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 EffectiveDate”) by and between Sunrise Senior Living, Inc., a corporation organized andexisting under the laws of Delaware (the “Company”), and Paul J. Klaassen (the“Executive”). This Amended Agreement amends and restates in its entirety theEmployment Agreement made and effective as of September 12, 2000 by and betweenthe Company and the Executive (the “Original Agreement” and, together with theAmended Agreement, the “Agreement”).
W I T N E S S E T H:
     WHEREAS, the Company wishes to employ the Executive as Chairman and ChiefExecutive Officer on the terms and conditions set forth in this Agreement; and
     WHEREAS, the Executive is willing to accept such employment on such termsand conditions;
     NOW, THEREFORE, in consideration of the premises and of the mutualpromises, representations and covenants herein contained, the parties heretoagree as follows:
1.     SCOPE OF EMPLOYMENT. The Company hereby agrees to employthe Executive upon the terms and conditions herein set forth and the Executiveagrees to perform such executive duties as may be determined and assigned tohim by the Board of Directors of the Company (the “Board”). The Executivehereby accepts such employment, subject to the terms and conditions herein setforth. The Executive shall have the title of Chairman and Chief ExecutiveOfficer. While serving as Chairman and Chief Executive Officer, the Executiveshall have the customary duties and powers of such position. Executive shallnot 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 forfive (5) years. It shall begin on the Amended Effective Date and thereafter onan annual basis be extended for a one-year period, to maintain a rollingfive-year term, unless it is earlier terminated as follows:
          (i) By the Company for Good Cause (as hereinafter defined) immediatelyupon notice from the Company to the Executive, or at such later time as suchnotice may specify;
          (ii) By the Company for other than Good Cause upon 30 days’ prior writtennotice from the Company to the Executive. For purposes hereof, the Executiveshall be deemed terminated by the Company for other than Good Cause if theExecutive terminates employment
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for Good Reason (as hereinafter defined) upon 30 days’ prior writtennotice 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 noticefrom 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) theExecutive’s willful commission of acts of dishonesty in connection with hisposition, (iii) chronic absenteeism (other than by reason of disability), (iv)the Executive’s willful failure or refusal to perform the essential duties ofhis position, (v) conviction of a felony, or (vi) the Executive’s engaging inillegal or other wrongful conduct substantially detrimental to the business orreputation of the Company. If a ground for termination under this Section 2(b)is amenable to cure, the Company shall provide the Executive with writtennotice describing the nature of the ground for termination. If the Executivecures same within 30 days after such notice is given, there shall be notermination for Good Cause.
     (c)  For purposes hereof, the term “Good Reason” shall mean the occurrenceof any one or more of the following events unless the Executive specificallyagrees in writing that such event shall not be Good Reason:
          (i) the assignment to the Executive by the Board or other officers orrepresentatives of the Company of duties materially inconsistent with theduties associated with the position described in Section 1 as such duties areconstituted as of the Amended Effective Date;
          (ii) a material change in the nature or scope of the Executive’s authorityfrom those applicable to him as Chairman and Chief Executive Officer as suchauthority is constituted on the Amended Effective Date;
          (iii) the occurrence of material acts or conduct on the part of theCompany or its officers and representatives which have as their purpose forcingthe resignation of the Executive or preventing him from performing his dutiesand responsibilities pursuant to this Agreement;
          (iv) a material breach by the Company of any material provision of thisAgreement, provided that failure of the Company to pay any amount, or toprovide any benefit, pursuant to the provision of Sections 3 and 4 hereof shallbe deemed to be a material breach by the Company of a material provision ofthis Agreement; or
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          (v) requiring the Executive to be principally based at any office orlocation 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, theExecutive shall provide the Company with written notice describing the natureof the ground for termination. If the Company cures same within 30 days aftersuch notice is given, there shall be no termination for Good Reason.
     (d)  For purposes hereof, the term “disability” shall have the samedefinition 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 nothave such a group term disability policy, the definition of “disability” shallbe as is set forth in the individual disability policy, if any, purchased inorder to fund the Company’s liability under this Agreement in the event of theExecutive’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 anormal manner for a period of six (6) consecutive months.
