Executive Officer Form

Exhibit 10.4

SUNRISE SENIOR LIVING, INC.

2008 OMNIBUS INCENTIVE PLAN, AS AMENDED

PERFORMANCE UNIT AGREEMENT

Sunrise Senior Living, Inc., a Delaware corporation (the “Company”), hereby
grants Performance Units relating to shares of its common stock, $0.01 par value
(the “Stock”), to the Grantee named below, the shares of Stock subject thereto
being subject to achieving the performance criteria and the vesting conditions
set forth in the attached agreement (the “Agreement”). Additional terms and
conditions of the grant are set forth in this cover sheet to the Agreement, in
the Agreement, and in the Company’s 2008 Omnibus Incentive Plan, as amended (the
“Plan”).

Grant Date:                     , 2011

Name of Grantee:                                 

Grantee’s Social Security Number:         -        -        

Threshold Number of Performance Units:                         

Target Number of Performance Units:                     

Maximum Number of Performance Units:                             

By checking the “Read and Acknowledge Award Documents” box on the Morgan Stanley
Smith Barney website, you agree to all of the terms and conditions described in
this Agreement, your employment agreement with the Company and in the Plan, a
copy of which is also attached. You acknowledge that you have carefully reviewed
the Plan, and agree that the Plan will control in the event any provision of
this Agreement is inconsistent with the Plan. Certain capitalized terms used in
this Agreement are defined in your employment agreement with the Company, and
have the meaning set forth in such agreement.

Attachment

This is not a stock certificate or a negotiable instrument.

 

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SUNRISE SENIOR LIVING, INC.

2008 OMNIBUS INCENTIVE PLAN, AS AMENDED

PERFORMANCE UNIT AGREEMENT

 

Award of Performance Units Issuable upon Achievement of Performance Criteria and
Vesting    This grant is an award of Performance Units (the “Performance Units”)
entitling you to the number of shares of Stock to be determined as set forth
below.    Subject to satisfaction of the time-vesting requirements set out in
“Vesting” below, the number of shares of Stock, if any, that may be issued
pursuant to the terms of this Agreement shall be calculated based on the
attainment as determined by the Compensation Committee of specified performance
goals, as set forth on the attached Exhibit A, as of December 31, 2011 and the
attainment as determined by the Compensation Committee of specified performance
goals to be established by the Compensation Committee for calendar year 2012 and
calendar year 2013 to be set forth on the attached Exhibits B and C (the
“Performance Periods”) within 90 days of the commencement of calendar years 2012
and 2013, respectively, and will be promptly communicated to you. The maximum
number of shares of Stock that may be issued to you hereunder is the Maximum
Number of Performance Units on the cover sheet, which number has been determined
by multiplying your Target Number of Performance Units from the cover sheet by
200% [150% for Messrs. Haddock and Richards with corresponding change to
exhibit]. The threshold number of shares of Stock that may be issued to you
hereunder is the Threshold Number of Performance Units on the cover sheet, which
number has been determined by multiplying your Target Number of Performance
Units from the cover sheet by 50%. The Threshold, Target and Maximum Number of
Performance Units are allocated among the three Performance Periods (2011, 2012
and 2013) 25%, 25% and 50%. Vesting   

Your right to the Stock under this Performance Unit vests as to 100% of such
shares on the third anniversary of the Grant Date, provided you then continue in
Service and only to the extent that the specified performance goals have been
satisfied, subject to acceleration as provided below in “Termination of Service;
Change in Control.”

 

Service for purposes of this Agreement shall be limited to Service as an
employee of the Company or an Affiliate.

Nontransferability and Forfeiture    Your Performance Units granted hereby may
not be sold, transferred, assigned, pledged or otherwise encumbered or disposed
of, whether by operation of law or otherwise.

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In the event that you voluntarily terminate your employment (other than as
provided below in “Termination of Service; Change in Control”) or your Service
terminates for Cause (as defined in your employment agreement) prior to the
third anniversary of the Grant Date, you will forfeit to the Company all of the
Performance Units.

