Document:

exv10w3

 

Exhibit 10.3

PURCHASER REPLACEMENT AND RELEASE AGREEMENT

          This PURCHASER REPLACEMENT AND RELEASE AGREEMENT (“Agreement”) is executed and delivered by
the undersigned as of this 18th day of February, 2005.

PREAMBLE

          WHEREAS, each of the undersigned (other than the Replacement Purchaser, as defined below) is a
party to that certain Facilities Purchase and Sale Agreement dated as of January 19, 2005 (the
“Facilities Purchase and Sale Agreement”), which, among other things, provides that each of the
parties to the Facilities Purchase and Sale Agreement will execute and deliver this Agreement in
the event a “Qualified Investor” executes and delivers this Agreement at or prior to 11:59 P.M.
(McLean, Virginia time) on the Investor Commitment Termination Date (or the Extended Investor
Commitment Termination Date, as applicable) in accordance with Section 12.3 of the Facilities
Purchase and Sale Agreement (capitalized terms not otherwise defined herein shall have the meanings
ascribed to such terms in the Facilities Purchase and Sale Agreement); and

          WHEREAS, the undersigned desire to execute and deliver this Agreement in accordance with
Section 12.3 of the Facilities Purchase and Sale Agreement to, among other things, substitute
Sunrise IV Senior Living Holdings, LLC (the “Replacement Purchaser”) as the “Purchaser” under the
Facilities Purchase and Sale Agreement (except in certain specified instances) and, except to the
extent expressly contemplated in this Agreement, remove Sunrise Senior Living Investments, Inc.
(“SSLII”) as a party to the Facilities Purchase and Sale Agreement and release SSLII and Sunrise
Senior Living, Inc. (“Sunrise”) from all obligations and Liability under the Facilities Purchase
and Sale Agreement, all in accordance with the terms set forth in this Agreement.

          NOW, THEREFORE, in consideration of the premises and the covenants and agreements hereinafter
set forth and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows.

Article I

Replacement Purchaser

          1.1 References to “Purchaser.” Effective as of the date hereof, the Facilities
Purchase and Sale Agreement is hereby amended so that, except with respect to Article VIII
(employee matters) of the Facilities Purchase and Sale Agreement (as more fully described in
Section 1.3(c) below), all references to “Purchaser” in the Facilities Purchase and Sale Agreement
shall mean the Replacement Purchaser instead of Sunrise Senior Living Investments, Inc. For the
sake of clarity, (i) nothing in this Agreement is intended to affect the rights and obligations of
the parties to the Facilities Purchase and Sale Agreement, including SSLII, under Section 12.3 of
the Facilities Purchase and Sale Agreement and (ii) it is acknowledged that (as

 

more fully described in Section 1.3 below) SSLII will continue to remain a party to the Facilities
Purchase and Sale Agreement with respect to certain provisions to which Replacement Purchaser as
the “Purchaser” is also a party.

          1.2 Replacement Purchaser Representations and Warranties. The Replacement Purchaser
is hereby deemed to have made for and on behalf of itself all of the representations and warranties
of “Purchaser” set forth in Article VI as of the date hereof; it being understood that, for
purposes of this Agreement and the Facilities Purchase and Sale Agreement (including Section
10.4(a)(i) thereof), in lieu of making the representation and warranty in Section 6.1(a) of the
Facilities Purchase and Sale Agreement, the Replacement Purchaser shall be deemed to have made the
following representation and warranty as of the date hereof:

          “(a) Purchaser is a limited liability company duly formed, validly existing and in good
standing under the Laws of the State of Delaware. Purchaser has the necessary limited liability
company power and authority to execute, deliver and perform its obligations under this Agreement
and each of the other Related Documents to which it is or will be a party and to consummate the
transactions contemplated hereby and thereby.”

Consistent with the foregoing, the reference to “as of the date hereof” in Section 10.4(a)(i) of
the Facilities Purchase and Sale Agreement shall mean (for purposes of determining whether such
condition has been satisfied) the date of this Agreement.

          1.3 SSLII Continuing Obligations Under Facilities Purchase and Sale Agreement.
Notwithstanding anything to the contrary herein, effective as of the date hereof, SSLII shall be
deemed to continue to remain a party to the Facilities Purchase and Sale Agreement for purposes of
only Article VI, Sections 7.3, 7.5, 7.6 and 7.7, Article VIII, Sections 10.1 and 10.4(d), Article
XI, Article XII and Article XIII as and to the extent described below:

               (a) Representations and Warranties: SSLII shall remain responsible under the Facilities
Purchase and Sale Agreement for the representations and warranties made by SSLII in Article VI of
the Facilities Purchase and Sale Agreement on the date thereof;

               (b) Covenants: SSLII shall remain responsible under Sections 7.3, 7.5, 7.6 and 7.7;

