Employment Agreement Granger Cobb August 31, 2007
Xxxxxxx
Xxxx
August
31, 2007
This
Employment Agreement (“Agreement”), effective as of the
Effective Date (as defined below), sets forth the terms and conditions under
which Emeritus Corporation, a Washington corporation,
(“Emeritus”), and its subsidiaries (the
“Subsidiaries”), as designated from time to time by
the Board
of Directors of Emeritus (the “Board”), agree to employ Xxxxxxx
Xxxx (“Employee”) to provide the services specified
hereunder. Emeritus and the Subsidiaries are sometimes collectively
referred to herein as the “Company.”
Each
of
Employee and Emeritus is sometimes referred to herein as a
“Party” and collectively referred to herein as the
“Parties.”
RECITALS
WHEREAS,
Emeritus desires to employ Employee as President and Co-Chief Executive Officer
of the Company and Employee desires to be employed as President and Co-Chief
Executive Officer of the Company, pursuant to the terms and conditions set
forth
in this Agreement.
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements set forth herein, the Parties agree as follows:
AGREEMENT
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1.
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Service
Period. Employee agrees to perform the duties of
the Company’s President and Co-Chief Executive Officer
(“CO-CEO”), for the period beginning on the Effective
Date and ending on December 31, 2011 or earlier termination pursuant
to
Section 7
below (the “Initial Service Period”); provided, however,
that, in the absence of termination, the Service Period shall be
extended
for successive 12-month terms (subject to the provisions of
Section 7
below) so long as neither Employee nor Emeritus gives written notice
of
non-renewal to the other Party not less than 90 days prior to the
then-current expiration date of the Service Period (each an
“Extension Period” and together with any and all other
Extension Periods, the “Extended Service
Period”). The Initial Service Period and the Extended
Service Period, if any, are collectively referred to herein as
the
“Service Period.” If such notice of
non-renewal is given, this Agreement shall expire at the end of
the
Initial Service Period or then-current Extension Period, as the
case may
be. The last day of the Service Period, including any earlier
date of termination pursuant to Section 7,
is referred to as the “Termination
Date.”
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For
purposes of this Agreement, "Effective Date" shall mean the
date on which the merger of Boston Project Acquisition Corp., a wholly-owned
subsidiary of the Company ("Merger Sub"), and Summerville
Senior Living, Inc. ("Summerville"), pursuant to that certain
Agreement and Plan of Merger dated as of March 29, 2007 among the Company,
Merger Sub, Summerville and certain other parties, is effective.
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2.
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Services. During
the Service Period, Employee shall render services to the Company
consistent with the positions of President and Co-Chief Executive
Officer
of the Company and Employee shall devote substantially his whole
business
time and attention to performing Employee’s obligations hereunder with
regard to the business of the Company. Notwithstanding the
foregoing, the Company hereby acknowledges and agrees that Employee
will
be permitted to manage his personal investments and real estate
transactions, during the Service Period to the extent that they
do not
materially interfere with Employee rendering services to the Company
as
described hereunder.
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3.
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Basic
Service Compensation. During the Initial Service
Period, the Company shall, in consideration for Employee’s services
hereunder, pay employee an annual base salary of $600,000, subject
to the
Company’s collection of all applicable withholding
taxes. Employee shall be entitled to receive a cost of living
increase of no less than five percent (5%) per year annually and
for any
Extended Service Periods. In addition, the Company shall
provide the following:
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A.
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Company-paid
term life insurance on the Employee’s life in the amount of $5 million for
the benefit of Employee’s designated
beneficiaries.
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B.
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Company-paid
long-term disability insurance providing disability pay at an annual
rate
equal to 75% of the Employee’s annual rate of base salary as in effect
from time to time under this
Agreement.
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C.
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Health
insurance coverage for Employee and his dependants through one
of the
Company’s contracted plans.
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D.
