exv10w1



 



EXHIBIT 10.1


November 13, 2003


AMENDED AND RESTATED EMPLOYMENT AGREEMENT



     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Amended Agreement”)
is made on, and is effective as of, November 13, 2003 (the “Amended Effective
Date”) by and between Sunrise Senior Living, Inc., a corporation organized and
existing under the laws of Delaware (the “Company”), and Paul J. Klaassen (the
“Executive”). This Amended Agreement amends and restates in its entirety the
Employment Agreement made and effective as of September 12, 2000 by and between
the Company and the Executive (the “Original Agreement” and, together with the
Amended Agreement, the “Agreement”).


W I T N E S S E T H:



     WHEREAS, the Company wishes to employ the Executive as Chairman and Chief
Executive Officer on the terms and conditions set forth in this Agreement; and


     WHEREAS, the Executive is willing to accept such employment on such terms
and conditions;


     NOW, THEREFORE, in consideration of the premises and of the mutual
promises, representations and covenants herein contained, the parties hereto
agree as follows:


1.     SCOPE OF EMPLOYMENT. The Company hereby agrees to employ
the Executive upon the terms and conditions herein set forth and the Executive
agrees to perform such executive duties as may be determined and assigned to
him by the Board of Directors of the Company (the “Board”). The Executive
hereby accepts such employment, subject to the terms and conditions herein set
forth. The Executive shall have the title of Chairman and Chief Executive
Officer. While serving as Chairman and Chief Executive Officer, the Executive
shall have the customary duties and powers of such position. Executive shall
not be employed by any other organization during the term of this Agreement.


2.     TERM.


     (a)  The term of Executive’s employment under this Agreement shall be for
five (5) years. It shall begin on the Amended Effective Date and thereafter on
an annual basis be extended for a one-year period, to maintain a rolling
five-year term, unless it is earlier terminated as follows:


          (i) By the Company for Good Cause (as hereinafter defined) immediately
upon notice from the Company to the Executive, or at such later time as such
notice may specify;



          (ii) By the Company for other than Good Cause upon 30 days’ prior written
notice from the Company to the Executive. For purposes hereof, the Executive
shall be deemed terminated by the Company for other than Good Cause if the
Executive terminates employment



1






 





for Good Reason (as hereinafter defined) upon 30 days’ prior written
notice from the Executive to the Company;


          (iii) Upon the Company’s dissolution or liquidation;



          (iv) By the Executive for any reason upon 30 days’ prior written notice
from the Executive to the Company;



          (v) Upon the death of the Executive; or



          (vi) Upon the disability of the Executive (as hereinafter defined)
immediately upon notice from either party to the other.



     (b)  For purposes hereof, “Good Cause” shall mean, and be limited to, (i)
any material breach by the Executive of the terms of this Agreement, (ii) the
Executive’s willful commission of acts of dishonesty in connection with his
position, (iii) chronic absenteeism (other than by reason of disability), (iv)
the Executive’s willful failure or refusal to perform the essential duties of
his position, (v) conviction of a felony, or (vi) the Executive’s engaging in
illegal or other wrongful conduct substantially detrimental to the business or
reputation of the Company. If a ground for termination under this Section 2(b)
is amenable to cure, the Company shall provide the Executive with written
notice describing the nature of the ground for termination. If the Executive
cures same within 30 days after such notice is given, there shall be no
termination for Good Cause.


     (c)  For purposes hereof, the term “Good Reason” shall mean the occurrence
of any one or more of the following events unless the Executive specifically
agrees in writing that such event shall not be Good Reason:


          (i) the assignment to the Executive by the Board or other officers or
representatives of the Company of duties materially inconsistent with the
duties associated with the position described in Section 1 as such duties are
constituted as of the Amended Effective Date;



          (ii) a material change in the nature or scope of the Executive’s authority
from those applicable to him as Chairman and Chief Executive Officer as such
authority is constituted on the Amended Effective Date;



          (iii) the occurrence of material acts or conduct on the part of the
Company or its officers and representatives which have as their purpose forcing
the resignation of the Executive or preventing him from performing his duties
and responsibilities pursuant to this Agreement;



          (iv) a material breach by the Company of any material provision of this
Agreement, provided that failure of the Company to pay any amount, or to
provide any benefit, pursuant to the provision of Sections 3 and 4 hereof shall
be deemed to be a material breach by the Company of a material provision of
this Agreement; or



2






 



          (v) requiring the Executive to be principally based at any office or
location more than 50 miles from the current offices of the Company in McLean,
Virginia.