               (c) Employment Matters: Article VIII of the Facilities Purchase and Sale Agreement is hereby
amended, effective as of the date hereof, (i) subject to subsection (iii) below, to replace all
references to “Purchaser” in Article VIII with references to SSLII; (ii) to add the Replacement
Purchaser (and its Affiliates, and each of their permitted successors and assigns, and the
respective officers, directors, employees, members, stockholders, partners and agents of each of
the foregoing) as an indemnified person for purposes of the Seller indemnification obligations in
Sections 8.1(c) and (d); and (iii) to replace all references to “Purchaser” in Sections 8.1(f) and
(g) with references to both SSLII and the Replacement Purchaser;

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               (d) Closing Conditions:

                    (i) Section 10.1 of the Facilities Purchase and Sale Agreement is hereby amended such that the
waiver of any of the conditions set forth in Section 10.1 shall require the prior written consent
of SSLII and the Replacement Purchaser; and

                    (ii) Sections 10.4(d) of the Facilities Purchase and Sale Agreement is hereby amended,
effective as of the date hereof, to require SSLII and the Replacement Purchaser to deliver on
behalf of each of them, respectively, the certificate contemplated in Section 10.4(d) as a
condition to the obligations of Sellers and the Trust to consummate the transactions contemplated
by the Facilities Purchase and Sale Agreement;

                    (e) Indemnification: SSLII shall remain obligated under Sections 11.2(b)(i) (as to only the
representations and warranties of SSLII in Article VI thereof) and Section 11.2(b)(ii) (as to only
the covenants to which SSLII remains obligated as expressly contemplated herein), subject to the
terms, conditions and other provisions of Article XI (including the limitations on indemnification
set forth in Section 11.8(b)). For the sake of clarity, (i) the definition of “Purchaser Included
Claim” in Section 11.8(b) shall include any Claims against the Replacement Purchaser or SSLII that
exceed $25,000, and (ii) notwithstanding anything to the contrary in this Agreement or the
Facilities Purchase and Sale Agreement, neither SSLII nor Sunrise shall be liable for any
obligations of the Replacement Purchaser under this Agreement or the Facilities Purchase and Sale
Agreement and the Replacement Purchaser shall not be liable for any obligations of SSLII or Sunrise
under this Agreement or the Facilities Purchase and Sale Agreement. SSLII and Sunrise shall each
remain a “Purchaser Indemnified Person” for purposes of Article XI;

                    (f) Termination: Sections 12.1(b), (c), (d), (e) and (g), the proviso following Section
12.1(g) and Sections 12.2(a) and (b) are hereby amended, effective as of the date hereof, by
inserting the phrase “or Sunrise Senior Living Investments, Inc.” immediately after the term
“Purchaser” in each place the term “Purchaser” appears in such Sections; and

                    (g) Miscellaneous Provisions:

                         (i) Section 13.1 is hereby amended, effective as of the date hereof, to add the following new
sentence at the end of Section 13.1: “For the sake of clarity, Sunrise Senior Living Investments,
Inc. is a party to this Agreement for purposes of this Section 13.1.”;

                         (ii) Section 13.4 is hereby deleted in its entirety, effective as of the date hereof, and
replaced with the following new Section 13.4:

     “13.4 No Assignment; Parties in Interest. Neither this
Agreement nor any rights and obligations hereunder shall be assigned by any
party hereto without the prior written consent of the other parties hereto,
except that Purchaser may, without the consent of the other parties hereto,
assign any or all of its rights and interests hereunder, including any

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rights to purchase one or more of the Facilities and the other
Purchased Assets associated with such Facilities, to any Affiliate of
Purchaser and/or to Sunrise Senior Living Investments, Inc. or any of its
Affiliates (which assignment shall not relieve Purchaser of its obligations
hereunder and provided all such assignees shall assume all obligations of
Purchaser with respect to such Facilities). Sunrise Senior Living
Investments, Inc., to the extent that it continues to remain a party to this
Agreement with respect to certain provisions may, without the consent of the
other parties hereto, assign any or all of its rights and interests
hereunder to any Affiliate of Sunrise Senior Living Investments, Inc. (which
assignment shall not relieve Sunrise Senior Living Investments, Inc. of its
obligations hereunder under such provisions). For internal structuring
reasons, US Senior Living Funding, Inc. may transfer and assign its
membership interest in the Replacement Purchaser to an entity that is funded
by, and the decisions of which are contractually controlled by, US Senior
Living Funding, Inc., subject to the consent of SSLII but without the
consent of any other party hereto, for Shariah compliance purposes that does
not affect the Sellers. Any attempted assignment in violation of this
Section 13.4 shall be null and void and of no force and effect.
Subject to the foregoing, all of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns and (except for the rights
expressly created in favor of the Seller Indemnified Persons and Purchaser
Indemnified Persons pursuant to Article XI) nothing in this
Agreement, express or implied, is intended to confer upon or give any other
Person any rights or remedies of any nature whatsoever under or by reason of
this Agreement. Nothing in this Agreement is intended to relieve or
discharge the obligation of any third Person to any party to this
Agreement.”

