EXHIBIT 10.2
**INDEMNIFICATION AGREEMENT**
     THIS INDEMNIFICATION AGREEMENT (the “Agreement”) is made as of November13, 2003 by and between Sunrise Senior Living, Inc., a Delaware corporation(the “Company”), and Paul J. Klaassen (“Indemnitee”), a director and officer ofthe Company.
     WHEREAS, Section 6 of the Amended and Restated Bylaws of the Company, asamended (the “Bylaws”), provides that the Company, among other things, shallindemnify and hold harmless each person who was or is a party or is threatenedto be made a party to or is involved in any threatened, pending or completedaction, suit or proceeding, whether civil, criminal, administrative, orinvestigative and whether by or in the right of the Company or otherwise, byreason of the fact that he or she is or was an officer or director of theCompany or is or was serving at the request of the Company as an officer,director, employee, partner (limited or general) or agent of anothercorporation or of a partnership, joint venture, limited liability company,trust, or other enterprise; and
     WHEREAS, in recognition of Indemnitee’s need for protection againstpersonal liability in order to enhance Indemnitee’s continued service to theCompany and Indemnitee’s reliance on the provisions of Section 6 of the Bylawsrequiring indemnification under certain circumstances, and in part to provideIndemnitee with specific contractual assurance that indemnification protectionwill be available and to implement such Bylaw provision, the Company wishes toprovide in this Agreement for the indemnification of, and the advancement ofexpenses to, Indemnitee to the fullest extent permitted by law.
     NOW, WHEREAS, in consideration of the mutual premises and covenantscontained herein, and for other good and valuable consideration, the receiptand sufficiency of which are hereby acknowledged, the parties hereto agree asfollows:
     SECTION 1. Right to Indemnification. The Company shall to the fullestextent permitted by applicable law as then in effect indemnify and holdharmless the Indemnitee in the event that he was or is a party to or isinvolved or becomes involved in any manner (including, without limitation, as aparty, intervenor or a witness) or is threatened to be made so involved in anythreatened, pending or completed investigation, claim, action, suit orproceeding, whether civil, criminal, administrative or investigative (includingwithout limitation, any action, suit or proceeding by or in the right of theCompany to procure a judgment in its favor) (a “Proceeding”) by reason of thefact that he, or a person of whom he is the legal representative, is or was adirector and/or officer of the Company, or is or was serving at the request ofthe Company as a director, officer, partner (limited or general) or agent ofanother corporation, partnership, joint venture, limited liability company,trust or other enterprise (including, without limitation, service with respectto an employee benefit plan) against all expenses, liabilities and losses(including attorneys’ fees, judgments, fines, taxes, penalties and amounts paidor to be paid in settlement) reasonably incurred by him in connection with suchProceeding. Such indemnification shall be a contract right and shall includethe right to receive payment in advance of any expenses incurred by theIndemnitee in connection with such Proceeding, consistent with the provisionsof applicable law as then in effect.
 

 

     SECTION 2. Indemnification; Not Exclusive Right. The right ofindemnification provided in this Agreement shall not be exclusive of and shallbe in addition to, and not in lieu of, any other rights to which the Indemniteemay otherwise be entitled under applicable law, the Bylaws, or otherwise.Nothing in this Agreement shall diminish or otherwise restrict the Indemnitee’sright to indemnification under applicable law, the Bylaws of otherwise. Theprovisions of this Agreement shall inure to the benefit of the heirs,executors, administrators and other legal representatives of the Indemnitee andshall be applicable to Proceedings commenced or continuing after the adoptionof this Agreement, whether arising from acts or omissions occurring before orafter its execution and delivery.