If a ground for termination under this Section 2(c) is amenable to cure, the
Executive shall provide the Company with written notice describing the nature
of the ground for termination. If the Company cures same within 30 days after
such notice is given, there shall be no termination for Good Reason.


     (d)  For purposes hereof, the term “disability” shall have the same
definition as is set forth in the then current group disability policy, if any,
maintained by the Company for its executive employees. If the Company does not
have such a group term disability policy, the definition of “disability” shall
be as is set forth in the individual disability policy, if any, purchased in
order to fund the Company’s liability under this Agreement in the event of the
Executive’s disability. If the Company maintains no such disability policies,
“disability” shall mean the inability of the Executive, due to illness,
accident or any other physical or mental incapacity, to perform his duties in a
normal manner for a period of six (6) consecutive months.


     (e)  For purposes hereof, the term “Date of Termination” shall mean the
effective date of the termination of the Executive’s employment in accordance
with the applicable provision of this Section 2.


3.     COMPENSATION.


     (a)  Annual Salary. The Company agrees to pay the Executive, and
the Executive agrees to accept, in payment for services to be rendered by the
Executive hereunder, an initial base salary of Four Hundred Fifty Thousand
Dollars ($450,000) per annum. The salary shall be payable in equal periodic
installments, not less frequently than monthly, less such sums as may be
required to be deducted or withheld under the provisions of federal, state or
local law. The Company agrees to review the Executive’s salary annually at or
around January 1st of each calendar year (or such other time as the Company and
the Executive mutually agree), commencing on or about January 1, 2004, for
adjustment based on the Executive’s performance.


     (b)  Annual Bonus. In addition to the Executive’s
salary, the Executive shall be eligible to receive an annual bonus based upon
the achievement of goals established by the compensation committee of the Board
(the “Compensation Committee”) after due consultation with the Executive. The
Executive’s annual bonus for calendar year 2003 will be targeted at a minimum
of $450,000.


     The Compensation Committee in its discretion, shall base such bonus
payment upon the satisfaction of one or more performance goals (“Performance
Goals”). The Performance Goals shall be based upon the achievement of (i) a
specified level, of (x) the Company’s consolidated pre-tax or after-tax
earnings or EBITDA or (y) the pre-tax or after-tax earnings, or the EBITDA, of
any particular subsidiary, division or other business unit of the Company, (ii)
the achievement of a specified level of revenues, earnings, costs, return on
assets, return on equity, return on capital, return on investment, return on
assets under management, net operating income or net operating income as a
percentage of book value with regard to the Company, particular subsidiaries,
divisions or business units of the Company, particular assets or groups of
assets or


3






 


particular employees or groups of employees, (iii) any other appropriate goals
as determined by the Compensation Committee or (iv) any combination of the
foregoing. Commencing with the year 2004, to be eligible for an annual bonus
for a particular year, the Executive must submit proposed Performance Goals in
writing to the Compensation Committee on or before January 31 of such year.


     (c)  Stock Options. The Executive was awarded an
incentive stock option grant on September 11, 2000 under the Company’s Stock
Option Plan for 350,000 shares of stock. Such grant vests at the rate of 25%
(87,500 shares per year) at the end of each calendar year beginning on December
31, 2000, and ending on December 31, 2003.


4.     FRINGE BENEFITS, REIMBURSEMENT OF EXPENSES, ETC.


     (a)  The Executive shall be entitled to paid vacation, holidays
and sick leave benefits in accordance with the Company’s policies for executive
employees.


     (b)  The Executive and/or his family shall be entitled to medical insurance
from the Company in accordance with the Company’s policies for employees. In
addition, the Executive shall be entitled to a fully-insured executive
medical/dental plan providing supplemental coverage for the Executive and his
family for those items not covered under the Company’s general health plan (for
example, prescriptions, orthodontia, eye surgery or other coverages which may
be excluded from the group medical plan). Notwithstanding the termination of
this Agreement for any reason, the Company and any of its successors and
assigns shall provide to the Executive and his family until the Executive
attains or, in the case of his death, would have attained, the age of 65 (but
to his children only through their attainment of age 22) the medical insurance
described in the first sentence of this Section 4(b) and the supplemental
coverage described in the second sentence of this Section 4(b), at the expense
of the Company.


