Exhibit 10.1
SEPARATION AGREEMENT
AND GENERAL RELEASE
This Agreement is made by and
between John F. Gaul (hereinafter “Employee”), 8013
River Falls Drive, Potomac, Maryland 20854, and Sunrise Senior
Living, Inc., Sunrise Senior Living Management, Inc., and their
affiliates and operating entities, subsidiaries, partners, parents,
investors, shareholders, directors, officers, employees,
representatives and agents (collectively hereinafter
“Sunrise”). The Employee and Sunrise may be referred to
collectively hereinafter from time to time as “the
Parties.”
WHEREAS, the Employee has been
employed by Sunrise as General Counsel; and
WHEREAS, the Parties wish to change
the employment relationship between them;
NOW, THEREFORE, in consideration of
the mutual covenants and agreements herein contained, the Parties
agree as follows:
1. Separation
From Employment
The Employee acknowledges and agrees
that he is separating from his employment with Sunrise effective
February 27, 2009, unless a later date in 2009 is mutually agreed
to by the Parties (the “Separation Date”). As of the
Separation Date, the Employee shall have no duties or
responsibilities to be performed for Sunrise and shall have no
authority to act on Sunrise’s behalf in any way.
The Employee acknowledges that
during the period between the execution of this Agreement and the
Separation Date, the Employee’s employment is at-will and can
be terminated by either the Employee or Sunrise at any time, with
or without cause. The Employee agrees and acknowledges that the
Agreement does not alter the Employee’s at-will
employment
status, and that should he be terminated
before the Separation Date, Sunrise shall not be obligated to
compensate him as an employee through the Separation Date.
Should the Employee, (i) be
involuntarily terminated by Sunrise before the Separation Date for
gross misconduct, which is materially and demonstrably injurious to
the Company, or (ii) voluntarily terminate his employment prior to
the Separation Date, Sunrise reserves the right to unilaterally
rescind this Agreement at its discretion, at which point this
Agreement shall become null and void and unenforceable in any
respect. The Employee acknowledges and understands that, should
Sunrise so rescind the Agreement, he will not be entitled to the
severance benefits mentioned herein.
Should the Employee, before the
Separation Date described above, be involuntarily terminated by
Sunrise other than for gross misconduct (as defined above), the
Employee shall be entitled to the severance benefits mentioned
herein in accordance with the terms of this Agreement and the date
of such termination shall be the Separation Date for purposes of
this Agreement.
2. Severance
Benefits
The Employee will not receive
compensation or benefits after the Separation Date, except as
hereinafter provided in this paragraph of this Agreement. The
Employee acknowledges and understands that these payments are not
routinely provided; that they exceed those provided under existing
policies; and that they are given in consideration of his release
and waiver of any claims that he may have against Sunrise in
connection with his employment and separation from that employment.
The Employee further acknowledges that his receipt of the
compensation and
2
benefits described in this paragraph is
subject to the conditions of Paragraphs 1, 3 and 4 of this
Agreement.
a. As soon as
administratively feasible, but in no event more than two (2) weeks
after the period for revoking the Addendum Agreement described in
Paragraph 3 has expired, e Employee will receive a lump sum payment
of $1,312,500 (which equates to one hundred and four (104) weeks of
his regular salary as of the date of this Agreement and his 2008
and 2009 target bonus), less applicable taxes and withholdings,
payment to be delivered to the Employee’s address of record.
The Employee acknowledges that no portion of this or any payment in
this Paragraph 2 may be contributed to the Company’s 401(k)
plan.
b. As soon as
practicable after the Separation Date, the Employee will receive a
lump sum payment for accrued vacation, if any, as of the Separation
Date, less applicable taxes and withholdings, payment to be
delivered to the Employee’s address of record.
c. By law,
the Employee will be entitled to COBRA continuation health
insurance coverage from his last date of employment (generally up
to eighteen (18) months). Sunrise is providing the Employee the
opportunity to elect for himself, his spouse and covered
dependents, up to twenty-four (24) months of continued health
insurance coverage from his last date of employment similar to
COBRA continuation coverage, except that such coverage will
continue for a period of up to twenty-four (24) months after the
Employee’s termination even if such period extends beyond the
period for which COBRA continuation coverage is required under
applicable law. If the
3
Employee
elects and pays for such continuation coverage for any portion of
those twenty-four (24) months, Sunrise will reimburse the Employee
in each of those elected months for the difference between the
amount the Employee paid for health care coverage for himself and
his covered spouse and dependents for his last month as an active
employee, and the cost to him in the elected month of health
insurance coverage for himself, his covered spouse and dependents.
The Employee acknowledges that all amounts reimbursed and paid to
the Employee will be issued on an after-tax basis. The Employee
acknowledges that if he desires to continue health insurance after
twenty-four (24) months from the final date of his employment, he
will be solely responsible for the entire premium due.
d. The
Employee will be provided up to twelve (12) months of
executive-level outplacement services by a vendor selected by
Sunrise and at a level and expense determined in Sunrise’s
discretion. Such outplacement services will be completed no later
than the last day of the second calendar year after the calendar
year in which the Separation Date occurs.
e. Long-term
Compensation Awards: To the extent that Employee has unvested
grants of stock options, restricted stock or other long-term
compensation under any Sunrise stock option, restricted stock or
long-term compensation plan (other than the Plan as defined in
Paragraph 2(f) below) as of the Separation Date, such stock
options, shares of restricted stock or long-term compensation shall
become 100% vested and cease to be subject to any restrictions on
ownership as of the Separation Date. All such stock options,
restricted stock or other long-term compensation awards are either
(i) exempt
4
from or (ii)
in compliance with, the provisions of Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”).
f. Sunco
Interest: The Employee’s bonus awards (the “Sunco Bonus
Awards”) under the Sunrise Assisted Living, Inc. Long Term
Incentive Cash Bonus Plan (the “Plan”), as set forth in
the PS UK Investment (Jersey) Limited Partnership Executive Officer
Bonus Award Agreement, dated May 16, 2007, between the Company and
the Employee, and the PS Germany Investment (Jersey) Limited
Partnership Executive Officer Bonus Award Agreement, dated May 16,
2007, between the Company and the Employee, shall become 100%
vested (if not already 100% vested prior to such date) as of the
Separation Date. The terms of the Sunco Bonus Awards will otherwise
be unaffected by this Agreement. For the avoidance of doubt, as of
the Separation Date the Employee shall be eligible, on a
fully-vested basis, for the Bonus Amounts that would have otherwise
been payable to him with respect to the Plan Year of termination
and all prior Plan Years (to the extent not already paid) and
future Plan Years, and shall not forfeit any rights to receive any
distribution under the Plan as a result of his separation of
employment as contemplated by this Agreement. All capitalized terms
in this Paragraph 2(f) not otherwise defined herein shall have the
meanings given such terms in the Plan. The Sunco Bonus Awards will
either be (i) exempt from or (ii) in compliance with, the
provisions of Section 409A of the Code.
3. Execution
of Addendum Agreement
The Employee agrees that on or after
the Separation Date (but no later than 45 days after the Separation
Date), he will execute the Addendum Agreement (attached hereto as
Exhibit A) that incorporates by reference the Agreement in its
entirety. The Employee acknowledges and
5
agrees that entitlement to the payments
and benefits described in Paragraph 2 is contingent upon execution
of the Addendum Agreement as described in this Section 3.
4. Effect of Reemployment
with Sunrise on Compensation and Benefits
The Employee agrees that should he
accept employment with Sunrise at any time after the effective date
of this Agreement, the benefits and compensation described in
Paragraph 2(a) shall cease as of that date of acceptance. As for
a