 

In addition, you will forfeit all Performance Units allocable to the calendar
year Performance Period as of the end of such Performance Period to the extent
the specified performance goal has not been achieved and to the extent provided
under “Termination of Service; Change in Control” below.

Termination of Service;

Change in Control

  

Notwithstanding any provisions in your employment agreement with the Company to
the contrary, in the event that your Service terminates without Cause or for
Good Reason (as defined in your employment agreement), other than in connection
with, or within two years after, a Change in Control (as defined in your
employment agreement) or your Service terminates due to death or Disability (as
defined in your employment agreement), you will vest in a pro-rata portion of
the Performance Units subject to this grant based on actual achievement of the
performance goals for the Performance Periods determined as of December 31,
2013, as if your Service continued for an additional 12 months after your date
of termination of employment. You will forfeit all other Performance Units.

 

Notwithstanding any provisions in your employment agreement with the Company, in
the event that your Service terminates without Cause or for Good Reason in
connection with or within two years after a Change in Control or a Change in
Control occurs and the Performance Units are not assumed and continued in the
transaction, you will vest in a portion of the Performance Units for any
calendar year or calendar years in the Performance Periods that have been
completed based on actual achievement of the performance goals and for any
calendar year and calendar years in the Performance Periods that have not been
completed, based on the assumption that target performance has been achieved as
of your termination of Service or earlier closing of the Change in Control
transaction if the Performance Units are not assumed and continued. You will
forfeit all other Performance Units.

 

Notwithstanding any provisions in your employment agreement with the Company, in
the event that your Service terminates without Cause or for Good Reason in
connection with but prior to a Change in Control, you will vest in a portion of
the Performance Units for any calendar year or calendar years in the Performance
Periods that have been completed prior to the closing of the Change in Control
transaction based on actual achievement of the performance goals and for any
calendar year or calendar years in the Performance Periods that have not been
completed at the time of the closing of the Change in Control transaction, based
on the assumption that target performance has been achieved. You will forfeit
all other Performance Units.

 

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Issuance of Stock

   The Performance Units awarded hereby are evidenced solely by this Agreement
and the cover sheet. The Company will issue any Stock earned pursuant hereto in
your name as of the date that you vest in the Performance Units. Such delivery
will be made as soon as practicable after the date on which vesting occurs and,
in any event, within 30 days thereafter. Notwithstanding the foregoing, if the
shares relating to the Performance Units would otherwise be delivered during a
period in which you are (i) subject to a lock-up agreement restricting your
ability to sell shares of Stock in the open market or (ii) restricted from
selling shares of Stock in the open market because you are not then eligible to
sell under the Company’s insider trading or similar plan as then in effect
(whether because a trading window is not open or you are otherwise restricted
from trading) and the Company determines not to satisfy tax withholding
requirements by withholding shares that are otherwise issuable to you in
connection with your Performance Units, delivery of the shares related to the
Performance Units may be delayed until no earlier than the first date on which
you are no longer prohibited from selling shares of Stock due to a lock-up
agreement or insider trading plan restriction; provided, however, that the
delivery of the shares related to your Performance Units will be made by
December 31 of the taxable year in which the Performance Units vest or such
other time as is required to comply with the requirements of Section 409A of the
Internal Revenue Code.

Book Entry Restrictions

   Any Stock issued hereunder may be issued in book entry form. In such event,
the Company shall cause the transfer agent for the shares of its Stock to make a
book entry record showing ownership for the shares of Stock in your name subject
to the terms and conditions of this Agreement. The Company shall issue or cause
to be issued to you an account statement acknowledging your ownership of the
shares of such Stock.