                         (iii) Section 13.6(b) is hereby amended, effective as of the date hereof, to delete the phrase
“if to Purchaser, to:” and replace it with the phrase “if to Sunrise Senior Living Investments,
Inc., to:”

                         (iv) Effective as of the date hereof, the following is added as a new Section 13.6(c):

	 	   	“if to Purchaser, to:
	 
	 	   	Sunrise IV Senior Living Holdings, LLC

7902 Westpark Drive

McLean, VA 22102

Attention: Bradley B. Rush

Telephone No.: (703) 744-1890
	 	   	Facsimile No.: (703) 744-1628

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	 	   	with a copy (which shall not constitute notice) to:
	 
	 	   	Sunrise Senior Living, Inc.

7902 Westpark Drive

McLean, VA 22102

Attention: John F. Gaul, Esq.

Telephone No.: (703) 744-1710

Facsimile No.: (703) 744-1990
	 
	 	   	and
	 
	 	   	King & Spalding LLP

1185 Avenue of the Americas

New York, NY 10036

Attention: Isam Salah

Telephone No.: (212) 556-2140

Facsimile No.: (212) 556-2222”

                         (v) Section 13.16 is hereby deleted in its entirety, effective as of the date hereof.

          1.4 Purchaser Representative. The parties hereby agree that Bradley B. Rush is
appointed as the representative of the Replacement Purchaser and SSLII for purposes of the direct
claim resolution process contemplated in Section 11.4(b) (direct indemnification claims) and to
serve as the primary contact person for purposes of addressing any matters that arise under the
Facilities Purchase and Sale Agreement prior to the Closing. In the event Mr. Rush is unable or
unwilling to serve in such capacity, or the Replacement Purchaser and SSLII desire to appoint
another person to serve in such capacity, then the Replacement Purchaser and SSLII shall designate
an alternate person reasonably acceptable to the Seller Representative to serve in such capacity.

Section II

Other Modifications and Amendments

          2.1 Purchaser Knowledge. All knowledge of SSLII within the meaning of Section 11.5
and other applicable provisions of the Facilities Purchase and Sale Agreement shall be attributable
to the Replacement Purchaser for purposes of the Facilities Purchase and Sale Agreement.

Section III

Release of SSLII and Sunrise

          3.1 Each Seller and the Trust, on behalf of itself and its successors and assigns, hereby
irrevocably and unconditionally releases and discharges SSLII and Sunrise and

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their respective Subsidiaries and Affiliates, and each of their respective agents, officers,
employees, directors, and representatives from and against any and all obligations and Liability
under the Facilities Purchase and Sale Agreement except with respect to Section 12.3 and except to
the extent of the particular provisions to which SSLII expressly agrees to continue to remain a
party thereto as set forth in Section 1.3 hereof. For the sake of clarity, this release shall
constitute a release of SSLII and Sunrise of any obligation to purchase the Purchase Assets, assume
the Assumed Liabilities and pay the Purchase Price as contemplated in the Facilities Purchase and
Sale Agreement. Each Seller and the Trust agrees not to file any claim, lawsuit or other
proceeding seeking monetary recovery or other relief and not to otherwise assert any claims that
are released in this Section 3.1. Each Seller and the Trust acknowledges and agrees that SSLII and
Sunrise and their respective Subsidiaries and Affiliates and each of their respective agents,
representatives, officers, employees, directors, successors and assigns are entitled to rely on
this release.

Section IV

Miscellaneous

          4.1 Entire Agreement. This Agreement, together with the Facilities Purchase and Sale
Agreement, constitute the entire agreement among the parties pertaining to the subject matter
hereof and supersede all prior agreements and understandings of the parties with respect to the
subject matter hereof, written or oral.

          4.2 Amendment. This Agreement may be modified or amended only by agreement in writing of all
of the parties hereto.

          4.3 Notices. All notices and other written communications shall be provided in accordance
with Section 13.6 of the Facilities Purchase and Sale Agreement (as amended hereby).

          4.4 Interpretation. In accordance with Section 13.10 of the Facilities Purchase and Sale
Agreement, from and after the date of this Agreement, each reference in the Facilities Purchase and
Sale Agreement to “this Agreement” shall mean the Facilities Purchase and Sale Agreement as
amended, modified and supplemented pursuant to this Agreement. If any provision of this Agreement
is, in the judgment of the trier of fact, ambiguous or unclear, that provision shall be interpreted
in a reasonable manner to effect the intent of the parties. In the event of any inconsistencies
between this Agreement and the Facilities Purchase and Sale Agreement, the terms of this Agreement
shall govern.