     (c)  Notwithstanding any termination of this Agreement, the Company agrees
to make contributions of $150,000 per year for 12 years into a non-qualified
deferred compensation plan. As of the Amended Effective Date, the Company
represents that it has paid an aggregate of $600,000 into this plan, leaving an
aggregate amount of $1,200,000 to be paid over the ensuing 8 years. At the end
of this 12-year period, the Executive or his beneficiaries, as the case may be,
shall be entitled to receive any net gains accrued or realized from the
investment of the amounts contributed by the Company and the Company will
receive any remaining amounts. This arrangement supercedes the life insurance
arrangement set forth in Section 4(c) of the Original Agreement.


     (d)  The Company agrees to pay, or promptly reimburse the Executive for,
all reasonable expenses incurred by the Executive in furtherance of or in
connection with the business of the Company, provided that the Executive
furnishes appropriate documentation for such expenses in accordance with the
Company’s practices and procedures.


     (e) The Company shall provide the Executive with an automobile reasonably
acceptable to the Executive and the Compensation Committee, or the Executive
shall receive an automobile allowance during the term of this Agreement in a
reasonable amount as determined by the Compensation Committee. The Company
agrees to pay, or promptly reimburse the


4






 


Executive for, any other benefits or expenses (such as executive air
travel and health club or other membership fees or dues) as may be approved by
the Compensation Committee from time to time.


     (f)  Executive shall be entitled to participate in those retirement plans,
both defined contribution and defined benefit, qualified and non-qualified, as
are then currently available to the Company’s executive employees and such new
retirement plans, if any, as may be adopted by the Company from time to time.


5.     TERMINATION BENEFITS. In addition to the benefits
described under the Agreement that survive the termination of the Agreement,
the following benefits will be paid on account of the termination of the
Agreement for the following reasons:


     (a)  Upon termination of this Agreement by the Company for Good Cause
pursuant to Section 2(a)(i), or by the Executive for other than Good Reason,
death or disability, the Company shall


          (i) pay to the Executive immediately after the Date of Termination an
amount equal to the sum of the Executive’s accrued base salary and any bonus
amount earned but not yet paid;



          (ii) make additional payments to the Executive each year on the
anniversary date of the Date of Termination, for three consecutive years
following said termination, equal to his annual salary and bonus for the year
of termination; and



          (iii) provide to Executive’s spouse (and children through their attainment
of age 22), in the event of his death (after termination of the Agreement for
one of the reasons set forth in clause (a) above), and the Executive in the
event of his disability (after the termination of the Agreement for one of the
reasons set forth in clause (a) above), medical insurance through the date the
Executive attains or, in the case of his death, would have attained, age 65.



     (b)  Upon termination of this Agreement due to the Executive’s disability
or death:


          (i) the Company shall pay to the Executive or his beneficiaries, as the
case may be, immediately after the Date of Termination, an amount which is
equal to the Executive’s base salary and annual bonus amount for the remaining
portion of the rolling five-year term of the Agreement (as if there had been no
early termination due to his disability or death);



          (ii) the Company shall make additional payments each year, on the
anniversary of the Date of Termination, for three consecutive years following
said termination equal to his annual salary and bonus for the year of
termination;



          (iii) the Company shall provide to the Executive’s spouse (and children
through their attainment of age 22) in the event of his death (after the
termination of the Agreement due to his disability), and to the Executive and
his family (including his children only through their attainment of age 22) in
the event of his disability, medical insurance through the date the Executive
attains or, in the case of his death, would have attained, age 65; and



5






 



          (iv) any stock options shall be fully vested.



     (c)  Upon termination of this Agreement by the Company for other than Good
Cause or by the Executive for Good Reason:


          (i) the Company shall pay to Executive or his beneficiaries, as the case
may be, immediately after the Date of Termination an amount which is equal to
the Executive’s base salary and annual bonus amount for the remaining portion
of the rolling five-year term of the Agreement (as if there had been no early
termination by the Company for other than Good Cause or by the Executive for
Good Reason);



          (ii) the Company shall make additional payments each year, on the
anniversary of the Date of Termination, for three consecutive years following
said termination equal to his annual salary and bonus for the year of
termination;



          (iii) the Company shall provide to the Executive’s spouse (and children
through their attainment of age 22) in the event of his death (after the
termination of the Agreement for one of the reasons set forth in clause (c)
above), and the Executive in the event of his disability (after the termination
of the Agreement for one of the reasons set forth in clause (c) above), medical
insurance through the date the Executive attains or, in the case of his death,
would have attained age 65; and



          (iv) the Company shall fully vest any stock options previously granted to
the Executive.