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Paid
vacation (based on the Employee’s annual rate of base salary in effect at
the time of payment) consistent with the Company’s policy for other senior
management employees.
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E.
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In
addition, Employee is eligible to participate in any other Company
programs and/or benefits offered to senior management, including
the
executive non-qualified deferred compensation
plan.
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4.
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Reimbursement
of Expenses. The Company will reimburse Employee
for reasonable out-of-pocket expenses incurred on behalf of Employee
in
connection with the performance of services hereunder by Employee,
in each
case subject to and consistent with Company
policy.
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5.
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Cash
Bonus.
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A.
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Provided
Employee has rendered services to the Company through December 31 of
each year, and commencing in calendar year 2008, 3.5% of the annual
year
over year increase in EBITDA, capped at 75% of Employee’s annual base
salary in respect of such year’s service. However, should
Employee services terminate prior to December 31 in any year by
reason of
his death or disability, then
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Employee
(or his estate) shall be entitled to a pro-rated amount to the time of
termination of any bonus he would have otherwise earned for such year had
he
continued in the Company’s service through December 31 of that
year. Each bonus payment under this Section 5.A
shall be made no later than March 15 of the following year, unless it is
not
administratively feasible to do so, in which event the payment shall be made
as
soon as administratively practicable thereafter, but not later than the last
day
of such year. Notwithstanding any provision to the contrary, any grant of
bonuses and any determination whether the bonus goal has been achieved, shall
be
made subject to the sole and absolute discretion of the Board.
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B.
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Each
bonus payment under this Section 5
shall be subject to the Company’s collection of all applicable withholding
taxes.
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6.
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Stock
Options.
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A.
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Upon
the Effective Date (or the first business day following the Effective
Date, if such date is a Saturday, Sunday or holiday), the Company
shall
grant Employee stock options to purchase five hundred thousand
(500,000)
shares of Emeritus common stock under the Company’s employee stock option
plan (the “Employee Options”). The Employee Options shall
have an exercise price per share equal to the closing selling price
per
share of Emeritus common stock on the date of grant and a maximum
term of
seven (7) years measured from such date. The Employee Options
shall vest and become exercisable in accordance with the following
schedule:
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Grant
Date:
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(i)
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September
1,
2007 20%
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(ii)
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September
1,
2008: 40%
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(iii)
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September
1,
2009: 60%
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(iv)
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September
1,
2010: 80%
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(v)
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September
1,
2011: 100%
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B.
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The
shares of Emeritus common stock subject to the Employee Options
shall be
registered on a form S-8 registration statement (or any successor
form)
filed with the Securities and Exchange Commission and maintained
in effect
until the Employee Options are exercised or
terminate.
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C.
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In
the event of a change of control (as defined below), the Employee
Options
immediately vest 100% and become exercisable for all of the option
shares. For purposes of this Agreement, a Change in Control
shall be limited to the following events affecting the ownership
or
control of Emeritus: (i) a merger or consolidation of
Emeritus in which securities possessing more than fifty
percent
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3
(50%)
or
more of the total combined voting power or total combined fair market value
of
Emeritus’s outstanding securities are transferred to “person” (as defined in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the
“Exchange Act”) or “persons” different from the persons holding
those securities immediately prior to such merger or consolidation,
(ii) any “person” (as defined in Sections 13(d) and 14(d) of the
Exchange Act) is permitted by the Board of Directors of Emeritus to become
the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of either (a) 30% or more of the outstanding shares of
common stock of Emeritus (other than persons that own in excess of 20% of
the
outstanding shares of common stock of Emeritus as of the Effective Date)
or
(b) 30% (by right to vote or grant or withhold any approval) of the
outstanding securities of any other class or classes which individually or
together have the power to elect a majority of the members of the Board of
Directors of Emeritus, (iii) the Board of Directors of Emeritus determines
to recommend the acceptance of any proposal set forth in a tender offer which
indicates the intention on the part of that person to acquire, or acceptance
of
which would otherwise have the effect of acquiring control of Emeritus, or
(iv) the sale, transfer or other disposition of all or substantially all of
the assets of Emeritus.