          4.5 Counterparts. This Agreement may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original instrument, but all such counterparts together shall
constitute one agreement. This Agreement may be delivered by facsimile or electronic transmission.

          4.6 Governing Law. This Agreement will be governed by and construed in accordance with the
Laws of the State of Delaware, without giving effect to any choice of law or conflicting provision
or rule (whether of the State of Delaware or any other jurisdiction) that would cause the Laws of
any jurisdiction other than Delaware to be applied. In furtherance of

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the foregoing, the Law of Delaware will control the interpretation and construction of this
Agreement, even if under such jurisdiction’s choice of law or conflict of law analysis, the
substantive Law of some other jurisdiction would ordinarily apply.

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          IN WITNESS WHEREOF, this Agreement has been executed and delivered by the undersigned as of
the date first set forth above.

	 	 	 	 	 	 	 
	 	 	SUNRISE IV SENIOR LIVING HOLDINGS, LLC
	 
	 	 	 	 	 	 
	 	 	     By:	 	Sunrise Senior Living Investments, Inc. (its Member)
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	   /s/ Bradley B. Rush
	

	 	 	 	 	 	 
	

	 	 	 	Name:
	 	   Bradley B. Rush
	

	 	 	 	Title:
	 	   Vice President
	 
	 	 	 	 	 	 
	 	 	     By:	 	US Senior Living Funding, Inc. (its Member)
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	   /s/ Henry Thompson
	

	 	 	 	 	 	 
	

	 	 	 	Name:
	 	   Henry Thompson
	

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	SUNRISE SENIOR LIVING INVESTMENTS, INC.
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	   /s/ Bradley B. Rush
	

	 	 	 	 	 	 
	

	 	 	 	Name:
	 	   Bradley B. Rush
	

	 	 	 	Title:
	 	   Vice President
	 
	 	 	 	 	 	 
	 	 	SUNRISE SENIOR LIVING, INC.
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	   /s/ Bradley B. Rush
	

	 	 	 	 	 	 
	

	 	 	 	Name:
	 	   Bradley B. Rush
	

	 	 	 	Title:
	 	   Chief Investment Officer
	 
	 	 	 	 	 	 
	 	 	FOUNTAINS CANTERBURY LIMITED PARTNERSHIP
	 
	 	 	 	 	 	 
	 	 	     By:	 	Fountains C.I.T. Holdings, L.L.C., General Partner
	 
	 	 	 	 	 	 
	 	 	 	 	By: Fountains Retirement Communities, Inc. (its Manager)
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	   /s/ David Freshwater
	

	 	 	 	 	 	 
	

	 	 	 	Name:
	 	   David Freshwater
	

	 	 	 	Title:
	 	   President

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	 	 	FOUNTAINS ALBEMARLE LIMITED PARTNERSHIP
	 
	 	 	 	 	 	 
	 	 	     By:	 	Fountains C.I.T. Holdings, L.L.C., General Partner
	 
	 	 	 	 	 	 
	 	 	     By:	 	Fountains Retirement Communities, Inc. (its Manager)
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	   /s/ David Freshwater
	

	 	 	 	 	 	 
	

	 	 	 	Name:
	 	   David Freshwater
	

	 	 	 	Title:
	 	   President
	 
	 	 	 	 	 	 
	 	 	FOUNTAINS LA CHOLLA LIMITED PARTNERSHIP
	 
	 	 	 	 	 	 
	 	 	     By:	 	Fountains C.I.T. Holdings, L.L.C., General Partner
	 
	 	 	 	 	 	 
	 	 	     By:	 	Fountains Retirement Communities, Inc. (its Manager)
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	   /s/ David Freshwater
	

	 	 	 	 	 	 
	

	 	 	 	Name:
	 	   David Freshwater
	

	 	 	 	Title:
	 	   President
	 
	 	 	 	 	 	 
	 	 	FOUNTAINS CRYSTAL LAKE LIMITED PARTNERSHIP
	 
	 	 	 	 	 	 
	 	 	     By:	 	Fountains C.I.T. Holdings, L.L.C., General Partner
	 
	 	 	 	 	 	 
	 	 	     By:	 	Fountains Retirement Communities, Inc. (its Manager)
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	   /s/ David Freshwater
	

	 	 	 	 	 	 
	

	 	 	 	Name:
	 	   David Freshwater
	

	 	 	 	Title:
	 	   President
	 
	 	 	 	 	 	 
	 	 	FOUNTAINS CORBY LIMITED PARTNERSHIP
	 
	 	 	 	 	 	 
	 	 	     By: Fountains C.I.T. Holdings, L.L.C., General Partner
	 
	 	 	 	 	 	 
	 	 	     By: Fountains Retirement Communities, Inc. (its Manager)
	 
