limited liability company (“CHTSun Metairie”), BATON ROUGE LA SENIOR LIVING OWNER, LLC, a Delaware limited liability company (“Baton Rouge Owner”), CHTSUN TWO BATON ROUGE LA SENIOR LIVING, LLC, a Delaware limited liability company (“CHTSun Baton Rouge”), LOMBARD IL SENIOR LIVING OWNER, LLC, a Delaware limited liability company (“Lombard Owner”), CHTSUN THREE LOMBARD IL SENIOR LIVING, LLC, a Delaware limited liability company (“CHTSun Lombard”), LOUISVILLE KY SENIOR LIVING OWNER, LLC, a Delaware limited liability company (“Louisville Owner”), SUNRISE LOUISVILLE KY SENIOR LIVING, LLC, a Kentucky limited liability company (“Sunrise Louisville”), SANTA MONICA ASSISTED LIVING OWNER, LLC, a Delaware limited liability company (“Santa Monica Owner”), AL SANTA MONICA SENIOR HOUSING, LP, a Delaware limited partnership (“AL Santa Monica”), and SUNRISE CONNECTICUT AVENUE ASSISTED LIVING OWNER, L.L.C., a Virginia limited liability company, formerly known as Sunrise Connecticut Avenue Assisted Living, L.L.C. (“Connecticut Avenue Owner”), each having its principal office and place of business as shown on Exhibit E attached hereto (each of the foregoing entities is referred to individually as a “Borrower” and collectively as “Borrowers”), and THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation, having an office at c/o Prudential Asset Resources, Inc., 2100 Ross Avenue, Suite 2500, Dallas, Texas 75201, Attention: Asset Management Department; Reference Loan Nos. 706108716-706108717 and 706108866-706108870, as lender (“Lender”), and joined in by CHTSun Partners IV, LLC, a Delaware limited liability company, for the limited purpose of agreeing to the provisions of Article XII of this Agreement.

RECITALS:

1. Lender has made certain loans (the “Original Loans”) to each of AL Santa Monica and Connecticut Avenue Owner (collectively, the “Original Borrowers”) in the aggregate original principal sum of Fifty-Five Million and No/100 Dollars ($55,000,000.00). Lender and Original Borrowers are the current parties to that certain Loan Agreement dated as of February 28, 2012 (the “Original Loan Agreement”).

2. Lender has agreed to make as of the date hereof certain additional loans (the “Additional Loans”) to each of Gilbert Owner, CHTSun Gilbert, Metairie Owner, CHTSun Metairie, Baton Rouge Owner, CHTSun Baton Rouge, Lombard Owner, CHTSun Lombard, Louisville Owner and Sunrise Louisville (collectively, the “Additional Borrowers”) in the aggregate original principal sum of Seventy Million and No/100 Dollars ($70,000,000.00).

3. By virtue of two separate Assumption of Liability Agreements dated of even date herewith, Santa Monica Owner assumed the obligations of AL Santa Monica under the Documents (as such term is defined in the Original Loan Agreement) executed by AL Santa Monica, with the result that both Santa Monica Owner and AL Santa Monica are jointly and severally liable for such obligations.

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

1

4. The Original Borrowers and Lender desire to amend the Original Loan Agreement to incorporate the Additional Loans and to add Santa Monica Owner and the Additional Borrowers as parties thereto and Santa Monica Owner, the Additional Borrowers and Lender are agreeable to same.

5. Each of the Original Borrowers, by the terms of its Promissory Note dated as of February 28, 2012, and each of Santa Monica Owner and the Additional Borrowers, by the terms of its Promissory Note dated as of the date hereof (as each such Promissory Note may be amended, restated, replaced, supplemented or otherwise modified from time to time) and in connection with the commercial mortgage loan (each, an “Individual Loan” and collectively in the aggregate, the “Loan”) from Lender to each Borrower, is indebted to Lender in the respective principal sum reflected on Exhibit D attached hereto.

6. Each Borrower desires to secure the payment of and the performance of all of its obligations under its Note and certain additional Obligations (as defined in Section 1.01 herein).

7. Each Borrower has, pursuant to the terms of its Instrument (as defined in Section 1.10 herein), irrevocably granted and conveyed to Lender or to the Trustee (as defined in such Instrument) for the benefit of Lender, and granted Lender a security interest in, (a) the real property described in its Instrument and shown in Exhibits A-1 through A-7 attached hereto and by this reference made a part hereof, and (b) the personal property described in its Instrument and shown in Exhibit B attached hereto and by this reference made a part hereof.

8. Pursuant to the terms of the Instruments (defined below) and each of the Assignments (defined below), Borrowers have absolutely and unconditionally assigned, set over, and transferred to Lender all of Borrowers’ rights, titles, interests and estates in and to the Leases (as defined in the Instruments) and the Rents (as defined in the Instruments), subject to the terms and license granted to Borrowers under the Assignments, which documents shall govern and control the provisions of said assignment.

9. In addition to the Note executed and delivered by each Borrower, each of the Additional Borrowers has executed and delivered to Lender a Supplemental Guaranty and each of the Original Borrowers and Santa Monica Owner has executed and delivered to Lender an Amended and Restated Supplemental Guaranty (as each such guaranty may be amended, restated, replaced, supplemented or otherwise modified from time to time, a “Supplemental Guaranty”) pursuant to which each Borrower guarantees the obligations of each of the other Borrowers under the Notes executed and delivered by such other Borrowers.

10. To secure performance by each Borrower under its Supplemental Guaranty, each Borrower has, pursuant to the terms of its Cross Collateral Mortgage (as defined in Section 1.10 herein), irrevocably granted and conveyed to Lender, and granted Lender a second priority security interest in, (a) the real property described in its Cross Collateral Mortgage and shown in Exhibits A-1 through A-7 attached hereto, and (b) the personal property described in its Cross Collateral Mortgage and shown in Exhibit B attached hereto.

11. Pursuant to the terms of the Cross Collateral Mortgages (defined below) and the Cross Collateral Assignments (defined below), Borrowers have absolutely and unconditionally assigned, set over, and transferred to Lender all of Borrowers’ rights, titles, interests and estates in and to the Leases (as defined in the Cross Collateral Mortgages) and the Rents (as defined in the Cross Collateral Mortgages), subject to the terms and license granted to Borrowers under the Cross Collateral Assignments, which documents shall govern and control the provisions of said assignment.

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

2

12. In connection with the making of the Additional Loans by Lender to the Additional Borrowers, Lender, Original Borrowers and Santa Monica Owner desire to amend and restate the Original Loan Agreement in its entirety, as more particularly set forth herein, and Additional Borrowers desire to join in the execution of this Agreement for the purpose of making the Additional Loans subject to the terms and provisions of this Agreement.

NOW, THEREFORE, in consideration of the covenants set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree, represent and warrant as follows:

ARTICLE I - OBLIGATIONS AND PAYMENTS

Section 1.01 Obligations. As used herein, the term “Obligations” shall mean the Obligations (as such term is defined in each Instrument and each Cross Collateral Mortgage) of any Borrower under the Instrument and the Cross Collateral Mortgage executed by such Borrower.

Section 1.02 Documents. The term “Individual Loan Documents” shall mean, for each Borrower, this Agreement, the Note, the Instrument, the Assignment, the Environmental Indemnity (defined below) (except for any Environmental Indemnity with respect to any Individual Property located in the States of California, Nevada or Washington), and any other written agreement executed by a Borrower in connection with its Individual Loan (but excluding the Loan application, the Loan commitment and the Cross Collateral Documents) (defined below) and by the party against whom enforcement is sought, including those given to evidence or further secure the payment and performance of a Borrower’s Obligations, and any written renewals, extensions, and amendments of the foregoing, executed by the party against whom enforcement is sought. All of the provisions of the Individual Loan Documents are incorporated into this Agreement as if fully set forth in this Agreement. The term “Documents” shall mean all of the Individual Loan Documents and all of the Cross Collateral Documents.

Section 1.03 Loan Payments. Principal and interest under the Notes shall be due and payable as follows:

(a) Interest on the unpaid principal balance of each Individual Loan (the “Balance”) shall accrue at the rate (the “Note Rate”) of four and sixty-six hundredths percent (4.66%) per annum with respect to each of the Connecticut Avenue Note and the Santa Monica Note, and five and twenty-five hundredths percent (5.25%) per annum with respect to each of the Gilbert Note, the Metairie Note, the Siegen Note, the Fountain Square Note and the Louisville Note, from and including the date of the first disbursement of Individual Loan proceeds under each Note (the “Funding Date”) until Maturity (defined below).

(b) Interest from and including the applicable Funding Date to (i) March 5, 2012, with respect to each of the Connecticut Avenue Note and the Santa Monica Note, and (ii) July 5, 2012, with respect to each of the Gilbert Note, the Metairie Note, the Siegen Note, the Fountain Square Note and the Louisville Note, shall be due and payable on the applicable Funding Date.

(c) Interest only under each of the Connecticut Avenue Note and the Santa Monica Note shall be paid in six (6) monthly installments in the amounts set forth on Exhibit F attached hereto and by this reference made a part hereof, commencing on April 5, 2012 and continuing on the fifth (5th) day of each succeeding month to and including September 5, 2012. Thereafter, principal and interest under each of the Connecticut Avenue Note and the Santa Monica Note shall be paid in seventy-eight (78) monthly installments in the amounts set forth on Exhibit F attached hereto, commencing on October 5, 2012, and continuing on the fifth (5^th) day of each succeeding month to and including March 5, 2019. Each payment due date under Sections 1.03(c) and 1.03(d) of this Agreement is referred to as a “Due Date”.

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

3

(d) Interest only under each of the Gilbert Note, the Metairie Note, the Siegen Note, the Fountain Square Note and the Louisville Note shall be paid in six (6) monthly installments in the amounts set forth on Exhibit F attached hereto and by this reference made a part hereof, commencing on August 5, 2012 and continuing on the fifth (5th) day of each succeeding month to and including January 5, 2013. Thereafter, principal and interest under each of the Gilbert Note, the Metairie Note, the Siegen Note, the Fountain Square Note and the Louisville Note shall be paid in seventy-four (74) monthly installments in the amounts set forth on Exhibit F attached hereto, commencing on February 5, 2013, and continuing on the fifth (5^th) day of each succeeding month to and including March 5, 2019.

(e) The entire Obligations of each Borrower shall be due and payable on March 5, 2019 (the “Maturity Date”). “Maturity” shall mean the Maturity Date or earlier date that such Obligations may be due and payable by acceleration by Lender as provided in the Documents.

(f) Interest on the unpaid Balance for any full month shall be calculated on the basis of a three hundred sixty (360) day year consisting of twelve (12) months of thirty (30) days each. For any partial month, interest shall be due in an amount equal to (i) the Balance multiplied by (ii) the applicable Note Rate divided by (iii) 360 multiplied by (iv) the number of days during such partial month that any Balance is outstanding to (but excluding) the date of payment.

Section 1.04 Late Payment and Default Interest.

(a) Late Charge. If any scheduled payment due under the Individual Loan Documents is not fully paid by its Due Date (other than the principal payment due on the Maturity Date), then a daily charge in the amount set forth on Exhibit F attached hereto (the “Daily Charge”) shall be assessed with respect to such Individual Loan for each day that elapses from and after the applicable Due Date until such payment is made in full (including the date payment is made); provided, however, that if any such payment, together with all accrued Daily Charges, is not fully paid by the fourteenth (14^th) day following the applicable Due Date, then a late charge equal to the lesser of (i) four percent (4%) of such payment or (ii) the maximum amount allowed by law (the “Late Charge”) shall be assessed and be immediately due and payable. The Late Charge shall be payable in lieu of Daily Charges that shall have accrued. The Late Charge may be assessed only once on each overdue payment. These charges shall be paid to defray the expenses incurred by Lender in handling and processing such delinquent payment(s) and to compensate Lender for the loss of the use of such funds. The Daily Charge and Late Charge shall be secured by the Individual Loan Documents. The imposition of the Daily Charge, Late Charge, and/or requirement that interest be paid at the Default Rate (defined below) shall not be construed in any way to (A) excuse any Borrower from its obligation to make each payment under its Note promptly when due or (B) preclude Lender from exercising any rights or remedies available under the Documents upon an Event of Default (as defined below).

(b) Default Rate. Upon an Event of Default or at Maturity, whether by acceleration (due to a voluntary or involuntary default) or otherwise, the entire Obligations of each Borrower (excluding accrued but unpaid interest if prohibited by law) shall bear interest at the Default Rate. The “Default Rate” shall be the lesser of (i) the maximum rate allowed by law or (ii) five percent (5%) plus the greater of (A) the applicable Note Rate or (B) the prime rate (for corporate loans at large United States money center commercial banks) published in The Wall Street Journal on the first Business Day (defined below) after the Event of Default or Maturity occurs and on the first Business Day of every month thereafter. The term “Business Day” shall mean each Monday through Friday except for days on which commercial national banking associations in New York City, New York are required or authorized to be closed.

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

4

(c) Failure to Initiate Monthly Payments. If (i) each Borrower meets all the requirements of the Documents relating to electronic funds transfer, (ii) the full applicable portion of the monthly principal and interest payment is maintained in each Borrower’s respective account (collectively, the “Borrower’s Account”) from which Lender initiates its monthly debit entries during the entire day on the Due Date, and (iii) the sole reason such funds were not withdrawn from Borrower’s Account was a result of Lender’s acts or omissions, then, in those circumstances, no Daily Charges shall be assessed with respect to that monthly principal and interest payment as a result of such monthly principal and interest payment having not been made on the Due Date, but shall be reinstated for any subsequent day in which all of the foregoing conditions are not satisfied.

Section 1.05 Application of Payments. Until an Event of Default occurs, all payments received under any Note shall be applied in the following order: (a) to unpaid fees, costs, and expenses due Lender pursuant to the applicable Individual Loan Documents; (b) to unpaid Daily Charges, Late Charges and costs of collection with respect to the applicable Individual Loan Documents; (c) to any Prepayment Premium due with respect to the applicable Individual Loan Documents; (d) to interest due on the Balance of the applicable Individual Loan; and (e) then to the Balance of the applicable Individual Loan. After an Event of Default (unless Lender has accepted cure of such Event of Default by specific written statement from Lender to Borrower acknowledging Lender’s acceptance of such cure, and Borrower specifically understands and agrees that Lender shall have no obligation whatsoever to accept the cure of any Event of Default), all payments shall be applied in any order determined by Lender.

Section 1.06 Prepayment. Any Note may be prepaid, in whole or in part, upon at least thirty (30) days’ prior written notice to Lender and upon payment of all accrued interest (and other Obligations of a Borrower due under the applicable Individual Loan Documents) and a prepayment premium (the “Prepayment Premium”) equal to the greater of (a) one percent (1%) of the principal amount being prepaid multiplied by the quotient of the number of full months remaining to the date that is ninety (90) days prior to the Maturity Date, calculated as of the prepayment date, divided by the number of full months comprising the term of the Note, or (b) the Present Value of the Loan (defined below) less the amount of principal and accrued interest (if any) being prepaid, calculated as of the prepayment date. The Prepayment Premium shall be due and payable, except as provided in this Agreement or as limited by law, upon any prepayment of a Note, whether voluntary or involuntary, and Lender shall not be obligated to accept any prepayment of any Note unless it is accompanied by the Prepayment Premium, all accrued interest and all other Obligations of a Borrower due under the applicable Individual Loan Documents. Lender shall notify the prepaying Borrower(s) of the amount of and the calculation used to determine the Prepayment Premium. Borrowers agree that (i) Lender shall not be obligated to actually reinvest the amount prepaid in any Treasury obligation and (ii) the Prepayment Premium is directly related to the damages that Lender will suffer as a result of the prepayment. The “Present Value of the Loan” shall be determined by discounting all scheduled payments remaining to the Maturity Date attributable to the amount being prepaid at the Discount Rate (defined below). Partial prepayments of principal hereunder shall not entitle any Borrower to have the installments of principal and interest payable under the Notes reduced by reamortizing the remaining unpaid principal balance due under the Notes or by applying such prepayment to the next maturing installment of principal and interest under the Notes. If prepayment occurs on a date other than a Due Date, then the actual number of days remaining from the date of prepayment to the next Due Date will be used to discount within this period. The “Discount Rate” is the rate which, when compounded monthly, is equivalent to the Treasury Rate (defined below), when compounded semi-annually. The “Treasury Rate” is the semi-annual yield on the Treasury Constant Maturity Series with maturity equal to the remaining weighted average life of the Loan, for the week prior

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

5

to the prepayment date, as reported in Federal Reserve Statistical Release H.15 - Selected Interest Rates, conclusively determined by Lender (absent a clear mathematical calculation error) on the prepayment date. The rate will be determined by linear interpolation between the yields reported in Release H.15, if necessary. If Release H.15 is no longer published, then Lender shall select a comparable publication to determine the Treasury Rate. Notwithstanding the foregoing, no Prepayment Premium shall be due if any Note is prepaid during the last ninety (90) days prior to the Maturity Date.

Except as provided in Section 5.02 and Section 5.03 of this Agreement, if any Borrower prepays the entire amount of its Individual Loan, then Borrowers must simultaneously prepay the entire amount of all of the other Individual Loans. In all events, the applicable Prepayment Premium must also be paid.

With respect to the foregoing provisions, Borrowers hereby expressly agree as follows:

(a) Each Note Rate provided herein has been determined based on the sum of (i) the treasury rate in effect at the time such Note Rate was determined under the Loan application submitted to Lender, plus (ii) an interest rate spread over such treasury rate, which together represent Lender’s agreed-upon return for making the proceeds of the Loan available to Borrowers over the term of such Loan.

(b) The determination of each Note Rate, and in particular the aforesaid interest rate spread, were based on the expectation and agreement of Borrowers and Lender that the principal sums advanced under the Notes would not be prepaid during the term of the Notes or, if any such prepayment occurs, the Prepayment Premium (calculated in the manner set forth above) would apply (except as expressly permitted by the Notes or this Agreement).

(c) Lender’s business involves making financial commitments to others based in part on the returns it expects to receive from the Notes and other similar loans made by Lender, and Lender’s financial performance as a business depends not only on the returns from each loan or investment it makes but also upon the aggregate amounts of the loans and investments it is able to make over any given period of time.

(d) In the event of a prepayment under the Documents, Lender will be required to redeploy the funds received into other loans or investments, which (i) may not provide a return to Lender comparable to the return Lender anticipates based on the applicable Note Rate and (ii) may reduce the total amount of loans or investments Lender is able to make during the term of the Loan, which in turn may impair the profitability of Lender’s business. Therefore, in order to compensate Lender for the potential impact and risks to its business of prepayments under the Notes, Lender has limited Borrowers’ right to prepay the Notes and has offered the method of calculation of the Prepayment Premium set forth above.

(e) Borrowers acknowledge that (i) Lender could have determined that it would not permit any prepayments under the Notes during their terms, and therefore, in electing to permit prepayments under the Individual Loan Documents, Lender is entitled to determine and negotiate the terms on which it will accept prepayments of its loans, and (ii) Borrowers could have elected to negotiate more permissive prepayment provisions and/or a more favorable manner of calculating the Prepayment Premium, but in such event the applicable interest rate spread, and therefore the applicable Note Rate, would have been higher to compensate Lender for the potential loss of income on account of the risk that Borrowers might elect to prepay the Notes at an earlier time and/or for a lesser Prepayment Premium than set forth herein.

Therefore, in consideration of Lender’s agreement to each Note Rate set forth herein, and in recognition of Lender’s reliance on the prepayment provisions of the Individual Loan Documents

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

6

(including the method of calculating the Prepayment Premium), Borrowers agree that the manner of calculation of the Prepayment Premium set forth in the Documents represents bargained-for compensation to Lender for granting to Borrowers the privilege of prepaying the Notes on the terms set forth in the Individual Loan Documents and for the potential loss of future income to Lender arising from having to redeploy the amounts prepaid under the Notes into other loans or investments. As such, the Prepayment Premium constitutes reasonable compensation to Lender for making the Loan on the terms reflected in the Notes and this Agreement and does not represent a penalty.

Section 1.07 Treatment of Payments. All payments under the Notes and the Documents shall be made, without offset or deduction, (a) in lawful money of the United States of America at the office of Lender or at such other place (and in the manner) Lender may specify by written notice to Borrowers, (b) in immediately available federal funds, and (c) if received by Lender prior to 2:00 p.m. Eastern Time at such place, shall be credited on that day, or, if received by Lender at or after 2:00 p.m. Eastern Time at such place, shall, at Lender’s option, be credited on the next Business Day. Initially (unless waived by Lender), and until Lender shall direct Borrowers otherwise, Borrowers shall make all payments due under the Notes in the manner set forth in Section 3.13 of this Agreement. If any Due Date falls on a day which is not a Business Day, then the Due Date shall be deemed to have fallen on the next succeeding Business Day.

Section 1.08 Unconditional Payment. Borrowers are and shall be obligated to pay principal, interest and any and all other amounts which became payable under the Notes or under the other Documents absolutely and unconditionally and without abatement, postponement, diminution or deduction and without any reduction for counterclaim or setoff. In the event that at any time any payment received by Lender under the Documents shall be deemed by a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under any bankruptcy, insolvency or other debtor relief law, then the obligation to make such payment shall survive any cancellation or satisfaction of any of the Notes or return thereof to any Borrower and shall not be discharged or satisfied with any prior payment thereof or cancellation of any Note, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof, and such payment shall be immediately due and payable upon demand.

Section 1.09 Certain Waivers. Borrowers and all others who may become liable for the payment of all or any part of the Pool Obligations (defined below) do hereby severally waive presentment and demand for payment, notice of dishonor, protest and notice of protest, notice of non-payment and notice of intent to accelerate the maturity hereof (and of such acceleration). No release of any security for the Pool Obligations (except as otherwise expressly provided in Article V below) or extension of time for payment of any Note or any installment thereof, and no alteration, amendment or waiver of any provision of any Note, any Instrument, this Agreement or the other Documents shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of any Borrower, and any other who may become liable for the payment of all or any part of the Pool Obligations, under the Notes, the Instruments, this Agreement and the other Documents.

Section 1.10 Additional Defined Terms. In addition to other capitalized terms defined herein, when used herein the following terms shall have the following meanings:

(a) “Accounting Period” means and refers to a calendar month.

(b) “Allocated Loan Amounts” means the pro rata allocation of the Loan to each Individual Property (each an “Allocated Loan Amount”), as mutually agreed between Lender and Borrowers and as currently set forth in Exhibit D attached hereto and by this reference made a part hereof, as such allocation may be revised or otherwise modified from time to time in accordance with the provisions of Sections 5.02 or 5.03 of this Agreement.

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

7

(c) “Assignment” means the assignment of the lessor’s interest in leases and rents (which may be incorporated in the Instrument) executed and delivered by the applicable Owner and the applicable Operator in connection with an Individual Property for the benefit of Lender, modified to reflect the laws of the state where the Individual Property is located and otherwise as Lender deems necessary or appropriate in its reasonable discretion (provided that no monetary or other material obligations of such Borrower under the Documents are thereby increased), as amended, supplemented, restated, or otherwise modified from time to time in accordance with the provisions hereof or thereof.

(d) “Assignments” means, collectively, each Assignment for the Individual Properties.

(e) “Bad Debt” means an Individual Property’s accounts receivable deemed to be uncollectable and written off, and the allowance for bad debts per the Property Manager’s policy, as consistently applied within Property Manager’s System.

(f) “Capital Transaction” means the sale, exchange or disposition of an Individual Property or any personal property located at the Individual Property, the refinancing of an Individual Loan, any financing or refinancing of the leasehold interest in an Individual Property or any casualty damage to or condemnation of an Individual Property or any portion thereof.

(g) “Cross Collateral Assignment of Leases” means a second priority assignment of the lessor’s interest in leases (which may be incorporated in each Cross Collateral Mortgage) executed and delivered by the applicable Owner and the applicable Operator in connection with an Individual Property for the benefit of Lender, to secure the obligations of such Owner and such Operator as described in the Cross Collateral Mortgage recorded with respect to the same Individual Property, and modified to reflect the laws of the state where the Individual Property is located and otherwise as Lender deems necessary or appropriate in its reasonable discretion, as amended, supplemented, restated, replaced, or otherwise modified from time to time in accordance with the provisions hereof or thereof.

(h) “Cross Collateral Assignments” means, collectively, each of the Cross Collateral Assignments of Leases for the Individual Properties.

(i) “Cross-Collateral Documents” means the Cross Collateral Mortgage, the Cross-Collateral Assignment of Leases and the Supplemental Guaranty executed and delivered by the applicable Owner and the applicable Operator in connection with an Individual Property for the benefit of Lender.

(j) “Cross Collateral Mortgage” means a second priority mortgage, deed of trust, indemnity deed of trust, deed to secure debt or other similar instrument, executed and delivered by the applicable Owner and the applicable Operator, as “Trustor,” “Mortgagor,” or “Grantor” who owns or leases, as applicable, the Individual Property or Individual Properties described in the Cross Collateral Mortgage, for the benefit of Lender as “Beneficiary”, “Mortgagee” or “Grantee” for an Individual Property to secure the obligations of Borrowers under all Notes other than the Note secured by the Instrument recorded with respect to the same Individual Property, modified to reflect the laws of the state where the Individual Property is located and otherwise in a form reasonably satisfactory to Lender and as amended, supplemented, restated, replaced, or otherwise modified from time to time in accordance with the provisions hereof or thereof.

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

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(k) “Cross Collateral Mortgages” means, collectively, each of the Cross Collateral Mortgages for the Individual Properties.

(l) “Environmental Indemnity” means (i) with respect to each Individual Property located outside the States of California, Nevada and Washington, the Environmental and ERISA Indemnity Agreement executed and delivered by the applicable Owner, the applicable Operator and Recourse Guarantors to Lender in a form reasonably satisfactory to Lender and modified to reflect the laws of the state where the Individual Property is located and otherwise as Lender deems necessary or appropriate in its reasonable discretion (provided that no monetary or other material obligations of such Borrower under the Documents are thereby increased), and as amended, supplemented, restated, or otherwise modified from time to time in accordance with the provisions hereof or thereof, and (ii) with respect to each Individual Property located in the States of California, Nevada or Washington, the Environmental Indemnity Agreement executed and delivered by the applicable Owner, the applicable Operator and Recourse Guarantors to Lender in a form reasonably satisfactory to Lender and modified to reflect the laws of the state where the Individual Property is located and otherwise as Lender deems necessary or appropriate in its reasonable discretion (provided that no monetary or other material obligations of such Borrower under the Documents are thereby increased), and as amended, supplemented, restated, or otherwise modified from time to time in accordance with the provisions hereof or thereof.

(m) “Environmental Indemnities” means, collectively, each Environmental Indemnity for the Individual Properties.

(n) “ERISA Indemnity” means, with respect to an Individual Property located in the States of California, Nevada or Washington, the ERISA Indemnity Agreement executed and delivered by the applicable Owner, the applicable Operator and Recourse Guarantors to Lender in a form satisfactory to Lender and modified to reflect the laws of the state where the Individual Property is located and otherwise as Lender deems necessary or appropriate in its sole discretion, and as amended, supplemented, restated, or otherwise modified from time to time in accordance with the provisions hereof or thereof.

(o) “ERISA Indemnities” means, collectively, each ERISA Indemnity for the Individual Properties.

(p) “Individual Property” means each real property or group of real properties (including, without limitation, all Improvements located thereon) now or hereafter included in the Property and identified together as an “Individual Property” on Exhibit D. Each Individual Property is more particularly described in Exhibits A-1 through A-7.

(q) “Instrument” means a deed of trust, mortgage, deed to secure debt or other similar instrument, executed and delivered by the applicable Owner and the applicable Operator, as “Trustor,” “Mortgagor,” or “Grantor”, for the benefit of Lender as “Beneficiary,” “Mortgagee” or “Grantee”, for an Individual Property, modified to reflect the laws of the state where such Individual Property is located and otherwise in form reasonably satisfactory to Lender and as amended, supplemented, restated, or otherwise modified from time to time in accordance with the provisions hereof or thereof.

(r) “Instruments” means, collectively, each of the Instruments for the Individual Properties.

(s) “Lien” means any mortgage, deed of trust, indemnity deed of trust, deed to secure debt, pledge security interest, encumbrance, lien or charge of any kind (including any agreement to give any of the foregoing), any conditional sale or other title retention agreement, any financing lease in the nature thereof, and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction.

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

9

(t) “Management Gross Revenues” means for each Accounting Period, all revenues and receipts of every kind derived from operating an Individual Property and all departments and parts thereof, including, but not limited to: income (from both cash and credit transactions) from monthly occupancy fees, health care fees and ancillary services fees received pursuant to various agreements with residents of the Individual Property; interest received with respect to the monies in any operating account of the Individual Property; income from food and beverage, and catering sales; income from telephone charges; income from vending machines; and proceeds, if any, from business interruption or other loss of income insurance (to the extent such insurance either reimburses on the basis of gross revenues or otherwise covers all expenses including Property Manager’s fees), all determined on an accrual basis in accordance with GAAP consistently applied; provided, however, that Management Gross Revenues shall not include: (i) gratuities to employees at the Individual Property; (ii) federal, state or municipal excise, sales or use taxes or similar taxes imposed at the point of sale and collected directly from residents or guests of the Individual Property or included as part of the sales price of any goods or services, such as gross receipts or similar taxes; (iii) proceeds from the sale or disposition of FF&E or other capital assets (which proceeds will be deposited in an FF&E reserve); (iv) interest received or accrued with respect to the monies in any reserve accounts maintained in connection with the operation of an Individual Property; (v) any cash refunds, rebates or discounts to residents of the Individual Property, or cash discounts and credits of a similar nature, given, paid or returned in the course of obtaining Management Gross Revenues or components thereof; (vi) proceeds from any sale of the Individual Property or any part thereof, or any other Capital Transaction; (vii) proceeds of any financing transaction affecting the Individual Property; (viii) security or resident fee deposits until such time as the same are applied to current fees and other charges due and payable; (ix) awards of damages, settlement proceeds and other payments received by Property Manager in respect of any litigation other than litigation to collect fees due for services rendered in connection with the operation of the Individual Property; (x) proceeds of any condemnation; (xi) proceeds of any casualty insurance, other than loss of rents or business interruption insurance; (xii) payments under any policy of title insurance; (xiii) income derived from securities and other property acquired and held for investment; (xiv) income from services to the extent they are outsourced and (xv) contributions by Property Manager. Any Bad Debt, or any community fees or deposits that are refunded to a resident shall be credited against Management Gross Revenues during the Accounting Period in which such Bad Debt is recognized or such refunds are made, as the case may be, if such amounts were previously included in Management Gross Revenues. Any Bad Debt which is recognized but is later collected shall be added to Management Gross Revenues.

(u) [INTENTIONALLY OMITTED].

(v) “Note” means, individually, any one of the Notes, as each such Note may be amended, restated, replaced, supplemented or otherwise modified from time to time.

(w) “Notes” means, collectively, each of (i) that certain Promissory Note dated of even date herewith, in the original principal amount of $17,061,000.00, executed by Gilbert Owner and CHTSun Gilbert, as maker, and payable to Lender or its order (as it may be amended, restated, replaced, supplemented or otherwise modified from time to time, “Gilbert Note”), (ii) that certain Amended and Restated Promissory Note dated of even date herewith, in the original principal amount of $33,932,000.00, executed by Connecticut Avenue Owner, as maker, and payable to Lender or its order (as it may be amended, restated, replaced, supplemented or otherwise modified from time to time, “Connecticut Avenue Note”), (iii) that certain Amended and Restated Promissory Note dated of even date herewith, in the original principal amount of $21,068,000.00, executed by Santa Monica Owner and

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

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AL Santa Monica, as maker, and payable to Lender or its order (as it may be amended, restated, replaced, supplemented or otherwise modified from time to time, “Santa Monica Note”), (iv) that certain Promissory Note dated of even date herewith, in the original principal amount of $13,839,000.00, executed by Metairie Owner and CHTSun Metairie, as maker, and payable to Lender or its order (as it may be amended, restated, replaced, supplemented or otherwise modified from time to time, “Metairie Note”), (v) that certain Promissory Note dated of even date herewith, in the original principal amount of $9,769,000.00, executed by Baton Rouge Owner and CHTSun Baton Rouge, as maker, and payable to Lender or its order (as it may be amended, restated, replaced, supplemented or otherwise modified from time to time, “Siegen Note”), (vi) that certain Promissory Note dated of even date herewith, in the original principal amount of $17,657,000.00, executed by Lombard Owner and CHTSun Lombard, as maker, and payable to Lender or its order (as it may be amended, restated replaced, supplemented or otherwise modified from time to time, “Fountain Square Note”) and (vii) that certain Promissory Note dated of even date herewith, in the original principal amount of $11,674,000.00, executed by Louisville Owner and Sunrise Louisville, as maker, and payable to Lender or its order (as it may be amended, restated, replaced, supplemented or otherwise modified from time to time, “Louisville Note”).

(x) “Operator” means, individually, each of CHT Sun Gilbert, CHTSun Metairie, CHTSun Baton Rouge, CHTSun Lombard, Sunrise Louisville and AL Santa Monica.

(y) “Operators” means, collectively, each Operator.

(z) “Owner” means, individually, each of Gilbert Owner, Metairie Owner, Baton Rouge Owner, Lombard Owner, Louisville Owner, Santa Monica Owner and Connecticut Avenue Owner.

(aa) “Owners” means, collectively, each Owner.

(bb) “Pool Obligations” means all monetary and non-monetary obligations of every nature of all Borrowers from time to time to be performed by any of Borrowers under all of the Documents, whether for principal, interest, fees, expenses, indemnification or otherwise.

(cc) “Property” means, collectively, each of the Individual Properties.

(dd) “Property Manager” means Sunrise Senior Living Management, Inc., a Virginia corporation, or its permitted successors or assigns.

(ee) “Property Manager’s System” means at any particular time the system or group of assisted living and/or independent living communities then owned and/or operated or managed by Property Manager (or one or more of its Affiliates).

(ff) “Recourse Documents” means, collectively, (i) the Recourse Liabilities Guaranties, (ii) the Environmental Indemnities, and (iii) the ERISA Indemnities, each as amended, supplemented, restated, replaced, or otherwise modified from time to time in accordance with the provisions hereof or thereof.

(gg) “Recourse Guarantors” means, together, CNL Healthcare Trust, Inc., a Maryland corporation, and Sunrise Senior Living Investments, Inc., a Virginia corporation.

(hh) “Recourse Liabilities Guaranty” means, with respect to an Individual Loan, the Recourse Liabilities Guaranty or the Amended and Restated Recourse Liabilities Guaranty executed and delivered by Recourse Guarantors to Lender with respect to such Individual Loan, as amended, supplemented, restated, replaced or otherwise modified from time to time in accordance with the provisions hereof or thereof.

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

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(ii) “Recourse Liabilities Guaranties” means, collectively, each Recourse Liabilities Guaranty for the Individual Loans.

ARTICLE II - REPRESENTATIONS AND WARRANTIES

Each Borrower hereby represents and warrants to Lender as follows (it being understood that, unless the context expressly provides otherwise in this Article II, all representations and warranties in this Article II are made by each Borrower with respect to itself, its Obligations and its Individual Property):

Section 2.01 Title, Legal Status and Authority. Borrower (other than the applicable Operator) (a) is seised of the Land (as defined in the Instrument) and the Improvements (as defined in the Instrument) in fee simple and has good and marketable title to its Individual Property, free and clear of all liens, charges, encumbrances and security interests, except the applicable matters for such Individual Property as listed in Exhibits C-1 through C-7 attached hereto (the “Permitted Encumbrances”); (b) will forever warrant and defend its title to its Individual Property and the validity, enforceability, and priority of the lien and security interest created by the Instrument and the other Documents against the claims of all persons; (c) is either a limited liability company or a limited partnership, as the case may be, duly organized, validly existing, and in good standing and qualified to transact business under the laws of its state of organization or incorporation (the “Organization State”) and is qualified to do business and in good standing in each of the states where any portion of its Individual Property is located (each, a “Property State”); and (d) has all necessary approvals, governmental and otherwise, and full power and authority to own its properties (including its Individual Property) and carry on its business. Operator is either a limited liability company or a limited partnership, as the case may be, duly organized, validly existing, and in good standing and qualified to transact business under the laws of its Organization State, is qualified to do business and in good standing in each Property State in which any portion of its Individual Property is located, and has all necessary approvals, governmental and otherwise, and full power and authority to own its properties, to operate its Individual Property, and to carry on its business.

Section 2.02 Validity of Documents. The execution, delivery and performance of the Documents and the borrowing evidenced by the Note and this Agreement (a) are within the power of Borrower; (b) have been authorized by all requisite action; (c) have received all necessary approvals and consents; (d) will not, to the best of Borrower’s knowledge (after due inquiry and investigation), violate, conflict with, breach, or constitute (with notice or lapse of time, or both) a default under (i) any law, order or judgment of any court, governmental authority, or the governing instrument of Borrower or (ii) any indenture, agreement, or other instrument to which Borrower is a party or by which it or any of its property is bound or affected; (e) will not result in the creation or imposition of any lien, charge, or encumbrance upon any of its properties or assets except for those in the Instrument and the other Documents; and (f) except for those obtained prior to the date of this Agreement, will not require any authorization or license from, or any filing with, any governmental or other body (except for the recordation of the Instrument, the Assignment, the Cross Collateral Mortgage, the Cross Collateral Assignment of Leases, Uniform Commercial Code (the “U.C.C.”) filings. The Documents constitute legal, valid, and binding obligations of Borrower.

Section 2.03 Litigation. There is no action, suit, or proceeding, judicial, administrative, or otherwise (including any condemnation or similar proceeding), pending or, to Borrower’s knowledge (after due inquiry and investigation), threatened or contemplated against, or affecting, Borrower or its Individual Property which would have a material adverse effect on either its Individual Property or Borrower’s ability to perform the Obligations.

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

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Section 2.04 Status of Property.

(a) The Land and Improvements are not located in an area identified by the Secretary of Housing and Urban Development, or any successor, as an area having special flood hazards pursuant to the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973, or the National Flood Insurance Reform Act of 1994, as each have been or may be amended, or any successor law (collectively, the “Flood Acts”) or, if located within any such area, Borrower has or will obtain, and will maintain, the insurance prescribed in Section 3.06(a) below.

(b) Borrower and Property Manager have all necessary (i) certificates, licenses, and other approvals, governmental and otherwise (including, without limitation, all Healthcare Permits [defined below]), for the operation of its Individual Property, the conduct of its business, and for the leasing and operation of its Individual Property as a Senior Living Facility, and (ii) zoning, building code, land use, environmental and other similar permits or approvals, all of which are currently in full force and effect and not subject to any pending action for revocation, suspension, forfeiture, or modification. To the best of Borrower’s knowledge (after due inquiry and investigation), Borrower’s Individual Property and its use and occupancy are in compliance in all material respects with all Laws, including, without limitation, all (1) health and fire safety codes; (2) laws regulating the handling and disposal of medical or biological waste; (3) the applicable provisions of the Senior Living Facility laws, rules, regulations and published interpretations thereof to which Borrower or its Individual Property is subject; and (4) all criteria established to classify such Individual Property as housing for older persons under the Fair Housing Amendments Act of 1988, and neither Borrower nor Property Manager has received any written notice of any violation or potential violation of the Laws which has not been remedied or satisfied or for which Borrower or Property Manager is not actively pursuing a remedy and which has not been disclosed to Lender, and the zoning classification of its Individual Property permits the use of such Individual Property as intended.

(c) Borrower’s Individual Property is served by all utilities (including water and sewer) required for its use.

(d) All public roads and streets necessary to serve Borrower’s Individual Property for its use have been completed, are serviceable, are legally open, and have been dedicated to and accepted by the appropriate governmental entities.

(e) Borrower’s Individual Property is free from damage caused by fire or other casualty.

(f) All costs and expenses for labor, materials, supplies, and equipment used in the construction of the Improvements for Borrower’s Individual Property have been paid in full except for the applicable Permitted Encumbrances and repairs done on the Improvements performed in the ordinary course of the operation of the Individual Property which are paid in the ordinary course of business.

(g) Owner or Operator, as applicable, owns all furnishings, fixtures, and equipment (other than the property of Property Manager and Tenants [as defined in the Instrument]) used in connection with the operation of Borrower’s Individual Property, free of all security interests, liens, or encumbrances except the applicable Permitted Encumbrances, purchase money security interests granted in connection with the acquisition of items of equipment used in the normal course of the operation of the Individual Property which do not exceed, in the aggregate, $100,000.00, and security interests, liens, or encumbrances created by the Documents.

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

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(h) Borrower’s Individual Property is assessed for real estate tax purposes as one or more wholly independent tax lot(s), separate from any adjoining land or improvements and no other land or improvements are assessed and taxed together with such Individual Property.

(i) Borrower’s Individual Property and its Improvements are either (i) in compliance with the provisions of the Fair Housing Amendments Act of 1988, as amended, which relate to accessibility design and construction requirements, and all rules, regulations, and guidelines issued thereunder, all as are in effect as of the date hereof (collectively, the “FHA Act”), or (ii) exempt from the FHA Act.

(j) Borrower’s Individual Property is in compliance with the provisions of the Americans with Disabilities Act of 1990, and any amendments in effect as of the date hereof, which relate to accessibility design and construction requirements, and all rules, regulations, and guidelines issued thereunder, all as are in force as of the date hereof.

Section 2.05 Tax Status of Borrower. Borrowers’ United States employee tax identification numbers and office addresses are set forth on Exhibit E attached hereto. Each Owner further represents and warrants to Lender that (i) it is a “disregarded entity” as defined in Section 1.1445-2(b)(2)(iii) of the Income Tax Regulations (a “disregarded entity”) issued under the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “Revenue Code”), (ii) Sun IV LLC (“Sun IV”), the sole member of each Owner that is a limited liability company and the sole shareholder of CHT SL IV TRS Corp., is a “disregarded entity”, (iii) Santa Monica GP, LLC, the general partner of AL Santa Monica, is a “disregarded entity”, (iv) Santa Monica AL, LLC, the limited partner of AL Santa Monica and the sole member of Santa Monica GP, LLC, is a “disregarded entity”, and (v) CHT SL IV TRS Corp., the sole member of Santa Monica AL, LLC and Connecticut Avenue Owner, is not a “disregarded entity” and is not a “foreign person,” “foreign partnership,” “foreign trust,” or “foreign estate” within the meaning of Sections 1445 and 7701 of the Revenue Code. CHTSun (as hereinafter defined), the actual or deemed owner of the Owners and Sun IV, is classified for federal income tax purposes as a partnership. CHTSun represents and warrants to Lender that it is not a “disregarded entity” and is not a “foreign person,” “foreign partnership,” “foreign trust,” or “foreign estate” within the meaning of Sections 1445 and 7701 of the Revenue Code. These statements are made by Borrower in compliance with Sections 1445 and 7701 of the Revenue Code to exempt any transferee of the Property from withholding the tax required upon a foreign transferor’s disposition of a U.S. real property interest.

Section 2.06 Bankruptcy and Equivalent Value.

(a) No bankruptcy, reorganization, insolvency, liquidation, or other proceeding for the relief of debtors has been instituted by or against Borrower, any general partner of Borrower (if Borrower is a partnership), or any manager or managing member of Borrower (if Borrower is a limited liability company).

(b) The Obligations incurred by Borrower under the Documents and the mortgaging of its Individual Property pursuant to the Instrument and the Cross Collateral Mortgage are not made or incurred with the intent to hinder, delay, or defraud any present or future creditor of Borrower;

(c) Borrower has not received less than reasonably equivalent value in exchange for incurring the Obligations and/or the mortgaging of its Individual Property in connection with the Loan;

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and 706108866-706108870

CHT REIT Portfolio

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(d) Borrower is solvent as of the date hereof, and Borrower will not become insolvent as a result of incurring the Obligations and/or the mortgaging of its Individual Property pursuant to the Documents;

(e) Borrower is not engaged, and Borrower is not about to engage, in business or a transaction for which any property remaining with Borrower is an unreasonably small capital;

(f) Borrower has not incurred and does not intend to incur, and Borrower does not believe that it will incur, debts that would be beyond Borrower’s ability to pay as such debts mature; and

(g) Borrower is not mortgaging its Individual Property and/or incurring the Obligations to or for the benefit of an insider (as defined in 11 U.S.C. § 101(31)), under an employment contract and not in the ordinary course of business.

Section 2.07 Disclosure. Borrower has not failed to disclose to Lender any material fact that could cause any representation or warranty made herein to be materially misleading. Borrower has disclosed to Lender all material facts (which facts, if not true and correct, would have a material adverse effect on Borrower’s Individual Loan, the Individual Loan Documents, the value of Borrower’s Individual Property, the utility of Borrower’s Individual Property, the operations at Borrower’s Individual Property, the financial condition of Borrower or any guarantor of the Individual Loan or the ability of Borrower to perform its obligations under the Individual Loan Documents). There has been no adverse change in any condition, fact, circumstance, or event between the date on which such information was delivered to Lender and the date hereof that would make any such information materially inaccurate, incomplete or otherwise misleading.

Section 2.08 Illegal Activity. No portion of Borrower’s Individual Property has been purchased, improved, fixtured, equipped or furnished with proceeds of any illegal activity and, to the best of Borrower’s knowledge, there are no illegal activities at or on its Individual Property.

Section 2.09 OFAC Lists. That (a) neither Borrower, nor, to the best of Borrower’s knowledge (after reasonable inquiry consisting of checking the published OFAC Lists with respect to such parties), any persons or entities holding any legal or beneficial interest whatsoever in Borrower (whether directly or indirectly), are named on any list of persons, entities, and governments issued by the Office of Foreign Assets Control of the United States Department of the Treasury (“OFAC”) pursuant to Executive Order 13224 - Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism (“Executive Order 13224”), as in effect on the date hereof, or any similar list issued by OFAC or any other department or agency of the United States of America (collectively, the “OFAC Lists”); provided, however, that (i) with respect to individual beneficiaries of any governmental plans or employee benefit plans holding interests in Borrower (collectively, the “Individual Beneficiaries”), the foregoing representations and warranties are limited to Borrower’s present actual knowledge, and (ii) with respect to individual shareholders of any publicly traded company holding an interest in Borrower (collectively, the “Individual Shareholders”), the foregoing representations and warranties are limited to Borrower’s present actual knowledge; (b) neither Borrower, nor, to the best of Borrower’s knowledge (after reasonable inquiry consisting of checking the published OFAC Lists with respect to such parties), any persons or entities holding any legal or beneficial interest whatsoever in Borrower (whether directly or indirectly), are included in, owned by, controlled by, acting for or on behalf of, providing assistance, support, sponsorship, or services of any kind to, or otherwise associated with any of the persons or entities referred to or described in the OFAC Lists; provided, however, that (i) with respect to any Individual Beneficiaries holding interests in Borrower, the foregoing representations and warranties are limited to Borrower’s present actual knowledge, and (ii) with respect to any Individual

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

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Shareholders holding interests in Borrower, the foregoing representations and warranties are limited to Borrower’s present actual knowledge; (c) neither any guarantor, nor, to the best of Borrower’s knowledge (after reasonable inquiry consisting of checking the published OFAC Lists with respect to such parties), any persons or entities holding any legal or beneficial interest whatsoever in any guarantor (whether directly or indirectly), are named on any OFAC Lists; provided, however, that (i) with respect to any Individual Beneficiaries holding interests in any guarantor, the foregoing representations and warranties are limited to Borrower’s present actual knowledge, and (ii) with respect to any Individual Shareholders holding interests in any guarantor, the foregoing representations and warranties are limited to Borrower’s present actual knowledge; (d) neither any guarantor, nor, to the best of Borrower’s knowledge (after reasonable inquiry consisting of checking the published OFAC Lists with respect to such parties), any persons or entities holding any legal or beneficial interest whatsoever in any guarantor (whether directly or indirectly), are included in, owned by, controlled by, acting for or on behalf of, providing assistance, support, sponsorship, or services of any kind to, or otherwise associated with any of the persons or entities referred to or described in the OFAC Lists; provided, however, that (i) with respect to any Individual Beneficiaries holding interests in any guarantor, the foregoing representations and warranties are limited to Borrower’s present actual knowledge, and (ii) with respect to any Individual Shareholders holding interests in any guarantor, the foregoing representations and warranties are limited to Borrower’s present actual knowledge; and (e) neither Borrower nor any guarantor has knowingly conducted business with or engaged in any transaction with any person or entity named on any of the OFAC Lists or any person or entity included in, owned by, controlled by, acting for or on behalf of, providing assistance, support, sponsorship, or services of any kind to, or otherwise associated with any of the persons or entities referred to or described in the OFAC Lists.

Section 2.10 Property as Single Asset. That (a) Owner’s only asset is its fee interest in its Individual Property and any cash, investment accounts (provided that the liability associated with any such investment account shall be limited to the assets contained in such account) and personal property relating to its Individual Property, (b) Operator’s only material asset is its leasehold interest in such Individual Property, and (c) such Individual Property generates substantially all of the gross income of Borrower and there is no substantial business being conducted by Borrower, directly or indirectly, other than the business of owning, operating, leasing and maintaining its Individual Property and the activities incidental thereto.

Section 2.11 Representations and Warranties Relating to Leases, Rents and Other Matters. That (a) Owner or Operator, as applicable, is the absolute owner of the landlord’s interest in the Leases; (b) Owner or Operator, as applicable, has the right, power and authority to assign, transfer, and set over all of its right, title and interest in, to and under the Leases and Rents and no other person (other than Property Manager and the respective Tenants) has any right, title or interest therein; (c) the Leases are valid and in full force and effect and have not been modified, amended or terminated, nor have any of the terms and conditions of the Leases been waived, except as expressly stated in the Lease, except to the extent that (i) the failure of any Lease to be in full force and effect, or (ii) any Lease which has been modified, amended or terminated, or (iii) any of the terms and conditions of the Leases which have been waived, would not have a material adverse effect on the aggregate Gross Revenue (as hereinafter defined) of the applicable Individual Property; (d) there are no outstanding assignments or pledges of the Leases or Rents except for those made by Borrower and Property Manager in connection with the Loan; (e) there are no outstanding leasing commissions due under the Operating Lease (as such term is defined in the Instrument) nor are there any outstanding leasing commissions due under the other Leases for the initial term or for any extensions, renewals or expansions which will not be paid in the ordinary cause of business; (f) except as disclosed to Lender in writing, to the best of Borrower’s knowledge, there are no existing defaults or any state of facts which, with the giving of notice and/or passage of time, would

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constitute a default under the Leases by any party thereto; provided, however, that (i) with respect to the Resident Agreements, the foregoing does not apply to defaults by residents under a Resident Agreement which default would not reasonably be expected to have a material adverse effect on the ownership, use or operation of the applicable Individual Property, and (ii) the foregoing does not apply to commercial Leases of 1500 square feet or less (“Minor Commercial Leases”); (g) exclusive of Minor Commercial Leases, to the best of Borrower’s knowledge, no Tenant has any defense, set-off or counterclaim against Borrower; (h) exclusive of Minor Commercial Leases, each Tenant is in possession of its leased premises and paying Rent and other charges as provided in its Lease except to the extent that the failure of any Tenant to be in possession of its leased premises and paying Rent and other charges as provided in its Lease would not have a material adverse effect on the aggregate Gross Revenue of the applicable Individual Property; (i) exclusive of Minor Commercial Leases, no Rents have been or will later be anticipated, discounted, released, waived, compromised or otherwise discharged, except as may be expressly permitted by the applicable Lease; (j) except as specified in the Leases and shown on the rent roll delivered to Lender in connection with the funding of Borrower’s Individual Loan (the “Rent Roll”) and which is attached as Exhibit C to the closing certification executed and delivered by Borrower to Lender in connection with the funding of such Individual Loan, there are no (i) options or other rights to acquire any interest in Borrower’s Individual Property in favor of any Tenant, or (ii) options or other rights (whether in the form of expansion rights, purchase rights, rights of first refusal to lease or purchase, or otherwise) relating to property which is not part of Borrower’s Individual Property and/or would require Borrower and/or Lender to possess or control any property (other than the Individual Property) to honor such rights; (k) the Rent Roll discloses all currently existing Leases and is true, complete and accurate in all material respects, except to the extent that any deficiencies would not have a material adverse effect on the aggregate Gross Revenue of the applicable Individual Property; and (l) all warranties and representations made in this Section 2.11 are true in all material respects and do not omit to state any facts necessary to prevent the same from being misleading as of the date hereof. For purposes of this Section 2.11, the term “Gross Revenue” means the greater of (A) total average revenue less rental concessions (including but not limited to, congregate care and assisted living rent and other revenue) for the prior three (3) month period multiplied by four (4), and (B) total average monthly revenue less rental concessions (including but not limited to, congregate care and assisted living rent and other revenue) for the most recent calendar month for which operating statements are available (which must be either the prior calendar month or the immediately preceding calendar month) multiplied by twelve (12).

ARTICLE III - COVENANTS AND AGREEMENTS

Each Borrower covenants and agrees with Lender as follows (it being understood that, unless the context expressly provides otherwise in this Article III, all covenants in this Article III are made by each Borrower with respect to itself, its Obligations and its Individual Property):

Section 3.01 Payment and Performance of Obligations. Borrower shall timely pay and cause to be performed the Obligations.

Section 3.02 Continuation of Existence. Borrower shall not (a) dissolve, terminate, or otherwise dispose of, directly, indirectly or by operation of law, all or substantially all of its assets; (b) reorganize or change its legal structure without Lender’s prior written consent, except as otherwise expressly permitted under Article V below; (c) change its name, address, or the name under which Borrower conducts its business without promptly notifying Lender; or (d) do anything to cause the representations in Section 2.02 to become untrue. Borrower shall (i) maintain its existence as a limited liability company or as a limited partnership, as the case may be, duly organized, validly existing, and in good standing and qualified to transact business under the laws of its Organization State and the Property State and (ii) shall maintain all necessary approvals, governmental and otherwise, and full power and authority to own its properties (including its Individual Property) and carry on its business.

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Section 3.03 Taxes and Other Charges.

(a) Payment of Assessments. Borrower shall pay (or cause to be paid) prior to becoming delinquent all taxes, liens, assessments, utility charges (public or private and including sewer fees), ground rents, maintenance charges, dues, fines, impositions, and public and other charges of any character (including penalties and interest) assessed against, or which could become a lien against, its Individual Property (the “Assessments”) and in all events prior to the date any fine, penalty, interest or charge for nonpayment may be imposed. Unless Borrower is making deposits per Section 3.10 herein, Borrower shall provide Lender (or cause Lender to be provided) with receipts or canceled checks evidencing such payments (except for income taxes, franchise taxes, ground rents, maintenance charges, and utility charges) within thirty (30) days after the date such payments, if not made, would be considered delinquent.

(b) Right to Contest. So long as no Event of Default (defined below) has occurred (or if Lender has accepted cure of such Event of Default by specific written statement from Lender to Borrower acknowledging Lender’s acceptance of such cure, and Borrower specifically understands and agrees that Lender shall have no obligation whatsoever to accept the cure of any Event of Default), Borrower may, prior to delinquency and at its sole expense, contest any Assessment, but this shall not change or extend Borrower’s obligation to pay the Assessment as required above unless (i) Borrower gives Lender prior written notice of its intent to contest an Assessment; (ii) Borrower demonstrates to Lender’s reasonable satisfaction that (A) its Individual Property will not be sold to satisfy the Assessment prior to the final determination of the legal proceedings, (B) Borrower has taken such actions as are required or permitted to accomplish a stay of any such sale, and (C) Borrower has either (1) furnished a bond or surety (reasonably satisfactory to Lender in form and amount) sufficient to prevent a sale of its Individual Property or (2) at Lender’s option, deposited one hundred twenty-five percent (125%) of the full amount necessary to pay any unpaid portion of the Assessments with Lender; and (iii) such proceeding shall be permitted under any other instrument to which Borrower or its Individual Property is subject (whether superior or inferior to the Instrument); provided, however, that the foregoing shall not restrict the contesting of any income taxes, franchise taxes, ground rents, maintenance charges, and utility charges.

(c) Documentary Stamps and Other Charges. Borrower shall pay all taxes, assessments, charges, expenses, costs and fees (including registration and recording fees and revenue, transfer, mortgage, recordation, stamp, intangible, and any similar taxes) (collectively, the “Transaction Taxes”) required in connection with the making and/or recording of the Documents. If Borrower fails to pay the Transaction Taxes after demand, then Lender may (but is not obligated to) pay these, and Borrower shall reimburse Lender on demand for any amount so paid with interest at the applicable interest rate specified in Article I, which shall be the Default Rate unless prohibited by Laws.

(d) Changes in Laws Regarding Taxation. If any law (i) deducts from the value of real property for the purpose of taxation any lien or encumbrance thereon, (ii) taxes mortgages, deeds of trust, deeds to secure debt or debts secured by mortgages, deeds of trust or deeds to secure debt for federal, state or local purposes or changes the manner of the collection of any such existing taxes, and/or (iii) imposes a tax, either directly or indirectly, on any of the Documents or the Obligations, then Borrower shall, if permitted by law, pay such tax within the statutory period or within twenty (20) days after demand by Lender, whichever is less; provided, however, that if, in the opinion of legal counsel to Lender (the cost of which opinion shall be paid for by Borrower), Borrower is not permitted by law to pay such taxes or to reimburse Lender for Lender’s payment of such taxes, then Lender shall have the option, in its

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sole discretion (exercised in good faith) to either (A) require that the Loan be re-documented or amended and restated, if possible, in such a manner that no such deduction or tax will so accrue and Lender shall have no liability in connection therewith, upon such terms and conditions as Lender may require, or (B) declare the Obligations immediately due and payable (without any Prepayment Premium) upon one hundred eighty (180) days’ notice to Borrower.

Section 3.04 Defense of Title, Litigation, and Rights under Documents. Owner shall forever warrant, defend and preserve Owner’s title to its Individual Property, the validity, enforceability and priority of the Instrument and the other Documents and the lien or security interest created thereby, and any rights of Lender under the Documents against the claims of all persons, and shall promptly notify Lender of any such claims. Lender (whether or not named as a party to such proceedings) is authorized and empowered (but shall not be obligated) after reasonable notice to Borrower of its intention to do so (except that no such prior notice shall be required if Lender determines in its sole discretion [exercised in good faith] that immediate action is necessary for the protection of Lender’s interest in the Individual Property or under the Documents) to take such additional steps as it may deem reasonably necessary or proper for the defense of any such proceeding or the protection of the lien, security interest, validity, enforceability, or priority of the Documents, title to the Individual Property, or any rights of Lender under the Documents, including, following an Event of Default, the employment of counsel, the prosecution and/or defense of litigation, the compromise, release, or discharge of such adverse claims, the purchase of any tax title, the removal of any such liens and security interests, and any other actions Lender deems necessary to protect its interests. Borrower authorizes Lender to take any actions required to be taken by Borrower, or permitted to be taken by Lender, in the Documents in the name and on behalf of Borrower. Borrower shall reimburse Lender on demand for all actual and documented out-of-pocket expenses (including reasonable attorneys’ fees) incurred by Lender in connection with the foregoing and Lender’s exercise of its rights under the Documents. All such expenses of Lender, until reimbursed by Borrower, (a) shall be part of the Obligations, (b) if not paid within five (5) days following demand, bear interest from the date of demand at the Default Rate unless prohibited by Laws, and (c) shall be secured by the Documents.

Section 3.05 Compliance with Laws and Operation and Maintenance of Property.

(a) Repair and Maintenance. Borrower will operate and maintain (or cause to be operated and maintained) its Individual Property in good order, repair, and operating condition, normal wear and tear excepted. Borrower will promptly make (or cause to be made) all necessary repairs, replacements, additions, and improvements necessary to ensure that the value and operational utility of its Individual Property shall not be diminished or impaired in any material respect. Borrower will not cause or allow any portion of its Individual Property to be misused, wasted, or to deteriorate in any material respect and Borrower will not abandon its Individual Property. No new building, structure, or other improvement shall be constructed on the Land nor shall any material part of the Improvements be removed, demolished, or structurally or materially altered without Lender’s prior written consent (which request for consent will be considered in good faith), except for improvements or alterations made pursuant to approved Leases or otherwise specifically contemplated by the Documents (provided, however, that for this purpose a non-structural alteration which (i) does not have a material adverse effect on the value of its Individual Property or the Improvements, (ii) does not diminish the operational utility of its Individual Property or the Improvements in any material respect, (iii) is not in violation of any Lease or any applicable Law, and (iv) results in a total cost of removal, demolition and construction that is not in excess of the lesser of (A) three percent (3%) of the outstanding balance of the applicable Note, and (B) $500,000.00, shall not be deemed to be material). Without limiting Lender’s rights and remedies under Article VI of this Agreement, Article III of the Instrument or otherwise, if Borrower fails to maintain or repair its Individual Property in compliance with the requirements of this Section 3.05(a), then Lender may impose additional reasonable requirements upon Borrower for the purpose of protecting Lender’s

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collateral security, insulating Lender from liability, or securing Lender’s rights hereunder, including reasonable monetary reserves or financial equivalents, until such time as Lender receives proof reasonably satisfactory to Lender of such compliance.

(b) Replacement of Property. Borrower will keep its Individual Property fully equipped and will replace all worn out or obsolete Personal Property (as defined in the Instrument) in a commercially reasonable manner with comparable fixtures or Personal Property. Borrower will not, without Lender’s prior written consent (which request for consent will be considered in good faith), remove any Personal Property covered by this Agreement or the Instrument unless the same is replaced by Borrower in a commercially reasonable manner with a comparable article (i) owned by Owner or Operator free and clear of any lien or security interest (other than the applicable Permitted Encumbrances, purchase money security interests granted in connection with the acquisition of items of equipment used in the normal course of the operation of its Individual Property which do not exceed, in the aggregate, $100,000.00, and those created by the Documents) or (ii) leased by Owner or Operator (A) with Lender’s prior written consent, (B) pursuant to a Permitted Capital Lease, or (C) if the replaced Personal Property was leased at the time of execution of this Agreement. Without limiting Lender’s rights and remedies under Article VI of this Agreement, Article III of the Instrument or otherwise, if Borrower fails to maintain its Individual Property in compliance with the requirements of this Section 3.05(b), then Lender may impose additional reasonable requirements upon Borrower for the purpose of protecting Lender’s collateral security, insulating Lender from liability, or securing Lender’s rights hereunder, including reasonable monetary reserves or financial equivalents, until such time as Lender receives proof reasonably satisfactory to Lender of such compliance.

(c) Compliance with Laws. Borrower shall comply with, and shall require Property Manager (in the Management Agreement [as defined in the Instrument] and any other contract with Property Manager) to comply with, and shall cause its Individual Property to be maintained, used, and operated in compliance in all material respects (unless the failure to comply in all respects has a material adverse effect on the use, operation or value of the Individual Property, in which case compliance in all respects shall be required) with all (i) present and future laws, Environmental Laws (defined below), ordinances, regulations, rules, orders and requirements (including zoning and building codes) of any governmental or quasi-governmental authority or agency applicable to Borrower, Property Manager or its Individual Property (collectively, the “Laws”); (ii) orders, rules, and regulations of any regulatory, licensing, accrediting, insurance underwriting or rating organization, or other body exercising similar functions; (iii) duties or obligations of any kind imposed under any Permitted Encumbrance or by law, covenant, condition, agreement, or easement, public or private; and (iv) policies of insurance at any time in force with respect to such Individual Property. Without limiting the foregoing, Borrower shall (and shall require Property Manager, in the Management Agreement and any other contract with Property Manager, to) maintain and operate its Individual Property as a Senior Living Facility at all times in accordance with the standards required by any applicable license or permit and as required by any regulatory authority, maintain in good standing all operating licenses and permits relating thereto, and cause to renew and extend all such required operating licenses or permits, and not fail to take any action necessary to keep all such licenses and permits in good standing and full force and effect. Borrower will immediately provide Lender with any notice or order received by Borrower which may adversely impact its Individual Property, its operations or its compliance with licensing and regulatory requirements. If proceedings are initiated or Borrower receives notice that Borrower or its Individual Property is not in compliance with any of the foregoing, then Borrower will promptly send Lender notice and a copy of the proceeding or violation notice. Borrower shall maintain (or cause to be maintained) all necessary (A) certificates, licenses, and other approvals, governmental and otherwise, for the operation of its Individual Property and the conduct of its business and (B) zoning, building code, land use, environmental and other similar

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permits or approvals, in full force and effect. Without limiting Lender’s rights and remedies under Article VI of this Agreement, Article III of the Instrument or otherwise, if Borrower, Property Manager or Borrower’s Individual Property is not in compliance with all Laws, then Lender may impose additional reasonable requirements upon Borrower for the purpose of protecting Lender’s collateral security, insulating Lender from liability, or securing Lender’s rights hereunder, including reasonable monetary reserves or financial equivalents, until such time as Lender receives proof reasonably satisfactory to Lender of such compliance.

(d) Zoning and Title Matters. Borrower shall not (and shall forbid Property Manager in the Management Agreement and any other contract with Property Manager from doing the same), without Lender’s prior written consent, (i) initiate or support any zoning reclassification of its Individual Property or variance under existing zoning ordinances; (ii) modify or supplement any of the Permitted Encumbrances; (iii) impose any restrictive covenants or encumbrances upon its Individual Property; (iv) execute or file any subdivision plat affecting its Individual Property; (v) consent to the annexation of its Individual Property to any municipality; (vi) permit its Individual Property to be used by the public or any person in a way that might make a claim of adverse possession or any implied dedication or easement possible; (vii) cause or permit its Individual Property to become a non-conforming use under zoning ordinances or any present or future non-conforming use of its Individual Property to be discontinued; or (viii) fail to comply, in all material respects, with the terms of the Permitted Encumbrances.

(e) Utility Service. Borrower shall take no action which causes or results in its Individual Property not to be served by all utilities (including water and sewer) required for its use.

(f) Roads and Streets. Borrower shall take no action which causes or results in any public roads and streets necessary to serve Borrower’s Individual Property for its use not to be completed, serviceable, legally open, and dedicated to and accepted by the appropriate governmental entities.

(g) Ownership of FF&E. Borrower shall own and shall have paid in full for all furnishings, fixtures, and equipment (other than Tenants’ property) or property leased by Borrower pursuant to equipment leases in compliance with the terms of the Documents used in connection with the operation of its Individual Property (“FF&E”), free of all security interests, liens, or encumbrances except the applicable Permitted Encumbrances and those created by the Documents.

(h) Separate Tax Lot. Borrower shall take no action which causes or results in (i) Borrower’s Individual Property not to be assessed for real estate tax purposes as one or more wholly independent tax lot(s), separate from any adjoining land or improvements, or (ii) any other land or improvements to be assessed and taxed together with Borrower’s Individual Property.

Section 3.06 Insurance.

(a) Property and Time Element Insurance. Borrower shall keep its Individual Property (or cause its Individual Property to be kept) insured for the benefit of Borrower and Lender (with Lender named as mortgagee) by (i) a special form property insurance policy with an agreed amount endorsement for Full Replacement Cost (defined below) without any coinsurance provisions, or the broadest form of coverage available, in an amount sufficient to prevent Lender from ever becoming a coinsurer under the policy or Laws; (ii) a policy or endorsement insuring against acts of terrorism (to the extent such coverage is commercially available at commercially reasonable rates); (iii) [INTENTIONALLY OMITTED]; (iv) a policy or endorsement providing business income insurance (including business interruption insurance and extra expense insurance and/or rent insurance) on an actual loss sustained basis in an amount equal to at least one (1) year’s total income from its Individual Property including all Rents plus all other pro

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forma annual income such as percentage rent and tenant reimbursements of fixed and operating expenses (excluding, however, the Rent [as such term is defined in the applicable Operating Lease] which is payable by Operator to the applicable Owner under the applicable Operating Lease to the extent such Rent is calculated based on the income from the Individual Property); (v) a policy or endorsement insuring against damage by flood if such Individual Property is located in a Special Flood Hazard Area identified by the Federal Emergency Management Agency or any successor or related government agency as a 100 year flood plain currently classified as Flood Insurance Rate Map Zones “A”, “AO”, “AH”, “A1-A30”, “AE”, “A99”, “V”, “V1-V30”, and “VE” in an amount equal to the original Allocated Loan Amount with respect to such Individual Property; (vi) a policy or endorsement covering against damage or loss from (A) sprinkler system leakage and (B) boilers, boiler tanks, HVAC systems, heating and air-conditioning equipment, pressure vessels, auxiliary piping, and similar apparatus, in the amount reasonably required by Lender; (vii) during the period of any construction, repair, restoration, or replacement of such Individual Property, a standard builder’s risk policy with extended coverage in an amount at least equal to the Full Replacement Cost of such Individual Property, and worker’s compensation, in statutory amounts; and (viii) a policy or endorsement covering against damage or loss by earthquake in the amounts reasonably required by Lender (to the extent such coverage is commercially available at commercially reasonable rates). “Full Replacement Cost” shall mean the one hundred percent (100%) replacement cost of such Individual Property, without allowance for depreciation and exclusive of the cost of excavations, foundations, footings, and value of land, and shall be subject to verification by Lender. Full Replacement Cost (i) will be determined, at Borrower’s expense, periodically upon policy renewal by (x) an appraiser, engineer, architect, or contractor selected by Borrower or (y) Borrower itself and (ii) approved by the applicable insurance company or companies providing coverage under this Section 3.06(a).

(b) Liability and Other Insurance. Borrower shall maintain (or cause to be maintained) commercial general liability insurance with per occurrence limits of $1,000,000, a products/completed operations limit of $1,000,000, and a general aggregate limit of $1,000,000, with an excess/umbrella liability policy of not less than $25,000,000 per occurrence and annual aggregate covering Borrower and Property Manager, with Lender named as an additional insured, against claims for bodily injury or death or property damage occurring in, upon, or about its Individual Property. Borrower shall also maintain (or cause to be maintained) professional liability insurance with per occurrence limits of $1,000,000 on a claims-made policy form covering Borrower and Property Manager, with an excess/umbrella liability policy of not less than $25,000,000 per occurrence and annual aggregate. In addition to any other requirements, such commercial general liability and excess/umbrella liability insurance shall provide insurance against acts of terrorism (to the extent such coverage is commercially available at commercially reasonable rates), or coverage against acts of terrorism may be provided by separate policy or endorsement (to the extent such coverage is commercially available at commercially reasonable rates). The insurance policies shall also include operations and blanket contractual liability coverage which insures contractual liability under the indemnifications set forth in Section 8.03 below (but such coverage or the amount thereof shall in no way limit such indemnifications). Upon request, Borrower shall also carry additional insurance or additional amounts of insurance covering Borrower or its Individual Property as Lender shall reasonably require.

(c) Form of Policy. All insurance required under this Section 3.06 shall be fully paid for (or if financed, then Borrower shall provide Lender with evidence reasonably acceptable to Lender, on a quarterly basis, that installment payments have been made). All insurance required under this Section 3.06 will carry a deductible not to exceed Twenty-Five Thousand and No/100 Dollars ($25,000.00), except for (i) the following policies under Section 3.06(a) above, which may carry high-risk deductibles of up to Two Hundred Fifty Thousand and No/100 Dollars or such higher deductible amount as may be

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reasonably necessary if a replacement or renewal policy with a Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) deductible is not available in the marketplace at commercially reasonable rates (provided, however, that such higher deductible amount may in no event exceed Five Hundred Thousand and No/100 Dollars ($500,000.00) unless Borrower has received specific prior written approval of such increase from Lender, which approval shall not be unreasonably withheld): (A) Earth Movement, (B) Named Windstorm (Tier 1 Counties) and (C) Flood (provided, however, that the deductible for Flood with respect to any Individual Property that is located in a Special Flood Hazard Area identified by the Federal Emergency Management Agency or any successor or related government agency as a 100-year flood plain currently classified as Flood Insurance Rate Map Zones “A”, “AO”, “AH”, “A1-A30”, “AE”, “A99”, “V”, “V1-V30”, or “VE” may be up to Five Hundred Thousand and No/100 Dollars ($500,000.00), when taking into account flood insurance obtained through the National Flood Insurance Program or a program that provides equivalent or superior coverage); and (ii) the professional liability insurance required under Section 3.06(b) above, which may have a self-insured retention not to exceed One Hundred Thousand and No/100 Dollars ($100,000.00). The insurance policies required under this Section 3.06 shall contain such provisions, endorsements, and expiration dates as Lender shall reasonably require. The policies shall be issued by insurance companies authorized to do business in the applicable Property State, approved by Lender (which approval shall not be unreasonably withheld, conditioned or delayed), and must have and maintain a current financial strength rating of “A-, X” (or higher) from A.M. Best or equivalent (or, if a rating by A.M. Best is no longer available, then a similar rating from a similar or successor service). In addition, all policies required under Section 3.06(a) shall (i) include a standard mortgagee clause, without contribution, in the name of Lender, (ii) provide that they shall not be canceled, amended, or materially altered (including reduction in the scope or limits of coverage) without at least thirty (30) days’ prior written notice to Lender except in the event of cancellation for non-payment of premium, in which case only ten (10) days’ prior written notice will be given to Lender, and (iii) include a waiver of subrogation clause substantially equivalent to the following: “The Company may require from the Insured an assignment of all rights of recovery against any party for loss to the extent that payment therefor is made by the Company, but the Company shall not acquire any rights of recovery which the Insured has expressly waived prior to loss, nor shall such waiver affect the Insured’s rights under this policy.” In addition, all policies required under Section 3.06(b) shall (i) provide that they shall not be canceled, amended, or materially altered (including reduction in the scope or limits of coverage) without at least thirty (30) days prior written notice to named insured (i.e., Sunrise Senior Living, Inc.) except in the event of cancellation for non-payment of premium, in which case only ten (10) days’ prior written notice will be given to named insured, and (ii) include a waiver of subrogation clause substantially equivalent to the following: “The Company may require from the Insured an assignment of all rights of recovery against any party for loss to the extent that payment therefor is made by the Company, but the Company shall not acquire any rights of recovery which the Insured has expressly waived prior to loss, nor shall such waiver affect the Insured’s rights under this policy”. Borrower agrees that if Sunrise Senior Living, Inc. receives any notice of cancellation, amendment or alteration (a “Liability Policy Notice”) of any policy under Section 3.06(b), then Borrower will, within five (5) Business Days after its receipt of such Liability Policy Notice, provide written notice to Lender that Sunrise Senior Living, Inc. has received such Liability Policy Notice, accompanied by a copy of such Liability Policy Notice.

(d) Certificates and Binders; Policies. Borrower shall deliver (i) with respect to all insurance coverage required under Section 3.06(a) above, either (A) an original MBA Evidence of Insurance - Commercial Property form certificate (the “MBA Form”) if the MBA Form is available in the Property State, or (B) an original certificate in form substantially similar to the ACORD 28 certificate (or equivalent certificates acceptable to Lender; provided, however, if any certificate contains language to the effect that the certificate is provided “for information only”, it shall not qualify as adequate evidence, in which case Borrower shall also provide an insurer-issued binder or insurance carrier binder in a form

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

23

reasonably satisfactory to Lender) evidencing that such policies are in full force and effect, and (ii) with respect to all insurance coverage required under Section 3.06(b) above, an original ACORD 25 certificate (or equivalent certificates acceptable to Lender; provided, however, that if any certificate contains language to the effect that the certificate is provided “for information only”, it shall not qualify as adequate evidence, in which case Borrower shall also provide an insurer-issued binder or insurance carrier binder in a form reasonably satisfactory to Lender) evidencing that such policies are in full force and effect. Upon Lender’s reasonable request if Lender determines in good faith that it needs a copy of any insurance policies required under this Section 3.06 or following an Event of Default, Borrower shall deliver to Lender copies of the applicable policies required under this Section 3.06.

(e) Expiration of Policies. Without limiting Lender’s other rights with respect to the foregoing obligations, if, within ten (10) days prior to the expiration of the current applicable policy, Lender has not timely received the items required under Section 3.06(d) above in form and substance reasonably acceptable to Lender (as being in compliance with the terms of this Agreement), then Lender may, but shall not be obligated to, (i) retain a commercial property insurance consultant to assist Lender in obtaining adequate evidence that the required insurance coverage is in effect, in which event Borrower shall (A) cooperate with such consultant in confirming that adequate evidence that the required insurance coverage is in effect, and (B) pay all of the costs and expenses of such consultant, and/or (ii) purchase forced placed insurance coverage sufficient to provide insurance satisfying the coverage requirements under the terms of this Agreement at Borrower’s expense (which expense will be in addition to and may be more than the cost of insurance that Borrower may be able to obtain on its own) to cover Lender’s interest in the Property, which insurance may, but need not, protect Borrower’s interest.

(f) General Provisions. Borrower shall not carry (and shall forbid Property Manager from carrying) separate or additional insurance concurrent in form or contributing in the event of loss with that required under this Section 3.06 unless endorsed in favor of Lender as per this Section 3.06 and approved by Lender in all respects. In the event of foreclosure of the Instrument or other transfer of title or assignment of Borrower’s Individual Property in extinguishment, in whole or in part, of the Obligations, all right, title, and interest of Borrower in and to all proceeds payable under all policies of insurance then in force regarding such Individual Property shall immediately vest in the purchaser or other transferee of such Individual Property. No approval by Lender of any insurer shall be construed to be a representation, certification, or warranty of its solvency. No approval by Lender as to the amount, type, or form of any insurance shall be construed to be a representation, certification, or warranty of its sufficiency. Borrower shall comply (and shall cause Property Manager to comply) with all insurance requirements and shall not cause or permit any condition to exist which would be prohibited by any insurance requirement or would invalidate the insurance coverage on its Individual Property. Borrower shall not be exempt from any of the requirements set forth in this Section 3.06 to the extent that a Tenant has agreed to provide the required insurance or a portion thereof pursuant to the terms and provisions of its respective Lease. If any insurance being carried by a Tenant (rather than Borrower) is being utilized to satisfy the requirements of this Section 3.06 on Borrower’s Individual Property, then (i) such insurance must fully comply with this Section 3.06, and (ii) Borrower shall obtain from any such Tenant(s) and provide to Lender documentation sufficient to satisfy the requirements of Section 3.06(d) above. Lender has no duty or obligation to contact any Tenant(s) regarding proof of insurance for Borrower’s Individual Property.

(g) Waiver of Subrogation. A waiver of subrogation shall be obtained by Borrower from its insurers and, consequently, Borrower for itself, and on behalf of its insurers, hereby waives and releases any and all right to claim or recover against Lender, its officers, employees, agents and representatives, for any loss of or damage to Borrower, other persons, Borrower’s Individual Property, Borrower’s property or the property of other persons from any cause required to be insured against by the provisions of this Agreement or otherwise insured against by Borrower.

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

24

Section 3.07 Damage and Destruction of Property.

(a) Borrower’s Obligations. If any damage to, loss, or destruction of Borrower’s Individual Property occurs (any “Damage”), then (i) Borrower shall notify Lender within ten (10) days after the occurrence of such Damage and shall take (or cause to be taken) all necessary steps to preserve any undamaged part of such Individual Property and (ii) if the insurance proceeds are made available to Borrower for Restoration (defined below) (but regardless of whether any proceeds are sufficient for Restoration), Borrower shall promptly commence and diligently pursue to completion (or shall require Property Manager to do the same) the restoration, replacement, and rebuilding of its Individual Property as nearly as possible to its value and condition immediately prior to the Damage or a Taking (defined below) in accordance with plans and specifications approved by Lender, which approval shall not be unreasonably withheld, conditioned or delayed (the “Restoration”). Borrower shall comply (and shall require Property Manager to comply) with other reasonable requirements established by Lender to preserve the security under the Documents.

(b) Lender’s Rights. If any Damage occurs and some or all of it is covered by insurance, then (i) Lender may, but is not obligated to, make proof of loss if not made promptly by Borrower and/or Property Manager, and Lender is authorized and empowered by Borrower to settle, adjust, or compromise any claims for the Damage; (ii) each insurance company concerned is authorized and directed to make payment directly to Lender for such Damage; and (iii) Lender may apply the insurance proceeds in any order it determines (A) to reimburse Lender for all Costs (defined below) related to collection of the proceeds and (B) subject to Section 3.07(c) and at Lender’s option, to (1) payment (without any Prepayment Premium or other premium) of all or part of the Obligations, whether or not then due and payable, in the order determined by Lender (provided that if any Obligations remain outstanding after this payment, then the unpaid Obligations shall continue in full force and effect, and Borrower shall not be excused in the payment thereof), (2) the cure of any default under the Documents, or (3) the Restoration. Notwithstanding the foregoing, if no Event of Default has occurred (and if there shall then be no event which with the passage of time and/or giving of notice would constitute an Event of Default), or if an Event of Default has occurred but Lender has accepted cure of such Event of Default by specific written statement from Lender to Borrower acknowledging Lender’s acceptance of such cure, and Borrower specifically understands and agrees that Lender shall have no obligation whatsoever to accept the cure of any Event of Default, then Borrower shall have the right to settle, adjust or compromise any claim for Damage if the total amount of such claim is less than the lesser of (1) $500,000.00 and (2) two percent (2%) of the Allocated Loan Amount with respect to Borrower’s Individual Property, provided that Borrower promptly uses the full amount of such insurance proceeds for Restoration of the Damage and provides evidence thereof to Lender in a manner acceptable to Lender. If Borrower receives any insurance proceeds for the Damage, then Borrower shall promptly deliver the proceeds to Lender unless Borrower is entitled to retain and use such insurance proceeds pursuant to the immediately preceding sentence of this Section 3.07(b). Borrower expressly assumes all risk of loss from any Damage, whether or not insurable or insured against.

(c) Application of Proceeds to Restoration. Lender shall make the Net Proceeds (defined below) available to Borrower for Restoration if: (i) there shall then be no Event of Default; (ii) Lender shall be satisfied that (A) Restoration can and will be completed within the earliest of (x) one (1) year after the date on which the Net Proceeds are first made available to Borrower for Restoration (notwithstanding the fact that the first disbursement may be made on a later date), (y) eighteen (18) months after the Damage occurs, or (z) the period for which Rent Loss Proceeds (defined below) are payable; (iii) Lender shall be satisfied that Restoration can and will be completed at least one (1) year prior to the Maturity Date of the Note; (iv) Borrower or Property Manager shall have entered into a general construction contract acceptable in all respects to Lender for Restoration, which contract must

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

25

include provision for retainage of not less than ten percent (10%) until fifty percent (50%) of the Restoration has been completed, at which point retainage may be reduced to not less than five percent (5%) until final completion of the Restoration; and (v) in Lender’s reasonable judgment, after Restoration has been completed, the net cash flow of Borrower’s Individual Property will be sufficient to cover all costs and operating expenses of Borrower’s Individual Property, including payments due and reserves required under the Documents. Notwithstanding any provision of this Agreement to the contrary, Lender shall not be obligated to make any portion of the Net Proceeds available for Restoration (whether as a result of Damage or a Taking) unless, at the time of the disbursement request, Lender has determined in its reasonable discretion that (y) Restoration can be completed at a cost which does not exceed the aggregate of the remaining Net Proceeds and any funds deposited with Lender by or on behalf of Borrower (the “Additional Funds”) and (z) the aggregate of (1) any loss of rental income insurance proceeds which the carrier has acknowledged to be payable (the “Rent Loss Proceeds”), (2) any funds deposited with Lender by Borrower and (3) any revenues reasonably expected to be generated by Borrower’s Individual Property during the period of Restoration are sufficient to cover all costs and operating expenses of Borrower’s Individual Property during the entire period of Restoration, including payments due and reserves required under the Documents.

(d) Disbursement of Proceeds. If Lender elects or is required to make insurance proceeds or the Award (defined below), as the case may be, available for Restoration, then Lender shall, through a disbursement procedure established by Lender, periodically make available to Borrower in installments the net amount of all insurance proceeds or the Award, as the case may be, received by Lender after deduction of all reasonable costs and expenses incurred by Lender in connection with the collection and disbursement of such proceeds (the “Net Proceeds”) and, if any, the Additional Funds. The amounts periodically disbursed to Borrower shall be based upon the amounts currently due under the construction contract for Restoration and Lender’s receipt of (i) appropriate lien waivers, copies of all invoices and proof of compliance with Laws, (ii) a certification of the percentage of Restoration completed by an architect or engineer reasonably acceptable to Lender, and (iii) title insurance protection against materialmen’s and mechanics’ liens. At Lender’s election, a disbursing agent selected by Lender shall disburse such funds, and Borrower shall pay such agent’s reasonable fees and expenses. The Net Proceeds, Rent Loss Proceeds, and any Additional Funds shall constitute additional security for the Individual Loan, and Borrower shall execute, deliver, file and/or record, at its expense, such instruments as Lender requires to grant to Lender a perfected, first-priority security interest in these funds. If the Net Proceeds are made available for Restoration and (x) Borrower refuses or fails to complete the Restoration, (y) an Event of Default occurs, or (z) the Net Proceeds or Additional Funds are not applied to Restoration, then any undisbursed portion may, at Lender’s option, be applied to the Obligations in any order of priority, and any such application to principal shall be deemed a voluntary prepayment subject to the Prepayment Premium.

Section 3.08 Condemnation.

(a) Borrower’s Obligations. Borrower will promptly notify Lender of any threatened or instituted proceedings for the condemnation or taking by eminent domain of its Individual Property, including any change in any street (whether as to grade, access, or otherwise) (a “Taking”). Borrower shall, at its expense, (i) diligently prosecute these proceedings, (ii) deliver to Lender copies of all papers served in connection therewith, and (iii) consult and cooperate with Lender in the handling of these proceedings. No settlement of these proceedings shall be made by Borrower without Lender’s prior written consent. Lender may participate in these proceedings (but shall not be obligated to do so) and Borrower will sign and deliver all instruments reasonably requested by Lender to permit this participation.

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

26

(b) Lender’s Rights to Proceeds. All condemnation awards, judgments, decrees, or proceeds of sale in lieu of condemnation (the “Award”) are assigned, and shall be paid, to Lender. Borrower authorizes Lender to collect and receive them, to give receipts for them, to accept them in the amount received without question or appeal, and/or to appeal any judgment, decree, or award. Borrower will sign and deliver all instruments reasonably requested by Lender to permit these actions. Notwithstanding the foregoing, the Award shall be payable to Borrower for Restoration provided (i) no Event of Default has occurred unless Lender has accepted cure of such Event of Default by specific written statement from Lender to Borrower acknowledging Lender’s acceptance of such cure, and Borrower specifically understands and agrees that Lender shall have no obligation whatsoever to accept the cure of any Event of Default (and there is then no event which, with the passage of time and/or the giving of notice, would constitute an Event of Default), (ii) the Taking does not impact any revenue producing portions of the applicable Individual Property, and (iii) the amount of the Award does not exceed $250,000.00.

(c) Application of Award. Lender may apply any Award in any order it determines (i) to reimburse Lender for all Costs related to collection of the Award and (ii) subject to Section 3.08(d) and at Lender’s option, to (A) payment (without any Prepayment Premium or other premium) of all or part of the Obligations, whether or not then due and payable, in the order determined by Lender (provided that if any Obligations remain outstanding after this payment, then the unpaid Obligations shall continue in full force and effect and Borrower shall not be excused in the payment thereof), (B) the cure of any default under the Documents, or (C) the Restoration.

(d) Application of Award to Restoration. Lender shall permit the application of any Award to Restoration if: (i) no more than (A) twenty percent (20%) of the gross area of the Improvements or (B) ten percent (10%) of the parking spaces is affected by the Taking; (ii) the amount of the loss does not exceed twenty percent (20%) of the original Allocated Loan Amount for Borrower’s Individual Property; (iii) the Taking does not materially impair or diminish access to Borrower’s Individual Property from any public right-of-way; (iv) there is no Event of Default at the time of the Taking or the application of the Award; (v) after Restoration, Borrower’s Individual Property and its use will be in compliance with all Laws; (vi) in Lender’s reasonable judgment, Restoration is practical and can be completed within the earlier of (A) twelve (12) months after the date on which the Award is first made available for Restoration or (B) eighteen (18) months after the Taking occurs; (vii) in Lender’s reasonable judgment, Restoration can be completed at least nine (9) months prior to the Maturity Date of the Note; (viii) Borrower or Property Manager shall have entered into a general construction contract acceptable in all respects to Lender for Restoration, which contract must include provision for retainage of not less than ten percent (10%) until fifty percent (50%) of the Restoration has been completed, at which point retainage may be reduced to not less than five percent (5%) until final completion of the Restoration; and (ix) in Lender’s reasonable judgment, after Restoration has been completed the net cash flow of Borrower’s Individual Property will be sufficient to cover all costs and operating expenses of such Individual Property, including payments due and reserves required under the Documents. Any portion of the Award that is in excess of the cost of any Restoration permitted above, may, at Lender’s option, be applied against the Obligations (without any Prepayment Premium or other premium) or paid to Borrower. If the Award is disbursed to Borrower under the provisions of this Section 3.08(d), then such Award shall be disbursed to Borrower in accordance with the terms and conditions of Section 3.07(d).

(e) Effect on the Obligations. Notwithstanding any Taking, Borrower shall continue to pay and perform the Obligations as provided in the Documents. Any reduction in the Obligations due to application of the Award shall take effect only upon Lender’s actual receipt and application of the Award to the Obligations. If Borrower’s Individual Property shall have been foreclosed, sold pursuant to any power of sale granted pursuant to the Documents, or transferred by deed-in-lieu of foreclosure prior to

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

27

Lender’s actual receipt of the Award, then Lender may apply the Award received to the extent of any deficiency upon such sale and Costs incurred by Lender in connection with such sale, and the balance thereof, if any, shall be paid to any person lawfully entitled to receive it.

