EMPLOYMENT AGREEMENT
EXECUTION
COPY
THIS EMPLOYMENT AGREEMENT
(this “Agreement”) is made
and entered into as of June 23, 2009 (the “Effective Date”), by
and between Brookdale Senior Living Inc., a Delaware corporation (the “Company”), and W. E.
Sheriff (“Executive”). Where
the context permits, references to “the Company” shall include the Company and
any successor of the Company.
W
I T N E S S E T H:
WHEREAS, the Company and
Executive previously entered into an employment agreement, dated May 12, 2006
and amended on December 30, 2008 (the “Original Agreement”),
pursuant to which Executive serves as the Chief Executive Officer of the Company
(the “CEO”);
and
WHEREAS, the Company and
Executive mutually desire to amend and restate the Original Agreement in its
entirety on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in
consideration of the mutual promises, covenants and agreements herein contained,
together with other good and valuable consideration the receipt of which is
hereby acknowledged, the parties hereto do hereby agree as follows:
1. SERVICES AND
DUTIES. Subject to Section 2 hereof, from and after the
Effective Date, Executive shall, pursuant to the terms of this Agreement,
continue to be employed by the Company as the CEO, and shall report directly to
the Company’s Board of Directors (the “Board”). The
principal location of Executive’s employment with the Company shall be the same
as Executive’s principal location of employment as of the Effective Date,
although Executive understands and agrees that Executive may be required to
travel from time to time for business reasons. During the Employment
Term (as defined in Section 2(a)), Executive shall be a full-time employee of
the Company and shall dedicate all of Executive’s working time to the Company
and shall have no other employment and no other business ventures which are
undisclosed to the Company or which conflict with Executive’s duties under this
Agreement. During the Consulting Term (as defined in Section 2(b)),
Executive shall serve the Company as a Consultant (as defined in Section 2(b))
and shall provide such services to the Company on an exclusive
basis. Executive shall perform such duties as are required by the
Company from time to time and normally associated with Executive’s position,
together with such additional duties, commensurate with Executive’s position, as
may be assigned to Executive from time to time by the
Board. Notwithstanding the foregoing, nothing herein shall prohibit
Executive from (i) participating in trade associations or industry organizations
which are related to the business of the Company or engaging in charitable,
civic or political activities or (ii) subject to the prior approval of the
Chairman of the Board, (1) engaging in personal investment activities for
Executive and Executive’s family that do not give rise to any conflicts of
interest with the Company or its Affiliates or (2) accepting directorships
unrelated to the Company that do not give rise to any conflict of interests with
the Company or its Affiliates, in each case so long as the interests in (i) and
(ii) above do not interfere, individually or in the aggregate, with the
performance of Executive’s duties hereunder. The Company acknowledges
and approves the
current
activities of Executive as set forth on Schedule 1 hereto; provided, however, that the
activities in which Executive participates pursuant to subsection (i) of the
immediately preceding sentence do not require such acknowledgment or
approval.
2. TERM.
(a) Employment
Term. Executive’s employment under the terms and conditions of
this Agreement shall commence on the Effective Date. Such employment
(or consultancy as provided in Section 2(b)) shall expire on the fifth (5th)
anniversary of the Effective Date (the “Term”); provided, however, that the
Term shall earlier expire immediately upon the termination of Executive’s
employment or consultancy (as applicable) pursuant to Section 5
hereof. Notwithstanding anything to the contrary in this Agreement,
at any time during the Term, Executive may elect to resign his position as the
CEO, effective six (6) months following the date on which Executive provides
written notice of such election to the Board (the date such resignation is
effective, the “Transition Date” and
the period from the Effective Date through the Transition Date, the “Employment
Term”).
(b) Consulting
Term. Following the Transition Date, Executive shall continue
serving the Company for the remainder of the Term (the “Consulting Term”) as
an independent contractor in the capacity of consultant (a “Consultant”) and will
perform services at a level equal to 20% or less of the average level of
services performed by Executive during the 36 month period prior to the
Transition Date. During the Consulting Term, Executive shall make
himself available to perform consulting services with respect to the businesses
conducted by the Company. Such consulting services shall be related
to such matters as the Board may designate from time to time. It is
understood that such consulting services will require Executive to, among other
things, provide consultation and advisory services regarding corporate
governance practices and procedures and business development matters, and to
perform such other duties as may reasonably be requested. At all
times during the Consulting Term, Executive shall comply with reasonable
requests for his consulting services and shall devote reasonable time and his
reasonable best efforts, skill and attention to the performance of such
consulting services, including travel reasonably required in the performance of
such consulting services. During the Consulting Term, Executive shall
continue to be subject to the terms and conditions of this
Agreement.