     (d)  If the Executive’s employment is terminated within 180 days after a
Change in Control, the Executive shall be entitled to the following from either
the Company or its successor, if any:


          (i) the Company shall pay to Executive or his beneficiaries, as the case
may be, immediately after the Date of Termination an amount which is equal to
the Executive’s base salary and annual bonus amount for the remaining portion
of the rolling five-year term of the Agreement (as if there had been no early
termination after a Change in Control);



          (ii) the Company shall make additional payments each year, on the
anniversary of the Date of Termination, for three consecutive years following
said termination equal to his annual salary and bonus for the year of
termination;



          (iii) Executive’s spouse (and any children through their attainment of age
22) in the event of his death (after the termination of the Agreement following
a Change in Control as contemplated by this Section 5(d)), and the Executive in
the event of his disability (after the termination of the Agreement following a
Change in Control as contemplated by this Section 5(d)) shall be entitled to
medical insurance through the date the Executive attains or, in the event of
his death, would have attained, age 65; and



          (iv) A “Change in Control” means any of the following events:



6






 





               (A) any person (as such term is used in Rule 13d-5 under the Securities
Exchange Act of 1934 (“Exchange Act”)) or group (as such term is defined in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act), other than a subsidiary or
any employee benefit plan (or any related trust) of the Company or a
subsidiary, becomes, after the Amended Effective Date, the beneficial owner of
20% or more of the common stock or of securities of the Company that are
entitled to vote generally in the election of directors of the Company (“Voting
Securities”) representing 20% or more of the combined voting power of all
Voting Securities of the Company.



               (B) individuals who, as of the Amended Effective Date, constitute the
Board (the “Incumbent Board”) cease for any reason to constitute a majority of
the members of the Board; provided that any individual who becomes a director
after the Amended Effective Date whose election or nomination for election by
the Company’s stockholders was approved by a majority of the members of the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
“election contest” relating to the election of the directors of the Company (as
such terms are used in Rule 14a-11 under the Exchange Act), “tender offer” (as
such term is used in Section 14(d) of the Exchange Act) or a proposed Merger
(as defined below)) shall be deemed to be members of the Incumbent Board; or



               (C) approval by the stockholders of the Company of either of the
following:



                     (I) a merger, reorganization, consolidation or similar transaction (any of
the foregoing, a “Merger”) as a result of which the persons who were the
respective beneficial owners of the outstanding common stock and Voting
Securities of the Company immediately before such Merger are not expected to
beneficially own, immediately after such Merger, directly or indirectly, more
than 60% of, respectively, the common stock and the combined voting power of
the Voting Securities of the corporation resulting from such Merger in
substantially the same proportions as immediately before such Merger, or



                     (II) a plan of liquidation of the Company or a plan or agreement for the
sale or other disposition of all or substantially all of the assets of the
Company.



Notwithstanding the foregoing, there shall not be a Change in Control if, in
advance of such event, the Executive agrees in writing that such event shall
not constitute a Change in Control.


     (e)  Upon a Change in Control, the Executive shall be entitled to the
following from either the Company or its successors, if any:


          (i) the Company shall fully vest any stock options previously granted to
the Executive; and



          (ii) In recognition of services by the Executive in connection with any
corporate activity that constitutes a Change in Control, the Company shall pay
the Executive in a



7






 





lump sum concurrent with or as soon as practicable following a Change in
Control as defined in Section 5(d)(iv)(A), (B) or (C), a disposition fee in the
amount of 1% of the Company’s enterprise value, defined as its market cap plus
debt as of the date of the Change in Control.


     (f)  If any payment or distribution by the Company to or for the benefit of
the Executive, whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise pursuant to or by reason of any
other agreement, policy, plan, program or arrangement, including without
limitation any stock option, stock appreciation right or similar right, or the
lapse or termination of any restriction on or the vesting or exercisability of
any of the foregoing (a “Payment”), would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”)
(or any successor provision thereto) or to any similar tax imposed by state or
local law, or any interest or penalties with respect to such tax (such tax or
taxes, together with any such interest and penalties, being hereafter
collectively referred to as the “Excise Tax”), then the Executive shall be
entitled to receive an additional payment or payments (collectively, a
“Gross-Up Payment”). The Gross-Up Payment shall be in an amount such that,
after payment by Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payment.