	 	 	 	 	 	 
	 	 	     By:	 	   /s/ David Freshwater
	 	 	 	 	 
	 	 	     Name:	 	   David Freshwater
	 	 	     Title:	 	   President

9

 

	 	 	 	 	 	 	 
	 	 	FOUNTAINS LA JOLLA LIMITED PARTNERSHIP
	 
	 	 	 	 	 	 
	 	 	     By:	 	Fountains C.I.T. Holdings, L.L.C., General Partner
	 
	 	 	 	 	 	 
	 	 	     By:	 	Fountains Retirement Communities, Inc. (its Manager)
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	   /s/ David Freshwater
	

	 	 	 	 	 	 
	

	 	 	 	Name:
	 	   David Freshwater
	

	 	 	 	Title:
	 	   President
	 
	 	 	 	 	 	 
	 	 	FOUNTAINS SENIOR PROPERTIES OF KALAMAZOO, L.L.C.
	 
	 	 	 	 	 	 
	 	 	     By:	 	Fountains Retirement Communities, Inc. (its Manager)
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	   /s/ David Freshwater
	

	 	 	 	 	 	 
	

	 	 	 	Name:
	 	   David Freshwater
	

	 	 	 	Title:
	 	   President
	 
	 	 	 	 	 	 
	 	 	THE FOUNTAINS AT LOGAN SQUARE, L.L.C.
	 
	 	 	 	 	 	 
	 	 	     By:	 	Fountains Retirement Communities, Inc. (its Manager)
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	   /s/ David Freshwater
	

	 	 	 	 	 	 
	

	 	 	 	Name:
	 	   David Freshwater
	

	 	 	 	Title:
	 	   President
	 
	 	 	 	 	 	 
	 	 	THE FOUNTAINS AT RIVERVUE, L.L.C.
	 
	 	 	 	 	 	 
	 	 	     By:	 	Fountains Retirement Communities, Inc. (its Manager)
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	   /s/ David Freshwater
	

	 	 	 	 	 	 
	

	 	 	 	Name:
	 	   David Freshwater
	

	 	 	 	Title:
	 	   President
	 
	 	 	 	 	 	 
	 	 	THE FOUNTAINS OF VIRGINIA, L.L.C.
	 
	 	 	 	 	 	 
	 	 	     By:	 	Fountains Retirement Communities, Inc. (its Manager)
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	   /s/ David Freshwater
	

	 	 	 	 	 	 
	

	 	 	 	Name:
	 	   David Freshwater
	

	 	 	 	Title:
	 	   President

10

 

	 	 	 	 	 	 	 
	 	 	THE FOUNTAINS SENIOR PROPERTIES OF CALIFORNIA, L.L.C.
	 
	 	 	 	 	 	 
	 	 	     By:	 	Fountains Retirement Communities, Inc. (its Manager)
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	   /s/ David Freshwater
	

	 	 	 	 	 	 
	

	 	 	 	Name:
	 	   David Freshwater
	

	 	 	 	Title:
	 	   President
	 
	 	 	 	 	 	 
	 	 	THE FOUNTAINS SENIOR PROPERTIES OF FLORIDA, L.L.C.
	 
	 	 	 	 	 	 
	 	 	     By:	 	Fountains Retirement Communities, Inc. (its Manager)
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	   /s/ David Freshwater
	

	 	 	 	 	 	 
	

	 	 	 	Name:
	 	   David Freshwater
	

	 	 	 	Title:
	 	   President
	 
	 	 	 	 	 	 
	 	 	THE FOUNTAINS SENIOR PROPERTIES OF MICHIGAN, L.L.C.
	 
	 	 	 	 	 	 
	 	 	     By:	 	Fountains Retirement Communities, Inc. (its Manager)
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	   /s/ David Freshwater
	

	 	 	 	 	 	 
	

	 	 	 	Name:
	 	   David Freshwater
	

	 	 	 	Title:
	 	   President
	 
	 	 	 	 	 	 
	 	 	THE FOUNTAINS SENIOR PROPERTIES OF NEW YORK, L.L.C.
	 
	 	 	 	 	 	 
	 	 	     By:	 	Fountains Retirement Communities, Inc. (its Manager)
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	   /s/ David Freshwater
	

	 	 	 	 	 	 
	

	 	 	 	Name:
	 	   David Freshwater
	

	 	 	 	Title:
	 	   President
	 
	 	 	 	 	 	 
	 	 	THE FOUNTAINS AT GREENBRIAR, INC.
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	   /s/ David Freshwater
	

	 	 	 	 	 	 
	

	 	 	 	Name:
	 	   David Freshwater
	

	 	 	 	Title:
	 	   President

11

 

	 	 	 	 	 	 	 
	 	 	THE FOUNTAINS SEA BLUFFS LEASING, L.L.C.
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	   /s/ David Freshwater
	

	 	 	 	 	 	 
	