3. COMPENSATION.
(a) Base
Compensation. In consideration of Executive’s full and
faithful satisfaction of Executive’s duties under this Agreement, the Company
agrees to pay to Executive base compensation for his services as
follows: (i) during the Employment Term, a base salary in the amount
of six hundred thousand dollars ($600,000) per annum, or (ii) during the
Consulting Term, a consulting fee in the amount of three hundred thousand
dollars ($300,000) per annum (as applicable, the “Base Compensation”),
in either case payable in such installments as the Company pays its similarly
placed employees or consultants, as applicable (but not less frequently than
each calendar month), subject to customary employee contributions to any health,
welfare and/or retirement programs in which Executive is
enrolled. The Base Compensation may be increased from time to time at
the Board’s sole discretion, but except as
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expressly
provided in clause (ii) of this Section 3(a), in no event shall the Base
Compensation be reduced without Executive’s approval.
(b) Annual
Bonus. In addition to the Base Compensation, for each calendar
year ending during the Employment Term, Executive shall be eligible to receive a
bonus (“Annual
Bonus”), subject to the terms of the Company’s incentive compensation
plan for senior executive officers as in effect from time to time (the “Bonus Plan”), with a
target Annual Bonus of six hundred thousand dollars ($600,000) (the “Target
Bonus”).
Notwithstanding
anything in this Section 3(b) to the contrary, for the year in which the
Transition Date occurs, Executive shall be eligible to receive an Annual Bonus,
determined as follows: if the Transition Date occurs (i) prior to
October 1st of such
year, a pro-rated portion of the Annual Bonus (to the extent earned under the
terms of the Bonus Plan) based on the number of days in which Executive served
as the CEO during such year or (ii) on or after October 1st of such
year, an Annual Bonus (to the extent earned under the terms of the Bonus Plan)
based on the full year. For the avoidance of doubt, Executive shall
not be eligible to receive an Annual Bonus for any calendar year commencing
during the Consulting Term.
The
Annual Bonus shall be paid to Executive, in cash, no later than thirty (30) days
following completion of the Company’s audit for the applicable year, which the
Company shall endeavor in good faith to complete within three (3) months
following the last day of such year; provided, however, that in no
event shall the Annual Bonus be paid to Executive prior to January 1 or later
than December 31 of the year following the year to which such Annual Bonus
relates.
(c) Restricted Stock Unit
Grant. Effective upon the Effective Date, Executive shall
receive a one-time grant of 500,000 restricted stock units of the Company’s
common stock.
(d) Existing Restricted Stock
Grants. All grants of restricted stock made to Executive prior
to the Effective Date (the “Existing Grants”)
shall continue to be governed by the applicable terms of such grants; provided, however, that service
as a Consultant hereunder shall be deemed to be continued employment for
purposes of such restricted stock awards.
(e) Withholding. All
taxable compensation payable to Executive pursuant to this Agreement shall be
subject to any applicable withholding taxes and such other taxes as are required
under Federal law or the law of any state or governmental body to be collected
with respect to compensation paid by the Company to Executive.
4. BENEFITS AND
PERQUISITES.
(a) Retirement and Welfare
Benefits. During the Employment Term, Executive shall be
eligible to participate in all benefit plans made available to the Company’s
senior executives, and during the Consulting Term, Executive shall be eligible
to participate in all benefit plans made available to the Company’s similarly
situated former executives. In either case, the benefits shall be
subject to the applicable limitations and requirements imposed by the terms of
such benefit plans and shall be governed in all respects in accordance with the
terms of such plans as from time to time in effect. Nothing in this
Section 4, however, shall require the
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Company
to maintain any benefit plan or provide any type or level of benefits to its
current or former employees, including Executive.
(b) Life
Insurance. During the Employment Term, the Company shall
provide Executive with basic life insurance benefits, up to a maximum of
$600,000, at no cost to Executive.
(c) Paid Time
Off. During the Employment Term, Executive shall be eligible
to participate in the paid time off policy generally applicable to the Company’s
senior executives, as it may be amended from time to time.
(d) Reimbursement of
Expenses. The Company shall reimburse Executive for any
expenses reasonably and necessarily incurred by Executive during the Term in
furtherance of Executive’s duties hereunder, including travel, meals and
accommodations, upon submission by Executive of vouchers or receipts and in
compliance with such rules and policies relating thereto as the Company may from
time to time adopt.
5. TERMINATION. Executive’s
employment or consultancy, as applicable, shall be terminated at the earliest to
occur of the following: (i) the end of the Term, unless Executive
agrees to continue employment or consultancy with the Company on an at-will
basis; (ii) the date on which the Board delivers written notice that Executive
is being terminated for “Disability” (as defined below); or (iii) the date of
Executive’s death. In addition, Executive’s employment or
consultancy, as applicable, with the Company (or its successors) may be earlier
terminated (1) by the Company for “Cause” (as defined below), effective on the
date on which a written notice to such effect is delivered to Executive; (2) by
the Company at any time without Cause, effective on the date on which a written
notice to such effect is delivered to Executive or such other date as is
reasonably designated by the Company; (3) by Executive for “Good Reason” (as
defined below), effective thirty-one (31) days following the date on which a
written notice to such effect is delivered to the Company; or (4) by Executive
at any time, effective fourteen (14) days following the date on which a written
notice to such effect is delivered to the Company (or its
successors).