     (e)  For purposes hereof, the term “Date of Termination” shall mean theeffective date of the termination of the Executive’s employment in accordancewith the applicable provision of this Section 2.
3.     COMPENSATION.
     (a)  Annual Salary. The Company agrees to pay the Executive, andthe Executive agrees to accept, in payment for services to be rendered by theExecutive hereunder, an initial base salary of Four Hundred Fifty ThousandDollars ($450,000) per annum. The salary shall be payable in equal periodicinstallments, not less frequently than monthly, less such sums as may berequired to be deducted or withheld under the provisions of federal, state orlocal law. The Company agrees to review the Executive’s salary annually at oraround January 1st of each calendar year (or such other time as the Company andthe Executive mutually agree), commencing on or about January 1, 2004, foradjustment based on the Executive’s performance.
     (b)  Annual Bonus. In addition to the Executive’ssalary, the Executive shall be eligible to receive an annual bonus based uponthe achievement of goals established by the compensation committee of the Board(the “Compensation Committee”) after due consultation with the Executive. TheExecutive’s annual bonus for calendar year 2003 will be targeted at a minimumof $450,000.
     The Compensation Committee in its discretion, shall base such bonuspayment upon the satisfaction of one or more performance goals (“PerformanceGoals”). The Performance Goals shall be based upon the achievement of (i) aspecified level, of (x) the Company’s consolidated pre-tax or after-taxearnings or EBITDA or (y) the pre-tax or after-tax earnings, or the EBITDA, ofany particular subsidiary, division or other business unit of the Company, (ii)the achievement of a specified level of revenues, earnings, costs, return onassets, return on equity, return on capital, return on investment, return onassets under management, net operating income or net operating income as apercentage of book value with regard to the Company, particular subsidiaries,divisions or business units of the Company, particular assets or groups ofassets or
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particular employees or groups of employees, (iii) any other appropriate goalsas determined by the Compensation Committee or (iv) any combination of theforegoing. Commencing with the year 2004, to be eligible for an annual bonusfor a particular year, the Executive must submit proposed Performance Goals inwriting to the Compensation Committee on or before January 31 of such year.
     (c)  Stock Options. The Executive was awarded anincentive stock option grant on September 11, 2000 under the Company’s StockOption 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 December31, 2000, and ending on December 31, 2003.
4.     FRINGE BENEFITS, REIMBURSEMENT OF EXPENSES, ETC.
     (a)  The Executive shall be entitled to paid vacation, holidaysand sick leave benefits in accordance with the Company’s policies for executiveemployees.
     (b)  The Executive and/or his family shall be entitled to medical insurancefrom the Company in accordance with the Company’s policies for employees. Inaddition, the Executive shall be entitled to a fully-insured executivemedical/dental plan providing supplemental coverage for the Executive and hisfamily for those items not covered under the Company’s general health plan (forexample, prescriptions, orthodontia, eye surgery or other coverages which maybe excluded from the group medical plan). Notwithstanding the termination ofthis Agreement for any reason, the Company and any of its successors andassigns shall provide to the Executive and his family until the Executiveattains or, in the case of his death, would have attained, the age of 65 (butto his children only through their attainment of age 22) the medical insurancedescribed in the first sentence of this Section 4(b) and the supplementalcoverage described in the second sentence of this Section 4(b), at the expenseof the Company.
     (c)  Notwithstanding any termination of this Agreement, the Company agreesto make contributions of $150,000 per year for 12 years into a non-qualifieddeferred compensation plan. As of the Amended Effective Date, the Companyrepresents that it has paid an aggregate of $600,000 into this plan, leaving anaggregate amount of $1,200,000 to be paid over the ensuing 8 years. At the endof 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 theinvestment of the amounts contributed by the Company and the Company willreceive any remaining amounts. This arrangement supercedes the life insurancearrangement 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 inconnection with the business of the Company, provided that the Executivefurnishes appropriate documentation for such expenses in accordance with theCompany’s practices and procedures.