Withholding Taxes

   You agree, as a condition of this grant, that you will make acceptable
arrangements to pay any withholding or other taxes that may be due as a result
of the delivery of shares of Stock acquired under this grant. In the event that
the Company determines that any federal, state, or local tax or withholding
payment is required relating to the payment of dividends or the delivery of
shares arising from this grant, the Company shall have the right to require such
payments from you, or withhold such amounts from other payments due to you.
Subject to the prior approval of the Compensation Committee, which may be
withheld by the Compensation Committee, in its sole discretion, you may elect to
satisfy this withholding obligation, in whole or in part, by causing the Company
to withhold shares of Stock otherwise issuable to you or by delivering to the
Company shares of Stock already owned by you. The shares of Stock so delivered
or withheld must have an aggregate Fair Market Value equal to the withholding
obligation and may not be subject to any repurchase, forfeiture, unfulfilled
vesting, or other similar requirements.

 

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Repurchase Rights

   The Company has the right to reacquire any or all of the shares of Stock
acquired pursuant to this Performance Unit Grant for two years after such shares
of Stock are delivered to you, at a price equal to the par value of such shares,
(i) if you violate any agreement covering (a) non-competition with the Company
or an Affiliate or (b) non-disclosure of confidential information of the Company
or an Affiliate, (ii) if you are terminated for Cause or (iii) if, subsequent to
termination of your Service with the Company or an Affiliate, the Board
determines that you committed acts or omissions which would have been the basis
for a termination of your Service for Cause had such acts or omissions been
discovered prior to termination of your Service. A notice of repurchase shall
specify the date of closing of such repurchase, which shall be no later than
30 days from the date the Company exercises such right. In the event any such
repurchase right is exercised, you shall be obligated to sell such stock to the
Company. If the shares of Stock have been sold prior to the Board’s
determination, you shall be required to pay to the Company an amount equal to
the gross amount realized on such sale by you. This repurchase right is not
considered a “repurchase” right for purposes of Section 18.3 of the Plan or this
Agreement.

Recoupment

   The Performance Units are subject to Company’s recoupment policy dated July
15, 2008 and the recoupment provisions set forth in your employment agreement.

Retention Rights

   This Agreement does not give you the right to be retained by the Company (or
any parent, Subsidiaries or affiliates) in any capacity. The Company (and any
Affiliates) reserves the right to terminate your Service at any time and for any
reason.

Shareholder Rights

   You, or your estate or heirs, do not have any of the rights of a stockholder
of the Company, including, without limitation, the right to vote or receive
dividends declared or paid on the Stock, unless and until the Performance Units
granted to you pursuant to this Agreement are paid in Stock and a certificate
for such shares of Stock has been issued or an appropriate book entry has been
made.

Adjustments

   In the event of any stock dividend, stock split, change in the corporate
structure affecting the Stock, or any change in the corporate structure that is
not a Change in Control, the number or kind of shares covered by this grant may
be adjusted pursuant to the Plan so that thereafter, subject to the terms and
conditions of the adjusted Awards, such Awards shall entitle you to receive the
kind and amount of securities or property or cash receivable upon any such event
by a holder of the number of Performance Units that would have been receivable
with respect to such Award immediately prior thereto. Your Performance Units, as
applicable, shall be subject to the terms of any such agreement of merger,
liquidation or reorganization in the event the Company is subject to such
corporate activity.

 

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Applicable Law

   This Agreement will be interpreted and enforced under the laws of the State
of Delaware, other than any conflicts or choice of law rule or principle that
might otherwise refer construction or interpretation of this Agreement to the
substantive law of another jurisdiction.

The Plan

   The text of the Plan is incorporated in this Agreement by reference. Certain
capitalized terms used in this Agreement are defined in the Plan, and have the
meaning set forth in the Plan.    This Agreement, the cover page and the Plan
constitute the entire understanding between you and the Company regarding this
grant of Performance Units and any shares of underlying Stock. Any prior
agreements, commitments or negotiations concerning this grant are superseded.