(a) For Cause
Termination. If Executive’s employment or consultancy, as
applicable, with the Company is terminated by the Company (or its successors)
for Cause, Executive shall not be entitled to any further compensation or
benefits other than, in each case if applicable as of the date of
termination: (i) any accrued but unpaid Base Compensation (payable as
provided in Section 3(a)); (ii) any Annual Bonus earned but unpaid as of
the date of termination for any previously completed year, payable as set forth
in Section 3(b) hereof; (iii) reimbursement for any business expenses properly
incurred by Executive prior to the date of termination in accordance with
Section 4(d) hereof, payable on the Company’s first regularly scheduled payroll
date which occurs at least ten (10) days after the date of termination; and (iv)
vested benefits, if any, to which Executive may be entitled under the Company’s
employee benefit plans as of the date of termination (collectively, the “Accrued
Benefits”). For the avoidance of doubt, the Existing Grants
shall be treated as provided in the applicable equity incentive plan and award
agreement governing such awards.
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(b) Termination by the Company
without Cause or by Executive for Good Reason. If Executive’s
employment or consultancy, as applicable, is terminated by the Company (or its
successors) other than for Cause or by Executive for Good Reason prior to the
end of the Term, then Executive shall be entitled, upon (i) Executive’s
execution and non-revocation of a general release of claims in a form
satisfactory to the Company within thirty (30) days following the date of
termination (the “Release”) and (ii)
Executive’s continued compliance with the restrictive covenants set forth in
Section 6 hereto and in any other agreement or agreements between Executive and
the Company or to which Executive is a party, including, without limitation, any
restricted stock agreement between the Company and Executive) and all other
applicable ongoing obligations to which Executive is subject as of the date of
termination, to, in each case if applicable as of the date of
termination:
(i) the
Accrued Benefits;
(ii)
continuation of his then-current Base Compensation for the lesser of (1)
twenty-four (24) months following the date of such termination or (2) the
remainder of the Term, in either case payable in the same manner as provided in
Section 3(a) hereof;
(iii) in
lieu of any Annual Bonus to be provided pursuant to Section 3(b) hereof, an
Annual Bonus (to the extent earned under the terms of the Bonus Plan) for the
year of termination, pro-rated based on the number of days in which Executive
served as the CEO during such year and payable as set forth in Section 3(b)
hereof; provided, however, that if such
termination occurs on or after October 1st, the
amount of such Annual Bonus shall not be subject to proration;
(iv) to
the extent Executive is then eligible for, and elects, continuation of health
care coverage under COBRA, the Company shall, for the length of the COBRA
coverage period, pay an amount of Executive’s applicable health care premiums
such that Executive’s monthly premiums are equal to those of the Company’s
then-current employees or former employees, as applicable; and
(v) the
treatment of the Existing Grants as provided in the applicable equity incentive
plan and award agreement governing such awards.
For
purposes of clarification, in no event shall Executive be entitled to any
amounts under this Section 5(b) upon a termination of employment if Executive
continues to perform services as a Consultant hereunder as contemplated by
Section 2(b).
(c) Death or
Disability. If Executive’s employment or consultancy, as
applicable, is terminated by reason of Executive’s death or Disability prior to
the end of the Term, in lieu of any other payments or benefits, Executive (or
Executive’s beneficiary or estate, as applicable) shall be entitled to the
Accrued Benefits. For the avoidance of doubt, the Existing Grants
shall be treated as provided in the applicable equity incentive plan and award
agreement governing such awards.
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(d) Voluntary Resignation by
Executive without Good Reason. If Executive voluntarily
resigns his employment or consultancy without Good Reason during the Term, then
Executive shall be entitled to, subject to the execution and non-revocation of
the Release and in either case if applicable as of the date of
termination: (i) the Accrued Benefits and (ii) in lieu of any Annual
Bonus to be provided pursuant to Section 3(b) hereof, an Annual Bonus (to the
extent earned under the terms of the Bonus Plan) for the year of termination,
pro-rated based on the number of days in which Executive served as the CEO
during such fiscal year and payable as set forth in Section 3(b) hereof; provided, however, that if such
termination occurs on or after October 1st, the
amount of such Annual Bonus shall not be subject to proration. For
the avoidance of doubt, the Existing Grants shall be treated as provided in the
applicable equity incentive plan and award agreement governing such
awards.
(e) Definitions. For
purposes of this Agreement:
“Affiliate” means an
affiliate of the Company (or other referenced entity, as the case may be) as
defined in Rule 12b-2 promulgated under Section 12 of the Securities Exchange
Act of 1934, as amended.