	 	 	 	Name:
	 	   David Freshwater
	

	 	 	 	Title:
	 	   President
	 
	 	 	 	 	 	 
	 	 	FOUNTAINS CHARITABLE INCOME TRUST
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	   /s/ David Freshwater
	

	 	 	 	 	 	 
	

	 	 	 	Name:
	 	   David Freshwater
	

	 	 	 	Title:
	 	   President
	 
	 	 	 	 	 	 
	 	 	          /s/ Mitchell Pozez
	 	 	 
	 	 	MITCHELL POZEZ
	 
	 	 	 	 	 	 
	 	 	          /s/ David Freshwater
	 	 	 
	 	 	DAVID FRESHWATER
	 
	 	 	 	 	 	 
	 	 	          /s/ George B. Kaiser
	 	 	 
	 	 	GEORGE B. KAISER

12exv10w4

 

Exhibit 10.4

SUNRISE SENIOR LIVING, INC.

[2002][2003] STOCK OPTION AND RESTRICTED STOCK PLAN

FORM OF

EXECUTIVE RESTRICTED STOCK AGREEMENT

     Sunrise Senior Living, Inc., a Delaware corporation (the “Company”), hereby grants shares of
its common stock, $0.01 par value (the “Stock”), to the Grantee named below, subject to the vesting
conditions set forth in the attachment. Additional terms and conditions of the grant are set forth
in this cover sheet, in the attachment and in the Company’s [2002] [2003] Stock Option and
Restricted Stock Plan (the “Plan”).

Grant Date:                                                                                                                

Name of Grantee:                                                                                                     

Number of Shares of Stock Covered by Grant:                                                    

Purchase Price per Share of Stock: $0.01

     By signing this cover sheet, you agree to all of the terms and conditions described in the
attached Agreement and in the Plan, a copy of which is available from the Company upon request.
You acknowledge that you have carefully reviewed the Plan, and agree that the Plan will control in
the event any provision of this Agreement should appear to be inconsistent.

		
	Grantee: 	                                                                                                      

  Print Name:                                                                                

		
	Company: 	                                                                                                    

Print Name:                                                                                

Title:                                                                                          

Attachment

This is not a stock certificate or a negotiable instrument.

 

 

SUNRISE SENIOR LIVING, INC.

[2002] [2003] STOCK OPTION AND RESTRICTED STOCK PLAN

EXECUTIVE RESTRICTED STOCK AGREEMENT

Restricted Stock/ Nontransferability

This grant is an award of Stock in the
number of shares set forth on the cover sheet,
at the purchase price set forth on the cover
sheet, and subject to the vesting conditions
described below (the “Restricted Stock”). The
purchase price for the Restricted Stock is
deemed paid by your services to the Company.
To the extent not yet vested, your Restricted
Stock may not be transferred, assigned, pledged
or hypothecated, whether by operation of law or
otherwise, nor may the Restricted Stock be made
subject to execution, attachment or similar
process.

Issuance and Vesting

The Company will issue your Restricted
Stock in your name as of the Grant Date.

Your right to the Stock under this Restricted
Stock grant becomes vested as to ___% of the
shares of Stock on each of the first ____ (__)
anniversaries of the Grant Date (the
“Anniversary Dates”), if you have been
continuously providing Services to the Company
or a Subsidiary from the Grant Date until the
Anniversary Date; provided, however, that if
you are restricted from selling Company stock
on an Anniversary Date pursuant to the
Company’s policy on insider trading, your
shares that would have vested on that
Anniversary Date will vest on the first date
that is during a window period in which Company
insiders are not restricted from selling
Company stock.

Notwithstanding the vesting schedule to the
extent not previously vested, your right to the
Stock under this Agreement becomes 100% vested
upon the earlier of (i) a Change in Control (as
defined below), (ii) your termination of
employment with the Company or a Subsidiary due
to your death or disability, (iii) your
termination of employment by the Company or a
Subsidiary other than for Cause (as defined in
the Company’s Senior Executive Severance Plan
dated February 25, 2000 (the “Severance
Plan”)), or (iv) termination of employment by
you for Good Reason (as defined in the
Severance Plan), if you have been continuously
employed by the Company or a Subsidiary from
the Grant Date.

 

 

ALTERNATIVE 1:

For purposes of this Agreement, “Change in
Control” means any of the following events:

     (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 Section 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
Grant Date, the beneficial owner of Stock or of
other securities of the Company that are
entitled to vote generally in the election of
directors of the Company (“Voting Securities”)
representing 50% or more of the combined voting
power of all Voting Securities of the Company;

     (b) individuals who, as of the Grant 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
Grant Date whose election or nomination for
election by the Company’s shareholders 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
Stock and Voting Securities of the Company
immediately before such Mergers are not
expected to beneficially own, immediately after
such Merger, directly or indirectly, more than
60% of the Stock and 60% of the combined voting
power of the Voting Securities of the Company
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.