Section 3.09 Liens and Liabilities. Borrower shall pay when due, bond or otherwise discharge (or cause to be paid when due, bonded or otherwise discharged) all claims and demands of mechanics, materialmen, laborers and others for any work performed or materials delivered for Borrower’s Individual Property or its Improvements (collectively, “Property Payables”); provided, however, that Borrower shall have the right to contest in good faith any such Property Payables, so long as it does so diligently, by appropriate proceedings and without prejudice to Lender and provided that neither Borrower’s Individual Property nor any interest therein would be in any danger of sale, loss or forfeiture as a result of such proceeding or contest. In the event that Borrower shall contest any such Property Payables, Borrower shall promptly notify Lender of such contest and thereafter shall, upon Lender’s request, promptly provide (or cause to be promptly provided) a bond, cash deposit or other security satisfactory to Lender to protect Lender’s interest and security should the contest be unsuccessful. If Borrower shall fail to immediately discharge or provide security against any such Property Payables as aforesaid, then Lender may do so, and any and all actual and documented out-of-pocket expenses incurred by Lender, together with interest thereon at the Default Rate from the date incurred by Lender until actually paid by Borrower, shall be immediately paid by Borrower on demand and shall be secured by the Instrument and by all other Documents securing all or any part of the Obligations. Borrower shall, at its sole expense, do everything necessary to preserve the lien and security interest created by the Instrument and the other Documents and their priority (and shall cause Property Manager to do the same). Nothing in the Documents shall be deemed or construed as constituting the consent or request by Lender, express or implied, to any contractor, subcontractor, laborer, mechanic or materialman for the performance of any labor or the furnishing of any material for any improvement, construction, alteration, or repair of Borrower’s Individual Property. Borrower further agrees that Lender does not stand in any fiduciary relationship to Borrower or Property Manager. Any contributions made, directly or indirectly, to Borrower or Property Manager by or on behalf of any of their partners, members, principals or any party related to such parties shall be treated as equity and shall be subordinate and inferior to the rights of Lender under the Documents. Without limiting Lender’s rights and remedies under Article VI of this Agreement, Article III of the Instrument or otherwise, if Borrower or its Individual Property fails to comply with the requirements of this Section 3.09, then Lender may impose additional reasonable requirements upon Borrower including monetary reserves or financial equivalents, until such time as Lender receives proof reasonably satisfactory to Lender of such compliance.

Section 3.10 Tax and Insurance Deposits; Other Deposits

(a) At Lender’s option (i) following an Event of Default (unless Lender has accepted cure of such Event of Default by specific written statement from Lender to Borrower acknowledging Lender’s acceptance of such cure, and Borrower specifically understands and agrees that Lender shall have no obligation whatsoever to accept the cure of any Event of Default), or (ii) in the event that Borrower fails to timely deliver to Lender evidence of payment of Assessments or insurance premiums as required by Sections 3.03(a) and 3.06(d), respectively, or (iii) in the event that the Debt Service Coverage Ratio for the Loan shall fall below 1.35 to 1.00 on a trailing three (3) consecutive calendar month basis, Borrower shall make monthly deposits (the “Deposits”) with Lender equal to one-twelfth (1/12^th) of the annual Assessments (except for income taxes, franchise taxes, ground rents, maintenance charges and utility charges) and the premiums for insurance required under Section 3.06 (the “Insurance Premiums”) together with amounts sufficient to pay these items thirty (30) days before they are due (collectively, the “Impositions”). Notwithstanding the foregoing, in the event that the Deposits are required by virtue of Section 3.10(a)(iii) above, such Deposits shall not be required for any time period thereafter once the

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

28

Debt Service Coverage Ratio is greater than 1.35 to 1.00 on a trailing three (3) consecutive calendar month basis, and at such time, provided no Event of Default has occurred, any Deposits then held by Lender shall be released to Borrowers. Lender shall estimate in good faith the amount of the Deposits until ascertainable. Borrower shall deposit any deficiency within ten (10) days after Lender notifies Borrower of the final amount of the required Deposits (or such earlier date specified by Lender if necessary to cause the Impositions to be paid by any applicable due date). Borrower shall promptly notify Lender of any changes to the amounts, schedules and instructions for payment of the Impositions. Borrower authorizes Lender or its agent to obtain the bills for Assessments directly from the appropriate tax or governmental authority. All Deposits are pledged to Lender and shall constitute additional security for the Obligations. If (A) there is no Event of Default at the time of payment, (B) Borrower has delivered bills or invoices to Lender for the Impositions in sufficient time to pay them when due, and (C) the Deposits are sufficient to pay the Impositions or Borrower has deposited the necessary additional amount, then Lender shall pay the Impositions prior to their due date. Any Deposits remaining after payment of the Impositions shall, at Lender’s option, be credited against the Deposits required for the following year or paid to Borrower. If an Event of Default occurs, then the Deposits may, at Lender’s option, be applied to the Obligations in any order of priority. Any application to principal shall be deemed a voluntary prepayment subject to the Prepayment Premium. Borrower shall not claim any credit against the principal and interest due under the Note for the Deposits. Subject to Article V, a transfer of title to the Land shall automatically transfer to the new owner the beneficial interest in the Deposits. Upon full payment and satisfaction of the Pool Obligations, or at any prior time that Borrower is entitled to the balance of the Deposits pursuant to this Section 3.10(a), or, at Lender’s option, at any other prior time, the balance of the Deposits in Lender’s possession shall be paid over to the record owner of the Land, and no other party shall have any right or claim to the Deposits. Lender may transfer all its duties under this Section 3.10 to such servicer or financial institution as Lender may periodically designate, and Borrower thereupon agrees to make the Deposits to such servicer or institution.

(b) Any insurance proceeds, Awards, Deposits, or similar funds paid to, and to be held by, Lender (or such servicer or financial institution as Lender may periodically designate) in connection with a Borrower’s Individual Loan shall be held without payment of interest to Borrower (except to the extent required under Laws) and may be commingled with other funds of Lender (or such servicer or financial institution as Lender may periodically designate). Notwithstanding anything in this Agreement or at law or in equity to the contrary, any such insurance proceeds, Awards, Deposits, or similar funds held by Lender (or such servicer or financial institution as Lender may periodically designate) shall not be deemed to be trust funds, and Lender may dispose of such monies in the manner provided in this Agreement.

Section 3.11 ERISA.

(a) Borrower understands and acknowledges that, as of the date hereof, the source of funds from which Lender is extending the Loan will include one or more of the following accounts: (i) an “insurance company general account,” as that term is defined in Prohibited Transaction Class Exemption (“PTE”) 95-60 (60 Fed. Reg. 35925 (Jul. 12, 1995)), as to which Lender meets the conditions for relief in Sections I and IV of PTE 95-60; (ii) pooled and single client insurance company separate accounts, which are subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”); (iii) one or more insurance company separate accounts maintained solely in connection with fixed contractual obligations of the insurance company, under which the amounts payable or credited to the plan are not affected in any manner by the investment performance of the separate account; and (iv) accounts of one or more entities, the assets of which do not constitute “plan assets” of one or more plans within the meaning of 29 C.F.R Section 2510.3-101 and Section 3(42) of ERISA.

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

29

(b) Borrower represents and warrants to Lender that (i) Borrower is not an “employee benefit plan” as defined in Section 3(3) of ERISA, or a “governmental plan” within the meaning of Section 3(32) of ERISA; (ii) Borrower is not a “party in interest”, as defined in Section 3(14) of ERISA, other than as a service provider or an affiliate of a service provider, to any employee benefit plan that has invested in a separate account described in Section 3.11(a)(ii) above, from which funds have been derived to make the Loan, or, if so, the execution of the Documents and making of the Loan thereunder do not constitute nonexempt prohibited transactions under ERISA; (iii) to Borrower’s knowledge after due inquiry and investigation, Borrower is not subject to state statutes regulating investments and fiduciary obligations with respect to governmental plans, or, if subject to such statutes, is not in violation thereof in the execution of the Documents and the making of the Loan thereunder; (iv) the assets of Borrower do not constitute “plan assets” of one or more plans within the meaning of 29 C.F.R. Section 2510.3-101; and (v) one or more of the following circumstances is true: (A) equity interests in Borrower are publicly offered securities, within the meaning of 29 C.F.R. Section 2510.3-101(b)(2); (B) less than twenty-five percent (25%) of all equity interests in Borrower are held by “benefit plan investors” within the meaning of 29 C.F.R. Section 2510.3-101(f)(2); or (C) Borrower qualifies as an “operating company,” a “venture capital operating company” or a “real estate operating company” within the meaning of 29 C.F.R. Section 2510.3-101(c), (d) or (e), respectively.

(c) Borrower shall deliver to Lender such commercially reasonable certifications and/or other evidence periodically requested by Lender, in its reasonable discretion, to verify the representations and warranties in Section 3.11(b) above. Failure to deliver these certifications or evidence, breach of these representations and warranties, or consummation of any transaction which would cause the Documents or any exercise of Lender’s rights under the Documents to (i) constitute a non-exempt prohibited transaction under ERISA or (ii) violate ERISA or any state statute regulating governmental plans (collectively, a “Violation”), shall be a default hereunder, subject to the provisions of Section 6.01(n) of this Agreement. Notwithstanding anything in the Documents to the contrary, no sale, assignment, or transfer of any direct or indirect right, title, or interest in Borrower or its Individual Property (including creation of a junior lien, encumbrance or leasehold interest) shall be permitted which would, in Lender’s opinion, negate Borrower’s representations in this Section 3.11 or cause a Violation. Except for a Permitted Transfer which shall be governed by the provisions of Section 5.01 of this Agreement, at least fifteen (15) days before consummation of any of the foregoing, Borrower shall obtain from the proposed transferee or lienholder (i) a certification to Lender that the representations and warranties of this Section 3.11 will be true after consummation and (ii) an agreement to comply with this Section 3.11.

Section 3.12 Environmental Representations, Warranties, and Covenants.

(a) Environmental Representations and Warranties. Borrower represents and warrants, to the best of Borrower’s knowledge (after due inquiry and investigation which is based solely on the Environmental Report [as hereinafter defined]) and additionally based upon the environmental site assessment report of Borrower’s Individual Property (each, an “Environmental Report”), that except as fully disclosed in each Environmental Report delivered to and approved by Lender: (i) there are no Hazardous Materials (defined below) or underground storage tanks affecting Borrower’s Individual Property (“affecting Borrower’s Individual Property” shall mean “in, on, under, stored, used or migrating to or from Borrower’s Individual Property”) except for (A) routine office, cleaning, janitorial and medical supplies and other materials necessary to operate Borrower’s Individual Property for its current use and (B) Hazardous Materials that are (1) in compliance with Environmental Laws (defined below), (2) have all required permits, and (3) are in only the amounts necessary to operate Borrower’s Individual Property; (ii) there are no past, present or threatened Releases (defined below) of Hazardous Materials in violation of any Environmental Law affecting Borrower’s Individual Property; (iii) there is

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no past or present non-compliance with Environmental Laws or with permits issued pursuant thereto; (iv) Borrower does not know of, and has not received, any written or oral notice or communication from any person relating to Hazardous Materials affecting Borrower’s Individual Property; and (v) Borrower has provided to Lender, in writing, all information relating to environmental conditions affecting Borrower’s Individual Property known to Borrower or contained in Borrower’s files. “Environmental Law” means any present and future federal, state and local laws, statutes, ordinances, rules, regulations, standards, policies and other government directives or requirements, as well as common law, that apply to Borrower or its Individual Property and relate to Hazardous Materials, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act and the Resource Conservation and Recovery Act. “Hazardous Materials” shall mean petroleum and petroleum products and compounds containing them, including gasoline, diesel fuel and oil; explosives, flammable materials; radioactive materials; polychlorinated biphenyls (“PCBs”) and compounds containing them; lead and lead-based paint; Microbial Matter, infectious substances, asbestos or asbestos-containing materials in any form that is or could become friable; underground or above-ground storage tanks, whether empty or containing any substance; any substance the presence of which on any Individual Property is prohibited by any federal, state or local authority; any substance that requires special handling; any medical products or devices, including, but not limited to, those materials defined as “medical waste” or “biological waste” under relevant statutes or regulations pertaining to any Environmental Law; and any other material or substance now or in the future defined as a “hazardous substance,” “hazardous material,” “hazardous waste,” “toxic substance,” “toxic pollutant,” “contaminant,” or “pollutant” within the meaning of any Environmental Law. “Release” of any Hazardous Materials includes any release, deposit, discharge, emission, leaking, spilling, seeping, migrating, pumping, pouring, escaping, dumping, disposing or other movement of Hazardous Materials. “Microbial Matter” shall mean the presence of fungi or bacterial matter which reproduces through the release of spores or the splitting of cells, including, but not limited to, mold, mildew and viruses, whether or not such Microbial Matter is living.

(b) Environmental Covenants. Borrower covenants and agrees that: (i) all use and operation of its Individual Property shall be in compliance with all Environmental Laws and required permits; (ii) there shall be no Releases of Hazardous Materials affecting its Individual Property in violation of Environmental Laws; (iii) except as disclosed in the Environmental Report, there shall be no Hazardous Materials affecting its Individual Property except (A) routine office, cleaning, medical and janitorial supplies and medical products or devices, (B) in compliance with all Environmental Laws, (C) in compliance with all required permits, and (D) (1) in only the amounts necessary to operate its Individual Property or (2) as shall have been fully disclosed to and approved by Lender in writing; (iv) Borrower shall keep its Individual Property free and clear of all liens and encumbrances imposed by any Environmental Laws due to any act or omission by Borrower or any person (the “Environmental Liens”); (v) Borrower shall, at its sole expense, fully and expeditiously cooperate (and shall require Property Manager to fully and expeditiously cooperate) in all activities performed under Section 3.12(c) including providing all relevant information and making knowledgeable persons available for interviews; (vi) Borrower shall, at its sole expense, (A) perform any environmental site assessment or other investigation of environmental conditions at its Individual Property upon Lender’s request based on Lender’s reasonable belief that such Individual Property is not in compliance with all Environmental Laws, (B) share with Lender the results and reports, and Lender and the Indemnified Parties (defined below) shall be entitled to rely on such results and reports, and (C) complete any remediation of Hazardous Materials affecting its Individual Property or other actions required by any Environmental Laws; (vii) Borrower shall not knowingly allow any Tenant or other user of its Individual Property to violate any Environmental Law; (viii) Borrower shall immediately notify Lender in writing after it becomes aware of (A) the presence, Release, or threatened Release of Hazardous Materials affecting its Individual Property in violation (or alleged violation) of Environmental Laws, (B) any non-compliance of

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its Individual Property with any Environmental Laws, (C) any actual or potential Environmental Lien, (D) any required or proposed remediation of environmental conditions relating to its Individual Property, or (E) any written or oral communication or notice from any person relating to Hazardous Materials affecting its Individual Property, or any oral communication relating to or alleging any violation or potential violation of Environmental Law, and (ix) if an Asbestos Operation and Maintenance Plan and any other Operation and Maintenance Plan (collectively, the “O&M Plan”) is in effect (or required by Lender to be implemented) as of the date of this Agreement, then Borrower shall, at its sole expense, implement and continue the O&M Plan (with any modifications required to comply with applicable Laws), until payment and full satisfaction of the Obligations.

(c) Lender’s Rights. Lender and any person designated by Lender may, upon reasonable prior notice to Borrower (except in an emergency or following an Event of Default, when no such prior notification will be required) and subject to the rights of the residents at Borrower’s Individual Property, enter Borrower’s Individual Property to assess the environmental condition of such Individual Property and its use including (i) conducting any environmental assessment or audit (the scope of which shall be determined by Lender) and (ii) taking samples of soil, groundwater or other water, air, or building materials, and conducting other invasive testing at all reasonable times when (A) an Event of Default has occurred under the Documents (unless Lender has accepted cure of such Event of Default by specific written statement from Lender to Borrower acknowledging Lender’s acceptance of such cure, and Borrower specifically understands and agrees that Lender shall have no obligation whatsoever to accept the cure of any Event of Default), (B) Lender reasonably believes that a Release has occurred or the Individual Property is not in compliance with all Environmental Laws, or (C) the Loan is being considered for sale (provided that (x) any out-of-pocket expenses incurred in connection with the entry under clause (C) only shall be at Lender’s expense unless an Event of Default under the Documents has occurred, and (y) entry under clause (C) shall be limited to twice per year, shall not include the right to perform a Phase II environmental site assessment or other invasive testing unless a Phase II environmental site assessment or other invasive testing is recommended by a reputable environmental consultant engaged by Lender (in which event, copies of such recommendations and supporting information shall be provided to Borrower prior to entry by Lender or any such person designated by Lender for the purposes of conducting the Phase II environmental site assessment or other invasive testing), and shall require at least seven (7) days’ prior written notice to Borrower for any Phase I environmental site assessment and at least five (5) days’ prior written notice to Borrower for any Phase II environmental site assessment or other invasive testing). Borrower shall cooperate (and shall require Property Manager to cooperate) with and provide access to Lender and such person. Lender and any such person shall use reasonable efforts to minimize interference with the use or operation of Borrower’s Individual Property by Borrower, any Tenant or any other user or occupant of Borrower’s Individual Property, and, following assessment, sampling or testing, Lender shall be required to restore Borrower’s Individual Property to substantially its condition prior to such assessment, sampling or testing (unless prohibited from doing so by Environmental Laws).

Section 3.13 Electronic Payments. Unless directed otherwise in writing by Lender, all payments due under the Documents shall be made by wire transfer initiated by Borrower. This accommodation by Lender shall be personal to the original Borrowers under the Loan, and no transferee shall have such right under this Section 3.13. Upon the occurrence of any monetary Event of Default under the Documents or if Borrower fails to make such payments by the Due Date more than two (2) times during the term of the Loan, then all payments due under the Documents shall be made by electronic funds transfer debit entries to Borrower’s account at an Automated Clearing House member bank satisfactory to Lender or by similar electronic transfer process selected by Lender. Each payment due under the Documents shall be initiated by Lender through the Automated Clearing House network (or similar electronic process) for settlement

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on the Due Date for the payment. Borrower shall, at Borrower’s sole cost and expense, direct its bank in writing to permit such electronic fund transfer debit entries (or similar electronic transfer) to be made by Lender. If Lender determines in its reasonable judgment that a change in Borrower’s bank is necessary to appropriately effectuate the Loan payments by electronic funds transfer debit entries (or similar electronic process), Lender shall have the right, upon thirty (30) days’ written notice, to require Borrower to use a different bank. Prior to each payment Due Date under the Documents, Borrower shall deposit and/or maintain sufficient funds in Borrower’s account to cover each debit entry. Any charges or costs, if any, by Borrower’s bank for the foregoing shall be paid by Borrower.

Section 3.14 Inspection. Borrower shall allow (and shall require Property Manager to allow) Lender and any person designated by Lender, subject to the rights of any residents at its Individual Property, to enter upon Borrower’s Individual Property and conduct tests (which Lender has concluded are reasonably necessary) or inspect such Individual Property at all reasonable times upon reasonable prior notice to Borrower (except in an emergency or following an Event of Default, when no such prior notice notification will be required), and any and all costs and expenses relating to such tests and inspections shall constitute Costs under Section 4.01 below. Borrower shall assist (and shall require Property Manager to assist) Lender and such person in effecting said inspection.

Section 3.15 Records, Reports, and Audits.

(a) Records and Reports. Borrower shall (or shall require Property Manager to) maintain complete and accurate books and records with respect to all operations of, or transactions involving, its Individual Property.

(i) Borrower shall furnish (or cause to be furnished) to Lender the following statements and reports (as soon as available and in no event later than forty-five days after the end of the calendar month or fiscal quarter, as applicable, in question) each in form and substance reasonably satisfactory to Lender: (A) a monthly operating statement (including a comparison to the budget and the previous year’s position) with both monthly and year-to-date information, and the overall occupancy; and (B) a quarterly capital expenditure and FF&E expenditure report detailing each project’s status, including the amount spent to date and all budget variances.

(ii) Borrower shall furnish (or cause to be furnished) to Lender annually: (A) as soon as available, but no later than April 30th of each calendar year, financial statements for Sunrise Senior Living, Inc. (“SSLI”), Borrower, and CHT REIT, in each case prepared in accordance with generally accepted accounting principles (“GAAP”) and certified by an authorized person, partner or official; (B) as soon as available, but no later than January 31st of each calendar year, preliminary annual unaudited operating statements for Borrower’s Individual Property prepared in accordance with GAAP, and as soon as available, but no later than March 31st of each calendar year, final annual unaudited operating statements for Borrower’s Individual Property and certified by an authorized person, partner or official, together with such additional information as Lender may reasonably request; (C) as soon as available, but no later than January 31st of each calendar year, a detailed revenue and expense projection by month showing projected occupancy, unit rates, gross revenues and expenditures by month; (D) as soon as available, but no later than January 31st of each calendar year, a capital improvement budget for proposed capital and FF&E expenditures, including the costs of completing any such additions, upgrades, or improvements commenced in a prior fiscal year, itemized by project and month(s) of occurrence; (E) if requested in writing by Lender no more than once a year and to the extent available without Borrower or Property Manager being required to perform additional work that is not insubstantial, a business and/or marketing plan, describing in narrative form Borrower’s intentions for the next fiscal year for the promotion and positioning of Borrower’s Individual Property in the market; (F) if requested in writing

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by Lender no more than once a year and to the extent available without Borrower or Property Manager being required to perform additional work that is not insubstantial, a schedule of all leases, including income-producing Leases and all equipment or financing leases; and (G) if requested in writing by Lender no more than once a year, an organizational chart of Borrower and any affiliated entity managing or operating Borrower’s Individual Property occurring after the date of this Agreement.

(b) Appraisal. If requested in writing by Lender no more than once a year and to the extent available without Borrower or Property Manager being required to perform additional work that is not insubstantial, Borrower shall furnish to Lender (i) whenever available, a duplicate copy of any appraisal, and (ii) such other information and internal market reports as Lender may reasonably request.

(c) Delivery of Reports. All of the reports, statements, and items required under this Section 3.15 shall be (i) certified as being true, correct, and accurate by an authorized person, partner, or officer of the delivering party or, at the deliverer’s option, audited by a Certified Public Accountant; (ii) reasonably satisfactory to Lender in form and substance; and (iii) except as otherwise expressly provided in this Section 3.15, delivered within (A) one hundred twenty (120) days after the end of Borrower’s fiscal year for annual reports and (B) forty-five (45) days after the end of each calendar quarter for quarterly reports. If any one report, statement, or item is not received by Lender within thirty (30) days after written notice from Lender, then a late fee of Two Hundred Fifty and No/100 Dollars ($250.00) per month shall be due and payable by Borrower. If any one report, statement, or item is not received after the expiration of (y) thirty (30) days after written notice from Lender (the “First Notice”) and (z) ten (10) days after delivery of a second written notice from Lender (the “Second Notice”), which Second Notice shall not be delivered before the date that is thirty (30) days after delivery of the First Notice, then Lender may immediately declare an Event of Default under the Documents. Borrower shall (i) provide Lender with such additional financial, management, or other information regarding Borrower, any general partner of Borrower, or Borrower’s Individual Property, as Lender may reasonably request and (ii) upon Lender’s request, deliver (or cause to be delivered) all items required by this Section 3.15 in an electronic format (i.e., on computer disks) or by electronic transmission acceptable to Lender in the format in which such reports, statements or items are ordinarily prepared and maintained by or for Borrower.

(d) Inspection of Records. Borrower shall allow (and shall require Property Manager to allow) Lender or any person designated by Lender to examine, audit, and make copies of all such books and records and all supporting data at the place where these items are located at all reasonable times after reasonable advance notice; provided that no notice shall be required after any Event of Default under the Documents (unless Lender has accepted cure of such Event of Default by specific written statement from Lender to Borrower acknowledging Lender’s acceptance of such cure, and Borrower specifically understands and agrees that Lender shall have no obligation whatsoever to accept the cure of any Event of Default). Borrower shall assist (and shall require Property Manager to assist) Lender in effecting such examination. Upon fifteen (15) days’ prior notice, Lender may inspect and make copies of Borrower’s income tax returns with respect to its Individual Property or, if Borrower is a partnership, any general partner of Borrower’s income tax returns with respect to the Property, for the purpose of verifying any items referenced in this Section 3.15.

Section 3.16 Certificates. Within ten (10) Business Days after Lender’s written request (but not more than twice in any given twelve (12) month period), Borrower shall furnish a written certification to Lender and any Investors (defined below) as to (a) the amount of the Obligations outstanding; (b) the interest rate, terms of payment, and maturity date of the Note; (c) the date to which payments have been paid under the Note; (d) whether, to the best of Borrower’s knowledge (after due inquiry), any offsets or defenses exist against the Obligations and a detailed description of any listed; (e) whether all Leases (including subleases and Resident Agreements [defined below]) are in full force and effect (except to the

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extent that the failure of any Lease to be in full force and effect would not have a material adverse effect on the aggregate Gross Revenue of the applicable Individual Property) and have not been modified (or if modified, setting forth all modifications except to the extent that the modification would not have a material adverse effect on the aggregate Gross Revenue of the applicable Individual Property); (f) the month to which the Rents have been paid (provided that the inaccuracy of this information disclosed to Lender shall not be a default unless such inaccuracy would have a material adverse effect on the aggregate Gross Revenue of the applicable Individual Property); (g) whether, to the best knowledge of Borrower, any defaults exist under the Leases which could have a material adverse effect on the aggregate Gross Revenue of the applicable Individual Property and a detailed description of any listed (excluding any Resident Agreements); (h) the security deposit held by Borrower under each Lease and that such amount is the amount required under such Lease (provided that the inaccuracy of this information disclosed to Lender shall not be a default unless such inaccuracy would have a material adverse effect on the aggregate Gross Revenue of the applicable Individual Property); (i) whether, to the best of Borrower’s knowledge after due inquiry, there are any defaults (or events which with the passage of time and/or giving of notice would constitute a default) under the Documents or a detailed description of any listed; (j) whether the Documents are in full force and effect; and (k) any other matters reasonably requested by Lender related to the Leases, the Obligations, Borrower’s Individual Property, or the Documents. For all non-residential properties and promptly upon Lender’s written request, but not more than twice in any given twelve (12) month period, Borrower shall use commercially reasonable efforts to deliver a written certification to Lender and Investors from any commercial (i.e. non-residential) Tenants specified by Lender that: (a) their Leases are in full force and effect; (b) there are no defaults (or events which with the passage of time and/or notice would constitute a default) under their Leases or a detailed description of any listed; (c) none of the Rents have been paid more than one month in advance; (d) there are no offsets or defenses against the Rents or a detailed description of any listed; and (e) any other matters reasonably requested by Lender related to the Leases; provided, however, that Borrower shall not have to pay money to a Tenant to obtain such certification, but it will deliver a landlord’s certification for any certification it cannot obtain. The immediately preceding sentence shall not apply to any Minor Commercial Leases.

Section 3.17 Full Performance Required; Survival of Warranties. Except as specifically limited by the terms of such representations and warranties, all representations and warranties of Borrower in the Loan application or made in connection with the Loan shall survive the execution and delivery of the Documents, and Borrower shall not knowingly perform any action, or knowingly permit any action to be performed, which would cause any of the warranties and representations of Borrower to become untrue in any material manner except to the extent that the performing of any action or the permitting of any action to be performed would not have a material adverse effect on Borrower’s Individual Loan, Borrower’s Individual Loan Documents, the value of Borrower’s Individual Property, the utility of Borrower’s Individual Property, the operations of Borrower’s Individual Property, the financial condition of Borrower or any guarantor of Borrower’s Individual Loan or the ability of Borrower to perform its obligations under Borrower’s Individual Loan Documents.

Section 3.18 Additional Security. No other security now existing or taken later to secure the Obligations shall be affected by the execution of the Documents and all additional security shall be held as cumulative. The taking of additional security, execution of partial releases, or extension of the time for the payment obligations of Borrower shall not diminish the effect and lien of the Documents and shall not affect the liability or obligations of any maker or guarantor. Neither the acceptance of the Documents nor their enforcement shall prejudice or affect Lender’s right to realize upon or enforce any other security now or later held by Lender. Lender may enforce the Documents or any other security in such order and manner as it may determine in its discretion.

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Section 3.19 Further Acts. Borrower shall take all necessary actions to (i) keep valid and effective the lien and rights of Lender under the Documents and (ii) protect the lawful owner of the Documents. Promptly upon request by Lender, and at Borrower’s expense, Borrower shall execute additional reasonable instruments and take such commercially reasonable actions as Lender reasonably believes are necessary or desirable to (a) maintain or grant Lender a first-priority, perfected lien on Borrower’s Individual Property, (b) grant to Lender to the fullest extent permitted by Laws, the right to foreclose on, or transfer title to, Borrower’s Individual Property non-judicially, (c) correct any error or omission in the Documents, and (d) effect the intent of the Documents, including filing/recording the Documents, additional mortgages, deeds of trust, deeds to secure debt, financing statements, and other instruments.

Section 3.20 Compliance with Anti-Terrorism Regulations.

(a) Borrower hereby covenants and agrees that neither Borrower nor any guarantor, nor any persons or entities holding any legal or beneficial interest whatsoever in Borrower or any guarantor (whether directly or indirectly), will knowingly conduct business with or engage in any transaction with any person or entity named on any of the OFAC Lists or any person or entity included in, owned by, controlled by, acting for or on behalf of, providing assistance, support, sponsorship, or services of any kind to, or otherwise associated with any of the persons or entities referred to or described in the OFAC Lists; provided, however, that the foregoing covenant shall not be deemed violated with respect to any of (i) the Individual Beneficiaries, (ii) the Individual Shareholders, or (iii) tenants, subtenants and residents of its Individual Property so long as Borrower complies with the provisions of Section 3.20(c) below.

(b) Borrower hereby covenants and agrees that it will comply at all times with the requirements of Executive Order 13224; the International Emergency Economic Powers Act, 50 U.S.C. Sections 1701-06; the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56; the Iraqi Sanctions Act, Pub. L. 101-513, 104 Stat. 2047-55; the United Nations Participation Act, 22 U.S.C. Section 287c; the Antiterrorism and Effective Death Penalty Act, (enacting 8 U.S.C. Section 219, 18 U.S.C. Section 2332d, and 18 U.S.C. Section 2339b); the International Security and Development Cooperation Act, 22 U.S.C. Section 2349 aa-9; the Terrorism Sanctions Regulations, 31 C.F.R. Part 595; the Terrorism List Governments Sanctions Regulations, 31 C.F.R. Part 596; and the Foreign Terrorist Organizations Sanctions Regulations, 31 C.F.R. Part 597 and any similar laws or regulations currently in force or hereafter enacted (collectively, the “Anti-Terrorism Regulations”).

(c) Borrower hereby covenants and agrees that if it becomes aware or receives any notice that Borrower, any guarantor or its Individual Property, or any person or entity holding any legal or beneficial interest whatsoever (whether directly or indirectly) in Borrower, any guarantor or in Borrower’s Individual Property, is named on any of the OFAC Lists (such occurrence, an “OFAC Violation”), then Borrower will immediately (i) give notice to Lender of such OFAC Violation, and (ii) comply with all Laws applicable to such OFAC Violation (regardless of whether the party included on any of the OFAC Lists is located within the jurisdiction of the United States of America), including, without limitation, the Anti-Terrorism Regulations, and Borrower hereby authorizes and consents to Lender’s taking any and all steps Lender deems necessary to comply with all Laws applicable to any such OFAC Violation, including, without limitation, the requirements of the Anti-Terrorism Regulations (including the “freezing” and/or “blocking” of assets).

(d) Upon Lender’s request from time to time during the term of the Loan (but not more than twice in any twelve (12) month period; provided, however, such limitation shall not apply to any such certification required in connection with a Permitted Transfer), Borrower agrees to deliver a certification confirming that the representations and warranties set forth in Section 2.09 above remain true and correct as of the date of such certificate and confirming Borrower’s and any guarantor’s compliance with this Section 3.20.

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Section 3.21 Compliance with Property as Single Asset. Borrower hereby covenants and agrees that during the term of the Loan, (a) Borrower shall not own any assets in addition to its Individual Property, other than any cash, investment accounts (provided that the liability associated with any such investment account shall be limited to the assets contained in such account) or personal property used in connection with such Individual Property, as applicable, (b) Borrower’s Individual Property shall remain as a single property or project, and (c) Borrower’s Individual Property shall generate substantially all of the gross income of Borrower and there shall be no substantial business being conducted by Borrower, either directly or indirectly, other than the business of owning, operating and maintaining its Individual Property and the activities incidental thereto; provided that (i) the cross- collateralization, cross-default and pooling arrangement of the Property and the Operating Leases required in connection with the Loan is not a violation of the provisions of this Section 3.21, and (ii) the Manager Pooling Agreement dated as of the date hereof by and among Operators, Connecticut Avenue Owner, Property Manager and CHTSun (the “Manager Pooling Agreement”) is not a violation of the provisions of this Section 3.21. Notwithstanding the foregoing, Operator may own its leasehold interest in its Individual Property and any personal property associated therewith.

Section 3.22 Separateness Covenants/Covenants with Respect to Indebtedness, Operations and Fundamental Changes of Borrower. Borrower hereby represents, warrants and covenants, as of the date hereof and until such time as the Obligations are paid in full, that Borrower:

(a) shall not (i) liquidate or dissolve (or suffer any liquidation or dissolution), terminate, or otherwise dispose of, directly, indirectly or by operation of law, all or substantially all of its assets; (ii) reorganize or change its legal structure without Lender’s prior written consent, except as otherwise expressly permitted under the Documents; (iii) change its name, address, or the name under which Borrower conducts its business without promptly notifying Lender; (iv) enter into or consummate any merger, consolidation, sale, transfer, assignment, liquidation, or dissolution involving any or all of the assets of Borrower or any general partner or managing member of Borrower; or (v) enter into or consummate any transaction or acquisition, merger or consolidation or otherwise acquire by purchase or otherwise all or any portion of the business or assets of, or any stock or other evidence of beneficial ownership of, any person or entity;

(b) has not incurred and shall not incur any secured or unsecured debt except for its Individual Loan, Permitted Capital Leases and customary and reasonable short term trade payables obtained and repaid in the ordinary course of Borrower’s business;

(c) shall not amend, modify or otherwise change its partnership certificate, partnership agreement, articles of incorporation, by-laws, operating agreement, articles of organization, or other formation agreement or document, as applicable, or governing agreement or document, in any material term or manner, or in a manner which adversely affects Borrower’s existence as a single purpose entity or Borrower’s compliance with Sections 3.21 and 3.22 of this Agreement, nor shall any managing member, general partner, shareholder or non-member manager of Borrower, as applicable, amend, modify or otherwise change its partnership certificate, partnership agreement, articles of incorporation, by-laws, operating agreement, articles of organization, or other formation agreement or document, as applicable, or governing agreement or document, in any manner which adversely affects Borrower’s existence as a single purpose entity or Borrower’s compliance with Sections 3.21 and 3.22 of this Agreement;

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and 706108866-706108870

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(d) to the extent that Borrower requires an office, shall maintain its principal executive office and telephone and facsimile numbers separate from that of any Affiliate (defined below) of same and shall conspicuously identify such office and numbers as its own or shall allocate by written agreement fairly and reasonably any rent, overhead and expenses for shared office space. Additionally, Borrower shall use its own separate stationery, invoices and checks;

(e) shall maintain correct and complete financial statements, accounts, books and records and other entity documents separate from those of any Affiliate of same or any other person or entity, except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that Borrower is properly reflected and treated as a separate legal entity;

(f) shall maintain its own separate bank accounts, payroll and correct, complete and separate books of account;

(g) shall file or cause to be filed its own separate tax returns, or if applicable, consolidated tax returns;

(h) shall hold itself out to the public (including any of its Affiliates’ creditors) under Borrower’s own name and as a separate and distinct entity and not as a department, division or otherwise of any Affiliate of same;

(i) shall observe all customary formalities regarding the existence of Borrower, including holding meetings and maintaining current and accurate minute books separate from those of any Affiliate of same;

(j) shall hold title to its assets in its own name and act solely in its own name and through its own duly authorized officers and agents. No Affiliate of same shall be appointed or act as agent of Borrower, other than, if applicable, a property manager with respect to Borrower’s Individual Property;

(k) shall make investments in the name of Borrower directly by Borrower or on its behalf by brokers engaged and paid by Borrower or its agents;

(l) except as expressly required by Lender in connection with the Loan and in writing (it being understood that the Supplemental Guaranty is expressly permitted), shall not guarantee or otherwise agree to be liable for (whether conditionally or unconditionally), pledge or assume or hold itself out or permit itself to be held out as having guaranteed, pledged or assumed any liabilities or obligations of any partner (whether limited or general), member, shareholder or any Affiliate of Borrower, as applicable, or any other party, nor shall it make any loan, except as expressly permitted in the Documents or in Section 5.07 below;

(m) is and intends to remain solvent, and has paid and will pay its own debts and liabilities out of its own funds and assets (to the extent of such funds and assets) as the same shall become due, and will give prompt written notice to Lender of the insolvency or bankruptcy filing of any Borrower or any general partner, managing member or controlling shareholder of a Borrower, or of the death, insolvency or bankruptcy filing of any Guarantor;

(n) shall separately identify, maintain and segregate its assets. Borrower’s assets shall at all times be held by or on behalf of Borrower and, if held on behalf of Borrower by another entity, shall at all times be kept identifiable (in accordance with customary usages) as assets owned by Borrower. This

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restriction requires, among other things, that, except as expressly permitted by the Manager Pooling Agreement, (i) Borrower funds shall be deposited or invested in Borrower’s name, (ii) Borrower funds shall not be commingled with the funds of any Affiliate of same or any other person or entity except as may be required in connection with the Loan with respect to Related Borrowers (as defined in the Instruments), (iii) Borrower shall maintain all accounts in its own name and with its own tax identification number, separate from those of any Affiliate of same or any other person or entity, and (iv) Borrower funds shall be used only for the business of Borrower;

(o) shall maintain its assets in such a manner that it is not costly or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate of same or other person or entity;

(p) shall pay or cause to be paid its own liabilities and expenses of any kind, including but not limited to salaries of its employees, if any, only out of its own separate funds and assets;

(q) shall at all times be adequately capitalized to engage in the transactions contemplated at its formation;

(r) shall not do any act which would make it impossible to carry on the ordinary business of Borrower;

(s) shall reflect Borrower’s ownership interest in all data and records (including computer records) used by Borrower or any Affiliate of same;

(t) shall not invest any of Borrower’s funds in securities issued by, nor shall Borrower acquire the indebtedness or obligation of, any Affiliate of same;

(u) shall maintain an arm’s length relationship with each of its Affiliates and may enter into contracts or transact business with its Affiliates only on commercially reasonable terms that are no less favorable to Borrower than is obtainable in the market from a person or entity that is not an Affiliate of same;

(v) shall correct any misunderstanding that is known by Borrower regarding its name or separate identity;

(w) shall not, without the prior written vote of one hundred percent (100%) of its partners, members, or shareholders, as applicable, institute proceedings to be adjudicated bankrupt or insolvent; or consent to the institution of bankruptcy or insolvency proceedings against it; or file a petition seeking, or consent to, reorganization or relief under any applicable federal or state law relating to bankruptcy; or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of Borrower or a substantial part of Borrower’s property; or make any assignment for the benefit of creditors; or admit in writing its inability to pay its debts generally as they become due or declare or effectuate a moratorium on payments of its obligation; or take any action in furtherance of any such action;

(x) The limited liability company agreement (the “LLC Agreement”) of any Borrower which is a limited liability company (each, an “LLC Borrower”) shall provide that (i) upon the occurrence of any event that causes the sole member of LLC Borrower (“Member”) to cease to be the member of LLC Borrower (other than (A) upon a transfer by Member of all of its limited liability company interest in LLC Borrower and the prior or simultaneous admission of the transferee in accordance with the LLC Agreement, or (B) the resignation of Member and the prior or simultaneous

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

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admission of an additional member of LLC Borrower in accordance with the terms of the LLC Agreement; provided, however, that exception (A) or (B) shall not be allowed without Lender’s prior written consent, which consent shall be granted or denied in Lender’s sole discretion, except to the extent such action is expressly permitted under Article V of this Agreement), then any person acting as springing member of LLC Borrower shall, without any action of any other person and simultaneously with the Member ceasing to be the member of LLC Borrower, automatically be admitted to LLC Borrower as a special member (“Special Member”) and shall continue LLC Borrower without dissolution and (ii) no Special Member may resign from LLC Borrower or transfer its rights as Special Member unless a successor Special Member has been admitted to LLC Borrower as Special Member in accordance with the LLC Agreement and the express prior written consent of Lender therefor has been obtained. The LLC Agreement shall further provide that (1) Special Member shall automatically cease to be a member of LLC Borrower upon the admission to LLC Borrower of a substitute Member (such admission of a substitute Member must be consented to in writing by Lender, with such consent being in Lender’s sole discretion), (2) Special Member shall be a member of LLC Borrower that has no interest in the profits, losses and capital of LLC Borrower and has no right to receive any distributions of LLC Borrower assets, (3) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make any capital contributions to LLC Borrower and shall not receive a limited liability company interest in LLC Borrower, (4) Special Member, in its capacity as Special Member, may not bind LLC Borrower and (5) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, LLC Borrower, including, without limitation, the merger, consolidation or conversion of LLC Borrower. In order to implement the admission to LLC Borrower of Special Member, each person acting as a springing member shall execute a counterpart to the LLC Agreement. Prior to its admission to LLC Borrower as Special Member, each person acting as a springing member shall not be a member of LLC Borrower. Borrower must obtain Lender’s prior approval of the identification of any person to act as a springing member prior to the LLC Agreement being executed;

(y) If the Member of any LLC Borrower is now or in the future an individual, then upon the occurrence of any event that causes the Member to cease to be a member of LLC Borrower (other than (A) upon a transfer by Member of all of its limited liability company interest in LLC Borrower and the prior or simultaneous admission of the transferee in accordance with the LLC Agreement, or (B) the resignation of Member and the prior or simultaneous admission of an additional member of LLC Borrower in accordance with the terms of the LLC Agreement; provided, however, that exception (A) or (B) shall not be allowed without Lender’s prior written consent, which consent shall be granted or denied in Lender’s sole discretion, except to the extent such action is expressly permitted under Article V of this Agreement), then to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in LLC Borrower, agree in writing (i) to continue LLC Borrower and (ii) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of LLC Borrower, effective as of the occurrence of the event that terminated the continued membership of Member of LLC Borrower in LLC Borrower. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws (defined below) shall not cause Member or Special Member to cease to be a member of LLC Borrower and upon the occurrence of such an event, the business of LLC Borrower shall continue without dissolution. The LLC Agreement shall provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve LLC Borrower upon the occurrence of any action initiated by or brought against Member or Special Member under any existing or future law (the “Creditors Rights Laws”) of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to its debts or debtors, or the occurrence of an event that causes Member or Special Member to cease to be a member of LLC Borrower; and

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and 706108866-706108870

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(z) Borrower shall be either a Delaware limited liability company or a Delaware limited partnership, as the case may be (except for Connecticut Avenue Owner, which may be a Virginia limited liability company, and Sunrise Louisville, which may be a Kentucky limited liability company).

“Affiliate” for purposes of this Agreement shall mean a person which controls, is controlled by, or is under common control with another person. For the purposes of this definition, “control” means the power to direct the management and policies of a person, directly or indirectly, whether through the ownership of voting securities or other beneficial interest, by contract or otherwise, and the terms “controlling” and “controlled” have the meanings correlative to the foregoing. A person shall not be deemed to be under common “control” with another person solely based on the fact that one or more person(s) serve as a director of both persons.

Section 3.23 Leasing Restrictions.

(a) With respect to any resident admission agreements, residency agreements, life care contracts or similar agreements with residents or patients of its Individual Property, Borrower shall lease its Individual Property at market rents and on market terms (subject to any currently existing governmental requirements regarding low income rentals) (based on the type, quality and location of such Individual Property) using Borrower’s standard approved resident agreement and lease form that has been approved by Lender and subject to any non-material changes thereto as Borrower may determine in its reasonable discretion to be necessary or desirable for the operation of its Individual Property, provided such changes comply with the provisions of Article XI of this Agreement. All Leases shall be bona fide, binding contracts, duly authorized and executed with third-party tenants, residents, and/or occupants unrelated to Borrower, any Recourse Party or any of their Affiliates. There shall be no additional economic obligations on the landlord under a Lease beyond providing the senior living services contemplated by the form lease that has been approved by Lender (and for which the landlord is separately compensated).

(b) Each Operating Lease shall be subject to Lender’s prior approval, which may be granted or denied in Lender’s sole and absolute discretion, and shall meet all regulatory requirements. Borrower shall not, without first obtaining Lender’s prior written consent, (i) amend or modify the Operating Lease with respect to Borrower’s Individual Property in any material respect (which shall include, without limitation, any modification or amendment to the Operating Lease that reduces the rent payable thereunder, alters the term of the Operating Lease, increases the landlord’s obligations or decreases the tenant’s obligations under the Operating Lease or any other modification or amendment deemed material by Lender), (ii) extend or renew (except in accordance with mandatory actions by the landlord under the existing Operating Lease provisions, if any) the Operating Lease with respect to Borrower’s Individual Property, (iii) terminate or accept the surrender of the Operating Lease with respect to Borrower’s Individual Property, (iv) enter into any new Operating Lease with respect to Borrower’s Individual Property, (v) consent to, or otherwise accept, an assignment of an Operating Lease, which assignment would result in the tenant being relieved from any liability under such Operating Lease, or (vi) accept any prepayment of rent more than one (1) month in advance, termination fee, or similar payment.

(c) With respect to any commercial Lease in excess of 1,500 square feet that is not an Operating Lease, Borrower may (i) enter into a new commercial Lease (if such new commercial Lease does not give the tenant any rights, whether in the form of expansion rights, rights of first refusal to lease or purchase, or otherwise, relating to property which is not part of such Borrower’s Individual Property

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

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and/or would require Borrower and/or Lender to possess or control any property other than such Borrower’s Individual Property to honor such rights and/or would grant such tenant any purchase rights with respect to any portion of such Borrower’s Individual Property), (ii) terminate any such commercial Lease, or (iii) amend any such commercial Lease (if such amendment does not give the tenant any rights, whether in the form of expansion rights, rights of first refusal to lease or purchase, or otherwise, relating to property which is not part of such Borrower’s Individual Property and/or would require Borrower and/or Lender to possess or control any property other than such Borrower’s Individual Property to honor such rights and/or would grant such tenant any purchase rights with respect to any portion of such Borrower’s Individual Property), provided that all decisions made and all actions taken by Borrower pursuant to clauses (i), (ii) and (iii) above (A) represent prudent business practices for the benefit of such Borrower’s Individual Property, (B) are on market terms and rents (based on the type, quality and location of such Individual Property), and (C) are bona fide, binding contracts, duly authorized and executed with third-party tenants unrelated to Borrower, any Recourse Party or any of their affiliates. There shall be no increase in the landlord’s obligations to pay operating expenses, taxes or insurance or change in the base year, and there shall be no economic obligations on the landlord under a commercial Lease in excess of 1,500 square feet that is not an Operating Lease beyond maintaining Borrower’s Individual Property. Any allowance for tenant improvements shall only be given at the beginning of the term of any commercial Lease in excess of 1,500 square feet that is not an Operating Lease.

(d) No portion of Borrower’s Individual Property shall (i) be leased to any party or entity that uses dry cleaning solvents on Borrower’s Individual Property, or (ii) permit the use or storage of hazardous substances in excess of limits allowed by applicable law, rule or regulation.

Section 3.24 Covenants Relating to Leases and Rents. Borrower shall not, except with the prior written consent of Lender in each instance, (a) sell, assign, pledge, mortgage or otherwise transfer or encumber (except hereby) any of the Leases, Rents or any right, title or interest of Borrower therein; (b) except for “community fees” paid by residents upon initial occupancy of the Individual Property as provided for under the form Resident Agreement (to the extent permitted by applicable Laws), accept prepayments of any Rents for a period of more than one (1) month in advance of the due dates thereof; (c) in any manner intentionally or materially impair the value of its Individual Property or the benefits to Lender of the Assignment; (d) except as otherwise permitted in Section 3.23 above, waive, excuse, condone, discount, set off, compromise, or in any manner release or discharge any Tenant from any of its obligations under the Leases; (e) except as otherwise permitted hereby, enter into any settlement of any action or proceeding arising under, or in any manner connected with, the Leases or with the obligations of the landlord or the Tenants thereunder; (f) except as otherwise permitted in Section 3.23 above, modify, cancel or terminate any guaranties under any Lease; or (g) lease any portion of its Individual Property to a dry cleaner that uses dry cleaning solvents on such Individual Property. Notwithstanding the immediately preceding sentence, (i) subsection (d) above shall not apply to Resident Agreements so long as such actions taken do not materially affect the operations of the applicable Individual Property, and (ii) subsections (d), (e), and (f) above shall not apply to any Minor Commercial Leases. Borrower shall, at its sole cost and expense, duly and timely keep, observe, perform, comply with and discharge all of the material obligations of the landlord under the Leases, or cause the foregoing to be done, and Borrower shall not take any actions that would, either presently or with the passage of time, cause a default by Borrower under any of the Leases. Borrower shall (i) enforce its interests in the Leases and all remedies available to Borrower upon any Tenant’s default, (ii) upon Lender’s request, deliver to Lender copies of all papers served in connection with any such enforcement proceedings, and (iii) upon Lender’s request, consult with Lender, its agents and attorneys with respect to the conduct thereof. Unless an Event of Default has occurred (or if an Event of Default has occurred but Lender has accepted cure of such Event of Default by specific written statement from Lender to Borrower acknowledging Lender’s acceptance of

Prudential Loan Nos. 706108716-706108717

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such cure, and Borrower specifically understands and agrees that Lender shall have no obligation whatsoever to accept the cure of any Event of Default), Borrower may enter into any settlement of any such proceeding without Lender’s prior written consent. Lender recognizes that the Resident Agreements are for occupancy of individual units by elderly persons and that due to the changing circumstances of the residents and other commercially reasonable considerations, Borrower and/or Property Manager on behalf of Borrower shall exercise good faith judgment in modifying, amending and terminating Resident Agreements on a case-by-case basis.

Section 3.25 Tax Status of Borrower. Borrower shall not become a “foreign person,” “foreign partnership,” “foreign trust,” or “foreign estate” within the meaning of Sections 1445 and 7701 of the Revenue Code. If CHTSun becomes a “disregarded entity” as defined in Section 1.1445-2(b)(2)(iii) of the Income Tax Regulations issued under the Revenue Code, it shall provide Lender with the appropriate documentation regarding same.

Section 3.26 Illegal Activity. No portion of Borrower’s Individual Property will be purchased, improved, fixtured, equipped or furnished by Borrower with proceeds of any illegal activity, and Borrower shall not engage in, and shall make commercially reasonable efforts to prevent others from engaging in, illegal activities at or on its Individual Property.

ARTICLE IV - ADDITIONAL ADVANCES; EXPENSES; SUBROGATION

Section 4.01 Expenses and Advances. Borrowers shall pay all Costs (defined below) (a) incurred by any Borrower or Lender and reasonable fees charged by Lender in connection with the granting, closing, servicing (other than routine loan servicing performed in the ordinary course of business and for the performance of which Lender is not routinely reimbursed by other borrowers in the ordinary course of Lender’s business), and enforcement of the Loan and the Documents or (b) attributable to any Borrower as owner of an Individual Property. The term “Costs” shall mean any and all actual and documented out-of-pocket appraisal, recording, filing, registration, brokerage, abstract, title insurance (including premiums), title searches and examinations, surveys and similar data and assurances with respect to title, U.C.C. search, escrow, reasonable attorneys’, engineers’, environmental engineers’, environmental testing, and architects’ fees, costs (including travel), expenses, and disbursements incurred in connection with (i) any default by any Borrower under the Documents, (ii) servicing of the Loan (other than routine loan servicing performed in the ordinary course of business and for the performance of which Lender is not routinely reimbursed by other borrowers in the ordinary course of Lender’s business), including administrative or service fees assessed by Lender pursuant to a Borrower consent request, or (iii) the exercise, enforcement, compromise, defense, litigation, or settlement of any of Lender’s rights or remedies under the Documents or relating to the Loan or the Pool Obligations following a default under the Documents. If any Borrower fails to pay any amounts or perform any actions required under the Documents, then Lender may (but shall not be obligated to) advance sums to pay such amounts or perform such actions. Each Borrower grants Lender the right (and shall require Property Manager to grant Lender the right) to enter upon and take possession of Borrower’s Individual Property to prevent or remedy any such failure and the right to take such actions in Borrower’s name. No advance or performance shall be deemed to have cured a default by any Borrower. All (a) sums advanced by or payable to Lender per this Section 4.01 or under applicable Laws, (b) except as expressly provided in the Documents, payments due under the Documents which are not paid in full when due, and (c) Costs, shall: (i) be deemed demand obligations, (ii) if not paid within five (5) days following demand, bear interest from the date of demand at the Default Rate (unless prohibited by Law) until paid, (iii) be part of, together with such interest, the Pool Obligations, and (iv) be secured by the Documents. Lender, upon making any such advance, shall also be subrogated to rights of the person receiving such advance.

Prudential Loan Nos. 706108716-706108717

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Section 4.02 Subrogation. If any proceeds of any Note were used to extinguish, extend or renew any indebtedness on an Individual Property, then, to the extent of the funds so used, (a) Lender shall be subrogated to all rights, claims, liens, titles and interests existing on such Individual Property held by the holder of such indebtedness and (b) these rights, claims, liens, titles and interests are not waived but rather shall (i) continue in full force and effect in favor of Lender and (ii) are merged with the lien and security interest created by the Documents as cumulative security for the payment and performance of the Pool Obligations.

ARTICLE V - SALE, TRANSFER, OR ENCUMBRANCE OF THE PROPERTY

Section 5.01 Due-on-Sale or Encumbrance. It shall be an Event of Default and, at the sole option of Lender, Lender may accelerate the Pool Obligations, and the entire Pool Obligations (including any Prepayment Premium) shall become immediately due and payable, if, without Lender’s prior written consent (which consent may be given or withheld for any or for no reason or given conditionally, in Lender’s sole discretion) any of the following shall occur:

(a) other than in connection with a transfer in accordance with the express conditions set forth in this Section 5.01 or in Sections 5.04, 5.05, 5.06 and 5.07 of this Agreement (each, a “Permitted Transfer”), any Borrower shall sell, convey, assign, transfer, dispose of or be divested of its title to its Individual Property, convey security title to its Individual Property, or mortgage, encumber or cause to be encumbered its Individual Property or any interest therein, in any manner or way, whether voluntary or involuntary (except for (i) the imposition of mechanic’s or materialmen’s liens, judgment liens, tax liens and other liens so long as such Borrower causes same to be satisfied or bonded off as required under the Documents, (ii) the sale or transfer of damaged or obsolete property replaced with property of equal or greater value, (iii) the imposition of easements and restrictions on the Property which in the aggregate do not have a material adverse effect on the value or use or marketability of the Property, or (iv) the Permitted Encumbrances; or

(b) other than in connection with a Permitted Transfer, in the event of any merger, consolidation, sale, transfer, assignment, liquidation, or dissolution involving any or all of the assets of any Borrower or any general partner or managing member of any Borrower; or

(c) other than in connection with a Permitted Transfer, in the event of the assignment, transfer, pledge, voluntary or involuntary sale, or encumbrance (or any of the foregoing at one time or over any period of time) of:

(i) (A) ten percent (10%) or more of (1) the ownership interests in any Borrower, regardless of the type or form of entity of such Borrower, (B) ten percent (10%) or more of the voting stock or ownership interest of any corporation or limited liability company which is, respectively, general partner or managing member of any Borrower or any corporation or limited liability company directly or indirectly owning fifteen percent (15%) or more of any such corporation or limited liability company, or (C) the ownership interests in any owner of fifteen percent (15%) or more of the beneficial interests of any Borrower if such Borrower is a trust; or

(ii) any general partnership, managing member or controlling interest in (A) any Borrower, (B) an entity which is in any Borrower’s chain of ownership and which is derivatively liable for the obligations of such Borrower, or (C) any entity that has the right to participate directly or indirectly in the control of the management or operations of any Borrower (other than solely as property manager of any Individual Property); or

Prudential Loan Nos. 706108716-706108717

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(d) a pledge or encumbrance of any ownership interest in any Borrower or in any owner of Borrower to secure financing; or

(e) in the event of the conversion of any general partnership interest in any Borrower to a limited partnership interest if such Borrower is a partnership; or

(f) in the event of any change, removal, or resignation of any general partner of any Borrower if such Borrower is a partnership (other than a change to a general partner that is a CHT Entity [defined below] or to an entity that is wholly owned and controlled by SSLI [an “SSLI Entity”]); or

(g) in the event of any change, removal, addition or resignation of a managing member of any Borrower (or if no managing member, any member) if such Borrower is a limited liability company (other than a change to a managing member that is a CHT Entity or an SSLI Entity); provided, the foregoing shall not prohibit the change, removal, addition or resignation of individuals (who are not managing members) on any board of managers of any Borrower or the general partner of any Borrower, as applicable; or

(h) any Borrower shall obtain any unsecured debt except for (i) customary and reasonable short-term trade payables obtained and repaid in the ordinary course of such Borrower’s business, and (ii) as long as no Event of Default has occurred and SSLI and CHT REIT directly or indirectly own an interest in each Borrower, loans to any Borrower (collectively, the “Permitted Member Loans”, and each, a “Permitted Member Loan”) from CHTSun Partners IV, LLC (“CHTSun”), SSLI, Sunrise Senior Living Investments, Inc. (“SSLII”), Property Manager or CHT REIT or another entity that holds direct or indirect ownership interests in the applicable Borrower, provided that such Permitted Member Loans (A) shall be unsecured, (B) shall be expressly subordinate to the lien of the Documents (which subordination shall be pursuant to documentation acceptable to Lender, which shall contain an express assignment to Lender of all votes in a bankruptcy case involving any Borrower and/or any Individual Property and of any claims under the Permitted Member Loans in such bankruptcy case, in a manner legally sufficient to assure that Lender shall have the exclusive right to vote bankruptcy claim(s) involving the Loan and/or the Permitted Member Loans in any bankruptcy case involving any Borrower and/or any Individual Property), (C) shall contain such provisions with respect to such subordination as Lender shall require, including, but not limited to, provisions regarding the payment obligations under such Permitted Member Loans, the collection rights of the holders of such Permitted Member Loans, and certain provisions regarding the Permitted Member Loans in the event of a bankruptcy of such Borrower, (D) made to any Borrower do not exceed, in the aggregate at any given time, an amount equal to five percent (5%) of the Allocated Loan Amount for such Borrower’s Individual Property, and (E) do not exceed, in the aggregate at any given time, the amount of $5,000,000 with respect to all Borrowers (on a collective basis). Borrowers shall also pay any reasonable expenses (including attorneys’ fees) incurred by Lender in connection with such Permitted Member Loans.

Notwithstanding anything to the contrary contained in this Agreement, the provisions of this Section 5.01 set forth above shall not apply to transfers (i) under any will or applicable law of descent, (ii) of publicly traded shares of SSLI so long as such transfers of publicly traded shares do not result in a merger of SSLI with another entity (unless either (1) SSLI is the surviving entity, or (2) SSLI is not the surviving entity but the surviving entity is a corporation created for the sole purpose of effecting the merger and which, at the time of the merger, both (x) had no material operating history and (y) is wholly-owned by SSLI or the constituent shareholders of SSLI [any such entity complying with items (x) and (y) above, an “SSLI Survivor”] and SSLI or the SSLI Survivor, as the case may be, shall retain the same level of control over each Borrower and the day-to-day operations of each Individual Property that SSLI had (A) as of the date of this Agreement, or (B) in the event of a Permitted Transfer or Permitted

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and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

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Transfers that occurred after the date of this Agreement, as a result of such Permitted Transfer), (iii) of publicly traded shares of CNL Healthcare Trust, Inc., a Maryland corporation (“CHT REIT”), (iv) between and among CHT REIT and its wholly-owned and controlled affiliates (each, a “CHT Entity”), (v) that result in the increase or decrease in the direct or indirect ownership interests in any Borrower held by CHT Entities as long as a CHT Entity retains control, and ownership (directly or indirectly) of at least fifty-one percent (51%) of, the applicable Borrower(s) following the transfer, provided, that a CHT Entity shall only be permitted to acquire all of the direct or indirect ownership interests in any Borrower in accordance with Section 5.05 of this Agreement and in the event that an SSLI Entity does not control the applicable Borrower, then following such transfer a CHT Entity shall control the applicable Borrower, or (vi) among the holders of direct or indirect ownership interests in any Borrower, and within sixty (60) days following any such transfer, such Borrower shall deliver to Lender (xx) a statement showing the current ownership of such Borrower, (yy) a certification from such Borrower that it remains in compliance with the ERISA provisions of the Documents, and (zz) a certification from such Borrower that it remains in compliance with the representations, warranties and covenants set forth in the Documents. Without limiting the provisions of the preceding sentence, Borrower and the transferee of the ownership interests in Borrower being transferred shall be deemed to have made in favor of Lender, as of the date of the applicable transfer, the certification described in clauses (xx), (yy) and (zz) above as a result of the transfer of the applicable ownership interests in such Borrower and the acceptance thereof.

In addition, the provisions of this Section 5.01(a) through 5.02(h) above shall not apply to any merger, consolidation, sale, transfer, or assignment involving all or substantially all of the assets of any Borrower to a CHT Entity or all of the ownership interests in any Borrower, provided that (i) such CHT Entity shall meet the special purpose entity requirements set forth in Sections 2.10, 3.21 and 3.22 of this Agreement, (ii) any transferee shall execute and deliver any and all documentation as may be reasonably required by Lender in form and substance reasonably satisfactory to Lender including assumption documents, (iii) counsel to transferee shall deliver to Lender opinion letters relating to such transfer (provided such opinion letters were required in connection with the closing of the Loan) in form and substance reasonably satisfactory to Lender, (iv) if any Individual Property is transferred, the applicable Borrower shall deliver (or cause to be delivered) to Lender, an endorsement to Lender’s title insurance policy relating to the change in the identity of the transferee and the execution and delivery of the transfer documentation in form and substance reasonably acceptable to Lender, (v) such Borrower shall pay all reasonable expenses incurred by Lender in connection with such transfer, including Lender’s reasonable attorneys’ fees and expenses, all recording fees, and all fees payable to the applicable title company for delivery to Lender of the endorsement referred to above and such Borrower shall pay Lender a servicing fee determined by Lender, and (vi) such other requirements of Lender shall be satisfied.

Section 5.02 Partial Release. Upon not less than sixty (60) days prior written notice from a Borrower, Lender shall release (a “Partial Release”) an Individual Property from the Lien of the Documents (a “Release Property”), upon the satisfaction (as determined by Lender in its sole discretion) of all of the following terms and conditions:

(a) At the time of the applicable Borrower’s request and the time of the proposed Partial Release, there shall be no then existing Event of Default under the Documents (unless such Partial Release itself would cause such Event of Default to be cured), and there shall exist no condition or state of facts which with the passage of time or the giving of notice or both, would constitute an Event of Default under the Documents;

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and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

46

(b) Any such request may be made no sooner than the later of (i) six (6) months after the date of (A) the Original Loan Agreement with respect to a Release Property owned by one of the Original Borrowers or the Santa Monica Owner, and (B) this Agreement with respect to a Release Property owned by one of the Additional Borrowers, or (ii) six (6) months after the completion of the most recent Partial Release or Substitution (as defined below), and such written request must be received no later than twelve (12) months prior to the Maturity Date;

(c) Each Release Property shall consist of an Individual Property, and each Partial Release shall involve no more than one (1) Individual Property;

(d) For each Release Property, the applicable Borrower shall have paid to Lender the “Release Price”, which shall be equal to (i) one hundred ten percent (110%) of the then unpaid principal balance of the Allocated Loan Amount applicable to the Release Property (such amount shall herein be called the “Principal Payment Amount”), plus (ii) the applicable Prepayment Premium (based on the Principal Payment Amount and calculated in accordance with the provisions set forth in Section 1.06 of this Agreement), plus (iii) all accrued interest with respect to the Individual Loan applicable to the Release Property and all accrued and unpaid charges with respect to such Individual Loan;

(e) The Principal Payment Amount shall be applied to pay in full the principal balance due with respect to the Individual Loan applicable to the Release Property, and Lender, in its sole discretion, shall apply the portion of the Principal Payment Amount which is in excess of the then outstanding principal balance of the Individual Loan applicable to the Release Property to one or more of the other Individual Loans applicable to the other Individual Properties;

(f) Lender shall have determined that, following the Partial Release, the Debt Service Coverage Ratio (defined below) calculated with respect to the remainder of the Property (excluding the Release Property) shall be at least equal to the greater of (i) 1.90 to 1.00 or (ii) the Debt Service Coverage Ratio for the Loan immediately prior to the proposed Partial Release (including the Release Property). In the event that the Debt Service Coverage Ratio calculated with respect to the remainder of the Property (excluding the Release Property) is less than the required level, then Borrowers shall have the right, subject to payment of the applicable Prepayment Premium, to pay Lender the amount necessary to increase the Debt Service Coverage Ratio calculated with respect to the remainder of the Property (excluding the Release Property) to the required level;

(g) Lender shall have determined that following the Partial Release, the Loan to Value Ratio calculated with respect to the remainder of the Property (excluding the Release Property) shall not exceed the lesser of (i) sixty percent (60%) or (ii) the Loan to Value Ratio of the Property (including the Release Property) immediately prior to the proposed Partial Release. In the event the Loan to Value Ratio with respect to the remainder of the Property (excluding the Release Property) exceeds the required level, then Borrowers shall have the right, subject to payment of the applicable Prepayment Premium, to pay Lender the amount necessary to reduce the Loan to Value Ratio calculated with respect to the remainder of the Property (excluding the Release Property) to the required level;

(h) At the time the applicable Borrower makes its written request to Lender for a Partial Release, such Borrower shall pay to Lender a non-refundable administrative fee of $25,000.00 (the “Release Administrative Fee”). The Release Administrative Fee shall be deemed earned by Lender upon its receipt by Lender and shall not be applied to the Principal Payment Amount, the Prepayment Premium, or any other amounts due under the Documents;

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and 706108866-706108870

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(i) Whether or not the Partial Release is actually consummated, the applicable Borrower shall pay to Lender all out-of-pocket costs and expenses actually incurred by Lender associated with the Partial Release, including, but not limited to, escrow, closing and recording charges and taxes, attorneys’ fees (including attorneys’ fees and expenses for Lender’s outside counsel), the cost of preparing and delivering releases, and re-conveyance documentation, modifications of the Documents, the cost of any title insurance endorsements that Lender may require, and any sums then due and payable under the Documents;

(j) Lender shall have determined that following the Partial Release, the value of the Individual Properties in any one (1) metropolitan area shall not exceed forty percent (40%) of the total value of the Individual Properties remaining in the Property;

(k) Lender shall have determined that following the Partial Release, the unpaid principal balance of the Loan shall be greater than sixty percent (60%) of the original principal amount of the Loan;

(l) The Mezzanine Loan (defined below) shall have been satisfied in full and all collateral therefor released; and

(m) Such other terms and conditions as Lender shall reasonably require in order to comply with regulatory or other legal requirements, or to effectuate the intent of the foregoing provisions, but which will not add additional economic burdens on Owner or Operator.

The term “Loan to Value Ratio” shall mean the ratio, as reasonably determined by Lender, of (i) the aggregate principal balance of all encumbrances against the Property to (ii) the fair market value of the Property. The term “Debt Service Coverage Ratio” shall mean the ratio, as reasonably determined by Lender, calculated by dividing (i) net operating income (“NOI”) by (ii) TADS (defined below). NOI is the gross annual income realized from operations of the Property for the applicable twelve (12) month period after subtracting all necessary and ordinary operating expenses (both fixed and variable) for that twelve (12) month period (assuming for expense purposes only that the Property has reached full economic occupancy and the expenses are stabilized, all as calculated by Lender in Lender’s discretion), including, without limitation, utilities, administrative expenses, cleaning, landscaping, security, repairs, and maintenance, ground rent payments, management fees (equal to five percent [5%]), reserves for replacements (equal to $500 per unit), real estate and other taxes, assessments and insurance, but excluding deduction for federal, state and other income taxes, debt service expense, depreciation or amortization of capital expenditures, and other similar non-cash items. NOI shall be determined on an accrual basis; provided, however, that ground rent payments shall be determined on a cash basis and based on actual cash payments of ground rent. Gross income shall be based on the cash actually received by Borrowers for the preceding twelve (12) months and projected income based on leases in place for the next succeeding twelve (12) months, and ordinary operating expenses shall not be prepaid. Documentation of NOI and expenses shall be certified by an officer of Borrowers with detail satisfactory to Lender and shall be subject to the approval of Lender. “TADS” shall mean the aggregate debt service payments for the applicable twelve (12) month period on the Loan and on all other indebtedness secured, or to be secured, by any part of the Property (excluding any balloon payments due at Maturity).

Notwithstanding anything to the contrary in this Section 5.02 and/or Section 5.03 below, Borrowers shall only have the right to a combined cumulative total (during the entire term of the Loan) of three (3) Partial Releases and Substitutions.

This Section 5.02 shall be personal to the original Borrowers under the Loan, and no transferee shall have any rights under this Section 5.02.

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

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Section 5.03 Substitution of Collateral. Upon prior written notice to Lender, a Borrower shall be entitled to obtain a release of an Individual Property owned by such Borrower (each, an “Exiting Property”) from the Lien of the Documents upon substituting therefor (a “Substitution”) another property (the “Substitute Property”) satisfactory to Lender (in its sole discretion, exercised in good faith) and upon satisfaction (as determined by Lender in its sole discretion) of each of the following terms and conditions:

(a) At the time of such Borrower’s request for a Substitution and at the time of the proposed Substitution, there shall exist no Event of Default, and there shall exist no condition or state of facts, which with the passage of time or the giving of notice, or both, would constitute an Event of Default under the Documents;

(b) The Mezzanine Loan shall have been satisfied in full and all collateral therefor released;

(c) A Substitution shall involve only one (1) Individual Property;

(d) The Substitution shall be in conjunction with the sale of the Exiting Property to a third party unrelated to any of the Borrowers, and Lender shall not be obligated to consummate the Substitution in the event the proposed sale of the Exiting Property shall not actually be consummated;

(e) Upon the applicable Borrower’s written request for a Substitution, such Borrower shall deliver to Lender a copy of the then current draft of the sale agreement pertaining to the sale of the Exiting Property, and as soon as available after such Borrower’s written request for a Substitution, such Borrower shall deliver to Lender a copy of the fully executed sale agreement (along with a marked copy of such fully executed sale agreement indicating all changes made after the draft of the sale agreement previously delivered to Lender), but in no event shall the delivery of such fully executed sale agreement and such marked sale agreement be later than five (5) business days after such Borrower’s execution of such sale agreement, and in all events such delivery shall be made at least thirty (30) days prior to the end of Lender’s period (as specified below) for processing such Substitution;

(f) Any written request by a Borrower to Lender for a Substitution may be made no sooner than the later of (i) six (6) months after the date of (A) the Original Loan Agreement with respect to an Exiting Property owned by one of the Original Borrowers or Santa Monica Owner, and (B) this Agreement with respect to an Exiting Property owned by one of the Additional Borrowers, or (ii) the completion of the most recent Partial Release or Substitution, and any such written request must be received no later than twelve (12) months prior to the Maturity Date;

(g) The proposed Substitute Property shall constitute the fee simple estate to such property, and no joint venture or partnership interests or interests in ground leases shall be permitted;

(h) The structure of the owner of the Substitute Property (the “Substitute Property Owner”) shall be identical to that of the entity that owned the Exiting Property, or if the Substitute Property is newly acquired and the Substitute Property Owner is not the same as the Borrower that owned the Exiting Property, then (A) the Substitute Property Owner’s parent (the “Parent”) must own one hundred percent (100%) of the Borrower that owned the Exiting Property and the Substitute Property Owner, (B) the Substitute Property Owner, the Borrower that owned the Exiting Property and the Parent shall enter into an agreement, in form and substance satisfactory to Lender, that shall provide that, among other things, the Parent would not have provided the funds for the purchase of the Substitute Property had Substitute Property Owner not agreed to assume the obligations under the Documents, (C) Lender shall be satisfied, in its sole discretion, that the assumption of the obligations under the Documents by the Substitute

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

49

Property Owner shall not render the Substitute Property Owner insolvent or leave the Substitute Property Owner with unreasonably small capital, (D) Lender shall receive a legal opinion, in form and substance satisfactory to Lender and from a law firm acceptable to Lender, that the assumption of the Loan by the Substitute Property Owner could not be considered to be a fraudulent conveyance under applicable federal bankruptcy law and state law, and (E) the Substitute Property Owner shall expressly assume all obligations under the Documents and shall execute any documents reasonably required by Lender, and all of these documents shall be satisfactory in form and substance to Lender, and a guarantor, acceptable to Lender, shall execute a guaranty and indemnities (pursuant to documents satisfactory in form and substance to Lender) with respect to all of the obligations under Sections 3.11, 3.12, 8.01, 8.02, 8.04 and 8.05 of this Agreement, the ERISA Indemnity (if applicable), and the Environmental Indemnity;

(i) At the time of any Substitution, the Substitute Property shall not be less than ninety percent (90%) occupied by third-party tenants in occupancy and paying rent, and free rent or other rental concessions shall have been extinguished except as may otherwise be approved in writing by Lender;

(j) [INTENTIONALLY OMITTED];

(k) Lender shall have received a physical condition report (conforming with Lender’s then-current guidelines and report requirements) of the Substitute Property from an engineer or architect chosen by Lender, which report shall be satisfactory in all respects to Lender (exercised in good faith). In addition, Lender shall have received an Environmental Site Assessment (conforming with Lender’s then current guidelines and report requirements) of the Substitute Property from an environmental consulting firm chosen by Lender, which Environmental Site Assessment shall be satisfactory in all respects to Lender (exercised in good faith). The cost of preparation of all such reports and all necessary inspections shall be paid by Borrower;

(l) The Substitute Property (including, without limitation, the location, the demographics of the market area, appearance, configuration, quality and age of and access to the Substitute Property) shall be satisfactory to Lender (exercised in good faith);

(m) The fair market value and NOI (as defined above) of the Substitute Property shall equal or exceed the then fair market value and NOI of the Exiting Property, all as determined by Lender (exercised in good faith);

(n) All conditions that Borrowers were obligated to meet and satisfy under the terms of the Loan application in connection with the closing of the Loan, or, if required by Lender, Lender’s then current closing and underwriting requirements, shall be satisfied regarding the Substitute Property, including without limitation, that (i) all Documents shall be satisfactory to Lender, (ii) Lender receives a satisfactory legal opinion from the applicable Borrower’s counsel, (iii) title to the Substitute Property shall be satisfactory in all respects to Lender (including, without limitation, evidence that Lender shall have a first and exclusive Lien on the fee simple interest in the Substitute Property), (iv) Lender shall receive a satisfactory survey and title insurance policy, (v) Lender receives satisfactory evidence that the Substitute Property complies with all applicable Laws, and (vi) Borrowers’ current financial condition shall be satisfactory to Lender;

(o) At the same time that the applicable Borrower delivers its written notice to Lender requesting a Substitution, such Borrower shall pay to Lender a non-refundable administrative fee of $25,000.00 (the “Substitution Administrative Fee”), and the Substitution Administrative Fee shall be deemed earned by Lender upon Lender’s receipt of such fee. At the closing of the Substitution, Borrower shall pay to Lender a non-refundable fee of one percent (1.0%) of the Allocated Loan Amount for the

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

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Exiting Property, but Lender shall credit against such fee the Substitution Administrative Fee previously paid by such Borrower to Lender. Neither the Substitution Administrative Fee nor the non-refundable fee paid at the closing of the Substitution shall be applied to the applicable Individual Loan or the outstanding principal balance due under the Loan;

(p) Whether or not the Substitution actually closes, Borrowers shall pay all out-of-pocket costs and expenses actually incurred by Lender associated with the Substitution, including but not limited to, title insurance and survey fees and expenses, recording charges and taxes, documentary stamp taxes, intangible taxes, attorneys’ fees (including attorneys’ fees and expenses for Lender’s outside counsel), fees of Lender’s architect and/or engineer, and fees related to the Environmental Report;

(q) The Substitute Property must be an independent assisted living or assisted living and dementia care property;

(r) Lender shall have determined that, after giving effect to the proposed Substitution (excluding the Exiting Property, but including the Substitute Property), the Loan to Value Ratio for the Property shall not exceed sixty percent (60%), and Lender shall have determined that, after giving effect to the proposed Substitution (excluding the Exiting Property, but including the Substitute Property), the Debt Service Coverage Ratio for the Property shall be at least 1.90 to 1.00. In the event that the Loan to Value Ratio of the Property (excluding the Exiting Property, but including the Substitute Property) exceeds the required level and/or the Debt Service Coverage Ratio of the Property (excluding the Exiting Property, but including the Substitute Property) is less than the required level, then Borrowers shall have the right, subject to the payment of the applicable Prepayment Premium, to pay Lender the amount necessary to reduce the Loan to Value Ratio and/or increase the Debt Service Coverage Ratio (as the case may be) of the Property (excluding the Exiting Property, but including the Substitute Property) to the required level(s);

(s) Lender shall have determined that, following the Substitution, the value of the Individual Properties in any one (1) metropolitan area shall not exceed forty percent (40%) of the total value of the Individual Properties remaining in the Property;

(t) Lender shall have determined that, following the Substitution, the Allocated Loan Amounts of all Individual Properties that comprised part of the Property as of the date of this Agreement and that would remain as part of the Property, shall be greater than sixty percent (60%) of the total original principal amount of the Loan;

(u) Lender’s decision to accept or reject any proposed Substitute Property shall be in Lender’s sole and absolute discretion, it being understood that, without limiting the foregoing, under no circumstances shall the Substitute Property qualify for a Substitution unless the value of the Substitute Property is, in Lender’s sole judgment, equal to or greater than one hundred percent (100%) of the value of the Exiting Property, as determined by Lender, and is at least equal to the Exiting Property in each of the following respects: (a) stability of cash flow, taking into consideration weighted average lease maturities; (b) tenant credit and quality and diversification; (c) building quality and diversification; and (d) location quality and diversification. Borrowers acknowledge that Lender may reject a property proposed as a Substitute Property for any reason or without giving a reason, and Borrowers assume such risk notwithstanding that they may spend substantial resources preparing the reports and other information required by Lender with respect to the Substitute Property;

(v) Lender determines in its sole discretion that the Substitution would not result in a violation of the ERISA provisions contained in Lender’s then current guidelines and report requirements, and Borrowers deliver such certifications and other documents as Lender may reasonably request in connection therewith;

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and 706108866-706108870

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(w) Lender is satisfied, and Borrowers shall deliver such assurances as may be reasonably requested by Lender (including a reaffirmation certification or other agreement) that any guaranty, indemnity or similar instrument delivered to Lender in connection with the Loan remains in full force and effect, notwithstanding and taking into consideration the Substitution; and

(x) The Substitute Property shall have the same unpaid principal balance allocated to such Substitute Property as the then existing unpaid principal balance allocated to the Exiting Property at the time of the closing of the Substitution.

Lender shall have at least sixty (60) days in which to process any request to effect a Substitution after receipt of (1) all materials and information necessary to evaluate such request and (2) the Substitution Administrative Fee.

Notwithstanding anything to the contrary in Section 5.02 above and/or this Section 5.03, Borrowers shall only have the right to a combined cumulative total (during the entire term of the Loan) of three (3) Partial Releases and Substitutions.

This Section 5.03 shall be personal to the original Borrowers under the Loan, and no transferee shall have any rights under this Section 5.03.

Section 5.04 One-Time Transfer. Notwithstanding Section 5.01, commencing twelve (12) months subsequent to the date of this Agreement and so long as there is no then existing Event of Default under the Documents (or event which with the passage of time or the giving of notice or both would be an Event of Default), Lender agrees, upon thirty (30) days’ prior written request, to consent to one transfer of the entire Property by the original Borrowers if:

(a) the proposed transferees of the Property are newly formed special purpose entities acceptable to Lender that are wholly owned and controlled by a person that (i) has total assets (in name or under management) in excess of $750,000,000 and (except with respect to a pension advisory firm or similar fiduciary) capital/statutory surplus or shareholder’s equity in excess of $350,000,000, (ii) in the judgment of Lender, has creditworthiness, reputation and experience in the ownership, operation, management, and leasing of similar properties, equal to or greater than that of Borrowers and Borrowers’ principals, and (iii) has been regularly engaged (directly or through affiliates) in the business of owning or operating comparable properties; it being understood, without limiting the foregoing, that the proposed transferees shall not be acceptable if (x) upon assumption of the Loan, the credit obligations of such transferees, its affiliates, or related entities shall exceed Lender’s individual or related borrower limits as established by Lender from time to time in its sole discretion, or (y) the proposed transferees are related to Lender or advised by Lender or any affiliate of Lender. In addition, the proposed transferees shall have, or will have upon the closing of the applicable transfer, all necessary licenses to own and operate each of the Individual Properties;

(b) at the time of transfer, the Loan to Value Ratio does not exceed sixty percent (60%);

(c) Borrower pays Lender a non-refundable servicing fee of $25,000 at the time of the request and an additional fee equal to one percent (1%) of the outstanding principal balance of the Loan at the time of the transfer less the amount of the non-refundable servicing fee paid to Lender;

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

52

(d) at Lender’s option, Lender’s title policy is endorsed to verify the first priority of the Documents at Borrowers’ expense;

(e) the Debt Service Coverage Ratio is at least 1.90 to 1.00 for the preceding twelve (12) month period;

(f) the Debt Yield (defined below) is at least eleven and twenty-five hundredths percent (11.25%) for the preceding twelve (12) month period;

(g) the transferees expressly assume all obligations under the Documents accruing from and after the date of the transfer and executes any documents reasonably required by Lender, and all of these documents are reasonably satisfactory in form and substance to Lender, and a guarantor, acceptable to Lender in Lender’s good faith discretion, executes and delivers a guaranty and indemnities (in form and substance reasonably satisfactory to Lender) with respect to all of the obligations contained in Sections 3.11, 3.12, 8.01, 8.02, 8.04 and 8.05 of this Agreement, the ERISA Indemnity (if applicable), and the Environmental Indemnity accruing from and after the date of transfer;

(h) Lender reasonably approves the form and content of all transfer documents and the transferees’ organizational documents, and Lender is furnished with a certified copy of the recorded transfer documents;

(i) the proposed transferees comply with and deliver the ERISA certification required under Section 3.11 of this Agreement and the Environmental Indemnity (and ERISA Indemnity, if applicable) of even date herewith;

(j) Borrowers shall provide a copy of (i) the purchase and sale agreement (and all amendments thereto) for the Property at the time of the transfer request or within five (5) days of execution thereof, (ii) all amendments to the purchase and sale agreement after delivery of said agreement to Lender, and (iii) a fully-executed closing statement upon closing of the transfer;

(k) The proposed transferees shall sign and deliver Lender’s then-current credit certification at the time of the request, which shall include a representation that the proposed transferees and all persons or entities holding any legal or beneficial interest whatsoever in the proposed transferees are not included in, owned by, controlled by, acting for or on behalf of, providing assistance, support, sponsorship, or services of any kind to, or otherwise associated with any of the persons or entities referred to or described in the OFAC Lists;

(l) Borrowers or the proposed transferees shall pay all reasonable out-of-pocket fees, costs, and expenses incurred by Lender in connection with the proposed transfer, including, without limitation, all reasonable legal fees and disbursements (for outside counsel), accounting, title insurance, documentary stamps taxes, intangible taxes, mortgage taxes, recording fees, and appraisal fees, whether or not the transfer is actually consummated;

(m) Lender shall be satisfied that, following any such transfer, the Property shall be managed by either Property Manager or a Qualified Manager (defined below). The term “Qualified Manager” shall mean a qualified and experienced property manager that has been approved by Lender and which, in the judgment of Lender, has financial capability and creditworthiness, reputation and experience in the operation, management and leasing of similar properties, equal to or greater than that of Property Manager (and which is not an Affiliate of any CHT Entity, and if reasonably requested by CHT REIT in order to satisfy applicable REIT qualification tests, is and at all times will be an “eligible independent contractor” as defined in Section 856(d) of the Revenue Code); and

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

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53

(n) The Mezzanine Loan shall have been satisfied in full and all collateral therefor released.

The term “Debt Yield” shall mean the aggregate NOI of the Property (as determined by Lender) divided by the original principal amount of the Loan.

Section 5.05 Permitted Transfers Without Fee. Notwithstanding and in addition to the other Permitted Transfers under Section 5.01 of this Agreement, the original Borrowers may engage in the transactions described below after at least fifteen (15) days’ prior written notice to Lender, provided that all of the following conditions are met: (a) there is no then existing Event of Default under the Documents (or event which with the passage of time or the giving of notice or both would be an Event of Default), and (b) payment to Lender by Borrowers or the proposed transferee of (i) all out-of-pocket costs and expenses incurred by Lender for the processing of said transfer, including a processing fee, and (ii) all other out-of-pocket costs and expenses (including reasonable attorneys’ fees and expenses for Lender’s outside counsel) involved in such proposed transfer and any modification of the Documents deemed necessary by Lender. Provided that all of the foregoing conditions are fulfilled with respect to each such transfer, (x) SSLI or its Affiliate shall be permitted to acquire the indirect ownership interests in any Borrower held by any CHT Entity, (y) the CHT Entities shall be permitted to acquire the indirect ownership interests in any Borrower held by any SSLI Entity, and (z) a third party shall be permitted to acquire up to forty-nine percent (49%) of the indirect ownership interests in any Borrower, provided that Lender receives satisfactory evidence of all of the following prior to any such transfer of any ownership interest in any Borrower:

(a) all terms and conditions of the Documents shall remain true and correct in all material respects, including without limitation all provisions relating to OFAC and ERISA;

(b) the Debt Yield is at least (i) ten and fifty hundredths percent (10.50%) for the preceding twelve (12) month period if SSLI acquires all ownership interests for itself without the participation by any other party, or (ii) eleven percent (11%) for the preceding twelve (12) month period if SSLI acquires all ownership interests for itself with the participation of any other party (which party shall not hold more than forty-nine percent (49%) of the equity in the acquiring entity and SSLI shall maintain control of the acquiring entity);

(c) in the event that SSLI acquires ownership interests with the participation of another party as aforesaid, then at the time of the transfer, the Loan to Value Ratio of the Property does not exceed sixty-five percent (65%);

(d) the acquiring party or its parent (SSLI or CHT REIT, as the case may be) shall be required to meet the following financial covenants: (i) minimum liquidity of $20,000,000, and (ii) minimum market capitalization of $200,000,000;

(e) following any transfer described in this Section 5.05, Property Manager or a Qualified Manager shall manage the day-to-day operations of the Property;

(f) At all times (i) either a CHT Entity or an SSLI Entity holds at least fifty-one percent (51%) of the indirect ownership interests in each Borrower and (ii) either a CHT Entity or an SSLI Entity shall control each Borrower and the operations of each Individual Property; and

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(g) In the event of any transfer of ownership interests involving an entity that is not a CHT Entity or an SSLI Entity, then within sixty (60) days following any such transfer, the applicable Borrower shall deliver to Lender (i) a statement showing the current ownership of such Borrower, (ii) a certification from such Borrower that it remains in compliance with the ERISA provisions of the Documents, and (iii) a certification from such Borrower that it remains in compliance with the representations, warranties and covenants set forth in the Documents. Without limiting the provisions of the preceding sentence, a Borrower and the transferee of the ownership interests in such Borrower being transferred shall be deemed to have made in favor of Lender, as of the date of the applicable transfer, the certification described in clauses (i), (ii) and (iii) above as a result of the transfer of the applicable ownership interests in such Borrower and the acceptance thereof.

Lender shall release SSLII and its Affiliates from any and all liabilities that SSLII and its Affiliates may have under any guaranty or other document entered into in connection with the Loan at such time that SSLII and its Affiliates no longer have any direct or indirect ownership interest in any Borrower as a result of a Permitted Transfer, to the extent accruing on or after the date of such transfer. In addition, Lender shall release CHT REIT and its Affiliates from any and all liabilities that CHT REIT and its Affiliates may have under any guaranty or other document entered into in connection with the Loan at such time that CHT REIT and its Affiliates no longer have any direct or indirect ownership interest in any Borrower as a result of a Permitted Transfer, to the extent accruing on or after the date of such transfer.

Section 5.06 Merger of SSLI or Divestiture by SSLI. Notwithstanding anything to the contrary in Section 5.01 of this Agreement, if no Event of Default (or event which with the passage of time or the giving of notice or both would be an Event of Default) has occurred and is continuing, Lender agrees that, upon thirty (30) days prior written request of Borrowers, Lender shall consent to (i) the merger of SSLI and another entity (an “SSLI Merger”) or (ii) the acquisition by a third party of all of the direct or indirect ownership interests in all of the Borrowers as part of a transaction in which such third party is acquiring directly or indirectly all or substantially all of the real estate assets owned directly or indirectly by SSLI as of the date of such acquisition and Property Manager remains a Qualified Manager and continues as a going concern (an “SSLI Real Estate Divestiture”), if:

(a) The proposed transferee (as used herein, such term includes the surviving party from an SSLI Merger other than SSLI [if SSLI is the surviving party no such consent shall be required] or the party acquiring all of the direct or indirect ownership interests in all of the Borrowers as part of the SSLI Real Estate Divestiture Transaction) is a United States entity and is a person which, in the judgment of Lender, has (i) the financial capability, creditworthiness and operational expertise necessary to own and operate a portfolio of properties of the size and complexity that the proposed transferee would own immediately following the consummation of the proposed merger; provided, however, in all events any such entity must (A) have total assets (in name or under management) of at least $750,000,000 and (B) except with respect to a pension advisory firm or similar fiduciary, either (y) have capital/statutory surplus or shareholder’s equity of at least $350,000,000 or (z) have common stock with a fair market value of at least $350,000,000 (which may include up to $50,000,000 of long term convertible and preferred stock), (ii) a reputation in real estate ownership that is comparable to the Borrowers and Borrowers’ principals, and (iii) has experience in the ownership, operation, management (either directly or through a Qualified Manager), and leasing (either directly or through a Qualified Manager) of similar properties, equal to or greater than Borrowers and Borrowers’ principals, it being understood, without limiting the foregoing, that the proposed transferee shall not be acceptable if (y) upon assumption of the Loan, such transferee’s, its affiliates’, or related entities’ credit obligations shall exceed Lender’s individual or related borrower limits as established by Lender from time to time in its sole discretion or (z) the proposed transferee is related to Lender or advised by Lender or any affiliate of Lender;

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and 706108866-706108870

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Amended and Restated Loan Agreement

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(b) Borrowers pay Lender a non-refundable servicing fee of $25,000.00 at the time of the request, and (i) with respect to an SSLI Merger, an additional fee equal to 0.25% of the outstanding principal balance of the Loan (less the $25,000.00 paid at the time of the request) at the time of the SSLI Merger, and (ii) with respect to an SSLI Real Estate Divestiture, an additional fee equal to 0.50% of the outstanding principal balance of the Loan (less the $25,000.00 paid at the time of the request) at the time of the SSLI Real Estate Divestiture;

(c) At Lender’s option (if required by Lender in its reasonable discretion), Lender’s title policy is endorsed to verify the first priority lien of the Instruments at Borrowers’ expense (to bring forward the effective date thereof and set forth the current schedule of subordinate matters with respect to title; provided, however, that if any element of such endorsement shall require payment of a full title insurance premium, Lender agrees to accept a title company certification or title report in lieu thereof);

(d) The transferee expressly assumes all obligations applicable to the SSLI Entities and, in the case of an SSLI Real Estate Divestiture, the CHT Entities under the Documents and executes any documents reasonably required by Lender, and all of these documents are satisfactory in form and substance to Lender, in Lender’s reasonable discretion, and a guarantor, reasonably acceptable to Lender, executes guaranties and indemnities (pursuant to documents satisfactory in form and substance to Lender) with respect to all of the obligations under Sections 3.11, 3.12, 8.01, 8.02, 8.04 and 8.05 of this Agreement, the ERISA Indemnity (if applicable), and the Environmental Indemnity;

(e) Borrowers shall deliver to Lender copies of all transfer documents and merger documents (to the extent Borrowers are permitted by law to reveal such documents);

(f) The transferee complies with the ERISA provisions of the Documents and delivers such ERISA certifications and representations as Lender shall require in order to demonstrate compliance with the ERISA provisions of the Documents;

(g) The transferee provides representations and warranties satisfactory to Lender regarding the Anti-Terrorism Regulations;

(h) In the event that SSLI was the holder of all of the direct or indirect ownership interests in any Borrower as of the proposed closing of the SSLI Merger or in the event of a SSLI Real Estate Divestiture, then Lender’s consent shall be conditioned upon confirmation that a Debt Yield of at least ten and fifty-hundredths percent (10.50%) was in existence for the immediately preceding twelve (12) month period. In the event the Debt Yield is below the required level, Borrowers shall have the right, subject to payment of the Prepayment Premium calculated in accordance with the provisions set forth in Section 1.06 of this Agreement, to pay Lender the amount necessary to increase the Debt Yield to the required level;

(i) Following any such SSLI Merger or SSLI Real Estate Divestiture, Property Manager or another Qualified Manager shall continue to manage day-to-day operations at the Property; and

(j) Borrowers or the transferee pays all reasonable fees, costs and expenses incurred by Lender in connection with the proposed transfer, including without limitation, all legal (for both outside counsel and Lender’s staff attorneys), accounting, title insurance, documentary stamps taxes, intangibles taxes, mortgage taxes, recording fees, and appraisal fees, whether or not the merger is actually consummated.