“Cause” means
(i) conviction of, or guilty plea concerning or confession of any felony,
(ii) any act of dishonesty committed by Executive in connection with the
Company’s or its subsidiaries’ business, (iii) any material breach by Executive
of this Agreement, after written notice thereof from the Board is given in
writing and such breach is not cured to the satisfaction of the Company within a
reasonable period of time (not greater than thirty (30) days) under the
circumstances; (iv) any material breach of any reasonable and lawful rule
or directive of the Company; (v) the gross or willful neglect of duties or
gross misconduct by Executive; or (vi) the habitual use of drugs or
habitual, excessive use of alcohol to the extent that any of such uses in the
Board’s good faith determination materially interferes with the performance of
Executive’s duties under this Agreement.
“Disability” means, as
determined by the Board in good faith, Executive’s inability, due to disability
or incapacity, to perform all of Executive’s duties hereunder on a full-time
basis for (i) periods aggregating one hundred eighty (180) days, whether or not
continuous, in any continuous period of three hundred and sixty five (365) days
or, (ii) where Executive’s absence is adversely affecting the performance of the
Company in a significant manner, periods greater than ninety (90) days and
Executive is unable to resume Executive’s duties on a full time basis within ten
(10) days of receipt of written notice of the Board’s determination under this
clause (ii).
“Good Reason” means
the occurrence, without the express prior written consent of Executive, of any
of the following circumstances, unless such circumstances are fully corrected by
the Company within thirty (30) days following written notification by Executive
(which written notice must be delivered within thirty (30) days of Executive’s
becoming aware of the occurrence of such circumstances) that Executive intends
to
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terminate
Executive’s employment for one of the reasons set forth below: (i)
the failure by the Company to pay to Executive any portion of Executive’s Base
Compensation or Annual Bonus, if applicable, within thirty (30) days following
the date such compensation is due; (ii) the relocation of Executive’s principal
office at the Company to a location outside a fifty (50) mile radius from
Executive’s principal office location as of the Effective Date; or (iii) during
the Employment Term, Executive is assigned duties, compensation or
responsibilities that are materially and significantly reduced with respect to
the scope or nature of the duties, compensation and/or responsibilities
associated with Executive’s position as of immediately after the Effective
Date. Notwithstanding the foregoing, a termination by Executive for
“Good Reason” shall not be deemed to have occurred by virtue of changes in
Executive’s duties, benefits or responsibilities resulting upon (or shortly
thereafter) (i) the consummation of any transaction or series of integrated
transactions immediately following which the holders of the common stock of the
Company immediately prior to such transaction or series of transactions continue
to have substantially the same proportionate ownership in an entity which owns
all or substantially all of the assets of the Company immediately following such
transaction or series of transactions or (ii) the Transition Date.
(f) Resignation as Officer or
Director. Upon a termination of employment or consultancy for
any reason, unless requested otherwise by the Company, Executive shall resign
each position (if any) that Executive then holds as an officer of the Company or
as an officer or director of any of the Company’s
subsidiaries. Executive’s execution of this Agreement shall be deemed
the grant by Executive to the officers of the Company of a limited power of
attorney to sign in Executive’s name and on Executive’s behalf any such
documentation as may be required to be executed solely for the limited purposes
of effectuating such resignations.
(g) Section
409A. It is intended that (i) each installment of the payments
provided under this Agreement is a separate “payment” for purposes of Section
409A of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) the
payments satisfy, to the greatest extent possible, the exemptions from the
application of Section 409A of the Code provided under Treasury Regulations
1.409A-1(b)(4), 1.409A-1(b)(9)(iii), and
1.409A-1(b)(9)(v). Notwithstanding anything contained to the contrary
in this Agreement, to the extent required in order to avoid accelerated taxation
and/or tax penalties under Section 409A of the Code, Executive shall not be
considered to have terminated employment with the Company for purposes of this
Agreement and no payments shall be due to Executive under Section 5 of this
Agreement until Executive would be considered to have incurred a “separation
from service” (as such term is defined under Treasury Regulation 1.409A-1(h))
with the Company (relating to his employment or service as a Consultant, as
applicable). Notwithstanding
anything to the contrary in this Agreement, if the Company determines (1) that
on the date Executive’s employment with the Company terminates or at such other
time that the Company determines to be relevant, Executive is a “specified
employee” (as such term is defined under Treasury Regulation 1.409A-1(i)(1)) of
the Company and (2) that any payments to be provided to Executive pursuant to
this Agreement are or may become subject to the additional tax under Section
409A(a)(1)(B) of the Code or any other taxes or penalties imposed under Section
409A of the Code, if provided at the time otherwise required under this
Agreement, then such payments shall be delayed until the date that is six (6)
months after the date of Executive’s “separation from service” (as such term
is
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defined
under Treasury Regulation 1.409A-1(h)) with the Company, or, if earlier, the
date of Executive’s death. Any payments delayed pursuant to this
Section 5(g) shall be made in a lump sum on the first day of the seventh (7th) month
following Executive’s “separation from service” (as such term is defined under
Treasury Regulation 1.409A-1(h)), or, if earlier, the date of Executive’s
death. In addition, to the extent that any reimbursement, fringe
benefit or other, similar plan or arrangement in which Executive participates
during the Term or thereafter provides for a “deferral of compensation” within
the meaning of Section 409A of the Code, (x) the amount eligible for
reimbursement or payment under such plan or arrangement in one (1) calendar year
may not affect the amount eligible for reimbursement or payment in any other
calendar year (except that a plan providing medical or health benefits may
impose a generally applicable limit on the amount that may be reimbursed or
paid), and (y) subject to any shorter time periods provided herein or the
applicable plans or arrangements, any reimbursement or payment of an expense
under such plan or arrangement must be made on or before the last day of the
calendar year following the calendar year in which the expense was
incurred.