     (e) The Company shall provide the Executive with an automobile reasonablyacceptable to the Executive and the Compensation Committee, or the Executiveshall receive an automobile allowance during the term of this Agreement in areasonable amount as determined by the Compensation Committee. The Companyagrees to pay, or promptly reimburse the
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Executive for, any other benefits or expenses (such as executive airtravel and health club or other membership fees or dues) as may be approved bythe 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, asare then currently available to the Company’s executive employees and such newretirement plans, if any, as may be adopted by the Company from time to time.
5.     TERMINATION BENEFITS. In addition to the benefitsdescribed under the Agreement that survive the termination of the Agreement,the following benefits will be paid on account of the termination of theAgreement for the following reasons:
     (a)  Upon termination of this Agreement by the Company for Good Causepursuant 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 anamount equal to the sum of the Executive’s accrued base salary and any bonusamount earned but not yet paid;
          (ii) make additional payments to the Executive each year on theanniversary date of the Date of Termination, for three consecutive yearsfollowing said termination, equal to his annual salary and bonus for the yearof termination; and
          (iii) provide to Executive’s spouse (and children through their attainmentof age 22), in the event of his death (after termination of the Agreement forone of the reasons set forth in clause (a) above), and the Executive in theevent of his disability (after the termination of the Agreement for one of thereasons set forth in clause (a) above), medical insurance through the date theExecutive attains or, in the case of his death, would have attained, age 65.
     (b)  Upon termination of this Agreement due to the Executive’s disabilityor death:
          (i) the Company shall pay to the Executive or his beneficiaries, as thecase may be, immediately after the Date of Termination, an amount which isequal to the Executive’s base salary and annual bonus amount for the remainingportion of the rolling five-year term of the Agreement (as if there had been noearly termination due to his disability or death);
          (ii) the Company shall make additional payments each year, on theanniversary of the Date of Termination, for three consecutive years followingsaid termination equal to his annual salary and bonus for the year oftermination;
          (iii) the Company shall provide to the Executive’s spouse (and childrenthrough their attainment of age 22) in the event of his death (after thetermination of the Agreement due to his disability), and to the Executive andhis family (including his children only through their attainment of age 22) inthe event of his disability, medical insurance through the date the Executiveattains or, in the case of his death, would have attained, age 65; and
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          (iv) any stock options shall be fully vested.
     (c)  Upon termination of this Agreement by the Company for other than GoodCause or by the Executive for Good Reason:
          (i) the Company shall pay to Executive or his beneficiaries, as the casemay be, immediately after the Date of Termination an amount which is equal tothe Executive’s base salary and annual bonus amount for the remaining portionof the rolling five-year term of the Agreement (as if there had been no earlytermination by the Company for other than Good Cause or by the Executive forGood Reason);
          (ii) the Company shall make additional payments each year, on theanniversary of the Date of Termination, for three consecutive years followingsaid termination equal to his annual salary and bonus for the year oftermination;
          (iii) the Company shall provide to the Executive’s spouse (and childrenthrough their attainment of age 22) in the event of his death (after thetermination 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 terminationof the Agreement for one of the reasons set forth in clause (c) above), medicalinsurance 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 tothe Executive.
     (d)  If the Executive’s employment is terminated within 180 days after aChange in Control, the Executive shall be entitled to the following from eitherthe Company or its successor, if any:
          (i) the Company shall pay to Executive or his beneficiaries, as the casemay be, immediately after the Date of Termination an amount which is equal tothe Executive’s base salary and annual bonus amount for the remaining portionof the rolling five-year term of the Agreement (as if there had been no earlytermination after a Change in Control);
          (ii) the Company shall make additional payments each year, on theanniversary of the Date of Termination, for three consecutive years followingsaid termination equal to his annual salary and bonus for the year oftermination;
          (iii) Executive’s spouse (and any children through their attainment of age22) in the event of his death (after the termination of the Agreement followinga Change in Control as contemplated by this Section 5(d)), and the Executive inthe event of his disability (after the termination of the Agreement following aChange in Control as contemplated by this Section 5(d)) shall be entitled tomedical insurance through the date the Executive attains or, in the event ofhis death, would have attained, age 65; and
          (iv) A “Change in Control” means any of the following events:
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               (A) any person (as such term is used in Rule 13d-5 under the SecuritiesExchange Act of 1934 (“Exchange Act”)) or group (as such term is defined inSections 3(a)(9) and 13(d)(3) of the Exchange Act), other than a subsidiary orany employee benefit plan (or any related trust) of the Company or asubsidiary, becomes, after the Amended Effective Date, the beneficial owner of20% or more of the common stock or of securities of the Company that areentitled to vote generally in the election of directors of the Company (“VotingSecurities”) representing 20% or more of the combined voting power of allVoting Securities of the Company.