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and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

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Section 5.07 Permitted Mezzanine Loan. Subject to the terms of that certain Intercreditor Agreement dated as of the date hereof (the “Mezzanine ICA”) between Lender and Mezzanine Lender (defined below), Lender has consented to one and only one secondary loan to CHT SL IV Holding, LLC, a wholly owned subsidiary of CHT REIT (“Mezzanine Borrower”) in the amount of $40,000,000.00 (the “Mezzanine Loan”) for a term ending not more than three (3) years after the date of this Agreement and without any re-borrowings being permitted under such Mezzanine Loan, secured by a pledge of Mezzanine Borrower’s ownership interests in CHTSun (the “Mezzanine Collateral”), and thus Mezzanine Borrower’s indirect interests in Borrowers, provided that (i) such Mezzanine Loan does not create any lien or encumbrance on the Property or any other assets of Borrowers, and (ii) immediately upon Mezzanine Lender’s or any purchaser at a UCC sale’s obtaining title to the Mezzanine Collateral following an event of default under the Mezzanine Loan, (A) SSLII (or any successor-in-interest to SSLII pursuant to a Permitted Transfer hereunder) shall become the managing member of CHTSun and CHT Sun will as of such date own one hundred percent (100%) of the indirect ownership interests in each Borrower, and (B) the Property shall be managed by either Property Manager or another Qualified Manager. The lender providing the Mezzanine Loan is RCG LV Debt IV Non-REIT Assets Holdings, LLC, a Delaware limited liability company (the “Mezzanine Lender”), a wholly owned and controlled subsidiary of RCG Longview Debt Fund IV, L.P. In connection with the Mezzanine Loan, Lender and Mezzanine Lender have entered into the Mezzanine ICA, and CHT REIT has executed and delivered to Lender that certain Mezzanine Loan Repayment Agreement and Security Agreement dated as of the date hereof.

ARTICLE VI - DEFAULTS AND REMEDIES

Section 6.01 Events of Default. The following shall be an “Event of Default”:

(a) if any Borrower fails to make any payment required under the Documents when due and such failure continues for five (5) days after written notice; provided, however, that if Lender gives two (2) notices of such a default within any twelve (12) month period, then Borrowers shall have no further right to any notice of such a default during that twelve (12) month period; provided, further, however, Borrowers shall have no right to any such notice upon the Maturity Date;

(b) except for defaults listed in the other subsections of this Section 6.01, if any Borrower fails to perform or comply with any other provision contained in the Documents (or if any Property Manager fails to perform or comply with any provision contained in the Documents with respect to which any Borrower has agreed to require such Property Manager to perform or comply) that is capable of cure by the payment of money and the default is not cured within fifteen (15) days after Lender’s providing written notice thereof; provided, however, that if Lender gives two (2) notices of such a default within any twelve (12) month period, then Borrowers shall have no further right to any notice of such a default during that twelve (12) month period;

(c) except for defaults listed in the other subsections of this Section 6.01, if any Borrower fails to perform or comply with any other provision contained in the Documents (or if any Property Manager fails to perform or comply with any provision contained in the Documents with respect to which any Borrower has agreed to require such Property Manager to perform or comply) and the default is not cured within thirty (30) days after Lender’s providing written notice thereof (the “Grace Period”); provided, however, that Lender may extend the Grace Period up to an additional ninety (90) days (for a total of one hundred twenty (120) days from the date of Lender’s initial written notice) if (i) such Borrower immediately commences and diligently pursues the cure of such default and delivers (within the Grace Period) to Lender a written request for more time and (ii) Lender determines in good faith that (A) such default cannot be cured within the Grace Period but can be cured within one hundred twenty

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(120) days from the date of Lender’s initial written notice, (B) no Lien or security interest created by the Documents will be impaired prior to completion of such cure, and (C) Lender’s immediate exercise of any remedies provided under the Documents or by law is not necessary for the protection or preservation of the Property or Lender’s security interest;

(d) if any representation made (i) in connection with the Loan or any of the Pool Obligations, or (ii) in the Loan application or Documents shall be false or misleading as of the date made in any material respect, with such representation being deemed false or misleading in a material respect if such representation would adversely affect the Loan, the Documents, the value of the Property, the utility of the Property, the operations of the Property, the financial condition of any Borrower or any guarantor of the Loan or the ability of any Borrower to perform its obligations under the Documents;

(e) if any default under Article V occurs;

(f) if any Borrower shall (i) become insolvent, (ii) make a transfer in fraud of creditors, (iii) make an assignment for the benefit of its creditors, (iv) not be able to pay its debts as such debts become due, or (v) admit in writing its inability to pay its debts as they become due;

(g) if any bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding, or any other proceedings for the relief of debtors, is instituted by or against any Borrower, and, if instituted against any Borrower, is allowed, consented to, or not dismissed within the earlier to occur of (i) ninety (90) days after such institution or (ii) the filing of an order for relief;

(h) if any of the events in Section 6.01(f) or Section 6.01(g) shall occur with respect to any (i) managing member of any Borrower (if Borrower is a limited liability company), (ii) general partner of any Borrower (if Borrower is a partnership), or (iii) guarantor of payment and/or performance of any of the Pool Obligations;

(i) if any Individual Property shall be taken, attached, or sequestered on execution or other process of law in any action against any Borrower (other than in connection with a Taking);

(j) if any default occurs under any of the Recourse Documents and such default is not cured within any applicable grace or cure period in the applicable Recourse Document;

(k) if any Borrower shall fail at any time to obtain, maintain, renew, or keep in force the insurance policies required by Section 3.06 within ten (10) days after written notice (or cause Property Manager to do so);

(l) if any Borrower shall be in material default (beyond the expiration of any applicable notice and cure period) under any other mortgage, deed of trust, deed to secure debt or security agreement covering any part of the Property, whether it be superior or junior in Lien to any of the Instruments;

(m) if any claim of priority (except based upon an applicable Permitted Encumbrance) to the Documents by title, Lien, or otherwise shall be upheld by any court of competent jurisdiction or shall be consented to by any Borrower;

(n) (i) the consummation by any Borrower of any transaction which would cause (A) any of the Individual Loans or any exercise of Lender’s rights under any of the Documents to constitute a non-exempt prohibited transaction under ERISA or (B) a violation of a state statute regulating governmental plans; (ii) the failure of any representation in Section 3.11 to be true and correct in all respects; or (iii) the

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

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Amended and Restated Loan Agreement

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failure of any Borrower to provide Lender with the written certifications required by Section 3.11, unless such default is cured within the lesser of (x) fifteen (15) days after written notice of such default to Borrower or (y) the shortest cure period, if any, provided for under any Laws applicable to such matters (including, without limitation, ERISA);

(o) (i) the consummation by any Borrower of any transaction which would cause an OFAC Violation; (ii) the failure of any representation in Section 2.09 to be true and correct in all respects; or (iii) the failure of any Borrower to comply with the provisions of Section 3.20, unless such default is cured within the lesser of (A) fifteen (15) days after written notice of such default to any Borrower or (B) the shortest cure period, if any, provided for under any Laws applicable to such matters (including, without limitation, the Anti-Terrorism Regulations);

(p) if any Borrower shall not allow access to any Individual Property in accordance with the provisions of Section 3.12(c) and/or Section 3.14, as applicable, within ten (10) days after written notice;

(q) [INTENTIONALLY OMITTED];

(r) any failure by any Borrower or any Property Manager to comply (or cause compliance) with the provisions of Sections 6.04 or 11.02 of this Agreement, including but not limited to the loss of any license (any provisional Healthcare Permit shall be deemed an acceptable Healthcare Permit for purposes of this provision as long as the operations of the applicable Individual Property are not impacted in any material manner) or other legal authority for the operation of an Individual Property as a Senior Living Facility, unless cured within one hundred twenty (120) days of such failure or loss, if susceptible to cure;

(s) any failure by any Borrower or any Property Manager to correct (or cause to be corrected), within the earlier of (i) the time deadlines set by any federal, state or local licensing agency (as the same may be extended by such agency) or (ii) one hundred twenty (120) days if no deadline is set by such agency, any deficiency that justifies any action by such agency with respect to an Individual Property that is likely to have a material adverse effect on the income and operation of such Individual Property or on Borrower’s interest in such Individual Property, including, without limitation, a termination, revocation or suspension of any applicable license (any provisional Healthcare Permit shall be deemed an acceptable Healthcare Permit for purposes of this provision as long as the operations of the applicable Individual Property are not impacted in any material manner), registration, permit, certificate, authorization or approval necessary for the operation of the Individual Property as a Senior Living Facility (whether held by Borrower or Property Manager) unless such deficiency is a direct and proximate result of Lender’s willful misconduct or gross negligence;

(t) if, without the prior written consent of Lender, any Borrower or any Property Manager ceases to operate any Individual Property as a Senior Living Facility (other than a temporary cessation of operations during any restoration period following a Taking, a casualty event or any other force majeure event so long as Borrower is making diligent efforts to resume operations in an expeditious manner);

(u) the occurrence of any material default by any Operator under any Management Agreement which is not waived or cured within applicable notice and cure periods thereunder;

(v) if, without the prior written consent of Lender (which shall not be unreasonably withheld by Lender) in contravention of Section 11.02(d) of this Agreement, there occurs any material amendment, modification or termination of any Management Agreement; or

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and 706108866-706108870

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(w) if CHTSun fails to comply with any of the provisions of Article XII of this Agreement and such failure to comply is not cured within thirty (30) days after Lender’s providing written notice thereof.

Section 6.02 Remedies. If an Event of Default occurs, then Lender or any person designated by Lender may (but shall not be obligated to) take any action (separately, concurrently, cumulatively, and at any time and in any order) permitted under any Laws, without notice, demand, presentment, or protest (all of which are hereby waived), to protect and enforce Lender’s rights under the Documents or Laws including the actions set forth in Section 3.02 of each of the Instruments and the Cross Collateral Mortgages.

Section 6.03 Expenses. All Costs, expenses, allocated or accrued fees, or other amounts paid or incurred by Lender in the exercise of its rights under the Documents, together with interest thereon at the applicable interest rate specified in Article I, which shall be the Default Rate unless prohibited by Laws, shall be (a) part of the Pool Obligations, (b) secured by the Documents, and (c) allowed and included as part of the Pool Obligations in any foreclosure, decree for sale, power of sale, or other judgment or decree enforcing Lender’s rights under the Documents.

Section 6.04 Agreement to Cooperate in Orderly Transition. Upon the acceleration of the Loan following the occurrence of an Event of Default under the Documents, each Borrower shall (i) upon request from Lender and to the extent permitted by applicable Laws, (A) consent to the immediate appointment of a receiver for the benefit of its Individual Property (which shall expressly include an appointment of a receiver under the applicable Operating Lease such that the receiver shall absolutely control the Operator’s interest under each Operating Lease), and/or (B) cause Lender to be appointed as attorney-in-fact for each Borrower in dealing with the applicable governmental or quasi-governmental authorities with respect to the Healthcare Permits and any alleged violations of the provisions of Article XI of this Agreement, and (ii) fully cooperate (and shall cause any licensed operator and/or manager of its Individual Property to cooperate) with Lender and any receiver as may be appointed by a court, in (A) performing all necessary services required under any operating agreement or applicable licensing or regulatory requirements applicable to its Individual Property and the Operating Lease or to its operation as a Senior Living Facility, subject to payment by Lender to Property Manager of the then current fee (not to exceed five percent (5%) of Management Gross Revenues) under each of the Management Agreements, and (B) arranging for an orderly transition to a replacement licensed operator, manager or provider of such necessary services for the operation of its Individual Property as a Senior Living Facility, including, without limitation, cooperating in the transfer of any existing licenses, permits, certificates, or contracts and application for any new licenses, permits, certificates, or contracts in accordance with all applicable Laws. Notwithstanding anything to the contrary in this Section 6.04 or any of the Documents, no Operating Lease may be terminated by Lender or any successor-in-interest to Lender until such time as Lender or such successor-in-interest to Lender takes possession of the Individual Property which is the subject of the applicable Operating Lease through foreclosure or deed in lieu of foreclosure; provided, however, that the applicable Operating Lease shall automatically terminate, without any cost or liability, upon the sale of the applicable Individual Property by a receiver.

ARTICLE VII - SECURITY AGREEMENT

Section 7.01 Security Agreement. This Agreement constitutes a “security agreement” within the meaning of the U.C.C. The Property includes real and personal property and all tangible and intangible rights and interest of Borrowers in the Property. Each Borrower grants to Lender, as security for its Obligations, a security interest in all of its Personal Property to the fullest extent that the Personal Property may be subject to the U.C.C. Each Borrower authorizes Lender to file any financing or continuation statements and amendments thereto relating to its Personal Property without the signature of such Borrower if permitted by Laws.

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

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ARTICLE VIII - LIMITATION ON PERSONAL LIABILITY AND INDEMNITIES

Section 8.01 Limited Recourse Liability. Except to the extent set forth in this Agreement and in the Recourse Liabilities Guaranties executed on the same date of this Agreement by the Recourse Parties (as defined below) other than Borrowers, none of (i) Borrowers or any partners or members of Borrowers, (ii) CHT SL IV Holding, LLC, (iii) SSLII, (iv) SSLI, or (v) CHT REIT (individually and collectively, the “Exculpated Parties”) shall have any personal liability for the Loan or the Pool Obligations. Notwithstanding the preceding sentence, Lender may bring a foreclosure action or other appropriate action to enforce the Documents or realize upon and protect the Property (including, without limitation, naming the Exculpated Parties in the actions) and IN ADDITION BORROWERS, CHT REIT AND SSLII (SINGULARLY OR COLLECTIVELY, THE “RECOURSE PARTIES”) SHALL HAVE JOINT AND SEVERAL PERSONAL LIABILITY FOR:

(a) any amounts accrued and/or payable under the indemnities and guaranties contained in the Documents expressly relating to the provisions of Sections 8.04, 8.05, 8.06 and 8.07 of this Agreement, the Environmental Indemnities, the ERISA Indemnities and Executive Order 13224 (the “OFAC Indemnity”) in connection with any claim relating thereto; provided, however, that the Recourse Parties shall not have any liability under the OFAC Indemnity for any loss relating to Individual Beneficiaries or Individual Shareholders;

(b) the amount of any assessments and taxes (accrued and/or payable prior to the Transfer of Possession Date [as defined below]) with respect to any Individual Property, except to the extent of amounts (if any) deposited with Lender for payment thereof pursuant to the Documents. As used in this paragraph, the term “Transfer of Possession Date” shall mean, from and after the date on which the applicable Individual Property has been assessed for real estate tax purposes as one or more wholly independent tax lot(s), separate from any adjoining land or improvements and with no other land or improvements assessed and taxed together with such Individual Property and after the first to occur of: (i) the date on which Lender acquires actual possession or control of the applicable Individual Property, (ii) the date on which a receiver is appointed for the benefit of the applicable Individual Property, or (iii) the date on which the applicable Borrower gives Lender a notice unconditionally offering to convey the applicable Individual Property to Lender, together with (A) a special warranty deed, in customary form for the jurisdiction in which such Individual Property is located, duly signed and acknowledged by the applicable Borrower, which conveys the applicable Individual Property to Lender, (B) an amount in cash equal to any transfer or similar taxes payable in connection with such transfer, (C) any other customary documents, instruments or forms required for the transfer of title in the jurisdiction in which the applicable Individual Property is located, duly signed and acknowledged by the applicable Borrower, and (D) such owner’s affidavits and other certifications, duly signed and acknowledged by the applicable Borrower, as may be reasonably necessary for Lender to obtain an ALTA owner’s policy of title insurance for the applicable Individual Property;

(c) the amount of any security deposits, rents prepaid more than one (1) month in advance, or prepaid expenses of Tenants (whether paid directly or by means of any third-party payments) to the extent (i) not turned over to Lender upon foreclosure, sale (pursuant to power of sale), or conveyance in lieu thereof, or (ii) not turned over to a receiver or trustee for the applicable Individual Property after appointment;

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

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(d) the amount of any insurance proceeds or condemnation awards paid to any Borrower or any of its Affiliates or available to be paid by applicable insurance company to such Borrower or any of its Affiliates (in which insurance company is ready, willing and able to fund such proceeds or awards to such Borrower, subject to typical or reasonable requirements) with respect to any Individual Property and not turned over to Lender in compliance with the Documents or otherwise not used in compliance with Sections 3.07 and 3.08 of this Agreement;

(e) damages suffered or incurred by Lender as a result of any Borrower’s (i) entering into a new Lease in breach of the leasing restrictions set forth in Section 3.23 of this Agreement, (ii) entering into an amendment or termination of an existing Lease in breach of the leasing restrictions set forth in Section 3.23 of this Agreement, or (iii) accepting a termination, cancellation or surrender of an existing Lease in breach of the leasing restrictions set forth in Section 3.23 of this Agreement;

(f) damages suffered or incurred by Lender by reason of any intentional physical waste of any Individual Property resulting from any act or omission by any of the Recourse Parties (but, with respect to a Tenant, only to the extent the Recourse Parties were not enforcing their rights under the applicable Tenant’s lease);

(g) the amount of any rents or other income from any Individual Property received by any of the Exculpated Parties after an Event of Default under the Documents and not otherwise applied to the indebtedness under the Documents or to the current (not deferred or capital) operating expenses of the applicable Individual Property; PROVIDED, HOWEVER, THAT THE RECOURSE PARTIES SHALL HAVE PERSONAL LIABILITY for amounts paid as expenses to a person or entity related to or affiliated with any of the Exculpated Parties after an Event of Default except for (A) reasonable salaries for on-site employees, (B) a reasonable allocation of the salaries of off-site employees for accounting and management, and (C) management fees (not to exceed five percent (5%) of Management Gross Revenues) for services rendered pursuant to a property management agreement approved by Lender,, plus out-of-pocket expenses of Borrowers’ management company relating to the applicable Individual Property, but in no event shall such expenses include any profit or be greater than prevailing market rates for any such services;

(h) [INTENTIONALLY OMITTED];

(i) [INTENTIONALLY OMITTED];

(j) the amount of (i) any security deposit under any Lease cashed or applied by, or on behalf of, any of the Exculpated Parties (a “Security Deposit”), (ii) any termination fee, cancellation fee or any other fee under a Lease (a “Termination Fee”) received by, or on behalf of, any of the Exculpated Parties, in each case (x) in connection with any lease termination, cancellation, surrender or expiration of a Lease within one hundred twenty (120) days prior to or after an Event of Default under the Documents, (y) which is greater than one (1) month’s base rent payable under the Lease to which the Security Deposit and/or the Termination Fee applies, and (z) which is not paid to Lender (or an escrow agent selected by Lender) to be disbursed for the payment of Lender approved (1) tenant improvements and/or (2) market leasing commissions;

(k) following an Event of Default under the Documents which is not cured within any applicable grace period, all reasonable out-of-pocket attorneys’ fees and other reasonable expenses incurred by Lender in enforcing the Documents if any of the Recourse Parties contests, delays, or otherwise hinders or opposes (including, without limitation, the filing of a bankruptcy by any of the Recourse Parties) any of Lender’s enforcement actions; provided, however, that if in such action the Recourse Parties prevail, the Recourse Parties shall not be required to reimburse Lender for such attorneys’ fees, allocated costs and other expenses;

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(l) damages suffered or incurred by Lender as a result of any Borrower’s failure to pay all insurance premiums and maintain all insurance required under the Documents, except to the extent of amounts (if any) deposited with Lender for payment thereof pursuant to the Documents;

(m) damages suffered or incurred by Lender as a result of any Borrower’s breach or violation of Sections 2.10, 3.21 and/or 3.22 of this Agreement or CHTSun’s breach or violation of Sections 12.01, 12.02 and/or 12.03 of this Agreement (it being understood that, in the absence of a violation of any other provisions of Sections 2.10, 3.21 or 3.22 of this Agreement, the Recourse Parties shall not have any recourse liability for any requirement in said sections which requires any Borrower to remain solvent after the date of this Agreement);

(n) damages suffered or incurred by Lender as a result of any material misrepresentation by any of the Recourse Parties in connection with the Property, the Documents, the Loan application or any other aspect of the Loan );

(o) damages suffered or incurred by Lender by reason of any loss, suspension or revocation of any Healthcare Permits due to any act or omission of any Borrower or any Recourse Party prior to the date that Lender has taken title to the Property or a receiver has been appointed, except to the extent that such loss, suspension or revocation of any such Healthcare Permits are a direct and proximate result of Lender’s willful misconduct or gross negligence in connection with such Healthcare Permits; provided, however, in the event that damages suffered or incurred by Lender by reason of such a loss, suspension or revocation occurs only with respect to a single Individual Property (a “Single Impacted Individual Property”), then there shall be no liability under this Section 8.01(o) (a “Single Impacted Individual Property Exception”); provided, further, however, in the event that the applicable Borrower has resolved the loss, suspension or revocation of any Healthcare Permits with respect to a Single Impacted Individual Property such that Lender does not suffer any damages whatsoever as a result of such loss, suspension or revocation of any Healthcare Permits, then the Recourse Parties shall have the right to another Single Impacted Individual Property Exception;

(p) damages suffered or incurred by Lender by reason of any failure to comply with the provisions of Section 6.04 of this Agreement; and

(q) damages suffered or incurred by Lender as a result of any Recourse Party (A) executing an amendment or termination of any Operating Lease (except as otherwise expressly permitted under the Documents), or (B) permitting any Borrower, pursuant to the terms of any Operating Lease, to execute an amendment or termination of such Operating Lease (except as otherwise expressly permitted under the Documents), in either such case without Lender’s prior written consent.

Section 8.02 Full Recourse Liability. Notwithstanding the provisions of Section 8.01 of this Agreement, the RECOURSE PARTIES SHALL HAVE JOINT AND SEVERAL PERSONAL LIABILITY for the Pool Obligations if:

(a) there shall be any breach or violation of Section 5.01 of this Agreement; or

(b) there shall be any fraud by any of the Recourse Parties in connection with the Property, the Documents, the Loan application, or any other aspect of the Loan; or

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(c) there shall be intentional material misrepresentation by any of the Exculpated Parties in inducing Lender to make the Loan to Borrowers on the terms and conditions contemplated by the Loan application or in the event that such intentional material misrepresentation has the effect of concealing an event or condition which would be an Event of Default under the Documents or, which with notice and/or the passage of time, or both, would constitute an Event of Default under the Documents;

(d) the Property or any part thereof shall become an asset in (i) a voluntary bankruptcy or insolvency proceeding or (ii) an involuntary bankruptcy or insolvency proceeding which is not dismissed within ninety (90) days after filing; provided, however, that this Section 8.02(d) shall not apply if (A) an involuntary bankruptcy is filed by Lender or (B) the involuntary filing was initiated by a third-party creditor independent of any collusive action, participation or collusive communication by (1) any Borrower, (2) any partner, shareholder or member of (I) any Borrower, or (II) any general partner or managing member of any Borrower, or (3) any of the Exculpated Parties; or

(e) any Instrument, any Cross Collateral Mortgage or any of the other Documents are deemed fraudulent conveyances or preferences or are otherwise deemed void pursuant to any principles limiting the rights of creditors, whether such claims, demands or assertions are made under the Bankruptcy Code (as defined in the Instrument) (as amended or replaced from time to time), including, without limitation, under Sections 544, 547 or 548 thereof, or under any applicable state fraudulent conveyance statutes or similar laws; or

(f) if any Individual Property is located in California and such Individual Property is determined to be “environmentally impaired” pursuant to the provisions of Section 726.5 of the California Code of Civil Procedure (in which event the provisions of this Section 8.02(f) shall apply only with respect to the Individual Loan applicable to the Individual Property that is located in California); or

(g) any Operating Lease or any part thereof shall become an asset in (i) a voluntary bankruptcy or insolvency proceeding or (ii) an involuntary bankruptcy or insolvency proceeding which is not dismissed within ninety (90) days after filing; provided, however, that this Section 8.02(g) shall not apply if (A) an involuntary bankruptcy is filed by Lender or (B) an involuntary filing was initiated by a third-party creditor independent of any collusive action, participation or collusive communication by (1) any Borrower, (2) any partner, shareholder or member of any Borrower or any Borrower’s general partner or managing member, or (3) any of the Recourse Parties.

Notwithstanding the foregoing, Lender acknowledges and agrees that the obligations and liability of CHT REIT and SSLII hereunder shall be limited to the property and assets of CHT REIT and SSLII only, and no other recourse shall be had to any of the property or assets of any other partners, members, trustees, beneficiaries, officers, directors, shareholders, employees or agents of CHT REIT and SSLII, or any of their respective partners, members, trustees, beneficiaries, officers, directors, shareholders, employees or agents. Notwithstanding anything contained herein to the contrary, Lender shall release SSLII from SSLII’s recourse obligations relating to any Individual Loan at such time as SSLII (or any of its Affiliates) no longer has any direct or indirect interests in any Borrower as a result of a Permitted Transfer, to the extent accruing on or after the date that SSLII (or any of its Affiliates) no longer has any direct or indirect interests in such Borrower. In addition, notwithstanding anything contained herein to the contrary, Lender shall release CHT REIT from CHT REIT’s recourse obligations relating to any Individual Loan at such time as CHT REIT (or any of its Affiliates) no longer has any direct or indirect interests in any Borrower as a result of a Permitted Transfer, to the extent accruing on or after the date that CHT REIT (or any of its Affiliates) no longer has any direct or indirect interests in such Borrower.

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Section 8.03 General Indemnity. Each Borrower agrees that while Lender has no liability to any person in tort or otherwise as lender and that Lender is not an owner or operator of any Individual Property, each Borrower shall, at its sole expense, protect, defend, release, indemnify and hold harmless (“indemnify”) the Indemnified Parties from any Losses (defined below) imposed on, incurred by, or asserted against the Indemnified Parties, directly or indirectly, arising out of or in connection with the Property, Loan, or Documents; provided, however, that (i) the foregoing indemnities shall not apply to any Losses caused by the gross negligence or willful misconduct of the Indemnified Parties and (ii) the foregoing indemnities shall not apply to any Losses that a Borrower can conclusively prove (A) were caused solely by actions, circumstances, conditions or events that occurred after the date Lender (or any purchaser at a foreclosure sale) actually acquired title to the Individual Property and (B) were not caused, contributed to, enhanced or exacerbated by the direct or indirect actions or inactions of such Borrower or any partners, officers, members, shareholders, employees or agents of such Borrower. The term “Losses” shall mean any claims, suits, liabilities (including strict liabilities), actions, proceedings, obligations, debts, damages, losses (including, without limitation, unrealized loss of value of the Individual Property), Costs, expenses, fines, penalties, charges, fees, judgments, awards, and amounts paid in settlement of whatever kind including reasonable attorneys’ fees and all other costs of defense. The term “Indemnified Parties” shall mean (a) Lender, (b) any prior owner or holder of any Note, (c) any existing or prior servicer of the Loan, (d) the officers, directors, shareholders, partners, members, employees and trustees of any of the foregoing, and (e) the heirs, legal representatives, successors and assigns of each of the foregoing.

Section 8.04 Transaction Taxes Indemnity. Each Borrower shall, at its sole expense, indemnify the Indemnified Parties from all Losses imposed upon, incurred by, or asserted against the Indemnified Parties or the Documents relating to Transaction Taxes.

Section 8.05 ERISA Indemnity. With respect to any Individual Property not located in the States of California, Nevada or Washington, each Borrower shall, at its sole expense, indemnify the Indemnified Parties against all Losses imposed upon, incurred by, or asserted against the Indemnified Parties (a) as a result of a Violation, (b) in the investigation, defense, and settlement of a Violation, (c) as a result of a breach of the representations in Section 3.11 or default thereunder, (d) in correcting any prohibited transaction or the sale of a prohibited loan, and (e) in obtaining any individual prohibited transaction exemption under ERISA that Lender determines may be required. With respect to any Individual Property located in the States of California, Nevada or Washington, each Borrower owning an Individual Property in such states and other persons, if any, have executed and delivered an ERISA Indemnity with respect to such Individual Property.

Section 8.06 Environmental Indemnity. Borrowers and other persons, if any, have executed and delivered an Environmental Indemnity with respect to each Individual Property.

Section 8.07 Duty to Defend, Costs and Expenses. Upon request, whether any Borrower’s obligation to indemnify Lender arises under Article VIII or in the Documents, each Borrower shall defend the Indemnified Parties (in the applicable Borrower’s or the Indemnified Parties’ names) by attorneys and other professionals reasonably approved by the Indemnified Parties; provided that, with respect to any insured matter, the Indemnified Parties shall be deemed to have approved attorneys and other professionals selected by the applicable insurance companies with respect to such matter absent an ethical conflict of interest or divergence of interests. Notwithstanding the foregoing, if any Indemnified Party notifies the applicable Borrower in writing that under applicable ethics rules an actual conflict of interest exists which precludes the attorney chosen by such Borrower from undertaking the defense of such Indemnified Party (it being understood that the joint representation of such Borrower and such Indemnified Party shall not necessarily constitute such a conflict of interest), such Indemnified Party may,

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in its sole and absolute discretion, engage its own attorneys and other professionals to defend or assist it with respect to such matters, and, at the option of the Indemnified Party, its attorneys shall control the resolution of any such claims or proceedings. Upon demand, each Borrower shall pay or, in the sole discretion of the Indemnified Parties, reimburse and/or indemnify the Indemnified Parties for all Costs imposed on, incurred by, or asserted against the Indemnified Parties by reason of any items set forth in this Article VIII and/or the enforcement or preservation of the Indemnified Parties’ rights under the Documents; provided, however, that the applicable Borrower shall not, with respect to any action brought against any Indemnified Party, be liable for the fees and expenses of more than one firm (in addition to any local counsel) for such Indemnified Party unless (i) the ethical constraints described in the preceding sentence require that any Indemnified Party engage separate counsel or (ii) the relevant Indemnified Party has reasonably concluded (in good faith and based upon advice of counsel) that there may be legal defenses available to it that are different from or in addition to those available to the other relevant Indemnified Parties. Any amount payable to the Indemnified Parties under this Section 8.07 shall (a) be deemed a demand obligation, (b) be part of the Pool Obligations, (c) bear interest from the date of demand at the Default Rate (unless prohibited by Law) until paid, if not paid on demand, and (d) be secured by the Documents.

Section 8.08 Recourse Obligation and Survival. Notwithstanding anything to the contrary in the Documents and in addition to the recourse obligations in Sections 8.01 and 8.02 above, the obligations of each Borrower under Sections 8.04, 8.05, 8.06 and 8.07 shall be a full recourse obligation of Borrowers, shall not be subject to any limitation on personal liability in the Documents, and shall survive (a) repayment of the Pool Obligations, (b) any termination, satisfaction, transfer of title by power of sale, assignment or foreclosure of any Instrument or any Cross Collateral Mortgage, (c) the acceptance by Lender (or any nominee) of a deed in lieu of foreclosure, (d) a plan of reorganization filed under the Bankruptcy Code, or (e) the exercise by Lender of any rights in the Documents. Borrowers’ obligations under this Article VIII shall not be affected by the absence or unavailability of insurance covering the same or by the failure or refusal by any insurance carrier to perform any obligation under any applicable insurance policy.

ARTICLE IX - ADDITIONAL PROVISIONS

Section 9.01 Usury Savings Clause. All agreements in the Documents are expressly limited so that in no event whatsoever shall the amount paid or agreed to be paid under the Documents for the use, forbearance, or detention of money exceed the highest lawful rate permitted by Laws. If, at the time of performance, fulfillment of any provision of the Documents shall involve transcending the limit of validity prescribed by Laws, then, ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity. If Lender shall ever receive as interest an amount which would exceed the highest lawful rate, then the receipt of such excess shall be deemed a mistake and (a) shall be canceled automatically or (b) if paid, such excess shall be (i) credited against the principal amount of the Obligations (without any Prepayment Premium or other premium) to the extent permitted by Laws or (ii) rebated to Borrower if it cannot be so credited under Laws. Furthermore, all sums paid or agreed to be paid under the Documents for the use, forbearance, or detention of money shall to the extent permitted by Laws be amortized, prorated, allocated, and spread throughout the full stated term of the Notes until payment in full so that the rate or amount of interest on account of the Obligations does not exceed the maximum lawful rate of interest from time to time in effect and applicable to the Obligations for so long as the Obligations are outstanding.

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Section 9.02 Notices. Any notice, request, demand, consent, approval, direction, agreement, or other communication (any “notice”) required or permitted under the Documents shall be in writing and shall be validly given if sent by a nationally-recognized courier that obtains receipts, delivered personally by a courier that obtains receipts, or mailed by United States certified mail (with return receipt requested and postage prepaid) addressed to the applicable person as follows:

If to any Borrower or CHTSun:	With a copy of notices sent to any Borrower or CHTSun to:
c/o CNL Healthcare Trust, Inc.
450 South Orange Avenue	Lowndes, Drosdick, Doster, Kantor & Reed, P.A.
Orlando, Florida 32801	215 North Eola Drive
Attention: Joseph T. Johnson, SVP and CFO;	Orlando, Florida 32801
and Holly J. Greer, SVP and General Counsel	Attention: Peter Luis Lopez, Esq.
and	and
c/o Sunrise Senior Living, Inc.	Willkie Farr & Gallagher LLP
7900 Westpark Drive, Suite T-900	787 Seventh Avenue
McLean, Virginia 22102	New York, New York 10019
Attention: Edward Burnett	Attention: Eugene A. Pinover, Esq.
	and
	c/o Sunrise Senior Living, Inc.
	7900 Westpark Drive, Suite T-900
	McLean, Virginia 22102
	Attention: General Counsel
If to Lender:	With a copy of notices sent to Lender to:
THE PRUDENTIAL INSURANCE COMPANY	THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA	OF AMERICA
c/o Prudential Asset Resources, Inc.	c/o Prudential Asset Resources, Inc.
2100 Ross Avenue, Suite 2500	2100 Ross Avenue, Suite 2500
Dallas, Texas 75201	Dallas, Texas 75201
Attention: Asset Management Department	Attention: Legal Department
Reference Loan Nos. 706108716-706108717 and	Reference Loan Nos. 706108716-706108717 and
706108866-706108870	706108866-706108870

Each notice shall be effective upon being so sent, delivered, or mailed, but the time period for response or action shall run from the date of receipt as shown on the delivery receipt. Refusal to accept delivery or the inability to deliver because of a changed address for which no notice was given shall be deemed receipt. Any party may periodically change its address for notice and specify up to two (2) additional addresses for copies by giving the other party at least ten (10) days’ prior notice.

Section 9.03 Sole Discretion of Lender. Except as otherwise expressly stated, whenever Lender’s judgment, consent, or approval is required or Lender shall have an option or election under the Documents, such judgment, the decision as to whether or not to consent to or approve the same, or the exercise of such option or election shall be in the sole and absolute discretion of Lender.

Section 9.04 Applicable Law and Submission to Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia and the applicable laws of the United States of America. Without limiting Lender’s right to bring any action or proceeding against

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any Borrower or such Borrower’s Individual Property relating to the Obligations (an “Action”) in the courts of other jurisdictions, each Borrower irrevocably (a) submits to the jurisdiction of any state or federal court in the applicable Property State, (b) agrees that any Action may be heard and determined in such court, and (c) waives, to the fullest extent permitted by Laws, the defense of an inconvenient forum to the maintenance of any Action in such jurisdiction.

Section 9.05 Construction of Provisions. The following rules of construction shall apply for all purposes of the Documents unless the context otherwise requires: (a) all references to numbered Articles or Sections or to lettered Exhibits are references to the Articles and Sections hereof and the Exhibits annexed to this Agreement and such Exhibits are incorporated into this Agreement as if fully set forth in the body of this Agreement; (b) all Article, Section, and Exhibit captions are used for convenience and reference only and in no way define, limit, or in any way affect this Agreement; (c) words of masculine, feminine, or neuter gender shall mean and include the correlative words of the other genders, and words importing the singular number shall mean and include the plural number, and vice versa; (d) no inference in favor of or against any party shall be drawn from the fact that such party has drafted any portion of this Agreement; (e) all obligations of Borrowers under the Documents shall be performed and satisfied by or on behalf of Borrowers at Borrowers’ sole expense; (f) the terms “include,” “including,” and similar terms shall be construed as if followed by the phrase “without being limited to”; (g) the terms “Property,” “Land,” “Improvements,” and “Personal Property” shall be construed as if followed by the phrase “or any part thereof”; (h) the term “Obligations” shall be construed as if followed by the phrase “or any other sums secured hereby, or any part thereof”; (i) the term “person” shall include natural persons, firms, partnerships, limited liability companies, trusts, corporations, governmental authorities or agencies, and any other public or private legal entities; (j) the term “provisions,” when used with respect hereto or to any other document or instrument, shall be construed as if preceded by the phrase “terms, covenants, agreements, requirements, and/or conditions”; (k) the term “lease” shall mean “tenancy, subtenancy, lease, sublease, or rental agreement,” the term “lessor” shall mean “landlord, sublandlord, lessor, and sublessor,” and the term “Tenants” or “lessee” shall mean “tenant, subtenant, lessee, and sublessee”; (l) the term “owned” shall mean “now owned or later acquired”; (m) the terms “any” and “all” shall mean “any or all”; (n) the term “on demand” or “upon demand” shall mean “within five (5) business days after written notice”; and (o) the term “day” or “days” shall mean a calendar day unless specifically referred to as a Business Day.

Section 9.06 Transfer of Loan.

(a) Lender may, at any time, (i) sell, transfer or assign the Documents and any servicing rights with respect thereto or (ii) grant participations therein or issue mortgage pass-through certificates or other securities evidencing a beneficial interest in a rated or unrated public offering or private placement (collectively, the “Securities”). Lender may forward to any purchaser, transferee, assignee, servicer, participant, or investor in such Securities (collectively, “Investors”), to any Rating Agency (defined below) rating such Securities and to any prospective Investor, all documents and information which Lender now has or may later acquire relating to the Obligations, any Borrower, Property Manager, any guarantor(s), any indemnitor(s), the Leases, and the Property, whether furnished by any Borrower, Property Manager, any guarantor(s), any indemnitor(s) or otherwise, as Lender determines advisable. Borrowers, any guarantor and any indemnitor agree to cooperate with Lender in connection with any transfer made or any Securities created pursuant to this Section 9.06 including the delivery of an estoppel certificate in accordance with Section 3.16 and such other documents as may be reasonably requested by Lender. Borrowers shall also furnish consent of any Borrower, Property Manager, any guarantor and any indemnitor in order to permit Lender to furnish such Investors or such prospective Investors or such Rating Agency with any and all information concerning the Property, the Leases, the financial condition of any Borrower, Property Manager, any guarantor and any indemnitor, as may be reasonably requested

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by Lender, any Investor, any prospective Investor or any Rating Agency and which may be complied with without undue expense. “Rating Agency” shall mean any one or more credit rating agencies approved by Lender.

(b) Each Borrower agrees that upon any assignment or transfer of the Documents by Lender to any third party, Lender shall have no obligations or liabilities under the Documents for the period from and after such assignment, such third party shall be substituted as the lender under the Documents for all purposes, and each Borrower shall look solely to such third party for the performance of any obligations under the Documents or with respect to the Loan which arise from and after the date of such assignment.

(c) Upon an assignment or other transfer of the Documents, Lender may, at its discretion, pay over the Deposits in its possession and deliver all other collateral mortgaged, granted, pledged or assigned pursuant to the Documents, or any part thereof, to the transferee who shall thereupon become vested with all the rights herein or under applicable law given to Lender with respect thereto, and Lender shall thereafter forever be relieved and fully discharged from any liability or responsibility in the matter; but Lender shall retain all rights hereby given to it with respect to any liabilities and the collateral not so transferred to any Borrower or to the assignee or transferee of the Documents. If the Deposits are transferred or assigned to the assignee or transferee, then each Borrower shall then look solely to such assignee or transferee with respect thereto. This provision shall apply to every transfer of the Deposits and any other collateral mortgaged, granted, pledged or assigned pursuant to the Documents, or any part thereof, to a new assignee or transferee. Subject to the provisions of Section 5.01, a transfer of title to the Land shall automatically transfer to the new owner the beneficial interest in the Deposits.

(d) Notwithstanding anything to the contrary contained in this Section 9.06, Borrowers shall not be required to pay any direct costs in connection with any transfer of the Loan by Lender pursuant to the terms of this Section 9.06 other than any out-of-pocket expenses in an amount equal to or less than Two Thousand Five Hundred Dollars ($2,500.00) per Individual Loan incurred by Borrowers in complying with any request for information made pursuant to this Section 9.06.

Section 9.07 Miscellaneous. If any provision of the Documents shall be held to be invalid, illegal, or unenforceable in any respect, this shall not affect any other provisions of the Documents and such provision shall be limited and construed as if it were not in the Documents. If title to the Property becomes vested in any person other than any Borrower, then Lender may, without notice to Borrowers, deal with such person regarding the Documents or the Obligations in the same manner as with any Borrower without in any way vitiating or discharging any Borrower’s liability under the Documents or being deemed to have consented to the vesting. If both the lessor’s and lessee’s interest under any Lease ever becomes vested in any one person, neither any of the Instruments or the Cross Collateral Mortgages nor the lien and security interest created by the Documents shall be destroyed or terminated by the application of the doctrine of merger, and Lender shall continue to have and enjoy all its rights and privileges as to each separate estate. Upon foreclosure (or transfer of title by power of sale) of any Instrument or any Cross Collateral Mortgage, none of the Leases shall be destroyed or terminated as a result of such foreclosure (or transfer of title by power of sale), by application of the doctrine of merger or as a matter of law, unless Lender takes all actions required by law to terminate the Leases as a result of foreclosure (or transfer of title by power of sale). Each Borrower’s covenants and agreements under the Documents shall run with the land and time is of the essence. Following an Event of Default (unless Lender has accepted cure of such Event of Default by specific written statement from Lender to Borrower acknowledging Lender’s acceptance of such cure, and Borrower specifically understands and agrees that Lender shall have no obligation whatsoever to accept the cure of any Event of Default), each Borrower appoints Lender as its attorney-in-fact, which appointment is irrevocable and shall be deemed to be coupled with an interest, with respect to the execution, acknowledgment, delivery, filing or recording for

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and in the name of any Borrower of any of the documents listed in Sections 3.04, 3.19, 4.01, and 6.02. The Documents cannot be amended, terminated or discharged except in a writing signed by the party against whom enforcement is sought. No waiver, release or other forbearance by Lender will be effective unless it is in a writing signed by Lender and then only to the extent expressly stated. The provisions of the Documents shall be binding upon each Borrower and its heirs, devisees, representatives, successors, and assigns including successors in interest to each Individual Property and inure to the benefit of Lender and its heirs, successors, substitutes, and assigns. Where two or more persons have executed the Documents, the obligations of such persons shall be joint and several, except to the extent the context clearly indicates otherwise. The Documents may be executed in any number of counterparts with the same effect as if all parties had executed the same document. All such counterparts shall be construed together and shall constitute one instrument, but in making proof hereof it shall only be necessary to produce one such counterpart. Upon receipt of an affidavit of an officer of Lender or Borrower, as the case may be, as to the loss, theft, destruction or mutilation of any Document which is not of public record, and, in the case of any mutilation, upon surrender and cancellation of the Document, any affected Borrower or Lender, as the case may be, will issue, in lieu thereof, a replacement Document, dated the date of the lost, stolen, destroyed or mutilated Document containing the same provisions. Any reviews, inspections, reports, approvals or similar items conducted, made or produced by or on behalf of Lender with respect to any Borrower, the Property or the Loan are for loan underwriting and servicing purposes only, and shall not constitute an acknowledgment, representation or warranty of the accuracy thereof, or an assumption of liability with respect to any Borrower, any Borrower’s contractors, architects, engineers, employees, agents or invitees, present or future tenants, occupants or owners of any Borrower’s Individual Property, or any other party.

Section 9.08 Entire Agreement. Except as provided in Section 3.17, (a) the Documents constitute the entire understanding and agreement between Borrowers and Lender with respect to the Loan and supersede all prior written or oral understandings and agreements with respect to the Loan including the Loan application and any Loan commitment, and (b) no Borrower is relying on any representations or warranties of Lender except as expressly set forth in the Documents. In the event of any conflict between the provisions of this Agreement and the provisions of the other Documents, the provisions of this Agreement shall control.

Section 9.09 WAIVER OF TRIAL BY JURY. EACH BORROWER AND LENDER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM FILED BY EITHER PARTY, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE DOCUMENTS, OR ANY ALLEGED ACTS OR OMISSIONS OF LENDER OR ANY BORROWER OR THEIR RESPECTIVE OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.

Section 9.10 Advertisement. Lender and any entity controlling, controlled by or under common control with Lender (collectively, the “Lender Affiliates”) shall obtain Borrower’s prior written approval prior to disclosing information concerning the Loan, Borrowers and the Property subsequent to the date of this Agreement, for advertising purposes, provided the information (including the form and content thereof) to be disclosed is approved by Borrowers prior to disclosure, such approval not to be unreasonably withheld. Upon obtaining Borrower’s written consent, loan information that may be disclosed by the Lender Affiliates includes the amount, term, and interest rate of the Loan, Property description, Property images, year built, type and location of the Property and name of Borrowers. Further, each Borrower agrees that it shall not place or conduct any advertising involving Lender’s involvement with the Loan without Lender’s prior written approval.

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Section 9.11 Performance of Covenants by Operators. Notwithstanding that covenants of Borrowers set forth in this Agreement may be binding on both Owners and Operators, it is understood and agreed that so long as the Operating Leases are in full force and effect, the full satisfaction and performance of any covenant that may be fully performed by either Owners or Operators (as the respective owner or operator of the Property) and is not a covenant that is personal to Owners or Operators, shall be deemed to be performance of the covenant by Borrowers hereunder.

ARTICLE X - ADDITIONAL SPECIAL PROVISIONS

Section 10.01 Cash Management. Not Applicable.

Section 10.02 Post-Closing Obligations. Attached hereto as Exhibit G is a description of certain items to be completed in connection with the Property. Borrowers hereby covenant and agree to complete such items within the time frames set forth in Exhibit G and to provide Lender with evidence reasonably satisfactory to Lender that such items have been completed following completion of each such item.

Section 10.03 Provisions Concerning Trustees Under Deeds of Trust. With respect to each of the Instruments that is a deed of trust, all references to “Lender” in Sections 3.04, 3.09, 3.19, 4.01, 4.02, 6.01(c), 8.03, and 9.07 of this Agreement shall be deemed modified, where appropriate in such context, to refer to Lender and/or Trustee.

Section 10.04 State Specific Environmental Provisions.

(a) Arizona.

(i) Section 3.12(a) of this Agreement is hereby amended to include the following within the defined terms “Environmental Law” and “Environmental Laws”: the Arizona Environmental Quality Act (Title 49, Arizona Revised Statutes) and all corresponding state laws and ordinances, the applicable provisions of the Arizona Administrative Code, and the regulations and guidelines promulgated under the foregoing.

(ii) Section 3.12(a) of this Agreement is hereby amended to include the following within the meaning of the defined term “Hazardous Materials”: any substance included within the definition of “hazardous waste” pursuant to the Arizona Environmental Quality Act or any other Environmental Law promulgated in the State of Arizona.

(b) California. With respect to any Individual Property located in the State of California, Section 3.12(a) of this Agreement is hereby amended by inserting the following words after the words “Resource Conservation and Recovery Act” at the end of the second sentence thereof: “and applicable provisions of the California Health and Safety Code and the California Water Code.”

(c) Louisiana.

(i) “Environmental Law” shall include, but shall not be limited to, the “Louisiana Environmental Quality Act”, La. R.S. 30: §§ 2001 et. seq. and its chapters, including the Louisiana Air Control Law (La. RS. 30:§§ 2051 - 2064), the Louisiana Water Control Law (La. R.S. 30:§§ 2071 - 2088), the Louisiana Solid Waste Management and Resource Recovery Law (La. R.S. 30:§§ 2151 - 2161), the Louisiana Hazardous Waste Control Law (La. R.S. 30:§§ 2171 - 2206), the Louisiana Inactive and Abandoned Hazardous Waste Site Law (La. R.S. 30: §§ 2221 - 2226), the Liability for Hazardous Substance Remedial Action Act (La. R.S. 30:§§ 2271 -

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2281), the Louisiana Hazardous Material Information Development, Preparedness, and Response Act (La. R.S. 30:§§ 2361 - 2379) and the Louisiana Oil Spill Prevention and Response Act (La. R.S. 30:§§ 2451 - 2496).

Section 10.05 Additional State-Specific Provisions.

(a) With respect to any Individual Property located in the State of California, this Agreement is amended as follows:

(i) Section 1.06 of this Agreement is hereby amended to insert the following additional paragraph at the end of Section 1.06:

“BORROWER HEREBY EXPRESSLY (A) WAIVES ANY RIGHTS IT MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION 2954.10 TO PREPAY THE NOTE, IN WHOLE OR IN PART, WITHOUT PENALTY, UPON ACCELERATION OF THE MATURITY DATE OF THE NOTE, AND (B) AGREES THAT IF, FOR ANY REASON, A PREPAYMENT OF ANY OR ALL OF THE NOTE IS MADE, UPON OR FOLLOWING ANY ACCELERATION OF THE MATURITY DATE OF THE NOTE BY LENDER ON ACCOUNT OF ANY DEFAULT BY BORROWER, THEN BORROWER SHALL BE OBLIGATED TO PAY, CONCURRENTLY THEREWITH, THE PREPAYMENT PREMIUM SPECIFIED IN THIS SECTION 1.06. BY INITIALING THIS PROVISION IN THE SPACE PROVIDED BELOW, BORROWER AGREES THAT LENDER’S AGREEMENT TO MAKE THE LOAN EVIDENCED BY THE NOTE AT THE INTEREST RATE AND FOR THE TERM SET FORTH IN SECTION 1.03 OF THIS AGREEMENT CONSTITUTES ADEQUATE CONSIDERATION, GIVEN INDIVIDUAL WEIGHT BY BORROWER FOR THIS WAIVER AND AGREEMENT.

Initials: Borrower /s/ JT

(b) With respect to any Individual Property located in the State of Arizona, this Agreement is amended as follows:

(i) Section 8.03 of this Agreement is hereby amended to provide that Borrowers’ indemnification obligations shall, to the extent permissible by applicable law, include any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs and expenses incurred as a result of Lender’s ordinary (but not gross) negligence.

(c) With respect to any Individual Property located in the State of Louisiana, this Agreement is amended as follows:

(i) Any and all references to the Uniform Commercial Code or U.C.C. shall also refer to and include the Louisiana Commercial Laws-Secured Transactions, Louisiana Revised Statutes 10:9-101, et. seq., and any and all provisions thereof corresponding to the Uniform Commercial Code.

(ii) In the event either the Metairie Note or the Siegen Note is placed in the hands of an attorney at law for collection, compromise or other action, or to institute legal proceedings to

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recover the amount thereof or any part thereof, in principal or interest, or to protect the interests of Lender, Borrower agrees to pay Lender’s reasonable attorneys’ fees in an amount not exceeding ten percent (10%) of the unpaid debt then owing under such note.

Section 10.06 Cross Default, Cross-Collateralization and Notice Provisions. Borrowers and Lender intend that each Individual Loan shall be cross-defaulted and cross-collateralized with every other Individual Loan. Accordingly, any default under any of the Documents shall constitute a default under all of the other Documents. The cross-collateralization shall arise by virtue of the Individual Loan Documents and the Cross Collateral Documents. Each Borrower has guaranteed the Obligations of every other Borrower pursuant to the Supplemental Guaranty, the performance of which is secured by the Lien of such Borrower’s Cross Collateral Mortgage and Cross Collateral Assignment of Leases. In the event of a default under any of the Documents, Borrowers hereby acknowledge and agree that: (A) Lender shall only be obligated to send one (1) notice of default to the parties listed in Section 9.02 of this Agreement, which notice shall, if such default relates only to a particular Individual Property, identity the Individual Property with respect to which such default exists; (B) said notice shall be deemed notice to all Borrowers under all of the Documents (including, without limitation, all of the Instruments); and (C) thereafter Lender shall have the right to exercise its rights and remedies for a default under any of the Documents after the expiration of any applicable cure period, if and only if a cure period is provided under the Documents.

ARTICLE XI - HEALTHCARE PROVISIONS

Section 11.01 Representations and Warranties of Borrowers.

(a) Definitions.

(i) “Affiliate” means, for the purposes of this Article XI, an affiliate of a person as defined in Rule 12b-2 promulgated under Section 12 of the Securities Exchange Act of 1934, but specifically excludes any shareholder of any publicly traded company holding an interest in any Borrower or any guarantors (or any holder of any such shareholder).

(ii) “CMS” means the federal Centers for Medicare and Medicaid Services, and any successor Governmental Authority (as defined below).

(iii) “CON” means any certificate of need or similar license which a Governmental Authority must determine that there is a need for a healthcare facility at a particular location or within a certain geographic region, or a need for a particular service or use of equipment at a particular healthcare facility.

(iv) “Governmental Authority” means any nation or government, any state or other political subdivision thereof, and any agency, department or person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any corporation or other person owned or controlled (through stock or capital ownership or otherwise) by any of the foregoing, whether domestic or foreign.

(v) “Healthcare Laws” means all laws and regulations applicable to the Property and relating to the operation of Senior Living Facilities, healthcare, patient healthcare information, patient abuse, the quality and adequacy of medical care, rate setting, equipment, personnel, operating policies, and fee splitting, including, without limitation, (a) all federal and state fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute (42 U.S.C. §1320a-7b(b)), the Stark Law (42 U.S.C.

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§1395nn), the civil False Claims Act (31 U.S.C. §3729 et seq.), (b) TRICARE, (c) HIPAA, (d) Medicare, (e) quality, safety and accreditation standards and requirements of all applicable state laws or regulatory bodies, (f) all laws, policies, procedures, requirements and regulations pursuant to which Healthcare Permits (as defined below) are issued, and (g) any and all other applicable health care laws, regulations, manual provisions, policies and administrative guidance, each of (a) through (g) as may be amended from time to time.

(vi) “Healthcare Permit” means a Permit that is related to the provision of adult residential services or the operation of the Individual Property as a Senior Living Facility required under any applicable Healthcare Laws for a Borrower to operate an Individual Property.

(vii) “HIPAA” means the Health Insurance Portability and Accountability Act of 1996, as the same may be amended, modified or supplemented from time to time, and any successor statute thereto, and any and all rules or regulations promulgated from time to time thereunder.

(viii) “HIPAA Compliant” shall mean that the applicable person is in material compliance with each of the applicable requirements of the so-called “Administrative Simplification” provisions of HIPAA, and is not and could not reasonably be expected to become the subject of any civil or criminal penalty, process claim, action or proceeding or any administrative or other regulatory review, survey, process or proceeding (other than routine surveys or reviews conducted by any government health plan or other accreditation entity) that could result in any of the foregoing or that could reasonably be expected to adversely affect such person’s business, operations, assets, properties or condition (financial or otherwise), in connection with any actual or potential violation by such person of the provisions of HIPAA.

(ix) “Medicaid” means the medical assistance programs administered by state agencies and approved by CMS pursuant to the terms of Title XIX of the Social Security Act, codified at 42 U.S.C. 1396 et seq.

(x) “Medicare” means the program of health benefits for the aged and disabled administered by CMS pursuant to the terms of Title XVIII of the Social Security Act, codified at 42 U.S.C. 1395 et seq.

(xi) “Permits” means all governmental licenses, authorizations, provider numbers, supplier numbers, registrations, permits, drug or device authorizations and approvals, certificates, franchises, qualifications, accreditations, consents and approvals required under all applicable Laws and required in order for any Borrower to carry on its business as now conducted, including, without limitation, Healthcare Permits.

(xii) “Resident Agreements” means the singular or collective reference to all patient and resident care agreements, admission agreements and service agreements which include an occupancy agreement and all amendments, modifications or supplements thereto applicable to each Individual Property.

(xiii) “Third Party Payor” means Medicare, Medicaid, TRICARE, and other state or federal health care program, Blue Cross and/or Blue Shield, private insurers, managed care plans and any other person which presently maintains Third Party Payor Programs.

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(xiv) “Third Party Payor Programs” means all payment and reimbursement programs, sponsored by a Third Party Payor, in which any Borrower has a contractual arrangement with such Third Party Payor to participate as a network provider.

(xv) “TRICARE” means the program administered pursuant to 10 U.S.C. Section 1071 et seq.), Sections 1320a-7 and 1320a-7a of Title 42 of the United States Code and the regulations promulgated pursuant to such statutes.

(b) General Health Care Matters. As of the date hereof and at all times while the Pool Obligations are outstanding, each Borrower represents and warrants (to the best of its knowledge after due inquiry) for itself and for Property Manager as follows:

(i) License and Permits. If required under applicable Healthcare Laws, Borrower has and shall maintain (or shall cause Property Manager to have and maintain) in full force and effect a valid CON for (i) the services currently rendered by Borrower and Property Manager, (ii) equipment owned by Borrower and Property Manager, and (iii) no less than the number of beds and units of the Property as of the date hereof. Borrower shall maintain (or shall cause Property Manager to maintain) any applicable CON free from restrictions or known conflicts which would materially impair the use or operation of its Individual Property for its current use, and shall not permit any CON to become provisional, probationary or restricted in any way.

(ii) Third Party Payors. To Borrower’s knowledge (after due inquiry and investigation), there is no investigation, audit, claim review, or other action pending or, to the knowledge of Borrower, threatened which could reasonably be expected to result in (A) a revocation, suspension, termination, probation, restriction, limitation, or non-renewal of any Third Party Payor Program participation agreement or provider number, except, as disclosed to Lender in writing, for deficiencies as a result of surveys or reviews that will be corrected in the ordinary course of business (but in no event does a survey violation exist which is not capable of being cured and could reasonably be expected to have a material adverse effect on its Individual Property), or (B) Borrower’s exclusion from any Third Party Payor Program, nor, to Borrower’s knowledge (after due inquiry and investigation), has any Third Party Payor Program made any decision to terminate or not to renew any participation agreement or provider agreement of Borrower, nor has Borrower or Property Manager made any decision to terminate or not to renew any Third Party Payor Program participation agreement or provider number, nor, to Borrower’s knowledge (after due inquiry and investigation), is there any action pending or threatened to impose material intermediate or alternative sanctions by a Third Party Payor with respect to Borrower, Property Manager, or its Individual Property.

(iii) Billing Practices. Borrower and Property Manager have not improperly or illegally billed any intermediaries or Third Party Payors for services rendered with respect to Borrower’s Individual Property that could reasonably be expected to result in a liability to a Third Party Payor in excess of $50,000. No funds relating to Borrower or Property Manager are now, or, to the knowledge of Borrower will be, withheld by any Third Party Payor. All billing practices of Borrower and Property Manager, including those with respect to all Third Party Payors, including the Third Party Payor Programs, if applicable, have been and will be in material compliance with all applicable laws, regulations and policies of such Third Party Payors and Third Party Payor Programs in all material respects.

(iv) Compliance with Healthcare Laws. With respect to each Individual Property, Borrower and Property Manager are in material compliance in all material respects with all Healthcare Laws except, as disclosed to Lender in writing, for deficiencies as a result of surveys or reviews that will

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be corrected in the ordinary course of business (but in no event does a survey violation exist which is not capable of being cured and could reasonably be expected to have a material adverse effect on Borrower’s Individual Property). To Borrower’s knowledge (after due inquiry and investigation), neither Borrower, Property Manager, nor any employee of Borrower or Property Manager for which Borrower or Property Manager is required under applicable Healthcare Laws to conduct background checks (each, an “Employee”) is currently under investigation or prosecution for, nor has Borrower, Property Manager or Employee been convicted of: (a) any offense related to the delivery of an item or service under the Third Party Payor Programs; (b) a criminal offense related to neglect or abuse of patients in connection with the delivery of a health care item or service; (c) fraud, theft, embezzlement or other financial misconduct; (d) the obstruction of an investigation of any crime referred to in subsections (a) through (c) of this Section; or (e) unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. Neither Borrower, Property Manager, nor any Employee has been required to pay any civil money penalty under applicable laws regarding false, fraudulent or impermissible claims or payments to induce a reduction or limitation of health care services to beneficiaries of any state or federal health care program, nor, to Borrower’s knowledge (after due inquiry and investigation), is Borrower, Property Manager, nor any Employee currently the subject of any investigation or proceeding that may result in such payment. Neither Borrower, Property Manager, nor any Employee has been excluded from participation in Medicare or TRICARE.

(v) HIPAA Compliance. If applicable, Borrower has complied in all material respects and at all times will comply in all material respects (and shall cause Property Manager to comply in all material respects) with the provisions of HIPAA and will be HIPAA Compliant.

(vi) Resident Agreements. The Resident Agreements comply in all material respects with all applicable Laws, including Healthcare Laws. Borrower shall provide notice to Lender of any proposed material modifications to the form of Resident Agreement previously approved by Lender. Borrower shall not, and shall not permit Property Manager to: (i) accept any payment under any Resident Agreement more than one month in advance of its due date; or (ii) enter into any Resident Agreement upon a form that fails to comply with applicable Laws.

(vii) Cash Management. Borrower will maintain or cause to be maintained all deposits, including, without limitation, deposits relating to patients or Resident Agreements if such deposits are in cash such deposits are to be deposited and held by Borrower (or Property Manager under the Management Agreement), as the case may be, at such commercial or savings bank or banks as may be reasonably satisfactory to Lender. Any bond or other instrument which Borrower (or Property Manager under the Management Agreement), as the case may be, is permitted to hold in lieu of cash deposits under any applicable legal requirements shall be maintained in full force and effect unless replaced by cash deposits as hereinabove described, shall be issued by an institution reasonably satisfactory to Lender, shall, if permitted pursuant to any legal requirements, name Lender as payee or mortgagee thereunder and shall, in all respects, comply with any applicable laws and legal requirements and otherwise be reasonably satisfactory to Lender. Following the occurrence and during the continuance of any Event of Default, Borrower shall, upon Lender’s request, if permitted by any applicable legal requirements, turn over to Lender the deposits (and any interest theretofore earned thereon and remaining therewith in the ordinary course of business) with respect to Borrower’s Individual Property, to be held by Lender subject to the terms of their related agreements.

Section 11.02 Covenants of Borrowers.

(a) Licensure and Authority. Borrower shall not, and shall not permit Property Manager to, without the prior written consent of Lender (which consent shall not be unreasonably withheld or

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delayed) in each instance, (i) cease to operate its Individual Property solely as a Senior Living Facility; (ii) cease to provide other facilities and services normally associated with Senior Living Facilities; (iii) provide or contract for healthcare services outside the scope of the Healthcare Permits (other than therapy services or other healthcare services provided by other duly licensed service providers and for which service tenants and/or residents pay separately), unless Borrower and/or Property Manager have obtained all necessary licenses, certificates, and permits required under applicable law for the provision of such services, copies of which shall be provided to Lender prior to the commencement of such new service(s); (iv) cause non-residential space leased or held available for lease to commercial tenants (i.e., space other than the units, dining areas, activity rooms, lobby, parlors, kitchen, mailroom, marketing/management offices) to exceed ten percent (10%) of the net rental area of Borrower’s Individual Property; (v) cease to hold and maintain in full force and effect the Healthcare Permits, or apply for any new license, registration, permit or participating provider status, other than renewals or as required under the Healthcare Permits, or (vi) cause or permit Borrower’s Individual Property to no longer be classified as housing for older persons pursuant to the Fair Housing Amendments Act of 1988, as it may be amended from time to time hereafter. Each Borrower will maintain in full force and effect, and free from restrictions, probations, conditions or known conflicts which would materially impair the use or operation of its Individual Property for its current use, all Healthcare Permits necessary under Healthcare Laws to carry on the business of Borrower as it is conducted on the date hereof. In addition, each Borrower will not suffer or permit to occur any of the following:

(i) any transfer of a Healthcare Permit or rights thereunder to any person (other than Lender) or to any location, except as otherwise permitted under this Agreement;

(ii) any pledge or hypothecation of any Healthcare Permit as collateral security for any indebtedness other than indebtedness to Lender; or

(iii) any rescission, withdrawal, revocation, amendment or modification of or other alteration to the nature, tenor or scope of any Healthcare Permit without Lender’s prior written consent, including, without limitation, (A) any change to the authorized units, services, beds and persons served capacity of Borrower and/or the units, services, number of beds and persons served approved by the applicable Governmental Authority, and (B) any transfer of all or any part of Borrower’s authorized unit or beds to another site or location.

(b) Health Care Notices.

(i) Each Borrower shall provide Lender annually with evidence, satisfactory to Lender, of such Borrower’s or Property Manager’s (if applicable), compliance, in all material respects, with all applicable local, state and federal laws, rules and regulations regarding the operation of Borrower’s Individual Property, including, but not limited to:

(A) a copy of the current Healthcare Permits authorizing Borrower’s Individual Property to be operated as a Senior Living Facility, and a copy of any other Healthcare Permits applicable to such Individual Property’s operation as a Senior Living Facility;

(B) copies of all state surveys, where applicable, dated within the immediately preceding twelve (12) month period and produced in connection with the performance and/or compliance of Borrower’s Individual Property, Borrower, Property Manager and any other licensee, as applicable, with standards regulating the use of such Individual Property as a Senior Living Facility and as may be applicable to any of the aforementioned parties;

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(C) the form Resident Agreements utilized at Borrower’s Individual Property;

(D) any notices, complaints, claims or waivers which Borrower has received, or was provided notice of, within the immediately preceding twelve (12) month period, from any federal and state governmental authority (such as the CMS) or other governmental, quasi-governmental or regulatory agency or agencies having jurisdiction over Borrower’s Individual Property, Borrower, Property Manager and any other licensee, including, without limitation, any deficiency notices, notices of investigations or notices of audit that have had, or can reasonably be expected to have, a material adverse effect on the business of operating Borrower’s Individual Property as a Senior Living Facility (in addition to such annual reporting obligations, Borrower shall also deliver to Lender any of the foregoing within ten (10) Business Days after Borrower, Property Manager or any other licensee first receives notice of or otherwise becomes aware of the same);

(E) descriptions of any litigation with respect to residents or former residents that is pending, ongoing or otherwise unresolved and was initiated within the last three (3) years of which Borrower has actual knowledge, which shall include copies of the pleadings with respect thereto, if requested by Lender;

(F) descriptions of any known criminal charges filed against any employees, agents, independent contractors or others performing services at Borrower’s Individual Property, if requested by Lender (in addition to such annual reporting obligations, Borrower shall also deliver to Lender any of the foregoing within ten (10) Business Days after Borrower, Property Manager or any other licensee first receives notice of or otherwise becomes aware of the same);

(G) a copy of any new CON (if applicable); and

(H) a copy of any additions or amendments to the administrative policy manual for Borrower’s Individual Property.

In addition, following the occurrence of an Event of Default, Lender reserves the right to increase the frequency of any of the foregoing reporting requirements to quarterly.

(ii) Each Borrower agrees to furnish, pursuant to the notice provisions of Section 9.02 herein, each of the following with respect to its Individual Property:

(A) (1) within ten (10) Business Days of receipt a copy of any healthcare related licensure and annual or biannual certification survey report and any statement of deficiencies and any survey (other than the annual or biannual survey) indicating a violation or deficiency, and (2) within the time period required by the particular agency for submission, a copy of the plan of correction with respect thereof if such plan of correction is required by such agency issuing the statement of deficiency or notice of violation, and correct or cause to be corrected any deficiency or violation within the time period required for cure by such agency, subject to such agency’s normal appeal process, if such deficiency or violation could adversely affect either the right to continue participation in Medicare or other Third Party Payor Programs for existing patients or the right to admit new Medicare patients or other Third Party Payor Program patients or result in the loss or suspension of Borrower’s licenses and permits to operate Borrower’s business;

(B) within ten (10) Business Days of the receipt by Borrower, any and all notices disclosing an adverse finding from any licensing, certifying and/or reimbursement agencies that

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Borrower’s license, Medicare certification or entitlement to payments pursuant to any Third Party Payor Program of Borrower is being downgraded to a substandard category, revoked, or suspended, or that action is pending or being considered to downgrade to a substandard category, revoke, or suspend any rights pursuant to Borrower’s license, certification or Third Party Payor Program; and

(C) within ten (10) Business Days of the date of the required filing of cost reports of Borrower with Medicare or other applicable agency or pursuant to any reimbursement contract or program, or the date of actual filing of such cost report of Borrower, whichever is earlier, a complete and accurate copy of the annual Medicare and other cost reports for Borrower, which will be prepared by an independent certified public accountant or by an experienced cost report preparer reasonably acceptable to Lender, and promptly furnish to Lender any amendments filed with respect to such reports and all responses, audit reports or inquiries with respect to such reports.

(iii) Any expiration, termination, suspension or revocation (any provisional Healthcare Permit shall be deemed an acceptable Healthcare Permit for purposes of this provision as long as the operations of Borrower’s Individual Property are not impacted in any material manner) of any of the Healthcare Permits described in Sections 11.02(b)(i)(A) and 11.02(b)(i)(C) above or any other Healthcare Permits that are necessary for the operation of any Borrower’s Individual Property as a Senior Living Facility, shall be, without any notice or cure period (except where such cure can be obtained on or before the date on which the failure to cure causes any material adverse impact with respect to such Borrower, the operation of Borrower’s Individual Property or Lender and except where the applicable State agency specifies a cure period to reinstate, in which event such cure period shall be the cure period specified by such State agency), an Event of Default under the Documents, unless all of the following are true: (i) no payment default occurs under the Documents, (ii) such Borrower has procured a replacement licensed operator satisfactory to Lender within one hundred twenty (120) days after any such de-licensure, provided that, if the applicable authority requires or recommends a replacement of the licensed operator at any time, then Borrower shall be required to promptly procure a replacement licensed operator, (iii) the replacement operator executes and delivers a subordination agreement in favor of Lender in form and content satisfactory to Lender, in Lender’s reasonable discretion, (iv) all such Healthcare Permits described in Sections 11.02(b)(i)(A) and 11.02(b)(i)(C) above have been reinstated or reissued in favor of such Borrower and/or the replacement operator, or Borrower or replacement operator is actively pursuing the reinstatement or reissuance of such Healthcare Permits, Lender has received satisfactory evidence that such reinstatement or reissuance efforts are reasonably likely to succeed, such reinstatement or reissuance shall have occurred not later than one hundred twenty (120) days after any such de-licensure and the operations of such Borrower’s Individual Property are not impacted in any material manner during the pendency of such efforts, provided, however, said one hundred twenty (120) day period may be extended for up to an additional sixty (60) days if (A) there is no material adverse effect on the business of operating such Borrower’s Individual Property as a Senior Living Facility as a result of applicable expiration, termination, suspension or revocation of any Healthcare Permit and (B) Lender has received evidence demonstrating, to Lender’s satisfaction, exercised in good faith, that the reinstatement or reissuance efforts have been proceeding with all due diligence and that such efforts are likely to be successful within said period of up to sixty (60) days, and (v) such Borrower’s Individual Property has not been required to cease operations as a Senior Living Facility.

(iv) Each Borrower shall (i) provide full and prompt disclosure to Lender of any violation of Healthcare Laws that can be reasonably expected to have a material adverse effect on the business of operating Borrower’s Individual Property as a Senior Living Facility, and (ii) conduct all appropriate (1) investigation of any violations or alleged violations of applicable Healthcare Laws and (2) correction of any violations of applicable Healthcare Laws, all at Borrower’s sole cost and expense; and (iii) indemnify Lender from all costs and risks relating to violations or alleged violations of Healthcare

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Laws; provided, however, that this indemnity shall not apply if Borrower can conclusively prove that (A) the violation of Healthcare Laws was caused solely by actions, conditions, or events that occurred after the date that Lender (or any purchaser at a foreclosure sale) actually acquired title to Borrower’s Individual Property, and (B) the violation of Healthcare Laws was not caused by, or attributable to, the direct or indirect actions or inaction of any of the Exculpated Parties or any general partner or managing member of any Borrower, any general partner or managing member of any general partner of any Borrower, any guarantor of the Loan, or any indemnitor under the Documents. In addition, Borrower shall grant licenses enabling Lender and its healthcare consultants to (A) make appropriate inquiries with respect to any alleged violations of applicable Healthcare Laws and (B) if required by written notice from Lender to Borrower, negotiate in cooperation with Borrower with any licensing authorities with respect to such alleged violations of applicable Healthcare Laws and to the extent permitted by applicable law, in cooperation with Borrower, to take other ameliorative steps with respect to the Healthcare Permits (whether before or after Lender or any other party succeeds to the interest of Borrower as owner of the applicable Individual Property in any manner, including but not limited to foreclosure, exercise of any power of sale, succession by deed in lieu or other conveyance), all at Borrower’s sole cost and expense; provided, however, Lender shall only have the right to exercise such licenses following an Event of Default These provisions shall survive any termination, satisfaction or foreclosure of the Instrument and Cross Collateral Mortgage signed by Borrower and shall be personal and full recourse obligations.

(c) Additional Health Care Related Matters. Each Borrower shall comply at all times with all accreditation standards that may be identified by Lender in writing (with reasonable advance notice), except to the extent that such failure to comply would not cause any material adverse effect on Borrower, Property Manager, or Borrower’s Individual Property. No Borrower shall do (or suffer to be done by Borrower, Property Manager or any Affiliate of Borrower or Property Manager) any of the following:

(i) Replace or transfer all or any part of Borrower’s units or beds to another site or location;

(ii) Transfer or demise any CON or other Healthcare Permit or rights thereunder to any person (other than Lender) or to any location other than Borrower’s Individual Property to which such CON or Healthcare Permit pertains, except as otherwise permitted under this Agreement; or

(iii) Pledge or hypothecate any CON or other Healthcare Permit as collateral security for any indebtedness other than indebtedness to Lender.

(d) Management Agreement. No Borrower shall amend, modify or supplement the Management Agreement in any material respect without Lender’s prior written consent (which consent shall not be unreasonably withheld or delayed).

(e) Filing Requirements. Each Borrower will (or will cause Property Manager to) (i) timely file all notifications, reports, submissions, Healthcare Permit renewals and reports of every kind whatsoever required by Healthcare Laws (which reports will be materially accurate and complete in all respects and not misleading in any respect); and (ii) timely file all cost reports required by Healthcare Laws, which reports shall be materially accurate and complete in all respects and not misleading in any material respect and which shall not remain open or unsettled, except in accordance with applicable settlement appeals procedures that are timely and diligently pursued and except for any processing delays of any Governmental Authority.

(f) Corporate Compliance Plan. Each Borrower will maintain (or will cause Property Manager to maintain) a corporate health care regulatory compliance program (“CCP”) which includes at

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least the following components: (i) standards of conduct and procedures that describe compliance policies regarding laws with an emphasis on prevention of fraud and abuse; (ii) specific officer within high-level personnel identified as having overall responsibility for compliance with such standards and procedures; (iii) policies with respect to fraud and abuse and billing practices; (iv) training and education programs which effectively communicate the compliance standards and procedures to employees and agents, including, without limitation, fraud and abuse laws and illegal billing practices; (v) auditing and monitoring systems and reasonable steps for achieving compliance with such standards and procedures including, without limitation, publicizing a report system to allow employees and other agents to anonymously report criminal or suspect conduct and potential compliance problems; (vi) disciplinary guidelines and consistent enforcement of compliance policies including, without limitation, discipline of individuals responsible for the failure to detect violations of the CCP; and (vii) mechanisms to immediately respond to detected violations of the CCP.

(g) Sub-Acute Units. No Borrower shall create or convert any portion of its existing facilities or units to Sub-Acute Units (defined below) without the prior written consent of Lender. A “Sub-Acute Unit” shall mean a dedicated specialty unit for individuals who require significantly more nursing hours (an average of four [4] or more hours per day) or therapy than required for individuals in the other units at the Individual Property. Any default under the provisions of this Section 10.02(g) shall be, without further notice or cure period, an Event of Default under the Documents.

(h) Leases of Capital Goods. Except for (i) vehicle leases, and (ii) leases for capital goods and/or equipment the value of which, if purchased, would not exceed Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) (on an aggregate basis per Individual Property and per calendar year) (“Permitted Capital Leases”), no Borrower shall, at any time during the term of the Loan, enter into any leases of capital goods and/or equipment without Lender’s prior written approval.

ARTICLE XII - CHTSUN PROVISIONS

Section 12.01 Compliance with Property as Single Asset. Except as provided below with respect to the Operators, CHTSun hereby covenants and agrees that during the term of the Loan, (a) it shall not own any assets in addition to its indirect or direct ownership interest in the Owners, other than any cash, investment accounts (provided that the liability associated with any such investment account shall be limited to the assets contained in such account) or personal property used in connection with such ownership, as applicable, and (b) the Property shall generate substantially all of the gross income of CHTSun and there shall be no substantial business being conducted by CHTSun, either directly or indirectly, other than the business of owning, operating and maintaining indirectly the Owners and the Property and the activities incidental thereto. Notwithstanding the foregoing, each Operator may own its leasehold interest in its Individual Property and any personal property associated therewith.

Section 12.02 Separateness Covenants/Covenants with Respect to Indebtedness, Operations and Fundamental Changes of CHTSun. CHTSun hereby represents, warrants and covenants, as of the date hereof and until such time as the Pool Obligations are paid in full, that CHTSun:

(a) shall not (i) liquidate or dissolve (or suffer any liquidation or dissolution), terminate, or otherwise dispose of, directly, indirectly or by operation of law, all or substantially all of its assets; (ii) reorganize or change its legal structure without Lender’s prior written consent (not to be unreasonably withheld), except as otherwise expressly permitted under the Documents; (iii) change its name, address, or the name under which it conducts its business without promptly notifying Lender; (iv) enter into or consummate any merger, consolidation, sale, transfer, assignment, liquidation, or dissolution involving any or all of the assets of CHTSun or any general partner or managing member of CHTSun; or (v) enter

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into or consummate any transaction or acquisition, merger or consolidation or otherwise acquire by purchase or otherwise all or any portion of the business or assets of, or any stock or other evidence of beneficial ownership of, any person or entity;

(b) has not incurred and shall not incur any secured or unsecured debt except for (i) the Loan, (ii) Permitted Capital Leases, (iii) customary and reasonable short term trade payables obtained and repaid in the ordinary course of its business, and (iv) unsecured loans whose proceeds shall be used solely for the benefit of the Property and the Owners and which do not exceed, in the aggregate at any given time, the amount of Ten Million and No/100 Dollars ($10,000,000.00).

(c) shall not amend, modify or otherwise change its partnership certificate, partnership agreement, articles of incorporation, by-laws, operating agreement, articles of organization, or other formation agreement or document, as applicable, or governing agreement or document, in any material term or manner, or in a manner which adversely affects CHTSun’s existence as a single purpose entity or CHTSun’s compliance with this Agreement, nor shall any managing member, general partner, shareholder or non-member manager of CHTSun, as applicable, amend, modify or otherwise change its partnership certificate, partnership agreement, articles of incorporation, by-laws, operating agreement, articles of organization, or other formation agreement or document, as applicable, or governing agreement or document, in any manner which adversely affects CHTSun’s existence as a single purpose entity or CHTSun’s compliance with this Agreement;

(d) to the extent that CHTSun requires an office, shall maintain its principal executive office and telephone and facsimile numbers separate from that of any Affiliate of same (other than the Pool Subsidiaries [defined below]) and shall conspicuously identify such office and numbers as its own or shall allocate by written agreement fairly and reasonably any rent, overhead and expenses for shared office space. Additionally, to the extent that it uses stationery, invoices and checks, CHTSun shall use its own separate stationery, invoices and checks. As used herein, the term “Pool Subsidiaries” shall mean Borrowers, Sun IV, LLC, CHT SL IV TRS Corp., CHTSun Two Pool Two, LLC, CHTSun Three Pool One, LLC, Santa Monica AL, LLC and any other CHTSun subsidiaries expressly permitted under the Documents;

(e) shall maintain correct and complete financial statements, accounts, books and records and other entity documents separate from those of any Affiliate of same or any other person or entity (other than the Pool Subsidiaries), except that CHTSun’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that CHTSun is properly reflected and treated as a separate legal entity;

(f) to the extent it has bank accounts, shall maintain its own separate bank accounts, and shall maintain correct, complete and separate books of account;

(g) shall file or cause to be filed its own separate tax returns, or if applicable, consolidated tax returns;

(h) shall hold itself out to the public (including any of its Affiliates’ creditors) under its own name and as a separate and distinct entity and not as a department, division or otherwise of any Affiliate of same;

(i) shall observe all customary formalities regarding its existence, including holding meetings and maintaining current and accurate minute books separate from those of any Affiliate of same;

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(j) shall hold title to its assets in its own name and act solely in its own name and through its own duly authorized officers and agents. No Affiliate of same shall be appointed or act as agent of CHTSun, other than, if applicable, any of the Operators as operator or the Property Manager as property manager with respect to the Property;

(k) shall make investments in the name of CHTSun directly by CHTSun or on its behalf by brokers engaged and paid by Borrower or its agents;

(l) except (i) as expressly required by Lender in connection with the Loan and in writing and (ii) for that certain Guaranty dated of even date herewith made by CHTSun in favor of Property Manager with respect to the Management Agreements and the Manager Pooling Agreement, shall not guarantee or otherwise agree to be liable for (whether conditionally or unconditionally), pledge or assume or hold itself out or permit itself to be held out as having guaranteed, pledged or assumed any liabilities or obligations of any partner (whether limited or general), member, shareholder or any Affiliate of CHTSun, as applicable, or any other party (other than of the Pool Subsidiaries, to the extent of indebtedness permitted under the Documents), except in connection with the Permitted Member Loans and Permitted Capital Leases; nor shall it make any loan (other than to (i) Pool Subsidiaries that are not Borrowers and (ii) any Borrowers to the extent that such loans qualify as Permitted Member Loans under Section 5.01(h));

(m) is and intends to remain solvent, and has paid and will pay its own debts and liabilities out of its own funds and assets (to the extent of such funds and assets) as the same shall become due, and will give prompt written notice to Lender of the insolvency or bankruptcy filing of CHTSun or any general partner, managing member or controlling shareholder of CHTSun;

(n) shall separately identify, maintain and segregate its assets. CHTSun’s assets shall at all times be held by or on behalf of CHTSun and, if held on behalf of CHTSun by another entity, shall at all times be kept identifiable (in accordance with customary usages) as assets owned by CHTSun. This restriction requires, among other things, that (i) CHTSun funds shall be deposited or invested in CHTSun’s name, (ii) CHTSun funds shall not be commingled with the funds of any Affiliate of same or any other person or entity except as may be required in connection with the Manager Pooling Agreement, (iii) CHTSun shall maintain any accounts it uses in its own name and with its own tax identification number, separate from those of any Affiliate of same or any other person or entity (other than the Pool Subsidiaries), and (iv) CHTSun funds shall be used only for the business of CHTSun (including distributions of available funds);

(o) shall maintain its assets in such a manner that it is not costly or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate of same or other person or entity;

(p) shall pay or cause to be paid its own liabilities and expenses of any kind, including but not limited to salaries of its employees, if any, only out of its own separate funds and assets;

(q) [INTENTIONALLY DELETED];

(r) [INTENTIONALLY DELETED];

(s) shall reflect CHTSun’s ownership interest in all data and records (including computer records) used by Borrower or any Affiliate of same;

(t) shall not invest any of CHTSun’s funds in securities issued by, nor shall CHTSun acquire the indebtedness or obligation of, any Affiliate of same (other than the Pool Subsidiaries);

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(u) shall maintain an arm’s length relationship with each of its Affiliates and may enter into contracts or transact business with its Affiliates only on commercially reasonable terms that are no less favorable to CHTSun than is obtainable in the market from a person or entity that is not an Affiliate of same (other than the Pool Subsidiaries); provided, however, that CHTSun shall be permitted to enter into the Management Agreements and the Manager Pooling Agreement;

(v) CHTSun shall be a Delaware limited liability company.

Section 12.03 Additional Covenants.

CHTSun further covenants and agrees that until such time as the Pool Obligations are paid in full, it will (a) cause Borrowers to comply with the provisions of Section 3.21 and Section 3.22 of this Agreement, and (b) not modify or amend the Manager Pooling Agreement in any manner which would (i) add any additional properties to such Manager Pooling Agreement, (ii) have a material adverse effect on the Loan, the Documents, the value of the Property, the utility of the Property, the operations of the Property, the financial condition of any Borrower or any guarantor of the Loan or the ability of any Borrower to perform its obligations under the Documents, or (iii) have a material adverse effect on the operations of CHTSun, the financial condition of CHTSun or the ability of CHTSun to perform its obligations under this Agreement or the Manager Pooling Agreement.

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as a sealed instrument as of the day first set forth above.

BORROWERS:
GILBERT AZ SENIOR LIVING OWNER, LLC, a Delaware limited liability company
By:	/s/ Joshua J. Taube	[SEAL]
Name:	Joshua J. Taube
Title:	Vice President
CHTSUN TWO GILBERT AZ SENIOR LIVING, LLC, a Delaware limited liability company
By:	/s/ Joshua J. Taube	[SEAL]
Name:	Joshua J. Taube
Title:	Vice President
METAIRIE LA SENIOR LIVING OWNER, LLC, a Delaware limited liability company
By:	/s/ Joshua J. Taube	[SEAL]
Name:	Joshua J. Taube
Title:	Vice President
CHTSUN TWO METAIRIE LA SENIOR LIVING, LLC, a Delaware limited liability company
By:	/s/ Joshua J. Taube	[SEAL]
Name:	Joshua J. Taube
Title:	Vice President

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BATON ROUGE LA SENIOR LIVING OWNER, LLC, a Delaware limited liability company
By:	/s/ Joshua J. Taube	[SEAL]
Name:	Joshua J. Taube
Title:	Vice President
CHTSUN TWO BATON ROUGE LA SENIOR LIVING, LLC, a Delaware limited liability company
By:	/s/ Joshua J. Taube	[SEAL]
Name:	Joshua J. Taube
Title:	Vice President
LOMBARD IL SENIOR LIVING OWNER, LLC, a Delaware limited liability company
By:	/s/ Joshua J. Taube	[SEAL]
Name:	Joshua J. Taube
Title:	Vice President
CHTSUN THREE LOMBARD IL SENIOR LIVING, LLC, a Delaware limited liability company
By:	/s/ Joshua J. Taube	[SEAL]
Name:	Joshua J. Taube
Title:	Vice President
LOUISVILLE KY SENIOR LIVING OWNER, LLC, a Delaware limited liability company
By:	/s/ Joshua J. Taube	[SEAL]
Name:	Joshua J. Taube
Title:	Vice President

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SUNRISE LOUISVILLE KY SENIOR LIVING, LLC, a Kentucky limited liability company
By:	/s/ Joshua J. Taube			[SEAL]
Name:	Joshua J. Taube
Title:	Vice President
SANTA MONICA ASSISTED LIVING OWNER, LLC, a Delaware limited liability company
By:	/s/ Joshua J. Taube			[SEAL]
Name:	Joshua J. Taube
Title:	Vice President
AL SANTA MONICA SENIOR HOUSING, LP, a Delaware limited partnership
By:	Santa Monica GP, LLC, a Delaware limited liability company, its general partner
	By:	/s/Joshua J. Taube		[SEAL]
		Name:	Joshua J. Taube
		Title:	Vice President
SUNRISE CONNECTICUT AVENUE ASSISTED LIVING OWNER L.L.C., a Virginia limited liability company, formerly known as Sunrise Connecticut Avenue Assisted Living, L.L.C.
By:	/s/ Joshua J. Taube			[SEAL]
Name:	Joshua J. Taube
Title:	Vice President

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STATE OF GEORGIA	)
COUNTY OF FULTON	)

On this 28th day of June, 2012, personally appeared before me Joshua J. Taube, who being by me duly sworn (or affirmed), did say that he is the Vice President of each of the Borrowers listed above with the exception of AL Santa Monica Senior Housing, LP, a Delaware limited partnership, as to which he is the Vice President of Santa Monica GP, LLC, a Delaware limited liability company and the general partner of AL Santa Monica Senior Housing, LP, and that on behalf of said limited liability companies, by authority of its board of managers, and said Vice President, acknowledged to me that said limited liability companies executed the same.