6. COVENANTS. Executive
acknowledges that during the period of his employment and consultancy with the
Company or any subsidiary, he shall have access to the Company’s “Confidential
Information” (as defined below) and will meet and develop relationships with the
Company’s potential and existing suppliers, financing sources, clients,
customers and employees.
(a) Noncompetition. Executive
agrees that during the period of his employment and consultancy with the Company
and for the two (2) year period immediately following the later of the date of
termination of Executive’s employment or consultancy with the Company or any
subsidiary for any reason or for no reason, Executive shall not directly or
indirectly, either as a principal, agent, employee, employer, consultant,
partner, shareholder of a closely held corporation or shareholder in excess of
five percent (5%) of a publicly traded corporation, corporate officer or
director, or in any other individual or representative capacity, engage or
otherwise participate in any manner or fashion in any business that is a
Competing Business in the Area (each as defined below). Executive
further covenants and agrees that this restrictive covenant is reasonable as to
duration, terms and geographical area and that the same protects the legitimate
interests of the Company and its Affiliates, imposes no undue hardship on
Executive, is not injurious to the public, and that any violation of this
restrictive covenant shall be specifically enforceable in any court with
jurisdiction upon short notice. Solely for purposes of this paragraph
(a): “Area” means a fifteen (15) mile radius of any senior living
facility owned, managed or operated by the Company (or its successor) at the
time Executive’s employment or consultancy, as applicable, is terminated; and
“Competing Business” means the business of owning, operating or managing senior
living facilities having gross annualized revenues of at least $35 million or
owning, operating or managing, in the aggregate, at least 1,000 units/beds
provided that at least 750 units/beds owned, operated or managed by such
business are located within the Area.
(b) Solicitation of Employees,
Etc. Executive agrees that during the period of his employment
and consultancy with the Company and for the two (2) year period immediately
following the later of the date of termination of Executive’s employment or
consultancy with the Company or any subsidiary for any reason or for no reason,
Executive shall not, directly or
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indirectly,
(i) solicit or induce any officer, director, employee, agent or consultant of
the Company or any of its successors, assigns, subsidiaries or Affiliates to
terminate his, her or its employment or other relationship with the Company or
its successors, assigns, subsidiaries or Affiliates, or otherwise encourage any
such person or entity to leave or sever his, her or its employment or other
relationship with the Company or its successors, assigns, subsidiaries or
Affiliates, for any other reason or (ii) hire any individual who left the employ
of the Company or any of its Affiliates during the immediately preceding one (1)
year period.
(c) Solicitation of Clients,
Etc. Executive agrees that during the period of his employment
and consultancy with the Company and for the two (2) year period immediately
following the later of the date of termination of Executive’s employment or
consultancy with the Company or any subsidiary for any reason or for no reason,
Executive shall not, directly or indirectly, solicit or induce (i) any customers
or clients of the Company or its successors, assigns, subsidiaries or Affiliates
or (ii) any vendors, suppliers or consultants then under contract to the Company
or its successors, assigns, subsidiaries or Affiliates, to terminate his, her or
its relationship with the Company or its successors, assigns, subsidiaries or
Affiliates, or otherwise encourage such customers or clients, or vendors,
suppliers or consultants then under contract, to terminate his, her or its
relationship with the Company or its successors, assigns, subsidiaries or
Affiliates, for any other reason. Nothing in this paragraph applies
to those customers, clients, vendors, suppliers, or consultants who did not
conduct business with the Company, or its successors, assigns, subsidiaries or
Affiliates, during Executive’s employment and consultancy with the
Company.
(d) Disparaging
Comments. Executive agrees that during the period of
Executive’s employment and consultancy with the Company and at all times
thereafter, Executive shall not make any disparaging or defamatory comments
regarding the Company or its Affiliates or, after termination of his employment
or consultant relationship with the Company, make any comments concerning any
aspect of the termination of their relationship. The obligations of
Executive under this paragraph shall not apply to disclosures required by
applicable law, regulation or order of any court or governmental
agency.
Nothing
contained in this Section 6 shall limit any common law or statutory obligation
that Executive may have to the Company or any of its Affiliates. For
purposes of all provisions of this Section 6, the “Company” refers to the
Company and any incorporated or unincorporated Affiliates of the Company,
including any entity which becomes Executive’s employer as a result of any
reorganization or restructuring of the Company for any reason.