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D.
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Upon
Termination, Employee shall have a24-month period measured from
the
Termination Date to exercise all vested Employee
Options.
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E.
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It
is the mutual intent of the Company and the Employee that Employee’s
participation in and entitlement to any monies from the Summerville
Profit
Participation Plan will cease as of the Effective
Date.
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7.
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Termination.
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A.
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Termination
in General. The Service Period shall terminate on
the first to occur of (i) the scheduled expiration date of the
then-current Service Period, assuming notice of non-renewal by
one of the
Parties was provided in accordance with Section 1
above, (ii) Employee’s death or Disability (as defined below),
(iii) termination of the Service Period by Employee with or without
Good Reason (as defined below) or (iv) termination of the Service
Period by the Board with or without Cause (as defined
below). Notwithstanding anything herein to the contrary, in the
event the Service Period terminates for any reason, Employee will
be
entitled to receive the Accrued Obligations (as defined
below).
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B.
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Termination
by the Company for Cause. If the Company
terminates the Service Period for Cause, Employee will be entitled
to
receive (i) all of the accrued but unpaid compensation pursuant to
Section 3
hereof as of the date of such termination, (ii) all of Employee’s
unreimbursed expenses as of the date of such termination, incurred
in
accordance with Section 4
hereof, (iii) all earned but unpaid Cash Bonus pursuant to
Section 5
hereof and (iv) all Employee Options vested in accordance with
the
provisions of Section 6
hereof. The amounts and the provisions specified in clause (i)
through (iv) are collectively
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4
referred
to herein as the “Accrued Obligations”. The payments
under clauses (i) through (iii) shall be made to Employee on the Termination
Date or as soon as administratively practicable thereafter, but in no event
later than the close of the calendar year in which such Termination Date
occurs
or (if later) the 15th day of the third calendar month following such
Termination Date.
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C.
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Termination
by Employee Without Good Reason. If Employee
terminates the Service Period pursuant to Section 1
or this Section 7
for reasons other than Good Reason, Employee will be entitled to
receive
payment of the Accrued Obligations on the Termination Date or as
soon as
administratively practicable thereafter, but in no event later
than the
close of the calendar year in which such Termination Date occurs
or (if
later) the 15th day of the third calendar month following such
Termination
Date.
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D.
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Termination
by the Company for Reasons Other than Cause; Termination by Employee
for
Good Reason. If the Service Period is terminated
by the Company pursuant to Section 1
or this Section 7
for reasons other than for Cause, or by Employee for Good Reason,
Employee
will be entitled to (i) receive the Accrued Obligations,
(ii) receive a lump sum payment equal to the lesser of (a) $2
million and (b) the amount of Employee’s then current annual base
salary (prorated for partial years) otherwise payable through December
31,
2011 or the end of the current Extension Period, if applicable,
and
(iii) receive 100% vesting in the Employee Options. Such
payments under clauses (i) and (ii) shall be made to Employee on
the
Termination Date or as soon as administratively practicable thereafter,
but in no event later than the close of the calendar year in which
such
Termination Date occurs or (if later) the 15th day of the third
calendar
month following such Termination
Date.
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E.
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Termination
as a Consequence of Employee’s Death or
Disability. If the Service Period is terminated as
a consequence of Employee’s Death or Disability (as defined below),
Employee will be entitled to (i) receive the Accrued Obligations and
(ii) receive a lump sum payment equal to the amount of Employee’s
then current annual base salary. The payments under clauses (i)
and (ii) shall be made to Employee (or his estate) on the Termination
Date
or as soon as administratively practicable thereafter, but in no
event
later than the close of the calendar year in which such Termination
Date
occurs or (if later) the 15th day of the third calendar month following
such Termination Date.
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F.