/s/ Sally Thornton

Notary Public

Sally Thornton

Printed Name

4/10/2014

My Commission expires

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CHTSUN PARTNERS IV, LLC, a Delaware limited liability company
By:	CHT SL IV Holding, LLC, a Delaware limited liability company, Managing Member
	By:	/s/ Joshua J. Taube	[SEAL]
	Name:	Joshua J. Taube
	Title:	Vice President

STATE OF GEORGIA	)
COUNTY OF FULTON	)

On this 28th day of July, 2012, personally appeared before me Joshua J. Taube, who being by me duly sworn (or affirmed), did say that he is the Vice President of CHT SL IV Holding, LLC, a Delaware limited liability company, Managing Member of CHTSun Partners IV, LLC, a Delaware limited liability company, and that on behalf of said limited liability company by authority of its board of managers, and said Vice President, acknowledged to me that said limited liability company executed the same.

/s/ Sally Thornton

Notary Public

Sally Thornton

Printed Name

4/10/2014

My Commission expires

AFFIX NOTARY SEAL

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LENDER:
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation
By:	/s/ Thomas P. Goodsite
Name:	Thomas P. Goodsite
Title:	Vice President
	[CORPORATE SEAL]

STATE OF GEORGIA	)
COUNTY OF FULTON	)

On this 27th day of July, 2012, personally appeared before me Thomas P. Goodsite, who being by me duly sworn (or affirmed), did say that he is the Vice President of The Prudential Insurance Company of America, a New Jersey corporation, and that on behalf of said corporation by authority of its bylaws (or of a resolution of its board of directors, as the case may be) and said Vice President, acknowledged to me that said corporation executed the same.

/s/ Kelly C. Bailey

Notary Public

Kelly C. Bailey

Printed Name

2/25/2014

My Commission expires

AFFIX NOTARY SEAL

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Exhibit A

LEGAL DESCRIPTION OF LAND

See Exhibits A-1 through A-7 attached hereto.

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Exhibit B

DESCRIPTION OF PERSONAL PROPERTY SECURITY

All of Borrower’s right, title and interest in, to and under the following as it pertains to each Borrower’s Individual Property:

1. All machinery, apparatus, goods, equipment, materials, fittings, fixtures, chattels, and tangible personal property, and all appurtenances and additions thereto and betterments, renewals, substitutions, and replacements thereof, owned by Borrower, wherever situate, and now or hereafter located on, attached to, contained in, or used or usable in connection with the real property described in Exhibit A attached to this Agreement and incorporated herein (the “Land”), and all improvements located thereon (the “Improvements”) or placed on any part thereof, though not attached thereto, including all screens, awnings, shades, blinds, curtains, draperies, carpets, rugs, furniture and furnishings, heating, electrical, lighting, plumbing, ventilating, air-conditioning, refrigerating, incinerating and/or compacting plants, systems, fixtures and equipment, elevators, hoists, stoves, ranges, vacuum and other cleaning systems, call systems, sprinkler systems and other fire prevention and extinguishing apparatus and materials, motors, machinery, pipes, ducts, conduits, dynamos, engines, compressors, generators, boilers, stokers, furnaces, pumps, tanks, appliances, equipment, fittings, and fixtures, including all personal property currently owned or acquired by Borrower after the date hereof used in connection with the ownership and operation of Borrower’s Individual Property as a Senior Living Facility (defined below), all kitchen or restaurant supplies, dining room facilities, medical facilities, or related furniture and equipment, and any other equipment, supplies or furniture owned by Borrower and leased to any third party service provider or facility operator under any use, occupancy, or lease agreements.

2. All funds, accounts, deposits, instruments, documents, contract rights, general intangibles, notes, and chattel paper arising from or by virtue of any transaction related to the Land, the Improvements, or any of the personal property described in this Exhibit B (including, without limitation, any payments due under any occupancy and admission agreements pertaining to occupants of Borrower’s Individual Property, including both residential and commercial agreements, and any management agreement or operating agreement under which control of the use or operation of Borrower’s Individual Property has been granted to any other entity, together with (i) all proceeds from any private insurance for tenants to cover rental charges and charges for services at or in connection with Borrower’s Individual Property, and the right to payments from Medicare or Medicaid programs, or similar federal, state or local programs, boards, bureaus or agencies and rights to payment from tenants, residents, occupants, private insurers or others, arising from the operation of Borrower’s Individual Property as a Senior Living Facility or otherwise due for tenants, residents or occupants or for services at Borrower’s Individual Property, (ii) all payments due, or received, from occupants, second party charges added to base rental income, base and/or additional meal sales, commercial operations located on Borrower’s Individual Property or provided as a service to the occupants of Borrower’s Individual Property, rental from guest suites, seasonal lease charges, furniture leases, and laundry services, and any and all other services provided to third parties in connection with Borrower’s Individual Property, and (iii) any and all other personal property on the real property site, excluding personal property belonging to occupants of the real property).

3. All permits, licenses, franchises, certificates, and other rights and privileges now held or hereafter acquired by Borrower in connection with the Land, the Improvements, or any of the personal property described in this Exhibit B, including all licenses, permits, certificates, and approvals required

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for the operation of Borrower’s Individual Property as a Senior Living Facility, to the extent permitted by applicable law and regulations. For purposes of this Agreement, “Senior Living Facility” shall mean (i) with respect to the Sunrise of Connecticut Avenue Individual Property, a residential housing facility which qualifies as “housing for older persons” under the Fair Housing Amendments Act of 1988 and includes congregate living units and assisted living units, but which does not include any nursing care units, and which is licensed as an “Assisted Living Residence” under District of Columbia law, (ii) with respect to the Sunrise of Santa Monica Individual Property, a residential housing facility which qualifies as “housing for older persons” under the Fair Housing Amendments Act of 1988 and includes congregate living units and assisted living units, but which does not include any nursing care units, and which is licensed as a “Residential Care Facility For The Elderly” under California law, (iii) with respect to the Sunrise of Gilbert Individual Property, a residential housing facility which qualifies as “housing for older persons” under the Fair Housing Amendments Act of 1988 and includes congregate living units and assisted living units, but which does not include any nursing care units, and which is licensed as an “Assisted Living Facility” under Arizona law, (iv) with respect to the Sunrise of Metairie Individual Property and the Sunrise at Siegen Individual Property, a residential housing facility which qualifies as “housing for older persons” under the Fair Housing Amendments Act of 1988 and includes congregate living units and assisted living units, but which does not include any nursing care units, and which is licensed as a “Shelter Care” facility under Louisiana law, (v) with respect to the Sunrise at Fountain Square Individual Property, a residential housing facility which qualifies as “housing for older persons” under the Fair Housing Amendments Act of 1988 and includes congregate living units and assisted living units, but which does not include any nursing care units, and which is licensed as an “Assisted Living” facility under Illinois law, and (vi) with respect to the Sunrise of Louisville Individual Property, a residential housing facility which qualifies as “housing for older persons” under the Fair Housing Amendments Act of 1988 and includes congregate living units and assisted living units, but which does not include any nursing care units, and which is licensed as a “Personal Care Home” under Kentucky law.

4. All right, title, and interest of Borrower in and to the name and style by which the Land and/or the Improvements is known, including trademarks and trade names relating thereto (but specifically excluding the tradename “Sunrise” and any intellectual property related to such tradename).

5. All right, title, and interest of Borrower in, to, and under all plans, specifications, maps, surveys, reports, permits, licenses, architectural, engineering and construction contracts, books of account, insurance policies, and other documents of whatever kind or character, relating to the use, construction upon, occupancy, leasing, sale, or operation of the Land and/or the Improvements; provided, however, that any such plans and specifications transferred hereunder are transferred for use in connection with Borrower’s Individual Property only and not for any other purpose.

6. All interests, estates, or other claims or demands, in law and in equity, which Borrower now has or may hereafter acquire in the Land, the Improvements, or the personal property described in this Exhibit B.

7. All right, title, and interest owned by Borrower in and to all options to purchase or lease the Land, the Improvements, or any other personal property described in this Exhibit B, or any portion thereof or interest therein, and in and to any greater estate in the Land, the Improvements, or any of the personal property described in this Exhibit B.

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8. All of the estate, interest, right, title, other claim or demand, both in law and in equity, including claims or demands with respect to the proceeds of insurance relating thereto, which Borrower now has or may hereafter acquire in the Land, the Improvements, or any of the personal property described in this Exhibit B, or any portion thereof or interest therein, and any and all awards made for the taking by eminent domain, or by any proceeding or purchase in lieu thereof, of the whole or any part of such property, including without limitation, any award resulting from a change of any streets (whether as to grade, access, or otherwise) and any award for severance damages.

9. All right, title, and interest of Borrower in and to all contracts, permits, certificates, licenses, approvals, utility deposits, utility capacity, and utility rights issued, granted, agreed upon, or otherwise provided by any governmental or private authority, person or entity relating to the ownership, development, construction, operation, maintenance, marketing, sale, or use of the Land and/or the Improvements, including all of Borrower’s rights and privileges hereto or hereafter otherwise arising in connection with or pertaining to the Land and/or the Improvements, including, without limiting the generality of the foregoing, all water and/or sewer capacity, all water, sewer and/or other utility deposits or prepaid fees, and/or all water and/or sewer and/or other utility tap rights or other utility rights, any right or privilege of Borrower under any loan commitment, lease, contract, declaration of covenants, restrictions and easements or like instrument, developer’s agreement, or other agreement with any third party pertaining to the ownership, development, construction, operation, maintenance, marketing, sale, or use of the Land and/or the Improvements.

10. All of Borrower’s inventory, accounts, accounts receivable, contract rights, general intangibles, and all proceeds thereof.

AND ALL PROCEEDS AND PRODUCTS OF THE FOREGOING PERSONAL PROPERTY DESCRIBED IN THIS EXHIBIT B.

A PORTION OF THE ABOVE DESCRIBED GOODS ARE OR ARE TO BE AFFIXED TO THE REAL PROPERTY DESCRIBED IN EXHIBIT A.

OWNER IS THE RECORD TITLE HOLDER AND OWNER OF THE REAL PROPERTY DESCRIBED IN EXHIBIT A.

ALL TERMS USED IN THIS EXHIBIT B (AND NOT OTHERWISE DEFINED IN THIS EXHIBIT B) SHALL HAVE THE MEANING, IF ANY, ASCRIBED TO SUCH TERM UNDER THE UNIFORM COMMERCIAL CODE AS ADOPTED AND IN FORCE IN THE JURISDICTION IN WHICH THIS FINANCING STATEMENT HAS BEEN FILED/RECORDED (THE “U.C.C.”).

WITH RESPECT TO ANY FINANCING STATEMENT TO WHICH THIS EXHIBIT B IS ATTACHED, THE TERM “BORROWER” SHALL MEAN “DEBTOR” AS SUCH TERM IS DEFINED IN THE U.C.C.

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

B-3

Exhibit C

PERMITTED ENCUMBRANCES

See Exhibits C-1 through C-7 attached hereto.

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

C-1

Exhibit C-1

PERMITTED ENCUMBRANCES

(Property Address)

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

C-2

Exhibit D

INDIVIDUAL PROPERTIES AND ALLOCATED LOAN AMOUNTS

Borrower	Individual Property Name/Address	Property State	County	Loan Number	Allocated Loan Amount
Gilbert AZ Senior Living Owner, LLC	Sunrise of Gilbert 580 South Gilbert Road Gilbert, Arizona 85296	Arizona	Maricopa	706108866	$	17,061,000.00
CHTSun Two Gilbert AZ Senior Living, LLC
Metairie LA Senior Living Owner, LLC	Sunrise of Metairie 3732 W. Esplanade Avenue, South Metairie, Louisiana 70002	Louisiana	Jefferson	706108867	$	13,839,000.00
CHTSun Two Metairie LA Senior Living, LLC
Baton Rouge LA Senior Living Owner, LLC	Sunrise at Siegen 9351 Siegen Lane Baton Rouge, Louisiana 70810	Louisiana	East Baton Rouge	706108868	$	9,769,000.00
CHTSun Two Baton Rouge LA Senior Living, LLC
Lombard IL Senior Living Owner, LLC	Sunrise at Fountain Square 2210 Fountain Square Drive Lombard, Illinois 60418	Illinois	Kane	706108869	$	17,657,000.00
CHTSun Three Lombard IL Senior Living, LLC
Louisville KY Senior Living Owner, LLC	Sunrise of Louisville 6800 Overlook Drive Louisville, Kentucky 40241	Kentucky	Jefferson	706108870	$	11,674,000.00
Sunrise Louisville KY Senior Living, LLC
Sunrise Connecticut Avenue Assisted Living Owner, L.L.C.	Sunrise of Connecticut Avenue 5111 Connecticut Avenue Washington, DC 20008	DC	District of Columbia	706108716	$	33,932,000.00
Santa Monica Assisted Living Owner, LLC	Sunrise of Santa Monica 1312 15th Street Santa Monica, California 90404	California	Los Angeles	706108717	$	21,068,000.00
AL Santa Monica Senior Housing, LP
AGGREGATE LOAN AMOUNT						$125,000,000.00

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

D-1

Exhibit E

LIST OF BORROWERS, BORROWERS’ ADDRESSES

AND BORROWERS’ TAX IDENTIFICATION NUMBERS

Borrower	Borrower Address	Federal Tax Identification Number
Gilbert AZ Senior Living Owner, LLC	c/o CNL Healthcare Trust, Inc. CNL Center at City Commons 450 South Orange Avenue Orlando, Florida 32801	61-1686403
CHTSun Two Gilbert AZ Senior Living, LLC	c/o CNL Healthcare Trust, Inc. CNL Center at City Commons 450 South Orange Avenue Orlando, Florida 32801	26-1149428
Metairie LA Senior Living Owner, LLC	c/o CNL Healthcare Trust, Inc. CNL Center at City Commons 450 South Orange Avenue Orlando, Florida 32801	36-4735750
CHTSun Two Metairie LA Senior Living, LLC	c/o CNL Healthcare Trust, Inc. CNL Center at City Commons 450 South Orange Avenue Orlando, Florida 32801	26-1149470
Baton Rouge LA Senior Living Owner, LLC	c/o CNL Healthcare Trust, Inc. CNL Center at City Commons 450 South Orange Avenue Orlando, Florida 32801	36-4735736
CHTSun Two Baton Rouge LA Senior Living, LLC	c/o CNL Healthcare Trust, Inc. CNL Center at City Commons 450 South Orange Avenue Orlando, Florida 32801	26-1149396
Lombard IL Senior Living Owner, LLC	c/o CNL Healthcare Trust, Inc. CNL Center at City Commons 450 South Orange Avenue Orlando, Florida 32801	90-0860102
CHTSun Three Lombard IL Senior Living, LLC	c/o CNL Healthcare Trust, Inc. CNL Center at City Commons 450 South Orange Avenue Orlando, Florida 32801	26-1429678

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

E-1

Louisville KY Senior Living Owner, LLC	c/o CNL Healthcare Trust, Inc. CNL Center at City Commons 450 South Orange Avenue Orlando, Florida 32801
Sunrise Louisville KY Senior Living, LLC	c/o CNL Healthcare Trust, Inc. CNL Center at City Commons 450 South Orange Avenue Orlando, Florida 32801	35-2276015
Santa Monica Assisted Living Owner, LLC	c/o CNL Healthcare Trust, Inc. CNL Center at City Commons 450 South Orange Avenue Orlando, Florida 32801	37-1695936
AL Santa Monica Senior Housing, LP	c/o CNL Healthcare Trust, Inc. CNL Center at City Commons 450 South Orange Avenue Orlando, Florida 32801	56-2492278
Sunrise Connecticut Avenue Assisted Living Owner, L.L.C.	c/o CNL Healthcare Trust, Inc. CNL Center at City Commons 450 South Orange Avenue Orlando, Florida 32801	52-2255136

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

E-2

Exhibit F

PRINCIPAL AND INTEREST PAYMENTS

AND DAILY CHARGES DUE UNDER EACH NOTE

Individual Loan	Monthly Interest Only Payment		Monthly Principal and Interest Payment		Daily Charge
Gilbert Note	$	74,641.88	$	94,211.47	$	275.00
Metairie Note	$	60,545.63	$	76,419.47	$	275.00
Siegen Note	$	42,739.38	$	53,944.78	$	275.00
Fountain Square Note	$	77,249.38	$	97,502.61	$	275.00
Louisville Note	$	51,073.75	$	64,464.26	$	275.00
Connecticut Avenue Note	$	131,769.26	$	175,169.31	$	250.00
Santa Monica Note	$	81,814.07	$	108,760.67	$	250.00

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

F-1

Exhibit G

LIST OF POST-CLOSING OBLIGATIONS

1. Borrowers covenant and agree to use commercially reasonable efforts to (a) complete the items with respect to the Property as set forth below within the timeframes specified for each item, and (b) provide Lender within the time period allowed for such items with evidence reasonably satisfactory to Lender that such items have been completed.

Property	Description	Total Costs	Time Allowance
Sunrise of Gilbert	Registration of four drywells with ADEQ	$100 filing fee per drywell	30 days from date of Agreement
Sunrise of Connecticut Avenue	Minor brick veneer repairs	$1,000.00	90 days from date of Agreement

Prudential Loan Nos. 706108716-706108717

and 706108866-706108870

CHT REIT Portfolio

Amended and Restated Loan Agreement

G-1

EX-10.6

Exhibit 10.6

PROMISSORY NOTE

(Sunrise of Gilbert)

$17,061,000.00	June 29, 2012
Loan No. 706108866

FOR VALUE RECEIVED, GILBERT AZ SENIOR LIVING OWNER, LLC, a Delaware limited liability company (“Owner”), and CHTSUN TWO GILBERT AZ SENIOR LIVING, LLC, a Delaware limited liability company (“Operator”, and together with Owner, “Borrower”), promise to pay to the order of THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation (“Lender”, which shall also mean successors and assigns who become holders of this Note), at 2100 Ross Avenue, Suite 2500, Dallas, Texas 75201, the principal sum of SEVENTEEN MILLION SIXTY-ONE THOUSAND AND NO/100 U.S. DOLLARS ($17,061,000.00), with interest on the unpaid balance (the “Balance”) at the applicable rate or rates set forth in the Loan Agreement (defined below) from and including the Funding Date (as defined in the Loan Agreement) under this Promissory Note (this “Note”) until Maturity, and to be paid in accordance with the terms of this Note and that certain Amended and Restated Loan Agreement dated as of the date hereof by and among Borrower, the Related Borrowers (as defined in the Instrument [defined below]), and Lender (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan Agreement”). Capitalized terms used without definition in this Note shall have the meanings ascribed to them in the Loan Agreement or that certain Deed of Trust and Security Agreement (Sunrise of Gilbert – First) dated as of the date hereof (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “Instrument”), as applicable.

1. Payment Terms. Borrower agrees to pay the principal sum of this Note and interest on the unpaid principal sum of this Note from time to time outstanding at the rates and at the times specified in the Loan Agreement, and the entire Obligations shall be due and payable on the Maturity Date.

2. Default and Acceleration. The Loan and the Obligations shall become immediately due and payable, at the option of Lender, upon the occurrence of any Event of Default.

3. Notices. All notices or other written communications hereunder shall be delivered in accordance with Section 9.02 of the Loan Agreement.

4. No Usury. Under no circumstances shall the aggregate amount paid or to be paid as interest under this Note exceed the highest lawful rate permitted under applicable usury law (the “Maximum Rate”). If under any circumstances the aggregate amounts paid on this Note shall include interest payments which would exceed the Maximum Rate, Borrower stipulates that payment and collection of interest in excess of the Maximum Rate (the “Excess Amount”) shall be deemed the result of a mistake by both Borrower and Lender, and Lender shall promptly credit the Excess Amount against the Balance (without Prepayment Premium or other premium) or refund to Borrower any portion of the Excess Amount which cannot be so credited.

5. Security and Documents Incorporated. This Note is the Gilbert Note referred to in the Loan Agreement and the Instrument and is the Note secured by the Instrument and the Property (as defined in the Instrument). Borrower shall observe and perform all of the terms and conditions in the Documents (as defined in the Instrument). All of the provisions of the other Documents (including,

Prudential Loan No. 706108866

CHT REIT Portfolio

Promissory Note (Sunrise of Gilbert)

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without limitation, the limited and full recourse liability provisions of Article VIII of the Loan Agreement) are incorporated into this Note to the same extent and with the same force as if fully set forth in this Note.

6. Joint and Several Liability. This Note shall be the joint and several obligation of all makers, endorsers, guarantors and sureties, and shall be binding upon them and their respective successors and assigns and shall inure to the benefit of Lender and its successors and assigns.

7. Certain Waivers. Borrower and all others who may become liable for the payment of all or any part of the Obligations do hereby severally waive presentment and demand for payment, notice of dishonor, protest and notice of protest, notice of non-payment and notice of intent to accelerate the maturity hereof (and of such acceleration). No release of any security for the Obligations or extension of time for payment of this Note or any installment hereof, and no alteration, amendment or waiver of any provision of this Note, the Instrument or the other Documents shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Borrower, and any other who may become liable for the payment of all or any part of the Obligations, under this Note, the Instrument and the other Documents.

8. WAIVER OF TRIAL BY JURY. EACH OF BORROWER AND LENDER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM FILED BY EITHER PARTY, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE DOCUMENTS, OR ANY ALLEGED ACTS OR OMISSIONS OF LENDER OR BORROWER IN CONNECTION THEREWITH.

9. Governing Law. This Note shall be governed by and construed in accordance with the laws of the applicable State of Arizona.

10. Local Law Provisions. Paragraph 4 is hereby amended to add the following provision as the new first sentence thereof:

(a) “In the event any amounts paid or to be paid by Borrower to Lender under the Note, the Instrument or any of the Documents, as the same may hereafter be amended or modified, are deemed to be interest or in the nature of interest, Borrower agrees that they shall be interest for purposes of calculating the agreed-upon rate of interest paid or to be paid by Borrower for purposes of Arizona Revised Statutes Section 44-1201 et. seq. and shall be part of the agreed-upon and contracted for rate of interest.”

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[SIGNATURES ON FOLLOWING PAGE]

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Promissory Note (Sunrise of Gilbert)

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IN WITNESS WHEREOF, this Note has been executed by Borrower as of the date first set forth above.

BORROWER:
OWNER:
GILBERT AZ SENIOR LIVING OWNER, LLC, a Delaware limited liability company
By:	/s/ Joshua J. Taube
Name:	Joshua J. Taube
Title:	Vice President
[SEAL]
OPERATOR:
CHTSUN TWO GILBERT AZ SENIOR LIVING, LLC, a Delaware limited liability company
By:	/s/ Joshua J. Taube
Name:	Joshua J. Taube
Title:	Vice President
[SEAL]

Prudential Loan No. 706108866

CHT REIT Portfolio

Promissory Note (Sunrise of Gilbert)

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EX-10.7

Exhibit 10.7

PREPARED BY AND UPON

RECORDATION RETURN TO:

Seyfarth Shaw LLP

1075 Peachtree Street, N.E., Suite 2500

Atlanta, Georgia 30309-3962

Attention: Robert M. Trusty, Esq.

Deal Name: CHT REIT Portfolio

Loan Number: 706108866

GILBERT AZ SENIOR LIVING OWNER, LLC, and

CHTSUN TWO GILBERT AZ SENIOR LIVING, LLC (f/k/a MetSun Two Gilbert AZ Senior Living,

LLC), as grantor

(Borrower)

to

FIRST AMERICAN TITLE INSURANCE COMPANY, as trustee

(Trustee)

for the benefit of

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, as mortgagee

(Lender)

DEED OF TRUST AND SECURITY AGREEMENT

(Sunrise of Gilbert – First)

Dated: As of June 29, 2012

Legal Description: SEE EXHIBIT A

Location:	580 South Gilbert Road, Gilbert
Lot:	_______________
County:	Maricopa County, Arizona

Prudential Loan No. 706108866

CHT REIT Portfolio

Deed of Trust and Security Agreement

(Sunrise of Gilbert – First)

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DEED OF TRUST AND SECURITY AGREEMENT

(Sunrise of Gilbert – First)

THIS DEED OF TRUST AND SECURITY AGREEMENT (this “Instrument”) is made as of the 29th day of June, 2012, by GILBERT AZ SENIOR LIVING OWNER, LLC, a Delaware limited liability company, having its principal place of business at c/o CNL Healthcare Trust, Inc., 450 South Orange Avenue, Orlando, Florida 32801 (“Owner”), and CHTSUN TWO GILBERT AZ SENIOR LIVING, LLC (f/k/a MetSun Two Gilbert AZ Senior Living, LLC), a Delaware limited liability company, having its principal place of business at c/o CNL Healthcare Trust, Inc., 450 South Orange Avenue, Orlando, Florida 32801, (“Operator”, and together with Owner, “Borrower”), to First American Title Insurance Company, having an address at 1 First American Way, Santa Ana, California 92707, as trustee (“Trustee”), for the benefit of to THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation, having an office at c/o Prudential Asset Resources, Inc., 2100 Ross Avenue, Suite 2500, Dallas, Texas 75201, Attention: Asset Management Department; Reference Loan No. 706108866, as mortgagee (“Lender”).

RECITALS:

1. Lender has agreed to make on the date hereof certain loans to Borrower and one or more affiliates of Borrower (collectively, “Related Borrowers”; Borrower and the Related Borrowers collectively referred to as “Borrowers”) in the aggregate original principal amount of $125,000,000.00, evidenced by the Notes (as defined in the Loan Agreement [as hereinafter defined]), and secured by, among other things, (i) the Property (as hereinafter defined), and (ii) certain other properties, as identified from time to time in the Loan Agreement, owned by one or more of the Related Borrowers (collectively, the “Other Properties”).

2. Borrower, by the terms of that certain Promissory Note (Sunrise of Gilbert) dated as of the date hereof (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “Note”) and in connection with the loan (the “Loan”) from Lender to Borrower, is indebted to Lender in the principal sum of SEVENTEEN MILLION SIXTY-ONE THOUSAND AND NO/100 U.S. DOLLARS ($17,061,000.00).

3. The Loan is governed by that certain Amended and Restated Loan Agreement dated as of the date hereof, by and among Borrower, Related Borrowers, and Lender (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan Agreement”).

4. Borrower desires to secure the payment and performance of all of its obligations under the Note and certain additional Obligations; provided, however, that notwithstanding anything to the contrary contained herein, this Instrument shall not secure any obligation of Borrowers relating to the Other Indebtedness, the Other Notes, the Other Documents or the Other Obligations (each as defined herein), except as set forth in Article VII below.

IN CONSIDERATION of the principal sum of the Note, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, Borrower irrevocably:

A. Grants, bargains, sells, assigns, transfers, pledges, mortgages, warrants, and conveys to Lender with power of sale, and grants Lender a security interest in, the following property, rights, interests and estates owned by either Owner or Operator (collectively, the “Property”) (it being understood and agreed that Owner is the owner of the Land and Improvements [each as hereinafter defined], and Operator is the tenant under the Operating Lease [as hereinafter defined]):

(i) The real property in Maricopa County, Arizona, and described in Exhibit A attached hereto (the “Land”);

Prudential Loan No. 706108866

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(Sunrise of Gilbert – First)

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(ii) All of Borrower’s present and future estate, right, title and interest under that certain Lease Agreement dated as of the date hereof, by and between Owner, as landlord, and Operator, as tenant, and all present and future amendments, extensions, renewals, supplements and replacements thereto or thereof as the context may require (collectively, the “Operating Lease”), a memorandum of which was recorded in the Official Records of Maricopa County, Arizona immediately prior hereto, covering the Land, together with and including, without limitation, (1) all options of any kind, rights of first refusal, privileges and other benefits under the Operating Lease; and (2) all leases, subleases and subtenancies, occupancy agreements and concessions under the Operating Lease or otherwise affecting the Property;

(iii) All buildings, structures and improvements (including fixtures) now or later located in or on the Land (the “Improvements”);

(iv) All easements, estates, and interests including hereditaments, servitudes, appurtenances, tenements, mineral and oil/gas rights, water rights, air rights, development power or rights, options, reversion and remainder rights, and any other rights owned by Borrower and relating to or usable in connection with or access to the Property;

(v) All right, title, and interest owned by Borrower in and to all land lying within the rights-of-way, roads, or streets, open or proposed, adjoining the Land to the center line thereof, and all sidewalks, alleys, and strips and gores of land adjacent to or used in connection with the Property;

(vi) All right, title and interest of Borrower in, to, and under all plans, specifications, surveys, studies, reports, permits, licenses, agreements, contracts, instruments, books of account, insurance policies, and any other documents relating to the use, construction, occupancy, leasing activity, or operation of the Property; provided, however, that any such plans and specifications transferred hereunder are transferred for use in connection with the Property only and for no other purpose;

(vii) All of the tangible and intangible personal property described in Exhibit B owned by either Owner or Operator and replacements thereof, including all personal property currently owned or acquired by Owner or Operator after the date hereof used in connection with the ownership and operation of the Property as a Senior Living Facility (defined below), all kitchen or restaurant supplies, dining room facilities, medical facilities, or related furniture and equipment, and any other equipment, supplies or furniture owned by Owner or Operator and leased to any third party service provider or facility operator (including, without limitation, Operator or Sunrise Senior Living Management, Inc., a Virginia corporation [“Property Manager”]) under any use, occupancy, or lease agreements, as well as all licenses, permits, certificates, and approvals required for the operation of the Property as a Senior Living Facility, to the extent permitted by applicable law and regulations (but specifically excluding the tradename “Sunrise” and any intellectual property related to such tradename), including replacements and additions thereto; but excluding all personal property owned by any tenant, resident or other occupant (each, a “Tenant”) of the Property other than Operator;

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(viii) All of Borrower’s right, title and interest in the proceeds (including conversion to cash or liquidation claims) of (A) insurance relating to the Property and (B) all awards made for the taking by eminent domain (or by any proceeding or purchase in lieu thereof) of the Property, including awards resulting from a change of any streets (whether as to grade, access, or otherwise) and for severance damages;

(ix) All of Borrower’s right, title and interest in and to all tax refunds, including interest thereon, tax rebates, tax credits, and tax abatements, and the right to receive the same, which may be payable or available with respect to the Property;

(x) All leasehold estates, ground leases, leases, subleases, licenses, or other agreements affecting the use, enjoyment or occupancy of the Property (including, without limitation, any occupancy and admission agreements pertaining to occupants of the Property, including both residential and commercial agreements [including the Resident Agreements, as defined in the Loan Agreement]), and any management agreement or other operating agreement under which control of the use or operation of the Property or any portion thereof has been granted to any other entity) now or later existing (including any use or occupancy arrangements created pursuant to Title 7 or 11 of the United States Code, as amended from time to time, or any similar federal or state laws now or later enacted for the relief of debtors [the “Bankruptcy Code”]) and all extensions and amendments thereto (collectively, the “Leases”) and all of Borrower’s right, title and interest under the Leases, including all guaranties thereof;

(xi) All rents, entrance fees, management fees, service fees, issues, profits, royalties, receivables, use and occupancy charges (including all oil, gas or other mineral royalties and bonuses), income and other benefits now or later derived from any portion or use of the Property (including any payments received with respect to any Tenant or the Property pursuant to the Bankruptcy Code) and all cash, security deposits, advance rentals, or similar payments relating thereto, together with and including all proceeds from any private insurance for tenants to cover rental charges and charges for services at or in connection with the Property, including, without limitation , the right to payments from Medicare or Medicaid (as such terms are defined in the Loan Agreement) programs, or similar federal, state or local programs, boards, bureaus or agencies and rights to payment from Tenants, residents, occupants, private insurers or others (“Third Party Payments”), arising from the operation of the Property as a Senior Living Facility or otherwise due for the rents of Tenants, residents or occupants or for services at the Property (collectively, the “Rents”) and all proceeds from the cancellation, termination, surrender, sale or other disposition of the Leases, and the right to receive and apply the Rents to the payment of the Obligations;

(xii) All of Borrower’s rights and privileges heretofore or hereafter otherwise arising in connection with or pertaining to the Property, including, without limiting the generality of the foregoing, all water and/or sewer capacity, all water, sewer and/or other utility deposits or prepaid fees, and/or all water and/or sewer and/or other utility tap rights or other utility rights, any right or privilege of Borrower under any loan commitment, lease, contract, declaration of covenants, restrictions and easements or like instrument, developer’s agreement, or other agreement with any third party pertaining to the ownership, development, construction, operation, maintenance, marketing, sale or use of the Property;

(xiii) All payments due, or received, from occupants, Third Party Payments added to base rental income, base and/or additional meal sales, commercial operations located on the Property or provided as a service to the occupants of the Property, rental from guest suites, seasonal lease charges, furniture leases, and laundry services, and any and all other services provided to third parties in

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connection with the Property, and any and all other personal property on the real property site, excluding personal property belonging to occupants of the real property (other than property belonging to Borrower);

(xiv) Subject to applicable laws and regulations and to the extent assignable, all permits, licenses, certificates, provider numbers and contracts relating to the operation and authority to operate the Property as a “Senior Living Facility” (but specifically excluding the tradename “Sunrise” and any intellectual property related to such tradename). For purposes of this Instrument, “Senior Living Facility” shall mean a residential housing facility which qualifies as “housing for older persons” under the Fair Housing Amendments Act of 1988 and includes congregate living units and assisted living units, but which does not include any nursing care units, and which is licensed as an “Assisted Living Facility” under Arizona law; and

(xv) All of Borrower’s inventory, accounts, accounts receivable, contract rights, general intangibles, and all proceeds thereof relating to the Property.

B. Absolutely and unconditionally assigns, sets over, and transfers to Lender all of Borrower’s right, title, interest and estates in and to the Leases and the Rents, subject to the terms and license granted to Borrower under that certain Assignment of Leases and Rents (Sunrise of Gilbert – First) made by Borrower to Lender dated as of the date hereof (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “Assignment”), which document shall govern and control the provisions of this assignment.

TO HAVE AND TO HOLD the Property unto Lender and its successors and assigns forever, subject to the Permitted Encumbrances (as defined in the Loan Agreement) and the provisions, terms and conditions of this Instrument.

PROVIDED, HOWEVER, if Borrower shall pay and perform (or cause to be paid or performed) the Obligations as provided for in the Documents (defined below) and shall comply with (or cause Property Manager to comply with) all the provisions, terms and conditions in the Documents, these presents and the estates hereby granted (except for the obligations of Borrower set forth in Sections 3.11 and 3.12 and Article VIII of the Loan Agreement) shall cease, terminate and be void.

IN FURTHERANCE of the foregoing, Borrower warrants, represents, covenants and agrees as follows:

ARTICLE I—OBLIGATIONS; DOCUMENTS; INCORPORATION; DEFINITIONS

Section 1.01 Obligations. This Instrument is executed, acknowledged, and delivered by Borrower to secure and enforce the following obligations (collectively, the “Obligations”):

(a) Payment of all obligations, indebtedness and liabilities owing by Owner or Operator, as applicable, under the Documents and any renewals, extensions, and amendments of the Documents, including (i) the Prepayment Premium, and (ii) interest at both the Note Rate and at the Default Rate, if applicable and to the extent permitted by Laws;

(b) Performance of every obligation, covenant, and agreement made by Owner or Operator, as applicable, under the Documents including renewals, extensions, and amendments of the Documents; and

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(c) Payment of all sums advanced (including costs and expenses) by Lender to Owner or Operator, as applicable, pursuant to the Documents including renewals, extensions, and amendments of the Documents.

Section 1.02 Documents; Incorporation. The “Documents” shall mean this Instrument, the Loan Agreement, the Note, the Assignment, and any other written agreement executed in connection with the Loan (but excluding the Loan application, Loan commitment and the Environmental Indemnity) and by the party against whom enforcement is sought, including those given to evidence or further secure the payment and performance of any of the Obligations, and any written renewals, extensions, and amendments of the foregoing, executed by the party against whom enforcement is sought. All of the provisions of the other Documents (including, without limitation, the limited and full recourse liability provisions of Article VIII of the Loan Agreement) are incorporated into this Instrument to the same extent and with the same force as if fully set forth in this Instrument.

Section 1.03 Definitions. All capitalized terms not defined herein shall have the respective meanings set forth in the Loan Agreement. The terms set forth below are defined in the following sections of this Instrument:

Assignment	Recitals, Section 4(B)
Bankruptcy Code	Recitals, Section 4(A)(x)
Borrower	Preamble
Borrowers	Recitals, Section 1
Documents	Section 1.02
Improvements	Recitals, Section 4(A)(iii)
Instrument	Preamble
Land	Recitals, Section 4(A)(i)
Leases	Recitals, Section 4(A)(x)
Lender	Preamble
Loan	Recitals, Section 2
Loan Agreement	Recitals, Section 3
Management Agreement	Section 3.05
Note	Recitals, Section 2
Notice	Section 5.02
Obligations	Section 1.01
Operator	Preamble
Operating Lease	Recitals, Section 4(A)(ii)
Other Documents	Section 7.01(a)
Other Indebtedness	Section 7.01(b)
Other Mortgages	Section 7.01(c)
Other Notes	Section 7.01(d)
Other Obligations	Section 7.01(e)
Other Properties	Recitals, Section 1
Other Subordinate Assignments	Section 7.01(g)
Other Subordinate Mortgages	Section 7.01(h)
Owner	Preamble
Personal Property	Section 3.02(j)
Property	Recitals, Section 4(A)
Property Manager	Recitals, Section 4(A)(vii)
Related Borrowers	Recitals, Section 1

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Rents	Recitals, Section 4(A)(xi)
Senior Living Facility	Recitals, Section 4(A)(xiv)
Subordinate Assignment	Section 7.01(i)
Subordinate Mortgage	Section 7.01(j)
Tenant	Recitals, Section 4(A)(vii)
Third Party Payments	Recitals, Section 4(A)(xi)

ARTICLE II—SALE, TRANSFER, OR ENCUMBRANCE OF THE PROPERTY

Section 2.01 Due-on-Sale or Encumbrance. It shall be an Event of Default and, at the sole option of Lender, Lender may accelerate the Obligations, and the entire Obligations (including any Prepayment Premium) shall become immediately due and payable, if, without Lender’s prior written consent (which consent may be given or withheld for any or for no reason or given conditionally, in Lender’s sole discretion), any of the events set forth in Section 5.01 of the Loan Agreement shall occur.

ARTICLE III—DEFAULTS AND REMEDIES

Section 3.01 Events of Default. The occurrence of an Event of Default (as such term is defined in Section 6.01 of the Loan Agreement) shall constitute, at Lender’s option, an Event of Default under this Instrument and the other Documents.

Section 3.02 Remedies. If an Event of Default occurs, Lender or any person designated by Lender, may (but shall not be obligated to) take any action (separately, concurrently, cumulatively, and at any time and in any order) permitted under any Laws, without notice, demand, presentment, or protest (all of which are hereby waived), to protect and enforce Lender’s rights under the Documents or Laws including the following actions:

(a) accelerate and declare the entire unpaid Obligations immediately due and payable, except for defaults under Sections 6.01(f), 6.01(g), 6.01(h), or 6.01(i) of the Loan Agreement which shall automatically make the Obligations immediately due and payable;

(b) judicially or otherwise, (i) completely foreclose this Instrument or (ii) partially foreclose this Instrument for any portion of the Obligations due and the lien and security interest created by this Instrument shall continue unimpaired and without loss of priority as to the remaining Obligations not yet due;

(c) sell for cash or upon credit the Property and all right, title and interest of Borrower therein and rights of redemption thereof, pursuant to power of sale;

(d) recover judgment on the Note either before, during or after any proceedings for the enforcement of the Documents and without any requirement of any action being taken to (i) realize on the Property or (ii) otherwise enforce the Documents;

(e) seek specific performance of any provisions in the Documents;

(f) apply for the appointment of a receiver, custodian, trustee, liquidator, or conservator of the Property without (i) notice to any person, (ii) regard for (A) the adequacy of the security for the Obligations or (B) the solvency of Borrower or any person liable for the payment of the Obligations; and Borrower and any person so liable waives or shall be deemed to have waived the foregoing and any other objections to the fullest extent permitted by Laws and consents or shall be deemed to have consented to such appointment;

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(g) with or without entering upon the Property, (i) exclude Borrower (solely upon acceleration of the Loan), Property Manager, and any other person from the Property without liability for trespass, damages, or otherwise; (ii) take possession of, and Borrower shall surrender on demand (and shall require Property Manager to surrender on demand [provided Lender has accelerated the Loan]), all books, records, and accounts relating to the Property; (iii) give notice to Property Manager and Tenants or any person, make demand for, collect, receive, sue for, and recover in its own name all Rents and cash collateral derived from the Property; (iv) use, operate, manage, preserve, control, and otherwise deal with every aspect of the Property including (A) conducting its business, (B) insuring it, (C) making all repairs, renewals, replacements, alterations, additions, and improvements to or on it, (D) completing the construction of any Improvements in manner and form as Lender deems advisable, (E) executing, modifying, enforcing, and terminating new and existing Leases on such terms as Lender deems advisable and evicting any Tenants in default, and (F) making payments for any required licensing fees, permits, or other expenses related to the operation of the Property by or on behalf of Lender as a Senior Living Facility, any fines or penalties that may be assessed against the Property, any costs incurred to bring the Property into full compliance with applicable codes and regulatory requirements, and for any fees or costs related to Lender’s employment of a licensed operator for the Property; (v) apply the receipts from the Property to payment of the Obligations, in any order or priority determined by Lender, after first deducting all Costs, expenses, and liabilities incurred by Lender in connection with the foregoing operations and all amounts needed to pay the Impositions and other expenses of the Property, as well as just and reasonable compensation for the services of Lender and its attorneys, agents, and employees; and/or (vi) in every case in connection with the foregoing, exercise all rights and powers of Borrower, Lender with respect to the Property, either in Borrower’s or Property Manager’s name or otherwise;

(h) release any portion of the Property for such consideration, if any, as Lender may require without, as to the remainder of the Property, impairing or affecting the lien or priority of this Instrument or improving the position of any subordinate lienholder with respect thereto, except to the extent that the Obligations shall have been actually reduced, and Lender may accept by assignment, pledge, or otherwise any other property in place thereof as Lender may require without being accountable for so doing to any other lienholder;

(i) apply any Deposits to the following items in any order and in Lender’s sole discretion: (A) the Obligations, (B) Costs, (C) advances made by Lender or under the Documents, and/or (D) Impositions;

(j) take all actions permitted under the U.C.C. of the State of Arizona, including (i) the right to take possession of all tangible and intangible personal property now or hereafter included within the Property (the “Personal Property”) and take such actions as Lender deems advisable for the care, protection and preservation of the Personal Property and (ii) request Borrower at its expense to assemble (or require Property Manager to assemble) the Personal Property and make it available to Lender at a convenient place acceptable to Lender. Any notice of sale, disposition or other intended action by Lender with respect to the Personal Property sent to Borrower at least five (5) Business Days prior to such action shall constitute commercially reasonable notice to Borrower; or

(k) take any other action permitted under any Laws.

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If Lender exercises any of its rights under Section 3.02(g), Lender shall not (a) be deemed to have entered upon or taken possession of the Property except upon the exercise of its option to do so, evidenced by its demand and overt act for such purpose; (b) be deemed a beneficiary or mortgagee in possession by reason of such entry or taking possession; nor (c) be liable (i) to account for any action taken pursuant to such exercise other than for Rents actually received by Lender, (ii) for any loss sustained by Borrower resulting from any failure to lease the Property, or (iii) any other act or omission of Lender except for losses caused by Lender’s willful misconduct or gross negligence. Borrower hereby consents to, ratifies, and confirms the exercise by Lender of its rights under this Instrument and appoints Lender as its attorney in fact, which appointment shall be deemed to be coupled with an interest and irrevocable, for such purposes. After an Event of Default, Lender is further authorized to give notice to all third party providers, including insurers, any governmental provider, or Medicare or Medicaid or any similar program or provider, at Lender’s option, instructing them to pay all Rents which would be otherwise paid to Borrower to Lender, to the extent permitted by law.

Section 3.03 Expenses. All Costs, expenses, allocated or accrued fees, or other amounts paid or incurred by Lender in the exercise of its rights under the Documents which are reimbursable or payable to Lender by Borrower under the Documents, together with interest thereon at the applicable interest rate specified in the Loan Agreement, which shall be the Default Rate unless prohibited by Laws, shall be (a) part of the Obligations, (b) secured by this Instrument, and (c) allowed and included as part of the Obligations in any foreclosure, decree for sale, power of sale, or other judgment or decree enforcing Lender’s rights under the Documents.

Section 3.04 Rights Pertaining to Sales. To the extent permitted under (and in accordance with) any Laws, the following provisions shall, as Lender may determine in its sole discretion, apply to any sales of the Property under this Article III, whether by judicial proceeding, judgment, decree, power of sale, foreclosure or otherwise: (a) Lender may conduct a single sale of the Property or multiple sales of any part of the Property in separate tracts or in any other manner as Lender deems in its best interests and Borrower waives any right to require otherwise; (b) if Lender elects more than one sale of the Property, Lender may at its option cause the same to be conducted simultaneously or successively, on the same day or on such different days or times and in such order as Lender may deem to be in its best interests, no such sale shall terminate or otherwise affect the lien of this Instrument on any part of the Property not then sold, and Borrower shall pay the costs and expenses of each such sale; (c) any sale may be postponed or adjourned by public announcement at the time and place appointed for such sale or for such postponed or adjourned sale without further notice; or such sale may occur, without further notice, at the time fixed by the last postponement or a new notice of sale may be given; and (d) Lender may acquire the Property and, in lieu of paying cash, may pay by crediting against the Obligations the amount of its bid, after deducting therefrom any sums which Lender is authorized to deduct under the provisions of the Documents. After any such sale, Lender shall deliver to the purchaser at such sale a deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in any such deed of any matters or facts shall be presumptive proof of the truthfulness thereof. Any person, including Borrower or Lender, may purchase at such sale.

Section 3.05 Application of Proceeds. Any proceeds received from any sale or disposition under this Article III or otherwise, together with any other sums held by Lender, shall, except as expressly provided to the contrary, be applied in the order determined by Lender to: (a) payment of all Costs and expenses of any enforcement action or foreclosure sale, transfer of title by power of sale, or otherwise, including interest thereon at the applicable interest rate specified in the Loan Agreement, which shall be the Default Rate unless prohibited by Laws, (b) all taxes, Assessments, and other charges unless the Property was sold subject to these items; (c) payment of the Obligations in such order as Lender may elect; (d) payment

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of any other sums secured or required to be paid by Borrower, or by Property Manager under that certain Management Agreement dated as of the date hereof, by and among Operator, CHTSun Partners IV, LLC, a Delaware limited liability company, and Property Manager (the “Management Agreement”) in order to maintain any licenses, permits, certificates or contracts relating to the operation of and authority to operate the Property as a Senior Living Facility; and (e) payment of the surplus, if any, to any person lawfully entitled to receive it. Borrower and Lender intend and agree that during any period of time between any foreclosure judgment that may be obtained and the actual foreclosure sale that the foreclosure judgment will not extinguish the Documents or any rights contained therein including the obligation of Borrower to pay all Costs and to pay interest at the applicable interest rate specified in the Loan Agreement, which shall be the Default Rate unless prohibited by Laws.

Section 3.06 Additional Provisions as to Remedies. No failure, refusal, waiver, or delay by Lender to exercise any rights under the Documents upon any default or Event of Default shall impair Lender’s rights or be construed as a waiver of, or acquiescence to, such or any subsequent default or Event of Default. No recovery of any judgment by Lender and no levy of an execution upon the Property or any other property of Borrower or Property Manager shall affect the lien and security interest created by this Instrument and such liens, rights, powers, and remedies shall continue unimpaired as before. Lender may resort to any security given by this Instrument or any other security now given or hereafter existing to secure the Obligations, in whole or in part, in such portions and in such order as Lender may deem advisable, and no such action shall be construed as a waiver of any of the liens, rights, or benefits granted hereunder. Acceptance of any payment after any Event of Default shall not be deemed a waiver or a cure of such Event of Default and such acceptance shall be deemed an acceptance on account only. If Lender has started enforcement of any right by foreclosure, sale, entry, or otherwise and such proceeding shall be discontinued, abandoned, or determined adversely for any reason, then Borrower and Lender shall be restored to their former positions and rights under the Documents with respect to the Property, subject to the lien and security interest hereof.

Section 3.07 Waiver of Rights and Defenses. To the fullest extent Borrower may do so under Laws, Borrower (a) will not at any time insist on, plead, claim, or take the benefit of any statute or rule of law now or later enacted providing for any appraisement, valuation, stay, extension, moratorium, redemption, or any statute of limitations; (b) for itself, its successors and assigns, and for any person ever claiming an interest in the Property (other than Lender), waives and releases all rights of redemption, reinstatement, valuation, appraisement, notice of intention to mature or declare due the whole of the Obligations, all rights to a marshaling of the assets of Borrower, including the Property, or to a sale in inverse order of alienation, in the event of foreclosure (or extinguishment by transfer of title by power of sale) of the liens and security interests created under the Documents; (c) shall not be relieved of its obligation to pay the Obligations as required in the Documents nor shall the lien or priority of the Documents be impaired by any agreement renewing, extending, or modifying the time of payment or the provisions of the Documents (including a modification of any interest rate), unless expressly released, discharged, or modified by such agreement. Regardless of consideration and without any notice to or consent by the holder of any subordinate lien, security interest, encumbrance, right, title, or interest in or to the Property, Lender may (a) release any person liable for payment of the Obligations or any portion thereof or any part of the security held for the Obligations or (b) modify any of the provisions of the Documents without impairing or affecting the Documents or the lien, security interest, or the priority of the modified Documents as security for the Obligations over any such subordinate lien, security interest, encumbrance, right, title, or interest.

Section 3.08 Additional Credit Bidding. In connection with any sale of the Property pursuant to Section 363 of the Bankruptcy Code or any plan under the Bankruptcy Code, Lender shall have the right to

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acquire the Property and, in lieu of paying cash, Lender shall have the right (at its option) to pay by crediting against the Obligations the amount of its bid, after deducting therefrom any sums which Lender is authorized to deduct under the provisions of the Documents.

ARTICLE IV—SECURITY AGREEMENT

Section 4.01 Security Agreement. This Instrument constitutes both a real property mortgage and a “security agreement” within the meaning of the U.C.C. The Property includes real and personal property and all tangible and intangible rights and interest of Borrower in the Property. Borrower grants to Lender, as security for the Obligations, a security interest in the Personal Property to the fullest extent that the Personal Property may be subject to the U.C.C. Borrower authorizes Lender to file any financing or continuation statements and amendments thereto relating to the Personal Property without the signature of Borrower if permitted by Laws.

ARTICLE V—ADDITIONAL PROVISIONS

Section 5.01 Usury Savings Clause. Without limiting Section 1.02 above, the provisions of Section 9.01 of the Loan Agreement are hereby incorporated by reference into this Instrument to the same extent and with the same force as if fully set forth herein.

Section 5.02 Notices. Any notice, request, demand, consent, approval, direction, agreement, or other communication (any “notice”) required or permitted under the Documents shall be in writing and shall be validly given if sent by a nationally-recognized courier that obtains receipts, delivered personally by a courier that obtains receipts, or mailed by United States certified mail (with return receipt requested and postage prepaid) addressed to the applicable person as follows:

If to Borrower:	With a copy of notices sent to Borrower to:
GILBERT AZ SENIOR LIVING OWNER, LLC	LOWNDES, DROSDICK, DOSTER, KANTOR &
and CHTSUN TWO GILBERT AZ SENIOR	REED, P.A.
LIVING, LLC	215 N. Eola Drive
c/o CNL Healthcare Trust, Inc.	Orlando, Florida 32801
450 South Orange Avenue	Attention: Peter Luis Lopez, Esq.
Orlando, Florida 32801
Attention: Holly Greer, Senior Vice President and
Joseph T. Johnson, Senior Vice president and Chief
Financial Officer
and	and
GILBERT AZ SENIOR LIVING OWNER, LLC	WILKIE FARR & GALLAGHER LLP
and CHTSUN TWO GILBERT AZ SENIOR	787 Seventh Avenue
LIVING, LLC	New York, New York 10019
c/o Sunrise Senior Living, Inc.	Attention: Eugene A. Pinover, Esq.
7900 Westpark Drive, Suite T-900
McLean, Virginia 22102
Attention: Edward Burnett

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and
c/o Sunrise Senior Living, Inc.
7900 Westpark Drive, Suite T-900
McLean, Virginia 22102
Attention: General Counsel
If to Lender:	With a copy of notices sent to Lender to:
THE PRUDENTIAL INSURANCE COMPANY	THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA	OF AMERICA
Prudential Asset Resources, Inc.	Prudential Asset Resources, Inc.
2100 Ross Avenue, Suite 2500	2100 Ross Avenue, Suite 2500
Dallas, Texas 75201	Dallas, Texas 75201
Attention: Asset Management Department	Attention: Legal Department
Reference Loan No. 706108866	Reference Loan No. 706108866
If to Trustee:
FIRST AMERICAN TITLE INSURANCE
COMPANY
1 First American Way
Santa Ana, California 92707

Each notice shall be effective upon being so sent, delivered, or mailed, but the time period for response or action shall run from the date of receipt as shown on the delivery receipt. Refusal to accept delivery or the inability to deliver because of a changed address for which no notice was given shall be deemed receipt. Any party may periodically change its address for notice and specify up to two (2) additional addresses for copies by giving the other party at least ten (10) days’ prior notice.

Section 5.03 Applicable Law and Submission to Jurisdiction. This Instrument shall be governed by and construed in accordance with the laws of the State of Arizona and the applicable laws of the United States of America. Without limiting Lender’s right to bring any Action (as defined in the Loan Agreement) in the courts of other jurisdictions, Borrower irrevocably (a) submits to the jurisdiction of any state or federal court in the State of Arizona, (b) agrees that any Action may be heard and determined in such court, and (c) waives, to the fullest extent permitted by Laws, the defense of an inconvenient forum to the maintenance of any Action in such jurisdiction.

Section 5.04 Transfer of Loan.

(a) Lender may, at any time, (i) sell, transfer or assign the Documents and any servicing rights with respect thereto or (ii) grant participations therein or issue Securities (as defined in the Loan Agreement). Lender may forward to any Investors (as defined in the Loan Agreement), to any Rating Agency (as defined in the Loan Agreement) rating such Securities and to any prospective Investor, all documents and information which Lender now has or may later acquire relating to the Obligations, Borrower, Property Manager, any guarantor(s), any indemnitor(s), the Leases, and the Property, whether furnished by Borrower, Property Manager, any guarantor(s), any indemnitor(s) or otherwise, as Lender determines advisable. Borrower, any guarantor and any indemnitor agree to cooperate with Lender in connection with any transfer made or any Securities created pursuant to this Section 5.04 including the

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delivery of an estoppel certificate in accordance with Section 3.16 of the Loan Agreement and such other documents as may be reasonably requested by Lender. Borrower shall also furnish consent of Borrower, Property Manager, any guarantor and any indemnitor in order to permit Lender to furnish such Investors or such prospective Investors or such Rating Agency with any and all information concerning the Property, the Leases, the financial condition of Borrower, any guarantor and any indemnitor, as may be reasonably requested by Lender, any Investor, any prospective Investor or any Rating Agency and which may be complied with without undue expense.

(b) Borrower agrees that upon any assignment or transfer of the Documents by Lender to any third party, Lender shall have no obligations or liabilities under the Documents for the period from and after such assignment or transfer, such third party shall be substituted as the lender under the Documents for all purposes, and Borrower shall look solely to such third party for the performance of any obligations under the Documents or with respect to the Loan arising from and after the date of such assignment or transfer.

(c) Upon an assignment or other transfer of the Documents, Lender may, at its discretion, pay over the Deposits in its possession and deliver all other collateral mortgaged, granted, pledged or assigned pursuant to the Documents, or any part thereof, to the transferee who shall thereupon become vested with all the rights herein or under applicable law given to Lender with respect thereto, and Lender shall thereafter forever be relieved and fully discharged from any liability or responsibility in the matter; but Lender shall retain all rights hereby given to it with respect to any liabilities and the collateral not so transferred to Borrower or to the assignee or transferee of the Documents. If the Deposits are transferred or assigned to the assignee or transferee, then Borrower shall then look solely to such assignee or transferee with respect thereto. This provision shall apply to every transfer of the Deposits and any other collateral mortgaged, granted, pledged or assigned pursuant to the Documents, or any part thereof, to a new assignee or transferee. Subject to the provisions of Section 5.01 of the Loan Agreement, a transfer of title to the Land shall automatically transfer to the new owner the beneficial interest in the Deposits.

(d) Notwithstanding anything to the contrary contained in this Section 5.04, Borrower shall not be required to pay any direct costs in connection with any transfer of the Loan by Lender pursuant to the terms of this Section 5.04 other than any out-of-pocket expenses in an amount equal to or less than Two Thousand Five Hundred Dollars ($2,500) incurred by Borrower in complying with any request for information made pursuant to this Section 5.04.

Section 5.05 Miscellaneous. If any provision of the Documents shall be held to be invalid, illegal, or unenforceable in any respect, this shall not affect any other provisions of the Documents and such provision shall be limited and construed as if it were not in the Documents. If title to the Property becomes vested in any person other than Owner or Operator, as applicable, then Lender may, without notice to Borrower, deal with such person regarding the Documents or the Obligations in the same manner as with Borrower without in any way vitiating or discharging Borrower’s liability under the Documents or being deemed to have consented to the vesting. If both the lessor’s and lessee’s interest under any Lease ever becomes vested in any one person, this Instrument and the lien and security interest created hereby shall not be destroyed or terminated by the application of the doctrine of merger, and Lender shall continue to have and enjoy all its rights and privileges as to each separate estate. Upon foreclosure (or transfer of title by power of sale) of this Instrument, none of the Leases shall be destroyed or terminated as a result of such foreclosure (or transfer of title by power of sale), by application of the doctrine of merger or as a matter of law, unless Lender takes all actions required by law to terminate the Leases as a result of foreclosure (or transfer of title by power of sale). All of Borrower’s covenants and agreements under the Documents shall run with the land and time is of the essence. Following an Event

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of Default (unless Lender has accepted cure of such Event of Default by specific written statement from Lender to Borrower acknowledging Lender’s acceptance of such cure, and Borrower specifically understands and agrees that Lender shall have no obligation whatsoever to accept the cure of any Event of Default), Borrower appoints Lender as its attorney-in-fact, which appointment is irrevocable and shall be deemed to be coupled with an interest, with respect to the execution, acknowledgment, delivery, filing or recording for and in the name of Borrower or Property Manager of any of the documents listed in Sections 3.04, 3.19, 4.01, and 6.02 of the Loan Agreement. The Documents cannot be amended, terminated, or discharged except in a writing signed by the party against whom enforcement is sought. No waiver, release, or other forbearance by Lender will be effective unless it is in a writing signed by Lender and then only to the extent expressly stated. The provisions of the Documents shall be binding upon Borrower and its heirs, devisees, representatives, successors, and assigns including successors in interest to the Property and inure to the benefit of Lender and its heirs, successors, substitutes, and assigns. Where two or more persons have executed the Documents, the obligations of such persons shall be joint and several, except to the extent the context clearly indicates otherwise. The Documents may be executed in any number of counterparts with the same effect as if all parties had executed the same document. All such counterparts shall be construed together and shall constitute one instrument, but in making proof hereof it shall only be necessary to produce one such counterpart. Upon receipt of an affidavit of an officer of Lender or Borrower, as the case may be, as to the loss, theft, destruction or mutilation of any Document which is not of public record, and, in the case of any mutilation, upon surrender and cancellation of the Document, any affected Borrower or Lender, as the case may be, will issue, in lieu thereof, a replacement Document, dated the date of the lost, stolen, destroyed or mutilated Document containing the same provisions (provided that if the Note is lost, stolen or destroyed, Lender provides an indemnity of the type customary in such situation). Any reviews, inspections, reports, approvals or similar items conducted, made or produced by or on behalf of Lender with respect to Borrower, the Property or the Loan are for loan underwriting and servicing purposes only, and shall not constitute an acknowledgment, representation or warranty of the accuracy thereof, or an assumption of liability with respect to Borrower, Borrower’s contractors, architects, engineers, employees, agents or invitees, present or future tenants, occupants or owners of the Property, or any other party.

Section 5.06 Entire Agreement. Except as provided in Section 3.17 of the Loan Agreement, (a) the Documents constitute the entire understanding and agreement between Borrower, Lender with respect to the Loan and supersede all prior written or oral understandings and agreements with respect to the Loan including the Loan application and Loan commitment, and (b) Borrower is not relying on any representations or warranties of Lender except as expressly set forth in the Documents.

Section 5.07 WAIVER OF TRIAL BY JURY. EACH OF BORROWER AND LENDER HEREBY WAIVES (AND SHALL CAUSE PROPERTY MANAGER TO WAIVE), TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM FILED BY EITHER PARTY, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE DOCUMENTS, OR ANY ALLEGED ACTS OR OMISSIONS OF LENDER OR BORROWER IN CONNECTION THEREWITH.

Section 5.08 Performance of Covenants by Operator. Notwithstanding that covenants of Borrower set forth in this Instrument may be binding on both Owner and Operator, it is understood and agreed that so long as the Operating Lease is in full force and effect, the full satisfaction and performance of any covenant that may be fully performed by either Owner or Operator (as the respective owner or operator of the Property) and is not a covenant that is personal to Owner or Operator, shall be deemed to be performance of the covenant by the Borrower hereunder.

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ARTICLE VI—LOCAL LAW PROVISIONS

[INTENTIONALLY OMITTED]

ARTICLE VII—SPECIAL PROVISIONS

Section 7.01 Other Definitions. As used in this Instrument, the following terms shall have the following meanings:

(a) Other Documents: The Other Notes, the Loan Agreement (as it relates to the Other Indebtedness), the Subordinate Mortgage, the Other Subordinate Mortgages, the Subordinate Assignment, the Other Subordinate Assignments, and all other documents evidencing, securing or relating to the payment of the Other Indebtedness or performance of the Other Obligations.

(b) Other Indebtedness: The loans from Lender to Related Borrowers as evidenced by the Other Notes.

(c) Other Mortgages: Those certain other mortgages and deeds of trust dated as of the date of this Instrument, executed by one or more of Related Borrowers, for the benefit of Lender, securing the Other Obligations and encumbering the Other Properties.

(d) Other Notes: Collectively, all of the promissory notes defined and identified from time to time in the Loan Agreement as the “Notes,” with the exception of that certain promissory note defined herein as the “Note,” as the same are amended, renewed, extended, supplemented, restated or otherwise modified from time to time in accordance with the provisions of the Loan Agreement or such promissory note.

(e) Other Obligations: Any and all covenants, promises, and other obligations (including payment of the Other Indebtedness) made or owing by Borrowers to or due to Lender under and/or as set forth in the Other Documents, and all of the material covenants, promises, and other material obligations made or owing by Borrowers to each and every other Person relating to the Property, exclusive of the Obligations.

(f) Other Properties: As defined in Recitals, Section 1.

(g) Other Subordinate Assignments: Those certain other second priority assignments of leases and rents dated as of the date of this Instrument, executed by one or more of Related Borrowers, for the benefit of Lender, securing the Other Obligations.

(h) Other Subordinate Mortgages: Those certain other second priority mortgages and deeds of trust dated as of the date of this Instrument, executed by one or more of Related Borrowers, for the benefit of Lender, securing the Other Obligations.

(i) Subordinate Assignment: The Assignment of Leases and Rents (Sunrise of Gilbert – Second) dated as of the date of this Instrument, executed by Borrower, for the benefit of Lender securing the Other Obligations.

(j) Subordinate Mortgage: The Deed of Trust and Security Agreement (Sunrise of Gilbert – Second) dated as of the date of this Instrument, executed by Borrower, for the benefit of Lender, securing the Other Obligations.

Prudential Loan No. 706108866

CHT REIT Portfolio

Deed of Trust and Security Agreement

(Sunrise of Gilbert – First)

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Section 7.02 Cross Default and Notice Provisions. Any Event of Default under any of the Other Documents shall constitute, at Lender’s option, an Event of Default under the Documents. Any Event of Default under any of the Documents shall constitute, at Lender’s option, an Event of Default under the Other Documents. In the event of a default under any of the Documents or any of the Other Documents, Borrower hereby acknowledges and agrees that: (A) Lender shall only be obligated to send one (1) notice of default to any one of Borrowers; and (B) said notice shall be deemed notice to all Borrowers under all of the Documents and all of the Other Documents.

Section 7.03 Application of Funds. At any time that Lender has the right or option hereunder to apply any funds in its possession (to the extent permitted by applicable Laws) to the Obligations following the occurrence of an Event of Default under any of the Documents or under the Other Documents, Lender shall be entitled to apply such amounts (to the extent permitted by applicable Laws) to the Note or any of the Other Notes, regardless of whether under the terms of such note(s) such amounts are then due and payable.

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Prudential Loan No. 706108866

CHT REIT Portfolio

Deed of Trust and Security Agreement

(Sunrise of Gilbert – First)

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IN WITNESS WHEREOF, the undersigned has executed this Instrument as of the day first set forth above.

BORROWER:
OWNER:
GILBERT AZ SENIOR LIVING OWNER, LLC, a Delaware limitedliability company
By:	/s/ Joshua J. Taube	[SEAL]
Name:	Joshua J. Taube
Title:	Vice President
OPERATOR:
CHTSUN TWO GILBERT AZ SENIOR LIVING, LLC (f/k/a MetSun Two Gilbert AZ Senior Living, LLC), a Delaware limited company
By:	/s/ Joshua J. Taube	[SEAL]
Name:	Joshua J. Taube
Title:	Vice President

STATE OF GEORGIA	)
		) SS.
COUNTY OF FULTON	)

This Instrument was acknowledged before me on the 28th day of June, 2012, by Joshua J. Taube, as Vice President of GILBERT AZ SENIOR LIVING OWNER, LLC, a Delaware limited liability company, and CHTSUN TWO GILBERT AZ SENIOR LIVING, LLC (f/k/a MetSun Two Gilbert AZ Senior Living, LLC), a Delaware limited liability company.

	/s/ Sally Thornton
	Notary Public
	Print Name:	Sally Thornton
[SEAL]	My Commission Expires: April 10, 2014

Prudential Loan No. 706108866

CHT REIT Portfolio

Deed of Trust and Security Agreement

(Sunrise of Gilbert – First)

14591237v.3 / 28227-001181

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Exhibit A

LEGAL DESCRIPTION

(Sunrise of Gilbert)

Prudential Loan No. 706108866

CHT REIT Portfolio

Deed of Trust and Security Agreement

(Sunrise of Gilbert – First)

14591237v.3 / 28227-001181

A-1

Exhibit B

DESCRIPTION OF PERSONAL PROPERTY SECURITY

All of Borrower’s right, title and interest in, to and under the following:

1. All machinery, apparatus, goods, equipment, materials, fittings, fixtures, chattels, and tangible personal property, and all appurtenances and additions thereto and betterments, renewals, substitutions, and replacements thereof, owned by Borrower, wherever situate, and now or hereafter located on, attached to, contained in, or used or usable in connection with the real property described in Exhibit A attached hereto and incorporated herein (the “Land”), and all improvements located thereon (the “Improvements”) or placed on any part thereof, though not attached thereto, including all screens, awnings, shades, blinds, curtains, draperies, carpets, rugs, furniture and furnishings, heating, electrical, lighting, plumbing, ventilating, air-conditioning, refrigerating, incinerating and/or compacting plants, systems, fixtures and equipment, elevators, hoists, stoves, ranges, vacuum and other cleaning systems, call systems, sprinkler systems and other fire prevention and extinguishing apparatus and materials, motors, machinery, pipes, ducts, conduits, dynamos, engines, compressors, generators, boilers, stokers, furnaces, pumps, tanks, appliances, equipment, fittings, and fixtures, including all personal property currently owned or acquired by Borrower after the date hereof used in connection with the ownership and operation of the Property as a Senior Living Facility (defined below), all kitchen or restaurant supplies, dining room facilities, medical facilities, or related furniture and equipment, and any other equipment, supplies or furniture owned by Borrower and leased to any third party service provider or facility operator under any use, occupancy, or lease agreements.

2. All funds, accounts, deposits, instruments, documents, contract rights, general intangibles, notes, and chattel paper arising from or by virtue of any transaction related to the Land, the Improvements, or any of the personal property described in this Exhibit B (including, without limitation, any payments due under any occupancy and admission agreements pertaining to occupants of the Property, including both residential and commercial agreements, and any management agreement or operating agreement under which control of the use or operation of the Property has been granted to any other entity, together with (i) all proceeds from any private insurance for tenants to cover rental charges and charges for services at or in connection with the Property, and the right to payments from Medicare or Medicaid programs, or similar federal, state or local programs, boards, bureaus or agencies and rights to payment from tenants, residents, occupants, private insurers or others, arising from the operation of the Property as a Senior Living Facility or otherwise due for tenants, residents or occupants or for services at the Property, (ii) all payments due, or received, from occupants, second party charges added to base rental income, base and/or additional meal sales, commercial operations located on the Property or provided as a service to the occupants of the Property, rental from guest suites, seasonal lease charges, furniture leases, and laundry services, and any and all other services provided to third parties in connection with the Property, and (iii) any and all other personal property on the real property site, excluding personal property belonging to occupants of the real property).

3. All permits, licenses, franchises, certificates, and other rights and privileges now held or hereafter acquired by Borrower in connection with the Land, the Improvements, or any of the personal property described in this Exhibit B, including all licenses, permits, certificates, and approvals required for the operation of the Property as a Senior Living Facility, to the extent permitted by applicable law and regulations. For purposes of this Instrument, “Senior Living Facility” shall mean a residential housing facility which qualifies as “housing for older persons” under the Fair Housing Amendments Act of 1988 and includes congregate living units and assisted living units, but which does not include any nursing care units, and which is licensed as an “Assisted Living Facility” under Arizona law.

Prudential Loan No. 706108866

CHT REIT Portfolio

Deed of Trust and Security Agreement

(Sunrise of Gilbert – First)

14591237v.3 / 28227-001181

B-1

4. All right, title, and interest of Borrower in and to the name and style by which the Land and/or the Improvements is known, including trademarks and trade names relating thereto (but specifically excluding the tradename “Sunrise” and any intellectual property related to such tradename).

5. All right, title, and interest of Borrower in, to, and under all plans, specifications, maps, surveys, reports, permits, licenses, architectural, engineering and construction contracts, books of account, insurance policies, and other documents of whatever kind or character, relating to the use, construction upon, occupancy, leasing, sale, or operation of the Land and/or the Improvements; provided, however, that any such plans and specifications transferred hereunder are transferred for use in connection with the Property only and for no other purpose.

6. All interests, estates, or other claims or demands, in law and in equity, which Borrower now has or may hereafter acquire in the Land, the Improvements, or the personal property described in this Exhibit B.

7. All right, title, and interest owned by Borrower in and to all options to purchase or lease the Land, the Improvements, or any other personal property described in this Exhibit B, or any portion thereof or interest therein, and in and to any greater estate in the Land, the Improvements, or any of the personal property described in this Exhibit B.

8. All of the estate, interest, right, title, other claim or demand, both in law and in equity, including claims or demands with respect to the proceeds of insurance relating thereto, which Borrower now has or may hereafter acquire in the Land, the Improvements, or any of the personal property described in this Exhibit B, or any portion thereof or interest therein, and any and all awards made for the taking by eminent domain, or by any proceeding or purchase in lieu thereof, of the whole or any part of such property, including without limitation, any award resulting from a change of any streets (whether as to grade, access, or otherwise) and any award for severance damages.

9. All right, title, and interest of Borrower in and to all contracts, permits, certificates, licenses, approvals, utility deposits, utility capacity, and utility rights issued, granted, agreed upon, or otherwise provided by any governmental or private authority, person or entity relating to the ownership, development, construction, operation, maintenance, marketing, sale, or use of the Land and/or the Improvements, including all of Borrower’s rights and privileges hereto or hereafter otherwise arising in connection with or pertaining to the Land and/or the Improvements, including, without limiting the generality of the foregoing, all water and/or sewer capacity, all water, sewer and/or other utility deposits or prepaid fees, and/or all water and/or sewer and/or other utility tap rights or other utility rights, any right or privilege of Borrower under any loan commitment, lease, contract, declaration of covenants, restrictions and easements or like instrument, developer’s agreement, or other agreement with any third party pertaining to the ownership, development, construction, operation, maintenance, marketing, sale, or use of the Land and/or the Improvements.

10. All of Borrower’s inventory, accounts, accounts receivable, contract rights, general intangibles, and all proceeds thereof.

AND ALL PROCEEDS AND PRODUCTS OF THE FOREGOING PERSONAL PROPERTY DESCRIBED IN THIS EXHIBIT B.

Prudential Loan No. 706108866

CHT REIT Portfolio

Deed of Trust and Security Agreement

(Sunrise of Gilbert – First)

14591237v.3 / 28227-001181

B-2

A PORTION OF THE ABOVE DESCRIBED GOODS ARE OR ARE TO BE AFFIXED TO THE REAL PROPERTY DESCRIBED IN EXHIBIT A.

OWNER IS THE RECORD TITLE HOLDER AND OWNER OF THE REAL PROPERTY DESCRIBED IN EXHIBIT A.

ALL TERMS USED IN THIS EXHIBIT B (AND NOT OTHERWISE DEFINED IN THIS EXHIBIT B) SHALL HAVE THE MEANING, IF ANY, ASCRIBED TO SUCH TERM UNDER THE UNIFORM COMMERCIAL CODE AS ADOPTED AND IN FORCE IN THE JURISDICTION IN WHICH THIS FINANCING STATEMENT HAS BEEN FILED/RECORDED (THE “U.C.C.”).

WITH RESPECT TO ANY FINANCING STATEMENT TO WHICH THIS EXHIBIT B IS ATTACHED, THE TERM “BORROWER” SHALL MEAN “DEBTOR” AS SUCH TERM IS DEFINED IN THE U.C.C.

Prudential Loan No. 706108866

CHT REIT Portfolio

Deed of Trust and Security Agreement

(Sunrise of Gilbert – First)

14591237v.3 / 28227-001181

B-3

EX-10.8

Exhibit 10.8

RECOURSE LIABILITIES GUARANTY

(Sunrise of Gilbert)

FOR VALUE RECEIVED, the sufficiency of which is hereby acknowledged, the undersigned, CNL HEALTHCARE TRUST, INC., a Maryland corporation (“CHT”), and SUNRISE SENIOR LIVING INVESTMENTS, INC., a Virginia corporation (“SSLII”) (CHT and SSLII are hereinafter together called “Guarantor” in the singular), absolutely guarantee and agree to pay to THE PRUDENTIAL INSURANCE COMPANY OF AMERICA (hereinafter called “Lender”) at the address designated in the Instrument (as hereinafter defined) for payment thereof or as such address may be changed as provided in the Instrument, all limited and full recourse indebtedness of GILBERT AZ SENIOR LIVING OWNER, LLC, a Delaware limited liability company (“Owner”), and CHTSUN TWO GILBERT AZ SENIOR LIVING, LLC, a Delaware limited liability company (“Operator”, and together with Owner, “Borrower”), under Sections 8.01 and 8.02 of the Loan Agreement (defined below), together with all interest, reasonable attorneys’ fees and collection costs provided for herein (all such indebtedness is hereinafter called the “Recourse Liabilities”), which obligations of Borrower under the Loan Agreement and that certain Promissory Note (Sunrise of Gilbert) dated as of the date hereof, in the original principal amount of Seventeen Million Sixty-One Thousand and No/100 Dollars ($17,061,000.00), payable to the order of Lender, and all modifications, renewals and extensions of and substitutions for said Promissory Note (said Promissory Note and all modifications, renewals and extensions thereof and all substitutions therefor hereinafter called the “Note”) are further evidenced and secured by that certain Deed of Trust and Security Agreement (Sunrise of Gilbert – First) dated as of the date hereof (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, hereinafter called the “Instrument”) from Borrower to Lender, and that certain Amended and Restated Loan Agreement among Borrower, the Related Borrowers (as defined in the Instrument) and Lender of even date herewith (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, hereinafter called the “ Loan Agreement”). Guarantor further agrees to pay any and all costs, reasonable attorneys’ fees and expenses incurred or expended by Lender in collecting any of the Recourse Liabilities or in enforcing any right granted hereunder. The term “Obligations” as used herein shall have the same meaning as such term is defined in the Instrument.

AGREEMENT:

1. Except as otherwise specifically provided or limited herein, in the event Borrower fails to pay the Recourse Liabilities, Guarantor shall pay for the benefit of Lender all of the Recourse Liabilities within fifteen (15) days after receipt of written notice from Lender specifying that Borrower has failed to pay any of the Recourse Liabilities, setting forth the amount of the Recourse Liabilities then due and payable and making demand for payment thereof by Guarantor.

2. Guarantor expressly waives presentment for payment, demand, notice of demand and of dishonor and non-payment of the Recourse Liabilities, notice of intention to accelerate the maturity of the Recourse Liabilities or any part thereof, notice of disposition of collateral, notice of acceleration of the maturity of the Recourse Liabilities or any part thereof, protest and notice of protest, diligence in collecting, and the bringing of suit against any other party. Lender shall be under no obligation to notify Guarantor of its acceptance hereof or of any advances made or credit extended on the faith hereof or the failure of Borrower to pay any of the Recourse Liabilities as they mature or any default in the performance of any of the Obligations under the Documents, or to use diligence in preserving the liability of any person on the Recourse Liabilities or the Obligations or in bringing suit to enforce collection of the Recourse Liabilities or performance of the Obligations. Guarantor waives all defenses given to sureties or guarantors at law or in equity other than the actual payment of the Recourse Liabilities and all defenses based upon questions as to the validity, legality or enforceability of the Recourse Liabilities and/or the Obligations and agrees that Guarantor shall be primarily liable hereunder.

Prudential Loan No. 706108866

CHT REIT Portfolio

Recourse Liabilities Guaranty (Sunrise of Gilbert)

14586438v.2 / 28227-001181

1

3. Lender, without authorization from or notice to Guarantor and without impairing, modifying, changing, releasing, limiting or affecting the liability of Guarantor hereunder, may from time to time at its discretion and with or without valuable consideration, alter, compromise, accelerate, renew, extend or change the time or manner for the payment of any or all of the Recourse Liabilities, increase or reduce the rate of interest thereon, take and surrender security, exchange security by way of substitution, or in any way it deems necessary take, accept, withdraw, subordinate, alter, amend, modify or eliminate security, add or release or discharge endorsers, guarantors or other obligors, make changes of any sort whatsoever in the terms of payment of the Recourse Liabilities, in the Obligations or in the manner of doing business with Borrower, or settle or compromise with Borrower or any other person or persons liable on the Recourse Liabilities or the Obligations on such terms as it may see fit, and may apply all moneys received from Borrower or others, or from any security held (whether held under a security instrument or not), in such manner upon the Recourse Liabilities (whether then due or not) as it may determine to be in its best interest, without in any way being required to marshal securities or assets or to apply all or any part of such moneys upon any particular part of the Recourse Liabilities. It is specifically agreed that Lender is not required to retain, hold, protect, exercise due care with respect thereto, perfect security interests in or otherwise assure or safeguard any security for the Recourse Liabilities or the Obligations; no failure by Lender to do any of the foregoing and no exercise or non-exercise by Lender of any other right or remedy of Lender shall in any way affect any of Guarantor’s obligations hereunder or any security furnished by Guarantor or give Guarantor any recourse against Lender.

4. The liability of any party comprising Guarantor hereunder shall not be modified, changed, released, limited or impaired in any manner whatsoever on account of any or all of the following: (a) the incapacity, death, disability, dissolution or termination of any party comprising Guarantor, Borrower, Lender or any other person or entity; (b) the failure by Lender to file or enforce a claim against the estate (either in administration, bankruptcy or other proceeding) of Borrower or any other person or entity; (c) recovery from Borrower or any other person or entity becomes barred by any statute of limitations or is otherwise prevented; (d) any defenses, set-offs or counterclaims which may be available to Borrower or any other person or entity (other than the actual payment of the Obligations); (e) any transfer or transfers of any of the property covered by the Instrument, the Loan Agreement or any other instrument securing the payment of the Note; (f) any modifications, extensions, amendments, consents, releases or waivers with respect to the Note, the Loan Agreement, the Instrument, any other instrument now or hereafter securing the payment of the Note, or this Guaranty; (g) any failure of Lender to give any notice to Guarantor of any default under the Note, the Loan Agreement, the Instrument, any other instrument securing the payment of the Note, or this Guaranty; (h) Guarantor is or becomes liable for any indebtedness owing by Borrower to Lender other than under this Guaranty; or (i) any impairment, modification, change, release or limitation of the liability of, or stay of actions or lien enforcement proceedings against, Borrower, its property, or its estate in bankruptcy resulting from the operation of any present or future provision of the Bankruptcy Code (as defined in the Instrument) or any other present or future federal or state insolvency, bankruptcy or similar law (all of the foregoing hereinafter collectively called “applicable Bankruptcy Law”) or from the decision of any court.

5. Lender shall not be required to pursue any other remedies before invoking the benefits of the guaranties contained herein, and specifically it shall not be required to make demand upon or institute suit or otherwise pursue or exhaust its remedies against Borrower or any surety other than Guarantor or to proceed against any security now or hereafter existing for the payment of any of the Recourse Liabilities. Lender may maintain an action on this Guaranty without joining Borrower therein and without bringing a separate action against Borrower.

Prudential Loan No. 706108866

CHT REIT Portfolio

Recourse Liabilities Guaranty (Sunrise of Gilbert)

14586438v.2 / 28227-001181

2

6. If for any reason whatsoever (including but not limited to ultra vires, lack of authority, illegality, force majeure, act of God or impossibility) the Recourse Liabilities or the Obligations cannot be enforced against Borrower, such unenforceability shall in no manner affect the liability of Guarantor hereunder and Guarantor shall be liable hereunder notwithstanding that Borrower may not be liable for such Recourse Liabilities or such Obligations and to the same extent as Guarantor would have been liable if such Recourse Liabilities or Obligations had been enforceable against Borrower.

7. Guarantor absolutely and unconditionally covenants and agrees that in the event that Borrower does not or is unable to pay the Recourse Liabilities for any reason, including, without limitation, liquidation, dissolution, receivership, conservatorship, insolvency, bankruptcy, assignment for the benefit of creditors, sale of all or substantially all assets, reorganization, arrangement, composition, or readjustment of, or other similar proceedings affecting the status, composition, identity, existence, assets or obligations of Borrower, or the disaffirmance or termination of any of the Recourse Liabilities or Obligations in or as a result of any such proceeding, Guarantor shall pay the Recourse Liabilities and no such occurrence shall in any way affect Guarantor’s obligations hereunder.

8. Should the status of Borrower change, this Guaranty shall continue and also cover the Recourse Liabilities of Borrower under the new status according to the terms hereof. This Guaranty shall remain in full force and effect notwithstanding any transfer of any of the property covered by the Loan Agreement, the Instrument or the Assignment (as defined in the Instrument).

9. In the event any payment by Borrower to Lender is held to constitute a preference under any applicable Bankruptcy Law, or if for any other reason Lender is required to refund such payment or pay the amount thereof to any other party, such payment by Borrower to Lender shall not constitute a release of Guarantor from any liability hereunder, but Guarantor agrees to pay such amount to Lender in accordance with Section 1 above and this Guaranty shall continue to be effective or shall be reinstated, as the case may be, to the extent of any such payment or payments.

10. Guarantor agrees that it shall not have (a) the right to the benefit of, or to direct the application of, any security held by Lender (including the property covered by the Loan Agreement, the Instrument, the Assignment, and any other instrument securing the payment of the Note), any right to enforce any remedy which Lender now has or hereafter may have against Borrower, or any right to participate in any security now or hereafter held by Lender, or (b) any defense arising out of the absence, impairment or loss of any right of reimbursement or subrogation or other right or remedy of Guarantor against Borrower or against any security resulting from the exercise or election of any remedies by Lender (including the exercise of the power of sale under the Instrument), or any defense arising by reason of any disability or other defense of Borrower or by reason of the cessation, from any cause, of the liability of Borrower.

11. The payment by Guarantor of any amount pursuant to this Guaranty shall not in any way entitle Guarantor to any right, title or interest (whether by way of subrogation or otherwise) in and to any of the Recourse Liabilities or any proceeds thereof, or any security therefor, unless and until the full amount owing to Lender on the Recourse Liabilities has been fully paid, but when the same has been fully paid Guarantor shall be subrogated as to any payments made by it to the rights of Lender as against Borrower and/or any endorsers, sureties or other guarantors.

12. Notwithstanding any payments made by or for the account of Guarantor on account of the Recourse Liabilities, Guarantor shall not be subrogated to any rights of Lender until such time as Lender shall have received payment of the full amount of all Recourse Liabilities. For the purposes of the preceding sentence only, the Recourse Liabilities shall not be deemed to have been paid in full by

Prudential Loan No. 706108866

CHT REIT Portfolio

Recourse Liabilities Guaranty (Sunrise of Gilbert)

14586438v.2 / 28227-001181

3

foreclosure of the Instrument or by acceptance of a deed in lieu thereof, and Guarantor hereby waives and disclaims any interest which it might have in the property covered by the Loan Agreement, the Instrument or the Assignment or other collateral security for the Recourse Liabilities and the Obligations, by subrogation or otherwise, following foreclosure of the Instrument or Lender’s acceptance of a deed in lieu thereof.

13. Guarantor expressly subordinates its rights to payment of any indebtedness owing from Borrower to Guarantor, whether now existing or arising at any time in the future, to the prior right of Lender to receive or require payment in full of the Recourse Liabilities and until payment in full of the Recourse Liabilities (and including interest accruing on the Note after any petition under applicable Bankruptcy Law, which post-petition interest Guarantor agrees shall remain a claim that is prior and superior to any claim of Guarantor notwithstanding any contrary practice, custom or ruling in proceedings under such applicable Bankruptcy Law generally), Guarantor agrees not to accept any payment or satisfaction of any kind of indebtedness of Borrower to Guarantor or any security for such indebtedness; provided, however, that so long as no Event of Default (as defined in the Loan Agreement) has occurred under the Documents, the foregoing restriction on payment or satisfaction of indebtedness shall not apply to (i) any distributions or payments of indebtedness made (A) to any Guarantor as the holder of an equity interest in Borrower or in payment or satisfaction of indebtedness to Guarantor, (B) in the ordinary course of Borrower’s business, and (C) more than ninety (90) days prior to an Event of Default under the Documents, or (ii) any payment made (A) to any Guarantor with respect to Permitted Member Loans (as defined in the Loan Agreement) made by such Guarantor to Borrower (B) in the ordinary course of Borrower’s business, and (C) more than one hundred twenty (120) days prior to an Event of Default under the Documents. If Guarantor should receive any such payment, satisfaction or security for any indebtedness of Borrower to Guarantor in contravention of the foregoing sentence, Guarantor agrees forthwith to deliver the same to Lender in the form received, endorsed or assigned as may be appropriate for application on account of, or as security for, the Recourse Liabilities and until so delivered, agrees to hold the same in trust for Lender.

14. Under no circumstances shall the aggregate amount paid or agreed to be paid hereunder exceed the highest lawful rate permitted under applicable law (the “Maximum Rate”) and the payment obligations of Guarantor hereunder are hereby limited accordingly. If under any circumstances, whether by reason of advancement or acceleration of the unpaid principal balance of the Note or otherwise, the aggregate amounts paid hereunder shall include amounts which by law are deemed interest and which could exceed the Maximum Rate, Guarantor stipulates that payment and collection of such excess amounts shall have been and will be deemed to have been the result of a mistake on the part of both Guarantor and Lender, and Lender shall promptly credit such excess (only to the extent such interest payments are in excess of the Maximum Rate) against the unpaid principal balance of the Note, and any portion of such excess payments not capable of being so credited shall be refunded to Guarantor. The term “applicable law” as used in this paragraph shall mean the laws of the State of Arizona or the laws of the United States, whichever laws allow the greater rate of interest, as such laws now exist or may be changed or amended or come into effect in the future.

15. Guarantor (each Guarantor representing and warranting as to itself only) hereby represents, warrants and covenants to and with Lender as follows: (a) the making of the Loan by Lender to Borrower is and will be of direct interest, benefit and advantage to Guarantor; (b) Guarantor is solvent, is not bankrupt and has no outstanding liens, garnishments, bankruptcies or court actions which could render Guarantor insolvent or bankrupt, and there has not been filed by or against Guarantor a petition in bankruptcy or a petition or answer seeking an assignment for the benefit of creditors, the appointment of a receiver, trustee, custodian or liquidator with respect to Guarantor or any substantial portion of Guarantor’s property, reorganization, arrangement, rearrangement, composition, extension, liquidation or

Prudential Loan No. 706108866

CHT REIT Portfolio

Recourse Liabilities Guaranty (Sunrise of Gilbert)

14586438v.2 / 28227-001181

4

dissolution or similar relief under applicable Bankruptcy Law; (c) all reports, financial statements and other financial and other data which have been or may hereafter be furnished by Guarantor to Lender in connection with this Guaranty are or shall be true and correct in all material respects and do not and will not omit to state any fact or circumstance necessary to make the statements contained therein not misleading and do or shall fairly represent the financial condition of Guarantor as of the dates and the results of Guarantor’s operations for the periods for which the same are furnished, and no material adverse change has occurred since the dates of such reports, statements and other data in the financial condition of Guarantor; (d) to the best of Guarantor’s knowledge (after due inquiry and investigation), the execution, delivery and performance of this Guaranty do not contravene, result in the breach of or constitute a default under any mortgage, deed of trust, lease, promissory note, loan agreement or other contract or agreement to which Guarantor is a party or by which Guarantor or any of its properties may be bound or affected and do not violate or contravene any law, order, decree, rule or regulation to which Guarantor is subject; (e) there are no judicial or administrative actions, suits or proceedings pending or, to the best of Guarantor’s knowledge, threatened against or affecting Guarantor that would have a material adverse effect on Guarantor’s ability to perform its obligations under this Guaranty or involving the validity, enforceability or priority of this Guaranty; and (f) this Guaranty constitutes the legal, valid and binding obligation of Guarantor enforceable in accordance with its terms.

16. Guarantor will deliver to Lender as soon as available, but not later than April 30 of each calendar year, financial statements of Guarantor prepared in accordance with generally accepted accounting principles and certified by an authorized person, partner or official.