(e) Confidentiality. All
books of account, records, systems, correspondence, documents, and any and all
other data, in whatever form, concerning or containing any reference to the
works and business of the Company or its Affiliates shall belong to the Company
and shall be given up to the Company whenever the Company requires Executive to
do so. Executive agrees that Executive shall not at any time during
the term of Executive’s employment or consultancy or thereafter, without the
Company’s prior written consent, disclose to any person (individual or entity)
any information or any trade secrets, plans or other information or data, in
whatever form, (including, without limitation, (i) any financing strategies and
practices, pricing information and methods, training and operational procedures,
advertising, marketing, and sales
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information
or methodologies or financial information and (ii) any “Proprietary Information”
(as defined below)), concerning the Company’s or any of its affiliated
companies’ or customers’ practices, businesses, procedures, systems, plans or
policies (collectively, “Confidential
Information”), nor shall Executive utilize any such Confidential
Information in any way or communicate with or contact any such customer other
than in connection with Executive’s employment by or consultancy with the
Company. Executive hereby confirms that all Confidential Information
constitutes the Company’s exclusive property, and that all of the restrictions
on Executive’s activities contained in this Agreement and such other
nondisclosure policies of the Company are required for the Company’s reasonable
protection. Confidential Information shall not include any
information that has otherwise been disclosed to the public not in violation of
this Agreement. This confidentiality provision shall survive the
termination of this Agreement and shall not be limited by any other
confidentiality agreements entered into with the Company or any of its
Affiliates.
Executive
agrees that Executive shall promptly disclose to the Company in writing all
information and inventions generated, conceived or first reduced to practice by
him alone or in conjunction with others, during or after working hours, while
employed by or a consultant to the Company (all of which is collectively
referred to herein as “Proprietary
Information”); provided, however, that such
Proprietary Information shall not include (i) any information that has otherwise
been disclosed to the public not in violation of this Agreement or (ii) general
business knowledge and work skills of Executive, even if developed or improved
by Executive while employed by or a consultant to the Company. All
such Proprietary Information shall be the exclusive property of the Company and
is hereby assigned by Executive to the Company. Executive’s
obligation relative to the disclosure to the Company of such Proprietary
Information shall continue beyond Executive’s termination of employment and
Executive shall, at the Company’s expense, give the Company all assistance it
reasonably requires to perfect, protect and use its right to the Proprietary
Information.
(f) Acknowledgement. Executive
agrees and acknowledges that each restrictive covenant in this Section 6 is
reasonable as to duration, terms and geographical area and that the same
protects the legitimate interests of the Company and its Affiliates, imposes no
undue hardship on Executive, is not injurious to the public, and that,
notwithstanding any provision in this Agreement to the contrary, any violation
of this restrictive covenant shall be specifically enforceable in any court with
jurisdiction upon short notice. Executive agrees and acknowledges
that a portion of the compensation paid to Executive under this Agreement will
be paid in consideration of the covenants contained in this Section 6, the
sufficiency of which consideration is hereby acknowledged. If any
provision of this Section 6 as applied to Executive or to any circumstance is
adjudged by a court with jurisdiction upon short notice to be invalid or
unenforceable, the same shall in no way affect any other circumstance or the
validity or enforceability of any other provisions of this Section
6. If the scope of any such provision, or any part thereof, is too
broad to permit enforcement of such provision to its full extent, Executive
agrees that the court making such determination shall have the power to reduce
the duration and/or area of such provision, and/or to delete specific words or
phrases, and in its reduced form, such provision shall then be enforceable and
shall be enforced. Executive agrees and acknowledges that the breach
of this Section 6 will cause irreparable injury to the Company and upon breach
of any provision of this Section 6, the Company shall be entitled to injunctive
relief,
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specific
performance or other equitable relief by any court with jurisdiction upon short
notice; provided, however, that this
shall in no way limit any other remedies which the Company may have (including,
without limitation, the right to seek monetary damages). Each of the
covenants in this Section 6 shall be construed as an agreement independent of
any other provisions in this Agreement.
7. SECTION
280G.
(a) Notwithstanding
anything in this Agreement to the contrary, in the event that any payment or
benefit received or to be received by Executive (including any payment or
benefit received in connection with a “Change in Control” (as defined in the
Brookdale Senior Living Inc. Omnibus Stock Incentive Plan) or the termination of
Executive’s employment or consultancy, whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement) (all such payments and
benefits being hereinafter referred to as the “Total Payments”)
would not be deductible (in whole or part) by the Company or any of its
subsidiaries or Affiliates making such payment or providing such benefit as a
result of Section 280G of the Code, then, to the extent necessary to make such
portion of the Total Payments deductible (and after taking into account any
reduction in the Total Payments provided by reason of Section 280G of the Code
in such other plan, arrangement or agreement), the portion of the Total Payments
that do not constitute deferred compensation within the meaning of Section 409A
of the Code shall first be reduced (if necessary, to zero), and all other Total
Payments shall thereafter be reduced (if necessary, to zero).