Data Privacy

   In order to administer the Plan, the Company may process personal data about
you. Such data includes, but is not limited to, the information provided in this
Agreement and any changes thereto, other appropriate personal and financial data
about you such as home address and business addresses and other contact
information, payroll information and any other information that might be deemed
appropriate by the Company to facilitate the administration of the Plan.    By
accepting this grant, you give explicit consent to the Company to process any
such personal data. You also give explicit consent to the Company to transfer
any such personal data to transferees who shall include the Company and other
persons who are designated by the Company to administer the Plan. Consent to
Electronic Delivery    The Company may choose to deliver certain statutory
materials relating to the Plan in electronic form. By accepting this grant, you
agree that the Company may deliver the Plan prospectus and the Company’s annual
report to you in an electronic format. If at any time you would prefer to
receive paper copies of these documents, as you are entitled to, the Company
would be pleased to provide copies. Please contact the General Counsel at
703-273-7500 to request paper copies of these documents.

Electronic Signature

   All references to signatures and delivery of documents in this Agreement can
be satisfied by procedures the Company has established or may establish for an
electronic signature system for delivery and acceptance of any such documents,
including this Agreement. Your electronic signature is the same as, and shall
have the same force and effect as, your manual signature. Any such procedures
and delivery may be effected by a third party engaged by the Company to provide
administrative services related to the Plan.

 

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By checking the “Read and Acknowledge Award Documents” box on the Morgan Stanley
Smith Barney website, you agree to all of the terms and conditions described
above, in your employment agreement and in the Plan.

 

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EXHIBIT A

2011 PERFORMANCE GOALS

AND NUMBER OF SHARES OF STOCK

 

Adjusted EBITDA*

  

Shares of Stock**

                    Threshold:  $      million   

12.5% of Target Performance

Units

                    Target:        $      million   

25% of Target Performance

Units

                    Maximum   $     million   

50% of Target Performance

Units

 

* “EBITDA” is net income (loss) attributable to common shareholders but excludes
depreciation and amortization, interest income, interest expense and (provision
for) benefit from income taxes.

“Adjusted EBITDA” further excludes stockholder litigation, buyout fees,
restructuring costs, write-off of capitalized project costs, allowance for
uncollectible receivables from owners, impairments of long-lived assets, gain
(loss) on investments, gain on fair value of liquidating trust note, other
income (expense), stock compensation, gain on the sale and development of real
estate and equity interests, loss from investments accounted for under the
profit-sharing method, discontinued operations (net of tax) and includes the
Company’s proportionate share of joint venture interest, taxes, depreciation,
rent and amortization. Any incremental Adjusted EBIDTA from the acquisition of
real estate or venture interests that was not contemplated in arriving at the
specified Adjusted EBIDTA targets will be excluded from the final calculation
of Adjusted EBITDA in determining the threshold/ target/maximum payout. However,
the incremental recurring cash flow (to be determined by arriving at net income
per generally accepted accounting principles and excluding depreciation and
amortization expense) from unbudgeted acquisitions will be added to the
final Adjusted EBIDTA computation.

Adjusted EBITDA is intended to serve as a measure of free cash flow available
for debt service.

 

** Earned amounts interpolated on a straight line basis if actual Adjusted
EBITDA falls between the specified Adjusted EBITDA amounts for threshold and
target achievement or between target and maximum achievement with the number of
units rounded down to the nearest whole unit.

[The percentage for the maximum award is 37.5% for Messrs. Haddock and
Richards.]

 

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EXHIBIT B

2012 PERFORMANCE GOALS

AND NUMBER OF SHARES OF STOCK

 

Adjusted EBITDA*

  

Shares of Stock**

                    Threshold:  $     million   

12.5% of Target Performance

Units

                    Target:        $      million   

25% of Target Performance

Units

                    Maximum:  $     million   

50% of Target Performance

Units

 

* “EBITDA” is net income (loss) attributable to common shareholders but excludes
depreciation and amortization, interest income, interest expense and (provision
for) benefit from income taxes.