     SECTION 3. Advancement of Expenses; Procedures; Presumptions and Effect ofCertain Proceedings; Remedies. In furtherance, but not in limitation of theforegoing provisions, the following procedures, presumptions and remedies shallapply with respect to the advancement of expenses and the right toindemnification under this Agreement:
        3(a) Advancement of Expenses. All reasonable expenses incurred by or onbehalf of the Indemnitee in the defense of or other involvement in or otherwisein connection with any Proceeding shall be advanced to the Indemnitee by theCompany within twenty (20) days after the receipt by the Company of a statementor statements from the Indemnitee requesting such advance or advances from timeto time, whether prior to or after final disposition of such Proceeding. Suchstatement or statements shall reasonably evidence the expenses incurred by theIndemnitee and, if required by law at the time of such advance, shall includeor be accompanied by an undertaking by or on behalf of the Indemnitee to repaythe amounts advanced if it should ultimately be determined that the Indemniteeis not entitled to be indemnified against such expenses pursuant to thisAgreement.
        3(b) Procedure for Determination of Entitlement to Indemnification.
            (i) To obtain indemnification under this Agreement, the Indemnitee shallsubmit to the Secretary of the Company a written request, including suchdocumentation and information as is reasonably available to the Indemnitee andreasonably necessary to determine whether and to what extent the Indemnitee isentitled to indemnification (the “Supporting Documentation”). Thedetermination of the Indemnitee’s entitlement to indemnification shall be madenot later than sixty (60) days after receipt by the Company of the writtenrequest for indemnification together with the Supporting Documentation. TheSecretary of the Company shall, promptly upon receipt of such a request forindemnification, advise the Board of Directors of the Company (the “Board ofDirectors”) in writing that the Indemnitee has requested indemnification.
            (ii) The Indemnitee’s entitlement to indemnification under this Agreementshall be determined in one of the following ways: (A) by a majority vote of theDisinterested Directors (as hereinafter defined), even though less than aquorum of the Board of Directors; (B) by a written opinion of IndependentCounsel (as hereinafter defined) if (x) a Change of Control (as hereinafterdefined) shall have occurred and the Indemnitee so requests or (y) there are noDisinterested Directors, or a majority of Disinterested Directors, even thoughless than a quorum, so directs; (C) by the stockholders of the Company (butonly if a majority of the Disinterested Directors, even though less than aquorum of the Board of Directors, presents
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the issue of entitlement to indemnification to the stockholders for theirdetermination); or (D) as provided in Section 3(c).
            (iii) In the event the determination of entitlement to indemnification isto be made by Independent Counsel pursuant to Section 3(b)(ii), a majority ofthe Disinterested Directors, or in the absence of any Disinterested Directors,a majority of the Board of Directors, shall select the Independent Counsel, butonly an Independent Counsel to which the Indemnitee does not reasonably object;provided, however, that if a Change of Control shall have occurred, theIndemnitee shall select such Independent Counsel, but only an IndependentCounsel to which the Board of Directors does not reasonably object.
        3(c) Presumptions and Effect of Certain Proceedings. Except as otherwiseexpressly provided in this Agreement, the Indemnitee shall be presumed to beentitled to indemnification under this Agreement upon submission of a requestfor indemnification together with the Supporting Documentation in accordancewith Section 3(b)(i), and thereafter the Company shall have the burden of proofto overcome that presumption in reaching a contrary determination. In anyevent, if the person or persons empowered under Section 3(b) to determineentitlement to indemnification shall not have been appointed or shall not havemade a determination within sixty (60) days after receipt by the Company of therequest therefor together with the Supporting Documentation, the Indemniteeshall be deemed to be entitled to indemnification and shall be entitled to suchindemnification unless (A) the Indemnitee misrepresented or failed to disclosea material fact in making the request for indemnification or in the SupportingDocumentation or (B) such indemnification is prohibited by law. Thetermination of any Proceeding described in Section l, or of any claim, issue ormatter herein, by judgment, order, settlement or conviction, or upon a plea ofnolo contendere or its equivalent, shall not, of itself, adversely affect theright of the Indemnitee to indemnification or create a presumption that theIndemnitee did not act in good faith and in a manner which he reasonablybelieved to be in or not opposed to the best interests of the Company or, withrespect to any criminal Proceeding, that the Indemnitee had reasonable cause tobelieve that his conduct was unlawful.