(b) For
purposes of this limitation, (i) no portion of the Total Payments the receipt or
enjoyment of which Executive shall have waived at such time and in such manner
as not to constitute a “payment” within the meaning of Section 280G(b) of the
Code shall be taken into account; (ii) no portion of the Total Payments shall be
taken into account which, in the opinion of tax counsel (“Tax Counsel”)
reasonably acceptable to Executive and selected by the accounting firm which
was, immediately prior to the Change in Control, the Company’s independent
auditor (the “Auditor”), does not
constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the
Code, including by reason of Section 280G(b)(4)(A) of the Code; (iii) the
severance payments payable to Executive pursuant to Section 5 hereof shall be
reduced only to the extent necessary so that the Total Payments (other than
those referred to in clauses (i) or (ii) of this paragraph) in their entirety
constitute reasonable compensation for services actually rendered within the
meaning of Section 280G(b)(4)(B) of the Code or are otherwise not subject to
disallowance as deductions by reason of Section 280G of the Code, in the opinion
of Tax Counsel; and (iv) the value of any non-cash benefit or any deferred
payment or benefit included in the Total Payments shall be determined by the
Auditor in accordance with the principles of Sections 280G(d)(3) and (4) of the
Code.
(c) If
it is established pursuant to a final determination of a court of competent
jurisdiction or an Internal Revenue Service proceeding that, notwithstanding the
good faith of Executive and the Company in applying the terms of this Section 7,
the Total Payments paid to or for Executive’s benefit are in an amount that
would result in any portion of such Total Payments being subject to the excise
tax imposed by Section 4999 of the Code (the “Excise Tax”), then,
if such repayment would result in (i) no portion of the remaining Total
Payments
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-
being
subject to the Excise Tax and (ii) a dollar-for-dollar reduction in Executive’s
taxable income and wages for purposes of federal, state and local income and
employment taxes, the Executive shall have an obligation to pay the Company upon
demand an amount equal to the sum of (x) the excess of the Total Payments paid
to or for Executive’s benefit over the Total Payments that could have been paid
to or for Executive’s benefit without any portion of such Total Payments being
subject to the Excise Tax; and (y) interest on the amount set forth in clause
(x) of this sentence at the rate provided in Section 1274(b)(2)(B) of the Code
from the date of Executive’s receipt of such excess until the date of such
payment.
8. ASSIGNMENT. This
Agreement, and all of the terms and conditions hereof, shall bind the Company
and its successors and assigns and shall bind Executive and Executive’s heirs,
executors and administrators. No transfer or assignment of this
Agreement shall release the Company from any obligation to Executive
hereunder. Neither this Agreement, nor any of the Company’s rights or
obligations hereunder, may be assigned or otherwise subject to hypothecation by
Executive, and any such attempted assignment or hypothecation shall be null and
void. The Company may assign the rights and obligations of the
Company hereunder, in whole or in part, to any of the Company’s subsidiaries,
Affiliates or parent corporations, or to any other successor or assign in
connection with the sale of all or substantially all of the Company’s assets or
stock or in connection with any merger, acquisition and/or reorganization,
provided the assignee assumes the obligations of the Company
hereunder.
9. GENERAL.
(a) Notices. Any
notices provided hereunder must be in writing and shall be deemed effective upon
the earlier of one (1) business day following personal delivery (including
personal delivery by telecopy or telex), or the third (3rd)
business day after mailing by first class mail to the recipient at the address
indicated below:
To the
Company:
General
Counsel
000
Xxxxxxxx Xxxxx
Xxxxx
000
Xxxxxxxxx,
XX 00000
with a
copy which shall not constitute notice to:
Xxxxxx
Xxxxxxx
Fortress
Investment Group
0000
Xxxxxx xx xxx Xxxxxxxx
00xx
Xxxxx
Xxx Xxxx,
XX 00000
To
Executive:
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W. E.
Sheriff
At the
address shown in the Company’s personnel records
with a
copy which shall not constitute notice to:
Xxxxxx I.
N. XxXxxxxx
0000
Xxxxxxxxx Xxxx
Xxxxx
000
Xxxxxxxxx,
XX 00000
or to
such other address or to the attention of such other person as the recipient
party will have specified by prior written notice to the sending
party.
(b) Severability. Any
provision of this Agreement which is deemed by a court of competent jurisdiction
to be invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction and subject to this paragraph be ineffective to the extent of such
invalidity, illegality or unenforceability, without affecting in any way the
remaining provisions hereof in such jurisdiction or rendering that or any other
provisions of this Agreement invalid, illegal, or unenforceable in any other
jurisdiction. If any covenant should be deemed invalid, illegal or
unenforceable by a court of competent jurisdiction because its scope is
considered excessive, such covenant shall be modified so that the scope of the
covenant is reduced only to the minimum extent necessary to render the modified
covenant valid, legal and enforceable.