               (B) individuals who, as of the Amended Effective Date, constitute theBoard (the “Incumbent Board”) cease for any reason to constitute a majority ofthe members of the Board; provided that any individual who becomes a directorafter the Amended Effective Date whose election or nomination for election bythe Company’s stockholders was approved by a majority of the members of theIncumbent Board (other than an election or nomination of an individual whoseinitial assumption of office is in connection with an actual or threatened“election contest” relating to the election of the directors of the Company (assuch terms are used in Rule 14a-11 under the Exchange Act), “tender offer” (assuch 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 thefollowing:
                     (I) a merger, reorganization, consolidation or similar transaction (any ofthe foregoing, a “Merger”) as a result of which the persons who were therespective beneficial owners of the outstanding common stock and VotingSecurities of the Company immediately before such Merger are not expected tobeneficially own, immediately after such Merger, directly or indirectly, morethan 60% of, respectively, the common stock and the combined voting power ofthe Voting Securities of the corporation resulting from such Merger insubstantially the same proportions as immediately before such Merger, or
                     (II) a plan of liquidation of the Company or a plan or agreement for thesale or other disposition of all or substantially all of the assets of theCompany.
Notwithstanding the foregoing, there shall not be a Change in Control if, inadvance of such event, the Executive agrees in writing that such event shallnot constitute a Change in Control.
     (e)  Upon a Change in Control, the Executive shall be entitled to thefollowing from either the Company or its successors, if any:
          (i) the Company shall fully vest any stock options previously granted tothe Executive; and
          (ii) In recognition of services by the Executive in connection with anycorporate activity that constitutes a Change in Control, the Company shall paythe Executive in a
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lump sum concurrent with or as soon as practicable following a Change inControl as defined in Section 5(d)(iv)(A), (B) or (C), a disposition fee in theamount of 1% of the Company’s enterprise value, defined as its market cap plusdebt as of the date of the Change in Control.
     (f)  If any payment or distribution by the Company to or for the benefit ofthe Executive, whether paid or payable or distributed or distributable pursuantto the terms of this Agreement or otherwise pursuant to or by reason of anyother agreement, policy, plan, program or arrangement, including withoutlimitation any stock option, stock appreciation right or similar right, or thelapse or termination of any restriction on or the vesting or exercisability ofany of the foregoing (a “Payment”), would be subject to the excise tax imposedby 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 orlocal law, or any interest or penalties with respect to such tax (such tax ortaxes, together with any such interest and penalties, being hereaftercollectively referred to as the “Excise Tax”), then the Executive shall beentitled 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 penaltiesimposed with respect to such taxes), including any Excise Tax imposed upon theGross-Up Payment, the Executive retains an amount of the Gross-Up Payment equalto the Excise Tax imposed upon the Payment.
     (g)  Subject to the provisions of the following subsection (k), alldeterminations required to be made under this Section 5, including whether anExcise Tax is payable by the Executive and the amount of such Excise Tax andwhether a Gross-Up Payment is required to be paid by the Company to theExecutive and the amount of such Gross-Up Payment, if any, shall be made by anationally recognized accounting firm (the “Accounting Firm”) selected by theCompany in the Company’s sole discretion. The Accounting Firm shall submit itsdetermination and detailed supporting calculations to both the Company and theExecutive 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 theExecutive. If the Accounting Firm determines that any Excise Tax is payable bythe Executive, the Company shall pay the required Gross-Up Payment to theExecutive within five business days after receipt of such determination andcalculations with respect to any Payment to the Executive. If the AccountingFirm determines that no Excise Tax is payable by the Executive, it shall, atthe same time as it makes such determination, furnish the Company and theExecutive an opinion that the Executive has substantial authority not to reportany Excise Tax on the Executive’s federal, state or local income or other taxreturn. As a result of the uncertainty in the application of Section 4999 ofthe Code (or any successor provision thereto) and the possibility of similaruncertainty regarding applicable state or local tax law at the time of anydetermination by the Accounting Firm hereunder, it is possible that Gross-UpPayments 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 itsremedies pursuant to the following subsection (k) and the Executive thereafteris required to make a payment of any Excise Tax, the Executive shall direct theAccounting Firm to determine the amount of the Underpayment that has occurredand to submit its determination and detailed supporting calculations to boththe Company and the Executive as promptly as possible. Any such Underpaymentshall be promptly paid by the Company to, or for the benefit of, the Executivewithin five business days after receipt of such determination and calculations.