***********************************

 

 

ALTERNATIVE 2:

For purposes of this Agreement, “Change in
Control” means any of the following events:

     (A) any person, other than Paul J. Klaassen,
Teresa M. Klaassen or their respective
affiliates, associates or estates, becomes,
after the date of grant, the beneficial owner,
directly or indirectly, of securities of the
Company representing 40% or more of the
combined voting power of the Company’s then
outstanding securities;

     (B) during any two-year period, individuals who
at the beginning of such period constitute the
Board (including, for this purpose, any
director who after the beginning of such period
filled a vacancy on the Board caused by the
resignation, mandatory retirement, death, or
disability of a director and whose election or
appointment was approved by a vote of at least
two-thirds of the directors then in office who
were directors at the beginning of such period)
cease for any reason to constitute a majority
thereof;

     (C) notwithstanding clauses (A) or (E) of this
paragraph, the Company consummates a merger or
consolidation of the Company with or into
another corporation, the result of which is
that the persons who were stockholders of the
Company at the time of the execution of the
agreement to merge or consolidate own less than
80% of the total equity of the corporation
surviving or resulting from the merger or
consolidation or of a corporation owning,
directly or indirectly, 100% of the total
equity of such surviving or resulting
corporation;

     (D) the sale in one or a series of transactions
of all or substantially all of the assets of
the Company;

     (E) any person, other than Paul J. Klaassen,
Teresa M. Klaassen or their respective
affiliates, associates or estates, has
commenced a tender or exchange offer, or
entered into an agreement or received an
option, to acquire beneficial ownership of
securities of the Company representing 40% or
more of the combined voting power of the
Company’s then outstanding securities, unless
the Board has made a determination that such
action does not constitute and will not
constitute a material change in the persons
having control of the Company;

 

 

     (F) the consummation by the Company or a
Subsidiary of a merger (including a triangular
merger involving a Subsidiary) or other
business combination transaction in which the
Company issues equity securities representing
20% or more of its then outstanding common
stock in such merger or other transaction; or

     (G) there is a change of control in the Company
of a nature that would be required to be
reported in response to Item 6(e) of Schedule
14A of Regulation 14A promulgated under the
Exchange Act other than in circumstances
specifically covered by clauses (A) through (F)
above.

***********************************

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

No additional shares of Stock will vest after
you have ceased to be employed by the Company
or any Subsidiary for any reason.

Forfeiture of Unvested Stock

In the event that your employment with the
Company or a Subsidiary terminates, you shall
forfeit all of the shares of Stock subject to
this grant that have not yet vested.

Book Entry Restrictions

The Restricted Stock will be issued in
book entry form. The Company shall cause the
transfer agent for the shares of Common Stock
to make a book entry record showing ownership
for the shares of Restricted Stock in your name
subject to the terms and conditions of this
Agreement. You shall be issued an account statement acknowledging your ownership of the shares of Restricted Stock.

The shares of Restricted Stock subject to
restrictions hereunder shall be subject to the
following terms and conditions relating to
their release from restrictions or their
cancellation:

 As your interest in the Restricted Stock vests
as described above, your vested Stock shall be
released from restrictions and delivered to
you, at your request.

 Should you forfeit any unvested Restricted
Stock held subject to restrictions hereunder,
then such unvested Restricted Stock shall be
cancelled without payment, and you shall have
no further rights with respect to such shares.

 

 

You authorize the Company to issue such
instructions to the transfer agent as the
Company may deem necessary or proper to comply
with the intent and purposes of this Agreement.
This paragraph shall be deemed to constitute
the stock power contemplated by the Plan.

Withholding Taxes

You agree, as a condition of this grant, that
you will make acceptable arrangements to pay
any withholding or other taxes that may be due
as a result of the vesting of Stock acquired
under this grant. In the event that the
Company determines that any federal, state,
local or foreign tax or withholding payment is
required relating to the vesting of shares
arising from this grant, the Company shall have
the right to require such payments from you, or
withhold such amounts from other payments due
to you from the Company or any Affiliate.

Section 83(b) Election

Under Section 83 of the Internal Revenue
Code of 1986, as amended (the “Code”), the
difference between the purchase price paid for
the shares of Stock and their fair market value
on the date any forfeiture restrictions
applicable to such shares lapse will be
reportable as ordinary income at that time.
For this purpose, “forfeiture restrictions”
include the Company’s Repurchase Right as to
unvested Stock described above. You may elect
to be taxed at the time the shares in
restricted form are acquired rather than
when such shares cease to be subject to such
forfeiture restrictions by filing an election
under Section 83(b) of the Code with the
Internal Revenue Service within thirty (30)
days after the Grant Date. You will have to
make a tax payment to the extent the purchase
price ($0.01 per share) is less than the fair
market value of the shares on the Grant Date.
The form for making this election is attached
as Exhibit A hereto. Failure to make this
filing within the thirty (30) day period will
result in the recognition of ordinary income by
you (in the event the fair market value of
the shares increases after the date of
purchase) as the forfeiture restrictions lapse.