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Definitions. For
purposes of this Agreement:
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(i)
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“Cause”
shall mean:
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(a)
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Employee’s
willful and repeated failure to comply with the lawful written
directives
of the Board;
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(b)
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any
knowing, willful or intentional act of disloyalty or misconduct
by
Employee that is materially injurious to the
property,
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5
operations,
business or reputation of the Company, or Employee’s conviction for, or plea of
guilty or nolo contendere to, a felony or for or of a crime involving moral
turpitude; or
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(c)
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Employee’s
material breach of the Agreement, provided that the Company has
provided
Employee with written notice of such material breach and Employee
shall
have failed to cure 30 business days after receipt by Employee
of such
written notice.
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A
determination that “Cause” exists shall be made by the Board, acting reasonably
and in good faith; provided, however, that Employee has not waived his right
to
contest any such determination by the Company in accordance with the provisions
of Section 16
below.
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(ii)
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“Good
Reason” shall mean:
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(a)
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(b)
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any
material change in Employee’s position and/or title (without Employee’s
prior written consent) or material diminution in Employee’s duties,
responsibilities and/or authority (without Employee’s prior written
consent);
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(c)
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the
occurrence of any of the following: (i) a merger or
consolidation of Emeritus into or with any other entity, but only
if
Emeritus or an entity, 50% or more of the total voting power of
which is
owned by Emeritus or its affiliates, is not the surviving entity
in such
merger or consolidation, (ii) a transfer to a third party which vests
in such third party 50% or more of the total voting power of all
classes
of stock of Emeritus, (iii) any third party acquires more than 50% of
the total number of shares of preferred stock of the Company that
are
issued and outstanding on the Effective Date, (iv) sale, transfer or
other disposition of all or substantially all of the assets of
Emeritus
(each a “Restructuring Event”), unless the entity which
survives the Restructuring Event shall assume and agree to perform
the
obligations of Emeritus hereunder pursuant to a written instrument
acceptable to Employee, at Employee’s sole discretion or (v) during
any period of 12 consecutive months, individuals who constitute
the Board
at the beginning of such period, together with any new directors
whose
election by the Board or whose nomination for election was previously
so
approved (collectively, the “Directors”), cease for any
reason to constitute a majority of the Board then in
office. Notwithstanding any of the foregoing, the merger
between the
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6
Company
and Summerville shall not constitute a Restructuring Event.
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(d)
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any
material breach by the Company of this Agreement, provided that
Employee
has provided the Company with written notice of such material breach
and
the Company has failed to cure such material breach, to Employee’s
reasonable satisfaction, within 30 business days after receipt
by the
Company of such written notice; or
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(e)
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any
requirement by the Board that Employee relocate his principal residence
or
if the Company relocates its headquarters more than 20 miles from
its
location on the date hereof (without Employee’s prior written
consent).
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(iii)
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“Disability”
shall mean Employee’s mental or physical disability for such
period of time and under such circumstances as entitle Employee
to receive
disability benefits under the terms of the long-term disability
insurance
policy then maintained by the Company. If the Company does not
have a long-term disability insurance policy, Disability shall
mean
Employee shall be unable to perform substantially all of his duties
under
this Agreement due to accident or disability or physical or mental
illness
for a period in excess of 90 or more consecutive working days in
any
12-month period, or 120 or more total working days in any 12-month
period.
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8.
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Confidential
Information. Employee acknowledges that
information obtained by him during the Service Period concerning
the
business or affairs of the Company (“Confidential
Information”) is the property of the Company. Employee
shall be prohibited at any time during or after the Service Period,
without the prior written consent of the Board, from disclosing
any
Confidential Information to any unauthorized person or use for
Employee’s
own account or for the account of any person other than the Company,
except (a) to the extent necessary to comply with applicable laws,
(b) to the extent necessary for Employee to render services hereunder
or (c) to the extent that such information becomes generally known to
and available for use by the public other than as a result of Employee’s
acts or failure to act. Upon termination of the Service Period
or at the request of the Board at any time, Employee agrees to
deliver to
the Company all documents containing Confidential Information or
relating
to the business or affairs of the Company that Employee may then
possess
or have under his control.