“Adjusted EBITDA” further excludes stockholder litigation, buyout fees,
restructuring costs, write-off of capitalized project costs, allowance for
uncollectible receivables from owners, impairments of long-lived assets, gain
(loss) on investments, gain on fair value of liquidating trust note, other
income (expense), stock compensation, gain on the sale and development of real
estate and equity interests, loss from investments accounted for under the
profit-sharing method, discontinued operations (net of tax) and includes the
Company’s proportionate share of joint venture interest, taxes, depreciation,
rent and amortization. Any incremental Adjusted EBIDTA from the acquisition of
real estate or venture interests that was not contemplated in arriving at the
specified Adjusted EBIDTA targets will be excluded from the final calculation
of Adjusted EBITDA in determining the threshold/ target/maximum payout. However,
the incremental recurring cash flow (to be determined by arriving at net income
per generally accepted accounting principles and excluding depreciation and
amortization expense) from unbudgeted acquisitions will be added to the
final Adjusted EBIDTA computation.

Adjusted EBITDA is intended to serve as a measure of free cash flow available
for debt service.

Nothing withstanding the foregoing definition of Adjusted EBITDA may be revised
at the same time the performance goal is set for 2012 as long such revised
definition, and adjustments, are within the performance goals in the 2008
Omnibus Incentive Plan, as amended, and qualify as a measure of free cash flow
available for debt service.

 

** Earned amounts interpolated on a straight line basis if actual Adjusted
EBITDA falls between the specified Adjusted EBITDA amounts for threshold and
target achievement or between target and maximum achievement with the number of
units rounded down to the nearest whole unit.

[The percentage for the maximum award is 37.5% for Messrs. Haddock and
Richards.]

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EXHIBIT C

2013 PERFORMANCE GOALS

AND NUMBER OF SHARES OF STOCK

 

Adjusted EBITDA*

  

Shares of Stock**

                    Threshold:    $     million   

25% of Target Performance

Units

                    Target:          $     million   

50% of Target Performance

Units

                    Maximum:   $     million   

100% of Target Performance

Units

 

* “EBITDA” is net income (loss) attributable to common shareholders but excludes
depreciation and amortization, interest income, interest expense and (provision
for) benefit from income taxes.

“Adjusted EBITDA” further excludes stockholder litigation, buyout fees,
restructuring costs, write-off of capitalized project costs, allowance for
uncollectible receivables from owners, impairments of long-lived assets, gain
(loss) on investments, gain on fair value of liquidating trust note, other
income (expense), stock compensation, gain on the sale and development of real
estate and equity interests, loss from investments accounted for under the
profit-sharing method, discontinued operations (net of tax) and includes the
Company’s proportionate share of joint venture interest, taxes, depreciation,
rent and amortization. Any incremental Adjusted EBIDTA from the acquisition of
real estate or venture interests that was not contemplated in arriving at the
specified Adjusted EBIDTA targets will be excluded from the final calculation
of Adjusted EBITDA in determining the threshold/ target/maximum payout. However,
the incremental recurring cash flow (to be determined by arriving at net income
per generally accepted accounting principles and excluding depreciation and
amortization expense) from unbudgeted acquisitions will be added to the
final Adjusted EBIDTA computation.

Adjusted EBITDA is intended to serve as a measure of free cash flow available
for debt service.

Nothing withstanding the foregoing definition of Adjusted EBITDA may be revised
at the same time the performance goal is set for 2013 as long such revised
definition, and adjustments, are within the performance goals in the 2008
Omnibus Incentive Plan, as amended, and qualify as a measure of free cash flow
available for debt service.

 

** Earned amounts interpolated on a straight line basis if actual Adjusted
EBITDA falls between the specified Adjusted EBITDA amounts for threshold and
target achievement or between target and maximum achievement with the number of
units rounded down to the nearest whole unit.

[The percentage for the maximum award is 75% for Messrs. Haddock and Richards.]