YOU ACKNOWLEDGE THAT IT IS YOUR SOLE
RESPONSIBILITY, AND NOT THE COMPANY’S, TO FILE
A TIMELY ELECTION UNDER SECTION 83(b), EVEN IF
YOU REQUEST THE COMPANY OR ITS REPRESENTATIVES
TO MAKE THIS FILING ON YOUR BEHALF. YOU ARE
RELYING SOLELY ON YOUR OWN ADVISORS WITH
RESPECT TO THE DECISION AS TO WHETHER OR NOT TO
FILE ANY 83(b) ELECTION.

 

 

Retention Rights

This Agreement does not give you the right to
be retained by the Company in any capacity.
The Company reserves the right to terminate
your service with the Company at any time and
for any reason.

Shareholder Rights

You shall have the right to vote the
Restricted Stock and, subject to the provisions
of this Agreement, to receive any dividends
declared or paid on such stock. Any
distributions you receive as a result of any
stock split, stock dividend, combination of shares or other similar transaction shall be
deemed to be a part of the Restricted Stock and
subject to the same conditions and restrictions
applicable thereto. The Company may in its
sole discretion require any dividends paid on
the Restricted Stock to be reinvested in shares
of Stock, which the Company may in its sole
discretion deem to be a part of the shares of
Restricted Stock and subject to the same
conditions and restrictions applicable thereto.
Except as described in the Plan, no
adjustments are made for dividends or other
rights if the applicable record date occurs
before your stock certificate is issued.

Adjustments

In the event of a stock split, a stock
dividend or a similar change in the Stock, the
number of shares covered by this grant may be
adjusted (and rounded down to the nearest whole
number) pursuant to the Plan. Your Restricted
Stock shall be subject to the terms of the
agreement of merger, liquidation or
reorganization in the event the Company is
subject to such corporate activity.

Applicable Law

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

The Plan

The text of the Plan is incorporated in this
Agreement by reference. Certain capitalized
terms used in this Agreement are defined in the
Plan, and have the meaning set forth in the
Plan.

This Agreement and the Plan constitute the
entire understanding between you and the
Company regarding this grant of Restricted
Stock. Any prior agreements, commitments or
negotiations concerning this grant are
superseded.

     By signing the cover sheet of this Agreement, you agree to all of the terms and conditions
described above and in the Plan.

 

 

EXHIBIT A

ELECTION UNDER SECTION 83(b) OF

THE INTERNAL REVENUE CODE

     The undersigned hereby makes an election pursuant to Section 83(b) of the Internal
Revenue Code with respect to the property described below and supplies the following information in
accordance with the regulations promulgated thereunder:

	1.  	The name, address and social security number of the undersigned:

	 	 	 
	Name:

	 	                                                                                
	 
	 	 
	Address:

	 	                                                                                
	 
	 	 
	

	 	                                                                                
	 
	 	 
	Social Security No.:

	 	                                                                                

	2.  	Description of property with respect to which the election is being made:
	 
	   	                    shares of common stock, par value $0.01 per share, of Sunrise Senior Living, Inc., a
Delaware corporation (the “Company”).
	 
	3.  	The date on which the property was transferred is:                     , 200___.
	 
	4.  	The taxable year to which this election relates is calendar year: 200___.
	 
	5.  	Nature of restrictions to which the property is subject:

The shares of stock are subject to the provisions of a Restricted Stock Agreement between the
undersigned and the Company. The shares of stock are subject to forfeiture under the terms of
the Agreement.

	6.  	The fair market value of the property at the time of transfer (determined without regard to
any lapse restriction) was: $                     per share, for a total of $                    .
	 
	7.  	The amount paid by taxpayer for the property was: $                    .
	 
	8.  	A copy of this statement has been furnished to the Company.

Dated: _____________, 200___

	 	 	 	 	 
	

	 	 	 	                                                                                                    
	

	 	 	 	Print Name:                                                                                

 

 

PROCEDURES FOR MAKING ELECTION

UNDER INTERNAL REVENUE CODE SECTION 83(b)

     The following procedures must be followed with respect to the attached form for making an
election under Internal Revenue Code section 83(b) in order for the election to be effective:

          1. You must file one copy of the completed election form with the IRS Service Center where you
file your federal income tax returns within thirty (30) days after the Grant Date of your
Restricted Stock.

          2. At the same time you file the election form with the IRS, you must also give a copy of the
election form to the Stock Plan Administrator of the Company.

          3. You must file another copy of the election form with your federal income tax return
(generally, Form 1040) for the taxable year in which the stock is transferred to you.

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