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9.
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Special
Tax Gross-Up.
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A.
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In
the event that (i) one or more of the payments or benefits which
the
Employee becomes entitled under this Agreement are deemed, in the
opinion
of the Independent Auditors or by the Internal Revenue Service,
to
constitute a parachute payment under Section 280(G) of the Internal
Revenue Code (the “Code”) and (ii) it is determined that the aggregate
present value (as determined in accordance with Code Section 280G
and the
Treasury Regulations thereunder)
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7
of
any
such parachute payment exceeds the maximum amount which the Employee can
receive
without the imposition of an excise tax under Code Section 4999 (the
“Maximum Permissible Parachute Amount”), then the Employee shall be entitled to
receive from the Company an additional payment (the “Gross-Up Payment”) in a
dollar amount determined pursuant to the following formula:
X = Y ÷ [1
- (A + B + C)], where
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X
is the total dollar payment of the Gross-up
Payment.
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Y
is the total excise tax, together with all applicable interest
and
penalties (collectively, the “Excise Tax”), imposed on the Employee
pursuant to Code Section 4999 (or any successor provision) with
respect to
the excess parachute payment attributable to one or more
payments provided the Employee under this Agreement or any other
agreement
with the Company.
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A
is the Excise Tax rate in effect under Code Section 4999 for such
excess
parachute payment,
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B
is the highest combined marginal federal income and applicable
state
income tax rate in effect for the Employee for the calendar year
in which
the Gross-Up Payment is made, determined after taking into account
(i) the
deductibility of state income taxes against federal income taxes
to the
extent actually allowable for that calendar year and (ii) any increase
in
effective tax rate due to the loss of itemized deductions by reason
of
applicable phase-out limitations,
and
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C
is the applicable Hospital Insurance (Medicare) Tax Rate in effect
for the
Executive for the calendar year in which the Gross-Up Payment is
made.
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For
purposes of this Section 9,
the Independent Auditors shall mean a nationally-recognized
registered public accounting firm mutually acceptable to both the
Company
and the Employee, other than the firm serving as the independent
audit
firm for the Company or any other entity involved in the change
in control
transaction triggering the parachute payment under Code Section
280G.
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B.
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All
determinations required to be made under this Section 9
shall be made by the Independent Auditors in accordance with the
following
procedures:
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(i)
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Within
ten (10) business days after each receipt of written notice from
the
Company on or the Employee that a parachute payment under Code
Section
280G has or is to be made, then the Independent Auditors
shall
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provide
both the Employee and the Company with a written determination of such parachute
payment, together with detailed supporting calculations with respect to the
Gross-Up Payment to which the Executive is entitled by reason of that parachute
payment. The Company shall pay the resulting Gross-Up Payment to the
Employee within three (3) business days after receipt of such determination
or
(if later) contemporaneously with the payment or benefit triggering such
Gross-Up Payment.
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(ii)
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In
the event the Treasury Regulations under Code Section 280G (or
applicable
judicial decisions) specifically address the status of any payment
or
benefit under Code Section 280G or the method of valuation therefor,
the
characterization afforded to such payment by those regulations
(or such
decisions) shall, together with the applicable valuation methodology,
be
controlling. All other determinations by the Independent
Auditors shall be made on the basis of "substantial authority"
(within the
meaning of Section 6662 of the
Code).
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(iii)
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The
Company and the Employee shall each provide the Independent Auditors
with
access to and copies of any books, records and documents in their
possession which may be reasonably requested by the Independent
Auditors
and shall otherwise cooperate with the Independent Auditors in
connection
with the preparation and issuance of the determinations contemplated
by
this Section 9.