     (g)  Subject to the provisions of the following subsection (k), all
determinations required to be made under this Section 5, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required to be paid by the Company to the
Executive and the amount of such Gross-Up Payment, if any, shall be made by a
nationally recognized accounting firm (the “Accounting Firm”) selected by the
Company in the Company’s sole discretion. The Accounting Firm shall submit its
determination and detailed supporting calculations to both the Company and the
Executive within 30 calendar days after the Date of Termination, if applicable,
and at such other time or times as may be requested by the Company or the
Executive. If the Accounting Firm determines that any Excise Tax is payable by
the Executive, the Company shall pay the required Gross-Up Payment to the
Executive within five business days after receipt of such determination and
calculations with respect to any Payment to the Executive. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it shall, at
the same time as it makes such determination, furnish the Company and the
Executive an opinion that the Executive has substantial authority not to report
any Excise Tax on the Executive’s federal, state or local income or other tax
return. As a result of the uncertainty in the application of Section 4999 of
the Code (or any successor provision thereto) and the possibility of similar
uncertainty regarding applicable state or local tax law at the time of any
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (an
“Underpayment”). In the event that the Company exhausts or fails to pursue its
remedies pursuant to the following subsection (k) and the Executive thereafter
is required to make a payment of any Excise Tax, the Executive shall direct the
Accounting Firm to determine the amount of the Underpayment that has occurred
and to submit its determination and detailed supporting calculations to both
the Company and the Executive as promptly as possible. Any such Underpayment
shall be promptly paid by the Company to, or for the benefit of, the Executive
within five business days after receipt of such determination and calculations.


8






 


     (h)  The Company and the Executive shall each provide the Accounting Firm
access to and copies of any books, records and documents in the possession of
the Company or the Executive, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determinations and calculations
contemplated by the preceding subsection (g). Any determination by the
Accounting Firm as to the amount of the Gross-Up Payment shall be binding upon
the Company and the Executive.


     (i)  The federal, state and local income or other tax returns filed by the
Executive shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Executive. The Executive shall make proper payment of the amount of any
Excise Tax, and at the request of the Company, provide to the Company true and
correct copies (with any amendments) of the Executive’s federal income tax
return as filed with the Internal Revenue Service and corresponding state and
local tax returns, if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by the Company, evidencing such
payment. If prior to the filing of the Executive’s federal income tax return,
or corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive shall within five business days pay to the Company the amount of such
reduction.


     (j)  The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by the
preceding subsection (g) shall be borne by the Company. If such fees and
expenses are initially paid by the Executive, the Company shall reimburse the
Executive the full amount of such fees and expenses within five business days
after receipt from the Executive of a statement therefor and reasonable
evidence of the Executive’s payment thereof.


     (k)  The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service or any other taxing authority that, if successful,
would require the payment by the Company of a Gross-Up Payment. Such
notification shall be given as promptly as practicable but no later than 10
business days after the Executive actually receives notice of such claim and
the Executive shall further apprise the Company of the nature of such claim and
the date on which such claim is requested to be paid (in each case, to the
extent known by the Executive). The Executive shall not pay such claim prior
to the earlier of (i) the expiration of the 30-calendar-day period following
the date on which the Executive gives such notice to the Company and (ii) the
date that any payment of amount with respect to such claim is due. If the
Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:


          (i) provide the Company with any written records or documents in the
Executive’s possession relating to such claim reasonably requested by the
Company;



          (ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including
without limitation accepting legal representation with respect to such claim by
an attorney competent in respect of the subject matter and reasonably selected
by the Company;




9






 





          (iii) cooperate with the Company in good faith in order effectively to
contest such claim; and



          (iv) permit the Company to participate in any proceedings relating to such
claim;



          provided, however, that the Company shall bear and pay directly all costs
and expenses (including interest and penalties) incurred in connection with
such contest and shall indemnify and hold harmless the Executive, on an
after-tax basis, for and against any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limiting the
foregoing provisions of this subsection (k), the Company shall control all
proceedings in connection with or relating to the contest of any claim
contemplated by this subsection (k) and, at its sole option, may pursue or
forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim (provided,
however, that the Executive may participate therein at the Executive’s own cost
and expense) and may, at its option, either pay the tax claimed and direct the
Executive to sue for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however, that
if the Company pays the tax claimed and directs the Executive to sue for a
refund, the Company shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including interest
or penalties with respect thereto, imposed with respect to such payment or with
respect to any imputed income in connection with such payment; and provided
further, however, that any extension of the statute of limitations relating to
payment of taxes for the taxable year of the Executive with respect to which
the contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company’s control of any such contested claim shall
be limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.