17. Where two or more persons or entities have executed this Guaranty, unless the context clearly indicates otherwise, all references herein to “Guarantor” shall mean the guarantors hereunder or either or any of them. All of the obligations and liability of said guarantors hereunder shall be joint and several. Suit may be brought against said guarantors, jointly and severally, or against any one or more of them or less than all of them, without impairing the rights of Lender against the other or others of said guarantors; and Lender may compound with any one or more of said guarantors for such sums or sum as it may see fit and/or release a portion of said guarantors from all further liability to Lender for any Recourse Liabilities without impairing the right of Lender to demand and collect the balance of such Recourse Liabilities from the other or others of said guarantors not so compounded with or released; but it is agreed among said guarantors themselves, however, that such compounding and release shall in nowise impair the rights of said guarantors as among themselves.

18. Except as otherwise provided herein, the rights of Lender are cumulative and shall not be exhausted by its exercise of any of its rights hereunder or otherwise against Guarantor or by any number of successive actions until and unless all Recourse Liabilities have been paid and each of the obligations of Guarantor hereunder has been performed.

19. Any notice or communication required or permitted hereunder shall be given in writing, sent by (a) personal delivery, or (b) expedited delivery service with proof of delivery, or (c) United States mail, postage prepaid, registered or certified mail, sent to the intended addressee at the address shown below, or to such other address or to the attention of such other person as hereafter shall be designated in writing by the applicable party sent in accordance herewith. Any such notice or communication shall be deemed to have been given and received either at the time of personal delivery or, in the case of delivery service or mail, as of the date of first attempted delivery at the address and in the manner provided herein, or in the case of telegram, telex or telecopy, upon receipt.

20. This Guaranty shall be deemed to have been made under and shall be governed by the laws of the State of Arizona in all respects.

Prudential Loan No. 706108866

CHT REIT Portfolio

Recourse Liabilities Guaranty (Sunrise of Gilbert)

14586438v.2 / 28227-001181

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21. This Guaranty may be executed in any number of counterparts with the same effect as if all parties hereto had signed the same document. All such counterparts shall be construed together and shall constitute one instrument, but in making proof hereof it shall only be necessary to produce one such counterpart.

22. This Guaranty may only be modified, waived, altered or amended by a written instrument or instruments executed by the party against which enforcement of said action is asserted. Any alleged modification, waiver, alteration or amendment which is not so documented shall not be effective as to any party.

23. The books and records of Lender showing the accounts between Lender and Borrower shall be admissible in any action or proceeding hereon as prima facie evidence of the items set forth herein.

24. Guarantor waives and renounces any and all homestead or exemption rights Guarantor may have under the Constitution or the laws of any state as against Guarantor, and does transfer, convey and assign to Lender a sufficient amount of such homestead or exemption as may be allowed, including such homestead or exemption as may be set apart in bankruptcy, to pay the Recourse Liabilities. Guarantor hereby directs any trustee in bankruptcy having possession of such homestead or exemption to deliver to Lender a sufficient amount of property or money set apart as exempt to pay the Recourse Liabilities.

25. The terms, provisions, covenants and conditions hereof shall be binding upon Guarantor and the heirs, devisees, representatives, successors and assigns of Guarantor and shall inure to the benefit of Lender and all transferees, credit participants, successors, assignees and/or endorsees of Lender. Within this Guaranty, words of any gender shall be held and construed to include any other gender and words in the singular number shall be held and construed to include the plural and words in the plural number shall be held and construed to include the singular, unless the context otherwise requires. A determination that any provision of this Guaranty is unenforceable or invalid shall not affect the enforceability or validity of any other provision and any determination that the application of any provision of this Guaranty to any person or circumstance is illegal or unenforceable shall not affect the enforceability or validity of such provision as it may apply to any other persons or circumstances.

26. None of Guarantor’s respective officers, directors, shareholders, employees, agents, parents or principals (each a “Related Party”) shall have any liability for Guarantor’s obligations set forth in this Guaranty, except with respect to a Related Party that is also a guarantor of such obligations and except as otherwise provided in the Documents.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

[SIGNATURES ON FOLLOWING PAGE]

Prudential Loan No. 706108866

CHT REIT Portfolio

Recourse Liabilities Guaranty (Sunrise of Gilbert)

14586438v.2 / 28227-001181

6

EXECUTED this 29th day of June, 2012.

GUARANTOR:
CHT:
CNL HEALTHCARE TRUST, INC., a Maryland corporation
By:	/s/ Joshua J. Taube
Name:	Joshua J. Taube
Title:	Vice President

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

Prudential Loan No. 706108866

CHT REIT Portfolio

Recourse Liabilities Guaranty (Sunrise of Gilbert)

14586438v.2 / 28227-001181

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

[SIGNATURE PAGE TO RECOURSE LIABILITIES GUARANTY]

SSLII:
SUNRISE SENIOR LIVING INVESTMENTS, INC., a Virginia corporation
By:	/s/ Edward W. Burnett
Name:	Edward W. Burnett
Title:	Vice President
[CORPORATE SEAL]

The address of Guarantor is:	With a copy to:
c/o CNL Healthcare Trust, Inc.	LOWNDES, DROSDICK, DOSTER, KANTOR
450 South Orange Avenue	& REED, P.A.
Orlando, Florida 32801	215 N. Eola Drive
Attention: Holly Greer, Senior Vice President	Orlando, Florida 32801
and General Counsel and Joseph T. Johnson, Senior	Attention: Peter Luis Lopez, Esq.
Vice President and Chief Financial Officer
and	and
c/o Sunrise Senior Living, Inc.	WILKIE FARR & GALLAGHER LLP
7900 Westpark Drive, Suite T-900	787 Seventh Avenue
McLean, Virginia 22102	New York, New York 10019
Attention: Edward Burnett	Attention: Eugene A. Pinover, Esq.
and
c/o Sunrise Senior Living, Inc.
7900 Westpark Drive, Suite T-900
McLean, Virginia 22102
Attention: General Counsel
The address of Lender is:
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
c/o Prudential Asset Resources, Inc.
2100 Ross Avenue, Suite 2500
Dallas, Texas 75201
Attention: Asset Management Department
Reference Loan No. 706108866
With a copy to:
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
c/o Prudential Asset Resources, Inc.
2100 Ross Avenue, Suite 2500
Dallas, Texas 75201
Attention: Legal Department
Reference Loan No. 706108866

Prudential Loan No. 706108866

CHT REIT Portfolio

Recourse Liabilities Guaranty (Sunrise of Gilbert)

14586438v.2 / 28227-001181

EX-10.9

Exhibit 10.9

MEZZANINE LOAN AGREEMENT

Dated as of June 29, 2012

Between

CHT SL IV HOLDING, LLC,

as Borrower

and

RCG LV DEBT IV NON-REIT ASSETS HOLDINGS, LLC,

as Lender

TABLE OF CONTENTS

		Page
I.         DEFINITIONS; PRINCIPLES OF CONSTRUCTION			1
Section 1.1	Definitions		1
Section 1.2	Principles of Construction		17
II.        GENERAL TERMS			18
Section 2.1	Loan Commitment; Disbursement to Borrower		18
2.1.1	Agreement to Lend and Borrow		18
2.1.2	Single Disbursement to Borrower		18
2.1.3	The Note, Pledge Agreement and Loan Documents		18
2.1.4	Use of Proceeds		18
Section 2.2	Interest; Loan Payments; Late Payment Charge		18
2.2.1	Payments		18
2.2.2	Interest Calculation		19
2.2.3	Payment on Maturity Date		19
2.2.4	Payments after Default		19
2.2.5	Late Payment Charge		20
2.2.6	Usury Savings		20
2.2.7	Indemnified Taxes		20
Section 2.3	Prepayments		21
2.3.1	Voluntary Prepayments		21
2.3.2	Liquidation Events		22
2.3.3	Prepayments After Default		23
2.3.4	Making of Payments		23
2.3.5	Application of Prepayments		23
Section 2.4	Release on Payment in Full		23
III.      CASH MANAGEMENT			23
Section 3.1	Property Account		23
Section 3.2	Net Capital Raise Account		24
IV.      REPRESENTATIONS AND WARRANTIES			24
Section 4.1	Borrower Representations		24
4.1.1	Organization		24
4.1.2	Proceedings		24
4.1.3	No Conflicts		25
4.1.4	Litigation		25
4.1.5	Agreements		25
4.1.6	Title		25
4.1.7	Solvency		26
4.1.8	Full and Accurate Disclosure		27
4.1.9	No Plan Assets		27
4.1.10	Compliance		27
4.1.11	Financial Information		27
4.1.12	Condemnation		28
4.1.13	Federal Reserve Regulations		28
4.1.14	Utilities and Public Access		28

i

4.1.15	Not a Foreign Person	28
4.1.16	Separate Lots	28
4.1.17	Assessments	28
4.1.18	Enforceability	29
4.1.19	No Prior Assignment	29
4.1.20	Insurance	29
4.1.21	Use of Property	29
4.1.22	Certificate of Occupancy; Licenses	29
4.1.23	Flood Zone	29
4.1.24	Physical Condition	29
4.1.25	Boundaries	30
4.1.26	Leases	30
4.1.27	Survey	30
4.1.28	Intentionally Omitted	30
4.1.29	Filing and Recording Taxes	30
4.1.30	Intentionally Omitted	30
4.1.31	Management Agreement; Manager Pooling Agreement	30
4.1.32	Illegal Activity	31
4.1.33	No Change in Facts or Circumstances; Disclosure	31
4.1.34	Investment Company Act	31
4.1.35	Principal Place of Business; State of Organization	31
4.1.36	Single Purpose Entity	31
4.1.37	Business Purposes	36
4.1.38	Taxes	37
4.1.39	Forfeiture	37
4.1.40	Environmental Representations and Warranties	37
4.1.41	Taxpayer Identification Number	37
4.1.42	OFAC	38
4.1.43	Intentionally Omitted	38
4.1.44	Intentionally Omitted	38
4.1.45	Embargoed Person	38
4.1.46	Affiliates	38
4.1.47	Mortgage Borrower Representations	38
4.1.48	List of Mortgage Loan Documents	39
4.1.49	Mortgage Loan Event of Default	39
4.1.50	Operating Lease Representations	39
4.1.51	JV Agreement Representations	39
Section 4.2	Survival of Representations	40
V.        BORROWER COVENANTS		40
Section 5.1	Affirmative Covenants	40
5.1.1	Existence; Compliance with Legal Requirements	40
5.1.2	Taxes and Other Charges	41
5.1.3	Litigation	41
5.1.4	Access to the Property	41
5.1.5	Notice of Default	42
5.1.6	Cooperate in Legal Proceedings	42
5.1.7	Award and Insurance Benefits	42

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5.1.8	Further Assurances	42
5.1.9	Mortgage and Intangible Taxes	43
5.1.10	Financial Reporting	43
5.1.11	Business and Operations	44
5.1.12	Costs of Enforcement	44
5.1.13	Estoppel Statement	45
5.1.14	Loan Proceeds	45
5.1.15	Performance by Borrower	45
5.1.16	Confirmation of Representations	46
5.1.17	Leasing Matters	46
5.1.18	Management Agreement	46
5.1.19	Environmental Covenants	47
5.1.20	Alterations	48
5.1.21	Intentionally Omitted	48
5.1.22	Intentionally Omitted	48
5.1.23	OFAC	48
5.1.24	Intentionally Omitted	49
5.1.25	Mortgage Loan Reserve Funds	49
5.1.26	Notices	49
5.1.27	Special Distributions	49
5.1.28	Mortgage Borrower Covenants	49
5.1.29	Mortgage Loan Estoppels	49
5.1.30	The Operating Lease	50
5.1.31	The JV Agreement	51
Section 5.2	Negative Covenants	52
5.2.1	Liens	52
5.2.2	Dissolution	52
5.2.3	Change In Business	52
5.2.4	Debt Cancellation	53
5.2.5	Zoning	53
5.2.6	No Joint Assessment	53
5.2.7	Name, Identity, Structure, or Principal Place of Business	53
5.2.8	ERISA	54
5.2.9	Affiliate Transactions	54
5.2.10	Transfers	55
5.2.11	Limitation on Securities Issuances	57
5.2.12	Distributions	57
5.2.13	Refinancing or Prepayment of the Mortgage Loan	57
5.2.14	Acquisition of the Mortgage Loan	57
5.2.15	Material Agreements	58
VI.       INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS		59
Section 6.1	Insurance	59
Section 6.2	Casualty	60
Section 6.3	Condemnation	60
Section 6.4	Restoration	60
Section 6.5	Rights of Lender	61
VII.     Intentionally OMitted		61

- iii -

VIII.    DEFAULTS		61
Section 8.1	Event of Default	61
Section 8.2	Remedies	65
Section 8.3	Right to Cure Defaults	66
Section 8.4	Remedies Cumulative; Waivers	67
Section 8.5	Power of Attorney	67
IX.      SPECIAL PROVISIONS		67
Section 9.1	Sale of Notes and Securitization	67
Section 9.2	Intentionally Omitted	68
Section 9.3	Servicer	68
Section 9.4	Exculpation	68
Section 9.5	Certain Additional Rights of Lender	68
Section 9.6	Mortgage Loan Defaults	70
Section 9.7	Intercreditor Agreement	71
Section 9.8	Discussions with Mortgage Lender	72
Section 9.9	Independent Approval Rights	72
X.        MISCELLANEOUS		72
Section 10.1	Survival	72
Section 10.2	Lender’s Discretion	72
Section 10.3	Governing Law	72
Section 10.4	Modification, Waiver in Writing	73
Section 10.5	Delay Not a Waiver	73
Section 10.6	Notices	74
Section 10.7	Trial by Jury	74
Section 10.8	Headings	75
Section 10.9	Severability	75
Section 10.10	Preferences	75
Section 10.11	Waiver of Notice	75
Section 10.12	Remedies of Borrower	76
Section 10.13	Expenses; Indemnity	76
Section 10.14	Schedules and Exhibits Incorporated	77
Section 10.15	Offsets, Counterclaims and Defenses	77
Section 10.16	No Joint Venture or Partnership; No Third Party Beneficiaries	77
Section 10.17	Publicity	78
Section 10.18	Waiver of Marshalling of Assets	78
Section 10.19	Waiver of Counterclaim	78
Section 10.20	Conflict; Construction of Documents; Reliance	78
Section 10.21	Brokers and Financial Advisors	79
Section 10.22	Prior Agreements	79

- iv -

MEZZANINE LOAN AGREEMENT

THIS MEZZANINE LOAN AGREEMENT, dated as of June 29, 2012 (as amended, restated, replaced, supplemented or otherwise modified from time to time, this “Agreement”), between RCG LV DEBT IV NON-REIT ASSETS HOLDINGS, LLC, a Delaware limited liability company, having an address at 7 Penn Plaza, Suite 512, New York, New York 10001 (“Lender”) and CHT SL IV HOLDING, LLC, a Delaware limited liability company, having its principal place of business at c/o CHT Partners, LP, CNL Center at City Commons, 450 South Orange Avenue, Orlando, Florida 32801 (“Borrower”).

W I T N E S S E T H:

WHEREAS, Borrower desires to obtain the Loan (as hereinafter defined) from Lender; and

WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in accordance with the terms of this Agreement and the other Loan Documents (as hereinafter defined).

NOW THEREFORE, in consideration of the making of the Loan by Lender and the covenants, agreements, representations and warranties set forth in this Agreement, the parties hereto hereby covenant, agree, represent and warrant as follows:

I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION

Section 1.1 Definitions.

For all purposes of this Agreement, except as otherwise expressly required or unless the context clearly indicates a contrary intent:

“Affiliate” shall mean, as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by or is under common control with such Person.

“Affiliated Manager” shall mean any property manager of an Individual Property which is an Affiliate of, or in which Borrower, Mortgage Borrower, Principal, Guarantor or Indemnitor has, directly or indirectly, any legal, beneficial or economic interest; but specifically excluding Sunrise Senior Living Management, Inc. or any Affiliate of Sunrise Senior Living Management, Inc., Sunrise Senior Living, Inc. or Sunrise.

“Annual Budget” shall mean the operating budget, including all planned Capital Expenditures, for each Individual Property prepared on behalf of Mortgage Borrower for the applicable Fiscal Year or other period.

“Applicable Laws” shall mean all existing and future federal, state and local laws, orders, ordinances, governmental rules and regulations and court orders.

“Approved Accountant” shall mean any “Big Four” accounting firm or any other independent certified public accountant reasonably acceptable to Lender.

“Award” shall mean any compensation paid by any Governmental Authority in connection with a Condemnation in respect of all or any part of any Individual Property.

“Bankruptcy Code” shall mean Title 11 U.S.C. § 101 et seq., and the regulations adopted and promulgated pursuant thereto (as the same may be amended from time to time).

“Baton Rouge Lessee Mortgage Borrower” shall mean CHTSun Two Baton Rouge LA Senior Living, LLC, a Delaware limited liability company, together with its successors and assigns.

“Baton Rouge Owner Mortgage Borrower” shall mean Baton Rouge LA Senior Living Owner, LLC, a Delaware limited liability company, together with its successors and assigns.

“Borrower” shall have the meaning set forth in the introductory paragraph hereto, together with its successors and assigns.

“Borrower’s Net Cash Flow After Debt Service” shall mean Net Cash Flow After Debt service paid to Borrower by Partners IV under the JV Agreement.

“Business Day” shall mean any day other than a Saturday, Sunday or any other day on which national banks in New York, New York are not open for business.

“Capital Contributions” shall have the meaning set forth in Section 6.5 of the JV Agreement.

“Capital Expenditures” shall mean, for any period, the amount expended with respect to the Properties for items capitalized under GAAP (including expenditures for building improvements or major repairs, leasing commissions and tenant improvements).

“Cash” shall mean coin or currency of the United States of America or immediately available federal funds, including such fund delivered by wire transfer.

“Casualty” shall mean the occurrence of any casualty, damage or injury, by fire or otherwise, to any Individual Property or any part thereof.

“Change of Control Purchase Option” shall have the meaning set forth in Section 12.1 of the JV Agreement.

“CHT GP” shall mean CHT GP, LLC, a Delaware limited liability company.

“CHT Partners” shall mean CHT Partners, LP, a Delaware limited partnership.

“CHT TRS” shall mean CHT SL IV TRS Corp., a Delaware corporation.

“Closing Date” shall mean the date of the funding of the Loan.

“Code” shall mean the Internal Revenue Code of 1986, as amended, as it may be further amended from time to time, and any successor statutes thereto, and all applicable U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form.

- 2 -

“Collateral” shall mean (i) the Collateral as defined in the Pledge Agreement, and (ii) all other collateral for the Loan granted in the Loan Documents.

“Condemnation” shall mean a temporary or permanent taking by any Governmental Authority as the result or in lieu or in anticipation of the exercise of the right of condemnation or eminent domain, of all or any part of any Individual Property, or any interest therein or right accruing thereto, including any right of access thereto or any change of grade affecting such Individual Property or any part thereof.

“Connecticut and Santa Monica Mortgage Borrower” shall mean Connecticut Owner Mortgage Borrower, Santa Monica Owner Mortgage Borrower and Santa Monica Lessee Mortgage Borrower, and their respective successors and/or assigns.

“Connecticut and Santa Monica Mortgage Lender” shall mean The Prudential Life Insurance Company of America, its successors and/or assigns.

“Connecticut and Santa Monica Mortgage Loan” means the existing mortgage indebtedness secured by the Connecticut and Santa Monica Properties issued on February 28, 2012 as evidenced by that certain Loan Agreement and related deeds of trust and additional loan documents made by Sunrise Connecticut Avenue Assisted Living, L.L.C. and AL Santa Monica Senior Housing, LP in favor of the Connecticut and Santa Monica Mortgage Lender, each as amended, restated or otherwise modified on the date hereof.

“Connecticut and Santa Monica Mortgage Loan Documents” shall mean all of the documents evidencing and/or securing the Connecticut and Santa Monica Mortgage Loan.

“Connecticut and Santa Monica Properties” shall mean the Individual Properties known as Sunrise of Connecticut Avenue and Sunrise of Santa Monica described on Schedule III attached hereto.

“Connecticut Owner Mortgage Borrower” shall mean Sunrise Connecticut Avenue Assisted Living Owner, L.L.C., a Virginia limited liability company, together with its successors and assigns.

“Control” (and the correlative terms “controlled by” and “controlling”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of the business and affairs of the entity in question by reason of the ownership of beneficial interests, by contract or otherwise.

“Creditors Rights Laws” shall mean with respect to any Person, any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to its debts or debtors.

“Debt” shall mean the outstanding principal amount set forth in, and evidenced by, this Agreement and the Note together with all interest accrued and unpaid thereon and all other sums due to Lender in respect of the Loan under the Note, this Agreement, the Pledge Agreement or any other Loan Document.

- 3 -

“Debt Service” shall mean, with respect to any particular period of time, interest and principal payments (if any) due under the Loan and the Mortgage Loan for such period.

“Default” shall mean the occurrence of any event hereunder or under any other Loan Document which, but for the giving of notice or passage of time, or both, would constitute an Event of Default.

“Default Rate” shall mean, with respect to the Loan, a rate per annum equal to the lesser of (a) the Maximum Legal Rate, or (b) five percent (5%) above the Note Rate.

“Embargoed Person” shall have the meaning set forth in Section 4.1.45 hereof.

“Environmental Indemnity” shall mean that certain Mezzanine Environmental Indemnity Agreement executed by Borrower and Indemnitor in connection with the Loan for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Environmental Law” shall mean any federal, State and local laws, statutes, ordinances, rules, regulations, standards, policies and other government directives or requirements, as well as common law, that, at any time, apply to Borrower, Mortgage Borrower, Guarantor and/or Indemnitor or any Individual Property and relate to Hazardous Materials, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act and the Resource Conservation and Recovery Act.

“Environmental Liens” shall have the meaning set forth in Section 5.1.19(a) hereof.

“Environmental Reports” shall have the meaning set forth in Section 4.1.40 hereof.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time.

“Event of Default” shall have the meaning set forth in Section 8.1(a) hereof.

“Exit Fee” shall mean the sum of (i) two percent (2.0%) of the principal balance of the Loan being prepaid and/or repaid plus (ii) upon the prepayment and/or repayment of the Loan in full, if Lender has not received interest payments totaling at least $3,200,000 as of such date, the amount equal to (x) $3,200,000 minus (y) the aggregate amount of interest payments received as of such date.

“Extended Maturity Date” shall have the meaning set forth in Section 2.2.1(c) hereof.

“Extension Fee” shall mean one percent (1.0%) of the original principal amount of the Loan.

“Extension Option” shall have the meaning set forth in Section 2.2.1(c) hereof.

“Extension Period” shall have the meaning set forth in Section 2.2.1(c) hereof.

“FINRA” shall mean the Financial Industry Regulatory Authority, Inc.

- 4 -

“Fiscal Year” shall mean each twelve (12) month period commencing on January 1 and ending on December 31 during the term of the Loan.

“Fitch” shall mean Fitch, Inc.

“Five-Pack Mortgage Borrower” shall mean Baton Rouge Owner Mortgage Borrower, Gilbert Owner Mortgage Borrower, Lombard Owner Mortgage Borrower, Louisville Owner Mortgage Borrower, Metairie Owner Mortgage Borrower, Baton Rouge Lessee Mortgage Borrower, Gilbert Lessee Mortgage Borrower, Lombard Lessee Mortgage Borrower, Louisville Lessee Mortgage Borrower and Metairie Lessee Mortgage Borrower, and their respective successors and/or assigns.

“Five-Pack Mortgage Lender” shall mean The Prudential Life Insurance Company of America, its successors and/or assigns.

“Five-Pack Mortgage Loan” means the mortgage indebtedness secured by the Five-Pack Properties, issued on the date hereof made by Five-Pack Mortgage Borrower in favor of the Five-Pack Mortgage Lender.

“Five-Pack Mortgage Loan Documents” shall mean all of the documents evidencing and/or securing the Five-Pack Mortgage Loan.

“Five-Pack Properties” shall mean the following Individual Properties described on Schedule III attached hereto: (i) Sunrise of Metairie, (ii) Sunrise at Seigen, (iii) Sunrise of Gilbert, (iv) Sunrise of Louisville and (v) Sunrise at Fountain Square.

“GAAP” shall mean generally accepted accounting principles in the United States of America as of the date of the applicable financial report.

“Gilbert Lessee Mortgage Borrower” shall mean CHTSun Two Gilbert AZ Senior Living, LLC, a Delaware limited liability company, together with its successors and assigns.

“Gilbert Owner Mortgage Borrower” shall mean Gilbert AZ Senior Living Owner, LLC, a Delaware limited liability company, together with its successors and assigns.

“Governmental Authority” shall mean any court, board, agency, commission, office, central bank or other authority of any nature whatsoever for any governmental unit (federal, State, county, district, municipal, city, country or otherwise) or quasi-governmental unit whether now or hereafter in existence.

“Gross Income from Operations” shall mean all income, computed in accordance with GAAP or an income tax basis, derived from the ownership and operation of the Properties from whatever source, including, but not limited to, the Rents, utility charges, escalations, service fees or charges, license fees, parking fees, rent concessions or credits, and other required pass-throughs, but excluding sales, use and occupancy or other taxes on receipts required to be accounted for by Mortgage Borrower to any Governmental Authority, refunds and uncollectible accounts, sales of furniture, fixtures and equipment, Insurance Proceeds (other than business interruption or other loss of income insurance), Awards, security deposits, interest on credit

- 5 -

accounts, utility and other similar deposits, interest on credit accounts, interest on the Mortgage Loan Reserve Funds, and any disbursements to Mortgage Borrower from the Mortgage Loan Reserve Funds. Gross income shall not be diminished as a result of the Security Instruments or the creation of any intervening estate or interest in any Individual Property or any part thereof.

“Guarantor” shall mean CNL Healthcare Trust, Inc., a Maryland corporation, and any other entity guaranteeing any payment or performance obligation of Borrower.

“Guaranty” shall mean that certain Mezzanine Guaranty, dated as of the date hereof, from Guarantor to Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Hazardous Materials” shall mean petroleum and petroleum products and compounds containing them, including gasoline, diesel fuel and oil; explosives; flammable materials; radioactive materials; polychlorinated biphenyls (“PCBs”) and compounds containing them; lead and lead-based paint; asbestos or asbestos-containing materials in any form that is or could become friable; toxic mold; underground or above-ground storage tanks, whether empty or containing any substance; any substance the presence of which on any Individual Property is prohibited by any federal, State or local authority; any substance that requires special handling; and any other material or substance now or in the future defined as a “hazardous substance,” “hazardous material,” “hazardous waste,” “toxic substance,” “toxic pollutant,” “contaminant,” “pollutant” or other words of similar import within the meaning of any Environmental Law.

“Improvements” shall mean all buildings, structures, fixtures, additions, enlargements, extensions, modifications, repairs, replacements and improvements now or hereafter erected or located on any Individual Property.

“Indemnified Parties” shall mean Lender, any Affiliate of Lender who is or will have been involved in the origination of the Loan, any Person who is or will have been involved in the servicing of the Loan, any Person in whose name the encumbrance created by the Pledge Agreement is or will have been recorded, Persons who may hold or acquire or will have held a full or partial interest in the Loan, the holders of any Securities, as well as custodians, trustees and other fiduciaries who hold or have held a full or partial interest in the Loan for the benefit of third parties) as well as the respective directors, officers, shareholders, partners, members, employees, agents, servants, representatives, contractors, subcontractors, Affiliates, subsidiaries, participants, successors and assigns of any and all of the foregoing (including but not limited to any other Person who holds or acquires or will have held a participation or other full or partial interest in the Loan or the Collateral, whether during the term of the Loan or as a part of or following a foreclosure of the Loan and including, but not limited to, any successors by merger, consolidation or acquisition of all or a substantial portion of Lender’s assets and business).

“Indemnified Taxes” shall mean any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority.

“Indemnitor” shall mean CNL Healthcare Trust, Inc., a Maryland corporation.

- 6 -

“Independent Director” of any corporation or limited liability company means an individual who is provided by CT Corporation, Corporation Service Company, National Registered Agents, Inc., Wilmington Trust Company, Stewart Management Company, Lord Securities Corporation or, if none of those companies is then providing professional Independent Directors, another nationally-recognized company reasonably approved by Lender, in each case that is not an Affiliate of Borrower and that provides professional Independent Directors and other corporate services in the ordinary course of its business, and which individual is duly appointed as a member of the board of directors or board of managers of such corporation or limited liability company and is not, and has never been, and will not while serving as Independent Director be, any of the following:

(i) a member, partner, equity holder, manager, director, officer or employee of Borrower, Principal, or any of their respective equity holders or Affiliates (other than as an Independent Director of an Affiliate of Borrower that is not in the direct chain of ownership of Borrower and that is required by a creditor to be a single purpose bankruptcy remote entity, provided that such Independent Director is employed by a company that routinely provides professional Independent Directors or managers);

(ii) a creditor, supplier or service provider (including provider of professional services) to Borrower, Principal, or any of their respective equity holders or Affiliates (other than a nationally-recognized company that routinely provides professional Independent Directors and other corporate services to Borrower, Principal, or any of their respective equity holders or Affiliates in the ordinary course of business);

(iii) a family member of any such member, partner, equity holder, manager, director, officer, employee, creditor, supplier or service provider;

(iv) a member, partner or employee of a law firm that has provided legal services of any kind to Borrower or its Affiliates; or

(v) a Person that controls (whether directly, indirectly or otherwise) any of (i), (ii), (iii) or (iv) above.

A natural person who otherwise satisfies the foregoing definition other than subparagraph (i) by reason of being the Independent Director of a “special purpose entity” affiliated with Borrower shall not be disqualified from serving as an Independent Director, provided that the fees that such individual earns from serving as Independent Directors of such Affiliates in any given year constitute in the aggregate less than five percent (5%) of such individual’s annual income for that year.

“Independent Director Event” shall mean (i) any acts or omissions by such Independent Director that constitute willful disregard of such Independent Director’s duties under the applicable organizational documents, (ii) such Independent Director engaging in or being charged with, or being convicted of, fraud or other acts constituting a crime under any law applicable to such Independent Director or (iii) such Independent Director no longer meeting the definition of Independent Director.

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“Individual Property” shall mean each parcel of real property, the Improvements thereon and all Personal Property owned by Mortgage Borrower and encumbered by a Security Instrument, together with all rights pertaining to such Property and Improvements, as more particularly described (i) in Article 1 of each Security Instrument and referred to therein as the “Property” and (ii) on Schedule III attached hereto.

“Insurance Proceeds” shall mean all insurance compensation, awards, proceeds, damages, claims, rights of action and payments and all causes of action and proceeds thereof of all types for any damage or injury to the Properties or any part thereof.

“Intercreditor Agreement” shall have the meaning set forth in Section 9.7 hereof.

“JV Agreement” shall mean that certain Amended and Restated Limited Liability Company Agreement of Partners IV, entered into effective as of the date hereof by and between Sunrise and Borrower.

“Leases” shall mean all leases, subleases and other agreements affecting the use, enjoyment or occupancy of the Property heretofore or hereafter entered into and all extensions, amendments and modifications thereto, whether before or after the filing by or against Borrower of any petition for relief under Title 11 U.S.C.A. § 101 et seq. and the regulations adopted and promulgated thereto, including, without limitation, the Operating Lease.

“Legal Requirements” shall mean all federal, State, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities affecting Borrower, the Collateral, Mortgage Borrower or any Individual Property or any part thereof, or the zoning, construction, use, alteration, occupancy or operation thereof, or any part thereof, whether now or hereafter enacted and in force, and all permits, licenses and authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Borrower, at any time in force affecting such Individual Property or any part thereof, including, without limitation, any which may (a) require repairs, modifications or alterations in or to such Individual Property or any part thereof, or (b) in any way limit the use and enjoyment thereof.

“Lender” shall have the meaning set forth in the introductory paragraph hereto, together with its successors and assigns.

“Licenses” shall have the meaning set forth in Section 4.1.22 hereof.

“Lien” shall mean any mortgage, deed of trust, lien, pledge, hypothecation, assignment, security interest, or any other encumbrance, charge or transfer of, on or affecting Borrower, Mortgage Borrower, the Collateral or any related Individual Property, any portion thereof or any interest therein, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and mechanic’s, materialmen’s and other similar liens and encumbrances.

“Liquidation Event” shall have the meaning set forth in Section 2.3.2 hereof.

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“Loan” shall mean the loan made by Lender to Borrower pursuant to this Agreement and the other Loan Documents as the same may be amended or split pursuant to the terms hereof.

“Loan Documents” shall mean, collectively, this Agreement, the Note, the Pledge Agreement, the Environmental Indemnity, the Guaranty and all other documents executed and/or delivered in connection with the Loan now existing or hereinafter executed.

“Loan Party” shall mean individually and collectively, as the context requires, Borrower, Mortgage Borrower, Guarantor or any Operating Lessee.

“Lombard Lessee Mortgage Borrower” shall mean CHTSun Three Lombard IL Senior Living, LLC, a Delaware limited liability company, together with its successors and assigns.

“Lombard Owner Mortgage Borrower” shall mean Lombard IL Senior Living Owner, LLC, a Delaware limited liability company, together with its successors and assigns.

“Losses” shall mean any and all claims, suits, liabilities (including, without limitation, strict liabilities), actions, proceedings, obligations, debts, damages, losses, costs, expenses, fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in settlement of whatever kind or nature (including but not limited to attorneys’ fees and other costs of defense).

“Louisville Lessee Mortgage Borrower” shall mean Sunrise Louisville KY Senior Living, LLC, a Kentucky limited liability company, together with its successors and assigns.

“Louisville Owner Mortgage Borrower” shall mean Louisville KY Senior Living Owner, LLC, a Delaware limited liability company, together with its successors and assigns.

“Management Agreement” shall mean, with respect to any Individual Property, the management agreement entered into by and between the applicable Operating Lessee and Manager, pursuant to which the Manager is to provide management and other services with respect to such Individual Property, or, if the context requires, the Replacement Management Agreement executed in accordance with the terms and provisions of this Agreement.

“Management Gross Revenues” shall have the meaning set forth in the Mortgage Loan Documents.

“Manager” shall mean Sunrise Senior Living Management, Inc., a Virginia corporation, or, if the context requires, a Qualified Manager who is managing the Properties or any Individual Property in accordance with the terms and provisions of this Agreement.

“Manager Pooling Agreement” shall have the meaning set forth in the JV Agreement.

“Material Action” shall mean, as to any Person, to file or consent to the filing of, institute, commence or seek relief under, any petition, proceeding, action or case under any Creditors Rights Laws, to seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any similar official of or for such Person or a substantial part of its property, to admit in writing Borrower’s inability to pay its debts generally as they become due, or to take action in furtherance of any of the foregoing.

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“Material Agreement” shall mean the Management Agreement, the JV Agreement, the Manager Pooling Agreement, the Operating Lease and all other agreements entered into by any Loan Party, affecting or relating to the Property, the Collateral or any other direct or indirect Ownership Interest of a Loan Party in Borrower requiring the payment of more than $100,000 in payments or liability in any annual period or which is not cancelable without penalty or premium on no more than thirty (30) days’ notice.

“Material Lease” shall mean, individually and collectively, as the context may require, the Operating Lease and any other Lease which requires the prior written consent or approval of Mortgage Lender under the Mortgage Loan Documents or Borrower under the JV Agreement to enter into, renew, amend, modify, extend or terminate.

“Maturity Date” shall mean July 5, 2014, as such date may be extended pursuant to the terms hereof, or such other date on which the final payment of the principal of the Note becomes due and payable as therein or herein provided, whether at such stated maturity date, by declaration of acceleration, or otherwise.

“Maximum Legal Rate” shall mean the maximum nonusurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the indebtedness evidenced by the Note and as provided for herein or in the other Loan Documents, under the laws of such State or States whose laws are held by any court of competent jurisdiction to govern the interest rate provisions of the Loan.

“Member Loans” shall have the meaning set forth in Section 6.5 of the JV Agreement.

“Metairie Lessee Mortgage Borrower” shall mean CHTSun Two Metairie LA Senior Living, LLC, a Delaware limited liability company, together with its successors and assigns.

“Metairie Owner Mortgage Borrower” shall mean Metairie LA Senior Living Owner, LLC, a Delaware limited liability company, together with its successors and assigns.

“Moody’s” shall mean Moody’s Investors Service, Inc.

“Mortgage Borrower” shall mean, individually and/or collectively, as the context may require, the Connecticut and Santa Monica Mortgage Borrower and the Five-Pack Mortgage Borrower.

“Mortgage Lender” shall mean, individually and/or collectively, as the context may require, the Connecticut and Santa Monica Mortgage Lender and the Five-Pack Mortgage Lender.

“Mortgage Loan” shall mean, individually and/or collectively, as the context may require, the Connecticut and Santa Monica Mortgage Loan and the Five-Pack Mortgage Loan.

“Mortgage Loan Documents” shall mean, individually and/or collectively, as the context may require, the Connecticut and Santa Monica Mortgage Loan Documents and the Five-Pack Mortgage Loan Documents, as amended, restated, replaced, supplemented or otherwise modified from time to time.

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“Mortgage Loan Event of Default” shall mean an event of default under the Mortgage Loan Documents which remains uncured following the expiration of any applicable cure or grace period.

“Mortgage Loan Prepayment Date” shall have the meaning set forth in Section 2.3.1 hereof.

“Mortgage Loan Reserve Funds” shall mean the all escrow and reserve funds required pursuant to the Mortgage Loan.

“Net Capital Raise Account” shall have the meaning set forth in Section 3.1 hereof.

“Net Cash Flow” for any period shall mean the amount obtained by subtracting Operating Expenses and Capital Expenditures for such period from Gross Income from Operations for such period.

“Net Cash Flow After Debt Service” for any period shall mean the amount obtained by subtracting Debt Service for such period from Net Cash Flow for such period.

“Net Liquidation Proceeds After Debt Service” shall mean, with respect to any Liquidation Event, all amounts paid to or received by or on behalf of Borrower under the JV Agreement in connection with such Liquidation Event.

“Net Operating Income” shall mean the amount obtained by subtracting Operating Expenses from Gross Income from Operations.

“Non-U.S. Entity” shall have the meaning set forth in Section 2.2.7 hereof.

“Note” shall mean that certain promissory note of even date herewith in the original principal amount of FORTY MILLION AND 00/100 DOLLARS ($40,000,000.00), made by Borrower in favor of Lender, as the same may be amended, restated, replaced, extended, renewed, supplemented, severed, split, or otherwise modified from time to time.

“Note Rate” shall mean (i) for the date hereof through and including the Payment Date occurring in July, 2013, 8.0% per annum and (ii) from and after the Payment Date occurring in August, 2013, 12.0% per annum.

“Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower which is signed by a Responsible Officer of Borrower.

“Operating Expenses” shall mean the total of all expenditures, computed in accordance with GAAP or an income tax basis, of whatever kind relating to the operation, maintenance and management of the Properties that are incurred on a regular monthly or other periodic basis, including without limitation, utilities, ordinary repairs and maintenance, insurance premiums, license fees, property taxes and assessments, advertising and marketing expenses, franchise fees, management fees, payroll and related taxes, computer processing charges, operational equipment or other lease payments as approved by Lender, and other similar costs, but excluding depreciation, Debt Service, Capital Expenditures and contributions to the Mortgage Reserve Funds.

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“Operating Lease” shall mean, individually and collectively, as the context may require, those certain lease agreements by and between the applicable Owner Mortgage Borrower and the applicable Operating Lessee.

“Operating Lessee” shall mean, individually and collectively, as the context may require, Baton Rouge Lessee Mortgage Borrower, Gilbert Lessee Mortgage Borrower, Lombard Lessee Mortgage Borrower, Louisville Lessee Mortgage Borrower, Metairie Lessee Mortgage Borrower, Connecticut Lessee Mortgage Borrower and Santa Monica Lessee Mortgage Borrower.

“Organizational Documents” shall mean (i) with respect to a corporation, such Person’s certificate of incorporation and by laws, and any shareholder agreement, voting trust or similar arrangement applicable to any of such Person’s authorized shares of capital stock, (ii) with respect to a partnership, such Person’s certificate of limited partnership, partnership agreement, voting trusts or similar arrangements applicable to any of its partnership interests, (iii) with respect to a limited liability company, such Person’s certificate of formation, limited liability company agreement or other document affecting the rights of holders of limited liability company interests, and (iv) any and all agreements between any constituent member, partner or shareholder of the Person in question, including any contribution agreement or indemnification agreements, including, without limitation, the JV Agreement and the Recognition Agreement. In each case, “Organizational Documents” shall include any indemnity, contribution, shareholders or other agreement among any of the owners of the entity in question.

“Other Charges” shall mean all maintenance charges, impositions other than Taxes, and any other charges, including, without limitation, vault charges and license fees for the use of vaults, chutes and similar areas adjoining any Individual Property, now or hereafter levied or assessed or imposed against such Individual Property or any part thereof.

“Owner Mortgage Borrower” shall mean, individually and collectively as the context requires, Baton Rouge Owner Mortgage Borrower, Gilbert Owner Mortgage Borrower, Lombard Owner Mortgage Borrower, Louisville Owner Mortgage Borrower, Metairie Owner Mortgage Borrower, Connecticut Owner Mortgage Borrower and Santa Monica Owner Mortgage Borrower.

“Owner’s Title Policy” shall mean that certain ALTA extended coverage owner’s policy of title insurance issued in connection with the closing of the Mortgage Loan insuring Mortgage Borrower as the owner of the Property.

“Ownership Interest” means, in respect of any Person (i) any interest of such Person in the Properties or (ii) any ownership interest in such Person, direct or indirect, contingent or fixed, at any level or any tier, of any nature whatsoever, whether in the form of a partnership interest, stock interest, membership interest, equitable interest, beneficial interests, profit interest, loss interest, voting rights, control rights, management rights or otherwise.

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“Partners IV” shall mean CHTSun Partners IV, LLC, a Delaware limited liability company.

“Payment Date” shall mean the fifth (5th) day of each calendar month during the term of the Loan or, if such day is not a Business Day, the immediately preceding Business Day.

“Permitted Encumbrances” shall mean, with respect to an Individual Property, collectively, (a) the Liens and security interests created by the Mortgage Loan Documents and permitted under the Mortgage Loan Documents, (b) all Liens, encumbrances and other matters disclosed in the Owner’s Title Policy relating to such Individual Property or any part thereof, (c) Liens, if any, for Taxes imposed by any Governmental Authority not yet delinquent, and (d) such other title and survey exceptions as Lender has approved or may approve in writing in Lender’s sole discretion.

“Person” shall mean any individual, corporation, partnership, joint venture, limited liability company, estate, trust, unincorporated association, any federal, State, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.

“Personal Property” shall mean all machinery, equipment, fixtures (including, but not limited to, all heating, air conditioning, plumbing, lighting, communications and elevator fixtures), furniture, software used in or to operate any of the foregoing and other property of every kind and nature whatsoever owned by Mortgage Borrower, or in which Mortgage Borrower has or shall have an interest, now or hereafter located upon the real property and the Improvements, or appurtenant thereto, and usable in connection with the present or future operation and occupancy of the real property and the Improvements and all building equipment, materials and supplies of any nature whatsoever owned by Borrower or Mortgage Borrower, or in which Borrower or Mortgage Borrower has or shall have an interest, now or hereafter located upon the Land and the Improvements, or appurtenant thereto, or usable in connection with the present or future operation and occupancy of the real property and the Improvements.

“Physical Conditions Report” shall mean, with respect to each Individual Property, a structural engineering report prepared by a company satisfactory to Lender and Mortgage Lender regarding the physical condition of such Individual Property, satisfactory in form and substance to Lender and Mortgage Lender in their respective sole discretion, which report shall, among other things, (a) confirm that such Individual Property and its use complies, in all material respects, with all applicable Legal Requirements (including, without limitation, zoning, subdivision and building laws) and (b) include a copy of a final certificate of occupancy with respect to all Improvements on such Individual Property.

“Plan” shall mean an employee benefit plan (as defined in section 3(3) of ERISA) whether or not subject to ERISA or a plan or other arrangement within the meaning of section 4975 of the Code.

“Plan Assets” shall mean assets of a Plan within the meaning of section 29 C.F.R. section 2510.3-101, as modified by section 3(42) of ERISA, or similar law.

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“Pledge Agreement” shall mean that certain Pledge and Security Agreement dated as of the date hereof, executed and delivered by Borrower to Lender as security for the Loan, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Pledged Member Interests” shall mean all membership interests pledged pursuant to the Pledge Agreement.

“Policies” shall mean any and all policies of insurance required hereunder or under the Mortgage Loan Documents.

“Pool Subsidiaries” shall have the meaning set forth in the JV Agreement.

“Prepayment Date” shall have the meaning set forth in Section 2.3.1 hereof.

“Principal” shall have the meaning set forth in Section 4.1.36 hereof, together with its successors and assigns.

“Prohibited Person” shall mean any Person:

(a) listed in the Annex to, or otherwise subject to the provisions of, the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (the “Executive Order”);

(b) that is owned or controlled by, or acting for or on behalf of, any person or entity that is listed to the Annex to, or is otherwise subject to the provisions of, the Executive Order;

(c) with whom Lender is prohibited from dealing or otherwise engaging in any transaction by any terrorism or money laundering law, including the Executive Order;

(d) who commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order;

(e) that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, http://www.treas.gov.ofac/t11sdn.pdf or at any replacement website or other replacement official publication of such list; or

(f) who is an Affiliate of or affiliated with a Person listed above.

“Properties” shall mean, collectively, each and every Individual Property.

“Property” shall mean, as the context may require, the Properties or an Individual Property.

“Qualified Manager” shall mean a reputable and experienced professional management organization (a) which manages (exclusive of the Properties), together with its Affiliates, ten (10) or more senior living facilities and assisted living facilities of a quality and size similar to the

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Properties, (b) prior to whose employment as manager of the Properties, such employment shall have been approved by Lender and (c) if requested by Borrower in order to satisfy applicable REIT qualification tests, is and at all times will be an “eligible independent contractor” as defined in Section 856(d) of the Internal Revenue Code.

“Rating Agencies” shall mean each of S&P, Moody’s, and Fitch, and any other nationally-recognized statistical rating agency which has been approved by Lender and has rated the Securities.

“Release” of any Hazardous Materials shall mean any release, deposit, discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing or other movement of Hazardous Materials.

“Recognition Agreement” shall mean that certain Recognition Agreement dated as of the date hereof between Borrower, Lender and Sunrise.

“Rents” shall mean all cash or securities deposited to secure the performance by the lessees of their obligations thereunder and all rents, additional rents, rent equivalents, moneys payable as damages or in lieu of rent or rent equivalents, royalties (including, without limitation, all oil and gas or other mineral royalties and bonuses), income, receivables, receipts, revenues, deposits (including, without limitation, security, utility and other deposits, accounts, cash, issues, profits, charges for services rendered, and other consideration of whatever form or nature received by or paid to or for the account of or benefit of Borrower or Mortgage Borrower or its agents or employees from any and all sources arising from or attributable to any Individual Property, including, all receivables, customer obligations, installment payment obligations, income from temporary and specialty tenants, kiosks, indoor retail merchandising units and other obligations now existing or hereafter arising or created out of the sale, lease, sublease, license, concession or other grant of the right of the use and occupancy of property or rendering of services by Borrower or Mortgage Borrower or Manager and proceeds, if any, from business interruption or other loss of income insurance whether paid or accruing before or after the filing by or against Borrower of any petition for relief under any Creditors Rights Laws.

“Replacement Management Agreement” shall mean, collectively, either (i) a management agreement with a Qualified Manager substantially in the same form and substance as the Management Agreement, or (ii) a management agreement with a Qualified Manager, which management agreement shall be acceptable to Lender in form and substance.

“Responsible Officer” shall mean with respect to a Person, the chairman of the board, president, chief operating officer, chief financial officer, treasurer or vice president-finance or other authorized officer of such Person.

“Restoration” shall mean the repair and restoration of each Individual Property after a Casualty or Condemnation as nearly as possible to the condition the Property was in immediately prior to such Casualty or Condemnation, with such alterations as may be reasonably approved by Lender.

“Restricted Party” shall mean Mortgage Borrower, Borrower, Principal, Guarantor, Indemnitor, Operating Lessee, any Affiliated Manager, Partners IV, Sun IV, CHT TRS, CHT

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Partners, CHT GP and each of the other Pool Subsidiaries or any shareholder, partner, member or non-member manager, or any direct or indirect legal or beneficial owner of Mortgage Borrower, Borrower, Principal, Guarantor, Indemnitor, Operating Lessee, any Affiliated Manager, Partners IV, Sun IV, CHT TRS, CHT Partners, CHT GP and each of the other Pool Subsidiaries; but specifically excluding Sunrise, Sunrise Senior Living, Inc., Sunrise Senior Living Management, Inc., and any shareholder, partner, member or non-member manager, or any direct or indirect legal or beneficial owner of Sunrise, Sunrise Senior Living, Inc. and Sunrise Senior Living Management, Inc.

“S&P” shall mean Standard & Poor’s Ratings Services, a division of McGraw-Hill, Inc.

“Sale or Pledge” shall mean a voluntary or involuntary sale, conveyance, transfer or pledge of a direct or indirect legal or beneficial interest.

“Santa Monica Lessee Mortgage Borrower” shall mean AL Santa Monica Senior Housing, LP, a Delaware partnership, together with its successors and assigns.

“Santa Monica Owner Mortgage Borrower” shall mean Santa Monica Assisted Living Owner, LLC, a Delaware limited liability company, together with its successors and assigns.

“SEC” shall mean the Securities and Exchange Commission.

“Securities” shall have the meaning set forth in Section 9.1 hereof.

“Securitization” shall have the meaning set forth in Section 9.1 hereof.

“Security Instrument” shall mean, with respect to each Individual Property, that certain first priority Mortgage (or Deed of Trust or Deed to Secure Debt, as applicable) and Security Agreement, executed and delivered by Mortgage Borrower as security for the Mortgage Loan and encumbering such Individual Property, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Servicer” shall have the meaning set forth in Section 9.3 hereof.

“Servicing Agreement” shall have the meaning set forth in Section 9.3 hereof.

“Severed Loan Documents” shall have the meaning set forth in Section 8.2(c) hereof.

“State” shall mean, with respect to an Individual Property, the State or Commonwealth in which such Individual Property or any part thereof is located.

“Sun IV” shall mean Sun IV LLC, a Delaware limited liability company.

“Sunrise” shall mean Sunrise Senior Living Investments, Inc., a Virginia corporation.

“Sunrise Purchase Option” shall have the meaning set forth in Section 12.1 of the JV Agreement.

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“Survey” shall mean, with respect to an Individual Property, a survey prepared by a surveyor licensed in the State where such Individual Property is located and satisfactory to Lender and the company or companies issuing the Title Insurance Policies, and containing a certification of such surveyor satisfactory to Lender.

“Taxes” shall mean all real estate and personal property taxes, assessments, water rates or sewer rents, now or hereafter levied or assessed or imposed against any Individual Property or part thereof.

“Title Insurance Policy” shall mean any title insurance policy insuring Mortgage Lender’s interest in the Properties.

“Transfer” shall have the meaning set forth in Section 5.2.10(a) hereof.

“UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in the state of New York.

“UCC Financing Statements” shall mean the UCC financing statement executed in connection with the Pledge Agreement and the other Loan Documents and filed in the applicable filing offices.

“UCC Title Insurance Policy” shall mean, with respect to the Collateral, a UCC title insurance policy in the form acceptable to Lender issued with respect to the Collateral and insuring the lien of the Pledge Agreement encumbering such Collateral.

Section 1.2 Principles of Construction.

All references to sections and schedules are to sections and schedules in or to this Agreement unless otherwise specified. All uses of the word “including” shall mean “including, without limitation” unless the context shall indicate otherwise. Unless otherwise specified, the words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise specified, all meanings attributed to defined terms herein shall be equally applicable to both the singular and plural forms of the terms so defined. With respect to terms defined by cross-reference to the Mortgage Loan Documents, such defined terms shall have the definitions set forth in the Mortgage Loan Documents as of the date hereof, and no modifications to the Mortgage Loan Documents shall have the effect of changing such definitions for the purpose of this Agreement unless Lender expressly agrees that such definitions as used in this Agreement have been revised or Lender consents to the modification documents. With respect to any provisions or definitions incorporated by reference herein from the Mortgage Loan Documents, such provisions or definitions shall be deemed a part of this Agreement notwithstanding the fact that the Mortgage Loan shall no longer be effective for any reason, including, without limitation, after the repayment of the Mortgage Loan.

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II. GENERAL TERMS

Section 2.1 Loan Commitment; Disbursement to Borrower.

2.1.1 Agreement to Lend and Borrow.

Subject to and upon the terms and conditions set forth herein, Lender hereby agrees to make and Borrower hereby agrees to accept the Loan on the Closing Date.

2.1.2 Single Disbursement to Borrower.

Borrower may request and receive only one borrowing hereunder in respect of the Loan and any amount borrowed and repaid hereunder in respect of the Loan may not be reborrowed.

2.1.3 The Note, Pledge Agreement and Loan Documents.

The Loan shall be evidenced by the Note and secured by the Pledge Agreement and the other Loan Documents.

2.1.4 Use of Proceeds.

All of the Mortgage Loan proceeds advanced to Mortgage Borrower have been and will be used solely in accordance with the Mortgage Loan Documents. The Loan proceeds may be used by Borrower for any lawful purpose.

Section 2.2 Interest; Loan Payments; Late Payment Charge.

2.2.1 Payments.

(a) Interest. Interest on the outstanding principal balance of the Loan shall accrue from the Closing Date to the Maturity Date at the Note Rate. Commencing on the fifth (5th) day of August, 2012 and continuing on each Payment Date thereafter, through and including the Maturity Date, unless sooner repaid, Borrower shall pay consecutive monthly payments of interest at the Note Rate and any amounts due pursuant to this Agreement.

(b) Intentionally Omitted.

(c) Extension Option. Borrower shall have the option to extend the term of the Loan beyond the initial Maturity Date for one (1) successive term (the “Extension Option”) of one (1) year (the “Extension Period”) to the Payment Date occurring in July, 2015 (such date, the “Extended Maturity Date”), upon satisfaction of the following terms and conditions:

(i) no Event of Default shall have occurred and be continuing at the time the Extension Option is exercised and on the date that the Extension Period is commenced;

(ii) Borrower shall notify Lender of its irrevocable election to extend the Maturity Date as aforesaid not earlier than ninety (90) days and no later than thirty (30) days prior to the Maturity Date;

(iii) Borrower shall have delivered to Lender together with its notice pursuant to subsection (c)(ii) of this Section 2.2.1 and as of the commencement of the Extension Option, an Officer’s Certificate in form reasonably acceptable to Lender certifying that each of the representations and warranties of Borrower contained in the Loan Documents

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is true, complete and correct in all material respects as of the date of such Officer’s Certificate except to the extent such representations and warranties are matters which by their nature can no longer be true and correct as a result of the passage of time; and

(iv) Borrower shall have paid to Lender the Extension Fee.

(d) All references in this Agreement and in the other Loan Documents to the Maturity Date shall mean the Extended Maturity Date in the event the Extension Option is exercised.

(e) All payments and other amounts due under the Note, this Agreement and the other Loan Documents shall be made without any setoff, defense or irrespective of, and without deduction for, counterclaims.

2.2.2 Interest Calculation.

Interest on the outstanding principal balance of the Loan shall be calculated by multiplying (a) the actual number of days elapsed in the period for which the calculation is being made by (b) a daily rate equal to the Note Rate divided by three hundred sixty (360) by (c) the outstanding principal balance of the Loan.

2.2.3 Payment on Maturity Date.

Borrower shall pay to Lender on the Maturity Date the outstanding principal balance, all accrued and unpaid interest thereon, the Exit Fee and all other amounts due hereunder and under the Note, the Pledge Agreement and the other Loan Documents.

2.2.4 Payments after Default.

Upon the occurrence and during the continuance of an Event of Default, (a) interest on the outstanding principal balance of the Loan and, to the extent permitted by Applicable Law, overdue interest and other amounts due in respect of the Loan, shall accrue at the Default Rate, calculated from the date of the underlying Default without regard to any grace or cure periods contained herein and (b) Lender shall be entitled to receive and Borrower shall pay to Lender on each Payment Date an amount equal to the Borrower’s Net Cash Flow After Debt Service for the prior month, such amount to be applied by Lender to the payment of the Debt in such order as Lender shall determine in its sole discretion, including, without limitation, alternating applications thereof between interest and principal. Interest at the Default Rate and Borrower’s Net Cash Flow After Debt Service shall both be computed from the occurrence of the Event of Default until the actual receipt and collection of the Debt (or that portion thereof that is then due). To the extent permitted by Applicable Law, interest at the Default Rate shall be added to the Debt, shall itself accrue interest at the same rate as the Loan and shall be secured by the Pledge Agreement. This paragraph shall not be construed as an agreement or privilege to extend the date of the payment of the Debt, nor as a waiver of any other right or remedy accruing to Lender by reason of the occurrence of any Event of Default; the acceptance of any payment of Borrower’s Net Cash Flow After Debt Service shall not be deemed to cure or constitute a waiver of any Event of Default; and Lender retains its rights under the Note to accelerate and to continue to demand payment of the Debt upon the happening of any Event of Default, despite any payment of Borrower’s Net Cash Flow After Debt Service.

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2.2.5 Late Payment Charge.

If any principal, interest or any other sums due under the Loan Documents is not paid by Borrower on the date on which it is due, Borrower shall pay to Lender upon demand an amount equal to the lesser of five percent (5%) of such unpaid sum or the maximum amount permitted by Applicable Law in order to defray the expense incurred by Lender in handling and processing such delinquent payment and to compensate Lender for the loss of the use of such delinquent payment. Any such amount shall be secured by the Pledge Agreement and the other Loan Documents to the extent permitted by Applicable Law.

2.2.6 Usury Savings.

This Agreement and the Note are subject to the express condition that at no time shall Borrower be obligated or required to pay interest on the principal balance of the Loan at a rate which could subject Lender to either civil or criminal liability as a result of being in excess of the Maximum Legal Rate. If, by the terms of this Agreement or the other Loan Documents, Borrower is at any time required or obligated to pay interest on the principal balance due hereunder at a rate in excess of the Maximum Legal Rate, the Note Rate or the Default Rate, as the case may be, shall be deemed to be immediately reduced to the Maximum Legal Rate and all previous payments in excess of the Maximum Legal Rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the sums due under the Loan, shall, to the extent permitted by Applicable Law, be amortized, prorated, allocated, and spread throughout the full stated term of the Loan until payment in full so that the rate or amount of interest on account of the Loan does not exceed the Maximum Legal Rate of interest from time to time in effect and applicable to the Loan for so long as the Loan is outstanding.

2.2.7 Indemnified Taxes.

(a) All payments made by Borrower hereunder shall be made free and clear of, and without reduction for or on account of, Indemnified Taxes, excluding (i) Indemnified Taxes measured by Lender’s net income, and franchise taxes imposed on it, by the jurisdiction under the laws of which Lender is resident or organized, or any political subdivision thereof, (ii) taxes measured by Lender’s overall net income, and franchise taxes imposed on it, by the jurisdiction of Lender’s applicable lending office or any political subdivision thereof or in which Lender is resident or engaged in business, and (iii) withholding taxes imposed by the United States of America, any state, commonwealth, protectorate territory or any political subdivision or taxing authority thereof or therein as a result of the failure of Lender which is a Non-U.S. Entity to comply with the terms of paragraph (b) below. If any non excluded Indemnified Taxes are required to be withheld from any amounts payable to Lender, the amounts so payable to Lender shall be increased to the extent necessary to yield to Lender (after payment of all non excluded Indemnified Taxes) interest or any such other amounts payable hereunder at the rate or in the amounts specified hereunder. Whenever any non excluded Indemnified Tax is payable pursuant to Applicable Law by Borrower, Borrower shall send to Lender an original official receipt showing payment of such non excluded Indemnified Tax or other evidence of payment reasonably satisfactory to Lender. Borrower hereby indemnifies Lender for any incremental taxes, interest or penalties that may become payable by Lender which may result from any failure by Borrower to pay any such non excluded Indemnified Tax when due to the appropriate taxing authority or any failure by Borrower to remit to Lender the required receipts or other required documentary evidence.

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(b) In the event that Lender or any successor and/or assign of Lender is not incorporated under the laws of the United States of America or a state thereof (a “Non-U.S. Entity”) Lender agrees that, prior to the first date on which any payment is due such entity hereunder, it will deliver to Borrower two duly completed copies of United States Internal Revenue Service Form W 8BEN or W 8ECI or successor applicable form, as the case may be, certifying in each case that such entity is entitled to receive payments under the Note, without deduction or withholding of any United States federal income taxes. Each entity required to deliver to Borrower a Form W 8BEN or W 8ECI pursuant to the preceding sentence further undertakes to deliver to Borrower two further copies of such forms, or successor applicable forms, or other manner of certification, as the case may be, on or before the date that any such form expires (which, in the case of the Form W 8ECI, is the last day of each U.S. taxable year of the Non-U.S. Entity) or becomes obsolete or after the occurrence of any event requiring a change in the most recent form previously delivered by it to Borrower, and such other extensions or renewals thereof as may reasonably be requested by Borrower, certifying in the case of a Form W 8BEN or W 8ECI that such entity is entitled to receive payments under the Note without deduction or withholding of any United States federal income taxes, unless in any such case an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such entity from duly completing and delivering any such form with respect to it and such entity advises Borrower that it is not capable of receiving payments without any deduction or withholding of United States federal income tax.

Section 2.3 Prepayments.

2.3.1 Voluntary Prepayments.

(I) On any Business Day, Borrower may, at its option, prepay the Loan in whole or in part, upon satisfaction of the following conditions:

(a) Borrower shall provide prior written notice to Lender (which notice shall be irrevocable) specifying the date (the “Prepayment Date”) upon which the prepayment is to be made, which notice shall be delivered to Lender not less than ten (10) Business Days prior to such payment;

(b) Borrower shall pay to Lender, simultaneously with such prepayment, (i) all accrued and unpaid interest calculated at the Note Rate on the amount of principal being prepaid through and including the Prepayment Date; (ii) all other sums then due under this Agreement, the Note or the other Loan Documents and (iii) the Exit Fee;

(c) each prepayment shall be in an aggregate principal amount of $1,000,000.00 or any integral multiple of $100,000.00 in excess thereof.

(d) Such prepayment shall not be prohibited pursuant to the Mortgage Loan Documents.

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(II) Notwithstanding anything to the contrary contained herein, Borrower shall be obligated to prepay the Loan in whole on the date that the Mortgage Loan is paid in full (the “Mortgage Loan Prepayment Date”), and in connection therewith:

(a) Borrower shall provide prior written notice to Lender (which notice shall be irrevocable) specifying the Mortgage Loan Prepayment Date, which notice shall be delivered to Lender not less than ten (10) Business Days prior to the Mortgage Loan Prepayment Date; and

(b) Borrower shall pay to Lender, simultaneously with such prepayment, (i) all accrued and unpaid interest calculated at the Note Rate on the amount of principal being prepaid through and including the Mortgage Loan Prepayment Date; (ii) all other sums then due under this Agreement, the Note or the other Loan Documents and (iii) the Exit Fee.

If a notice of prepayment is given by Borrower to Lender pursuant to this Section 2.3.1, the amount designated for prepayment and all other sums required under this Section 2.3.1 shall be due and payable on the Prepayment Date and/or the Mortgage Loan Prepayment Date, as applicable; provided, however, that such notice may be revoked at any time prior to the Prepayment Date and/or the Mortgage Loan Prepayment Date, as applicable, provided Borrower pays to Lender all actual out-of-pocket expenses incurred by Lender in connection with the anticipated prepayment;.

2.3.2 Liquidation Events.

(a) In the event of (i) any Casualty to all or any portion of any Individual Property, (ii) any Condemnation of all or any portion of any Individual Property, (iii) a Transfer of any Individual Property in connection with realization thereon by Mortgage Lender following an Event of Default under the Mortgage Loan, including without limitation a foreclosure sale, or (iv) any refinancing of any Individual Property or the Mortgage Loan (each, a “Liquidation Event”), Borrower shall cause the related Net Liquidation Proceeds After Debt Service to be deposited directly into an account designated by Lender. On each date on which Lender actually receives a distribution of Net Liquidation Proceeds After Debt Service, if such date is a Payment Date, such Net Liquidation Proceeds After Debt Service shall be applied to the outstanding principal balance of the Note in an amount equal to one hundred percent (100%) of such Net Liquidation Proceeds After Debt Service, together with interest that would have accrued on such amount through the next Payment Date and all other sums then due. In the event Lender receives a distribution of Net Liquidation Proceeds After Debt Service on a date other than a Payment Date, such amounts shall be held by Lender as collateral security for the Loan in an interest bearing account, with such interest accruing to the benefit of Borrower, and shall be applied by Lender on the next Payment Date.

(b) Borrower shall promptly notify Lender of any Liquidation Event once Borrower has knowledge of such event. Borrower shall be deemed to have knowledge of (i) a sale (other than a foreclosure sale) of any Individual Property on the date on which a contract of sale for such sale is entered into, and a foreclosure sale, on the date notice of such foreclosure sale is given, and (ii) a refinancing of any Individual Property, on the date on which a commitment for such refinancing is entered into. The provisions of this Section 2.3.2 shall not be construed to contravene in any manner the restrictions and other provisions regarding refinancing of the Mortgage Loan or Transfer of the Property set forth in this Agreement and the other Loan Documents.

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2.3.3 Prepayments After Default.

If, following an Event of Default, Borrower tenders payment of all or any part of the Debt, or if all or any portion of the Debt is recovered by Lender after such Event of Default (including, without limitation, through application of any Net Liquidation Proceeds After Debt Service) (which tender Lender may reject to the extent permitted under applicable Legal Requirements) Borrower shall pay, in addition to the Debt, (i) all accrued and unpaid interest calculated at the Default Rate on the amount of principal being prepaid through and including the Prepayment Date; (ii) an amount equal to three percent (3%) of the original Loan Amount and (iii) all other sums due under this Agreement, the Note or the other Loan Documents in connection with a partial or total prepayment, including, without limitation, the Exit Fee.

2.3.4 Making of Payments.

Each payment by Borrower hereunder or under the Note shall be made in funds settled through the New York Clearing House Interbank Payments System or other funds immediately available to Lender by 12:00 p.m., New York City time, on or prior to the date such payment is due, to Lender by deposit to such account as Lender may designate by written notice to Borrower.

2.3.5 Application of Prepayments.

All prepayments received pursuant to this Section 2.3 and Section 2.4 shall be applied first, to interest on the outstanding principal balance being prepaid that accrued through and including the Prepayment Date and second, to the payments of principal due under the Loan in the inverse order of maturity.

Section 2.4 Release on Payment in Full.

Lender shall, upon the written request and at the expense of Borrower, upon payment in full of all principal and interest due on the Loan and all other amounts due and payable under the Loan Documents in accordance with the terms and provisions of the Note and this Agreement, release the Lien of the Pledge Agreement and the Collateral.

III. CASH MANAGEMENT

Section 3.1 Property Account.

(a) During the term of the Loan, Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to establish and maintain any property accounts (a “Property Account”) required under the Mortgage Loan Documents and to comply with all provisions under the Mortgage Loan Documents relating thereto.

(b) Borrower shall exercise any rights it may have under the JV Agreement to not permit or cause Mortgage Borrower to further pledge, assign or grant any security interest in the

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Property Account or the monies deposited therein or permit any lien or encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1 Financing Statements, except those naming Mortgage Lender as the secured party, to be filed with respect thereto.

Section 3.2 Net Capital Raise Account.

During the term of the Loan, Borrower shall cause Guarantor to establish and maintain the Net Capital Raise Account in accordance with the Mezzanine Loan Repayment and Security Agreement dated as of the date hereof given by Guarantor to Mortgage Lender and to otherwise comply with all provisions of under the Mortgage Loan Documents relating thereto. Subject to the terms of the Mortgage Loan Documents, Borrower will not cause or permit any Person in any way to alter or modify the Net Capital Raise Account and will notify Lender of the account number thereof. Borrower shall direct or cause Guarantor to direct that all cash distributions from the Net Capital Raise Account to be paid to Lender in accordance with the Mortgage Loan Documents be deposited into an account specified by Lender.

IV. REPRESENTATIONS AND WARRANTIES

Section 4.1 Borrower Representations.

Borrower represents and warrants as of the Closing Date that:

4.1.1 Organization.

Borrower is duly organized and is validly existing and in good standing in the jurisdiction in which it is organized, with requisite power and authority to own its assets and to transact the businesses in which it is now engaged. Borrower is duly qualified to do business and is in good standing in each jurisdiction where it is required to be so qualified in connection with its assets, its businesses and operations. Borrower possesses all rights, licenses, permits and authorizations, governmental or otherwise, necessary to entitle it to own its assets and to transact the businesses in which it is now engaged. Attached hereto as Schedule I is an organizational chart of Borrower. Borrower has delivered to Lender true and correct copies of Mortgage Borrower’s operating agreement and all other Organizational Documents for Mortgage Borrower, Borrower and Principal, all of which are in full force and effect.

4.1.2 Proceedings.

Borrower has taken all necessary action to authorize the execution, delivery and performance of this Agreement and the other Loan Documents. This Agreement and the other Loan Documents have been duly executed and delivered by or on behalf of Borrower and constitute legal, valid and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms, subject only to applicable bankruptcy, insolvency and similar laws affecting rights of creditors generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

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4.1.3 No Conflicts.

The execution, delivery and performance of this Agreement and the other Loan Documents by Borrower will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any Lien, charge or encumbrance (other than pursuant to the Loan Documents) upon any of the property or assets of Borrower pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, partnership agreement, management agreement, or other agreement or instrument to which Borrower is a party or by which any of Borrower’s property or assets is subject, nor will such action result in any violation of the provisions of any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over Borrower or any of Borrower’s property or other assets, or any license or other approval required to own and manage its property, and any consent, approval, authorization, order, registration or qualification of or with any Governmental Authority required for the execution, delivery and performance by Borrower of this Agreement or any other Loan Documents have been obtained and is in full force and effect.

4.1.4 Litigation.

There are no actions, suits or proceedings at law or in equity by or before any Governmental Authority or other agency now pending or threatened against or affecting Borrower, the Collateral or to Borrower’s knowledge, the Mortgage Borrower or any Individual Property, which actions, suits or proceedings, if determined against Borrower, Mortgage Borrower, the Collateral or any Individual Property, might materially adversely affect the condition (financial or otherwise) or business of Borrower, Mortgage Borrower, the Collateral or the condition or ownership of any Individual Property.

4.1.5 Agreements.

Borrower is not a party to any agreement or instrument or subject to any restriction which might materially and adversely affect Borrower, Mortgage Borrower, the Collateral or any Individual Property, or Borrower’s or Mortgage Borrower’s business, properties or assets, operations or condition, financial or otherwise. Neither Borrower, nor to Borrower’s knowledge Mortgage Borrower, is in default in any material respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument to which it is a party or by which Borrower, Mortgage Borrower, the Collateral or any of the Properties are bound. Neither Borrower, nor to Borrower’s knowledge Mortgage Borrower, has any material financial obligation under any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which Borrower or Mortgage Borrower is a party or by which Borrower, Mortgage Borrower, the Collateral or any Individual Property is otherwise bound, other than (a) obligations incurred in the ordinary course of the business relating to Borrower’s ownership and operation of the Collateral, (b) obligations incurred in the ordinary course of the business relating to Mortgage Borrower’s ownership and operation of the Property and (c) obligations under the Loan Documents and the Mortgage Loan Documents, as applicable.

4.1.6 Title.

(a) Each Loan Party purporting to grant a Lien on any Collateral is the legal and beneficial owner of, and has good and marketable title to, the Collateral, free and clear of all

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Liens whatsoever. The Pledge Agreement, together with the UCC Financing Statements relating to the Collateral when properly filed in the appropriate records, will create a valid, perfected first priority security interests in and to the Collateral, all in accordance with the terms thereof for which a Lien can be perfected by filing a UCC Financing Statement. For so long as the Lien of the Pledge Agreement is outstanding, Borrower shall forever warrant, defend and preserve such title and the validity and priority of the Lien of the Pledge Agreement and shall forever warrant and defend such title, validity and priority to Lender against the claims of all persons whomsoever.

(b) Owner Mortgage Borrower has good title to the Properties and that Owner Mortgage Borrower possesses fee simple absolute estate in each Individual Property and that it owns the Properties free and clear of all liens, encumbrances and charges whatsoever except for the Permitted Encumbrances. The Permitted Encumbrances do not and will not materially adversely affect or interfere with the value, or materially adversely affect or interfere with the current use or operation, of the Property or the ability of Borrower to repay the Note or any other amount owing under the Note, the Pledge Agreement, the Loan Agreement, or the other Loan Documents or to perform its obligations thereunder in accordance with the terms of the Loan Agreement, the Note, the Pledge Agreement or the other Loan Documents. Other than Mortgage Lender, no Person other than Mortgage Borrower owns any interest in any payments due under any Leases. Borrower shall exercise any rights it may have under the JV Agreement to cause Owner Mortgage Borrower to forever warrant, defend and preserve the title to the Property and to forever warrant and defend the same to Lender against the claims of all persons whomsoever.

4.1.7 Solvency.

Borrower (a) has not entered into the transaction or executed the Note, this Agreement or any other Loan Documents with the actual intent to hinder, delay or defraud any creditor and (b) has received reasonably equivalent value in exchange for its obligations under the Loan Documents. Giving effect to the Loan, the fair saleable value of Borrower’s assets exceeds and will, immediately following the making of the Loan, exceed Borrower’s total liabilities, including, without limitation, subordinated, unliquidated, disputed and contingent liabilities. Borrower’s assets do not and, immediately following the making of the Loan will not, constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted. Borrower does not intend to incur debt and liabilities (including contingent liabilities and other commitments) beyond its ability to pay such debt and liabilities as they mature (taking into account the timing and amounts of cash to be received by Borrower and the amounts to be payable on or in respect of obligations of Borrower). No petition under the Bankruptcy Code or similar state bankruptcy or insolvency law has been filed against Borrower, Mortgage Borrower or any constituent Person in the last seven (7) years, and neither Borrower nor any constituent Person in the last seven (7) years has ever made an assignment for the benefit of creditors or taken advantage of any insolvency act for the benefit of debtors. Neither Borrower nor any of its constituent Persons are contemplating either the filing of a petition by it under the Bankruptcy Code or similar state bankruptcy or insolvency law or the liquidation of all or a major portion of Borrower’s assets or property, and Borrower has no knowledge of any Person contemplating the filing of any such petition against it or such constituent Persons.

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4.1.8 Full and Accurate Disclosure.

No statement of fact made by Borrower in this Agreement or in any of the other Loan Documents contains any untrue statement of a material fact or omits to state any material fact necessary to make statements contained herein or therein not misleading. There is no fact presently known to Borrower which has not been disclosed to Lender which materially and adversely affects, or might materially and adversely affect, the Collateral, any Individual Property or the business, operations or condition (financial or otherwise) of Borrower or Mortgage Borrower.

4.1.9 No Plan Assets.

No Loan Party is a Plan and none of the assets of any Loan Party constitute or will constitute, by virtue of the application of 29 C.F.R. §2510.3-101(f) as modified by section 3(42) of ERISA, “Plan Assets” of one or more Plans. In addition, (a) no Loan Party is a “governmental plan” within the meaning of Section 3(32) of ERISA and (b) transactions by or with any Loan Party are not subject to State statutes regulating investment of, and fiduciary obligations with respect to, governmental plans similar to the provisions of Section 406 of ERISA or Section 4975 of the Code currently in effect, which prohibit or otherwise restrict the transactions contemplated by this Agreement.

4.1.10 Compliance.

Borrower, Mortgage Borrower and the Property and the use thereof comply in all material respects with all applicable Legal Requirements, including, without limitation, all Environmental Laws, building and zoning ordinances and codes. Neither Borrower, nor to Borrower’s knowledge Mortgage Borrower, is in default or violation of any order, writ, injunction, decree or demand of any Governmental Authority. There has not been committed by Borrower, nor to Borrower’s knowledge Mortgage Borrower or any other Person in occupancy of or involved with the operation or use of the Property, any act or omission affording the federal government or any other Governmental Authority the right of forfeiture as against any Individual Property or any part thereof or any monies paid in performance of Borrower’s obligations under any of the Loan Documents.

4.1.11 Financial Information.

All financial data, including, without limitation, the statements of cash flow and income and operating expense, that have been delivered to Lender in respect of Borrower, Mortgage Borrower, the Collateral and the Properties (i) are true, complete and correct in all material respects, (ii) accurately represent the financial condition of Borrower, the Collateral and to Borrower’s knowledge the Mortgage Borrower and the Properties, as applicable, as of the date of such reports, and (iii) have been prepared in accordance with GAAP throughout the periods covered, except as disclosed therein. Except for Permitted Encumbrances, Borrower does not have any contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments that are known to Borrower and reasonably likely to have a materially adverse effect on the Collateral or any Individual Property or the operation of any Individual Property as a senior housing property except as referred to or reflected in said financial statements. Since the date of such financial statements, there has been no materially adverse change in the financial condition, operations or business of Borrower or to Borrower’s knowledge Mortgage Borrower from that set forth in said financial statements.

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4.1.12 Condemnation.

No Condemnation or other similar proceeding has been commenced or, to the best of Borrower’s knowledge, is threatened or contemplated with respect to all or any portion of any Individual Property or for the relocation of roadways providing access to any Individual Property.

4.1.13 Federal Reserve Regulations.

No part of the proceeds of the Loan will be used for the purpose of purchasing or acquiring any “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or for any other purpose which would be inconsistent with such Regulation U or any other Regulations of such Board of Governors, or for any purposes prohibited by Legal Requirements or by the terms and conditions of this Agreement or the other Loan Documents.

4.1.14 Utilities and Public Access.

Each Individual Property has rights of access to public ways and is served by public water, sewer, sanitary sewer and storm drain facilities adequate to service such Individual Property for its respective intended uses. All public utilities necessary or convenient to the full use and enjoyment of each Individual Property are located either in the public right of way abutting each Individual Property (which are connected so as to serve each Individual Property without passing over other property) or in recorded easements serving each Individual Property and such easements are set forth in and insured by the Owner’s Title Policy. All roads necessary for the use of each Individual Property for their current respective purposes have been completed, are physically open and are dedicated to public use and have been accepted by all Governmental Authorities.

4.1.15 Not a Foreign Person.

Borrower is not a “foreign person” within the meaning of §1445(f)(3) of the Code.

4.1.16 Separate Lots.

Each Individual Property is comprised of one (1) or more parcels which constitute a separate tax lot or lots and does not constitute a portion of any other tax lot not a part of such Individual Property.

4.1.17 Assessments.

There are no pending or proposed special or other assessments for public improvements or otherwise affecting any Individual Property, nor are there any contemplated improvements to any Individual Property that may result in such special or other assessments.

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4.1.18 Enforceability.

The Loan Documents are not subject to any right of rescission, set-off, counterclaim or defense by Borrower, including the defense of usury, and Borrower has not asserted any right of rescission, set-off, counterclaim or defense with respect thereto.

4.1.19 No Prior Assignment.

Other than the Mortgage Loan Documents, there are no prior assignments of the Leases or any portion of the Rents due and payable or to become due and payable which are presently outstanding. There are no prior assignments of the Collateral which are presently outstanding except in accordance with the Loan Documents.

4.1.20 Insurance.

Mortgage Borrower has obtained and Borrower has delivered to Lender certified copies of all Policies reflecting the insurance coverages, amounts and other requirements set forth in this Agreement. Neither Borrower, nor to Borrower’s knowledge any other Person, has done, by act or omission, anything which would impair the coverage of any such Policies.

4.1.21 Use of Property.

Each Individual Property is used exclusively for senior housing purposes and other appurtenant and related uses.

4.1.22 Certificate of Occupancy; Licenses.

All certifications, permits, licenses and approvals, including without limitation, certificates of completion and occupancy permits required for the legal use, occupancy and operation of each Individual Property by Mortgage Borrower as a senior housing property (collectively, the “Licenses”), have been obtained and are in full force and effect and are not subject to revocation, suspension or forfeiture. Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to keep and maintain all Licenses necessary for the operation of each Individual Property as a senior housing property. The use being made of each Individual Property is in conformity with the certificate of occupancy issued for such Individual Property.

4.1.23 Flood Zone.

None of the Improvements on any Individual Property are located in an area as identified by the Federal Emergency Management Agency as an area having special flood hazards and, if so located, the flood insurance required pursuant to the Mortgage Loan Documents is in full force and effect with respect to each such Individual Property.

4.1.24 Physical Condition.

Each Individual Property, including, without limitation, all buildings, improvements, parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection systems, electrical systems, equipment, elevators, exterior sidings and doors, landscaping, irrigation systems and all structural components, are in good condition, order and

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repair in all material respects; there exists no structural or other material defects or damages in any Individual Property, whether latent or otherwise, and Borrower has not received notice from any insurance company or bonding company of any defects or inadequacies in any Individual Property, or any part thereof, which would adversely affect the insurability of the same or cause the imposition of extraordinary premiums or charges thereon or of any termination or threatened termination of any policy of insurance or bond. Each Individual Property is free from damage covered by fire or other casualty. All liquid and solid waste disposal, septic and sewer systems located on each Individual Property are in a good and safe condition and repair and in compliance with all Legal Requirements.

4.1.25 Boundaries.

All of the Improvements which were included in determining the appraised value of each Individual Property lie wholly within the boundaries and building restriction lines of such Individual Property, and no improvements on adjoining properties encroach upon such Individual Property, and no easements or other encumbrances upon the applicable Individual Property encroach upon any of the Improvements.

4.1.26 Leases.

Other than the Operating Lease and those leases listed on Schedule IV attached hereto, the Properties are not subject to any Leases.

4.1.27 Survey.

To Borrower’s knowledge, the Survey for each Individual Property delivered to Lender in connection with this Agreement does not fail to disclose any material matter affecting such Individual Property or the title thereto.

4.1.28 Intentionally Omitted.

4.1.29 Filing and Recording Taxes.

All transfer taxes, deed stamps, intangible taxes or other amounts in the nature of transfer taxes required to be paid by any Person under applicable Legal Requirements currently in effect in connection with the transfer of the Collateral to Borrower, the making of the Mortgage Loan, the Loan or the other transactions contemplated by this Agreement have been paid. All mortgage, mortgage recording, stamp, intangible or other similar tax required to be paid by any Person under applicable Legal Requirements currently in effect in connection with the execution, delivery, recordation, filing, registration, perfection or enforcement of any of the Loan Documents, including, without limitation, the Pledge Agreement, have been paid.

4.1.30 Intentionally Omitted.

4.1.31 Management Agreement; Manager Pooling Agreement.

(a) The Management Agreement is in full force and effect and there is no default thereunder by Operating Lessee or to Borrower’s knowledge Manager and to Borrower’s knowledge no event has occurred that, with the passage of time and/or the giving of notice would constitute a default thereunder.

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(b) The Manager Pooling Agreement is in full force and effect and there is no default thereunder by Operating Lessee or to Borrower’s knowledge Manager and to Borrower’s knowledge no event has occurred that, with the passage of time and/or the giving of notice would constitute a default thereunder.

4.1.32 Illegal Activity.

No portion of any Individual Property or the Collateral has been or will be purchased with proceeds of any illegal activity and to the best of Borrower’s knowledge, there are no illegal activities or activities relating to any controlled substances at any Individual Property.

4.1.33 No Change in Facts or Circumstances; Disclosure.

All information submitted by Borrower to Lender and in all financial statements, rent rolls, reports, certificates and other documents submitted in connection with the Loan or in satisfaction of the terms thereof and all statements of fact made by Borrower in this Agreement or in any other Loan Document, are accurate, complete and correct in all material respects. There has been no material adverse change in any condition, fact, circumstance or event that would make any such information inaccurate, incomplete or otherwise misleading in any material respect or that otherwise materially and adversely affects or might materially and adversely affect the use, operation or value of the Properties or the business operations or the financial condition of Borrower or Mortgage Borrower. Borrower has disclosed to Lender all material facts and has not failed to disclose any material fact that could cause any information described in this Section 4.1.33 or any representation or warranty made herein to be materially misleading.

4.1.34 Investment Company Act.

Borrower is not (a) an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended; (b) a “holding company” or a “subsidiary company” of a “holding company” or an “affiliate” of either a “holding company” or a “subsidiary company” within the meaning of the Public Utility Holding Company Act of 1935, as amended; or (c) subject to any other federal or State law or regulation which purports to restrict or regulate its ability to borrow money.

4.1.35 Principal Place of Business; State of Organization.

Borrower’s principal place of business as of the date hereof is the address set forth in the introductory paragraph of this Agreement. Borrower is organized under the laws of the State of Delaware and its organizational identification number is 5165524.

4.1.36 Single Purpose Entity.

Borrower covenants and agrees that its Organizational Documents shall provide that it has not, and shall not, and that the Organizational Documents of its general partner(s), if Borrower is a partnership, or its managing member(s) (if any), if Borrower is a limited liability company (in each case, “Principal”) shall provide that it has not and shall not:

(a) with respect to Borrower, engage in any business or activity other than the acquisition, ownership, and managing of the Collateral, and entering into the Loan, and activities incidental thereto and with respect to any Principal, engage in any business or activity other than the ownership of its interest in Borrower, and activities incidental thereto;

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(b) with respect to Borrower, acquire or own any material assets other than (i) the Collateral, and (ii) such incidental personal property as may be necessary for the ownership of the Collateral, and with respect to any Principal, acquire or own any material asset other than its interest in Borrower;

(c) merge into or consolidate with any person or entity or dissolve, terminate or liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;

(d) (i) fail to observe its organizational formalities or preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the laws of the jurisdiction of its organization or formation or (ii) without the prior written consent of Lender, amend, modify, terminate or fail to comply with the provisions of Borrower’s Partnership Agreement, Articles of Organization or similar Organizational Documents, as the case may be, or of any Principal’s Certificate of Incorporation, Articles of Organization or similar Organizational Documents, as the case may be, whichever is applicable;

(e) own any subsidiary or make any investment in, any Person without the prior written consent of Lender;

(f) except as expressly permitted by the Loan Documents, commingle its assets with the assets of any of its members, general partners, Affiliates, principals or of any other Person or entity, participate in a cash management system with any other entity or Person or fail to use its own separate stationery, telephone number, invoices and checks;

(g) with respect to Borrower, incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than the Debt, except for liabilities incurred in the ordinary course of business relating to the ownership of the Collateral and the routine administration of Borrower, in amounts not to exceed $25,000 which liabilities are not more than sixty (60) days past due and are not evidenced by a note, and with respect to any Principal, incur any debt secured or unsecured, direct or contingent (including guaranteeing any obligations), except for liabilities incurred in the ordinary course of business relating to the ownership of its interest in Borrower and the routine administration of Principal, in amounts not to exceed $25,000 which liabilities are not more than sixty (60) days past due and are not evidenced by a note;

(h) become insolvent or fail to pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall become due;

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(i) (i) fail to maintain its records (including financial statements), books of account and bank accounts separate and apart from those of the members, general partners, principals and Affiliates of Borrower or of any Principal, as the case may be, the Affiliates of a member, general partner or principal of Borrower or of any Principal, as the case may be, and any other Person, (ii) permit its assets or liabilities to be listed as assets or liabilities on the financial statement of any other Person or (iii) include the assets or liabilities of any other Person on its financial statements; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate; provided that Borrower is properly reflected and treated as a separate legal entity in such consolidated financial statements;

(j) enter into any contract or agreement with any member, general partner, principal or Affiliate of Borrower or of any Principal, as the case may be, Guarantor, Indemnitor, or any member, general partner, principal or Affiliate thereof (other than a business management services agreement with an Affiliate of Borrower, provided that (i) such agreement is acceptable to Lender, (ii) the manager, or equivalent thereof, under such agreement holds itself out as an agent of Borrower and (iii) the agreement meets the standards set forth in this subsection (j) following this parenthetical), except upon terms and conditions that are commercially reasonable, intrinsically fair and substantially similar to those that would be available on an arms-length basis with third parties other than any member, general partner, principal or Affiliate of Borrower or of any Principal, as the case may be, Guarantor, Indemnitor or any member, general partner, principal or Affiliate thereof;

(k) seek the dissolution or winding up in whole, or in part, of Borrower or of any Principal, as the case may be;

(l) fail to correct any known misunderstandings regarding the separate identity of Borrower, or of any Principal, as the case may be, or any member, general partner, principal or Affiliate thereof or any other Person;

(m) guarantee or become obligated for the debts of any other Person or hold itself out to be responsible for the debts of another Person;

(n) make any loans or advances to any third party, including any member, general partner, principal or Affiliate of Borrower or of any Principal, as the case may be, or any member, general partner, principal or Affiliate thereof, and shall not acquire obligations or securities of any member, general partner, principal or Affiliate of Borrower or any Principal, as the case may be, or any member, general partner, or Affiliate thereof;

(o) fail to file its own tax returns or be included on the tax returns of any other Person except as required by Applicable Law;

(p) fail either to hold itself out to the public as a legal entity separate and distinct from any other Person or to conduct its business solely in its own name or a name franchised or licensed to it by an entity other than an Affiliate of Borrower or of any Principal, as the case may be, and not as a division or part of any other entity in order not (i) to mislead others as to the identity with which such other party is transacting business, or (ii) to suggest that Borrower or any Principal, as the case may be, is responsible for the debts of any third party (including any member, general partner, principal or Affiliate of Borrower, or of any Principal, as the case may be, or any member, general partner, principal or Affiliate thereof);

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(q) fail to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Principal to make any additional capital contributions to Borrower;

(r) share any common logo with or hold itself out as or be considered as a department or division of (i) any general partner, principal, member or Affiliate of Borrower or of Principal, as the case may be, (ii) any Affiliate of a general partner, principal or member of Borrower or of any Principal, as the case may be, or (iii) any other Person;

(s) fail to allocate fairly and reasonably any overhead expenses that are shared with an Affiliate, including paying for office space and services performed by any employee of an Affiliate;

(t) pledge its assets for the benefit of any other Person, and with respect to Borrower, other than with respect to the Loan;

(u) fail to maintain a sufficient number of employees in light of its contemplated business operations;

(v) fail to provide in its (i) Articles of Organization, Certificate of Formation and/or Operating Agreement, as applicable, if it is a limited liability company, (ii) Limited Partnership Agreement, if it is a limited partnership or (iii) Certificate of Incorporation, if it is a corporation, that for so long as the Loan is outstanding pursuant to the Note, this Agreement and the other Loan Documents, it shall not file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any applicable insolvency, bankruptcy, liquidation or reorganization statute, or make an assignment for the benefit of creditors without the unanimous affirmative vote of each Independent Director and of all other general partners/managing members/directors;

(w) fail to hold its assets in its own name;

(x) if Borrower or any Principal is a corporation, fail to consider the interests of its creditors in connection with all corporate actions to the extent permitted by Applicable Law; or

(y) have any of its obligations guaranteed by an Affiliate except the Guarantor in connection with the Loan.