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(iv)
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All
fees and expenses of the Independent Auditors and the appraisers
shall be
borne solely by the Company, and to the extent those fees or expenses
are
treated as a parachute payment under Code Section 280G, they shall
be
taken into account in the calculation of the Gross-Up Payment to
which the
Employee is entitled under this Section 9.
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C.
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The
Employee shall provide written notification to the Company of any
claim
made by the Internal Revenue Service which would, if successful,
require
the payment by the Company of an additional Gross-Up
Payment. Such notification shall be given within ten (10)
business days after the Employee is informed in writing of such
claim and
shall apprise the Company of the nature of such claim and the date
on
which such claim is requested to be paid. The Employee shall
not pay such claim prior to the expiration of the thirty (30)-day
period
following the date on which such notice is given to the Company
(or such
shorter period ending on the date that any payment of taxes, interest
and/or penalties with respect to such claim is
due). Prior to the expiration of such thirty (30)-day or
shorter period, the Company shall ether (i) make the additional
Gross-Up
Payment to the Employee attributable to the Internal Revenue Service
claim
or (ii) provide written notice to the Employee that the Company
shall
contest the claim on the Employee’s behalf. In the event, the
Company provides the Employee with such written notice, the
Employee shall:
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(i)
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provide
the Company with any information reasonably requested by the Company
relating to such claim;
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(ii)
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take
such action in connection with contesting such claim as the Company
may
reasonably request in writing from time to time, including (without
limitation) accepting legal representation with respect to such
claim by
an attorney reasonably selected by the Company and reasonably satisfactory
to the Employee, with the fees and expenses of such attorney to
be the
sole responsibility of the Company without any tax implications
to the
Employee in accordance with the same tax indemnity/gross-up arrangement
as
in effect under subparagraph (iv)
below;
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(iii)
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cooperate
with the Company in good faith in order to effectively contest
such claim;
and
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(iv)
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permit
the Company to participate in any proceedings relating to such
claim;
provided, however, that the Company shall bear
and pay directly all additional Excise Taxes imposed upon the Employee
and
all costs, legal fees and other expenses (including additional
interest
and penalties) incurred in connection with such contest and shall
indemnify the Employee for and hold him harmless from, on an after-tax
basis, any additional Excise Tax (including interest and penalties)
imposed upon the Employee and any Excise Tax or income or
employment tax (including interest and penalties)
attributable to the Company’s payment of that additional Excise Tax on
Employee’s behalf or imposed as a result of such
representation and payment of all related costs, legal fees and
expenses. The amounts owed to the Employee by reason of the
foregoing shall be paid to him or on his behalf as they become
due and
payable. Without limiting the foregoing provisions
of this subparagraph (iv), the Company shall control all proceedings
taken
in connection with such contest and, at its sole option, may pursue
or
forgo any and all administrative appeals, proceedings, hearings
and
conferences with the taxing authority in respect of such claim
and may, at
the Company’s sole option, either direct the Employee to pay the tax
claimed and xxx for a refund or contest the claim in any permissible
manner, and the Employee shall prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction
and
in one or more appellate courts, as the Company shall determine;
provided, however, that should the Company
direct the Employee to pay such claim and xxx for a refund, the
Company
shall advance the amount of such payment to the Employee, on an
interest-free basis, and shall indemnify the Employee for and hold
him
harmless from, on an after-tax basis, any Excise Tax or income
or
employment tax (including interest or penalties) imposed with respect
to
such advance or with respect to any imputed income with respect
to such
advance or any income resulting from the Company’s forgiveness of such
advance;
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10
provided,
further, that the Company’s control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder, and the Employee shall be entitled to settle or contest, as the
case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
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10.
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D&O
Insurance. The Company will
maintain at all times during the Service Period officer and director
liability insurance coverage for Employee, in the same aggregate
amount
and under the same terms as are maintained for the Company’s senior
officers and directors, and will otherwise indemnify Employee and
hold him
harmless (except for Employee’s gross negligence and/or willful
misconduct) to the fullest extent permitted by Delaware law for
all losses
and expenses incurred by them as a result of any suits or proceedings
relating to Employee’s rendering services to the Company
hereunder.