        3(d) Remedies of Indemnitee.
            (i) In the event that a determination is made pursuant to Section 3(b)that the Indemnitee is not entitled to indemnification under this Agreement,the Indemnitee shall be entitled to seek an adjudication of his entitlement tosuch indemnification either at the Indemnitee’s sole option, in (x) anappropriate court of the State of Delaware or any other court of competentjurisdiction or (y) an arbitration to be conducted by a single arbitratorpursuant to the rules of the American Arbitration Association; it beingunderstood that any such judicial proceeding or arbitration shall be de novoand the Indemnitee shall not be prejudiced by reason of such adversedetermination; and in any such judicial proceeding or arbitration the Companyshall have the burden of proving that the Indemnitee is not entitled toindemnification under this Agreement.
            (ii) If a determination shall have been made or deemed to have been made,pursuant to Sections 3(b) or (c), that the Indemnitee is entitled toindemnification, the Company shall be obligated to pay the amounts constitutingsuch indemnification within five (5)
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days after such determination has been made or deemed to have been madeand shall be conclusively bound by such determination unless (A) the Indemniteemisrepresented or failed to disclose a material fact in making the request forindemnification or in the Supporting Documentation or (B) such indemnificationis prohibited by law. In the event that advancement of expenses is not timelymade pursuant to Section 3(a) or payment of indemnification is not made withinfive (5) days after a determination of entitlement to indemnification has beenmade or deemed to have been made pursuant to Section 3(b) or (c), theIndemnitee shall be entitled to seek judicial enforcement of the Company’sobligation to pay to the Indemnitee such advancement of expenses orindemnification. Notwithstanding the foregoing, the Company may bring anaction, in an appropriate court in the State of Delaware or any other court ofcompetent jurisdiction, contesting the right of the Indemnitee to receiveindemnification hereunder due to the occurrence of an event described insubclause (A) or (B) of this clause (ii) (a “Disqualifying Event”); provided,however, that in any such action the Company shall have the burden of provingthe occurrence of such Disqualifying Event.
            (iii) The Company shall be precluded from asserting in any judicialproceeding or arbitration commenced pursuant to this Section 3(d) that theprocedures and presumptions of this Agreement are not valid, binding andenforceable and shall stipulate in any such court or before any such arbitratorthat the Company is bound by all the provisions of this Agreement.
            (iv) In the event that the Indemnitee, pursuant to this Section 3(d),seeks a judicial adjudication of or an award in arbitration to enforce his orher rights under, or to recover damages for breach of, this Agreement, theIndemnitee shall be entitled to recover from the Company, and shall beindemnified by the Company against, any expenses actually and reasonablyincurred by him if the Indemnitee prevails in such judicial adjudication orarbitration. If it shall be determined in such judicial adjudication orarbitration that the Indemnitee is entitled to receive part but not all of theindemnification or advancement of expenses sought, all such expenses incurredby the Indemnitee in connection with such judicial adjudication or arbitrationshall be paid.
        3(e) Definitions. For the purposes of this Section 3:
            (i) “Change in Control” means a change in control of the Company of anature that would be required to be reported in response to Item 6(e) ofSchedule 14A of Regulation 14A promulgated under the Securities Exchange Act of1934, as amended (the “Act”), whether or not the Company is then subject tosuch reporting requirement; provided that, without limitation, such a change incontrol shall be deemed to have occurred if (A) any “person” (as such term isused in Sections 13(d) and 14(d) of the Act) becomes after the date hereof the“beneficial owner” (as defined in Rule l3d-3 under the Act), directly orindirectly, of securities of the Company representing twenty-five percent (25%)or more of the combined voting power of the Company’s then outstandingsecurities without the prior approval of at least two-thirds of the members ofthe Board of Directors in office immediately prior to such acquisition; (B) theCompany is a party to a merger, consolidation, sale of assets or otherreorganization, or a proxy contest, as a consequence of which members of theBoard of Directors in office immediately prior to such transaction or eventconstitute less than a majority of the Board of Directors thereafter or (C)during any period of two (2) consecutive years, individuals who at the
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beginning of such period constituted the Board of Directors (including forthis purpose any new director whose election or nomination for election by theCompany’s stockholders was approved by a vote of at least a majority of thedirectors then still in office who were directors at the beginning of suchperiod) cease for any reason to constitute at least a majority of the Board ofDirectors.