(z) Intentionally omitted

(aa) with respect to any Principal, or Borrower, if Borrower is a single member limited liability company that complies with the requirements of Section 4.1.36 (cc) below, fail at any time to have at least two Independent Directors; or

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(bb) with respect to any Principal, or Borrower, if Borrower is a single member limited liability company that complies with the requirements of Section 4.1.36(cc) below, permit its board of directors to take any action which, under the terms of any certificate of incorporation, by-laws, voting trust agreement with respect to any common stock or other applicable organizational documents, requires the unanimous vote of one hundred percent (100%) of the members of the board without the vote of the Independent Directors.

(cc) In the event Borrower is a Delaware limited liability company that does not have a managing member which complies with the requirements for a Principal under this Section 4.1.36, the limited liability company agreement of Borrower (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the last remaining member of Borrower (“Member”) to cease to be the member of Borrower (other than (1) upon an assignment by Member of all of its limited liability company interest in Borrower and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of Borrower in accordance with the terms of the Loan Documents and the LLC Agreement), any person acting as Independent Director of Borrower shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower, automatically be admitted to Borrower (“Special Member”) and shall continue Borrower without dissolution and (B) Special Member may not resign from Borrower or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to Borrower as Special Member in accordance with requirements of Delaware law and (2) such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of Borrower upon the admission to Borrower of a substitute Member, (w) Special Member shall be a member of Borrower that has no interest in the profits, losses and capital of Borrower and has no right to receive any distributions of Borrower assets, (x) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make any capital contributions to Borrower and shall not receive a limited liability company interest in Borrower, (y) Special Member, in its capacity as Special Member, may not bind Borrower and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower, including, without limitation, the merger, consolidation or conversion of Borrower; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the LLC Agreement. In order to implement the admission to Borrower of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower as Special Member, Special Member shall not be a member of Borrower.

(dd) Upon the occurrence of any event that causes the Member to cease to be a member of Borrower, to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower, agree in writing (A) to continue Borrower and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower, effective as of the occurrence of the event that terminated the continued membership of Member of Borrower in Borrower. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not

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cause Member or Special Member to cease to be a member of Borrower and upon the occurrence of such an event, the business of Borrower shall continue without dissolution. The LLC Agreement shall provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower.

(ee) In addition, the organizational documents of any Principal shall include the following provisions: (a) Principal shall not, without the unanimous written consent of its board of directors including the Independent Directors, on behalf of itself or Borrower, take any Material Action or any action that might cause such entity to become insolvent, and when voting with respect to such matters, the Independent Directors shall consider only the interests of Borrower, including its creditors; (b) no Independent Director of Borrower or Principal, as applicable, may be removed or replaced except as a result of an Independent Director Event; provided, however, prior to such removal or replacement Borrower or Principal, as applicable, must provide Lender with not less than three (3) Business Days’ prior written notice of (i) any proposed removal of an Independent Director, together with a statement as to the reasons for such removal, and (ii) the identity of the proposed replacement Independent Director, together with a certification that such replacement satisfies the requirements set forth in the organizational documents for an Independent Director; (c) to the fullest extent permitted by applicable law, including Section 18-1101(c) of the Act and notwithstanding any duty otherwise existing at law or in equity, the Independent Directors shall consider only the interests of Borrower, the constituent members of Borrower (the “Constituent Members”) and Principal (including Borrower’s and Principal’s respective creditors) in acting or otherwise voting on the matters provided for herein (which such fiduciary duties to the Constituent Members and Borrower and Principal (including Borrower’s and Principal’s respective creditors), in each case, shall be deemed to apply solely to the extent of their respective economic interests in Borrower or Principal (as applicable) exclusive of (i) all other interests (including, without limitation, all other interests of the Constituent Members), (ii) the interests of other Affiliates of the Constituent Members, Borrower and Principal and (iii) the interests of any group of Affiliates of which the Constituent Members, Borrower or Principal is a part; (d) other than as provided above, the Independent Directors shall have fiduciary duties of loyalty and care similar to that of a director of a business corporation organized under the General Corporate Law of the State of Delaware; (e) the foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing under applicable law; and (f) to the fullest extent permitted by applicable law, including Section 18-1101(e) of the Act, an Independent Director shall not be liable to Borrower, Principal, any Constituent Member or any other Person for breach of contract or breach of duties (including fiduciary duties), unless the Independent Director acted in bad faith or engaged in willful misconduct.

Mortgage Borrower is and shall continue to comply with the provisions of Section 3.22 of the Mortgage Loan Documents.

4.1.37 Business Purposes.

The Loan is solely for the business purpose of Borrower, and is not for personal, family, household, or agricultural purposes.

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4.1.38 Taxes.

Borrower has filed all federal, State, county, municipal, and city income and other tax returns required to have been filed by it and has paid all taxes and related liabilities which have become due pursuant to such returns or pursuant to any assessments received by it. Borrower knows of no basis for any additional assessment in respect of any such taxes and related liabilities for prior years.

4.1.39 Forfeiture.

Neither Borrower nor to Borrower’s knowledge any other Person in occupancy of or involved with the operation or use any of the Properties has committed any act or omission affording the federal government or any State or local government the right of forfeiture as against any of the Collateral, the Properties or any part thereof or any monies paid in performance of Borrower’s obligations under the Note, this Agreement or the other Loan Documents. Borrower hereby covenants and agrees not to commit, permit or suffer to exist any act or omission affording such right of forfeiture.

4.1.40 Environmental Representations and Warranties.

Borrower represents and warrants, except as disclosed in the written reports resulting from the environmental site assessments of the Properties delivered to and approved by Lender prior to the Closing Date (the “Environmental Report”) of each Individual Property that: (a) there are no Hazardous Materials or underground storage tanks in, on, or under any of the Properties, except those that are both (i) in compliance with current Environmental Laws and with permits issued pursuant thereto (if such permits are required), and (ii) either (A) in amounts not in excess of that necessary to operate, clean, repair and maintain the applicable Individual Property or each tenant’s respective business at such Individual Property as set forth in their respective Leases, or (B) held by a tenant for sale to the public in its ordinary course of business, (b) there are no past, present or threatened Releases of Hazardous Materials in violation of any Environmental Law and which would require remediation by a Governmental Authority in, on, under or from any of the Properties; (c) there is no threat of any Release of Hazardous Materials migrating to any of the Properties; (d) there is no past or present non-compliance with current Environmental Laws, or with permits issued pursuant thereto, in connection with any of the Properties except as described in the Environmental Reports; (e) Borrower does not know of, and has not received, and Mortgage Borrower has not received, any written or oral notice or other communication from any Person (including but not limited to a Governmental Authority) relating to Hazardous Materials in, on, under or from any of the Properties; and (f) Borrower has truthfully and fully provided to Lender, in writing, any and all information relating to environmental conditions in, on, under or from any of the Properties known to Borrower or contained in Borrower’s or Mortgage Borrower’s files and records, including but not limited to any reports relating to Hazardous Materials in, on, under or migrating to or from any of the Properties and/or to the environmental condition of the Properties.

4.1.41 Taxpayer Identification Number.

Borrower’s United States taxpayer identification number is REDACTED.

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4.1.42 OFAC.

Borrower represents and warrants that neither Borrower, Mortgage Borrower, Guarantor, Indemnitor or any of their respective Affiliates is a Prohibited Person, and Borrower, Mortgage Borrower, Guarantor, Indemnitor and their respective Affiliates are in full compliance with all applicable orders, rules, regulations and recommendations of The Office of Foreign Assets Control of the U.S. Department of the Treasury.

4.1.43 Intentionally Omitted.

4.1.44 Intentionally Omitted.

4.1.45 Embargoed Person.

As of the date hereof and at all times throughout the term of the Loan, including after giving effect to any Transfers permitted pursuant to the Loan Documents, (a) none of the funds or other assets of Borrower, Mortgage Borrower, Principal, Indemnitor and Guarantor constitute property of, or are beneficially owned, directly or indirectly, by any person, entity or government subject to trade restrictions under U.S. law, including but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder with the result that the investment in Borrower, Mortgage Borrower, Principal, Indemnitor or Guarantor, as applicable (whether directly or indirectly), is prohibited by law or the Loan made by Lender is in violation of law (“Embargoed Person”); (b) no Embargoed Person has any interest of any nature whatsoever in Borrower, Mortgage Borrower, Principal, Indemnitor or Guarantor, as applicable, with the result that the investment in Borrower, Mortgage Borrower, Principal, Indemnitor or Guarantor, as applicable (whether directly or indirectly), is prohibited by law or the Loan is in violation of law; and (c) none of the funds of Borrower, Mortgage Borrower, Principal, Indemnitor or Guarantor, as applicable, have been derived from any unlawful activity with the result that the investment in Borrower, Mortgage Borrower, Principal, Indemnitor or Guarantor, as applicable (whether directly or indirectly), is prohibited by law or the Loan is in violation of law.

4.1.46 Affiliates.

Borrower does not own any equity interests in any other Person other than the related Pledged Member Interests.

4.1.47 Mortgage Borrower Representations.

Borrower has reviewed the representations and warranties made by, and covenants of, Mortgage Borrower to and for the benefit of Mortgage Lender contained in the Mortgage Loan Documents and to Borrower’s knowledge such representations and warranties are true, correct and complete in all material respects.

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4.1.48 List of Mortgage Loan Documents.

There are no Mortgage Loan Documents other than those set forth on Schedule II attached hereto. Borrower has or has caused to be delivered to Lender true, complete and correct copies of all Mortgage Loan Documents, and none of the Mortgage Loan Documents has been amended or modified as of the date thereof.

4.1.49 Mortgage Loan Event of Default.

No Mortgage Loan Event of Default or an event or circumstance has occurred which with the giving of notice or the passage of time, or both, would constitute a Mortgage Loan Event of Default exists as of the date hereof.

4.1.50 Operating Lease Representations.

(a) (i) The Operating Lease is in full force and effect and has not been modified or amended in any manner whatsoever, (ii) there are no defaults under the Operating Lease by tenant or landlord thereunder, and no event has occurred which but for the passage of time, or notice, or both would constitute a default under the Operating Lease, (iii) all rents, additional rents and other sums due and payable under the Operating Lease have been paid in full and (iv) neither tenant nor the landlord under the Operating Lease has commenced any action or given or received any notice for the purpose of terminating the Operating Lease.

(b) The Operating Lease or a memorandum thereof has been duly recorded and there has not been any change in the terms of the Operating Lease since its recordation;

(c) Mortgage Borrower’s interest in the Operating Lease is not subject to any Liens superior to, or of equal priority with, the Security Instrument; and

(d) Borrower has delivered to Lender a true, correct and complete copy of the Operating Lease.

4.1.51 JV Agreement Representations.

(a) (i) The JV Agreement is in full force and effect and has not been modified or amended in any manner whatsoever, (ii) there are no defaults under the JV Agreement by Borrower or to Borrower’s knowledge by Sunrise, and no event has occurred which but for the passage of time, or notice, or both would constitute a default by Borrower under the JV Agreement, (iii) all Capital Contributions other sums due and payable under the JV Agreement have been paid in full and no Member Loans are outstanding and (iv) no party under the JV Agreement has commenced any action or has given or received any notice for the purpose of terminating the JV Agreement.

(b) Borrower’s interest in the JV Agreement is not subject to any Liens existing as of the date hereof and except for the Lien under the Loan Documents; and

(c) Borrower has delivered to Lender a true, correct and complete copy of the JV Agreement.

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Section 4.2 Survival of Representations.

Borrower agrees that all of the representations and warranties of Borrower set forth in Section 4.1 and elsewhere in this Agreement and in the other Loan Documents shall survive for so long as any amount remains owing to Lender under this Agreement or any of the other Loan Documents by Borrower. All representations, warranties, covenants and agreements made in this Agreement or in the other Loan Documents by Borrower shall be deemed to have been relied upon by Lender notwithstanding any investigation heretofore or hereafter made by Lender or on its behalf.

V. BORROWER COVENANTS

Section 5.1 Affirmative Covenants.

From the date hereof and until payment and performance in full of all obligations of Borrower under the Loan Documents or the earlier release in full of Lender’s Liens encumbering the Collateral (and all related obligations) in accordance with the terms of this Agreement and the other Loan Documents, Borrower hereby covenants and agrees with Lender that:

5.1.1 Existence; Compliance with Legal Requirements.

Borrower shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its existence, rights, licenses, permits and franchises, and comply, or exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to comply, in all material respects, with all Legal Requirements applicable to it, the Collateral and the Properties. There shall never be committed by Borrower, and Borrower shall exercise any rights it may have under the JV Agreement to not permit or cause Mortgage Borrower to permit any other Person in occupancy of or involved with the operation or use of the Properties any act or omission affording the federal government or any State or local government the right of forfeiture against any Individual Property or any part thereof or any monies paid in performance of Borrower’s obligations under any of the Loan Documents. Borrower hereby covenants and agrees to exercise any rights it may have under the JV Agreement to not to permit or cause Mortgage Borrower to commit, permit or suffer to exist any act or omission affording such right of forfeiture. Borrower shall at all times exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to keep, maintain, preserve and protect all franchises and trade names and preserve all the remainder of its property used or useful in the conduct of its business and shall keep the Properties in good working order and repair, and from time to time make, or cause to be made, all reasonably necessary repairs, renewals, replacements, betterments and improvements thereto, all as more fully provided in the Loan Documents. Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to keep, the Properties insured at all times by financially sound and reputable insurers, to such extent and against such risks, and maintain liability and such other insurance, as is more fully provided in this Agreement. As of the first day of each calendar quarter, at least fifty percent (50%) of Mortgage Borrower’s assets (valued at cost) shall be invested in real estate which is managed or developed and with respect to which such entity has the right to substantially participate directly in the management or development activities.

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5.1.2 Taxes and Other Charges.

Borrower shall pay or shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to pay, all Taxes and Other Charges now or hereafter levied or assessed or imposed against the Properties or any part thereof as the same become due and payable. Borrower shall furnish, or cause to be furnished, to Lender receipts, or other evidence for the payment of the Taxes and the Other Charges prior to the date the same shall become delinquent (provided, however, that Borrower is not required to furnish such receipts for payment of Taxes in the event that such Taxes have been paid by Mortgage Lender pursuant to the Mortgage Loan Documents). Borrower shall not suffer and shall exercise any rights it may have under the JV Agreement to not permit Mortgage Borrower to suffer and shall promptly exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to promptly pay and discharge any Lien or charge whatsoever which may be or become a Lien or charge against the Properties, and shall promptly pay for all utility services provided to the Properties. After prior written notice to Lender, Borrower, at its own expense, may, or may exercise any rights it may have under the JV Agreement to, cause Mortgage Borrower to, contest by appropriate legal proceeding, promptly initiated and conducted in good faith and with due diligence, the amount or validity or application in whole or in part of any Taxes or Other Charges, provided that (i) no Default or Event of Default has occurred and remains uncured; (ii) such proceeding shall be permitted under and be conducted in accordance with the provisions of any other instrument to which Borrower and Mortgage Borrower are subject and shall not constitute a default thereunder and such proceeding shall be conducted in accordance with all Applicable Laws; (iii) neither the Collateral nor any Individual Property nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, cancelled or lost; (iv) Borrower shall, or shall exercise any rights it may have under the JV Agreement to, cause Mortgage Borrower to, promptly upon final determination thereof pay the amount of any such Taxes or Other Charges, together with all costs, interest and penalties which may be payable in connection therewith; (v) such proceeding shall suspend the collection of such contested Taxes or Other Charges from such Individual Property; and (vi) Borrower shall furnish such security as may be required in the proceeding, or as may be requested by Lender, to insure the payment of any such Taxes or Other Charges, together with all interest and penalties thereon. Lender may apply such security or part thereof held by Lender at any time when, in the judgment of Lender, the validity or applicability of such Taxes or Other Charges are established or any Individual Property or any asset of Borrower (or part thereof or interest therein) shall be in danger of being sold, forfeited, terminated, cancelled or lost or there shall be any danger of the Lien of any Security Instrument or the Pledge Agreement being primed by any related Lien.

5.1.3 Litigation.

Borrower shall give prompt written notice to Lender of any litigation or governmental proceedings pending or threatened against Borrower or Mortgage Borrower which might materially adversely affect Borrower’s or Mortgage Borrower’s condition (financial or otherwise) or business or any Individual Property.

5.1.4 Access to the Property.

Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to permit agents, representatives and employees of Lender to inspect the Properties or any part thereof at reasonable hours upon reasonable advance notice; provided the same does not unreasonably interfere with the operation of the Properties or the residents thereof.

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5.1.5 Notice of Default.

Borrower shall promptly advise Lender of any material adverse change in Borrower’s or Mortgage Borrower’s condition, financial or otherwise, or of the occurrence of any Default or Event of Default of which Borrower has knowledge.

5.1.6 Cooperate in Legal Proceedings.

Borrower shall cooperate and shall cause each Loan Party, except as to Mortgage Borrower and Operating Lessee, in which case Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower and Operating Lessee, to cooperate, fully with Lender with respect to any proceedings before any court, board or other Governmental Authority which may in any way adversely affect the rights of Lender hereunder or any rights obtained by Lender under any of the other Loan Documents and, in connection therewith, permit Lender, at its election, to participate in any such proceedings.

5.1.7 Award and Insurance Benefits.

Borrower shall cooperate with Lender in obtaining for Lender the benefits of any Awards or Insurance Proceeds lawfully or equitably payable to Borrower in connection with any Individual Property, and Lender shall be reimbursed for any expenses incurred in connection therewith (including attorneys’ fees and disbursements, and the payment by Borrower of the expense of an appraisal on behalf of Lender in case of Casualty or Condemnation affecting any Individual Property or any part thereof) out of such Award or Insurance Proceeds which are paid to Borrower.

5.1.8 Further Assurances.

Borrower shall and shall cause Guarantor and, with respect to subsection (a) below shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower and Operating Lessee, at Borrower’s sole cost and expense:

(a) furnish to Lender all instruments, documents, boundary surveys, footing or foundation surveys, certificates, plans and specifications, appraisals, title and other insurance reports and agreements, and each and every other document, certificate, agreement and instrument required to be furnished by Borrower pursuant to the terms of the Loan Documents or reasonably requested by Lender in connection therewith;

(b) execute and deliver to Lender such documents, instruments, certificates, assignments and other writings, and do such other acts necessary or desirable, to evidence, preserve and/or protect the collateral at any time securing or intended to secure the obligations of Borrower under the Loan Documents, as Lender may reasonably require including, without limitation, the authorization of Lender to execute and/or the execution by Borrower of UCC financing statements; and

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(c) do and execute all and such further lawful and reasonable acts, conveyances and assurances for the better and more effective carrying out of the intents and purposes of this Agreement and the other Loan Documents, as Lender shall reasonably require from time to time.

5.1.9 Mortgage and Intangible Taxes.

Borrower shall pay and shall cause each Loan Party, except as to Mortgage Borrower and Operating Lessee, in which case Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower and Operating Lessee, to pay all State, county and municipal recording, intangible, and all other taxes imposed upon the execution and recordation of the UCC Financing Statements and/or upon the execution and delivery of the Note.

5.1.10 Financial Reporting.

(a) Borrower will keep and maintain or will cause to be kept and maintained on a Fiscal Year basis, in accordance with GAAP (or such other accounting basis acceptable to Lender), proper and accurate books, records and accounts reflecting all of the financial affairs of Borrower and all items of income and expense in connection with the operation on an individual basis of the Properties. Lender shall have the right from time to time at all times during normal business hours upon reasonable notice to examine such books, records and accounts at the office of Borrower or any other Person maintaining such books, records and accounts and to make such copies or extracts thereof as Lender shall desire. After the occurrence of an Event of Default, Borrower shall pay any costs and expenses incurred by Lender to examine Borrower’s accounting records with respect to the Properties, as Lender shall determine to be necessary or appropriate in the protection of Lender’s interest. Notwithstanding the foregoing to the contrary, with respect to all items of income and expense in connection with the operation on an individual basis of the Properties which are maintained in the books, records or accounts of any Person other than Borrower or Guarantor, Borrower’s obligations under this Section 5.1.10(a) shall be to exercise any rights it may have under the JV Agreement to provide Lender with the rights afforded under this Section 5.1.10(a) with respect to such books, records or accounts.

(b) Borrower will furnish, or cause to be furnished, to Lender on or before twenty (20) days after the end of each calendar month a schedule of net equity raised by Guarantor for the subject month and all prior months accompanied by a certificate of a Responsible Officer stating that such items are true, correct, accurate, and complete.

(c) Borrower will furnish to Lender quarterly, within forty-five (45) days after the end of each fiscal quarter, a complete copy of Borrower’s and Guarantor’s quarterly financial statements in the form attached hereto as Schedule V, each prepared by Guarantor in accordance with GAAP. Borrower’s and Guarantor’s respective quarterly financial statements shall be accompanied by a certificate executed by a Responsible Officer of Borrower or Guarantor, as applicable, stating that each such quarterly financial statement presents fairly the financial condition and the results of the operation of such Person and has been prepared in accordance with GAAP. Borrower shall furnish to Lender copies of Mortgage Borrower’s financial statements required to be provided to Mortgage Lender under the Mortgage Loan Documents at the same time the same are provided to Mortgage Lender.

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(d) Borrower will furnish to Lender annually, within one hundred twenty (120) days following the end of each Fiscal Year, a complete copy of Borrower’s and Guarantor’s annual financial statements in the form attached hereto as Schedule VI prepared by Guarantor in accordance with GAAP. Borrower’s and Guarantor’s respective annual financial statements shall be accompanied by a certificate executed by a Responsible Officer of Borrower or Guarantor, as applicable, stating that each such annual financial statement presents fairly the financial condition of such Person and the Collateral and has been prepared in accordance with GAAP and Guarantor’s statement shall be audited by an Approved Accountant. Borrower shall furnish to Lender copies of Mortgage Borrower’s financial statements required to be provided to Mortgage Lender under the Mortgage Loan Documents at the same time the same are provided to Mortgage Lender.

(e) Annually, on or before September 30^th of each Fiscal Year, Borrower shall or shall cause Guarantor to provide to Lender a copy of all of the most recent filed State and Federal income tax returns of Guarantor.

(f) For each Fiscal Year hereafter, Borrower shall submit to Lender an Annual Budget for each Individual Property not later January 31^st of each Fiscal Year in form reasonably satisfactory to Lender.

(g) Borrower will furnish, or cause Guarantor and shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower and Operating Lessee to furnish, to Lender a copy of the financial statements and all other materials Mortgage Borrower is required to provide Mortgage Lender under the Mortgage Loan Documents within the time periods required thereunder.

(h) Borrower shall furnish or cause Guarantor and shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower and Operating Lessee to furnish to Lender, within ten (10) Business Days after request such further detailed information with respect to the operation of the Properties and the financial affairs of Borrower, Guarantor or Mortgage Borrower as may be reasonably requested by Lender, including, without limitation, an annual operating budget for each Individual Property.

5.1.11 Business and Operations.

Borrower will exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to continue to be engaged in the businesses presently conducted by it as and to the extent the same are necessary for the ownership, maintenance, management and operation of the Properties. Borrower will and shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to remain in good standing under the laws of each jurisdiction to the extent required for the ownership, maintenance, management and operation of the Properties.

5.1.12 Costs of Enforcement.

In the event (a) Lender exercises any of its rights or remedies under the Pledge Agreement or any other Loan Document as and when permitted thereby, or (b) of the bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of Borrower or any of its constituent Persons or an assignment by Borrower or any of its constituent Persons for the

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benefit of its creditors or (c) Lender incurs any costs or expenses in connection with any refinancing or restructuring of the Loan in the nature of a workout, Borrower, its successors or assigns, shall be chargeable with and agrees to pay all costs of collection and defense and all other expenses, including attorneys’ fees and costs, incurred by Lender or Borrower in connection therewith and in connection with any appellate proceeding or post-judgment action involved therein, together with all required service or use taxes.

5.1.13 Estoppel Statement.

(a) After request by Lender, Borrower shall within ten (10) days furnish Lender with a statement, duly acknowledged and certified, setting forth (i) the amount of the original principal amount of the Note, (ii) the unpaid principal amount of the Note, (iii) the Note Rate of the Note, (iv) the date installments of interest and/or principal were last paid, (v) any offsets or defenses to the payment of the Debt, and (vi) that the Note, this Agreement, the Pledge Agreement and the other Loan Documents are valid, legal and binding obligations and have not been modified or if modified, giving particulars of such modification.

(b) Borrower shall deliver to Lender upon request, estoppel certificates from Operating Lessee and any commercial tenant leasing space at any Individual Property (to the extent such tenant is obligated to provide such an estoppel certificate) in form and substance reasonably satisfactory to Lender.

5.1.14 Loan Proceeds.

Borrower shall use the proceeds of the Loan received by it on the Closing Date only for the purposes set forth in Section 2.1.4.

5.1.15 Performance by Borrower.

(a) Borrower shall in a timely manner observe, perform and fulfill each and every covenant, term and provision of each Loan Document executed and delivered by, or applicable to, Borrower, and shall not enter into or otherwise suffer or permit any amendment, waiver, supplement, termination or other modification of any Loan Document executed and delivered by, or applicable to, Borrower without the prior written consent of Lender.

(b) Borrower shall not cause or exercise any rights it may have under the JV Agreement to permit Mortgage Borrower to enter into or otherwise suffer or permit any material amendment, waiver, supplement, termination or other material modification of any Mortgage Loan Document executed and delivered by, or applicable to, Mortgage Borrower as of the date hereof without the prior written consent of Lender. Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to provide Lender with a copy of any amendment, waiver, supplement, termination or other modification to the Mortgage Loan Documents within five (5) days after the execution thereof. Borrower shall not, and shall not permit any Loan Party, except as to Mortgage Borrower and Operating Lessee, in which case Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower and Operating Lessee, to not, amend or modify the Organizational Documents of any Loan Party in any respect without Lender’s prior written consent which would (i) limit distributions to be made to Borrower, (ii) limit cure rights of Borrower, (iii) modify the special purpose entity requirements set forth therein or (iv) would in any other respect have any adverse effect on Lender without Lender’s consent.

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5.1.16 Confirmation of Representations.

Borrower shall deliver, in connection with any Securitization, (a) one or more Officer’s Certificates certifying as to the accuracy of all representations made by Borrower in the Loan Documents as of the date of the closing of such Securitization in all relevant jurisdictions, and (b) certificates of the relevant Governmental Authorities in all relevant jurisdictions indicating the good standing and qualification of Borrower and Principal as of the date of the closing of such Securitization.

5.1.17 Leasing Matters.

Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to not, without the prior written consent of Lender, enter into, renew, extend, materially amend or modify, waive any provisions of, terminate, reduce rents under, accept a surrender of space under, or shorten the term of, any Material Lease or any instrument guaranteeing or providing credit support for any Material Lease, including, without limitation, the Operating Lease.

5.1.18 Management Agreement.

(a) The Improvements on the Properties are operated under the terms and conditions of the Management Agreement. In no event shall the management fees under the Management Agreement exceed six percent (6%) of Management Gross Revenues. Borrower shall exercise any rights it may have under the JV Agreement to cause Operating Lessee to (i) diligently perform and observe all of the terms, covenants and conditions of the Management Agreement, on the part of Operating Lessee to be performed and observed to the end that all things shall be done which are necessary to keep unimpaired the rights of Operating Lessee under the Management Agreement and (ii) promptly notify Lender of the giving of any notice by Manager to Operating Lessee of any default by Operating Lessee in the performance or observance of any of the terms, covenants or conditions of the Management Agreement on the part of Operating Lessee to be performed and observed and deliver to Lender a true copy of each such notice. Borrower shall exercise any rights it may have under the JV Agreement to cause Operating Lessee to not, except as permitted under the Mortgage Loan Documents, surrender the Management Agreement, consent to the assignment by the Manager of its interest under the Management Agreement (except as to any assignment expressly permitted under the Management Agreement), or terminate or cancel the Management Agreement, or modify, change, supplement, alter or amend the Management Agreement, in any respect, either orally or in writing. Subject to the rights of Mortgage Lender and Sunrise under the JV Agreement, if Operating Lessee shall default in the performance or observance of any material term, covenant or condition of the Management Agreement on the part of Operating Lessee to be performed or observed, then, without limiting the generality of the other provisions of this Agreement, and without waiving or releasing Borrower from any of its obligations hereunder, Borrower shall permit Lender to pay any sums and to perform any act or take any action as may be appropriate to cause all the terms, covenants and conditions of the Management Agreement on the part of Operating Lessee to be performed or observed to be promptly performed or observed on behalf

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of Operating Lessee, to the end that the rights of Mortgage Borrower in, to and under the Management Agreement shall be kept unimpaired and free from default; provided, however, that Lender shall have no such obligation to perform any such action. Borrower shall exercise any rights it may have under the JV Agreement to cause Lender and any Person designated by Lender to have the right to enter upon the applicable Individual Property at any time and from time to time for the purpose of taking any such action. If the Manager shall deliver to Lender a copy of any notice sent to Borrower or Operating Lessee of default under the Management Agreement, such notice shall constitute full protection to Lender for any action taken or omitted to be taken by Lender in good faith, in reliance thereon. Except as may be expressly permitted under the Management Agreement, Borrower shall exercise any rights it may have under the JV Agreement to cause Operating Lessee to not, and shall exercise any rights it may have under the JV Agreement to not permit the Manager to, sub-contract any or all of its management responsibilities under the Management Agreement to a third-party without the prior written consent of Lender, which consent shall not be unreasonably withheld. Borrower shall, from time to time, exercise any rights it may have under the JV Agreement to obtain from the Manager such certificates of estoppel with respect to compliance by Operating Lessee with the terms of the Management Agreement as may be reasonably requested by Lender. Subject to the rights of Mortgage Lender, Borrower shall exercise any rights it may have under the JV Agreement to cause Operating Lessee to exercise each individual option, if any, to extend or renew the term of the Management Agreement upon demand by Lender made at any time within one (1) year of the last day upon which any such option may be exercised. Any sums expended by Lender pursuant to this paragraph (i) shall bear interest at the Default Rate from the date such cost is incurred to the date of payment to Lender, (ii) shall be deemed to constitute a portion of the Debt, (iii) shall be secured by the lien of the Pledge Agreement and the other Loan Documents and (iv) shall be immediately due and payable upon demand by Lender therefor.

(b) Subject to the terms and provisions of the Mortgage Loan Documents governing termination of the Management Agreement and provided the Management Agreement affords Operating Tenant the right to terminate the Management Agreement, Borrower, upon the request of Lender, shall exercise any rights it may have under the JV Agreement to cause Operating Lessee to terminate the Management Agreement and replace Manager, without penalty or fee, if at any time during the Loan: (a) Manager shall become insolvent or a debtor in any bankruptcy or insolvency proceeding or (b) there exists a default by Manager under the Management Agreement which has not been cured within any applicable cure or grace period. At such time as the Manager may be removed, a Qualified Manager shall assume management of the applicable Individual Property pursuant to a Replacement Management Agreement.

5.1.19 Environmental Covenants.

Borrower covenants and agrees that so long as the Loan is outstanding (i) all uses and operations on or of the Properties, whether by Mortgage Borrower or any other Person, shall be in compliance in all material respects with all Environmental Laws and permits issued pursuant thereto; (ii) there shall be no Releases of Hazardous Materials in, on, under or from any of the Properties; (iii) there shall be no Hazardous Materials in, on, or under any of the Properties, except those that are both (A) in compliance with all Environmental Laws and with permits issued pursuant thereto, if and to the extent required, and (B) (1) in amounts not in excess of that necessary to operate the applicable Individual Property or (2) fully disclosed to and approved by

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Lender in writing; (iv) Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to keep the Properties free and clear of all liens and other encumbrances imposed pursuant to any Environmental Law, whether due to any act or omission of Borrower or any other Person (the “Environmental Liens”); (v) Borrower shall exercise any rights it may have under the JV Agreement to cause, at its sole cost and expense, Mortgage Borrower to fully and expeditiously cooperate in all activities pursuant to paragraph (b) below, including but not limited to providing all relevant information and making knowledgeable persons available for interviews; (vi) Borrower shall, at its sole cost and expense, exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to perform any environmental site assessment or other investigation of environmental conditions in connection with any of the Properties, pursuant to any reasonable written request of Lender, upon Lender’s reasonable belief that an Individual Property is not in full compliance with all Environmental Laws, and share with Lender the reports and other results thereof, and Lender and other Indemnified Parties shall be entitled to rely on such reports and other results thereof; (vii) Borrower shall, at its sole cost and expense, exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to comply with all reasonable written requests of Lender to (A) reasonably effectuate remediation of any Hazardous Materials in, on, under or from any Individual Property; and (B) comply with any Environmental Law; (viii) Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to not allow any tenant or other user of any of the Properties to violate any Environmental Law; and (ix) Borrower shall immediately notify Lender in writing after it has become aware of (A) any presence or Release or threatened Releases of Hazardous Materials in, on, under, from or migrating towards any of the Properties; (B) any noncompliance with any Environmental Laws related in any way to any of the Properties; (C) any actual or potential Environmental Lien; (D) any required or proposed remediation of environmental conditions relating to any of the Properties; and (E) any written or oral notice or other communication of which Borrower becomes aware from any source whatsoever (including but not limited to a Governmental Authority) relating in any way to Hazardous Materials.

5.1.20 Alterations.

Without Lender’s prior written consent, Borrower shall not permit, to the extent it has any rights under the JV Agreement to permit, any alterations to any Improvements which (i) cost in excess of $250,000 or (ii) may have a material adverse effect on Borrower’s or Mortgage Borrower’s financial condition, the value of the related Individual Property, the Collateral or the Net Operating Income.

5.1.21 Intentionally Omitted.

5.1.22 Intentionally Omitted.

5.1.23 OFAC.

At all times throughout the term of the Loan, Borrower, Mortgage Borrower, Guarantor, Indemnitor and their respective Affiliates shall be in full compliance with all applicable orders, rules, regulations and recommendations of The Office of Foreign Assets Control of the U.S. Department of the Treasury.

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5.1.24 Intentionally Omitted.

5.1.25 Mortgage Loan Reserve Funds.

Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to deposit and maintain each of the Mortgage Loan Reserve Funds as more particularly set forth in the Mortgage Loan Documents and to perform and comply with all the terms and provisions relating thereto.

5.1.26 Notices.

Borrower shall give notice, or cause notice to be given, to Lender promptly upon the occurrence of any Mortgage Loan Event of Default.

5.1.27 Special Distributions.

On each date on which amounts are required to be disbursed to Lender pursuant to the Mortgage Loan Documents, Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to make to Borrower a distribution in an aggregate amount such that Lender shall receive the amount required to be disbursed pursuant to the Mortgage Loan Documents.

5.1.28 Mortgage Borrower Covenants.

Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to comply with all obligations with which Mortgage Borrower has covenanted to comply under the Mortgage Loan Documents and all other Mortgage Loan Documents whether the Mortgage Loan has been repaid or the related Mortgage Loan Document has been otherwise terminated, unless otherwise consented to in writing by Lender. Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to promptly notify Lender of all notices received by Mortgage Borrower under or in connection with the Mortgage Loan, including, without limitation, any notice by Mortgage Lender to Mortgage Borrower of any default by Mortgage Borrower in the performance or observance of any of the terms, covenants or conditions of the Mortgage Loan Documents on the part of Mortgage Borrower to be performed or observed, and deliver to Lender a true copy of each such notice, together with any other consents, notices, requests or other written correspondence between Mortgage Borrower and Mortgage Lender.

5.1.29 Mortgage Loan Estoppels.

Borrower shall, or shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to, use commercially reasonable efforts from time to time, to obtain from Mortgage Lender such certificates of estoppel with respect to compliance by Mortgage Borrower with the terms of the Mortgage Loan Documents as may be requested by Lender. In the event or to the extent that Mortgage Lender is not legally obligated to deliver such certificates of estoppel and is unwilling to deliver the same, or is legally obligated to deliver such certificates of estoppel but breaches such obligation, then Borrower shall not be in breach of this provision so long as Borrower furnishes to Lender an estoppel executed by Borrower and expressly representing to

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Lender the information requested by Lender regarding compliance by Mortgage Borrower with the terms of the Mortgage Loan Documents. Borrower hereby indemnify Lender from and against all out-of-pocket liabilities, obligations, losses, damages, penalties, assessments, actions, or causes of action, judgments, suits, claims, demands, costs, expenses (including, without limitation, reasonable attorneys’ and other professional fees, whether or not suit is brought and settlement costs) and disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against Lender based in whole or in part upon any fact, event, condition, or circumstances relating to the Mortgage Loan which was misrepresented in, or which warrants disclosure and was omitted from such estoppel executed by Borrower and Mortgage Borrower.

5.1.30 The Operating Lease.

With respect to the Operating Lease,

(a) Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to (i) diligently perform and observe all of the terms, covenants and conditions of the Operating Lease on the part of Mortgage Borrower, as landlord thereunder, (ii) promptly notify Lender of the giving of any notice under the Operating Lease to Mortgage Borrower of any default by Mortgage Borrower, as landlord thereunder, and deliver to Lender a true copy of each such notice within two (2) Business Days of receipt and (iii) promptly notify Lender of any bankruptcy, reorganization or insolvency of any party under the Operating Lease or of any notice thereof, and deliver to Lender a true copy of such notice within two (2) Business Days of Mortgage Borrower’s receipt, together with copies of all notices, pleadings, schedules and similar matters received by Mortgage Borrower in connection with such bankruptcy, reorganization or insolvency within two (2) Business Days after receipt. Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to not, without the prior written consent of Lender, (x) surrender the leasehold estate created by the Operating Lease or terminate or cancel the Operating Lease or except as permitted under the Mortgage Loan Documents, modify, change, supplement, alter or amend the Operating Lease, either orally or in writing, or (y) consent to, acquiesce in, or fail to object to, any attempt by any party, as debtor in possession or by a trustee for such party, to sell or transfer such party’s estate free and clear of the Operating Lease under section 363(f) of the Bankruptcy Code or otherwise. Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to object to any such attempt, as debtor in possession or by a trustee for any such party, to sell or transfer such estate free and clear of the Operating Lease under section 363(f) of the Bankruptcy Code or otherwise, and in such event shall affirmatively assert and pursue its right to adequate protection under section 363(e) of the Bankruptcy Code. Borrower hereby assigns to Lender all of its rights under Section 363 of the Bankruptcy Code to consent or object to any sale or transfer of any estate free and clear of the Operating Lease, and grants to Lender the right to object to any such sale or transfer on behalf of Mortgage Borrower, and Borrower shall not contest any pleadings, motions documents or other actions filed or taken on Lender’s or Mortgage Borrower’s behalf by Lender in the event that the landlord, as debtor in possession or by a trustee, attempts to sell or transfer the fee estate free and clear of the Operating Lease under section 363(f) of the Bankruptcy Code or otherwise.

(b) Subject to the rights of Mortgage Lender and Sunrise under the JV Agreement, if Mortgage Borrower shall default in the performance or observance of any term, covenant or

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condition of the Operating Lease on the part of Mortgage Borrower thereunder, Lender shall have the right, but shall be under no obligation, to pay any sums and to perform any act or take any action as may be appropriate to cause all of the terms, covenants and conditions of the Operating Lease on the part of Mortgage Borrower to be performed or observed on behalf of Mortgage Borrower, to the end that the rights of Mortgage Borrower in, to and under the Operating Lease shall be kept unimpaired and free from default. If the tenant or landlord under the Operating Lease shall deliver to Lender a copy of any notice of default under the Operating Lease, such notice shall constitute full protection to Lender for any action taken or omitted to be taken by Lender, in good faith, in reliance thereon. Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to exercise each individual option, if any, to extend or renew the term of the Operating Lease upon demand by Lender made at any time within one (1) year prior to the last day upon which any such option may be exercised.

(c) Subleases. Except as expressly permitted under the Operating Lease and the Mortgage Loan Documents, Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to not further sublet any portion of any Individual Property without prior written consent of Lender. Subject to the terms of the JV Agreement, Borrower shall cause each sublease hereafter made to provide that, (a) in the event of the termination of the Operating Lease, the sublease shall not terminate or be terminable by the lessee thereunder; (b) in the event of any action for the foreclosure of the Security Instrument, the sublease shall not terminate or be terminable by the lessee thereunder by reason of the termination of the Operating Lease unless such lessee is specifically named and joined in any such action and unless a judgment is obtained therein against such lessee; and (c) in the event that the Operating Lease is terminated as aforesaid, the lessee under the sublease shall attorn to the lessor under the Operating Lease or to the purchaser at the sale of the Individual Property on such foreclosure, as the case may be. In the event that any portion of an Individual Property shall be sublet pursuant to the terms of this subsection, such sublease shall be deemed to be included in the applicable Individual Property.

5.1.31 The JV Agreement.

With respect to the JV Agreement,

(a) Borrower shall (i) pay all sums, if any, required to be paid by Borrower under and pursuant to the provisions of the JV Agreement, (ii) diligently perform and observe all of the terms, covenants and conditions of the JV Agreement on the part of Borrower thereunder, (iii) promptly notify Lender of the giving of any notice under the JV Agreement to Borrower of any default by Borrower, and deliver to Lender a true copy of each such notice within five (5) Business Days of receipt and (iv) promptly notify Lender of any bankruptcy, reorganization or insolvency of any party under the JV Agreement or of any notice thereof, and deliver to Lender a true copy of such notice within five (5) Business Days of Borrower’s receipt, together with copies of all notices, pleadings, schedules and similar matters received by Borrower in connection with such bankruptcy, reorganization or insolvency within two (2) Business Days after receipt. Borrower shall not, without the prior written consent of Lender, terminate or cancel the JV Agreement or modify, change, supplement, alter or amend the JV Agreement, in any material respect, either orally or in writing.

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(b) If Borrower shall default in the performance or observance of any term, covenant or condition of the JV Agreement on the part of Borrower thereunder, Lender shall have the right, but shall be under no obligation, to pay any sums and to perform any act or take any action as may be appropriate to cause all of the terms, covenants and conditions of the JV Agreement on the part of Borrower to be performed or observed on behalf of Borrower, to the end that the rights of Borrower in, to and under the JV Agreement shall be kept unimpaired and free from default. If any party to the JV Agreement shall deliver to Lender a copy of any notice of default under the JV Agreement, such notice shall constitute full protection to Lender for any action taken or omitted to be taken by Lender, in good faith, in reliance thereon.

Section 5.2 Negative Covenants.

From the date hereof until payment and performance in full of all obligations of Borrower under the Loan Documents or the earlier release in full of Lender’s Lien on the Collateral in accordance with the terms of this Agreement and the other Loan Documents, Borrower covenants and agrees with Lender that it will not do, directly or indirectly, any of the following:

5.2.1 Liens.

Subject to Borrower’s right to contest the same in accordance with the terms hereof, Borrower shall exercise any rights it may have under the JV Agreement to not permit or cause Mortgage Borrower to create, incur, assume or suffer to exist any Lien on any portion of the each Individual Property or permit any such action to be taken, except Permitted Encumbrances. Borrower shall not create, incur, assume or suffer to exist any Lien on any portion of the Collateral or permit any such action to be taken.

5.2.2 Dissolution.

Borrower shall not (a) engage in any dissolution, liquidation or consolidation or merger with or into any other business entity, (b) transfer, lease or sell, in one transaction or any combination of transactions, the assets or all or substantially all of its interest in the Properties or assets of Borrower except to the extent expressly permitted by the Loan Documents, (c) except as expressly permitted under the Loan Documents, materially modify or amend, waive or terminate its Organizational Documents or its qualification and good standing in any jurisdiction or (d) cause the Principal or Mortgage Borrower to (i) dissolve, wind up or liquidate or take any action, or omit to take an action, as a result of which the Principal or Mortgage Borrower would be dissolved, wound up or liquidated in whole or in part, or (ii) except as expressly permitted under the Loan Documents, materially amend or modify, waive or terminate the certificate of incorporation, bylaws or similar Organizational Documents of the Principal or the Organizational Documents of Mortgage Borrower, in each case, without obtaining the prior written consent of Lender. Nothing contained in this Section 5.2.2 is intended to expand the rights of Borrower contained in Section 5.2.10 hereof.

5.2.3 Change In Business.

(a) Borrower shall not enter into any line of business other than the ownership of the Collateral, or make any material change in the scope or nature of its business purposes, or undertake or participate in activities other than the continuance of its present business.

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(b) Borrower shall exercise any rights it may have under the JV Agreement to not cause Mortgage Borrower to enter into any line of business other than the ownership and operation of the Properties, or make any material change in the scope or nature of its business objectives, purposes or operations, or undertake or participate in activities other than the continuance of its present business.

5.2.4 Debt Cancellation.

Borrower shall not cancel or otherwise forgive or release any material claim or debt (other than termination of Leases in accordance herewith) owed to Borrower by any Person, except for adequate consideration and in the ordinary course of Borrower’s business. In addition, Borrower shall exercise any rights it may have under the JV Agreement to not permit or cause Mortgage Borrower to cancel or otherwise forgive or release any material claim or debt owed to Mortgage Borrower by any Person, except for adequate consideration and in the ordinary course of Mortgage Borrower’s business.

5.2.5 Zoning.

Borrower shall exercise any rights it may have under the JV Agreement to not cause Mortgage Borrower to initiate or consent to any zoning reclassification of any portion of any Individual Property or seek any variance under any existing zoning ordinance or use or permit the use of any portion of any Individual Property in any manner that could result in such use becoming a non-conforming use under any zoning ordinance or any other Applicable Law, without the prior written consent of Lender.

5.2.6 No Joint Assessment.

Borrower shall exercise any rights it may have under the JV Agreement to not cause Mortgage Borrower to suffer, permit or initiate the joint assessment of any Individual Property with (a) any other real property constituting a tax lot separate from such Individual Property, or (b) any portion of such Individual Property which may be deemed to constitute personal property, or any other procedure whereby the Lien of any taxes which may be levied against such personal property shall be assessed or levied or charged to such Individual Property.

5.2.7 Name, Identity, Structure, or Principal Place of Business.

Borrower shall not, and shall not permit any Loan Party, except as to Mortgage Borrower and Operating Lessee, in which case Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower and Operating Lessee to, change its name, identity (including its trade name or names), or principal place of business set forth in the introductory paragraph of this Agreement, without, in each case, first giving Lender thirty (30) days prior written notice. Borrower shall not change its corporate, partnership or other structure, or the place of its organization as set forth in Section 4.1.35, without, in each case, the consent of Lender. Upon Lender’s request, Borrower shall execute and deliver additional financing statements, security agreements and other instruments which may be necessary to effectively evidence or perfect Lender’s security interest in the Properties as a result of such change of principal place of business or place of organization.

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5.2.8 ERISA.

(a) During the term of the Loan or of any obligation or right hereunder, no Loan Party shall be a Plan and none of the assets of Borrower or any Loan Party shall constitute Plan Assets.

(b) Borrower further covenants and agrees to deliver to Lender such certifications or other evidence from time to time throughout the term of the Loan, as requested by Lender in its sole discretion, and represents and covenants that (A) no Loan Party is, and no Loan Party maintains an “employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, or a “governmental plan” within the meaning of Section 3(32) of ERISA; (B) no Loan Party is subject to State statutes regulating investments and fiduciary obligations with respect to governmental plans; and (C) one or more of the following circumstances is true:

(i) Equity interests in such Loan Party are publicly offered securities, within the meaning of 29 C.F.R. §2510.3 101(b)(2);

(ii) None of the assets of any Loan Party are, by virtue of the application of 29 C.F.R. §2510.3 101(f) as modified by section 3(42) of ERISA, regarded as assets of any Plan; or

(iii) Such Loan Party qualifies as an “operating company” or a “real estate operating company” within the meaning of 29 C.F.R. §2510.3 101(c) or (e).

5.2.9 Affiliate Transactions.

(a) Borrower shall not enter into, or be a party to, any transaction with an Affiliate of Borrower, any Principal or any of the partners in or members of Borrower or any Principal except in the ordinary course of business and on terms which are fully disclosed to Lender in advance and are no less favorable to Borrower or such Affiliate than would be obtained in a comparable arm’s-length transaction with an unrelated third party.

(b) Except in connection with (i) payments made to Manager pursuant to and in accordance with the Management Agreement and (ii) payments made to Sunrise pursuant to the Manager Pooling Agreement, no Loan Party shall, except as to Mortgage Borrower and Operating Lessee, in which case Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower and Operating Lessee to not, pay, or permit the payment of, development fees, management fees, brokerage or leasing fees or commissions or any other compensation of any form whatsoever to any Loan Party or any direct or indirect partner, member, shareholder or Affiliate thereof, or request disbursement of funds from Lender or Mortgage Lender for such purpose, without the prior written consent of Lender. Any contracts or agreements relating to any Individual Property in any manner between or among any Loan Party and any other Loan Party or their respective direct or indirect partners, members, shareholders or Affiliates, including the Management Agreement, the Manager Pooling Agreement and any other agreement specifically related to the Properties, the Collateral or any Loan Party (collectively, the “Affiliate Agreements”) shall be made on an arm’s-length basis and shall be subject to the prior written approval of Lender if made by or on behalf of Borrower or Guarantor; and to the extent Borrower has the right under the JV Agreement, Borrower shall

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cause the parties to each Affiliate Agreement to acknowledge and agree that such agreement (other than the Management Agreement and the Manager Pooling Agreement) is terminable by Mortgage Borrower immediately upon notice, without the payment of any fee, penalty, premium or liability for future or accrued liabilities or obligations, if an Event of Default shall have occurred and be continuing. Following an Event of Default, if requested by Lender in writing, Borrower shall, or shall cause the applicable Loan Party, except as to Mortgage Borrower and Operating Lessee, in which case Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower and Operating Lessee to, terminate any existing Affiliate Agreement (other than the Management Agreement and the Manager Pooling Agreement) specified by Lender within five (5) days after delivery of Lender’s request without payment of any penalty, premium, termination fee or any other amount which might be due and payable under such Affiliate Agreement. If such Affiliate Agreement is not terminated in accordance with the immediately preceding sentence, Lender shall have the right, and Borrower hereby irrevocably authorizes Lender and irrevocably appoints Lender as Borrower’s attorney-in-fact coupled with an interest, to the extent Borrower has such right, at Lender’s sole option, to terminate such Affiliate Agreement on behalf of and in the name of the applicable Loan Party, and Borrower hereby releases and waives any claims against Lender arising out of Lender’s exercise of such authority.

5.2.10 Transfers.

(a) Borrower shall not, and shall exercise any rights it may have under the JV Agreement to not cause or permit Mortgage Borrower to, sell, convey, mortgage, grant, bargain, encumber, pledge, assign, grant options with respect to, or otherwise transfer or dispose of (directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, and whether or not for consideration or of record) any Individual Property, the Collateral or any part thereof or any legal or beneficial interest therein or permit a Sale or Pledge of an interest in any Restricted Party (collectively, a “Transfer”) without (i) the prior written consent of Lender and (ii) if a Securitization has occurred, delivery to Lender of written confirmation from the Rating Agencies that the Transfer will not result in the downgrade, withdrawal or qualification of the then current ratings assigned to any Securities or the proposed rating of any Securities.

(b) A Transfer shall include, but not be limited to: (i) an installment sales agreement to sell one or more Individual Properties or any part thereof, the Collateral or any part thereof for a price to be paid in installments; (ii) an agreement by Mortgage Borrower leasing all or a substantial part of any Individual Property for other than actual occupancy by a space tenant thereunder or a sale, assignment or other transfer of, or the grant of a security interest in, Mortgage Borrower’s right, title and interest in and to any Leases or any Rents; (iii) if a Restricted Party is a corporation, any merger, consolidation or Sale or Pledge of such corporation’s stock or the creation or issuance of new stock; (iv) if a Restricted Party is a limited or general partnership or joint venture, any merger or consolidation or the change, removal, resignation or addition of a general partner or the Sale or Pledge of the partnership interest of any general partner or any profits or proceeds relating to such partnership interest, or the Sale or Pledge of limited partnership interests or any profits or proceeds relating to such limited partnership interests or the creation or issuance of new limited partnership interests; (v) if a Restricted Party is a limited liability company, any merger or consolidation or the change, removal, resignation or addition of a managing member or non-member manager (or if no

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managing member, any member) or the Sale or Pledge of the membership interest of a managing member (or if no managing member, any member) or any profits or proceeds relating to such membership interest, or the Sale or Pledge of non-managing membership interests or the creation or issuance of new non-managing membership interests; (vi) if a Restricted Party is a trust or nominee trust, any merger, consolidation or the Sale or Pledge of the legal or beneficial interest in a Restricted Party or the creation or issuance of new legal or beneficial interests; (vii) the removal or the resignation of the managing agent (including, without limitation, an Affiliated Manager) other than in accordance with the Mortgage Loan Documents and Section 5.1.18 hereof, or (viii) any deed-in-lieu or consensual foreclosure relating to any Individual Property with or for the benefit of Mortgage Lender or any Affiliate thereof.

(c) Notwithstanding the provisions of Sections 5.2.10(a) and (b), the following transfers shall not be deemed to be a Transfer: (i) the Sale or Pledge of non-managing membership interests in Guarantor in accordance with Guarantor’s Organizational Documents, (ii) the sale, transfer or issuance of stock in Guarantor, provided (I) such stock is sold through SEC registered offerings and (II) Guarantor is regulated by the SEC and FINRA; (iii) the Sale or Pledge of any direct or indirect interest in Partners IV, Mortgage Borrowers, CHT TRS, Sun IV or any Pool Subsidiaries which are owned by Sunrise or any Affiliate or Subsidiary of Sunrise (unless Borrower or any Affiliate of Borrower has consent or approval rights relating to such Sale or Pledge) and (v) Member Loans in accordance with the JV Agreement, the Recognition Agreement and the Mortgage Loan Documents; provided, however, no Transfer made pursuant to this Subsection (c) shall result in the change of Control in a Restricted Party.

(d) Notwithstanding anything to the contrary contained in this Section 5.2.10, (i) Borrower must at all times own fifty-five percent (55%) of the direct equity interest in Partners IV, (ii) Partners IV must at all times own one hundred percent (100%) of the direct equity interest in Sun IV, (iii) Sun IV must at all times own one hundred percent (100%) of the direct equity interest in Mortgage Borrower and (iv) (iv) Guarantor must at all times have voting control over Borrower, Borrower must at all times have voting control over Partners IV, Partners IV must at all time have voting control over Sun IV, and Sun IV must at all times have voting control over Mortgage Borrower.

(e) Lender shall not be required to demonstrate any actual impairment of its security or any increased risk of default hereunder in order to declare the Debt immediately due and payable upon a Transfer in violation of this Section 5.2.10. This provision shall apply to every Transfer regardless of whether voluntary or not, or whether or not Lender has consented to any previous Transfer. Notwithstanding anything to the contrary contained in this Section 5.2.10, (a) no transfer (whether or not such transfer shall constitute a Transfer) shall be made to any Prohibited Person and (b) in the event any transfer (whether or not such transfer shall constitute a Transfer) results in any Person and its Affiliates owning in excess of ten percent (10%) of the ownership interest in a Restricted Party, Borrower shall provide to Lender, not less than thirty (30) days prior to such transfer, the name and identity of each proposed transferee, together with the names of its controlling principals, the social security number or employee identification number of such transferee and controlling principals, and such transferee’s and controlling principal’s home address or principal place of business, and home or business telephone number.

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5.2.11 Limitation on Securities Issuances.

Borrower shall not issue any limited liability membership interests or other securities other than those that have been issued as of the date hereof.

5.2.12 Distributions.

(a) Any and all dividends, including capital dividends, stock or liquidating dividends, distributions of property, redemptions or other distributions made by Mortgage Borrower on or in respect of any interests in Mortgage Borrower and which are payable to Borrower under the JV Agreement, and any and all cash and other property received in payment of the principal of or in redemption of or in exchange for any such interests which are payable to and received by Borrower (collectively, the “Distributions”), shall become part of the Collateral. Notwithstanding the foregoing, Lender expressly agrees that Borrower shall be permitted to distribute to its members any Distributions Borrower receives only upon the express condition that no Event of Default has occurred and is continuing under the Loan.

(b) If any Distributions shall be received by Borrower or any Affiliate of Borrower after the occurrence and during the continuance of an Event of Default, Borrower shall hold, or shall cause the same to be held, in trust for the benefit of Lender. Any and all revenue derived from the Properties paid directly by tenants, subtenants or occupants of the Properties shall be held and applied in accordance with the terms and provisions of the Mortgage Loan Documents.

5.2.13 Refinancing or Prepayment of the Mortgage Loan.

Neither Borrower nor Mortgage Borrower shall be required to obtain the consent of Lender to refinance the Mortgage Loan, provided that the Loan shall have (or shall simultaneously be) been paid in full in accordance with the terms of this Agreement (including any prepayment premiums and other amounts due and payable to Lender under the Loan Documents). Borrower shall cause Mortgage Borrower to obtain the prior written consent of Lender to enter into any other refinancing of the Mortgage Loan, which consent shall not be unreasonably withheld.

5.2.14 Acquisition of the Mortgage Loan.

(a) No Loan Party or any Affiliate of any of them or any Person acting at any such Person’s request or direction, shall acquire or agree to acquire Mortgage Lender’s interest in the Mortgage Loan, or any portion thereof or any interest therein, or any direct or indirect ownership interest in the holder of the Mortgage Loan, via purchase, transfer, exchange or otherwise, and any breach or attempted breach of this provision shall constitute an Event of Default hereunder. If, solely by operation of applicable subrogation law, Borrower shall have failed to comply with the foregoing, then Borrower: (i) shall immediately notify Lender of such failure; (ii) shall cause any and all such prohibited parties acquiring any interest in the Mortgage Loan Documents: (A) not to enforce the Mortgage Loan Documents; and (B) upon the request of Lender, to the extent any of such prohibited parties has or have the power or authority to do so, to promptly: (1) cancel the promissory note evidencing the Mortgage Loan, (2) reconvey and release the Lien securing the Mortgage Loan and any other collateral under the Mortgage Loan Documents, and (3) discontinue and terminate any enforcement proceeding(s) under the Mortgage Loan Documents.

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(b) Lender shall have the right at any time to acquire all or any portion of the Mortgage Loan or any interest in any holder of, or participant in, the Mortgage Loan without notice or consent of Borrower or any other Loan Party, in which event Lender shall have and may exercise all rights of Mortgage Lender thereunder (to the extent of its interest), including the right (i) to declare that the Mortgage Loan is in default and (ii) to accelerate the Mortgage Loan indebtedness, in accordance with the terms thereof and (iii) to pursue all remedies against any obligor under the Mortgage Loan Documents. In addition, Borrower hereby expressly agree that any claims, counterclaims, defenses, offsets, deductions or reductions of any kind which Mortgage Borrower or any other Person may have against Mortgage Lender relating to or arising out of the Mortgage Loan shall be the personal obligation of Mortgage Lender, and in no event shall Mortgage Borrower be entitled to bring, pursue or raise any such claims, counterclaims, defenses, offsets, deductions or reductions against Lender or any Affiliate of Lender or any other Person as the successor holder of the Mortgage Loan or any interest therein, provided that Mortgage Borrower may seek specific performance of its contractual rights under the Mortgage Loan Documents.

5.2.15 Material Agreements.

(a) Borrower shall not, and shall not permit any Loan Party, except as to Mortgage Borrower and Operating Lessee, in which case Borrower shall exercise any rights it may have under the JV Agreement, to cause Mortgage Borrower and Operating Lessee to, enter into any Material Agreement without the prior written consent of Lender. Lender may condition its consent upon Mortgage Borrower also obtaining the consent of the Mortgage Lender, if applicable. Upon the request of Lender with respect to Material Agreements, Borrower shall, or shall cause the applicable Loan Party, except as to Mortgage Borrower and Operating Lessee, in which case Borrower shall exercise any rights it may have under the JV Agreement, to cause Mortgage Borrower and Operating Lessee to, deliver to Lender a recognition agreement from such service or material provider, to the extent such service or material provider is obligated to deliver such recognition agreement under its Material Agreement, among other things, providing for such Person’s continued performance should Lender become the owner of the Collateral. Each such Material Agreement and each recognition agreement relating thereto, shall be in form and substance reasonably acceptable to Lender in all respects, including the amount of the costs and fees thereunder.

(b) Except as specifically set forth herein, Borrower will not, and will not permit or cause any Loan Party, except as to Mortgage Borrower and Operating Lessee, in which case Borrower shall exercise any rights it may have under the JV Agreement to not permit or cause Mortgage Borrower and Operating Lessee, to materially amend or modify, supplement, rescind or terminate any Material Agreement (other than the Management Agreement, Manager Pooling Agreement Operating Lease and JV Agreement which shall be governed by Sections 5.1.18, 5.1.30 and 5.1.31, respectively, of this Agreement), without Lender’s approval, including the identity of the party to perform services under such agreement. If a material or service provider under a Material Agreement (other than the Management Agreement, Manager Pooling Agreement Operating Lease and JV Agreement which shall be governed by Sections 5.1.18, 5.1.30 and 5.1.31, respectively, of this Agreement) is in default in its obligations thereunder to the extent entitling the applicable Loan Party to rescind or terminate that agreement, then if Lender so requires (but not otherwise), Borrower will, or will cause the applicable Loan Party,

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except as to Mortgage Borrower and Operating Lessee, in which case Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower and Operating Lessee, to promptly use all reasonable efforts to terminate that agreement and appoint a new party in its place, with such identity and terms of appointment approved by Lender.

(c) Borrower shall and shall cause each Loan Party, except as to Mortgage Borrower and Operating Lessee, in which case Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower and Operating Lessee, as applicable, to observe and perform each and every term to be observed or performed by such Loan Party under the Material Agreements.

VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS

Section 6.1 Insurance.

(a) Notwithstanding that the Mortgage Loan may have been repaid or prepaid in full, Borrower shall cause to be maintained at all times during the term of the Loan the insurance required under the Mortgage Loan Documents, including, without limitation, meeting all insurer requirements thereunder. In addition, Borrower shall cause Lender to be named as a named insured together with Mortgage Lender, as their interest may appear, under the insurance policies required under Section 3.06(b) of the Mortgage Loan Documents. Borrower shall also cause all insurance policies required under this Section 6.1 to provide for at least thirty (30) days prior notice to Lender in the event of policy cancellation or material changes, except in the event of cancellation for non-payment of premium, in which case only ten (10) days’ prior written notice will be given Lender. Not less than ten (10) days prior to the expiration dates of the Policies Borrower shall cause copies of the items required to be delivered to Mortgage Lender under Section 3.06(d) of the Mortgage Loan Agreement, to be delivered to Lender.

(b) If at any time Lender is not in receipt of written evidence that all insurance required hereunder is in full force and effect, Lender shall have the right, without notice to Borrower, to take such action as Lender deems necessary to protect its interest in the Collateral, including, without limitation, the obtaining of such insurance coverage as Lender in its sole discretion deems appropriate and all expenses incurred by Lender in connection with such action or in obtaining such insurance and keeping it in effect shall be paid by Borrower to Lender upon demand and until paid shall be secured by the Pledge Agreement and shall bear interest at the Default Rate.

(c) For purposes of this Agreement, Lender shall have the same approval rights over the insurance referred to above (including, without limitation, the insurers, deductibles and coverages thereunder, as well as the right to require other reasonable insurance) as are provided in favor of Mortgage Lender in the Mortgage Loan Documents; provided, however such rights shall be subject to Borrower rights under the JV Agreement and/or the Mortgage Loan Documents. All liability insurance provided for in the Mortgage Loan Documents shall provide insurance with respect to the liabilities of Mortgage Borrower. The insurance policies delivered pursuant to the Mortgage Loan Documents shall include endorsements of the type described therein, but pursuant to which Lender shall have the same rights as Mortgage Lender as referred to therein.

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(d) In the event that the Mortgage Loan has been paid in full, except upon the occurrence and continuance of an Event of Default, Borrower shall permit, to the extent it has the right under the JV Agreement to permit, Mortgage Borrower to settle any insurance or condemnation claims with respect to the insurance proceeds or condemnation awards which in the aggregate are less than or equal to $100,000 for the applicable Individual Property; provided, further, the same shall be subject to the rights of Sunrise under the JV Agreement. Subject to Borrower’s rights under the JV Agreement, Lender shall have the right to participate in and reasonably approve any settlement for insurance or condemnation claims with respect to the insurance proceeds or condemnation awards which in the aggregate are equal to or greater than $100,000 for the applicable Individual Property. If an Event of Default shall have occurred and be continuing, Borrower hereby irrevocably empowers Lender, in the name of Borrower as its true and lawful attorney-in-fact, to file and prosecute such claim and to collect and to make receipt for any such payment, to the extent Borrower has such right to do so under the JV Agreement.

Section 6.2 Casualty.

If any Individual Property shall sustain a Casualty, Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to give prompt notice of such Casualty to Lender and shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to promptly commence and diligently prosecute the completion of the repair and restoration of such Individual Property as nearly as possible to the condition the Individual Property was in immediately prior to such Casualty and otherwise in accordance with the Mortgage Loan Documents.

Section 6.3 Condemnation.

Borrower shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to give Lender prompt notice of any actual or threatened Condemnation by any Governmental Authority of all or any part of any Individual Property and shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to deliver to Lender copies of any and all papers served in connection with such proceedings. Lender may participate in any such proceedings, and Borrower shall from time to time exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to deliver to Lender all instruments requested by Lender to permit such participation. Borrower shall, at its expense, exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to diligently prosecute any such proceedings, and shall consult with Lender, its attorneys and experts, and cooperate with them in the carrying on or defense of any such proceedings. Notwithstanding any Condemnation, Borrower shall continue to pay the Debt at the time and in the manner provided for its payment in the Note and in this Agreement.

Section 6.4 Restoration.

(a) Borrower shall, or shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to, deliver to Lender all reports, plans, specifications, documents and other materials that are delivered to Mortgage Lender under the Mortgage Loan Documents in connection with a restoration of any Individual Property after a Casualty or Condemnation. If any insurance proceeds or condemnation awards are to be disbursed by Mortgage Lender for

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restoration, Borrower shall deliver or cause to be delivered to Lender copies of all written correspondence delivered to and received from Mortgage Lender that relates to the restoration and release of the insurance proceeds or condemnation awards.

(b) Notwithstanding any provision in this Agreement to the contrary, all insurance proceeds and condemnation award will be made available to Mortgage Borrower in accordance with the Mortgage Loan Documents. In the event the Mortgage Loan has been paid in full and Lender receives any insurance proceeds or condemnation award, Lender shall either apply the portion of such proceeds which are to be paid to or on behalf of Borrower under the JV Agreement to the Debt or for the restoration of the applicable Individual Property in accordance with the same terms and conditions contained in the Mortgage Loan Documents.

Section 6.5 Rights of Lender.

For purposes of this Article 6, Borrower shall, to the extent it has the right to do so under the JV Agreement, obtain the approval of Lender for each matter requiring the approval of Mortgage Lender under the provisions of the Mortgage Loan Documents, with each reference in any such provisions to the “Loan” to include the Mortgage Loan and the Loan, and the reference in any such provisions to the “Maturity Date” to mean the Maturity Date, as defined herein. If Mortgage Lender does not require the deposit by Mortgage Borrower of the “Proceeds Deficiency” pursuant to the Mortgage Loan Documents, Lender shall have the right to demand that Borrower make a deposit of said “Proceeds Deficiency” in accordance with the terms of such Section (as if each reference therein to “Borrower” and “Lender” referred to Borrower and Lender, respectively).

VII. INTENTIONALLY OMITTED

VIII. DEFAULTS

Section 8.1 Event of Default.

(a) Each of the following events shall constitute an event of default hereunder (an “Event of Default”):

(i) if any portion of the Debt is not paid on or before the date the same is due and payable;

(ii) if any of the Taxes or Other Charges are not paid on or before the date the same become delinquent, unless the same are being contested in good faith pursuant to the terms of this Agreement or the Mortgage Loan Documents;

(iii) if the Policies are not kept in full force and effect or if certified copies or other evidence reasonably acceptable to Lender, of the Policies are not delivered to Lender on request;

(iv) if Borrower transfers or encumbers any portion of any of the Collateral in violation of the provisions hereof or the Pledge Agreement or if any other Transfer under Section 5.2.10 occurs, including, without limitation, as a result of the exercise of a

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Change of Control Purchase Option or a Sunrise Purchase Option and failure of Borrower to have satisfied the Debt in full prior to or at the time of a Transfer effected by a Change of Control Purchase Option or a Sunrise Purchase Option;

(v) if any representation or warranty made by Borrower, any Principal, Indemnitor or Guarantor herein (or incorporated by reference herein) or in any other Loan Document, or in any report, certificate, financial statement or other instrument, agreement or document furnished to Lender shall have been false or misleading in any material respect as of the date the representation or warranty was made;

(vi) if Borrower, Mortgage Borrower, any Principal, Indemnitor, Guarantor or any other guarantor under any guaranty issued in connection with the Loan shall make an assignment for the benefit of creditors;

(vii) if a receiver, liquidator or trustee shall be appointed for Borrower, Mortgage Borrower, any Principal, Indemnitor, Guarantor or any other guarantor under any guarantee issued in connection with the Loan or if Borrower, Mortgage Borrower, any Principal, Indemnitor, Guarantor or such other guarantor shall be adjudicated a bankrupt or insolvent, or if any petition for bankruptcy, reorganization or arrangement pursuant to the Bankruptcy Code, or any similar federal or State law, shall be filed by or against, consented to, or acquiesced in by, Borrower, Mortgage Borrower, any Principal, Indemnitor, Guarantor or such other guarantor, or if any proceeding for the dissolution or liquidation of Borrower, Mortgage Borrower, any Principal, Indemnitor, Guarantor or such other guarantor shall be instituted; provided, however, if such appointment, adjudication, petition or proceeding was involuntary and not consented to by Borrower, Mortgage Borrower, any Principal, Indemnitor, Guarantor or such other guarantor, upon the same not being discharged, stayed or dismissed within sixty (60) days;

(viii) if Borrower assigns its rights under this Agreement or any of the other Loan Documents or any interest herein or therein in contravention of the Loan Documents;

(ix) if Borrower breaches any of its negative covenants contained in Section 5.2 hereof;

(x) if Borrower violates or does not comply with any of the provisions of Section 5.1.17 hereof;

(xi) if a default by Mortgage Borrower has occurred and continues beyond any applicable cure period under the Management Agreement (or any Replacement Management Agreement) if such default permits the Manager thereunder to terminate or cancel the Management Agreement (or any Replacement Management Agreement);

(xii) if Borrower or any Principal violates or does not comply with any of the provisions of Section 4.1.36 hereof;

(xiii) if any Individual Property becomes subject to any mechanic’s, materialman’s or other Lien other than a Lien for local real estate taxes and assessments not then due and payable and the Lien shall remain undischarged of record (by payment, bonding or otherwise) for a period of thirty (30) days;

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(xiv) if any federal tax Lien or state or local income tax Lien is filed against Borrower, Mortgage Borrower, Principal, Guarantor, Indemnitor, the Collateral or any Individual Property and same is not discharged of record within thirty (30) days after same is filed;

(xv) (A) Borrower fails to timely provide Lender with the written certification and evidence referred to in Section 5.2.8 hereof, (B) Borrower is a Plan or its assets constitute Plan Asset; or (C) Borrower consummates a transaction which would cause the Pledge Agreement or Lender’s exercise of its rights under the Pledge Agreement, the Note, this Agreement or the other Loan Documents to constitute a nonexempt prohibited transaction under ERISA or result in a violation of a State statute regulating governmental plans, subjecting Lender to liability for a violation of ERISA, the Code, a State statute or other similar law;

(xvi) if Borrower shall fail to deliver to Lender, within ten (10) days after request by Lender, any estoppel certificates required pursuant to the terms hereof; provided that the party giving the estoppel certificate is otherwise obligated to deliver such estoppel certificate within such period of time;

(xvii) if any default occurs under any guaranty or indemnity executed in connection herewith (including, without limitation, the Guaranty and the Environmental Indemnity) and such default continues after the expiration of applicable grace or cure periods, if any;

(xviii) if Borrower shall be in default beyond applicable notice and grace periods under any pledge agreement or other security agreement covering any portion of the Collateral whether it be superior or junior in lien to the Pledge Agreement;

(xix) with respect to any term, covenant or provision set forth herein which specifically contains a notice requirement or grace period, if Borrower shall be in default under such term, covenant or condition after the giving of such notice or the expiration of such grace period;

(xx) intentionally omitted;

(xxi) if Mortgage Borrower or Operating Lessee ceases operating a senior housing facility on any Individual Property or terminates such business for any reason whatsoever (other than temporary cessation in connection with any renovations to such Individual Property or restoration of the Individual Property after Casualty or Condemnation);

(xxii) if there shall be a default under the Pledge Agreement or any of the other Loan Documents beyond any applicable grace or notice and cure periods contained in such documents, whether as to Borrower or the Collateral, or if any other such event shall occur or condition shall exist, if the effect of such event or condition is to accelerate the maturity of any portion of the Debt or to permit Lender to accelerate the maturity of all or any portion of the Debt;

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(xxiii) if there shall occur any default under the Operating Lease in the observance or performance of any term, covenant or condition of the Operating Lease and said default is not cured following the expiration of any applicable grace, notice and cure periods therein provided, or if the leasehold estate created by the Operating Lease shall be surrendered or if the Operating Lease shall cease to be in full force and effect or the Operating Lease shall be terminated or canceled for any reason, or if any of the terms, covenants or conditions of the Operating Lease shall in any manner be modified, changed, supplemented, altered, or amended in violation of Section 5.1.30 of this Agreement;

(xxiv) (I) if there shall occur any default under the JV Agreement by Borrower in the observance or performance of any term, covenant or condition of the JV Agreement and said default is not cured following the expiration of any applicable grace, notice and cure periods therein provided, or (II) if the JV Agreement shall cease to be in full force and effect or (III) the JV Agreement shall be terminated or canceled for any reason, or (IV) if any of the terms, covenants or conditions of the JV Agreement shall in any manner be modified, changed, supplemented, altered, or amended in violation of Section 5.1.31 of this Agreement;

(xxv) if there shall occur any default under the Recognition Agreement by any party thereto other than Lender or if the Recognition Agreement shall cease to be in full force and effect or the Recognition Agreement shall be terminated or canceled for any reason by any party thereto other than Lender, or if any of the terms, covenants or conditions of the Recognition Agreement shall in any manner be modified, changed, supplemented, altered, or amended without the prior written consent of Lender; provided, however, there shall be no Event of Default under this subsection (xxv) if the default, termination or cancellation is caused by any party other than Borrower and Borrower has fully satisfied and paid off the Loan in accordance with the terms hereof within ten (10) Business Days following written notice from Lender;

(xxvi) the Liens created pursuant to any Loan Document shall cease to be a fully enforceable first priority security interest;

(xxvii) a Mortgage Loan Event of Default shall occur, and shall not have been waived or settled by Mortgage Lender or cured by Mortgage Borrower, or if Mortgage Borrower enters into or otherwise suffers or permits any material amendment, waiver, supplement, termination, extension, renewal, replacement or other material modification of any Mortgage Loan Document without the prior written consent of Lender; or

(xxviii) if Borrower shall continue to be in Default under any of the other terms, covenants or conditions of this Agreement not specified in subsections (i) to (xxvii) above, for ten (10) days after notice to Borrower from Lender, in the case of any Default which can be cured by the payment of a sum of money, or for thirty (30) days after notice from Lender in the case of any other Default; provided, however, that if such non-monetary Default is susceptible of cure but cannot reasonably be cured within such 30-

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day period and provided further that Borrower shall have commenced to cure such Default within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall be extended for such time as is reasonably necessary for Borrower in the exercise of due diligence to cure such Default, such additional period not to exceed sixty (60) days.

(b) Upon the occurrence of an Event of Default (other than an Event of Default described in clauses (vi) or (vii) above) and at any time during the continuance of such Event of Default, in addition to any other rights or remedies available to it pursuant to this Agreement and the other Loan Documents or at law or in equity, Lender may take such action, without notice or demand, that Lender deems advisable to protect and enforce its rights against Borrower and the Collateral, including, without limitation, declaring the Debt to be immediately due and payable, and Lender may enforce or avail itself of any or all rights or remedies provided in the Loan Documents and any or all of the Collateral and may exercise all the rights and remedies of a secured party under the Uniform Commercial Code against Borrower and the Collateral, including, without limitation, all rights or remedies available at law or in equity; and upon any Event of Default described in clauses (vi) or (vii) above, the Debt and all other obligations of Borrower hereunder and under the other Loan Documents shall immediately and automatically become due and payable, without notice or demand, and Borrower hereby expressly waives any such notice or demand, anything contained herein or in any other Loan Document to the contrary notwithstanding.

Section 8.2 Remedies.

(a) Upon the occurrence of an Event of Default, all or any one or more of the rights, powers, privileges and other remedies available to Lender against Borrower under this Agreement or any of the other Loan Documents executed and delivered by, or applicable to, Borrower or at law or in equity may be exercised by Lender at any time and from time to time during the continuance of such Event of Default, whether or not all or any of the Debt shall be declared due and payable, and whether or not Lender shall have commenced any foreclosure proceeding or other action for the enforcement of its rights and remedies under any of the Loan Documents with respect to all or any part of any Individual Property or any other Collateral. Any such actions taken by Lender shall be cumulative and concurrent and may be pursued independently, singly, successively, together or otherwise, at such time and in such order as Lender may determine in its sole discretion, to the fullest extent permitted by Applicable Law, without impairing or otherwise affecting the other rights and remedies of Lender permitted by Applicable Law, equity or contract or as set forth herein or in the other Loan Documents. Without limiting the generality of the foregoing, Borrower agrees that if an Event of Default is continuing (i) Lender is not subject to any “one action” or “election of remedies” law or rule, and (ii) all Liens and other rights, remedies or privileges provided to Lender shall remain in full force and effect until Lender has exhausted all of its remedies against the Collateral and the Collateral has been foreclosed, sold and/or otherwise realized upon in satisfaction of the Debt or the Debt has been paid in full.

(b) With respect to Borrower and the Collateral, nothing contained herein or in any other Loan Document shall be construed as requiring Lender to resort to any Collateral for the satisfaction of any of the Debt in preference or priority, and Lender may seek satisfaction out of

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the Collateral or any other collateral or any part thereof, in its absolute discretion in respect of the Debt. In addition, Lender shall have the right from time to time to partially foreclose upon the Collateral in any manner and for any amounts secured by the Pledge Agreement then due and payable as determined by Lender in its sole discretion including, without limitation, the following circumstances: (i) in the event Borrower defaults beyond any applicable grace period in the payment of one or more scheduled payments of principal and interest, Lender may foreclose upon the Collateral to recover such delinquent payments, or (ii) in the event Lender elects to accelerate less than the entire outstanding principal balance of the Loan, Lender may foreclose upon the Collateral to recover so much of the principal balance of the Loan as Lender may accelerate and such other sums secured by the Pledge Agreement as Lender may elect. Notwithstanding one or more partial foreclosures, the Collateral shall remain subject to the Pledge Agreement to secure payment of sums secured by the Pledge Agreement and not previously recovered.

(c) Lender shall have the right, from time to time, to sever the Note and the other Loan Documents into one or more separate notes, pledges and other security documents (the “Severed Loan Documents”) in such denominations as Lender shall determine in its sole discretion for purposes of evidencing and enforcing its rights and remedies provided hereunder. Borrower shall execute and deliver to Lender from time to time, promptly after the request of Lender, a severance agreement and such other documents as Lender shall request in order to effect the severance described in the preceding sentence, all in form and substance reasonably satisfactory to Lender. Borrower hereby absolutely and irrevocably appoints Lender as its true and lawful attorney, coupled with an interest, in its name and stead to make and execute all documents necessary or desirable to effect the aforesaid severance, Borrower ratifying all that its said attorney shall do by virtue thereof; provided, however, Lender shall not make or execute any such documents under such power until three (3) Business Days after notice has been given to Borrower by Lender of Lender’s intent to exercise its rights under such power. The Severed Loan Documents shall not contain any representations, warranties or covenants not contained in the Loan Documents and any such representations and warranties contained in the Severed Loan Documents will be given by Borrower only as of the Closing Date.

(d) Any amounts recovered from the Collateral after an Event of Default may be applied by Lender toward the payment of any interest and/or principal of the Loan and/or any other amounts due under the Loan Documents in such order, priority and proportions as Lender in its sole discretion shall determine.

Section 8.3 Right to Cure Defaults.

Upon the occurrence and during the continuance of any Event of Default, Lender may, but without any obligation to do so and without notice to or demand on Borrower and without releasing Borrower from any obligation hereunder, make any payment or do any act required of Borrower hereunder in such manner and to such extent as Lender may deem necessary to protect the security hereof. All such costs and expenses incurred by Lender in remedying such Event of Default or such failed payment or act or in appearing in, defending, or bringing any action or proceeding shall bear interest at the Default Rate, for the period after notice from Lender that such cost or expense was incurred to the date of payment to Lender. All such costs and expenses incurred by Lender together with interest thereon calculated at the Default Rate shall be deemed

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to constitute a portion of the Debt and be secured by the liens, claims and security interests provided to Lender under the Loan Documents and shall be immediately due and payable upon demand by Lender therefor.

Section 8.4 Remedies Cumulative; Waivers.

The rights, powers and remedies of Lender under this Agreement shall be cumulative and not exclusive of any other right, power or remedy which Lender may have against Borrower pursuant to this Agreement or the other Loan Documents, or existing at law or in equity or otherwise. Lender’s rights, powers and remedies may be pursued singularly, concurrently or otherwise, at such time and in such order as Lender may determine in Lender’s sole discretion. No delay or omission to exercise any remedy, right or power accruing upon an Event of Default shall impair any such remedy, right or power or shall be construed as a waiver thereof, but any such remedy, right or power may be exercised from time to time and as often as may be deemed expedient. A waiver of one or more Defaults or Events of Default with respect to Borrower shall not be construed to be a waiver of any subsequent Default or Event of Default by Borrower or to impair any remedy, right or power consequent thereon.

Section 8.5 Power of Attorney.

For the purpose of carrying out the provisions and exercising the rights, powers and privileges granted in this Section 8, Borrower hereby irrevocably appoints Lender as its true and lawful attorney-in-fact to execute, acknowledge and deliver any instruments and do and perform any acts such as are referred to in this subsection in the name and on behalf of Borrower. This power of attorney is a power coupled with an interest and cannot be revoked.

IX. SPECIAL PROVISIONS

Section 9.1 Sale of Notes and Securitization

Borrower agrees to cooperate with Lender in connection with a sale, transfer, pledge or assignment of the Note, this Agreement, the Pledge Agreement and the other Loan Documents, and any or all servicing rights with respect thereto, or the granting of participations therein or the issuance of mortgage pass-through certificates or other securities (the “Securities”) evidencing a beneficial interest in a rated or unrated public offering or private placement (a “Securitization”), including, without limitation, (a) the delivery of an estoppel certificate and such other documents as may be reasonably requested by Lender, (b) the execution of such amendments to the Loan Documents as may be requested by the holder of the Note or otherwise to effect the Securitization including, without limitation, bifurcation of the Loan into two or more separate notes; provided, however, that Borrower shall not be required to modify or amend any Loan Document if such modification or amendment would (i) change the interest rate, the stated maturity or the amortization of principal set forth in the Note, except in connection with a bifurcation of the Loan which may result in varying interest rates and amortization schedules on the component notes, but which shall have, in the aggregate, the same initial weighted average spread of the Note immediately prior to such componentization, or (ii) in the reasonable judgment of Borrower, modify or amend any other material economic term of the Loan, or (iii) in the reasonable judgment of Borrower, materially increase Borrower’s obligations and liabilities under the Loan Documents, and (c) make changes to the organizational documents of

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Borrower and its principals and/or use its best efforts to cause changes to the legal opinions delivered by Borrower in connection with the Loan, provided, that such changes shall not result in a material adverse economic effect to Borrower. Borrower shall also furnish and Borrower consents to Lender furnishing to such investors or such prospective investors or such Rating Agency any and all information concerning the Properties, the Leases, the financial condition of Borrower as may be requested by Lender, any investor, any prospective investor or any Rating Agency in connection with any sale or transfer of the Loan or any Securities.

All reasonable third party costs and expenses incurred by Lender in connection with Borrower’s complying with requests made under this Section 9.1 shall be paid by Borrower.

Section 9.2 Intentionally Omitted.

Section 9.3 Servicer.

At the option of Lender, the Loan may be serviced by a servicer/trustee (the “Servicer”) selected by Lender and Lender may delegate all or any portion of its responsibilities under this Agreement and the other Loan Documents to the Servicer pursuant to a servicing agreement (the “Servicing Agreement”) between Lender and Servicer. Borrower shall pay (i) any liquidation fees that may be due to the Servicer under the Servicing Agreement in connection with the exercise of any or all remedies permitted under this Agreement, (ii) any workout fees and special servicing fees that may be due to the Servicer under the Servicing Agreement, which fees shall be due and payable by Borrower on a periodic or continuing basis in accordance with the Servicing Agreement, and (iii) the costs of all property inspections and/or appraisals of the Properties (or any updates to any existing inspection or appraisal) required under the Servicing Agreement or that the Servicer may otherwise require under the Servicing Agreement (other than the cost of annual inspections required to be borne by the Servicer under the Servicing Agreement).

Section 9.4 Exculpation.

The Debt is fully recourse to Borrower and Guarantor, jointly and severally.

Section 9.5 Certain Additional Rights of Lender.

(a) Notwithstanding anything to the contrary contained herein, for so long as the Loan is outstanding, Lender shall have:

(i) the right to routinely consult with and advise Borrower’s management regarding the business activities and business and financial developments of Borrower, including but not limited to (A) annual operating and capital budgets, (B) insurance, (C) material leases and lease forms, (D) property manager and leasing agents, amendment or modifications to any agreements with them and termination of agreements with them, (E) changes in business and (F) amendment and modification of its organizational documents in violation of this Agreement; provided, however, that such consultations shall not include discussions of environmental compliance programs or disposal of hazardous substances. Consultation meetings should occur on a regular basis (no less frequently than quarterly) with Lender having the right to call special meetings at any reasonable times;

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(ii) the right, in accordance with the terms of this Agreement, to visit and inspect any of the properties of Borrower and its subsidiaries and examine (and request copies of) the books and records of Borrower relating to the Property at any time upon reasonable notice and to request monthly rent rolls, leasing schedules and reports, operating statements and other leasing information;

(iii) the right, in accordance with the terms of this Agreement, to receive monthly, quarterly and year-end financial reports, including balance sheets, statements of income, shareholder’s equity and cash flow, a management report and schedules of outstanding indebtedness, together with an auditor’s report, and to receive any reports or statements required to be filed with the SEC;

(iv) the right, without restricting any other rights of Lender under this Agreement (including any similar right), to restrict financing to be obtained in connection with future property transactions, refinancing of any acquisition financings, and unsecured debt other than unsecured debt obtained in the ordinary course of business in accordance with the terms hereof;

(v) the right, without restricting any other right of Lender under this Agreement (including any similar right), to restrict, upon the occurrence of an Event of Default, Borrower’s payments of management consulting, director or similar fees to Affiliates of Borrower (or their personnel);

(vi) the right, without restricting any other rights of Lender under this Agreement (including any similar right), to approve any acquisition by Borrower of any other significant property (other than personal property required for the day-to-day operation of the Properties);

(vii) the right, without restricting any other rights of Lender under this Agreement (including any similar right), in the event of certain Events of Default, to vote the owners’ interests in Borrower pursuant to irrevocable proxies granted, at the request of Lender in advance for this purpose; and

(viii) the right, without restricting any other rights of Lender under this Agreement (including any similar right), to restrict the transfer of voting interests in Borrower held by its members, and the right to restrict the transfer of interests in such members, except for any Transfer that is expressly permitted pursuant to Section 5.2.10 hereof.

(b) In addition to the foregoing, Borrower agrees that, upon the request of Lender, Borrower shall deliver a “VCOC Letter” in form and substance substantially similar to the letter attached hereto as Exhibit A to any future participant or other interest holder in the Loan, and hereby grants to any such future participant or other interest holder in the Loan the rights set forth under this Section 9.5; provided, however, that all such participants and other interest holders use commercially reasonable efforts to coordinate the exercise of such rights.

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(c) The rights described above may be exercised by any entity which owns and controls, directly or indirectly, substantially all of the interests in Lender.

Section 9.6 Mortgage Loan Defaults.

(a) Without limiting the generality of the other provisions of this Agreement, and without waiving or releasing Borrower from any of its obligations hereunder, if there shall occur any default under the Mortgage Loan Documents which is not cured within any applicable cure or grace period or if Mortgage Lender asserts that Mortgage Borrower has defaulted in the performance or observance of any term, covenant or condition of the Mortgage Loan Documents and such default has continued beyond any applicable notice, cure or grace periods, Borrower hereby expressly agrees that Lender shall have the immediate right, without notice to or demand on Borrower or Mortgage Borrower, but shall be under no obligation: (i) to pay all or any part of the Mortgage Loan, and any other sums, that are then due and payable and to perform any act or take any action on behalf of Mortgage Borrower, as may be appropriate, to cause all of the terms, covenants and conditions of the Mortgage Loan Documents on the part of Mortgage Borrower to be performed or observed thereunder to be promptly performed or observed; and (ii) to pay any other amounts and take any other action as Lender, in its sole and absolute discretion, shall deem advisable to protect or preserve the rights and interests of Lender in the Loan and/or the Collateral. Lender shall have no obligation to complete any cure or attempted cure undertaken or commenced by Lender. In such event, Lender shall be subrogated to the rights of Mortgage Lender to the full extent permitted by law or equity. Except to the extent of such subrogation, all sums so paid and the costs and expenses incurred by Lender in exercising rights under this Section (including, without limitation, reasonable attorneys’ and other professional fees), with interest at the Default Rate, for the period from the date of demand by Lender to Borrower for such payments to the date of payment to Lender, shall constitute a portion of the Debt, shall be secured by the Pledge Agreement and shall be due and payable to Lender within two Business Days following demand therefor.

(b) Borrower shall not, and shall exercise any rights it may have under the JV Agreement to not cause or permit Mortgage Borrower or any other Person to impede, interfere with, hinder or delay, any effort or action on the part of Lender to cure any default or asserted default under the Mortgage Loan, or to otherwise protect or preserve Lender’s interests in the Loan and the Collateral, including the Property in accordance with the provisions of this Agreement and the other Loan Documents.