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11.
|
Section
409A. Certain payments contemplated by
this
Agreement may be “deferred compensation” for purposes of Section 409A of
the Code. Accordingly, the following provisions shall be in
effect for purposes of avoiding or mitigating any adverse tax consequences
to the Employee under Code Section
409A.
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A.
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It
is the intent of the parties that the provisions of this Agreement
comply
with all applicable requirements of Code Section
409A. Accordingly, to the extent any provisions of this
Agreement would otherwise contravene one or more requirements or
limitations of Code Section 409A, then the Company and the Employee
shall,
within the remedial amendment period provided under the regulations
issued
under Code Section 409A, effect through mutual agreement the appropriate
amendments to those provisions which are necessary in order to
bring the
provisions of this Agreement into compliance with Section
409A.
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B.
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Notwithstanding
any provision to the contrary in this Agreement, no payments or
benefits
to which the Employee becomes entitled under Section 7
of this Agreement shall be made or paid to the Employee prior to
the
earlier of (i) the expiration of the six
(6)-month period measured from the date of his “separation from service”
with the Company (as such term is defined in Treasury Regulations
issued
under Code Section 409A) or (ii) the date of his death, if the
Employee is deemed at the time of such separation from service
a “key
employee” within the meaning of that term under Code Section 416(i) and
such delayed commencement is otherwise required in order to avoid
a
prohibited distribution under Code Section 409A(a)(2). Upon the
expiration of the applicable Code Section 409A(a)(2) deferral period,
all payments deferred pursuant to this subsection 11.B
shall be paid in a lump sum to the Employee, and any remaining
payments due under this Agreement shall be paid in accordance with
the
normal payment dates specified for them
herein.
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C.
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Should
the Employee comply with the provisions of subsections 11.A
and 11.B
above but nevertheless incur the 20% penalty tax imposed under
Section 409A with respect to one or more payments or benefits provided
to
him under this Agreement, then the Employee will be entitled to
receive an
additional payment
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11
(the
“409A Gross-Up Payment”) in an amount such that after payment by the Employee of
all federal, state and local income and employment taxes (including any interest
or penalties imposed with respect to such taxes), including any tax imposed
upon
the 409A Gross-Up Payment, the Employee retains an amount of the 409A Gross-Up
Payment equal to the 20% tax imposed upon the Employee’s deferred
compensation.
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12.
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No
Mitigation Duty. The Company shall not be entitled
to set off any of the following amounts against the payments or
benefits
to which the Employee may become entitled under this Agreement:
(i) any
amounts which the Employee may subsequently earn through other
employment
or service following his Termination Date with the Company or (ii)
any
amounts which the Employee might have potentially earned in other
employment or service had he sought such other employment or
service.
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13.
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Prior
Agreements. This Agreement
embodies the complete agreement and understanding between the Parties
and
supersedes any and all prior agreements, arrangements or understandings,
written or oral, between Parties. Any agreements and
understandings between Employee and Summerville pursuant to Employee’s
employment contract with that company (“Summerville Contract”) are hereby
considered null and void as of the Effective Date. Employee
understands and agrees he shall not be entitled to any further
benefits
pursuant to the Summerville Contract as of the Effective
Date. This Agreement may be amended or modified, and the terms
hereof may be waived, only in writing duly executed and delivered
by
Employee and Emeritus.
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14.
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15.
|
Governing
Law. All questions concerning the
construction, validity and interpretation of this Agreement shall
be
governed by the laws of the State of
Washington.
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16.