(c) Entire
Agreement. This document, together with all restrictive
covenants in any and all agreements between Executive and the Company or to
which Executive is a party (other than any such provisions contained in the
Original Agreement) constitute the final, complete, and exclusive embodiment of
the entire agreement and understanding between the parties related to the
subject matter hereof and except as otherwise explicitly set forth in this
Agreement, supersedes and preempts any prior or contemporaneous understandings,
agreements, or representations by or between the parties, written or oral,
including but not limited to the Original Agreement, which is hereby terminated
and superseded in its entirety.
(d) Counterparts. This
Agreement may be executed on separate counterparts, any one (1) of which need
not contain signatures of more than one (1) party, but all of which taken
together will constitute one and the same agreement.
(e) Amendments. No
amendments or other modifications to this Agreement may be made except by a
writing signed by all parties. No amendment or waiver of this
Agreement requires the consent of any individual, partnership, corporation or
other entity not a party to this Agreement. Nothing in this
Agreement, express or implied, is intended to confer upon any third person any
rights or remedies under or by reason of this Agreement.
(f) Choice of
Law. All questions concerning the construction, validity and
interpretation of this Agreement shall be governed by the laws of the State of
Tennessee without giving effect to principles of conflicts of law of such
state.
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-
(g) Survivorship. The
provisions of this Agreement necessary to carry out the intention of the parties
as expressed herein shall survive the termination or expiration of this
Agreement.
(h) Waiver. The
waiver by either party of the other party’s prompt and complete performance, or
breach or violation, of any provision of this Agreement shall not operate nor be
construed as a waiver of any subsequent breach or violation, and the failure by
any party hereto to exercise any right or remedy which it may possess hereunder
shall not operate nor be construed as a bar to the exercise of such right or
remedy by such party upon the occurrence of any subsequent breach or
violation. No waiver shall be deemed to have occurred unless set
forth in a writing executed by or on behalf of the waiving party. No
such written waiver shall be deemed a continuing waiver unless specifically
stated therein, and each such waiver shall operate only as to the specific term
or condition waived and shall not constitute a waiver of such term or condition
for the future or as to any act other than that specifically
waived.
(i) Captions. The
captions of this Agreement are for convenience and reference only and in no way
define, describe, extend or limit the scope or intent of this Agreement or the
intent of any provision hereof.
(j) Construction. The
parties acknowledge that this Agreement is the result of arm’s-length
negotiations between sophisticated parties, each afforded representation by
legal counsel. Each and every provision of this Agreement shall be
construed as though both parties participated equally in the drafting of the
same, and any rule of construction that a document shall be construed against
the drafting party shall not be applicable to this Agreement.
(k) Arbitration. Except
as necessary for the Company and its subsidiaries, Affiliates, successors or
assigns or Executive to specifically enforce or enjoin a breach of this
Agreement, the parties agree that any and all disputes that may arise in
connection with, arising out of or relating to this Agreement, or any dispute
that relates in any way, in whole or in part, to Executive’s services on behalf
of the Company or any subsidiary, the termination of such services or any other
dispute by and between the parties or their subsidiaries, Affiliates, successors
or assigns, shall be submitted to binding arbitration in Nashville, Tennessee
according to the National Employment Dispute Resolution Rules and procedures of
the American Arbitration Association. The parties agree that each
party shall bear its or his own expenses incurred in connection with any such
dispute. This arbitration obligation extends to any and all claims
that may arise by and between the parties or their subsidiaries, Affiliates,
successors or assigns, and expressly extends to, without limitation, claims or
causes of action for wrongful termination, impairment of ability to compete in
the open labor market, breach of an express or implied contract, breach of the
covenant of good faith and fair dealing, breach of fiduciary duty, fraud,
misrepresentation, defamation, slander, infliction of emotional distress,
disability, loss of future earnings, and claims under the United States
Constitution, and applicable state and federal fair employment laws, federal and
state equal employment opportunity laws, and federal and state labor statutes
and regulations, including, but not limited to, the Civil Rights Act of 1964, as
amended, the Fair Labor Standards Act, as amended, the Americans With
Disabilities Act of 1990, as amended, the Rehabilitation Act of 1973, as
amended, the Employee Retirement
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-
Income
Security Act of 1974, as amended, the Age Discrimination in Employment Act of
1967, as amended, and any other state or federal law.
10. EXECUTIVE REPRESENTATION AND
ACCEPTANCE. By signing this Agreement, Executive hereby
represents that Executive is not currently under any contractual obligation to
work for another employer and that Executive is not restricted by any agreement
or arrangement from entering into this Agreement and performing Executive’s
duties hereunder.
[Remainder
of page is left blank intentionally]
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IN
WITNESS WHEREOF AND INTENDING TO BE LEGALLY BOUND THEREBY, the parties hereto
have executed and delivered this Agreement as of the year and date first above
written.
|
By:
|
/s/
T. Xxxxxx Xxxxx
|
|||
|
Name:
|
T.
Xxxxxx Xxxxx
|
|||
|
Title:
|
Executive
Vice President
|
|||
|
EXECUTIVE
|
||
|
/s/
W. E. Sheriff
|
||
|
W.
E. Sheriff
|
||
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