(c) Borrower hereby indemnifies Lender from and against all out-of-pocket liabilities, obligations, losses, damages, penalties, assessments, actions, or causes of action, judgments, suits, claims, demands, costs, expenses (including, without limitation, reasonable attorneys’ and other professional fees, whether or not suit is brought, and settlement costs), and disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Lender as a result of the foregoing actions. Lender shall have no obligation to Borrower, Mortgage Borrower or any other party to make any such payment or performance. Borrower shall not impede, interfere with, hinder or delay, and shall exercise any rights it may have under the JV Agreement to cause Mortgage Borrower to not impede, interfere with, hinder or delay, any effort or action on the part of Lender to cure any default or asserted default under the Mortgage Loan, or to otherwise protect or preserve Lender’s interests in the Loan and the Collateral following a default or asserted default under the Mortgage Loan.

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(d) If Lender shall receive a copy of any notice of default under the Mortgage Loan Documents sent by Mortgage Lender to Mortgage Borrower, such notice shall constitute full protection to Lender for any action taken or omitted to be taken by Lender, in good faith, in reliance thereon. As a material inducement to Lender’s making the Loan, Borrower hereby absolutely and unconditionally release and waive all claims against Lender arising out of Lender’s exercise of its rights and remedies provided in this Section other than claims arising out of the fraud, illegal acts, gross negligence or willful misconduct of Lender. In the event that Lender makes any payment in respect of the Mortgage Loan, Lender shall be subrogated to all of the rights of Mortgage Lender under the Mortgage Loan Documents against the Property to the full extent permitted by law or equity, in addition to all other rights it may have under the Loan Documents.

(e) Any default under the Mortgage Loan which is cured by Lender following the expiration of any applicable grace, notice or cure period under the Mortgage Loan Documents, shall constitute an immediate Event of Default under this Agreement without any notice, grace or cure period otherwise applicable under this Agreement.

(f) In the event that Lender makes any payment in respect of the Mortgage Loan, Lender shall be subrogated to all of the rights of Mortgage Lender under the Mortgage Loan Documents against the Property and Mortgage Borrower to the full extent permitted by law or equity in addition to all other rights Lender may have under the Loan Documents or applicable law.

Section 9.7 Intercreditor Agreement.

(a) Lender and Mortgage Lender are parties to a certain intercreditor agreement dated as of the date hereof (the “Intercreditor Agreement”) memorializing their relative rights and obligations with respect to the Mortgage Loan, the Loan, Mortgage Borrower, Borrower and the Properties. Borrower hereby acknowledges and agrees that (i) such Intercreditor Agreement is intended solely for the benefit of Lender and Mortgage Lender and (ii) Borrower and Mortgagor are not intended third-party beneficiaries of any of the provisions therein and shall not be entitled to rely on any of the provisions contained therein. Lender and Mortgage Lender shall have no obligation to disclose to Borrower the contents of the Intercreditor Agreement. Borrower’s obligations hereunder are independent of such Intercreditor Agreement and remain unmodified by the terms and provisions thereof.

(b) In the event Lender is required pursuant to the terms of the Intercreditor Agreement to pay over any payment or distribution of assets, whether in cash, property or securities which is applied to the Debt, including, without limitation, any proceeds of the Properties previously received by Lender on account of the Loan to Mortgage Lender, then Borrower agrees to indemnify Lender for any amounts so paid, and any amount so paid shall continue to be owing pursuant to the Loan Documents as part of the Debt notwithstanding the prior receipt of such payment by Lender.

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Section 9.8 Discussions with Mortgage Lender.

In connection with the exercise of its rights set forth in the Loan Documents, Lender shall have the right at any time to discuss the Properties, the Mortgage Loan, the Loan or any other matter directly with Mortgage Lender or Mortgage Lender’s consultants, agents or representatives without notice to or permission from Borrower or any other Loan Party, nor shall Lender have any obligation to disclose such discussions or the contents thereof with Borrower or any other Loan Party.

Section 9.9 Independent Approval Rights.

If any action, proposed action or other decision is consented to or approved by Mortgage Lender, such consent or approval shall not be binding or controlling on Lender. Borrower hereby acknowledges and agrees that (i) the risks of Mortgage Lender in making the Mortgage Loan are different from the risks of Lender in making the Loan, (ii) in determining whether to grant, deny, withhold or condition any requested consent or approval Mortgage Lender and Lender may reasonably reach different conclusions, and (iii) Lender has an absolute independent right to grant, deny, withhold or condition any requested consent or approval based on its own point of view. Further, the denial by Lender of a requested consent or approval shall not create any liability or other obligation of Lender if the denial of such consent or approval results directly or indirectly in a default under the Mortgage Loan, and Borrower hereby waives any claim of liability against Lender arising from any such denial.

X. MISCELLANEOUS

Section 10.1 Survival.

This Agreement and all covenants, agreements, representations and warranties made herein and in the certificates delivered pursuant hereto shall survive the making by Lender of the Loan and the execution and delivery to Lender of the Note, and shall continue in full force and effect so long as all or any of the Debt is outstanding and unpaid unless a longer period is expressly set forth herein or in the other Loan Documents. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the legal representatives, successors and assigns of such party. All covenants, promises and agreements in this Agreement, by or on behalf of Borrower, shall inure to the benefit of the legal representatives, successors and assigns of Lender.

Section 10.2 Lender’s Discretion.

Whenever pursuant to this Agreement, Lender exercises any right given to it to approve or disapprove, or any arrangement or term is to be satisfactory to Lender, the decision of Lender to approve or disapprove or to decide whether arrangements or terms are satisfactory or not satisfactory shall (except as is otherwise specifically herein provided) be in the sole discretion of Lender and shall be final and conclusive.

Section 10.3 Governing Law.

(a) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN

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ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS) PROVIDED HOWEVER, THAT WITH RESPECT TO THE CREATION, PERFECTION, PRIORITY AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED BY THIS AGREEMENT, THE PLEDGE AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND THE DETERMINATION OF DEFICIENCY JUDGMENTS, THE LAWS OF THE STATE WHERE THE COLLATERAL IS LOCATED SHALL APPLY.

(b) WITH RESPECT TO ANY CLAIM OR ACTION ARISING HEREUNDER OR UNDER THIS AGREEMENT, THE NOTE, OR THE OTHER LOAN DOCUMENTS, BORROWER (A) IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK, NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF, AND (B) IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING ON VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS BROUGHT IN ANY SUCH COURT, IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING IN THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS INSTRUMENT WILL BE DEEMED TO PRECLUDE LENDER FROM BRINGING AN ACTION OR PROCEEDING WITH RESPECT HERETO IN ANY OTHER JURISDICTION.

Section 10.4 Modification, Waiver in Writing.

No modification, amendment, extension, discharge, termination or waiver of any provision of this Agreement, the Note, or of any other Loan Document, nor consent to any departure by Borrower therefrom, shall in any event be effective unless the same shall be in a writing signed by the party against whom enforcement is sought, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which given. Except as otherwise expressly provided herein, no notice to, or demand on Borrower, shall entitle Borrower to any other or future notice or demand in the same, similar or other circumstances.

Section 10.5 Delay Not a Waiver.

Neither any failure nor any delay on the part of Lender in insisting upon strict performance of any term, condition, covenant or agreement, or exercising any right, power, remedy or privilege hereunder, or under the Note or under any other Loan Document, or any other instrument given as security therefor, shall operate as or constitute a waiver thereof, nor shall a single or partial exercise thereof preclude any other future exercise, or the exercise of any other right, power, remedy or privilege. In particular, and not by way of limitation, by accepting payment after the due date of any amount payable under this Agreement, the Note or any other Loan Document, Lender shall not be deemed to have waived any right either to require prompt payment when due of all other amounts due under this Agreement, the Note or the other Loan Documents, or to declare a default for failure to effect prompt payment of any such other amount.

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Section 10.6 Notices.

All notices or other written communications hereunder shall be deemed to have been properly given (i) upon delivery, if delivered in person or by facsimile transmission with receipt acknowledged by the recipient thereof and confirmed by telephone by sender, (ii) one (1) Business Day after having been deposited for overnight delivery with any reputable overnight courier service, or (iii) three (3) Business Days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

If to Borrower:	c/o CNL Healthcare Trust, Inc
	CNL Center at City Commons
	450 South Orange Avenue
	Orlando, Florida 32801
	Attention: Joseph T. Johnson, SVP and CFO and
	Holly Greer, SVP and General Counsel
	Facsimile No.: (407) 540-2544
With a copy to:	Lowndes, Drosdick, Doster, Kantor & Reed, P.A.
	215 N. Eola Drive
	Orlando, Florida 32801
	Attention: Peter L. Lopez, Esq.
	Facsimile No.: (407) 843-4444
If to Lender:	RCG LV DEBT IV NON-REIT ASSETS HOLDINGS, LLC
	7 Penn Plaza, Suite 512
	New York, New York 10001
	Attention: Ms. Sara Ely
	Facsimile No: (212) 356-9293
With a copy to:	SNR Denton US LLP
	1221 Avenue of the Americas
	New York, New York 10020
	Attention: David S. Hall, Esq.
	Facsimile No: (212) 768-6800

or addressed as such party may from time to time designate by written notice to the other parties.

Either party by notice to the other may designate additional or different addresses for subsequent notices or communications.

Section 10.7 Trial by Jury.

EACH OF BORROWER AND LENDER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY

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CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.

Section 10.8 Headings.

The Article and/or Section headings and the Table of Contents in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

Section 10.9 Severability.

Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under Applicable Law, but if any provision of this Agreement shall be prohibited by or invalid under Applicable Law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

Section 10.10 Preferences.

Lender shall have the continuing and exclusive right to apply or reverse and reapply any and all payments by Borrower to any portion of the obligations of Borrower hereunder. To the extent Borrower makes a payment or payments to Lender, which payment or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, State or federal law, common law or equitable cause, then, to the extent of such payment or proceeds received, the obligations hereunder or part thereof intended to be satisfied shall be revived and continue in full force and effect, as if such payment or proceeds had not been received by Lender.

Section 10.11 Waiver of Notice.

Borrower shall not be entitled to any notices of any nature whatsoever from Lender except with respect to matters for which this Agreement or the other Loan Documents specifically and expressly provide for the giving of notice by Lender to Borrower and except with respect to matters for which Borrower is not, pursuant to applicable Legal Requirements, permitted to waive the giving of notice. Borrower hereby expressly waives the right to receive any notice from Lender with respect to any matter for which this Agreement or the other Loan Documents do not specifically and expressly provide for the giving of notice by Lender to Borrower.

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Section 10.12 Remedies of Borrower.

In the event that a claim or adjudication is made that Lender or its agents have acted unreasonably or unreasonably delayed acting in any case where by law or under this Agreement or the other Loan Documents, Lender or such agent, as the case may be, has an obligation to act reasonably or promptly, Borrower agrees that neither Lender nor its agents shall be liable for any monetary damages, and Borrower’s sole remedies shall be limited to commencing an action seeking injunctive relief or declaratory judgment. The parties hereto agree that any action or proceeding to determine whether Lender has acted reasonably shall be determined by an action seeking declaratory judgment.

Section 10.13 Expenses; Indemnity.

(a) Borrower covenants and agrees to pay or, if Borrower fails to pay, to reimburse, Lender within five (5) days of receipt of written notice from Lender for all reasonable costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by Lender in connection with (i) the preparation, negotiation, execution and delivery of this Agreement and the other Loan Documents and the consummation of the transactions contemplated hereby and thereby and all the costs of furnishing all opinions by counsel for Borrower (including without limitation any opinions requested by Lender as to any legal matters arising under this Agreement or the other Loan Documents with respect to the Properties); (ii) Borrower’s ongoing performance of and compliance with Borrower’s respective agreements and covenants contained in this Agreement and the other Loan Documents on its part to be performed or complied with after the Closing Date, including, without limitation, confirming compliance with environmental and insurance requirements; (iii) Lender’s ongoing performance and compliance with all agreements and conditions contained in this Agreement and the other Loan Documents on its part to be performed or complied with after the Closing Date; (iv) the negotiation, preparation, execution, delivery and administration of any consents, amendments, waivers or other modifications to this Agreement and the other Loan Documents and any other documents or matters requested by Lender; (v) securing Borrower’s compliance with any requests made pursuant to the provisions of this Agreement; (vi) the filing and recording fees and expenses, title insurance and reasonable fees and expenses of counsel for providing to Lender all required legal opinions, and other similar expenses incurred in creating and perfecting the Liens in favor of Lender pursuant to this Agreement and the other Loan Documents; (vii) enforcing or preserving any rights, in response to third party claims or the prosecuting or defending of any action or proceeding or other litigation, in each case against, under or affecting Borrower, this Agreement, the other Loan Documents, the Collateral, or any other security given for the Loan; and (viii) enforcing any obligations of or collecting any payments due from Borrower under this Agreement, the other Loan Documents or with respect to the Collateral or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a “work-out” or of any insolvency or bankruptcy proceedings; provided, however, that Borrower shall not be liable for the payment of any such costs and expenses to the extent the same arise by reason of the gross negligence, illegal acts, fraud or willful misconduct of Lender. Any cost and expenses due and payable to Lender shall be payable to Lender’s designee.

(b) Borrower shall indemnify, defend and hold harmless Lender and the Indemnified Parties from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel for

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Lender and the Indemnified Parties in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not Lender or the Indemnified Parties shall be designated a party thereto), that may be imposed on, incurred by, or asserted against Lender or the Indemnified Parties in any manner relating to or arising out of (i) any breach by Borrower of its obligations under, or any material misrepresentation by Borrower contained in, this Agreement or the other Loan Documents, or (ii) the use or intended use of the proceeds of the Loan (collectively, the “Additional Indemnified Liabilities”); provided, however, that Borrower shall not have any obligation to Lender or the Indemnified Parties hereunder to the extent that such Liabilities arise from the gross negligence, illegal acts, fraud or willful misconduct of Lender or the Indemnified Parties. To the extent that the undertaking to indemnify, defend and hold harmless set forth in the preceding sentence may be unenforceable because it violates any law or public policy, Borrower shall pay the maximum portion that it is permitted to pay and satisfy under Applicable Law to the payment and satisfaction of all Additional Indemnified Liabilities incurred by Lender or the Indemnified Parties.

(c) Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless Lender and the Indemnified Parties from and against any and all losses (including, without limitation, reasonable attorneys’ fees and costs incurred in the investigation, defense, and settlement of losses incurred in correcting any prohibited transaction or in the sale of a prohibited loan, and in obtaining any individual prohibited transaction exemption under ERISA, the Code, any State statute or other similar law that may be required, in Lender’s sole discretion) that Lender or the Indemnified Parties may incur, directly or indirectly, as a result of a default under Sections 4.1.9 or 5.2.8 hereof.

Section 10.14 Schedules and Exhibits Incorporated.

The Schedules and Exhibits annexed hereto are hereby incorporated herein as a part of this Agreement with the same effect as if set forth in the body hereof.

Section 10.15 Offsets, Counterclaims and Defenses.

Any assignee of Lender’s interest in and to this Agreement, the Note and the other Loan Documents shall take the same free and clear of all offsets, counterclaims or defenses which are unrelated to such documents which Borrower may otherwise have against any assignor of such documents, and no such unrelated counterclaim or defense shall be interposed or asserted by Borrower in any action or proceeding brought by any such assignee upon such documents and any such right to interpose or assert any such unrelated offset, counterclaim or defense in any such action or proceeding is hereby expressly waived by Borrower.

Section 10.16 No Joint Venture or Partnership; No Third Party Beneficiaries.

(a) Borrower and Lender intend that the relationships created hereunder and under the other Loan Documents be solely that of borrower and lender. Nothing herein or therein is intended to create a joint venture, partnership, tenancy-in-common, or joint tenancy relationship between Borrower and Lender.

(b) This Agreement and the other Loan Documents are solely for the benefit of Lender and Borrower and nothing contained in this Agreement or the other Loan Documents

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shall be deemed to confer upon anyone other than Lender and Borrower any right to insist upon or to enforce the performance or observance of any of the obligations contained herein or therein. All conditions to the obligations of Lender to make the Loan hereunder are imposed solely and exclusively for the benefit of Lender and no other Person shall have standing to require satisfaction of such conditions in accordance with their terms or be entitled to assume that Lender will refuse to make the Loan in the absence of strict compliance with any or all thereof and no other Person shall under any circumstances be deemed to be a beneficiary of such conditions, any or all of which may be freely waived in whole or in part by Lender if, in Lender’s sole discretion, Lender deems it advisable or desirable to do so.

Section 10.17 Publicity.

All news releases, publicity or advertising by Borrower or their Affiliates through any media intended to reach the general public which refers to the Loan Documents or the financing evidenced by the Loan Documents, to Lender, or any of their Affiliates shall be subject to the prior written approval of Lender, which shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, disclosure required by any federal or State securities laws, rules or regulations, as determined by Borrower’s counsel, shall not be subject to the prior written approval of Lender.

Section 10.18 Waiver of Marshalling of Assets.

(a) To the fullest extent permitted by Applicable Law, Borrower, for itself and its successors and assigns, waives all rights to a marshalling of the assets of Borrower, Borrower’s partners and others with interests in Borrower, and of the Collateral, or to a sale in inverse order of alienation in the event of foreclosure of all or any of the Pledge Agreement, and agrees not to assert any right under any laws pertaining to the marshalling of assets, the sale in inverse order of alienation, homestead exemption, the administration of estates of decedents, or any other matters whatsoever to defeat, reduce or affect the right of Lender under the Loan Documents to a sale of the Collateral for the collection of the Debt without any prior or different resort for collection or of the right of Lender to the payment of the Debt out of the net proceeds of the Properties in preference to every other claimant whatsoever.

Section 10.19 Waiver of Counterclaim.

Borrower hereby waives the right to assert a counterclaim, other than a compulsory counterclaim, in any action or proceeding brought against it by Lender or its agents.

Section 10.20 Conflict; Construction of Documents; Reliance.

In the event of any conflict between the provisions of this Agreement and any of the other Loan Documents, the provisions of this Agreement shall control. The parties hereto acknowledge that they were represented by competent counsel in connection with the negotiation, drafting and execution of the Loan Documents and that such Loan Documents shall not be subject to the principle of construing their meaning against the party which drafted same. Borrower acknowledges that, with respect to the Loan, Borrower shall rely solely on its own judgment and advisors in entering into the Loan without relying in any manner on any statements, representations or recommendations of Lender or any parent, subsidiary or Affiliate

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of Lender. Lender shall not be subject to any limitation whatsoever in the exercise of any rights or remedies available to it under any of the Loan Documents or any other agreements or instruments which govern the Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of Lender of any equity interest any of them may acquire in Borrower, and Borrower hereby irrevocably waives the right to raise any defense or take any action on the basis of the foregoing with respect to Lender’s exercise of any such rights or remedies. Borrower acknowledges that Lender engages in the business of real estate financings and other real estate transactions and investments which may be viewed as adverse to or competitive with the business of Borrower or its Affiliates.

Section 10.21 Brokers and Financial Advisors.

Each of Borrower and Lender hereby represent that it has dealt with no financial advisors, brokers, underwriters, placement agents, agents or finders in connection with the transactions contemplated by this Agreement. Borrower hereby agrees to indemnify, defend and hold Lender harmless from and against any and all claims, liabilities, costs and expenses of any kind (including Lender’s attorneys’ fees and expenses) in any way relating to or arising from a claim by any Person that such Person acted on behalf of Borrower in connection with the transactions contemplated herein. The provisions of this Section 10.21 shall survive the expiration and termination of this Agreement and the payment of the Debt.

Section 10.22 Prior Agreements.

This Agreement and the other Loan Documents contain the entire agreement of the parties hereto and thereto in respect of the transactions contemplated hereby and thereby, and all prior agreements among or between such parties, whether oral or written, between Borrower and/or its Affiliates and Lender are superseded by the terms of this Agreement and the other Loan Documents.

[NO FURTHER TEXT ON THIS PAGE]

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IN WITNESS WHEREOF, the parties hereto have caused this agreement to be duly executed by their duly authorized representatives, all as of the day and year first above written.

BORROWER:
CHT SL IV HOLDING, LLC, a Delaware limited liability company
By:	/s/ Joshua J. Taube
	Name: Joshua J. Taube
	Title: Vice President
LENDER:
RCG LV DEBT IV NON-REIT ASSETS HOLDINGS, LLC, a Delaware limited liability
By:	RCG Longview Debt Fund IV, L.P., a Delaware limited partnership, its sole member
	By:	RCG Longview Debt Fund IV Partners, LLC, a Delaware limited liability company, its general partner
	By:	/s/ Dean C. Ravosa
		Dean C. Ravosa
		Chief Operating Officer

SCHEDULE I

Organizational Chart of Borrower

(See attached.)

SCHEDULE II

Mortgage Loan Documents

(CHT REIT PORTFOLIO

LIST OF LOAN DOCUMENTS)

Global Documents

1. Amended and Restated Loan Agreement

2. Amended and Restated Fraudulent Conveyance Indemnity Agreement

3. Loan Closing Statement and Loan Disbursement Approval

Sunrise of Connecticut Avenue – Loan No. 706108716 (District of Columbia)

4. Amended and Restated Promissory Note (Sunrise of Connecticut Avenue)

5. Amended and Restated Deed of Trust and Security Agreement (Sunrise of Connecticut Avenue – First)

6. Amended and Restated Deed of Trust and Security Agreement (Sunrise of Connecticut Avenue – Second)

7. Amended and Restated Assignment of Leases and Rents (Sunrise of Connecticut Avenue – First)

8. Amended and Restated Assignment of Leases and Rents (Sunrise of Connecticut Avenue – Second)

9. Closing Certification (Sunrise of Connecticut Avenue)

10. Amended and Restated Environmental and ERISA Indemnity Agreement (Sunrise of Connecticut Avenue)

11. Amended and Restated Recourse Liabilities Guaranty (Sunrise of Connecticut Avenue)

12. Amended and Restated Supplemental Guaranty (Sunrise of Connecticut Avenue)

13. Amended and Restated Reimbursement and Exoneration Agreement (Sunrise of Connecticut Avenue)

14. Amended and Restated Assignment of Permits and Developer’s Rights (Sunrise of Connecticut Avenue)

15. Amended and Restated Subordination of Management Agreement and Subordinated Management Fees (Sunrise of Connecticut Avenue)

16. UCC-1 Fixture Filing (District of Columbia)

17. UCC-1 Financing Statement (Virginia State Corporation Commission)

18. UCC-1 Financing Statement (Delaware Secretary of State)

Sunrise of Santa Monica – Loan No. 706108717 (California)

19. Assumption Agreement (Sunrise of Santa Monica)

20. Amended and Restated Promissory Note (Sunrise of Santa Monica)

21. Amended and Restated Deed of Trust, Security Agreement and Fixture Filing (Sunrise of Santa Monica – First)

22. Amended and Restated Deed of Trust, Security Agreement and Fixture Filing (Sunrise of Santa Monica – Second)

23. Amended and Restated Assignment of Leases and Rents (Sunrise of Santa Monica – First)

24. Amended and Restated Assignment of Leases and Rents (Sunrise of Santa Monica – Second)

25. Closing Certification (Sunrise of Santa Monica)

26. Amended and Restated Environmental Indemnity Agreement (Sunrise of Santa Monica)

27. Amended and Restated ERISA Indemnity Agreement (Sunrise of Santa Monica)

28. Amended and Restated Recourse Liabilities Guaranty (Sunrise of Santa Monica)

29. Amended and Restated Supplemental Guaranty (Sunrise of Santa Monica)

30. Amended and Restated Reimbursement and Exoneration Agreement (Sunrise of Santa Monica)

31. Amended and Restated Assignment of Permits and Developer’s Rights (Sunrise of Santa Monica)

32. Amended and Restated Subordination of Management Agreement and Subordinated Management Fees (Sunrise of Santa Monica)

33. UCC-1 Fixture Filing (Los Angeles County, California)

34. UCC-1 Financing Statement (Delaware Secretary of State)

Sunrise of Gilbert – Loan No. 706108866 (Arizona)

35. Promissory Note (Sunrise of Gilbert)

36. Deed of Trust and Security Agreement (Sunrise of Gilbert – First)

37. Deed of Trust and Security Agreement (Sunrise of Gilbert – Second)

38. Assignment of Leases and Rents (Sunrise of Gilbert – First)

39. Assignment of Leases and Rents (Sunrise of Gilbert – Second)

40. Closing Certification (Sunrise of Gilbert )

41. Environmental and ERISA Indemnity Agreement (Sunrise of Gilbert )

42. Recourse Liabilities Guaranty (Sunrise of Gilbert )

43. Supplemental Guaranty (Sunrise of Gilbert )

44. Reimbursement and Exoneration Agreement (Sunrise of Gilbert )

45. Assignment of Permits and Developer’s Rights (Sunrise of Gilbert )

46. Subordination of Management Agreement and Subordinated Management Fees (Sunrise of Gilbert )

47. UCC-1 Fixture Filing (Maricopa County, Arizona)

48. UCC-1 Financing Statement (Delaware Secretary of State)

Sunrise of Metairie – Loan No. 706108867 (Louisiana)

49. Promissory Note (Sunrise of Metairie)

50. Mortgage and Security Agreement (Sunrise of Metairie – First)

51. Mortgage and Security Agreement (Sunrise of Metairie – Second)

52. Assignment of Leases and Rents (Sunrise of Metairie – First)

53. Assignment of Leases and Rents (Sunrise of Metairie – Second)

54. Closing Certification (Sunrise of Metairie)

55. Environmental and ERISA Indemnity Agreement (Sunrise of Metairie)

56. Recourse Liabilities Guaranty (Sunrise of Metairie)

57. Supplemental Guaranty (Sunrise of Metairie)

58. Reimbursement and Exoneration Agreement (Sunrise of Metairie)

59. Assignment of Permits and Developer’s Rights (Sunrise of Metairie)

60. Subordination of Management Agreement and Subordinated Management Fees (Sunrise of Metairie)

61. UCC-1 Fixture Filing (Jefferson Parish, Louisiana)

62. UCC-1 Financing Statement (Delaware Secretary of State)

Sunrise at Seigen– Loan No. 706108868 (Louisiana)

63. Promissory Note (Sunrise at Seigen)

64. Mortgage and Security Agreement (Sunrise at Seigen – First)

65. Mortgage and Security Agreement (Sunrise at Seigen – Second)

66. Assignment of Leases and Rents (Sunrise at Seigen – First)

67. Assignment of Leases and Rents (Sunrise at Seigen – Second)

68. Closing Certification (Sunrise at Seigen)

69. Environmental and ERISA Indemnity Agreement (Sunrise at Seigen)

70. Recourse Liabilities Guaranty (Sunrise at Seigen)

71. Supplemental Guaranty (Sunrise at Seigen)

72. Reimbursement and Exoneration Agreement (Sunrise at Seigen)

73. Assignment of Permits and Developer’s Rights (Sunrise at Seigen)

74. Subordination of Management Agreement and Subordinated Management Fees (Sunrise at Seigen)

75. UCC-1 Fixture Filing (East Baton Rouge Parish, Louisiana)

76. UCC-1 Financing Statement (Delaware Secretary of State)

Sunrise at Fountain Square – Loan No. 706108869 (Illinois)

77. Promissory Note (Sunrise at Fountain Square)

78. Mortgage and Security Agreement (Sunrise at Fountain Square – First)

79. Mortgage and Security Agreement (Sunrise at Fountain Square – Second)

80. Assignment of Leases and Rents (Sunrise at Fountain Square – First)

81. Assignment of Leases and Rents (Sunrise at Fountain Square – Second)

82. Closing Certification (Sunrise at Fountain Square)

83. Environmental and ERISA Indemnity Agreement (Sunrise at Fountain Square)

84. Recourse Liabilities Guaranty (Sunrise at Fountain Square)

85. Supplemental Guaranty (Sunrise at Fountain Square)

86. Reimbursement and Exoneration Agreement (Sunrise at Fountain Square)

87. Assignment of Permits and Developer’s Rights (Sunrise at Fountain Square)

88. Subordination of Management Agreement and Subordinated Management Fees (Sunrise at Fountain Square)

89. UCC-1 Fixture Filing (DuPage County, Illinois)

90. UCC-1 Financing Statement (Delaware Secretary of State)

Sunrise of Louisville – Loan No. 706108870 (Kentucky)

91. Promissory Note (Sunrise of Louisville)

92. Mortgage and Security Agreement (Sunrise of Louisville – First)

93. Mortgage and Security Agreement (Sunrise of Louisville – Second)

94. Assignment of Leases and Rents (Sunrise of Louisville – First)

95. Assignment of Leases and Rents (Sunrise of Louisville – Second)

96. Closing Certification (Sunrise of Louisville)

97. Environmental and ERISA Indemnity Agreement (Sunrise of Louisville)

98. Recourse Liabilities Guaranty (Sunrise of Louisville)

99. Supplemental Guaranty (Sunrise of Louisville)

100. Reimbursement and Exoneration Agreement (Sunrise of Louisville)

101. Assignment of Permits and Developer’s Rights (Sunrise of Louisville)

102. Subordination of Management Agreement and Subordinated Management Fees (Sunrise of Louisville)

103. UCC-1 Fixture Filing (Jefferson County, Kentucky)

104. UCC-1 Financing Statement (Delaware Secretary of State)

105. UCC-1 Financing Statement (Kentucky Secretary of State)

SCHEDULE III

Properties

Name of Property	Street Address	City	ST	Zip
Sunrise of Metairie	3732 West Esplanade Ave S	Metairie	LA	70002
Sunrise at Siegen	9351 Siegen Lane	Baton Rouge	LA	70810
Sunrise of Gilbert	580 South Gilbert Road	Gilbert	AZ	85296
Sunrise of Louisville	6700 Overlook Drive	Louisville	KY	40241
Sunrise at Fountain Square	2210 Fountain Square Drive	Lombard	IL	60148
Sunrise of Santa Monica	1312 15th Street	Santa Monica	CA	90404
Sunrise of Connecticut Avenue	5111 Connecticut Avenue, NW	Washington	DC	20008

SCHEDULE IV

Additional Leases

(See attached.)

SCHEDULE V

(Form of Quarterly Financial Statement)

Financials for Guarantor will be those from the 10-Q disclosures filed with the Securities and Exchange Commission

SCHEDULE VI

(Form of Annual Financial Statement)

Financials for Guarantor will be those from the 10-K disclosures filed with the Securities and Exchange Commission

(See Attached)

EXHIBIT A

FORM OF VCOC LETTER

[BORROWER LETTER HEAD]

                         , 20    

[Participant]

Re: [Loan Information]

Ladies and Gentlemen:

The undersigned understands that, pursuant to that certain Participation and Servicing Agreement, dated as of [            ] [        ], 201     (the “Participation Agreement”), you are purchasing from [                        ] (“Lender”), a participation interest in that certain mezzanine loan (the “Loan”) originated by Lender to [                    ] (“Borrower”), the indirect owner of certain real property located at                                          and more particularly described in the Participation Agreement. The Loan is evidenced by a certain promissory note, dated as of [            ], 201    , made by Borrower, as maker, in favor of Lender, as payee, and is secured by, inter alia, that certain Pledge Agreement, dated as of [            ], 201    , between Borrower and Lender (the “Pledge Agreement”). Capitalized terms not otherwise defined in this letter shall have the meanings set forth in the Pledge Agreement.

You have asked us to provide this letter to you in connection with the provision of management rights for purposes of the Department of Labor “plan assets” regulation, 29 C.F.R. Section 2510.3-101.

This letter will confirm the agreement among Borrower, Lender and you (the “Junior Participant”) pursuant to which the Junior Participant will be entitled to certain rights in connection with the Loan. The undersigned acknowledges that whenever reference is made herein to the “Junior Participant,” such term shall be deemed to include any other holder of a participation or sub-participation interest entitled to exercise the rights of the Junior Participant under the Participation Agreement.

Upon written request of Lender and/or Junior Participant and upon reasonable advance notice, Junior Participant and/or Lender shall have the right to consult with management of Borrower once each quarter on significant business issues (collectively, the “Property and Management Information”), and Borrower will make itself available once each quarter either personally at the office of Borrower or Borrower’s property manager (as selected by Borrower) or by telephone, in each case at mutually agreeable times for such consultation with Lender. Such consultation need not result in any change in Borrower’s course of action, and Borrower may take any course of action Borrower determines in Borrower’s sole discretion, subject to the limitations of the Loan Documents.

Lender and Junior Participant hereby acknowledge and agree that Borrower will not be required to have separate quarterly consultations with Lender, Junior Participant or any other

Person(s) holding a participation interest in the Loan, but will only be required to make itself available once each quarter for a consultation with Lender, Junior Participant and such other Person(s) holding a participation interest in the Loan at the same time and at the location specified above.

Junior Participant agrees that all Property and Management Information relating to Borrower which is provided to Junior Participant shall be kept confidential by Junior Participant and shall not, without the prior consent of Borrower, be disclosed by Junior Participant except as provided herein. Notwithstanding the foregoing, Property and Management Information may be disseminated (a) pursuant to the requirements of applicable law, (b) pursuant to judicial process, administrative agency process or order of Governmental Authority, (c) to Junior Participant’s consultants, attorneys, accountants, advisors, auditors, regulators and actual or prospective financing sources, (d) to the Rating Agencies, (e) to actual or prospective trustees, assignees, pledgees, Junior Participants, agents, servicers and securities holders in a Securitization, (f) investors in Junior Participant and (g) pursuant to the requirements or rules of a stock exchange or stock trading system on which the securities of Junior Participant or its affiliates may be listed or traded.

The rights granted to Junior Participant hereunder are not in substitution for, and shall not be deemed to be in limitation of, any rights otherwise available to Lender and/or Junior Participant under the Loan Documents.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, this letter has been duly executed as of the date written above.

BORROWER:
, a
By:	, a                             , its
	By:
		Name:
		Title:

EX-10.10

Exhibit 10.10

PROMISSORY NOTE

(Mezzanine Loan)

$40,000,000.00	New York, New York
	June 29, 2012

FOR VALUE RECEIVED, CHT SL IV HOLDING, LLC, a Delaware limited liability company, having its principal place of business at c/o CHT Partners, LP, CNL Center at City Commons, 450 South Orange Avenue, Orlando, Florida 32801, as maker (“Borrower”), hereby unconditionally promises to pay to the order of RCG LV DEBT IV NON-REIT ASSETS HOLDINGS, LLC, a Delaware limited liability company, having an address at 7 Penn Plaza, Suite 512, New York, New York 10001, as payee (“Lender”), or at such other place as the holder hereof may from time to time designate in writing, the principal sum of FORTY MILLION AND 00/100 DOLLARS ($40,000,000.00), in lawful money of the United States of America with interest thereon to be computed from the date of this Note at the Note Rate, and to be paid in accordance with the terms of this Note and that certain Mezzanine Loan Agreement, dated the date hereof, between Borrower and Lender (the “Loan Agreement”). All capitalized terms not defined herein shall have the respective meanings set forth in the Loan Agreement.

ARTICLE 1—PAYMENT TERMS

Borrower agrees to pay the principal sum of this Note and interest on the unpaid principal sum of this Note from time to time outstanding at the rates and at the times specified in Article 2 of the Loan Agreement and the outstanding balance of the principal sum of this Note and all accrued and unpaid interest thereon shall be due and payable on the Maturity Date.

ARTICLE 2—DEFAULT AND ACCELERATION

The Debt shall without notice become immediately due and payable at the option of Lender if any payment required in this Note is not paid following the expiration of any applicable grace or cure period (if any) or if not paid on the Maturity Date or on the happening of any other Event of Default and in addition, Lender shall be entitled to receive interest on the entire unpaid principal sum at the Default Rate pursuant to the terms of the Loan Agreement. This Article 2, however, shall not be construed as an agreement or privilege to extend the date of the payment of the Debt, nor as a waiver of any other right or remedy accruing to Lender by reason of the occurrence of any Event of Default.

ARTICLE 3—LOAN DOCUMENTS

This Note is secured by the Pledge Agreement (as defined in the Loan Agreement) and the other Loan Documents. All of the terms, covenants and conditions contained in the Loan Agreement, the Pledge Agreement and the other Loan Documents are hereby made part of this Note to the same extent and with the same force as if they were fully set forth herein. In the event of a conflict or inconsistency between the terms of this Note and the Loan Agreement, the terms and provisions of the Loan Agreement shall govern.

ARTICLE 4—SAVINGS CLAUSE

This Note and the Loan Agreement are subject to the express condition that at no time shall Borrower be obligated or required to pay interest on the principal balance of the Loan at a rate which could subject Lender to either civil or criminal liability as a result of being in excess of the Maximum Legal Rate. If, by the terms of this Note, the Loan Agreement or the other Loan Documents, Borrower is at any time required or obligated to pay interest on the principal balance due hereunder at a rate in excess of the Maximum Legal Rate, the Note Rate or the Default Rate, as the case may be, shall be deemed to be immediately reduced to the Maximum Legal Rate and all previous payments in excess of the Maximum Legal Rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the sums due under the Loan, shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Loan until payment in full so that the rate or amount of interest on account of the Loan does not exceed the Maximum Legal Rate of interest from time to time in effect and applicable to the Loan for so long as the Loan is outstanding.

ARTICLE 5—NO ORAL CHANGE

This Note may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

ARTICLE 6—WAIVERS

Borrower and all others who may become liable for the payment of all or any part of the Debt do hereby severally waive presentment and demand for payment, notice of dishonor, notice of intention to accelerate, notice of acceleration, protest and notice of protest and non-payment and all other notices of any kind. No release of any security for the Debt or extension of time for payment of this Note or any installment hereof, and no alteration, amendment or waiver of any provision of this Note, the Loan Agreement or the other Loan Documents made by agreement between Lender or any other Person shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Borrower, and any other Person who may become liable for the payment of all or any part of the Debt, under this Note, the Loan Agreement or the other Loan Documents. No notice to or demand on Borrower shall be deemed to be a waiver of the obligation of Borrower or of the right of Lender to take further action without further notice or demand as provided for in this Note, the Loan Agreement or the other Loan Documents. If Borrower is a partnership, the agreements herein contained shall remain in force and be applicable, notwithstanding any changes in the individuals or entities comprising the partnership, and the term “Borrower,” as used herein, shall include any alternate or successor partnership, but any predecessor partnership and their partners shall not thereby be released from any liability. If Borrower is a corporation, the agreements contained herein shall remain in full force and be applicable notwithstanding any changes in the shareholders comprising, or the officers and directors relating to, the corporation, and the term “Borrower” as used herein, shall include any alternate or successor corporation, but any predecessor corporation shall not be relieved of

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liability hereunder. If Borrower is a limited liability company, the agreements herein contained shall remain in force and be applicable, notwithstanding any changes in the members comprising the limited liability company, and the term “Borrower” as used herein, shall include any alternate or successor limited liability company, but any predecessor limited liability company and their members shall not thereby be released from any liability. (Nothing in the foregoing sentence shall be construed as a consent to, or a waiver of, any prohibition or restriction on transfers of interests in such partnership, corporation or limited liability company which may be set forth in the Loan Agreement, the Pledge Agreement or any other Loan Document.) If Borrower consists of more than one person or party, the obligations and liabilities of each such person or party shall be joint and several.

ARTICLE 7—TRANSFER

Upon the transfer of this Note, Borrower hereby waiving notice of any such transfer, Lender may deliver all the collateral mortgaged, granted, pledged or assigned pursuant to the Loan Documents, or any part thereof, to the transferee who shall thereupon become vested with all the rights herein or under applicable law given to Lender with respect thereto, and Lender shall thereafter forever be relieved and fully discharged from any liability or responsibility in the matter; but Lender shall retain all rights hereby given to it with respect to any liabilities and the collateral not so transferred.

ARTICLE 8—EXCULPATION

Notwithstanding anything to the contrary contained in this Note, the liability of Borrower to pay the Debt and for the performance of the other agreements, covenants and obligations contained herein and in the Pledge Agreement, the Loan Agreement and the other Loan Documents shall be limited as set forth in Section 9.4 of the Loan Agreement.

ARTICLE 9—GOVERNING LAW

This Note shall be governed in accordance with the terms and provisions of Section 10.3 of the Loan Agreement.

ARTICLE 10—NOTICES

All notices or other written communications hereunder shall be delivered in accordance with Section 10.6 of the Loan Agreement.

ARTICLE 11—PREPAYMENT

This Note may be prepaid in whole or in part in accordance with the terms and provisions of Section 2.3 of the Loan Agreement.

[NO FURTHER TEXT ON THIS PAGE]

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IN WITNESS WHEREOF, Borrower has duly executed this Note as of the day and year first above written.

CHT SL IV HOLDING, LLC, a Delaware limited liability company
By:	/s/ Joshua J. Taube
	Name: Joshua J. Taube
	Title: Vice President

EX-10.11

Exhibit 10.11

PLEDGE AND SECURITY AGREEMENT

PLEDGE AND SECURITY AGREEMENT (this “Agreement”), dated as of 29th day of June, 2012 by CHT SL IV HOLDING, LLC, a Delaware limited liability company, having its principal place of business at c/o CHT Partners, LP, CNL Center at City Commons, 450 South Orange Avenue, Orlando, Florida 32801 (“Borrower”) in favor of RCG LV DEBT IV NON-REIT ASSETS HOLDINGS, LLC, a Delaware limited liability company, having an address at 7 Penn Plaza, Suite 512, New York, New York 10001 as Lender (“Lender”).

RECITALS

WHEREAS, Mortgage Lender (as defined in the Loan Agreement) has made one or more loans in the aggregate principal amount of $125,000,000.00 to Mortgage Borrower (as defined in the Loan Agreement) evidenced and secured by the Mortgage Loan Documents (as defined in the Loan Agreement);

WHEREAS, Borrower owns 55.0212% of the membership interests in JV (defined below);

WHEREAS, Borrower has requested Lender to make a loan to it in the principal amount of $40,000,000.00 (the “Loan”) evidenced by the Note (as defined in the Loan Agreement (defined below));

WHEREAS, it is a condition precedent to the obligation of Lender to make the Loan to Borrower, as borrower under the Loan Agreement, that Borrower shall have executed and delivered this Agreement to Lender;

NOW, THEREFORE, in consideration of the premises and to induce Lender to make the Loan and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower hereby agrees with Lender as follows:

1. Defined Terms. As used in this Agreement, the following terms have the meanings set forth in or incorporated by reference below. All other capitalized terms not otherwise defined herein shall have the respective meanings given to such terms in the hereinafter referred to Loan Agreement or, if not defined therein, in the hereinafter referred to Code:

“Agreement” means this Pledge and Security Agreement, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Article 8 Matter” means any action, decision, determination or election by Issuer or its member(s) that its membership interests or other equity interests, or any of them, be, or cease to be, a “security” as defined in and governed by Article 8 of the Uniform Commercial Code, and all other matters related to any such action, decision, determination or election.

“Borrower” shall have the meaning set forth in the Preamble hereto.

“Code” means the Uniform Commercial Code from time to time in effect in the State of New York or the State of Delaware, as applicable.

“Collateral” shall have the meaning set forth in Section 2 hereof.

“Debt” shall have the meaning set forth in the Loan Agreement.

“Delivered Certificates” shall have the meaning set forth in Section 3.

“Event of Default” shall have the meaning set forth in the Loan Agreement.

“Issuer” shall have the meaning set forth in the definition of “Pledged Interests”.

“Issuer Formation Agreement” means the Organizational Documents of Issuer.

“JV” shall man CHTSun Partners IV, LLC, a Delaware limited liability company

“Lender” shall have the meaning set forth in the Preamble hereto, together with its successors and assigns.

“Lien” shall have the meaning set forth in the Loan Agreement.

“Loan” shall have the meaning set forth in the Recitals.

“Loan Agreement” means the Mezzanine Loan Agreement of even date herewith between Borrower and Lender.

“Loan Documents” means the Note, the Loan Agreement, this Agreement, the UCC-1 Financing Statements and the other documents and instruments entered into in connection with the Loan.

“Mortgage Borrower” has the meaning ascribed to such term in the Recitals.

“Mortgage Lender” shall have the meaning set forth in the Recitals hereto.

“Mortgage Loan Documents” has the meaning ascribed to such term in the Recitals.

“Organizational Documents” shall have the meaning set forth in the Loan Agreement.

“Pledged Interests” means all limited liability company membership interests, partnership interests, capital stock or other equity interests of, and all other right, title and interest now owned or hereafter acquired by Borrower in and to, each entity described on Schedule I attached hereto (each such entity, individually or collectively, as the context may require, hereinafter referred to as an “Issuer”), together with (a) all additional membership interests, partnership interests, capital stock or other equity interests in each Issuer owned by Borrower and options, warrants, and other rights now or hereafter acquired by Borrower in respect of such membership interests, partnership interests, capital stock or other equity interests (whether in connection with any capital increase, recapitalization, reclassification, or reorganization of each Issuer or otherwise) and all other property, rights or instruments of any description at any time issued or

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issuable as an addition to or in substitution for such membership interests, partnership interests, capital stock or other equity interests owned by Borrower; (b) all certificates, instruments, or other writings representing or evidencing interests in each Issuer owned by Borrower, and all accounts and general intangibles arising out of, or in connection with, the interests in any Issuer owned by Borrower; (c) any and all moneys or property due and to become due to Borrower now or in the future in respect of the interests in each Issuer, or to which Borrower may now or in the future be entitled in its capacity as a member, partner, shareholder or other equity holder of the Issuer, whether by way of a dividend, distribution, return of capital or otherwise; (d) all other claims which Borrower now has or may in the future acquire in its capacity as a member, partner, shareholder or other equity holder of any Issuer against any Issuer and its property; and (e) all rights of Borrower under each Issuer Formation Agreement applicable to each Issuer (and all other agreements, if any, to which Borrower is a party from time to time which relate to its ownership of the interests in each Issuer), including, without limitation, all voting and consent rights of Borrower arising thereunder or otherwise in connection with Borrower’s ownership of the interests in each Issuer.

“Proceeds” shall mean (i) Borrower’s share, right, title and interest in and to all distributions, monies, fees, payments, compensations and proceeds now or hereafter becoming due and payable to Borrower by each applicable Issuer with respect to the Pledged Interests whether payable as profits, distributions, asset distributions, repayment of loans or capital or otherwise and including all “proceeds” as such term is defined in Section 9-102(a)(64) of the Code; (ii) all contract rights, general intangibles, claims, powers, privileges, benefits and remedies of Borrower relating to the foregoing; and (iii) all cash or non-cash proceeds of any of the foregoing.

“UCC Financing Statements” shall mean the UCC financing statement delivered in connection with the Pledge Agreement and the other Loan Documents and filed in the applicable filing offices.

Terms used herein but not otherwise defined herein shall have the respective meanings ascribed to them in the Loan Agreement.

2. Pledge; Grant of Security Interest. Borrower hereby pledges and grants to Lender, as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Debt, a first priority security interest in all of Borrower’s right, title and interest to the following (the “Collateral”):

(i) all Pledged Interests;

(ii) all right, title and interest of Borrower in, to and under any policy of insurance payable by reason of loss or damage to the Pledged Interests and any other Collateral;

(iii) all “accounts”, “general intangibles”, “instruments” and “investment property” (in each case as defined in the Code) constituting or relating to the foregoing; and

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(iv) any Net Liquidation Proceeds After Debt Service (as defined in the Loan Agreement); and

(v) to the extent not otherwise part of the Pledged Interests, all Proceeds, income and profits thereof and all property received in exchange or substitution thereof, of any of the foregoing property of Borrower.

Each Issuer has evidenced its acknowledgement and consent to the pledge and grant given hereby, by execution and delivery of an Acknowledgement and Consent in the form attached hereto as Exhibit A.

3. Representations and Warranties. Borrower represents and warrants as of the date hereof that:

(a) no authorization, consent of or notice to any other Person (including, without limitation, any member, partner, shareholder or creditor of Borrower or Issuer) that has not been obtained, is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement including, without limitation, the assignment and transfer by Borrower of any of the Collateral to Lender or the subsequent transfer thereof by Lender pursuant to the terms hereof;

(b) the Pledged Interests constitute fifty-five percent (55%) of the issued and outstanding equity interests in JV;

(c) Borrower is the sole record and beneficial owner of, and has good and marketable title to, the Pledged Interests free of any and all Liens or options in favor of, or claims of, any other Person, except the Lien created by this Agreement and the Pledged Interests have not previously been assigned, sold, transferred, pledged or encumbered (except pursuant to this Agreement);

(d) the exact legal name of Borrower is set forth on Schedule I attached hereto;

(e) other than those certificates delivered to Lender pursuant to this Agreement, copies of which are attached hereto as Schedule III (the “Delivered Certificates”), there currently exist no certificates, instruments or writings representing the Pledged Interests (other than with respect to any pledge of capital stock hereunder) except for the Issuer Formation Agreements. However, to the extent that in the future there exist any such certificates, instruments or writings, Borrower shall deliver all such certificates, instruments or writings to Lender;

(f) the equity interests in each Issuer have been validly issued and fully paid for as provided in the applicable Issuer Formation Agreements;

(g) there are no options, warrants or other agreements (other than the applicable Issuer Formation Agreement) with respect to the Collateral outstanding;

(h) with respect to any Issuer that is a corporation, simultaneously with the delivery of this Pledge Agreement, Borrower is delivering to Lender all instruments and stock certificates representing the Collateral, together with stock powers duly executed in blank by Borrower;

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(i) Schedule II states Borrower’s (1) exact legal name as indicated on the public record in Borrower’s jurisdiction of organization, (2) type of entity, (3) organizational identification number, (4) principal place of business and chief executive office, (5) jurisdiction of incorporation or formation, (6) name under which Borrower does business, if other than its legal name, and (7) address for the past six years, or if less, the date since which it has been so located;

(j) all Collateral which constitutes a “security” (under the applicable version of the Code) has been delivered to Lender; and

(k) upon the filing of the UCC-1 financing statement referred to herein with the Delaware Secretary of State and the delivery of the Delivered Certificates to Lender, the Lien granted pursuant to this Agreement will constitute a valid, perfected Lien on the Collateral and related Proceeds in such jurisdiction, enforceable against all creditors of Borrower and any Persons purporting to purchase any Collateral and related Proceeds from Borrower.

4. Covenants. Borrower covenants and agrees with Lender that, from and after the date of this Agreement until the Debt (exclusive of any indemnification or other obligations which are expressly stated in any of the Loan Documents to survive satisfaction of the Note) is paid in full:

(a) Acknowledgements of Parties. If Borrower shall, as a result of its ownership of the Pledged Interests, become entitled to receive or shall receive an ownership or equity certificate (including, without limitation, any certificate representing a distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection with any reorganization), option or rights, whether in addition to, in substitution of, as a conversion of, or in exchange for any of the Pledged Interests, or otherwise in respect thereof, Borrower shall accept the same as Lender’s agent, hold the same in trust for Lender and deliver the same forthwith to Lender in the exact form received, duly endorsed by Borrower to Lender, if required, together with an undated ownership interest power covering such certificate duly executed in blank and with, if Lender so requests, signature guaranteed, to be held by Lender hereunder as additional security for the Debt. Any sums paid upon or in respect of the Pledged Interests upon the liquidation or dissolution of any Issuer shall be paid over to Lender to be held by it hereunder as additional security for the Debt, and in case any distribution of capital shall be made on or in respect of the Pledged Interests or any property shall be distributed upon or with respect to the Pledged Interests pursuant to the recapitalization or reclassification of the capital of any Issuer or pursuant to the reorganization thereof, the property so distributed shall be delivered to Lender to be held by it, subject to the terms hereof, as additional security for the Debt. If any sums of money or property so paid or distributed in respect of the Pledged Interests shall be received by Borrower, Borrower shall, until such money or property is paid or delivered to Lender, hold such money or property in trust for Lender, segregated from other funds of Borrower, as additional security for the Debt.

(b) Without the prior written consent of Lender, Borrower shall not, directly or indirectly (i) vote to enable, or take any other action to permit, any Issuer to issue any equity interests or to issue any other securities convertible into or granting the right to purchase or exchange for any equity interests in such Issuer, or (ii) except as permitted by the Loan

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Agreement, sell, assign, transfer, exchange or otherwise dispose of, or grant any option with respect to, the Collateral, or (iii) create, incur, authorize or permit to exist any Lien or option in favor of, or any claim of any Person with respect to, any of the Collateral, or any interest therein, except for the Lien provided for by this Agreement and any option expressly granted under the Issuer Formation Agreement with respect to the Pledged Interests. Borrower shall defend the right, title and interest of Lender in and to the Collateral against the claims and demands of all Persons whomsoever.

(c) At any time and from time to time, upon the written request of Lender, and at the sole expense of Borrower, Borrower shall promptly and duly give, execute, deliver file and/or record such further instruments and documents and take such further actions as Lender may reasonably request for the purposes of obtaining, creating, perfecting, validating or preserving the full benefits of this Agreement and of the rights and powers herein granted including without limitation filing UCC financing or continuation statements, provided that the amount of the Debt shall not be increased thereby. Borrower hereby authorizes Lender to file any such financing statement or continuation statement without the signature of Borrower to the extent permitted by law. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any promissory note, other instrument or chattel paper, such note, instrument or chattel paper shall be promptly delivered to Lender, duly endorsed in a manner satisfactory to Lender, to be held as Collateral pursuant to this Agreement.

(d) Borrower shall not amend or modify the applicable Issuer Formation Agreement in any respect other than in accordance with the Loan Agreement.

(e) Borrower will furnish to Lender from time to time statements and schedules further identifying and describing the Pledged Interests and such other reports in connection with the Pledged Interests as Lender may reasonably request, all in reasonable detail.

(f) Borrower will not (A) change the location of its chief executive office or principal place of business from that specified in Schedule II, (B) change its name, identity or structure, or (C) reorganize under the laws of another jurisdiction, unless, in each case, (i) it shall have given thirty (30) days’ prior written notice to such effect to Lender, (ii) all action reasonably necessary or advisable, in Lender’s opinion, to protect and perfect the Liens and security interests intended to be created hereunder with respect to the Pledged Interests shall have been taken and (iii) it shall have provided Lender with an updated “Eagle 9” UCC Policy or other comparable UCC insurance policy acceptable to Lender.

(g) Borrower shall pay, and save Lender harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes (which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement.

(h) With respect to any Pledged Interests that are not capital stock in a corporation, Borrower shall not permit the applicable Issuer to opt out of Article 8 of the Code without Lender’s prior written consent.

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(i) Borrower shall not enter into any agreement whereby it transfers or cedes its voting rights in any Issuer or otherwise restricts its voting rights in any way.

(j) Borrower shall promptly deliver to Lender, or cause the Issuer or any other entity issuing the Collateral to deliver directly to Lender, share certificates or other instruments representing any Collateral acquired or received after the date of this Pledge Agreement with a stock or bond power duly executed by Borrower in the form reasonably acceptable to Lender. If at any time Lender notifies Borrower that it requires additional stock or bond powers endorsed in blank, Borrower shall promptly execute in blank and deliver the requested stock power to the requesting party.

(k) Borrower shall notify Lender of any contemplated change to the information provided on Schedule II hereof, at least thirty (30) days prior to such change taking effect.

5. Certain Understandings of Parties; Registration of Pledge; Control of Pledged Collateral, Etc.

(a) The parties acknowledge and agree that each of the Pledged Interests is a “security” (as defined in Section 8-102(a) and Section 8-103 of the Code). The parties further acknowledge and agree that the Pledged Interests are not and will not be investment company securities within the meaning of Section 8-103 of the Code.

(b) Registration of Pledge; Control of Collateral. Notwithstanding the foregoing, to better assure the perfection of the security interest of Lender in the Pledged Interests concurrently with the execution and delivery of this Agreement, Borrower shall send written instructions in the form of Exhibit B hereto to the applicable Issuer, and shall cause such Issuer to, and each such Issuer shall, deliver to Lender the Confirmation Statement and Instruction Agreement in the form of Exhibit C hereto pursuant to which such Issuer will confirm that it has registered the pledge effected by this Agreement on its books and agrees to comply with the instructions of Lender in respect of the Pledged Interests without further consent of Borrower or any other Person. Notwithstanding anything in this paragraph, neither the written instructions nor the Confirmation Statement and Instruction Agreement shall be construed as expanding the rights of Lender to give instructions with respect to the Collateral beyond such rights set forth in this Agreement.

(c) In the event that Lender assigns its interest in the Loan in accordance with the Loan Agreement, Borrower will promptly execute and deliver or cause each Issuer to execute and deliver, as applicable, revised versions of the documents attached as Exhibits A through and including C hereto in favor of the assignee thereof.

(d) Irrevocable Proxy. Solely with respect to Article 8 Matters, Borrower hereby irrevocably grants and appoints Lender, from the date of this Agreement until the termination of this Agreement in accordance with its terms, as Borrower’s true and lawful proxy, for and in Borrower’s name, place and stead to vote the Pledged Interests in Issuer by, whether directly or indirectly, beneficially or of record, now owned or hereafter acquired, with respect to such Article 8 Matters. The proxy granted and appointed in this Section 5(d) shall include the right to sign Borrower’s name (as a member of Issuer) to any consent, certificate or other document

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relating to an Article 8 Matter and the Pledged Interests that applicable law may permit or require, to cause the Pledged Interests to be voted in accordance with the preceding sentence. Borrower hereby represents and warrants that there are no other proxies and powers of attorney with respect to an Article 8 Matter and the Pledged Interests that Borrower may have granted or appointed. Borrower will not give a subsequent proxy or power of attorney or enter into any other voting agreement with respect to the Pledged Interests with respect to any Article 8 Matter and any attempt to do so with respect to an Article 8 Matter shall be void and of no effect.

The proxies and powers granted by Borrower pursuant to this Agreement are coupled with an interest, are irrevocable and are given to secure the performance of Borrower’s obligations.

6. Cash Dividends; Voting Rights. Unless an Event of Default shall have occurred and is continuing, Borrower shall be permitted to receive all profits, losses, income, surplus, return on capital and equity interest distributions paid in the normal course of business of the applicable Issuer and to exercise all voting, consent, administration, management and other powers, rights and remedies of Borrower with respect to the Pledged Interests, provided that no vote shall be cast or right exercised or other action taken which, in Lender’s reasonable judgment, would impair the Collateral or which would be inconsistent with or result in any violation of any provision of the Loan Agreement, the Note, this Agreement or any other Loan Documents.

7. Rights of Lender.

(a) If an Event of Default shall occur and be continuing, Lender shall have the right to receive any and all income, distributions, proceeds or other property received or paid in respect of the Pledged Interests or other Collateral and make application thereof to the Debt, in such order as Lender, in its sole discretion, may elect, in accordance with the Loan Documents. If an Event of Default shall occur and be continuing, then all such Pledged Interests at Lender’s option, shall be registered in the name of Lender or its nominee (if not already so registered), and Lender or its nominee may thereafter exercise (i) all voting and all equity and other rights pertaining to the Pledged Interests and (ii) any and all rights of conversion, exchange, and subscription and any other rights, privileges or options pertaining to such Pledged Interests as if it were the absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of the Pledged Interests upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the organizational structure of any Issuer or upon the exercise by Borrower or Lender of any right, privilege or option pertaining to such Pledged Interests, and in connection therewith, the right to deposit and deliver any and all of the Pledged Interests with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as it may determine), all without liability except to account for property actually received by it, but Lender shall have no duty to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing.

(b) The rights of Lender under this Agreement shall not be conditioned or contingent upon the pursuit by Lender of any right or remedy against Borrower or against any other Person which may be or become liable in respect of all or any part of the Debt or against any other security therefor, guarantee thereof or right of offset with respect thereto. Lender shall not be

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liable for any failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so, nor shall it be under any obligation to sell or otherwise dispose of any Collateral upon the request of Borrower or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof.

(c) Upon satisfaction in full of the Debt and payment of all amounts owed on the Note, Lender’s rights under this Agreement shall terminate and Lender shall execute and deliver to Borrower UCC-3 termination statements or similar documents and agreements to terminate all of Lender’s rights under this Agreement and all other Loan Documents (other than those rights expressly stated in the Loan Documents to survive termination) and to return any shares of capital stock (or other certificates evidencing the Pledged Interests) pledged pursuant to the terms hereof and in the possession of Lender.

(d) Borrower also authorizes Lender, at any time and from time to time, to execute, in connection with the sale provided for herein, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral.

(e) The powers conferred on Lender hereunder are solely to protect Lender’s interest in the Collateral and shall not impose any duty upon Lender to exercise any such powers. Lender shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or Lender shall be responsible to Borrower for any act or failure to act hereunder, except for its or their gross negligence or willful misconduct.

(f) If Borrower fails to perform or comply with any of its agreements contained herein and Lender, as provided for by the terms of this Agreement, shall itself perform or comply, or otherwise cause performance or compliance, with such agreements, the reasonable expenses of Lender incurred in connection with such performance or compliance, together with interest at the Default Rate if such expenses are not paid on demand, shall be payable by Borrower to Lender on demand and shall constitute obligations secured hereby.

8. Remedies. If an Event of Default shall occur and is continuing, Lender may exercise, in addition to all other rights and remedies granted in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Debt:

(a) all rights and remedies of a secured party under the Code in effect in each applicable jurisdiction and such additional rights and remedies to which a secured party is entitled at law or in equity, including, without limitation, the right, to the maximum extent permitted by law, to exercise all voting, consensual and other powers of ownership pertaining to the Collateral as if Lender were the sole and absolute owner thereof (and Borrower agrees to take all such action as may be reasonably appropriate to give effect to such right);

(b) Lender may make any reasonable compromise or settlement deemed desirable with respect to any of the Collateral and may extend the time of payment, arrange for payment in installments, or otherwise modify the terms of, any of the Collateral;

(c) Lender in its discretion may, in its name or in the name of Borrower or otherwise, demand, sue for, collect, direct payment of or receive any money or property at any time payable or receivable on account of or in exchange for any of the Collateral, but shall be under no obligation to do so.

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Without limiting the generality of the foregoing, Lender, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below or otherwise required hereby) to or upon Borrower, any Issuer or any other Person (all and each of which demands, presentments, protests, advertisements and notices, or other defenses, are hereby waived to the extent permitted under applicable law), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, assign, give option or options to purchase or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, in the over-the-counter market, at any exchange, broker’s board or office of Lender or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best in its sole discretion, for cash or on credit or for future delivery without assumption of any credit risk. Lender shall have the right, without notice or publication, to adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for such sale, and any such sale may be made at any time or place to which the same may be adjourned without further notice. Lender shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption of Borrower, which right or equity of redemption is hereby waived or released. Lender shall apply any Proceeds from time to time held by it and the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable costs and expenses of every kind incurred therein or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of Lender hereunder, including, without limitation, reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the Debt, in such order as specified in Section 9-615 of the Code, and only after such application and after the payment by Lender of any other amount required by any provision of law, including, without limitation, Sections 9-610 and 9-615 of the Code, need Lender account for the surplus, if any, to Borrower. To the extent permitted by applicable law, Borrower waives all claims, damages and demands it may acquire against Lender arising out of the exercise by Lender of any of its rights hereunder, except for any claims, damages and demands it may have against Lender arising from the willful misconduct, bad faith or gross negligence of Lender or its affiliates, or any agents or employees of the foregoing. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least ten (10) days before such sale or other disposition.

(d) The rights, powers, privileges and remedies of Lender under this Agreement are cumulative and shall be in addition to all rights, powers, privileges and remedies available to Lender at law or in equity. All such rights, powers and remedies shall be cumulative and may be exercised successively or concurrently without impairing the rights of Lender hereunder.

9. Private Sales. (a) Borrower recognizes that Lender may be unable to effect a public sale of any or all of the Pledged Interests, by reason of certain prohibitions contained in the Securities Act of 1933, as amended, and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of

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purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. Borrower acknowledges and agrees that any such private sale may result in prices and other terms less favorable to Lender than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall not be deemed to have been made in a commercially unreasonable manner solely by virtue of being a private sale. Lender shall be under no obligation to delay a sale of any of the Pledged Interests for the period of time necessary to permit any Issuer or Borrower to register such securities for public sale under the Securities Act of 1933, as amended, or under applicable state securities laws, even if any Issuer or Borrower would agree to do so.

(b) Borrower further shall use its best efforts to do or cause to be done all such other acts as may be reasonably necessary to make any sale or sales of all or any portion of the Pledged Interests pursuant to this Section 9 valid and binding and in compliance with any and all other requirements of applicable law. Borrower further agrees that a breach of any of the covenants contained in this Section 9 will cause irreparable injury to Lender, that Lender has no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 9 shall be specifically enforceable against Borrower and Borrower hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred under the Loan Agreement, or any defense relating to Lender’s willful misconduct, bad faith or gross negligence.

(c) Lender shall not incur any liability as a result of the sale of any Collateral, or any part thereof, at any private sale conducted in a commercially reasonable manner, it being agreed that some or all of the Collateral is or may be of one or more types that threaten to decline speedily in value and that are not customarily sold in a recognized market. Borrower hereby waives any claims against Lender arising by reason of the fact that the price at which any of the Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale or was less than the aggregate amount of the Debt, even if Lender accepts the first offer received and does not offer any Collateral to more than one offeree, provided that Lender has acted in a commercially reasonable manner in conducting such private sale.

(d) Section 9-610 of the Code states that Lender is able to purchase the Pledged Interests only if they are sold at a public sale. Lender has advised Borrower that SEC staff personnel have issued various No-Action Letters describing procedures which, in the view of the SEC staff, permit a foreclosure sale of securities to occur in a manner that is public for purposes of Article 9 of the Code, yet not public for purposes of Section 4(2) of the Securities Act of 1933. The Code permits Borrower to agree on the standards for determining whether Lender has complied with its obligations under Article 9 of the Code. Pursuant to the Code, Borrower specifically agrees (x) that it shall not raise any objection to Lender’s purchase of the Pledged Interests (through bidding on the obligations or otherwise) and (y) that a foreclosure sale conducted in conformity with the principles set forth in the No-Action Letters (i) shall be considered to be a “public” sale for purposes of the Code; (ii) will be considered commercially reasonable notwithstanding that Lender, has not registered or sought to register the Pledged Interests under the Securities Laws, even if Borrower or the applicable Issuer agrees to pay all costs of the registration process and (iii) shall be considered to be commercially reasonable notwithstanding that Lender purchases the Pledged Interests at such a sale.

11

(e) Borrower agrees that Lender shall not have any general duty or obligation to make any effort to obtain or pay any particular price for any Pledged Interests or other Collateral sold by Lender pursuant to this Agreement. Lender, may, in its sole discretion, among other things, accept the first offer received, or decide to approach or not to approach any potential purchasers. Without in any way limiting Lender’s right to conduct a foreclosure sale in any manner which is considered commercially reasonable, Borrower hereby agrees that any foreclosure sale conducted in accordance with the following provisions shall be considered a commercially reasonable sale and hereby irrevocably waives any right to contest any such sale:

(i) Lender conducts the foreclosure sale in the State of New York,

(ii) The foreclosure sale is conducted in accordance with the laws of the State of New York,

(iii) Not more than ten (10) days before, and not less than five (5) days in advance of the foreclosure sale, Lender notifies Borrower at the address set forth herein of the time and place of such foreclosure sale,

(iv) The foreclosure sale is conducted by an auctioneer licensed in the State of New York and is conducted in front of the New York Supreme Court located in New York City or such other New York State Court having jurisdiction over the Collateral on any Business Day between the hours of 9 a.m. and 5 p.m.,

(v) The notice of the date, time and location of the foreclosure sale is published in the New York Times or Wall Street Journal (or such other newspaper widely circulated in New York, New York) for seven (7) consecutive days prior to the date of the foreclosure sale, and

(vi) Lender sends notification of the foreclosure sale to all secured parties identified as a result of a search of the UCC financings statements in the filing offices located in the State of Delaware conducted not later than twenty (20) days and not earlier than thirty (30) days before such notification date.

10. Limitation on Duties Regarding Collateral. Lender’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the Code or otherwise, shall be to use reasonable care. Borrower hereby agrees that Lender shall be deemed to have used reasonable care with respect to Collateral in its possession if it deals with such Collateral in the same manner as Lender deals with similar securities and property for its own account. Neither Lender nor any of its directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of Borrower or otherwise.

11. Financing Statements; Other Documents. On the date hereof, Borrower (a) shall deliver to Lender the Delivered Certificates and (b) hereby authorizes Lender to file UCC-1

12

financing statements with respect to the Collateral. Borrower agrees to deliver any other document or instrument which Lender may reasonably request with respect to the Collateral for the purposes of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted.

12. Attorney-in-Fact. Without limiting any rights or powers granted by this Agreement to Lender, Lender is hereby appointed, which appointment as attorney-in-fact is irrevocable and coupled with an interest, the attorney-in-fact of Borrower for the purpose of carrying out the provisions of this Agreement or the Loan Agreement and taking any action in connection therewith and executing any instruments which Lender may deem reasonably necessary or advisable to accomplish the purposes hereof including, without limitation:

(a) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral;

(b) to receive, endorse and collect any drafts or other instruments, documents and chattel paper in connection with clause (a) above;

(c) to file any claims or take any action or institute any proceedings that the Lender may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of Lender, with respect to any of the Collateral;

(d) to execute, in connection with the sale provided for in Section 8 or 9 any endorsement, assignments, or other instruments of conveyance or transfer with respect to the Collateral, including, without limitation, to transfer or cause the transfer of the Collateral, or any part thereof, on the books of the Issuer or other entity issuing such Collateral, to the name of Lender or any nominee; and

(e) to affix to any certificates and documents representing the Collateral the stock powers delivered with respect thereto.

Lender hereby agrees only to exercise the power of attorney powers set forth in this Section 12 only upon the occurrence and during the continuation of an Event of Default.

If so requested by Lender, Borrower shall ratify and confirm any such sale or transfer by executing and delivering to Lender at Borrower’s expense all proper deeds, bills of sale, instruments of assignment, conveyance of transfer and releases as may be designated in any such request.

13. Control. If, in order to maintain a perfected security interest in the Pledged Interests, Lender must perfect through “control” the security interest in the Pledged Interests as securities governed by Article or Division 8 of the Code (“Division 8”), Borrower agrees, at any time promptly following written request therefor from Lender, to exercise any rights it may have under the Issuer Formation Agreement, to cause the Issuer to modify the applicable Issuer Formation Agreement to provide that the ownership interests in JV are securities governed by Division 8 and to enter into a control agreement with Lender with respect thereto (pursuant to which JV shall agree, upon receipt of notice from Lender at any time following an Event of Default, to comply with all instructions originated by Lender with respect to the Pledged Interests without further consent of Borrower).

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14. Recourse. The provisions of Section 9.4 of the Loan Agreement are hereby incorporated by reference into this Agreement.

15. Indemnity. Borrower agrees that the terms and provisions of Section 10.13 of the Loan Agreement are hereby incorporated by reference into this Agreement to the same extent and with the same force as if fully set forth herein.

16. Construction. All covenants, representations, terms and conditions contained in this Agreement applicable to Borrower, Issuer, Pledged Interests or any Issuer Formation Agreement shall be deemed to apply to Borrower, Issuer, Pledged Interests or Issuer Formation Agreement, individually. It shall constitute an Event of Default if any covenant, representation, term or condition contained in this Agreement applicable to Borrower, Issuer, Pledged Interests or Issuer Formation Agreement is breached (beyond any applicable notice and cure periods) with respect to any single Borrower, Issuer, Pledged Interests or Issuer Formation Agreement. Notwithstanding the foregoing to the contrary, it is acknowledged and agreed that Issuer has not made, nor is deemed to have made any covenants or representations under this Agreement or is otherwise bound by the terms of this Agreement.

17. Miscellaneous.

(a) Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

(b) Headings. The headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

(c) No Waiver; Cumulative Remedies. Lender shall not by any act (except by a written instrument pursuant to Section 17(d) hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any default or in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of Lender, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by Lender of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which Lender would otherwise have on any future occasion. The rights, remedies, powers and privileges herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights, remedies, powers or privileges provided by law.

(d) Waivers and Amendments; Successors and Assigns. None of the terms or provisions of this Agreement may be waived, amended, or otherwise modified except by a

14

written instrument executed by the party against which enforcement of such waiver, amendment, or modification is sought. This Agreement shall be binding upon and shall inure to the benefit of Borrower and the respective successors and assigns of Borrower and shall inure to the benefit of Lender and its successors and assigns; provided no Borrower shall have any right to assign its rights hereunder. The rights of Lender under this Agreement shall automatically be transferred to any permitted transferee to which Lender transfers the Note and Loan Agreement.

(e) Notices. Notices by Lender to Borrower to be effective shall be in writing (including by facsimile transmission), addressed or transmitted to Borrower at the address or facsimile number of Borrower set forth in the Loan Agreement, and shall be deemed to have been duly given or made in accordance with the terms and provisions of Section 10.6 of the Loan Agreement.

(f) Governing Law.

(i) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY BORROWER AND ACCEPTED BY LENDER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE NOTE SECURED HEREBY WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:

JAECKLE FLEISCHMANN & MUGEL, LLP

AVANT BUILDING—SUITE 900

200 DELAWARE AVENUE

BUFFALO, NY 14202-2107

ATTN: JESSICA E. LANKFORD

15

ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

(g) Agents. Lender may employ agents and attorneys-in-fact in connection herewith and shall not be responsible for their actions except for the gross negligence or willful misconduct of any such agents or attorneys-in-fact selected by it in good faith.

(h) Irrevocable Authorization and Instruction to the Issuer. Borrower hereby authorizes and instructs each Issuer and any servicer of the Loan to comply with any instruction received by it from Lender in writing that is in accordance with the terms of this Agreement, without any other or further instructions from Borrower, and Borrower agrees that each applicable Issuer and any servicer shall be fully protected in so complying, absent gross negligence, bad faith or willful misconduct.

(i) Counterparts. This Agreement may be executed in any number of counterparts and all the counterparts taken together shall be deemed to constitute one and the same instrument.

(j) WAIVER OF JURY TRIAL, DAMAGES, JURISDICTION. BORROWER AND LENDER EACH HEREBY AGREES TO WAIVE ITS RIGHTS TO A JURY TRIAL ON ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT

16

OF THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, OR ANY DEALINGS BETWEEN BORROWER AND LENDER. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. BORROWER AND LENDER EACH ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO LENDER TO ENTER INTO A BUSINESS RELATIONSHIP WITH BORROWER. BORROWER REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH WAIVER IS KNOWINGLY AND VOLUNTARILY GIVEN FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED, EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, REPLACEMENTS, REAFFIRMATIONS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, OR ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

WITH RESPECT TO ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, BORROWER SHALL AND HEREBY DOES SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE STATE OF NEW YORK (AND ANY APPELLATE COURTS TAKING APPEALS THEREFROM). BORROWER HEREBY WAIVES AND AGREES NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, (A) THAT IT IS NOT SUBJECT TO SUCH JURISDICTION OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN THOSE COURTS OR THAT THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY NOT BE ENFORCED IN OR BY THOSE COURTS OR THAT IT IS EXEMPT OR IMMUNE FROM EXECUTION, (B) THAT THE ACTION, SUIT OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR (C) THAT THE VENUE OF THE ACTION, SUIT OR PROCEEDING IS IMPROPER. IN THE EVENT ANY SUCH ACTION, SUIT, PROCEEDING OR LITIGATION IS COMMENCED, BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE, AND PERSONAL JURISDICTION OVER BORROWER OBTAINED, BY SERVICE OF A COPY OF THE SUMMONS, COMPLAINT AND OTHER PLEADINGS REQUIRED TO COMMENCE SUCH LITIGATION UPON BORROWER AT THE ADDRESS OF BORROWER AND TO THE ATTENTION OF SUCH PERSON AS SET FORTH IN THIS SECTION 17.

(k) No claim may be made by Borrower against Lender, its affiliates and its respective directors, officers, employees, or attorneys for any special, indirect or consequential damages (“Special Damages”) in respect of any breach or wrongful conduct (whether the claim

17

therefor is based on contract, tort or duty imposed by law) in connection with, arising out of, or in any way related to the transactions contemplated or relationship established by this Agreement, or any act, omission or event occurring in connection herewith or therewith; and to the fullest extent permitted by law each Borrower hereby waives, releases and agrees not to sue upon any such claim for Special Damages, whether or not accrued and whether or not known or suspected to exist in its favor.

[SIGNATURES COMMENCE ON THE FOLLOWING PAGE]

18

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized officers as of the date set forth above.

BORROWER:
CHT SL IV Holding, LLC, a Delaware limited liability company
	By:	/s/ Joshua J. Taube
		Name: Joshua J. Taube
		Title: Vice President
LENDER:
RCG LV DEBT IV NON-REIT ASSETS HOLDINGS, LLC a Delaware limited liability
By:	RCG Longview Debt Fund IV, L.P., a Delaware limited partnership, its sole member
	By:	RCG Longview Debt Fund IV Partners, LLC, a Delaware limited Liability company, its general partner
By:		/s/ Dean C. Ravosa
		Name: Dean C. Ravosa
		Title: Chief Operating Officer

1

EXHIBIT A

ACKNOWLEDGMENT AND CONSENT

CHTSUN PARTNERS IV, LLC, a Delaware limited liability company (“JV”) hereby acknowledges receipt of a copy of that certain Pledge and Security Agreement (the “Pledge Agreement”) granted by CHT SL IV HOLDING, LLC, a Delaware limited liability company (“Borrower”) to and for the benefit of Lender (as defined therein) and acknowledges that Borrower is bound thereby. JV agrees to notify Lender promptly in writing of the occurrence of any of the events described in Section 4(a) of the Pledge Agreement.

Dated:                  , 2012

JV:
	, a

By:		, a	,
	its

By:
	Name:
	Title:

1

EXHIBIT B

INSTRUCTION TO REGISTER PLEDGE

            , 2012

To:   CHTSUN PARTNERS IV, LLC, a Delaware limited liability company

In accordance with the requirements of that certain Pledge and Security Agreement dated as the date hereof (as amended, supplemented or otherwise modified from time to time, the “Pledge Agreement”), between RCG LV DEBT IV NON-REIT ASSETS HOLDINGS, LLC, a Delaware limited liability company (“Lender”) and CHT SL IV HOLDING, LLC, a Delaware limited liability company, (“Borrower”) (capitalized but undefined terms used herein as therein defined), you are hereby instructed to register the pledge of the following interests as follows:

All right, title and interest now owned or hereafter acquired by Borrower in the following:

(i) all limited liability company membership interests, partnership interests, capital stock or other equity interests of, and all other right, title and interest now owned or hereafter acquired by Borrower in and to Issuer (as defined in the Pledge Agreement), together with (a) all additional membership interests, partnership interests, capital stock or other equity interests in Issuer and options, warrants, and other rights now or hereafter acquired by Borrower in respect of such membership interests, partnership interests, capital stock or other equity interests (whether in connection with any capital increase, recapitalization, reclassification, or reorganization of Issuer or otherwise) and all other property, rights or instruments of any description at any time issued or issuable as an addition to or in substitution for such membership interests, partnership interests, capital stock or other equity interests; (b) all certificates, instruments, or other writings representing or evidencing interests in Issuer, and all accounts and general intangibles arising out of, or in connection with, the interests in Issuer; (c) any and all moneys or property due and to become due to Borrower now or in the future in respect of the interests in Issuer, or to which Borrower may now or in the future be entitled in its capacity as a member, partner, shareholder or other equity holder of Issuer, whether by way of a dividend, distribution, return of capital or otherwise; (d) all other claims which Borrower now has or may in the future acquire in its capacity as a member, partner, shareholder or other equity holder of Issuer against Issuer and its property; and (e) all rights of Borrower under the applicable Issuer Formation Agreement applicable to Issuer (and all other agreements, if any, to which Borrower is a party from time to time which relate to its ownership of the interests in Issuer), including, without limitation, all voting and consent rights of Borrower arising thereunder or otherwise in connection with Borrower’s ownership of the interests in Issuer (collectively, the “Pledged Interests”);

1

(ii) all right, title and interest of Borrower in, to and under any policy of insurance payable by reason of loss or damage to the Pledged Interests and any other Collateral;

(iii) all “accounts”, “general intangibles”, “payment intangibles”, “instruments” and “investment property” (in each case as defined in the Code) constituting or relating to the foregoing;

(iv) any Net Liquidation Proceeds After Debt Service allocable to the Pledged Interests; and

(v) to the extent not otherwise part of the Pledged Interests, all Proceeds, income and profits thereof and all property received in exchange or substitution thereof, of any of the foregoing property of Borrower.

You are hereby further authorized and instructed to execute and deliver to Lender a Confirmation Statement and Instruction Agreement, substantially in the form of Exhibit C to the Pledge Agreement and, to the extent provided more fully therein, to comply with the instructions of Lender in respect of the Collateral without further consent of, or notice to, Borrower.

Dated:             , 2012

LENDER:
[RCG]
By:
	Name:
	Title:

BORROWER:
	, a

By:
	Name:
	Title:

2

EXHIBIT C

CONFIRMATION STATEMENT AND INSTRUCTION AGREEMENT

            , 2012

To: RCG LV DEBT IV NON-REIT ASSETS HOLDINGS, LLC, a Delaware limited liability company

Pursuant to the requirements of that certain Pledge and Security Agreement dated the date hereof (as amended, supplemented or otherwise modified from time to time, the “Pledge Agreement”), between RCG LV DEBT IV NON-REIT ASSETS HOLDINGS, LLC, a Delaware limited liability company (“Lender”) and CHT SL IV HOLDING, LLC, a Delaware limited liability company (“Borrower”) (capitalized but undefined terms used herein as therein defined), this Confirmation Statement and Instruction Agreement relates to those ownership interests (the “Pledged Interests”), as further described on Schedule I to the Pledge Agreement, issued by CHTSUN PARTNERS IV, LLC, a Delaware limited liability company (“Issuer”).

The Pledged Interests are not (i) “investment company securities” (within the meaning of Section 8-103 of the Uniform Commercial Code (the “Code”)) or (ii) dealt in or traded on securities exchanges or in securities markets. The terms of any Pledged Interest or the Issuer Formation Agreement provides that it is a “security” (within the meaning of Sections 8-102(a)(15) and 8-103 of the Code) and Issuer agrees as follows:

On the date hereof, the registered owner of 55.0212% of the ownership interests in JV and the Pledged Interests is Borrower.

The registered pledgee of the Pledged Interests is:

RCG LV DEBT IV NON-REIT ASSETS HOLDINGS, LLC, a Delaware limited liability company

There are no liens of Issuer on the Pledged Interests or any adverse claims thereto for which Issuer has a duty under Section 8-403 of the Code. Issuer has by book-entry registered the Pledged Interests in the name of the registered pledgee on or before the date hereof. No other pledge is currently registered on the books and records of Issuer with respect to the Pledged Interests.

Until the Debt is paid in full (exclusive of provisions which shall survive full payment), Issuer agrees to: (i) comply with the instructions of Lender sent in accordance with Section 17(h) of the Pledge Agreement, without any further consent from Borrower or any other Person, in respect of the Collateral; and (ii) disregard any request made by Borrower or any other person which contravenes the instructions of Lender with respect to the Collateral.

Dated:             , 2012

MORTGAGE BORROWER:
	, a

By:		, a	,
	its

	By:
		Name:
		Title:
ACKNOWLEDGED AND AGREED:

[RCG]

By:
	Name:
	Title:

BORROWER:
	, a

By:		, a	,
	its

By:
	Name:
	Title:

2

SCHEDULE I

ISSUER	PLEDGOR	INTERESTS PLEDGED
CHTSun Partners IV, LLC	CHT SL IV HOLDING, LLC, a Delaware limited liability company	55.0212% of the membership interests in CHTSun Partners IV, LLC

3

SCHEDULE II

Pledgor	Chief Executive Office/Principal Place of Business	Type of Entity	Organizational Identification Number	Jurisdiction of Incorporation or Formation	Name under which Borrower does business, if other than its legal name	Date located at present address if less than six years
CHT SL IV HOLDING, LLC	c/o CHT Partners, LP, CNL Center at City Commons, 450 South Orange Avenue, Orlando, Florida 32801	Limited Liability Company		Delaware	N/A	N/A

4

SCHEDULE III

(Delivered Certificates)

(to be attached)

5

EX-10.12

Exhibit 10.12

New York, New York

As of June 29, 2012

MEZZANINE GUARANTY

FOR VALUE RECEIVED, and to induce RCG LV DEBT IV NON-REIT ASSETS HOLDINGS, LLC, a Delaware limited liability company, having an address at 7 Penn Plaza, Suite 512, New York, New York 10001 (“Lender”), to lend to CHT SL IV HOLDING, LLC, a Delaware limited liability company, having its principal place of business at c/o CHT Partners, LP, CNL Center at City Commons, 450 South Orange Avenue, Orlando, Florida 32801 (“Borrower”), the principal sum of FORTY MILLION AND 00/100 DOLLARS ($40,000,000.00) (the “Loan”), advanced pursuant to that certain Loan Agreement, dated as of the date hereof, between Borrower and Lender (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan Agreement”) and evidenced by the Note (as defined in the Loan Agreement) and the other Loan Documents (as defined in the Loan Agreement), the undersigned, CNL HEALTHCARE TRUST, INC., a Maryland corporation, having an office at c/o CHT Partners, LP, CNL Center at City Commons, 450 South Orange Avenue, Orlando, Florida 32801 (hereinafter referred to as “Guarantor”) absolutely and unconditionally guarantee to Lender the prompt and unconditional payment of the Debt (as defined in the Loan Agreement) and the due and prompt performance of all of the terms, agreements, covenants and conditions thereof. All capitalized words and phrases not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement.

It is expressly understood and agreed that this is a continuing guaranty and that the obligations of Guarantor hereunder are and shall be absolute under any and all circumstances, without regard to the validity, regularity or enforceability of the Note, the Loan Agreement, or the other Loan Documents, a true copy of each of said documents Guarantor hereby acknowledges having received and reviewed.

Any indebtedness of Borrower to Guarantor now or hereafter existing (including, but not limited to, any rights to subrogation Guarantor may have as a result of any payment by Guarantor under this Mezzanine Guaranty (the “Guaranty”)), together with any interest thereon, shall be, and such indebtedness is, hereby deferred, postponed and subordinated to the prior payment in full of the Debt. Until payment in full of the Debt (and including interest accruing on the Note after the commencement of a proceeding by or against Borrower under the Bankruptcy Code and the regulations adopted and promulgated pursuant thereto, which interest the parties agree shall remain a claim that is prior and superior to any claim of Guarantor notwithstanding any contrary practice, custom or ruling in cases under the Bankruptcy Code generally), Guarantor agrees not to accept any payment or satisfaction of any kind of indebtedness of Borrower to Guarantor and hereby assigns such indebtedness to Lender, including the right to file proof of claim and to vote thereon in connection with any such proceeding under the Bankruptcy Code, including the right to vote on any plan of reorganization. Further, if Guarantor shall comprise more than one person, firm or corporation, Guarantor agrees that until such payment in full of the Debt, (a) no one of them shall accept payment from the others by way of contribution on account of any payment made hereunder by such party to Lender, (b) no one

of them will take any action to exercise or enforce any rights to such contribution, and (c) if any Guarantor should receive any payment, satisfaction or security for any indebtedness of Borrower to any Guarantor or for any contribution by the other Guarantors for payment made hereunder by the recipient to Lender, the same shall be delivered to Lender in the form received, endorsed or assigned as may be appropriate for application on account of, or as security for, the Debt and until so delivered, shall be held in trust for Lender as security for the Debt.

Guarantor agrees that, with or without notice or demand, Guarantor will reimburse Lender, to the extent that such reimbursement is not made by Borrower, for all expenses (including reasonable counsel fees and disbursements) incurred by Lender in connection with the collection of the Debt or any portion thereof or with the enforcement of this Guaranty.

Except for payments of principal and interest under the Note made by Borrower as and when the same become due and payable or any prepayments of principal made in accordance with the terms of the Loan Documents, all moneys available to Lender for application in payment or reduction of the Debt may be applied by Lender in such manner and in such amounts and at such time or times and in such order and priority as Lender may see fit to the payment or reduction of such portion of the Debt as Lender may elect.

Guarantor hereby waives notice of the acceptance hereof, presentment, demand for payment, protest, notice of protest, or any and all notice of non-payment, non-performance or non-observance, or other proof, or notice or demand, whereby to charge Guarantor therefor.

Guarantor further agrees that the validity of this Guaranty and the obligations of Guarantor hereunder shall in no way be terminated, affected or impaired (a) by reason of the assertion by Lender of any rights or remedies which it may have under or with respect to either the Note, the Loan Agreement, or the other Loan Documents, against any person obligated thereunder or the Collateral covered under the Loan Agreement, or (b) by reason of any failure to file or record any of such instruments or to take or perfect any security intended to be provided thereby, or (c) by reason of the release of Collateral covered under the Loan Agreement or other collateral for the Loan, or (d) by reason of Lender’s failure to exercise, or delay in exercising, any such right or remedy or any right or remedy Lender may have hereunder or in respect to this Guaranty, or (e) by reason of the commencement of a case under the Bankruptcy Code by or against any person obligated under the Note, the Loan Agreement or the other Loan Documents, or the death of any Guarantor, or (f) by reason of any payment made on the Debt or any other indebtedness arising under the Note, the Loan Agreement, or the other Loan Documents, whether made by Borrower or Guarantor or any other person, which is required to be refunded pursuant to any bankruptcy or insolvency law; it being understood that no payment so refunded shall be considered as a payment of any portion of the Debt, nor shall it have the effect of reducing the liability of Guarantor hereunder. It is further understood, that if Borrower shall have taken advantage of, or be subject to the protection of, any provision in the Bankruptcy Code, the effect of which is to prevent or delay Lender from taking any remedial action against Borrower, including the exercise of any option Lender has to declare the Debt due and payable on the happening of any default or event by which under the terms of the Note, the Loan Agreement, or the other Loan Documents, the Debt shall become due and payable, Lender may, as against Guarantor, nevertheless, declare the Debt due and payable and enforce any or all of its rights and remedies against Guarantor provided for herein.

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Guarantor further covenants that this Guaranty shall remain and continue in full force and effect as to any modification, extension or renewal of the Note, the Loan Agreement, or the other Loan Documents, that Lender shall not be under a duty to protect, secure or insure the Collateral covered under the Loan Agreement, and that other indulgences or forbearance may be granted under any or all of such documents, all of which may be made, done or suffered without notice to, or further consent of, Guarantor.