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     (h)  The Company and the Executive shall each provide the Accounting Firmaccess to and copies of any books, records and documents in the possession ofthe Company or the Executive, as the case may be, reasonably requested by theAccounting Firm, and otherwise cooperate with the Accounting Firm in connectionwith the preparation and issuance of the determinations and calculationscontemplated by the preceding subsection (g). Any determination by theAccounting Firm as to the amount of the Gross-Up Payment shall be binding uponthe Company and the Executive.
     (i)  The federal, state and local income or other tax returns filed by theExecutive shall be prepared and filed on a consistent basis with thedetermination of the Accounting Firm with respect to the Excise Tax payable bythe Executive. The Executive shall make proper payment of the amount of anyExcise Tax, and at the request of the Company, provide to the Company true andcorrect copies (with any amendments) of the Executive’s federal income taxreturn as filed with the Internal Revenue Service and corresponding state andlocal tax returns, if relevant, as filed with the applicable taxing authority,and such other documents reasonably requested by the Company, evidencing suchpayment. If prior to the filing of the Executive’s federal income tax return,or corresponding state or local tax return, if relevant, the Accounting Firmdetermines that the amount of the Gross-Up Payment should be reduced, theExecutive shall within five business days pay to the Company the amount of suchreduction.
     (j)  The fees and expenses of the Accounting Firm for its services inconnection with the determinations and calculations contemplated by thepreceding subsection (g) shall be borne by the Company. If such fees andexpenses are initially paid by the Executive, the Company shall reimburse theExecutive the full amount of such fees and expenses within five business daysafter receipt from the Executive of a statement therefor and reasonableevidence of the Executive’s payment thereof.
     (k)  The Executive shall notify the Company in writing of any claim by theInternal Revenue Service or any other taxing authority that, if successful,would require the payment by the Company of a Gross-Up Payment. Suchnotification shall be given as promptly as practicable but no later than 10business days after the Executive actually receives notice of such claim andthe Executive shall further apprise the Company of the nature of such claim andthe date on which such claim is requested to be paid (in each case, to theextent known by the Executive). The Executive shall not pay such claim priorto the earlier of (i) the expiration of the 30-calendar-day period followingthe date on which the Executive gives such notice to the Company and (ii) thedate that any payment of amount with respect to such claim is due. If theCompany notifies the Executive in writing prior to the expiration of suchperiod that it desires to contest such claim, the Executive shall:
          (i) provide the Company with any written records or documents in theExecutive’s possession relating to such claim reasonably requested by theCompany;
          (ii) take such action in connection with contesting such claim as theCompany shall reasonably request in writing from time to time, includingwithout limitation accepting legal representation with respect to such claim byan attorney competent in respect of the subject matter and reasonably selectedby the Company;
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          (iii) cooperate with the Company in good faith in order effectively tocontest such claim; and
          (iv) permit the Company to participate in any proceedings relating to suchclaim;
          *provided, however,*that the Company shall bear and pay directly all costsand expenses (including interest and penalties) incurred in connection withsuch contest and shall indemnify and hold harmless the Executive, on anafter-tax basis, for and against any Excise Tax or income tax, includinginterest and penalties with respect thereto, imposed as a result of suchrepresentation and payment of costs and expenses. Without limiting theforegoing provisions of this subsection (k), the Company shall control allproceedings in connection with or relating to the contest of any claimcontemplated by this subsection (k) and, at its sole option, may pursue orforego any and all administrative appeals, proceedings, hearings andconferences with the taxing authority in respect of such claim (*provided,however,*that the Executive may participate therein at the Executive’s own costand expense) and may, at its option, either pay the tax claimed and direct theExecutive to sue for a refund or contest the claim in any permissible manner,and the Executive agrees to prosecute such contest to a determination beforeany administrative tribunal, in a court of initial jurisdiction and in one ormore appellate courts, as the Company shall determine; *provided, however,*thatif the Company pays the tax claimed and directs the Executive to sue for arefund, the Company shall indemnify and hold the Executive harmless, on anafter-tax basis, from any Excise Tax or income or other tax, including interestor penalties with respect thereto, imposed with respect to such payment or withrespect to any imputed income in connection with such payment; and *providedfurther, however,*that any extension of the statute of limitations relating topayment of taxes for the taxable year of the Executive with respect to whichthe contested amount is claimed to be due is limited solely to such contestedamount. Furthermore, the Company’s control of any such contested claim shallbe limited to issues with respect to which a Gross-Up Payment would be payablehereunder and the Executive shall be entitled to settle or contest, as the casemay be, any other issue raised by the Internal Revenue Service or any othertaxing authority.