            (ii) “Disinterested Director” means a director of the Company who is notor was not a party to the Proceeding in respect of which indemnification issought by the Indemnitee.
            (iii) “Independent Counsel” means a law firm or a member of a law firmthat neither presently is, nor in the past five (5) years has been, retained torepresent (A) the Company or the Indemnitee in any matter material to eithersuch party or (B) any other party to the Proceeding giving rise to a claim forindemnification under this Agreement. Notwithstanding the foregoing, the term“Independent Counsel” shall not include any person who, under the applicablestandards of professional conduct then prevailing under the law of the State ofDelaware, would have a conflict of interest in representing either the Companyor the Indemnitee in an action to determine the Indemnitee’s rights under thisAgreement.
     SECTION 4. Notification and Defense of Claim. Promptly after receipt ofnotice of the commencement of any action, suit or proceeding, Indemnitee will,if a claim in respect thereof is to be made against the Company under thisAgreement, notify the Company of the commencement thereof, but the omission soto notify the Company will not relieve the Company from any liability that theCompany may have to Indemnitee under this Agreement unless the Company ismaterially prejudiced thereby. With respect to any such action, suit orproceeding as to which Indemnitee notifies the Company of the commencementthereof:
        4(a) The Company will be entitled to participate therein at its ownexpense; and
        4(b) Except as otherwise provided below, the Company jointly with anyother indemnifying party similarly notified will be entitled to assume thedefense thereof, with counsel reasonably satisfactory to Indemnitee. Afternotice from the Company to Indemnitee of the Company’s election so to assumethe defense thereof, the Company will not be liable to Indemnitee under thisAgreement for any legal or other expenses subsequently incurred by Indemniteein connection with the defense thereof other than reasonable costs ofinvestigation or as otherwise provided below. Indemnitee shall have the rightto employ Indemnitee’s own counsel in such action, suit or proceeding, but thefees and disbursements of such counsel incurred after notice from the Companyof the Company’s assumption of the defense thereof shall be at the expense ofIndemnitee unless (i) the employment by counsel by Indemnitee has beenauthorized by the Company, (ii) Indemnitee shall have reasonably concluded thatthere may be a conflict of interest between the Company and Indemnitee in theconduct of the defense of such action, (iii) such action, suit or proceedingseeks penalties or other relief against Indemnitee with respect to which theCompany could not provide monetary indemnification to Indemnitee (such asinjunctive relief or incarceration) or (iv) the Company shall not in fact haveemployed counsel to assume the defense of such action, in each of which casesthe fees and disbursements of counsel shall be at the expense of the Company.The Company shall not be entitled to assume
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the defense of any action, suit or proceeding brought by or on behalf ofthe Company, or as to which Indemnitee shall have reached the conclusionspecified in (ii) above, or which involves penalties or other relief againstIndemnitee of the type referred to in (iii) above. It is acknowledged that adirector or former director shall be entitled under circumstances specified inthe Bylaws to expenses of separate legal counsel, up to the amount specifiedtherein.
        4(c) The Company shall not be liable to indemnify Indemnitee under thisAgreement for any amounts paid in settlement of any action or claim effectedwithout the Company’s written consent. The Company shall not settle any actionor claim in any manner that would impose any penalty or limitation onIndemnitee without Indemnitee’s written consent. Neither the Company norIndemnitee will unreasonably withhold consent to any proposed settlement.