Guarantor hereby represents and warrants that Guarantor is not a Plan and none of the assets of Guarantor constitute or will constitute, by virtue of the application of 29 C.F.R. §2510.3-101(f) as modified by section 3(42) of ERISA, “Plan Assets” of one or more Plans. If Guarantor is not a natural person, Guarantor further represents and warrants that (a) Guarantor is not a “governmental plan” within the meaning of Section 3(32) of ERISA and (b) transactions by or with Guarantor are not subject to State statutes regulating investment of, and fiduciary obligations with respect to, governmental plans similar to the provisions of Section 406 of ERISA or Section 4975 of the Code currently in effect, which prohibit or otherwise restrict the transactions contemplated by this Guaranty.

If Guarantor is not a natural person, Guarantor hereby covenants and agrees with Lender that:

(a) During the term of the Loan or of any obligation or right hereunder, Guarantor shall not be a Plan and none of the assets of Guarantor shall constitute Plan Assets.

(b) Guarantor further covenants and agrees to deliver to Lender such certifications or other evidence from time to time throughout the term of the Loan, as requested by Lender in its sole (but reasonable) discretion and represents and covenants that (A) Guarantor is not and does not maintain an “employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, or a “governmental plan” within the meaning of Section 3(32) of ERISA; (B) Guarantor is not subject to State statutes regulating investments and fiduciary obligations with respect to governmental plans; and (C) one or more of the following circumstances is true:

(i) Equity interests in Guarantor are publicly offered securities, within the meaning of 29 C.F.R. §2510.3-101(b)(2);

(ii) None of the assets of Guarantor are, by virtue of the application of 29 C.F.R. §2510.3-101(f) as modified by section 3(42) of ERISA, regarded as assets of any Plan; or

(iii) Guarantor qualifies as an “operating company” or a “real estate operating company” within the meaning of 29 C.F.R. §2510.3-101(c) or (e).

As a further inducement to Lender to make the Loan and in consideration thereof, Guarantor further covenants and agrees (a) that in any action or proceeding brought by Lender against Guarantor on this Guaranty, Guarantor shall and does hereby waive trial by jury, (b) that the Supreme Court of the State of New York for the County of New York, or, in a case involving diversity of citizenship, the United States District Court for the Southern District of New York,

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shall have exclusive jurisdiction of any such action or proceeding, and (c) that service of any summons and complaint or other process in any such action or proceeding may be made by registered or certified mail directed to Guarantor at Guarantor’s address set forth above, Guarantor waiving personal service thereof. Nothing in this Guaranty will be deemed to preclude Lender from bringing an action or proceeding with respect hereto in any other jurisdiction.

This is a guaranty of payment and not of collection and upon any default of Borrower under the Note, the Loan Agreement, or the other Loan Documents, Lender may, at its option, proceed directly and at once, without notice, against Guarantor to collect and recover the full amount of the liability hereunder or any portion thereof, without proceeding against Borrower or any other person, or foreclosing upon, selling, or otherwise disposing of or collecting or applying against any of the Collateral for the Loan. Guarantor hereby waives the pleading of any statute of limitations as a defense to the obligation hereunder.

Each reference herein to Lender shall be deemed to include its successors and assigns, to whose favor the provisions of this Guaranty shall also inure. Each reference herein to Guarantor shall be deemed to include the heirs, executors, administrators, legal representatives, successors and assigns of Guarantor, all of whom shall be bound by the provisions of this Guaranty.

If any party hereto shall be a partnership, the agreements and obligations on the part of Guarantor herein contained shall remain in force and application notwithstanding any changes in the individuals composing the partnership and the term “Guarantor” shall include any alternate or successive partnerships but the predecessor partnerships and their partners shall not thereby be released from any obligations or liability hereunder.

Guarantor has full power, authority and legal right to execute this Guaranty and to perform all its obligations under this Guaranty.

All understandings, representations and agreements heretofore had with respect to this Guaranty are merged into this Guaranty which alone fully and completely expresses the agreement of Guarantor and Lender.

This Guaranty may be executed in one or more counterparts by some or all of the parties hereto, each of which counterparts shall be an original and all of which together shall constitute a single agreement of Guaranty. The failure of any party hereto to execute this Guaranty, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

This Guaranty may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Lender or Borrower, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

This Guaranty shall be governed, construed and interpreted as to validity, enforcement and in all other respects, in accordance with the laws of the State of New York.

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IN WITNESS WHEREOF, Guarantor has duly executed this Guaranty as of the date first above set forth.

CNL HEALTHCARE TRUST, INC., a Maryland corporation
By:	/s/ Joshua J. Taube
	Name: Joshua J. Taube
	Title: Vice President

EX-10.13

Exhibit 10.13

MEZZANINE LOAN REPAYMENT AGREEMENT AND SECURITY AGREEMENT

THIS MEZZANINE LOAN REPAYMENT AGREEMENT AND SECURITY AGREEMENT (this “Agreement”) is made as of the 29th day of June 2012, by and between CNL HEALTHCARE TRUST, INC., a Maryland corporation (“CHT REIT”), and THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation (“Lender”).

RECITALS:

1. Of even date herewith, Lender has entered into an Amended and Restated Loan Agreement (the “Loan Agreement”) with GILBERT AZ SENIOR LIVING OWNER, LLC, a Delaware limited liability company, CHTSUN TWO GILBERT AZ SENIOR LIVING, LLC, a Delaware limited liability company, METAIRIE LA SENIOR LIVING OWNER, LLC, a Delaware limited liability company, CHTSUN TWO METAIRIE LA SENIOR LIVING, LLC, a Delaware limited liability company, BATON ROUGE LA SENIOR LIVING OWNER, LLC, a Delaware limited liability company, CHTSUN TWO BATON ROUGE LA SENIOR LIVING, LLC, a Delaware limited liability company, LOMBARD IL SENIOR LIVING OWNER, LLC, a Delaware limited liability company, CHTSUN THREE LOMBARD IL SENIOR LIVING, LLC, a Delaware limited liability company, LOUISVILLE KY SENIOR LIVING OWNER, LLC, a Delaware limited liability company, SUNRISE LOUISVILLE KY SENIOR LIVING, LLC, a Kentucky limited liability company, SANTA MONICA ASSISTED LIVING OWNER, LLC, a Delaware limited liability company, AL SANTA MONICA SENIOR HOUSING, LP, a Delaware limited partnership, and SUNRISE CONNECTICUT AVENUE ASSISTED LIVING OWNER, L.L.C., a Virginia limited liability company, formerly known as Sunrise Connecticut Avenue Assisted Living, L.L.C. (each a “Borrower”, and collectively referred to herein as “Borrowers”), which Loan Agreement concerns certain loans made by Lender to Borrowers in the aggregate principal amount of One Hundred Twenty-Five Million and No/100ths Dollars ($125,000,000.00)(collectively, the “Loan”).

2. In connection with the Loan, Lender has consented to one and only one secondary loan secured by a pledge of indirect interests in Borrowers (the “Mezzanine Loan”) from RCG LV DEBT IV NON-REIT ASSETS HOLDINGS, LLC (the “Mezzanine Lender”), to CHT SL IV Holding, LLC, a Delaware limited liability company (“CHT Holding”), a wholly owned subsidiary of CHT REIT, in the amount of $40,000,000.00.

3. Lender and Mezzanine Lender have entered into an Intercreditor Agreement of even date herewith and Lender, CHT REIT and Wells Fargo Bank, National Association (“Wells Fargo”) have entered into a Deposit Account Control Agreement of even date herewith (the “Deposit Agreement”) with respect to the Capital Raise Account (as hereinafter defined).

4. As a condition of consenting to the Mezzanine Loan, Lender has required that CHT REIT agree to repay, pay down or payoff, as applicable, the Mezzanine Loan in the manner, at the times and in the amounts set forth herein, and CHT REIT is agreeable to same.

NOW, THEREFORE, in consideration of the covenants set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Net Capital Raise and Repayment of Mezzanine Loan. To the extent that during the twelve (12) month period following the date of this Agreement (the “First Mezz Loan Year”) CHT REIT raises Net Capital (defined below) sufficient to satisfy the Mezzanine Loan, CHT REIT shall satisfy the Mezzanine Loan on or before the end of the First Mezz Loan Year. If CHT REIT has not raised sufficient Net Capital within the First Mezz Loan Year to satisfy the full amount of the then-outstanding Mezzanine Loan, then CHT REIT shall use all Net Capital raised during the First Mezz Loan Year to pay down the Mezzanine Loan and then use all Net Capital raised from that point forward to continue paying the Mezzanine Loan until it is satisfied in full. In all events and under all circumstances, CHT REIT shall satisfy the Mezzanine Loan in full prior to the end of the term of the Mezzanine Loan. For purposes hereof, (i) “Net Capital” shall mean the Aggregate Capital (defined below) raised by CHT REIT less an amount not to exceed fifteen percent (15%) of the Aggregate Capital to be used by CHT REIT for payment of reasonable and customary costs incurred with raising equity, including, without limitation, commissions, marketing support and other offering costs and expenses, and (ii) “Aggregate Capital” shall mean the aggregate amount of equity raised by CHT REIT.

2. Deposit of Net Capital Proceeds. At any time when the Mezzanine Loan (or any portion thereof) remains outstanding, all Net Capital proceeds raised by CHT REIT shall be directly deposited into a bank account (the “Capital Raise Account”) with Wells Fargo, which Capital Raise Account Lender shall control pursuant to the Deposit Agreement. Upon the occurrence of a Mezzanine Repayment Failure (defined below), Lender shall have the right to deliver to Wells Fargo an Access Termination Notice (as such term is defined in the Deposit Agreement) to exercise its control over the Capital Raise Account and to cause the proceeds deposited therein, by delivery of Disposition Instructions (as such term is defined in the Deposit Agreement) to Wells Fargo, to be paid to Mezzanine Lender to repay the Mezzanine Loan. A “Mezzanine Repayment Failure” shall occur if CHT REIT has not repaid the Mezzanine Loan by the earlier to occur of (i) the end of the First Mezz Loan Year to the extent required to do so pursuant to Section 1 above, or (ii) the end of the term of the Mezzanine Loan. Following an event of default under the Mezzanine Loan which has not been cured within any applicable grace or cure period (a “Mezzanine Event of Default”), Lender shall have the right (and upon Lender’s receipt of written notice from the Mezzanine Lender that a Mezzanine Event of Default has occurred, Lender shall) deliver to Wells Fargo an Access Termination Notice and Disposition Instructions requiring that the funds then held in the Capital Raise Account be paid to Mezzanine Lender for application against the Mezzanine Loan. Except as otherwise provided herein or in the Deposit Agreement, CHT REIT shall have full access to all funds then held in the Capital Raise Account for use in the ordinary course of CHT REIT’s business.

3. Reports. Until such time as the Mezzanine Loan has been satisfied in full and all collateral therefor released, CHT REIT shall deliver to Lender or cause to be delivered to Lender (A) on or before twenty (20) days after the end of each calendar month a schedule of net equity raised by CHT REIT for the subject month and all prior months (certified by CHT REIT), (B) on a quarterly basis, by the forty-fifth (45th) day after the end of each calendar quarter, financial statements of CHT REIT and CHT Holding (certified by the applicable party) and (C) on an annual basis, by the one hundred twentieth (120th) day after the end of the fiscal year of such entities, financial statements of CHT Holding (certified by CHT Holding) and CHT REIT (audited) and state and Federal income tax returns of such parties.

4. Guaranteed Amount. CHT REIT’s liability under this Agreement shall be limited to the sum of (a) the then current outstanding principal balance of the Mezzanine Loan together with any accrued and unpaid interest thereon and any exit fee imposed by Mezzanine Lender, and (b) all costs and expenses of Lender (including, but not limited to, attorneys’ fees and expenses) related to the enforcement of this Agreement and collection of the sum described in clause (a) above (the sum of the amounts described in clauses (a) and (b) herein referred to as the “Guaranteed Amount”). Notwithstanding

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anything to the contrary contained herein, to the extent that at any time hereafter there are then funds in the Capital Raise Account, including, without limitation, funds deposited therein and interest earned thereon (collectively, the “Deposited Funds”) and either (i) (A) a Mezzanine Repayment Failure has occurred, and (B) Lender elects to deliver an Access Termination Notice and Disposition Instructions to Wells Fargo causing the Deposited Funds (less the $5,000.00 minimum balance required by the Deposit Agreement) to be paid to Mezzanine Lender and applied against the amounts then due and owing under the Mezzanine Loan, or (ii) a Mezzanine Event of Default has occurred and Lender elects or is required in accordance with the terms hereof to deliver to Wells Fargo an Access Termination Notice and Disposition Instructions causing the Deposited Funds (less the $5,000.00 minimum balance required by the Deposit Agreement) to be paid to Mezzanine Lender and applied against the amounts then due and owing under the Mezzanine Loan, then Lender agrees that the portion of the Guaranteed Amount described in clause (a) above shall be reduced by the amount of the Deposited Funds actually paid to Mezzanine Lender. It is hereby acknowledged and agreed that any and all of the Guaranteed Amount described in clause (a) herein that is paid by CHT REIT to Lender shall be immediately paid by Lender to the Mezzanine Lender in accordance with Paragraph 2 of this Agreement for application by Mezzanine Lender towards the Mezzanine Loan.

5. Full Recourse Liability. Notwithstanding the foregoing, CHT REIT’s liability under this Agreement shall be fully recourse and is expressly not subject to, or limited by, any limitations on CHT REIT’s liability set forth in the Loan Agreement or in any of the Recourse Documents (as such term is defined in the Loan Agreement), and CHT REIT agrees and acknowledges that Lender is relying upon the full recourse nature of this Agreement in making the Loan to Borrowers.

6. Term of Agreement. CHT REIT’s liability under this Agreement shall continue, but only up to the Guaranteed Amount, until the earlier to occur of (i) the date upon which the Mezzanine Loan has been satisfied in full in accordance with its terms and all collateral therefor released, and (ii) Lender has been paid the full amount of the Pool Obligations (as such term is defined in the Loan Agreement) (a “Termination Event”); provided, however, that CHT REIT’s liability under this Agreement shall be in addition to, and not in lieu of, any liability or obligations of CHT REIT under any other document or other instrument delivered by CHT REIT in connection with the Loan. CHT REIT agrees that Lender shall be under no obligation to notify CHT REIT of its acceptance of this Agreement or of any advances made or credit extended on the faith of this Agreement. Upon the occurrence of a Termination Event and delivery by CHT REIT of evidence reasonably satisfactory to Lender that the Mezzanine Loan has been satisfied in full in accordance with its terms and all collateral therefor released (if such is the basis for the termination of this Agreement), then Lender agrees, upon written request from CHT REIT, to execute and deliver to CHT REIT an instrument confirming such termination, together with a termination of the Deposit Agreement. Upon such termination, all Deposited Funds then remaining in the Capital Raise Account shall be released to CHT REIT.

7. Security Agreement. This Agreement constitutes a “security agreement” within the meaning of the U.C.C. (as such term is defined in the Loan Agreement). CHT REIT hereby pledges, transfers and assigns to Lender, and grants to Lender, as additional security for the payment and performance of each and all of CHT REIT’s obligations hereunder, a continuing perfected security interest in and to, and a general first lien upon, (i) the proceeds in the Capital Raise Account, the Capital Raise Account and all of CHT REIT’s right, title and interest in and to all cash, property or rights transferred to or deposited in the Capital Raise Account from time to time by CHT REIT or on behalf of CHT REIT, (ii) all earnings, investments and securities held in the Capital Raise Account, and (iii) any and all proceeds of the foregoing. The acceptance by Lender of the security interest granted herein shall not waive or impair any other security Lender may have or hereafter acquire, nor shall the taking of any such additional security waive or impair the security interest granted hereby, or any term, covenant or condition herein contained, but Lender may resort to any security it may have in the order it may deem proper at its sole and absolute discretion.

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8. Representations and Warranties. CHT REIT hereby represents, warrants and covenants to and with Lender as follows: (i) the making of the Loan by Lender to Borrowers is and will be of direct interest, benefit and advantage to CHT REIT; (ii) CHT REIT is solvent, is not bankrupt and has no outstanding liens, garnishments, bankruptcies or court actions which could render CHT REIT insolvent or bankrupt; (iii) there has not been filed by or against CHT REIT a petition in bankruptcy or a petition or answer seeking an assignment for the benefit of creditors, the appointment of a receiver, trustee, custodian or liquidator with respect to CHT REIT or any substantial portion of CHT REIT’s property, reorganization, arrangement, rearrangement, composition, extension, liquidation or dissolution or similar relief under any present or future provision of 11 U.S.C. §101 et. seq. or any other present or future federal or state insolvency, bankruptcy or similar law; (iv) all reports, financial statements and other financial and other data which have been or may hereafter be furnished by CHT REIT to Lender in connection with this Agreement are or shall be true and correct in all material respects and do not and will not omit to state any fact or circumstance necessary to make the statements contained therein not misleading and do or shall fairly represent the financial condition of CHT REIT as of the dates and the results of CHT REIT’s operations for the periods for which the same are furnished, and no material adverse change has occurred since the dates of such reports, statements and other data in the financial condition of CHT REIT; (v) the execution, delivery and performance of this Agreement does not contravene, result in the breach of or constitute a default under any mortgage, deed of trust, lease, promissory note, loan agreement or other contract or agreement to which CHT REIT is a party or by which CHT REIT or any of its properties may be bound or affected, and does not violate or contravene any law, order, decree, rule or regulation to which CHT REIT is subject; (vi) there are no judicial or administrative actions, suits or proceedings pending or, to the best of CHT REIT’s knowledge, threatened against or affecting CHT REIT or involving the validity or enforceability of this Agreement; and (vii) this Agreement constitutes the legal, valid and binding obligation of CHT REIT enforceable in accordance with its terms.

9. Event of Default/Remedies. The failure of CHT REIT to comply with any of its obligations under this Agreement within ten (10) days after Lender provides written notice of such default shall constitute an “Event of Default” hereunder. Upon the occurrence of any Event of Default, and at any time thereafter (unless Lender has accepted cure of such Event of Default by specific written statement from Lender to CHT REIT acknowledging Lender’s acceptance of such cure, and CHT REIT specifically understands and agrees that Lender shall have no obligation whatsoever to accept the cure of any Event of Default), the Lender shall have the right to use or apply (or to direct the use or application of) all Deposited Funds to cure any default of CHT REIT hereunder, including without limitation, to use (or direct the use of) Deposited Funds to make payments to the Mezzanine Lender to be applied against the Mezzanine Loan. Without limiting the foregoing, if an Event of Default occurs, then Lender or any person designated by Lender may (but shall not be obligated to) take any action (separately, concurrently, cumulatively, and at any time and in any order) permitted under this Agreement, the Deposit Agreement or any Laws (as such term is defined in the Loan Agreement), without notice, demand, presentment, or protest (all of which are hereby waived), to protect and enforce Lender’s rights under this Agreement or Laws.

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10. Miscellaneous. CHT REIT further agrees to the following:

(a) Except as otherwise provided herein, the rights of Lender are cumulative and shall not be exhausted by its exercise of any of its rights under this Agreement or otherwise against CHT REIT or by any number of successive actions, until and unless all amounts due under this Agreement have been paid and all obligations of CHT REIT under this Agreement have been performed.

(b) Any notice or communication required or permitted under this Agreement shall be given in writing, sent by (i) personal delivery, or (ii) expedited delivery service with proof of delivery, or (iii) United States mail, postage prepaid, registered or certified mail, sent to the intended addressee at the address shown below, or to such other address or to the attention of such other person(s) as hereafter shall be designated in writing by the applicable party. Any such notice or communication shall be deemed to have been given and received either at the time of personal delivery or, in the case of delivery service or mail, as of the date of first attempted delivery at the applicable address.

(c) This Agreement shall be deemed to have been made under and shall be governed in all respects by the laws of the State of Maryland.

(d) This Agreement may be executed in any number of counterparts with the same effect as if all parties hereto had signed the same document. All such counterparts shall be construed together and shall constitute one instrument, but in making proof hereof it shall only be necessary to produce one such counterpart.

(e) This Agreement may only be modified, waived, altered or amended by a written instrument or instruments executed by the party against which enforcement of said action is asserted. Any alleged modification, waiver, alteration or amendment which is not so documented shall not be effective as to any party.

(f) CHT REIT waives and renounces any and all homestead or exemption rights CHT REIT may have under the United States Constitution or the laws of any state as against CHT REIT, and CHT REIT transfers, conveys and assigns to Lender a sufficient amount of such homestead or exemption as may be allowed, including such homestead or exemption as may be set apart in bankruptcy, to pay and perform the obligations of CHT REIT arising under this Agreement. CHT REIT hereby directs any trustee in bankruptcy having possession of such homestead or exemption to deliver to Lender a sufficient amount of property or money set apart as exempt to pay and perform such obligations.

(g) The terms, provisions, covenants and conditions of this Agreement shall be binding upon CHT REIT, its heirs, devisees, representatives, successors and assigns, and shall inure to the benefit of Lender and Lender’s transferees, credit participants, successors, assigns and/or endorsees.

(h) Within this Agreement, the words of any gender shall be held and construed to include any other gender, and the words in the singular number shall be held and construed to include the plural and the words in the plural number shall be held and construed to include the singular, unless the context otherwise requires.

(i) A determination that any provision of this Agreement is unenforceable or invalid shall not affect the enforceability or validity of any other provision, and any determination that the application of any provision of this Agreement to any person or circumstance is illegal or unenforceable shall not affect the enforceability or validity of such provision as it may apply to any other persons or circumstances. Accordingly, the provisions of this Agreement are declared to be severable.

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11. Costs and Expenses. CHT REIT shall be responsible for and shall pay all costs and expenses (including, but not limited to, the fees and disbursements of Lender’s outside counsel) incurred in connection with the enforcement of the Lender’s rights and remedies hereunder and for the review of any materials and documents submitted in connection with the release and/or termination of CHT REIT’s liability under this Agreement and any modifications of this Agreement or the other Documents as a result of the release and/or termination of CHT REIT’s liability under this Agreement, as deemed necessary by Lender.

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THIS AGREEMENT is executed on this 29th day of June, 2012.

CHT REIT:
CNL HEALTHCARE TRUST, INC., a Maryland
corporation
By:	/s/ Joshua J. Taube
Name: Joshua J. Taube
Title: Vice President

The address of CHT REIT is:

CNL Healthcare Trust, Inc.

450 South Orange Avenue

Orlando, Florida 32801

Attention: Joseph T. Johnson, SVP and CEO and

Holly J. Greer, SVP and General Counsel

With a copy to:

Lowndes, Drosdick, Doster,

Kantor & Reed, P.A.

215 North Eola Drive

Orlando, Florida 32901

Attention: Peter Luis Lopez, Esq.

The address of Lender is:

The Prudential Insurance Company of America

c/o Prudential Asset Resources, Inc.

2100 Ross Avenue, Suite 2500

Dallas, Texas 75201

Attention: Asset Management Department

Reference Loan Nos. 706108716-706108717 and

706108866-706108870

With a copy to:

The Prudential Insurance Company of America

c/o Prudential Asset Resources, Inc.

2100 Ross Avenue, Suite 2500

Dallas, Texas 75201

Attention: Legal Department

Reference Loan Nos. 706108716-706108717 and

706108866-706108870

SIGNATURE PAGE TWO TO

MEZZANINE LOAN REPAYMENT AGREEMENT AND SECURITY AGREEMENT

LENDER:
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, a New Jersey corporation
By:	/s/ Thomas P. Goodsite
Name:	Thomas P. Goodsite
Title:	Vice President
	[CORPORATE SEAL]

8

EX-10.14

Exhibit 10.14

Schedule of Omitted Documents

of CNL Healthcare Trust, Inc.

The following management agreements have not been filed as exhibits pursuant to Instruction 2 of Item 601 of Regulation S-K: These documents are substantially identical in all material respects to Exhibit 10.4 to this Form 10-Q.

1. (Sunrise At Siegen) Management Agreement dated as of June 29, 2012, by and among Sunrise Senior Living Management, Inc., CHTSun Two Baton Rouge LA Senior Living, LLC and CHTSUN Partners IV, LLC.

2. (Sunrise of Gilbert) Management Agreement dated as of June 29, 2012, by and among Sunrise Senior Living Management, Inc., CHTSun Two Gilbert AZ Senior Living, LLC and CHTSUN Partners IV, LLC.

3. (Sunrise of Santa Monica) Management Agreement dated as of June 29, 2012, by and among Sunrise Senior Living Management, Inc., AL Santa Monica Senior Housing, LP and CHTSUN Partners IV, LLC.

4. (Sunrise of Metairie) Management Agreement dated as of June 29, 2012, by and among Sunrise Senior Living Management, Inc., CHTSun Two Metairie LA Senior Living, LLC and CHTSUN Partners IV, LLC.

5. (Sunrise of Louisville) Management Agreement dated as of June 29, 2012, by and among Sunrise Senior Living Management, Inc., Sunrise Louisville KY Senior Living, LLC and CHTSUN Partners IV, LLC.

6. (Sunrise at Fountain Square) Management Agreement dated as of June 29, 2012, by and among Sunrise Senior Living Management, Inc., CHTSun Three Lombard IL Senior Living, LLC and CHTSUN Partners IV, LLC.

The following promissory notes have not been filed as exhibits pursuant to Instruction 2 of Item 601 of Regulation S-K: These documents are substantially identical in all material respects to Exhibit 10.6 to this Form 10-Q.

1. (Sunrise at Siegen) Promissory Note ($9,769,000) dated June 29, 2012, made by Baton Rouge LA Senior Living Owner, LLC and CHTSUN Two Baton Rouge LA Senior Living, LLC in favor of The Prudential Insurance Company of America.

2. (Sunrise of Connecticut Avenue) Promissory Note ($33,932,000) dated June 29, 2012, made by Sunrise Connecticut Avenue Assisted Living Owner, L.L.C. (f/k/a Sunrise Connecticut Avenue Assisted Living, L.L.C.) in favor of The Prudential Insurance Company of America.

3. (Sunrise of Santa Monica) Promissory Note ($21,068,000) dated June 29, 2012, made by Santa Monica Assisted Living Owner, LLC and AL Santa Monica Housing, LP in favor of The Prudential Insurance Company of America.

4. (Sunrise of Metairie) Promissory Note ($13,839,000) dated June 29, 2012, made by Metairie LA Senior Living Owner, LLC and CHTSun Two Metairie LA Senior Living, LLC in favor of The Prudential Insurance Company of America.

5. (Sunrise of Louisville) Promissory Note ($11,674,000) dated June 29, 2012, made by Louisville KY Senior Living Owner, LLC and Sunrise Louisville KY Senior Living, LLC in favor of The Prudential Insurance Company of America.

6. (Sunrise at Fountain Square) Promissory Note ($17,657,000) dated June 29, 2012, made by Lombard IL Senior Living Owner, LLC and CHTSun Three Lombard IL Senior Living, LLC in favor of The Prudential Insurance Company of America.

The following deeds of trust and security agreements have not been filed as exhibits pursuant to Instruction 2 of Item 601 of Regulation S-K: These documents are substantially identical in all material respects to Exhibit 10.7 to this Form 10-Q.

1. Sunrise at Siegen—First) Multiple Indebtedness Mortgage and Security Agreement dated as of June 29, 2012, made by Baton Rouge LA Senior Living Owner, LLC and CHTSun Two Baton Rouge LA Senior Living, LLC (f/k/a MetSun Two Baton Rouge LA Senior Living, LLC) to The Prudential Insurance Company of America.

2. (Sunrise of Connecticut Avenue—First) Amended and Restated Deed of Trust and Security Agreement dated as of June 29, 2012, made by Sunrise Connecticut Avenue Assisted Living Owner, L.L.C. (f/k/a Sunrise Connecticut Avenue Assisted Living, L.L.C.) to First American Title Insurance Company (Trustee) f/b/o the Prudential Insurance Company of America.

3. (Sunrise of Santa Monica—First) Amended and Restated Deed of Trust, Security Agreement and Fixture Filing dated as of June 29, 2012, made by Santa Monica Assisted Living Owner, LLC and AL Santa Monica Senior Housing, LP to First American Title Insurance Company (Trustee) f/b/o The Prudential Insurance Company of America.

4. (Sunrise of Metairie—First) Multiple Indebtedness Mortgage and Security Agreement dated as of June 29, 2012, made by Metairie LA Senior Living Owner, LLC and CHTSun Two Metairie LA Senior Living, LLC (f/k/a MetSun Two Metairie LA Senior Living, LLC) to The Prudential Insurance Company of America.

5. (Sunrise of Louisville—First) Mortgage and Security Agreement dated as of June 29, 2012, made by Louisville KY Senior Living Owner, LLC and Sunrise Louisville KY Senior Living, LLC to The Prudential Insurance Company of America.

6. (Sunrise at Fountain Square—First) Mortgage and Security Agreement dated as of June 29, 2012, made by Lombard IL Senior Living Owner, LLC and CHTSun Three Lombard IL Senior Living, LLC (f/k/a MetSun Three Lombard IL Senior Living, LLC) to The Prudential Insurance Company of America.

7. (Sunrise of Gilbert—Second) Deed of Trust and Security Agreement dated as of June 29, 2012 made by Gilbert AZ Senior Living Owner , LLC and CHTSun Two Gilbert AZ Senior Living, LLC to First American Title Insurance Company (Trustee) f/b/o The Prudential Insurance Company of America.

8. (Sunrise at Siegen—Second) Multiple Indebtedness Mortgage and Security Agreement dated as of June 29, 2012, made by Baton Rouge LA Senior Living Owner, LLC and CHTSun Two Baton Rouge LA Senior Living, LLC to The Prudential Insurance Company of America.

9. (Sunrise of Connecticut Avenue—Second) Amended and Restated Deed of Trust and Security Agreement dated as of June 29, 2012, made by Sunrise Connecticut Avenue Assisted Living Owner, L.L.C. (f/k/a Sunrise Connecticut Avenue Assisted Living, L.L.C.) to First American Title Insurance Company (Trustee) f/b/o The Prudential Insurance Company of America.

10. (Sunrise of Santa Monica—Second) Amended and Restated Deed of Trust, Security Agreement and Fixture Filing dated as of June 29, 2012, made by Santa Monica Assisted Living Owner, LLC and AL Santa Monica Senior Housing, LP to First American Title Insurance Company (Trustee) f/b/o The Prudential Insurance Company of America.

11. (Sunrise at Metairie—Second) Multiple Indebtedness Mortgage and Security Agreement dated as of June 29, 2012, made by Metairie LA Senior Living Owner, LLC and CHTSun Two Metairie LA Senior Living, LLC (f/k/a MetSun Two Metairie LA Senior Living, LLC) to The Prudential Insurance Company of America.

12. (Sunrise of Louisville—Second) Mortgage and Security Agreement dated as of June 29, 2012, made by Louisville KY Senior Living Owner, LLC and Sunrise Louisville KY Senior Living, LLC to The Prudential Insurance Company of America.

13. (Sunrise at Fountain Square—Second) Mortgage and Security Agreement dated as of June 29, 2012, made by Lombard IL Senior Living Owner, LLC and CHTSun Three Lombard IL Senior Living, LLC (f/k/a MetSun Three Lombard IL Senior Living, LLC to The Prudential Insurance Company of America.

The following recourse liabilities guaranties have not been filed as exhibits pursuant to Instruction 2 of Item 601 of Regulation S-K: These documents are substantially identical in all material respects to Exhibit 10.8 to this Form 10-Q.

1. (Sunrise at Siegen) Recourse Liabilities Guaranty dated June 29, 2012, given by CNL Healthcare Trust, Inc. and Sunrise Senior Living Investments, Inc. f/b/o The Prudential Insurance Company of America.

2. (Sunrise of Connecticut Avenue) Amended and Restated Recourse Liabilities Guaranty dated June 29, 2012, given by CNL Healthcare Trust, Inc. and Sunrise Senior Living Investments, Inc. f/b/o The Prudential Insurance Company of America.

3. (Sunrise of Santa Monica) Amended and Restated Recourse Liabilities Guaranty dated June 29, 2012, given by CNL Healthcare Trust, Inc. and Sunrise Senior Living Investments, Inc. f/b/o The Prudential Insurance Company of America.

4. (Sunrise of Metairie) Recourse Liabilities Guaranty dated June 29, 2012, given by CNL Healthcare Trust, Inc. and Sunrise Senior Living Investments, Inc. f/b/o The Prudential Insurance Company of America.

5. (Sunrise of Louisville) Recourse Liabilities Guaranty dated June 29, 2012, given by CNL Healthcare Trust, Inc. and Sunrise Senior Living Investments, Inc. f/b/o The Prudential Insurance Company of America.

6. (Fountain Square) Recourse Liabilities Guaranty dated June 29, 2012, given by CNL Healthcare Trust, Inc. and Sunrise Senior Living Investments, Inc. f/b/o The Prudential Insurance Company of America.

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

OF CNL HEALTHCARE TRUST, INC.

PURSUANT TO RULE 13a-14(a), AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen H. Mauldin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CNL Healthcare Trust, Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) [Reserved]

(c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: August 14, 2012	By:	/s/ Stephen H. Mauldin
		STEPHEN H. MAULDIN
		Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

OF CNL HEALTHCARE TRUST, INC.

PURSUANT TO RULE 13a-14(a), AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph T. Johnson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CNL Healthcare Trust, Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) [Reserved]

(c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: August 14, 2012	By:	/s/ Joseph T. Johnson
		JOSEPH T. JOHNSON
		Senior Vice President, Chief Financial Officer and Treasurer
		(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of CNL Healthcare Trust, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2012, as filed with the United States Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen H. Mauldin, Chief Executive Officer and Joseph T. Johnson, Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 14, 2012	By:	/s/ Stephen H. Mauldin
		Stephen H. Mauldin
		Chief Executive Officer
Date: August 14, 2012	By:	/s/ Joseph T. Johnson
		Joseph T. Johnson
		Senior Vice President, Chief Financial Officer and Treasurer

XML

Intangibles, net (Details 1) (USD $)	Jun. 30, 2012
Estimated future amortization for intangible assets
2012	$ 84,517
2013	169,033
2014	169,033
2015	169,033
2016	169,033
Thereafter	873,340
Total	$ 1,633,989

XML

Related Party Arrangements (Details Textual) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Related Party Transaction [Line Items]
Amounts due to related parties for fees and reimbursable costs and expenses	$ 514,983	$ 192,755
Related Party Arrangements (Textual) [Abstract]
Additional costs incurred in connection with offering exceeding percentage of expense cap	1,700,000
Advisor [Member]
Related Party Transaction [Line Items]
Amounts due to related parties for fees and reimbursable costs and expenses	$ 100,000
Maximum [Member]
Related Party Transaction [Line Items]
Organizational and other offering costs incurred by advisor become liability if percentage exceeds gross proceeds of offering	15.00%

XML

Related Party Arrangements (Details 1) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Reimbursable expenses:
Offering costs	$ 2,022,653	$ 3,427,346
Operating expenses	407,337	824,043
Total reimbursable expenses	2,429,990	4,251,389
Investment services fees	2,301,311	3,856,236
Property management fees	33,137	49,515
Asset management fees	210,125	280,167
Total fees	$ 4,974,563	$ 8,437,307

XML

Acquisitions (Details Textual) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012 Options
Acquisitions (Textual) [Abstract]
Base term of triple-net long-term leases with senior housing properties		10 years
Two additional five year renewal options		2
Lease rate in initial lease year	7.875%	7.875%
Annual capital reserve income paid to Company, per unit		300
Weighted-average amortization period for intangible in-place leases acquired		10 years
Revenues attributable to properties	$ 1.9	$ 2.9
Net income (loss) attributable to properties	$ 0.3	$ (1.6)
Shares issued in relation to acquisition of properties	603,303

XML

Unconsolidated Entity (Tables)

6 Months Ended

Jun. 30, 2012

Unconsolidated Entity [Abstract]

Summarized operating data of Unconsolidated Entity

	Quarter ended June 30, 2012  (2)			Six months ended June 30, 2012  (2)
Revenue	$	—		$	—
Operating loss	$	(1,372,635	)	$	(1,372,635	)
Net loss	$	(1,433,935	)	$	(1,433,935	)
Loss allocable to venture partner (1)	$	(660,307	)	$	(660,307	)
Loss allocable to the Company (1)	$	(773,628	)	$	(773,628	)
Amortization of capitalized costs		—			—
Equity in earnings (loss) of unconsolidated entity	$	(773,628	)	$	(773,628	)

FOOTNOTES:

(1) Income is allocated between the Company and its joint venture partner using the HLBV method of accounting.

(2) Represents operating data from the date of acquisition through the end of the period presented.

XML

Subsequent Events (Details) (USD $)	1 Months Ended	3 Months Ended	6 Months Ended	1 Months Ended			6 Months Ended
	Aug. 09, 2012	Jun. 30, 2012	Jun. 30, 2012	Aug. 09, 2012 Common Stock [Member]	Aug. 01, 2012 Common Stock [Member]	Jul. 01, 2012 Common Stock [Member]	Jun. 30, 2012 Distribution declared [Member]
Subsequent Events (Textual) [Abstract]
Monthly cash distribution					$ 0.03333	$ 0.03333
Monthly stock distribution, shares		61,111	61,111				0.002500
Cash and stock distributions to be paid and distributed, date			Sep. 30, 2012
Additional subscription received
Additional subscription proceeds received, shares

XML

Unconsolidated Entity (Details Textual) (USD $)	6 Months Ended
	Jun. 30, 2012
Unconsolidated Entity (Textual) [Abstract]
Membership interest in seven senior housing properties through a joint venture	55.00%
Total contribution in joint venture	$ 56,700,000
Remaining percentage held by unconsolidated entity	45.00%
Value agreed upon membership interest acquired in seven senior housing properties in new joint venture	226,100,000
New loan obtained by CHTSun Partners collateralized by the seven properties	125,000,000
Total percentage of contribution interest in joint venture	100.00%
Return on invested capital under terms of venture agreement for CHTSun Partners, percentage	11.00%
Investment in unconsolidated entity	56,142,185
Loan Maturity date	Mar. 05, 2019
Amortization schedule for the principle and interest amount	30 years
Maximum [Member]
Unconsolidated Entity (Textual) [Abstract]
Fixed interest on non-recourse loan	5.25%
Principle amount of the loan for different interest rate	70,000,000
Minimum [Member]
Unconsolidated Entity (Textual) [Abstract]
Fixed interest on non-recourse loan	4.66%
Principle amount of the loan for different interest rate	$ 55,000,000

XML

Operating Leases (Details Textual)	6 Months Ended
	Jun. 30, 2012
Operating Leases (Textual) [Abstract]
Real estate investment properties, percentage leased under operating leases	7.875%
Lease, expiration date	Feb. 01, 2022
Annual capital reserve income paid to Company, per unit	300
Operating Lease Expense [Member]
Operating Leases (Textual) [Abstract]
Number of real estate investment properties owned	5
Real estate investment properties, percentage leased under operating leases	100.00%
Additional five-year renewal options	2
Annual capital reserve income paid to Company, per unit	300

XML

Related Party Arrangements (Details 2) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Amounts due to related parties
Amounts due to related parties for fees and reimbursable costs and expenses	$ 514,983	$ 192,755
Due to CNL Lifestyle Properties, Inc.	268,715
Offering costs [Member]
Amounts due to related parties
Offering costs	(262,390)	41,416
Operating expenses [Member]
Amounts due to related parties
Amounts due to related parties for fees and reimbursable costs and expenses	131,030	69,173
Reimbursable expenses [Member]
Amounts due to related parties
Amounts due to related parties for fees and reimbursable costs and expenses	(131,360)	110,589
Selling commissions [Member]
Amounts due to related parties
Selling commissions	135,228	57,516
Marketing Support fees [Member]
Amounts due to related parties
Marketing and supporting fees	61,525	24,650
Property management fees [Member]
Amounts due to related parties
Amounts due to related parties for fees and reimbursable costs and expenses	49,515
Fees and reimbursable costs and expenses [Member]
Amounts due to related parties
Amounts due to related parties for fees and reimbursable costs and expenses	$ 246,268	$ 82,166

XML

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2012

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation — The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles of the United States (“GAAP”). The unaudited condensed consolidated financial statements reflect all normal recurring adjustments, which are, in the opinion of management, necessary for the fair presentation of the Company’s results for the interim periods presented. Amounts as of December 31, 2011 included in the unaudited condensed consolidated financial statements have been derived from the audited consolidated financial statements as of that date but do not include all disclosures required by GAAP. These accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of December 31, 2011 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries over which it has control. All intercompany balances have been eliminated in consolidation.

In accordance with the guidance for the consolidation of variable interest entities (“VIE”), the Company analyzes its variable interests, including loans, leases, guarantees, and equity investments, to determine if the entity in which it has a variable interest is a variable interest entity. The Company’s analysis includes both quantitative and qualitative reviews. The Company bases its quantitative analysis on the forecasted cash flows of the entity, and its qualitative analysis on its review of the design of the entity, its organizational structure including decision-making ability and financial agreements. The Company also uses its quantitative and qualitative analyses to determine if it is the primary beneficiary of the VIE, and if such determination is made, it includes the accounts of the VIE in its consolidated financial statements.

The Company has no items of other comprehensive income (loss) in the periods presented and therefore, has not included other comprehensive income (loss) or total comprehensive income (loss) in the accompanying unaudited condensed consolidated financial statements.

Use of Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods and the disclosure of contingent liabilities. For example, significant estimates and assumptions are made in connection with the allocation of purchase price and analysis of real estate and equity method investments. Actual results could differ from those estimates.

Allocation of Purchase Price for Real Estate Acquisitions — Upon acquisition of properties, the Company estimates the fair value of acquired tangible assets (consisting of land, building and improvements, tenant improvements and equipment) and identifiable intangible assets (consisting of in-place leases) and allocates the purchase price to the assets acquired and liabilities assumed. In estimating the fair value of the tangible and intangible assets acquired, the Company considers information obtained about each property as a result of its due diligence and utilizes various valuation methods, such as estimated cash flow projections using appropriate discount and capitalization rates, estimates of replacement costs net of depreciation and available market information.

The fair value of the tangible assets of an acquired leased property is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land and building based on the determination of the fair values of these assets.

The purchase price is allocated to in-place lease intangibles based on management’s evaluation of the specific characteristics of the acquired lease. Factors considered include estimates of carrying costs during hypothetical expected lease up periods, including estimates of lost rental income during the expected lease up periods, and costs to execute similar leases such as leasing commissions, legal and other related expenses.

Investment in Unconsolidated Entity — The Company accounts for its investment in an unconsolidated joint venture under the equity method of accounting as the Company exercises significant influence, but does not control this entity. This investment is recorded initially at cost and subsequently adjusted for cash contributions, distributions and equity in earnings (loss) of the unconsolidated entity. Based on the respective venture structure and preference the Company receives on distributions and liquidation, the Company records its equity in earnings of the entity under the hypothetical liquidation at book value (“HLBV”) method of accounting. Under this method, the Company recognizes income or loss in each period as if the net book value of the assets in the venture were hypothetically liquidated at the end of each reporting period following the provisions of the joint venture agreement. In any given period, the Company could be recording more or less income than actual cash distributions received and more or less than what the Company may receive in the event of an actual liquidation.

Depreciation and Amortization — Real estate costs related to the acquisition and improvement of properties are capitalized. Repair and maintenance costs are charged to expense as incurred and significant replacements and betterments are capitalized. Repair and maintenance costs include all costs that do not extend the useful life of the real estate asset. The Company considers the period of future benefit of an asset to determine its appropriate useful life. Real estate assets are stated at cost less accumulated depreciation, which is computed using the straight-line method of accounting over the estimated useful lives of the related assets. Buildings and improvements are depreciated over 39 years and equipment is depreciated over its estimated useful life.

Amortization of intangible assets is computed using the straight-line method of accounting over the respective lease term or estimated useful life. If a lease were to be terminated prior to its scheduled expiration, all unamortized costs related to the lease would be written off.

Real Estate Impairments — Real estate assets are reviewed on an ongoing basis to determine whether there are any indicators that the value of the real estate properties (including any related amortizable intangible assets or liabilities) may be impaired. Factors that could trigger an impairment analysis include, among others: (i) significant underperformance relative to historical or projected future operating results; (ii) significant changes in the manner of use of the Company’s real estate assets or the strategy of its overall business; (iii) a significant increase in competition; (iv) a significant adverse change in legal factors or an adverse action or assessment by a regulator, which could affect the value of the Company’s real estate assets; or (v) significant negative industry or economic trends. When such events or changes in circumstances are present, the Company will assess potential impairment by comparing estimated future undiscounted operating cash flows expected to be generated over the life of the asset and from its eventual disposition, to the carrying amount of the asset. In the event that the carrying amount exceeds the estimated future undiscounted operating cash flows, the Company would recognize an impairment provision to adjust the carrying amount of the asset to the estimated fair value. Fair values are generally determined based on incorporating market participant assumptions, discounted cash flow models and the Company’s estimates reflecting the facts and circumstances of each property.

For real estate the Company indirectly owns through an investment in a joint venture, tenant-in-common interest or other similar investment structure and accounts for under the equity method, when impairment indicators are present, the Company compares the estimated fair value of its investment to the carrying value. An impairment charge will be recorded to the extent the fair value of its investment is less than the carrying amount and the decline in value is determined to be other than a temporary decline.

Fair Value Measurements — GAAP emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. GAAP requires the use of observable market data, when available, in making fair value measurements. Observable inputs are inputs that the market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of ours. When market data inputs are unobservable, the Company utilizes inputs that it believes reflects the Company’s best estimate of the assumptions market participants would use in pricing the asset or liability. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. As a basis for considering market participant assumptions in fair value measurements, GAAP establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). The three levels of inputs used to measure fair value are as follows:

• Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

• Level 2 — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3 — Unobservable inputs for the asset or liability, which are typically based on the Company’s own assumptions, as there is little, if any, related market activity.

Revenue Recognition — Rental revenue from leases is recorded on the straight-line basis over the terms of the leases. The Company’s leases require the tenants to pay certain contractual amounts that are set aside by the Company for replacements of fixed assets and other improvements to the properties. These amounts are and will remain the property of the Company during and after the term of the lease. The amounts are recorded as capital improvement reserve income at the time that they are earned and are included in rental income from operating leases in the accompanying condensed consolidated statement of operations.

Loan Costs — Financing costs paid in connection with obtaining debt are deferred and amortized over the life of the debt using the effective interest rate.

Net Loss per Share — Net loss per share is calculated based upon the weighted average number of shares of common stock outstanding during the period in which the Company was operational. For the purposes of determining the weighted average number of shares of common stock outstanding, stock distributions are treated as if they were issued and outstanding for the full periods presented. Therefore, the weighted average number of shares outstanding for the quarter and six months ended June 30, 2012 has been revised to include stock distributions declared through June 30, 2012 as if they were outstanding as of the beginning of each period presented. Included in the weighted average shares outstanding for the quarter and six months ended June 30, 2012 are 61,111 shares declared as stock distributions through June 30, 2012.

Recent Accounting Pronouncements — In May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” This ASU clarifies the application of existing fair value measurements and disclosure requirements and certain changes to principles and requirements for measuring fair value. This update is to be applied prospectively and is effective during interim and annual periods beginning after December 15, 2011. The adoption of this ASU did not have a material impact on the Company’s financial statements and disclosures.

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Borrowings (Details) (USD $)	Jun. 30, 2012
Schedule of future principal payments and maturity for borrowing
2012
2013	49,878,000
2014	40,000,000
2015
2016
Thereafter
Future principal payments and maturity for borrowing	$ 89,878,000

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Summary of Significant Accounting Policies (Details)	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Summary of Significant Accounting Policies (Textual) [Abstract]
Real estate and accumulated depreciation, buildings and improvements, depreciated period		39 years
Number of shares declared as stock distributions	61,111	61,111

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Organization (Details) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Dec. 31, 2011	Oct. 05, 2011	Jun. 27, 2011
Subsidiary, Sale of Stock [Line Items]
Common stock shares initial public offering	$ 68,954,452	$ 13,290,246
Organization (Textual) [Abstract]
CNL properties Trust, Inc. organized date	Jun. 08, 2010
Common stock offering price per share				$ 10.00
Offering price for reinvestment plan				$ 9.50
Aggregate subscription of common stock			2,000,000
IPO [Member]
Subsidiary, Sale of Stock [Line Items]
Common stock shares initial public offering	$ 3,000,000,000

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Borrowings (Details Textual) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Apr. 30, 2012
Borrowings (Additional Textual) [Abstract]
Number of senior housing properties collateralized for loan	5
Fair market value of mortgage notes payable	$ 89.9
Carrying value of mortgage notes payable	89.9
Collateralized loan obligations [Member]
Borrowings (Textual) [Abstract]
Loan obtained	71.4
Interest rate, margin added to LIBOR	3.25%	6.00%
Net offering proceeds through common stock	50.00%
Outstanding principle balance of loan amount	49.9
Debt Instrument, Maturity Date	Feb. 01, 2013
Until the Loan had been paid down to an outstanding principal balance of approximately	54.0
Mezzanine loan agreement [Member]
Borrowings (Textual) [Abstract]
Loan obtained	$ 40.0
Debt Instrument, Maturity Date	Jul. 05, 2014
Mezzanine loan agreement [Member] | Date of origination through July 2013 [Member]
Borrowings (Textual) [Abstract]
Interest accrued on loan	8.00%
Mezzanine loan agreement [Member] | Remaining term [Member]
Borrowings (Textual) [Abstract]
Interest accrued on loan	12.00%

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Acquisitions (Details) (USD $)	6 Months Ended
	Jun. 30, 2012
Acquisitions of senior housing properties
Allocated Purchase Price	$ 84,050,000
One senior housing property [Member] | Sweetwater Retirement Community [Member]
Acquisitions of senior housing properties
Location	Billings, MT
Date of Acquisition	Feb. 16, 2012
Allocated Purchase Price	16,640,440
One senior housing property [Member] | Primrose Retirement Community of Grand Island [Member]
Acquisitions of senior housing properties
Location	Grand Island, NE
Date of Acquisition	Feb. 16, 2012
Allocated Purchase Price	13,862,710
One senior housing property [Member] | Primrose Retirement Community of Marion [Member]
Acquisitions of senior housing properties
Location	Marion, OH
Date of Acquisition	Feb. 16, 2012
Allocated Purchase Price	15,480,587
One senior housing property [Member] | Primrose Retirement Community of Mansfield [Member]
Acquisitions of senior housing properties
Location	Mansfield, OH
Date of Acquisition	Feb. 16, 2012
Allocated Purchase Price	19,129,186
One senior housing property [Member] | Primrose Retirement Community of Casper [Member]
Acquisitions of senior housing properties
Location	Casper, WY
Date of Acquisition	Feb. 16, 2012
Allocated Purchase Price	$ 18,937,077

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Acquisitions (Details 1) (USD $)	Jun. 30, 2012
Allocation of the purchase price
Land and land improvements	$ 5,746,081
Buildings	75,680,273
Equipment	933,313
In-place lease intangibles	1,690,333
Total Purchase Price Allocation	$ 84,050,000

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Organization

6 Months Ended

Jun. 30, 2012

Organization [Abstract]

Organization

1. Organization

CNL Healthcare Trust, Inc., formerly known as CNL Properties Trust, Inc., (“the Company”) is a Maryland corporation incorporated on June 8, 2010 that intends to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes in 2012. In order to better reflect the concentrated investment focus, as described below, the Company amended its amended and restated articles of incorporation on February 9, 2012 to change its name to CNL Healthcare Trust, Inc.

In February 2012, the Company announced it would place its investment focus on acquiring properties primarily in the United States within the senior housing and healthcare sectors, although the Company may also acquire properties in the lifestyle and lodging sectors. Senior housing asset classes the Company may acquire include active adult communities (age-restricted and age-targeted housing), independent and assisted living facilities, continuing care retirement communities, memory care facilities and skilled nursing facilities. Healthcare asset classes the Company may acquire include medical office buildings, as well as other types of healthcare and wellness-related properties such as physicians’ offices, specialty medical and diagnostic service providers, specialty hospitals, walk-in clinics and outpatient surgery centers, hospitals and inpatient rehabilitative facilities, long-term acute care hospitals, pharmaceutical and medical supply manufacturing facilities, laboratories and research facilities and medical marts. Lifestyle asset classes the Company may acquire are those properties that reflect or are affected by the social, consumption and entertainment values of society and generally include ski and mountain resorts, golf courses, attractions (such as amusement parks, waterparks and family entertainment centers), marinas, and other leisure or entertainment-related properties. Lodging asset classes the Company may acquire include resort, boutique and upscale properties or any full service, limited service, extended stay and/or other lodging-related properties. The Company expects to primarily lease its properties to wholly-owned taxable REIT subsidiaries (“TRS Entities”) and engage independent third-party managers under management agreements to operate the properties as permitted under applicable tax regulations. However, it may also lease its properties to third-party tenants under a triple-net lease. The Company also may invest in and originate mortgage, bridge or mezzanine loans or in entities that make investments similar to the foregoing.

On June 27, 2011, the Company commenced its initial public offering of up to $3.0 billion of shares of common stock (the “Offering”), including shares being offered from its distribution reinvestment plan (the “Reinvestment Plan”), pursuant to a registration statement on Form S-11 under the Securities Act of 1933. The shares are being offered at $10.00 per share, or $9.50 per share pursuant to the Reinvestment Plan, unless changed by the board of directors. As of October 5, 2011, the Company received and accepted aggregate subscriptions in excess of the minimum offering amounts of $2.0 million in shares of common stock and the Company commenced operations. Prior to October 5, 2011, the Company was in its development stage and had not commenced operations. As a result, there are no comparative financial statements for the quarter and six months ended June 30, 2011.

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Acquisitions (Details 2) (Unaudited) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Unaudited pro forma results of operations
Revenues	$ 1,922,467	$ 3,844,948
Net loss	$ (3,479,565)	$ (6,171,923)
Loss per share of common stock (basic and diluted)	$ (0.55)	$ (1.38)
Weighted average number of shares of common stock outstanding (basic and diluted)	6,326,923	4,484,422

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Intangibles, net (Details Textual) (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Intangibles, net (Textual) [Abstract]
Amortization expense on intangible assets	$ 0.04	$ 0.06

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Condensed Consolidated Balance Sheets (Unaudited) (USD $)	Jun. 30, 2012	Dec. 31, 2011
ASSETS
Real estate investment properties, net	$ 81,573,932
Investment in unconsolidated entity	56,142,185
Cash	13,082,283	10,001,872
Intangibles, net	1,633,989
Loan costs, net	1,687,910
Prepaid and other assets	542,824	161,390
Due from affiliates	131,360
Restricted cash	39,400
Deposits		400,000
Total Assets	154,833,883	10,563,262
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes payable	89,878,000
Accounts payable and accrued expenses	2,620,623	668,120
Due to related parties	514,983	192,755
Other liabilities	56,815
Total Liabilities	93,070,421	860,875
Commitments and contingencies (Note 11)
Stockholders' Equity:
Preferred stock, $0.01 par value per share, 200,000,000 shares authorized and unissued
Excess shares, $0.01 par value per share, 300,000,000 shares authorized and unissued
Common stock, $0.01 par value per share, 1,120,000,000 and 7,000,000 shares authorized, respectively; 8,317,844 and 1,357,572 shares issued and 8,316,795 and 1,357,572 shares outstanding as of June 30, 2012 and December 31, 2011, respectively	83,168	13,576
Capital in excess of par value	70,149,094	11,504,283
Accumulated loss	(7,652,445)	(1,759,580)
Accumulated distributions	(816,355)	(55,892)
Total Stockholders' Equity	61,763,462	9,702,387
Total Liabilities and Stockholders' Equity	$ 154,833,883	$ 10,563,262

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Related Party Arrangements (Details) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Fees in connection with Offering
Selling commissions	$ 2,510,748	$ 4,432,183
Marketing support fees	1,217,197	2,040,669
Total	$ 3,727,945	$ 6,472,852

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Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Condensed Consolidated Statements of Stockholders' Equity [Abstract]
Cash distributions, declared and paid per share	$ 0.19998	$ 0.06666

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Real Estate Investment Properties, net (Details Textual) (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Real Estate Investment Properties, net (Textual) [Abstract]
Depreciation expense on real estate investment properties	$ 0.6	$ 0.8

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Real Estate Investment Properties, net (Tables)

6 Months Ended

Jun. 30, 2012

Real Estate Investment Properties, net [Abstract]

Schedule of real estate investment properties

Land and land improvements	$	5,746,081
Buildings		75,680,273
Equipment		933,313
Less: accumulated depreciation		(785,735	)
	$	81,573,932

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Operating Leases (Details) (USD $)	Jun. 30, 2012
Schedule of future minimum lease payments
2012	$ 3,372,800
2013	6,929,069
2014	7,139,463
2015	7,349,856
2016	7,560,250
Thereafter	42,057,132
Total	$ 74,408,570

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Intangibles, net (Tables)

6 Months Ended

Jun. 30, 2012

Intangibles, net [Abstract]

Schedule of net book value of Intangibles

Intangible Assets	Gross Carrying Amount		Accumulated Amortization			Net Book Value as of June 30, 2012
In-place leases	$	1,690,333	$	(56,344	)	$	1,633,989

Schedule of estimated future amortization

2012	$	84,517
2013		169,033
2014		169,033
2015		169,033
2016		169,033
Thereafter		873,340
	$	1,633,989

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Condensed Consolidated Statement of Cash Flows (Unaudited) (USD $)	6 Months Ended
	Jun. 30, 2012
Operating Activities:
Net Cash Used in Operating Activities	$ (1,856,857)
Investing Activities:
Acquisition of property	(83,650,000)
Investment in unconsolidated entity	(56,915,813)
Changes in restricted cash	(39,400)
Other	(9,087)
Net Cash Flows Used in Investing Activities	(140,614,300)
Financing Activities:
Subscriptions received for common stock through public offering	68,533,285
Payment of stock issuance costs	(10,418,795)
Distributions to stockholders, net of distribution reinvestments	(339,296)
Redemption of common stock	(10,474)
Proceeds from mortgage note payable	111,400,000
Principal payment on mortgage note payable	(21,522,000)
Payment of loan costs	(2,091,152)
Net Cash Flows Provided by Financing Activities	145,551,568
Net increase in cash	3,080,411
Cash at beginning of period	10,001,872
Cash at End of Period	13,082,283
Amounts incurred but not paid (included in due to related parties):
Selling Commissions and Marketing Support Fees	196,753
Stock distributions (at par)	$ 570

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Condensed Consolidated Balance Sheets [Abstract]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	200,000,000	200,000,000
Preferred stock, shares unissued	200,000,000	200,000,000
Excess shares, par value	$ 0.01	$ 0.01
Excess shares, shares authorized	300,000,000	300,000,000
Excess shares, shares unissued	300,000,000	300,000,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	1,120,000,000	7,000,000
Common stock, shares issued	8,317,844	1,357,572
Common stock, shares outstanding	8,316,795	1,357,572

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Stockholders' Equity

6 Months Ended

Jun. 30, 2012

Stockholders' Equity [Abstract]

Stockholders' Equity

10. Stockholders’ Equity

Public Offering — As of June 30, 2012, the Company had received aggregate offering proceeds of approximately $82.2 million (8.2 million shares) including approximately $0.4 million (47,228 shares) received through its Reinvestment Plan.

Distributions — During the six months ended June 30, 2012, the Company declared cash distributions of approximately $0.76 million of which $0.34 million were paid in cash to stockholders and $0.42 million were reinvested pursuant to the Company’s Reinvestment Plan. In addition, the Company declared and made stock distributions of 56,931 shares of common stock for the six months ended June 30, 2012.

For the six months ended June 30, 2012, 100% of the cash distributions paid to stockholders are expected to be a return of capital to stockholders for federal income tax purposes.

No amounts distributed to stockholders for the six months ended June 30, 2012 were required to be or have been treated by the Company as a return of capital for purposes of calculating the stockholders’ return on their invested capital as described in the Company’s advisory agreement. The distribution of new common shares to recipients is non-taxable.

Redemptions — During the six months ended June 30, 2012, the Company redeemed 1,049 shares of common stock for approximately $0.01 million.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Aug. 09, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	CNL Healthcare Trust, Inc.
Entity Central Index Key	0001496454
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		10,174,124

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Commitment and Contingencies

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies [Abstract]

Commitments and Contingencies

11. Commitment and Contingencies

In the ordinary course of business, the Company may become subject to litigation or claims. There are no material legal proceedings pending or known to be contemplated against the Company.

See Note 9. “Related Party Arrangements” for information on contingent amounts due to the Company’s Advisor in connection with its Offering and expenses thereof.

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Condensed Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Revenues:
Rental income from operating leases	$ 1,922,467	$ 2,863,982
Total Revenues	1,922,467	2,863,982
Expenses:
Acquisition fees and expenses	2,429,230	4,328,643
General and administrative	575,352	1,059,400
Asset management fees	210,125	280,167
Property management fees	33,137	49,515
Depreciation and amortization	631,883	842,079
Total Expenses	3,879,727	6,559,804
Operating Loss	(1,957,260)	(3,695,822)
Other Income (Expense):
Interest and other income	5,245	5,346
Interest expense and loan cost amortization	(753,922)	(1,428,761)
Equity in earnings (loss) of unconsolidated entity	(773,628)	(773,628)
Total Other Expense	(1,522,305)	(2,197,043)
Net Loss	$ (3,479,565)	$ (5,892,865)
Net Loss Per Share of Common Stock (basic and diluted)	$ (0.55)	$ (1.33)
Weighted Average Number of Shares of Common Stock Outstanding (basic and diluted)	6,326,923	4,428,705

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Operating Leases

6 Months Ended

Jun. 30, 2012

Operating Leases [Abstract]

Operating Leases

5. Operating Leases

As of June 30, 2012, the Company owned five real estate investment properties that were 100% leased under operating leases. The leases will expire in February 2022, subject to the tenant’s option to extend the leases for two additional five-year renewal options. Annual base rent is equal to the properties’ lease basis multiplied by the lease rate. The lease rate is 7.875% in the initial lease year and will escalate thereafter pursuant to the lease agreements. Annual capital reserve income is paid to the Company based on $300 per unit each year. Under the terms of the lease agreements, the tenant is responsible for payment of property taxes, general liability insurance, utilities, repairs and maintenance, including structural and roof expenses.

The tenant is expected to pay real estate taxes directly to taxing authorities. However, if the tenant does not pay, the Company will be liable.

The following is a schedule of future minimum lease payments to be received under non-cancellable operating leases as of June 30, 2012:

2012	$	3,372,800
2013		6,929,069
2014		7,139,463
2015		7,349,856
2016		7,560,250
Thereafter		42,057,132
	$	74,408,570

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Real Estate Investment Properties, net

6 Months Ended

Jun. 30, 2012

Real Estate Investment Properties, net [Abstract]

Real Estate Investment Properties, net

4. Real Estate Investment Properties, net

As of June 30, 2012, real estate investment properties consisted of the following:

Land and land improvements	$	5,746,081
Buildings		75,680,273
Equipment		933,313
Less: accumulated depreciation		(785,735	)
	$	81,573,932

For the quarter and six months ended June 30, 2012, depreciation expense on the Company’s real estate investment properties was approximately $0.6 million and $0.8 million, respectively.

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Operating Leases (Tables)

6 Months Ended

Jun. 30, 2012

Operating Leases [Abstract]

Schedule of future minimum lease payments

2012	$	3,372,800
2013		6,929,069
2014		7,139,463
2015		7,349,856
2016		7,560,250
Thereafter		42,057,132
	$	74,408,570

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Subsequent Events

6 Months Ended

Jun. 30, 2012

Subsequent Events [Abstract]

Subsequent Events

12. Subsequent Events

In July 2012, the Company amended its property management agreement. The amendment clarified the nature of the fees payable and duties of the property manager. The fees payable to the property manager under the revised agreement will continue to be determined in a manner consistent with past determinations under the prior agreement.

The Company’s board of directors declared a monthly cash distribution of $0.03333 and a monthly stock distribution of 0.002500 shares on each outstanding share of common stock on July 1, 2012 and August 1, 2012. These distributions are to be paid and distributed by September 30, 2012.

During the period July 1, 2012 through August 9, 2012, the Company received additional subscription proceeds of approximately $18.6 million (1.9 million shares).

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Borrowings

6 Months Ended

Jun. 30, 2012

Borrowings [Abstract]

Borrowings

8. Borrowings

In connection with the closing of the five senior housing properties, the Company entered into a collateralized loan agreement with a lender in the original aggregate principal amount of $71.4 million (the “Loan”). The Loan matures in February 2013. The Loan initially bore interest at LIBOR plus 6.00% and the Company was required to pay down the Loan at an amount equal to 50% of the net offering proceeds collected through the Company’s offering of common stock, as defined in the loan agreement, until the Loan had been paid down to an outstanding principal balance of approximately $54.0 million. The Company met this requirement in April 2012. For the remainder of the term, monthly interest only payments will be required through maturity, and the Loan will bear interest at a rate equal to LIBOR plus 3.25%. The Company may prepay the Loan at any time, without prepayment penalty. As of June 30, 2012, approximately $49.9 million was outstanding under the Loan.

The Loan is collateralized by first priority mortgages and deeds of trust on all real property of the senior housing properties and by an assignment of all leases and agreements relating to the use and occupancy of the properties. The Loan contains customary affirmative, negative and financial covenants including limitations on incurrence of additional indebtedness, restrictions on distributions, minimum occupancy at the properties, debt service coverage and minimum tangible net worth. As of June 30, 2012, the Company was in compliance with the aforementioned financial covenants.

In connection with the closing of CHTSun IV, the Company entered into a mezzanine loan agreement, providing for a mezzanine loan in the original aggregate principal amount of $40.0 million (the “Mezz Loan”). The Mezz Loan matures on July 5, 2014, unless the Company exercises its option to extend the term of the Mezz Loan for one year, provided certain terms and conditions are satisfied. Interest on the outstanding principal balance of the Mezz Loan accrues from the date of the Mezz Loan through maturity at (i) a rate of 8% per annum from the date of origination through and including the payment date in July, 2013, and (ii) a rate of 12% per annum for the remaining term of the Mezz Loan. Interest payments are payable monthly. At maturity, the Company is required to pay the outstanding principal balance, all accrued and unpaid interest thereon, the exit fee. (defined in the loan agreement as the sum of: (i) 2% of the principal balance of the Mezz Loan being prepaid and/or repaid plus (ii) upon the prepayment and/or repayment of the Mezz Loan in full, if the lender has not received interest payments totaling at least $3,200,000 as of such date, the amount equal to: (x) $3,200,000 minus (y) the aggregate amount of interest payments received as of such date) and all other amounts due. The Company may prepay the Mezz Loan, in whole or in part, plus any applicable exit fee.

In connection with entering into the loan with Prudential relating to the CHTSUN IV joint venture, described in Note 7. “Unconsolidated Entity”, the Company entered into a separate agreement with Prudential, where as a condition of Prudential consenting to the Mezz Loan, Prudential required the Company to repay the Mezz Loan within twelve months to the extent the Company raises sufficient net offering proceeds to satisfy the Mezz Loan. To the extent that the Company does not repay the Mezz Loan within twelve months, it will be required to restrict the use of all net offering proceeds to pay down the outstanding balance until the Mezz Loan is repaid in full.

The Mezz Loan is collateralized by a first priority security interest in the Company’s membership interest in CHTSun IV.

The following is a schedule of future principal payments and maturity for the Company’s borrowings as of June 30, 2012:

2012	$	—
2013		49,878,000
2014		40,000,000
2015		—
2016		—
Thereafter		—
	$	89,878,000

The fair market value and carrying value of the mortgage notes payable was approximately $89.9 million, as of June 30, 2012 based on then-current rates and spreads the Company would expect to obtain for similar borrowings. Because this methodology includes inputs that are less observable by the public and are not necessarily reflected in active markets, the measurement of the estimated fair values related to our mortgage notes payable is categorized as level 3 on the three-level valuation hierarchy. The estimated fair value of accounts payable and accrued expenses approximates the carrying value as of June 30, 2012 and December 31, 2011 because of the relatively short maturities of the obligations.

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Intangibles, net

6 Months Ended

Jun. 30, 2012

Intangibles, net [Abstract]

Intangibles, net

6. Intangibles, net

The gross carrying amount and accumulated amortization of the Company’s intangible assets as of June 30, 2012 are as follows:

Intangible Assets	Gross Carrying Amount		Accumulated Amortization			Net Book Value as of June 30, 2012
In-place leases	$	1,690,333	$	(56,344	)	$	1,633,989

Amortization expense on the Company’s intangible assets was approximately $0.04 million and $0.06 million for the quarter and six months ended June 30, 2012, respectively.

The estimated future amortization for the Company’s intangible assets as of June 30, 2012 was as follows:

2012	$	84,517
2013		169,033
2014		169,033
2015		169,033
2016		169,033
Thereafter		873,340
	$	1,633,989

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Unconsolidated Entity

6 Months Ended

Jun. 30, 2012

Unconsolidated Entity [Abstract]

Unconsolidated Entity

7. Unconsolidated Entity

Unconsolidated Entity — In June 2012, the Company acquired a 55% membership interest in seven senior housing properties through a joint venture, CHTSUN Partners IV, LLC (“CHTSun IV”), formed by the Company and its co-venture partner, Sunrise Senior Living Investments, Inc. (“Sunrise”), for approximately $56.7 million. The remaining 45% interest is held by Sunrise. The total acquisition price for the seven senior housing properties was approximately $226.1 million. CHTSun IV obtained a $125.0 million loan from The Prudential Insurance Company of America (“Prudential”), a portion of which was used to refinance the existing indebtedness encumbering the properties in the portfolio. The non-recourse loan which is collateralized by the properties has a maturity date of March 5, 2019 and a fixed-interest rate of 4.66% on $55.0 million of the principal amount and 5.25% on $70.0 million of the principal amount of the loan. The loan requires interest-only payments on $55.0 million of the principal amount until September 5, 2012 and interest-only payments on $70 million of the principal amount until January 5, 2013 and monthly payments on both outstanding amounts thereafter of principal and interest based upon a 30-year amortization schedule.

Under the terms of the venture agreement for CHTSun IV, the Company is entitled to receive a preferred return of 11% on its invested capital for the first six years and shares control over major decisions with Sunrise. Subject to certain restrictions, Sunrise has the option to acquire 100% of the Company’s interest in the Joint Venture in years one and two and in years four through seven. The calculation of Sunrise’s purchase price is based upon a predetermined formula as provided in the venture agreement.

The Company accounts for this investment under the equity method of accounting. While several significant decisions are shared between the Company and its joint venture partner, the Company does not control the venture or direct the activities that most significantly impact the venture’s performance.

As of June 30, 2012, the Company’s investment in its unconsolidated entity was approximately $56.1 million. The following tables present financial information for the Company’s unconsolidated entity as of and for the quarter and six months ended June 30, 2012:

Summarized operating data:

	Quarter ended June 30, 2012  (2)			Six months ended June 30, 2012  (2)
Revenue	$	—		$	—
Operating loss	$	(1,372,635	)	$	(1,372,635	)
Net loss	$	(1,433,935	)	$	(1,433,935	)
Loss allocable to venture partner (1)	$	(660,307	)	$	(660,307	)
Loss allocable to the Company (1)	$	(773,628	)	$	(773,628	)
Amortization of capitalized costs		—			—
Equity in earnings (loss) of unconsolidated entity	$	(773,628	)	$	(773,628	)

FOOTNOTES:

(1) Income is allocated between the Company and its joint venture partner using the HLBV method of accounting.

(2) Represents operating data from the date of acquisition through the end of the period presented.

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Related Party Arrangements

6 Months Ended

Jun. 30, 2012

Related Party Arrangements [Abstract]

Related Party Arrangements

9. Related Party Arrangements

For the quarter and six months ended June 30, 2012, the Company incurred the following fees in connection with its Offering:

	Quarter Ended June 30, 2012		Six Months Ended June 30, 2012
Selling commissions	$	2,510,748	$	4,432,183
Marketing support fees		1,217,197		2,040,669
	$	3,727,945	$	6,472,852

For the quarter and six months ended June 30, 2012, the Company incurred the following fees and reimbursable expenses as follows:

	Quarter Ended June 30,  2012		Six Months Ended June 30, 2012
Reimbursable expenses:
Offering costs	$	2,022,653	$	3,427,346
Operating expenses		407,337		824,043
		2,429,990		4,251,389
Investment services fees		2,301,311		3,856,236
Property management fees		33,137		49,515
Asset management fees		210,125		280,167
	$	4,974,563	$	8,437,307

As of June 30, 2012 and December 31, 2011, the following amounts were included in due to (from) related parties in the financial statements:

	June 30, 2012			December 31, 2011
Reimbursable expenses:
Offering costs	$	(262,390	)	$	41,416
Operating expenses		131,030			69,173
		(131,360	)		110,589
Selling commissions		135,228			57,516
Marketing support fees		61,525			24,650
Property management fees		49,515			—
		246,268			82,166
Due to CNL Lifestyle Properties, Inc.		268,715			—
	$	383,623		$	192,755

Organizational and other offering costs incurred by the Advisor become a liability to the Company only to the extent selling commissions, marketing support fees and organizational and other offering costs do not exceed 15% of the gross proceeds of the Offering. The Advisor has incurred on the Company’s behalf approximately an additional $1.7 million of costs in connection with the Offering exceeding the 15% expense cap as of June 30, 2012. These costs will be recognized by the Company in future periods as the Company receives future Offering proceeds to the extent such costs are within such 15% limitation.

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Real Estate Investment Properties, net (Details) (USD $)	Jun. 30, 2012
Real Estate Investment Property, at Cost [Abstract]
Land and land improvements	$ 5,746,081
Buildings	75,680,273
Equipment	933,313
Less: accumulated depreciation	(785,735)
Real estate investment properties, net	$ 81,573,932

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Acquisitions (Tables)

6 Months Ended

Jun. 30, 2012

Acquisitions [Abstract]

Acquisitions of senior housing properties

Property/Description	Location	Date of Acquisition	Allocated Purchase Price
Sweetwater Retirement Community	Billings, MT	2/16/2012	$	16,640,440
One senior housing property
Primrose Retirement Community of Grand Island	Grand Island, NE	2/16/2012		13,862,710
One senior housing property
Primrose Retirement Community of Marion	Marion, OH	2/16/2012		15,480,587
One senior housing property
Primrose Retirement Community of Mansfield	Mansfield, OH	2/16/2012		19,129,186
One senior housing property
Primrose Retirement Community of Casper	Casper, WY	2/16/2012		18,937,077
One senior housing property
			$	84,050,000

Schedule of purchase price allocation

	Total Purchase Price
Land and land improvements	$	5,746,081
Buildings		75,680,273
Equipment		933,313
In-place lease intangibles		1,690,333
	$	84,050,000

Schedule of unaudited pro forma results of operations

	Quarter ended June 30, 2012			Six months ended June 30, 2012
Revenues	$	1,922,467		$	3,844,948
Net loss	$	(3,479,565	)	$	(6,171,923	)
Loss per share of common stock (basic and diluted)	$	(0.55	)	$	(1.38	)
Weighted average number of shares of common stock outstanding (basic and diluted) (1)		6,326,923			4,484,422

FOOTNOTES:

(1) As a result of the properties being treated as operational since January 1, 2012, the Company assumed approximately 603,303 shares were issued as of January 1, 2012. Consequently the weighted average shares outstanding was adjusted to reflect this amount of shares being issued on January 1, 2012 instead of actual dates on which the shares were issued, and such shares were treated as outstanding as of the beginning of the periods presented.

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Borrowings (Tables)

6 Months Ended

Jun. 30, 2012

Borrowings [Abstract]

Schedule of future principal payments and maturity

2012	$	—
2013		49,878,000
2014		40,000,000
2015		—
2016		—
Thereafter		—
	$	89,878,000

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Stockholders' Equity (Details) (USD $)	6 Months Ended
	Jun. 30, 2012
Class of Stock [Line Items]
Aggregate offering proceeds received from public offering	$ 82,200,000
Shares issued from public offering	8,200,000
Stockholders Equity (Textual) [Abstract]
Cash distribution declared	760,000
Declared cash distributions paid to stockholders	339,296
Amount reinvested pursuant to Reinvestment Plan	420,000
Percentage of cash distribution to stockholders	100.00%
Redemption of common stock	10,474
Redemption of common stock, shares	1,049
Common Stock [Member]
Class of Stock [Line Items]
Stock distributions of common stock declared and made	56,931
Stockholders Equity (Textual) [Abstract]
Redemption of common stock	10
Redemption of common stock, shares	1,049
Reinvestment Plan [Member]
Class of Stock [Line Items]
Aggregate offering proceeds received from public offering	$ 400,000
Shares issued from public offering	47,228

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Unconsolidated Entity (Details) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Summarized operating data:
Revenue
Operating loss	(1,372,635)	(1,372,635)
Net loss	(1,433,935)	(1,433,935)
Loss allocable to venture partner	(660,307)	(660,307)
Loss allocable to the Company	(773,628)	(773,628)
Amortization of capitalized costs
Loss of unconsolidated entity	$ (773,628)	$ (773,628)

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Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (USD $)	Total	Common Stock	Capital in Excess of Par Value	Accumulated Loss	Accumulated Distributions
Beginning Balance at Dec. 31, 2010	$ 200,000	$ 222	$ 199,778
Beginning Balance, shares at Dec. 31, 2010		22,222
Subscriptions received for common stock through through public offering and reinvestment plan	13,290,246	13,312	13,276,934
Subscriptions received for common stock through through public offering and reinvestment plan, shares		1,331,170
Stock distributions		42	(42)
Stock distributions, shares		4,180
Stock issuance and offering costs	(1,972,387)		(1,972,387)
Net Loss	(1,759,580)			(1,759,580)
Cash distributions, declared and paid	(55,892)				(55,892)
Ending Balance at Dec. 31, 2011	9,702,387	13,576	11,504,283	(1,759,580)	(55,892)
Ending Balance, shares at Dec. 31, 2011	1,357,572	1,357,572
Subscriptions received for common stock through through public offering and reinvestment plan	68,954,452	69,032	68,885,420
Subscriptions received for common stock through through public offering and reinvestment plan, shares		6,903,341
Stock distributions	(570)	570	(570)
Stock distributions, shares		56,931
Redemption of common stock	(10,474)	(10)	(10,464)
Redemption of common stock, shares	(1,049)	(1,049)
Stock issuance and offering costs	(10,229,575)		(10,229,575)
Net Loss	(5,892,865)			(5,892,865)
Cash distributions, declared and paid	(760,463)				(760,463)
Ending Balance at Jun. 30, 2012	$ 61,763,462	$ 83,168	$ 70,149,094	$ (7,652,445)	$ (816,355)
Ending Balance, shares at Jun. 30, 2012	8,316,795	8,316,795

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Acquisitions

6 Months Ended

Jun. 30, 2012

Acquisitions [Abstract]

Acquisitions

3. Acquisitions

Consolidated Entities — During the six months ended June 30, 2012, the Company acquired the following five senior housing properties:

Property/Description	Location	Date of Acquisition	Allocated Purchase Price
Sweetwater Retirement Community	Billings, MT	2/16/2012	$	16,640,440
One senior housing property
Primrose Retirement Community of Grand Island	Grand Island, NE	2/16/2012		13,862,710
One senior housing property
Primrose Retirement Community of Marion	Marion, OH	2/16/2012		15,480,587
One senior housing property
Primrose Retirement Community of Mansfield	Mansfield, OH	2/16/2012		19,129,186
One senior housing property
Primrose Retirement Community of Casper	Casper, WY	2/16/2012		18,937,077
One senior housing property
			$	84,050,000

The senior housing properties above are subject to long-term triple-net leases with a base term of 10 years and two additional five-year renewal options. Annual base rent is equal to the properties’ lease basis multiplied by the lease rate. The lease rate is 7.875% in the initial lease year and will escalate thereafter pursuant to the lease agreements. Annual capital reserve income is paid to the Company based on $300 per unit each year.

The following summarizes the allocation of the purchase price for the above properties, and the estimated fair values of the assets acquired:

	Total Purchase Price
Land and land improvements	$	5,746,081
Buildings		75,680,273
Equipment		933,313
In-place lease intangibles		1,690,333
	$	84,050,000

The weighted-average amortization period for in-place lease intangibles as of the date of the acquisition was 10 years.

The revenues and net income (loss) attributable to the properties included in the Company’s unaudited condensed consolidated operations were approximately $1.9 million and $0.3 million for the quarter ended June 30, 2012, respectively, and $2.9 million and $(1.6) million for the six months ended June 30, 2012, respectively.

The following table presents the unaudited pro forma results of operations of the Company as if each of the properties were acquired as of January 1, 2012 and owned during the quarter and six months ended June 30, 2012:

	Quarter ended June 30, 2012			Six months ended June 30, 2012
Revenues	$	1,922,467		$	3,844,948
Net loss	$	(3,479,565	)	$	(6,171,923	)
Loss per share of common stock (basic and diluted)	$	(0.55	)	$	(1.38	)
Weighted average number of shares of common stock outstanding (basic and diluted) (1)		6,326,923			4,484,422

FOOTNOTES:

(1) As a result of the properties being treated as operational since January 1, 2012, the Company assumed approximately 603,303 shares were issued as of January 1, 2012. Consequently the weighted average shares outstanding was adjusted to reflect this amount of shares being issued on January 1, 2012 instead of actual dates on which the shares were issued, and such shares were treated as outstanding as of the beginning of the periods presented.

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Related Party Arrangements (Tables)

6 Months Ended

Jun. 30, 2012

Related Party Arrangements [Abstract]

Fees in connection with Offering

	Quarter Ended June 30, 2012		Six Months Ended June 30, 2012
Selling commissions	$	2,510,748	$	4,432,183
Marketing support fees		1,217,197		2,040,669
	$	3,727,945	$	6,472,852

Schedule of fees and reimbursable expenses

	Quarter Ended June 30,  2012		Six Months Ended June 30, 2012
Reimbursable expenses:
Offering costs	$	2,022,653	$	3,427,346
Operating expenses		407,337		824,043
		2,429,990		4,251,389
Investment services fees		2,301,311		3,856,236
Property management fees		33,137		49,515
Asset management fees		210,125		280,167
	$	4,974,563	$	8,437,307

Schedule of amounts due to related parties

	June 30, 2012			December 31, 2011
Reimbursable expenses:
Offering costs	$	(262,390	)	$	41,416
Operating expenses		131,030			69,173
		(131,360	)		110,589
Selling commissions		135,228			57,516
Marketing support fees		61,525			24,650
Property management fees		49,515			—
		246,268			82,166
Due to CNL Lifestyle Properties, Inc.		268,715			—
	$	383,623		$	192,755

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Intangibles, net (Details) (USD $)	Jun. 30, 2012
Acquired Finite-Lived Intangible Assets [Line Items]
Net Book Value as of June 30, 2012	$ 1,633,989
Intangible Assets, In place leases [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,690,333
Accumulated Amortization	(56,344)
Net Book Value as of June 30, 2012	$ 1,633,989

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2012

Summary of Significant Accounting Policies [Abstract]

Basis of Presentation and Consolidation

Basis of Presentation and Consolidation — The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles of the United States (“GAAP”). The unaudited condensed consolidated financial statements reflect all normal recurring adjustments, which are, in the opinion of management, necessary for the fair presentation of the Company’s results for the interim periods presented. Amounts as of December 31, 2011 included in the unaudited condensed consolidated financial statements have been derived from the audited consolidated financial statements as of that date but do not include all disclosures required by GAAP. These accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of December 31, 2011 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries over which it has control. All intercompany balances have been eliminated in consolidation.

In accordance with the guidance for the consolidation of variable interest entities (“VIE”), the Company analyzes its variable interests, including loans, leases, guarantees, and equity investments, to determine if the entity in which it has a variable interest is a variable interest entity. The Company’s analysis includes both quantitative and qualitative reviews. The Company bases its quantitative analysis on the forecasted cash flows of the entity, and its qualitative analysis on its review of the design of the entity, its organizational structure including decision-making ability and financial agreements. The Company also uses its quantitative and qualitative analyses to determine if it is the primary beneficiary of the VIE, and if such determination is made, it includes the accounts of the VIE in its consolidated financial statements.

The Company has no items of other comprehensive income (loss) in the periods presented and therefore, has not included other comprehensive income (loss) or total comprehensive income (loss) in the accompanying unaudited condensed consolidated financial statements.

Use of Estimates

Use of Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods and the disclosure of contingent liabilities. For example, significant estimates and assumptions are made in connection with the allocation of purchase price and analysis of real estate and equity method investments. Actual results could differ from those estimates.

Allocation of Purchase Price for Real Estate Acquisitions

Allocation of Purchase Price for Real Estate Acquisitions — Upon acquisition of properties, the Company estimates the fair value of acquired tangible assets (consisting of land, building and improvements, tenant improvements and equipment) and identifiable intangible assets (consisting of in-place leases) and allocates the purchase price to the assets acquired and liabilities assumed. In estimating the fair value of the tangible and intangible assets acquired, the Company considers information obtained about each property as a result of its due diligence and utilizes various valuation methods, such as estimated cash flow projections using appropriate discount and capitalization rates, estimates of replacement costs net of depreciation and available market information.

The fair value of the tangible assets of an acquired leased property is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land and building based on the determination of the fair values of these assets.

The purchase price is allocated to in-place lease intangibles based on management’s evaluation of the specific characteristics of the acquired lease. Factors considered include estimates of carrying costs during hypothetical expected lease up periods, including estimates of lost rental income during the expected lease up periods, and costs to execute similar leases such as leasing commissions, legal and other related expenses.

Investment in Unconsolidated Entity

Investment in Unconsolidated Entity — The Company accounts for its investment in an unconsolidated joint venture under the equity method of accounting as the Company exercises significant influence, but does not control this entity. This investment is recorded initially at cost and subsequently adjusted for cash contributions, distributions and equity in earnings (loss) of the unconsolidated entity. Based on the respective venture structure and preference the Company receives on distributions and liquidation, the Company records its equity in earnings of the entity under the hypothetical liquidation at book value (“HLBV”) method of accounting. Under this method, the Company recognizes income or loss in each period as if the net book value of the assets in the venture were hypothetically liquidated at the end of each reporting period following the provisions of the joint venture agreement. In any given period, the Company could be recording more or less income than actual cash distributions received and more or less than what the Company may receive in the event of an actual liquidation.

Depreciation and Amortization

Depreciation and Amortization — Real estate costs related to the acquisition and improvement of properties are capitalized. Repair and maintenance costs are charged to expense as incurred and significant replacements and betterments are capitalized. Repair and maintenance costs include all costs that do not extend the useful life of the real estate asset. The Company considers the period of future benefit of an asset to determine its appropriate useful life. Real estate assets are stated at cost less accumulated depreciation, which is computed using the straight-line method of accounting over the estimated useful lives of the related assets. Buildings and improvements are depreciated over 39 years and equipment is depreciated over its estimated useful life.

Amortization of intangible assets is computed using the straight-line method of accounting over the respective lease term or estimated useful life. If a lease were to be terminated prior to its scheduled expiration, all unamortized costs related to the lease would be written off.

Real Estate Impairments

Real Estate Impairments — Real estate assets are reviewed on an ongoing basis to determine whether there are any indicators that the value of the real estate properties (including any related amortizable intangible assets or liabilities) may be impaired. Factors that could trigger an impairment analysis include, among others: (i) significant underperformance relative to historical or projected future operating results; (ii) significant changes in the manner of use of the Company’s real estate assets or the strategy of its overall business; (iii) a significant increase in competition; (iv) a significant adverse change in legal factors or an adverse action or assessment by a regulator, which could affect the value of the Company’s real estate assets; or (v) significant negative industry or economic trends. When such events or changes in circumstances are present, the Company will assess potential impairment by comparing estimated future undiscounted operating cash flows expected to be generated over the life of the asset and from its eventual disposition, to the carrying amount of the asset. In the event that the carrying amount exceeds the estimated future undiscounted operating cash flows, the Company would recognize an impairment provision to adjust the carrying amount of the asset to the estimated fair value. Fair values are generally determined based on incorporating market participant assumptions, discounted cash flow models and the Company’s estimates reflecting the facts and circumstances of each property.

For real estate the Company indirectly owns through an investment in a joint venture, tenant-in-common interest or other similar investment structure and accounts for under the equity method, when impairment indicators are present, the Company compares the estimated fair value of its investment to the carrying value. An impairment charge will be recorded to the extent the fair value of its investment is less than the carrying amount and the decline in value is determined to be other than a temporary decline.

Fair Value Measurements

Fair Value Measurements — GAAP emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. GAAP requires the use of observable market data, when available, in making fair value measurements. Observable inputs are inputs that the market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of ours. When market data inputs are unobservable, the Company utilizes inputs that it believes reflects the Company’s best estimate of the assumptions market participants would use in pricing the asset or liability. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. As a basis for considering market participant assumptions in fair value measurements, GAAP establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). The three levels of inputs used to measure fair value are as follows:

• Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

• Level 2 — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3 — Unobservable inputs for the asset or liability, which are typically based on the Company’s own assumptions, as there is little, if any, related market activity.

Revenue Recognition

Revenue Recognition — Rental revenue from leases is recorded on the straight-line basis over the terms of the leases. The Company’s leases require the tenants to pay certain contractual amounts that are set aside by the Company for replacements of fixed assets and other improvements to the properties. These amounts are and will remain the property of the Company during and after the term of the lease. The amounts are recorded as capital improvement reserve income at the time that they are earned and are included in rental income from operating leases in the accompanying condensed consolidated statement of operations.

Loan Costs

Loan Costs — Financing costs paid in connection with obtaining debt are deferred and amortized over the life of the debt using the effective interest rate.

Net Loss per Share

Net Loss per Share — Net loss per share is calculated based upon the weighted average number of shares of common stock outstanding during the period in which the Company was operational. For the purposes of determining the weighted average number of shares of common stock outstanding, stock distributions are treated as if they were issued and outstanding for the full periods presented. Therefore, the weighted average number of shares outstanding for the quarter and six months ended June 30, 2012 has been revised to include stock distributions declared through June 30, 2012 as if they were outstanding as of the beginning of each period presented. Included in the weighted average shares outstanding for the quarter and six months ended June 30, 2012 are 61,111 shares declared as stock distributions through June 30, 2012.

Recent Accounting Pronouncements

Recent Accounting Pronouncements — In May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” This ASU clarifies the application of existing fair value measurements and disclosure requirements and certain changes to principles and requirements for measuring fair value. This update is to be applied prospectively and is effective during interim and annual periods beginning after December 15, 2011. The adoption of this ASU did not have a material impact on the Company’s financial statements and disclosures.