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Notices. Any
notices, consents or other communication required hereunder shall
be in
writing and shall be sufficiently given only if sent by overnight
courier
(such as Federal Express) or by registered or certified mail (return
receipt requested), postage prepaid, or by facsimile or by e-mail
addressed as follows (or to such other address or addresses as
may
hereafter be furnished in writing by notices similarly given by
one Party
to the other):
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To
Employee:
Xxxxxxx
Xxxx
00
Xxxxxx
Xxxx
Xxxxxx,
XX 00000
E-mail: xxxxxxx.xxxx@xxxxxx.xxx
12
To
the Company or the Board:
EMERITUS
CORPORATION
0000
Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxxxxx 00000
Attn:
Xxxxxx X. Xxxx
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17.
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Counterparts. This
Agreement may be executed in two or more original counterparts,
each of
which shall constitute one and the same instrument. Only one
such counterpart signed by the Party against whom enforceability
is sought
needs to be produced to evidence the existence of the
Agreement. Signatures may be exchanged by telecopy, with
original signatures to follow. Each party to this Agreement
agrees to be bound by its/his own telecopied signature and to accept
the
telecopied signature of the other Party to this
Agreement.
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18.
|
Severability. The
various provisions of the Agreement are severable from each other
and from
the rest of this Agreement, and, in the event any part of this
Agreement
is held to be invalid or unenforceable by a court or otherwise,
the
remainder of this Agreement shall be fully effective, operative
and
enforceable.
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19.
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Disputes;
Attorneys’ Fees. Except as
otherwise provided in the last sentence hereof, the Parties agree
that any
claim, controversy or dispute arising out of, in connection with,
related
to or regarding the subject matter hereof (“Dispute(s)”)
shall be resolved by arbitration (“Arbitration”)
conducted by a single arbitrator engaged in the practice of law
(the
“Arbitrator”) under the Employment Arbitration Rules (the
“EAR”) of the American Arbitration Association
(“AAA”). The Federal Arbitration Act, 9
U.S.C., Sections 1-16, not state law, shall govern all Arbitration
proceedings instituted hereunder. The Arbitrator’s award or
ruling with respect to any Dispute shall be final, binding and
nonappealable and may be entered in any court having jurisdiction
thereof. Each Party shall bear its own costs and attorneys’
fees of the Arbitration proceeding; provided, however, that, in
addition
to any damages awarded by the Arbitrator, the substantially prevailing
Party in the Dispute (as determined by the Arbitrator) shall be
entitled
to receive from the other Party its/his reasonable attorneys’ fees and
out-of-pocket costs. The laws of the State of Washington shall
govern the construction and interpretation of this Agreement, and
any
Arbitration hereunder shall be conducted in Seattle,
Washington. It is expressly agreed that a Party may seek
injunctive relief in the case of any dispute in Arbitration or
in an
appropriate court of law or equity, at the sole discretion of such
Party.
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20.
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Assignment. Except
as herein expressly provided, the respective rights and obligations
of the
Employee and the Company under this Agreement shall not be assignable
by
either party without the written consent of the other party and
shall,
subject to the foregoing, enure to the benefit of and be binding
upon the
Employee and the Company and their permitted successors or
assigns. Nothing herein expressed or implied is intended
to
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13
confer
on
any person other than the parties hereto any rights, remedies, obligations
or
liabilities under or by reason of this Agreement.
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21.
|
Waiver. No
provision hereof shall be deemed waived and no breach excused,
unless such
waiver or consent excusing the breach is made in writing and signed
by the
party to be charged with such waiver or consent. A waiver by a
party of
any provision of this Agreement shall not be construed as a waiver
of a
further breach of the same
provision.
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[Signature
Pages to Follow]
14
IN
WITNESS WHEREOF, the parties have executed this Agreement on the dates
set forth
by their respective signatures:
Emeritus:
EMERITUS
CORPORATION
By: /s/ Xxxxxx
X.
Xxxx
Name: Xxxxxx
X. Xxxx
Title: Chairman
and Co-CEO
Employee:
By: /s/ Xxxxxxx
Xxxx
Xxxxxxx
Xxxx
15