     (l)  If, after the receipt by the Executive of a Gross-Up Payment orpayment by the Company of an amount on the Executive’s behalf pursuant to thepreceding subsection (k), the Executive receives any refund with respect to theExcise Tax to which such Gross-Up Payment relates or with respect to suchclaim, the Executive shall (subject to the Company’s complying with therequirements of the preceding subsection (k)), promptly pay to the Company theamount of such refund (together with any interest paid or credited thereon lessany taxes applicable thereto). If a determination is made that the Executiveshall not be entitled to any refund with respect to payment by the Company ofan 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 tocontest such denial of refund prior to the expiration of 30 calendar days aftersuch determination, then the amount of such payment by the Company of theamount on the Executive’s behalf shall offset, to the extent thereof, theamount of Gross-Up Payment required to be paid by the Company to the Executivepursuant to this Section 5.
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     (m)  The Company’s obligations under this Section 5 shall survivetermination of this Agreement.
6.     INSURANCE. It is understood that the Company maypurchase insurance policies to fund all or part of the obligations set forth inthis Agreement, provided it is understood that said obligations shall not beaffected by the availability or unavailability of insurance coverage. TheExecutive agrees to execute such applications for insurance and to make himselfavailable for and to undergo all reasonable medical examinations which may berequired in the event the Company determines to procure or place any insuranceto fund all or any part of the aforementioned obligations.
7.     ENTIRE AGREEMENT. This Agreement contains the entireunderstanding between the parties hereto and supersedes all other oral andwritten agreements or understandings between them with respect to such matters.All previous oral or written agreements between the parties hereto with respectto such matters shall be deemed to have been completely fulfilled by bothparties and shall be superseded by this Agreement. No modification or additionhereto or waiver or cancellation of any provision shall be valid except by awriting signed by the party to be charged therewith.
8.     SUCCESSORS AND ASSIGNS. This Agreement shall be bindingupon, and inure to the benefit of, the parties hereto and their heirs,successors, assigns and personal representatives. As used herein, thesuccessors of the Company shall include, but not be limited to, any successorby way of merger, consolidation, sale of all or substantially all of itsassets, or similar reorganization. In no event may the Executive assign anyduties or obligations under this Agreement.
9.     CONTROLLING LAW. The validity and construction of thisAgreement or of any of its provisions shall be determined under the laws of theState of Delaware. The invalidity or unenforceability of any provision of thisAgreement shall not affect or limit the validity and enforceability of theother provisions hereof.
10.     NOTICES. All notices, consents, waivers and othercommunications required or permitted by this Agreement shall be in writing andshall be deemed given to a party when (a) delivered to the appropriate addressby hand or by nationally recognized overnight courier service (costs prepaid);(b) sent by facsimile or e-mail with confirmation of transmission by thetransmitting equipment; or (c) received or rejected by the addressee, if sentby certified mail, return receipt requested, in each case to the followingaddresses, facsimile numbers or e-mail addresses and marked to the attention ofthe 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 noticeto the other party):
  The Board of Directors of Sunrise Senior Living, Inc.