     (l)  If, after the receipt by the Executive of a Gross-Up Payment or
payment by the Company of an amount on the Executive’s behalf pursuant to the
preceding subsection (k), the Executive receives any refund with respect to the
Excise Tax to which such Gross-Up Payment relates or with respect to such
claim, the Executive shall (subject to the Company’s complying with the
requirements of the preceding subsection (k)), promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon less
any taxes applicable thereto). If a determination is made that the Executive
shall not be entitled to any refund with respect to payment by the Company of
an amount on the Executive’s behalf pursuant to the preceding subsection (k)
and the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 calendar days after
such determination, then the amount of such payment by the Company of the
amount on the Executive’s behalf shall offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid by the Company to the Executive
pursuant to this Section 5.


10






 


     (m)  The Company’s obligations under this Section 5 shall survive
termination of this Agreement.


6.     INSURANCE. It is understood that the Company may
purchase insurance policies to fund all or part of the obligations set forth in
this Agreement, provided it is understood that said obligations shall not be
affected by the availability or unavailability of insurance coverage. The
Executive agrees to execute such applications for insurance and to make himself
available for and to undergo all reasonable medical examinations which may be
required in the event the Company determines to procure or place any insurance
to fund all or any part of the aforementioned obligations.


7.     ENTIRE AGREEMENT. This Agreement contains the entire
understanding between the parties hereto and supersedes all other oral and
written agreements or understandings between them with respect to such matters.
All previous oral or written agreements between the parties hereto with respect
to such matters shall be deemed to have been completely fulfilled by both
parties and shall be superseded by this Agreement. No modification or addition
hereto or waiver or cancellation of any provision shall be valid except by a
writing signed by the party to be charged therewith.


8.     SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their heirs,
successors, assigns and personal representatives. As used herein, the
successors of the Company shall include, but not be limited to, any successor
by way of merger, consolidation, sale of all or substantially all of its
assets, or similar reorganization. In no event may the Executive assign any
duties or obligations under this Agreement.


9.     CONTROLLING LAW. The validity and construction of this
Agreement or of any of its provisions shall be determined under the laws of the
State of Delaware. The invalidity or unenforceability of any provision of this
Agreement shall not affect or limit the validity and enforceability of the
other provisions hereof.


10.     NOTICES. All notices, consents, waivers and other
communications required or permitted by this Agreement shall be in writing and
shall be deemed given to a party when (a) delivered to the appropriate address
by hand or by nationally recognized overnight courier service (costs prepaid);
(b) sent by facsimile or e-mail with confirmation of transmission by the
transmitting equipment; or (c) received or rejected by the addressee, if sent
by certified mail, return receipt requested, in each case to the following
addresses, facsimile numbers or e-mail addresses and marked to the attention of
the person (by name or title) designated below (or to such other address,
facsimile number, e-mail address or person as a party may designate by notice
to the other party):



	 	 	The Board of Directors of Sunrise Senior Living, Inc.

c/o General Counsel

7902 Westpark Drive

McLean, Virginia 22102

Attention: John Gaul

Fax no.: (703) 744-1990



11






 







	 	 	E-mail address: John.Gaul@sunriseseniorliving.com
	 
	 	 	Paul J. Klaassen

7902 Westpark Drive

McLean, Virginia 22102

Fax no.: (703) 744-1630

E-mail address: Paul.Klaassen @sunriseseniorliving.com



11.     COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.


12.     HEADINGS. The headings herein are inserted only as a
matter of convenience and reference, and in no way define, limit or describe
the scope of this Agreement or the intent of any provisions thereof.


13.     INDEMNIFICATION. The Company and the Executive shall
enter into an Indemnification Agreement concurrently with the execution of this
Amended Agreement. The Company may obtain coverage for the Executive under an
insurance policy covering the directors and officers of the Company against
claims set forth in such Indemnification Agreement if such coverage is possible
at a reasonable cost, provided, however, it is understood and agreed that the
Company’s obligation to indemnify the Executive as set forth in the
Indemnification Agreement shall not be affected by the Company’s ability or
inability to obtain insurance coverage.


     IN WITNESS WHEREOF, the parties have duly executed this Amended Agreement
as of the date and year first above written.



	 	 	 
	 	 	
Sunrise Senior Living, Inc.


	 	 	
/s/ Thomas J. Donohue
	 	 	


	 	 	
Thomas J. Donohue
	 	 	
Director and
	 	 	
Chairman, Compensation Committee
	 	 	 
	 	 	
/s/ Paul J. Klaassen
	 	 	


	 	 	
Paul J. Klaassen



12