     SECTION 5. Severability. If any provision or provisions of this Agreementshall be held to be invalid, illegal or unenforceable for any reasonwhatsoever: (a) the validity, legality and enforceability of the remainingprovisions of this Agreement (including, without limitation, all portions ofany paragraph of this Agreement containing any such provision held to beinvalid, illegal or unenforceable, that are not themselves invalid, illegal orunenforceable) shall not in any way be affected or impaired thereby and (b) tothe fullest extent possible, the provisions of this Agreement (including,without limitation, all portions of any paragraph of this Agreement containingany such provision held to be invalid, illegal or unenforceable, that are notthemselves invalid, illegal or unenforceable) shall be construed so as to giveeffect to the intent manifested by the provision held invalid, illegal orunenforceable.
     SECTION 6. Company’s Right to Indemnification. Nothing in this Agreementshall diminish, limit or otherwise restrict or modify in any way the Company’sright to indemnification or contribution from an Indemnitee or an Indemnitee’sobligation to indemnify or hold harmless the Company under any agreement,instrument, commitment or understanding now or hereafter in effect.
     SECTION 7. Cancellation. The Company may cancel the provisions of thisAgreement prospectively only upon thirty (30) days’ prior written notice toIndemnitee, in order to afford Indemnitee an opportunity to resign as officerand/or director rather than continue to serve absent indemnification providedunder this Agreement; it being understood that “prospectively only” shall meanthat the Agreement shall remain in full force and effect for all acts oromissions that occur through the effective date of cancellation.
     SECTION 8. Amendments and Waiver. No amendment, modification or dischargeor this Agreement, and no waiver hereunder, shall be valid or binding unlessset forth in writing and duly executed by both of the parties hereto. Neitherthe waiver by any of the parties hereto of a breach of or a default under anyof the provisions of this Agreement, nor the failure of any of the parties, onone or more occasions, to enforce any of the provisions of this Agreement or toexercise any right or privilege hereunder shall thereafter be construed as awaiver of any subsequent breach or default of a similar nature, or as a waiverof any of such provisions, rights or privileges hereunder. No delay or failureon the part of any party in exercising any right, power or privilege under thisAgreement or under any other instruments given in connection with or pursuantto this Agreement shall impair any such right, power or privilege or beconstrued as a
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waiver of any default or any acquiescence therein. No single or partialexercise of any such right, power or privilege shall preclude the furtherexercise of such right, power or privilege, or the exercise of any other right,power or privilege.
     SECTION 9. Subrogation. In the event of payment under this Agreement, theCompany shall be subrogated to the extent of such payment to all of the rightsof recovery of Indemnitee, who shall execute all papers required and shall doeverything that may be necessary to secure such rights, including the executionand delivery of such documents necessary to enable the Company effectively tobring suit to enforce such rights.
     SECTION 10. No Duplication of Payment. The Company shall not be liableunder this Agreement to make any payment in connection with any claim madeagainst Indemnitee to the extent Indemnitee has otherwise actually receivedpayment (under any insurance policy, Bylaw provision or otherwise) of theamounts otherwise indemnifiable hereunder.
     SECTION 11. Governing Law; Headings. This Agreement shall be governed byand construed and enforced in accordance with the laws of the State of Delawareapplicable to contracts made and to be performed in such state without givingeffect to the principles of conflicts of laws. The section and other headingscontained in this Agreement are for reference purposes only and shall notaffect in any way the meaning of interpretation of this Agreement.
     IN WITNESS WHEREOF, the parties hereto have executed and delivered thisAgreement or have caused this Agreement to be executed and delivered as of theday and year first above written.
SUNRISE SENIOR LIVING, INC.   By: /s/ Thomas J. Donohue  Name: Thomas J. DonohueTitle: Director and Chairman, Compensation Committee
INDEMNITEE   By: /s/ Paul J. Klaassen  Name: Paul J. Klaassen
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