Exhibit 10.3
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BROOKDALE SENIOR LIVING INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
the 12th day of May, 2006, 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, concurrently with the execution of this Agreement, the
Company, Beta Merger Sub Corporation and American Retirement Corporation ("ARC")
are entering into an Agreement and Plan of Merger dated as of May 12, 2006 (the
"Merger Agreement"); and
WHEREAS, the Executive is currently employed by ARC;
WHEREAS, the Company desires to secure the services of the Executive
from and after the "Closing Date" of the "Merger" (as such terms are defined in
the Merger Agreement); and
WHEREAS, Executive desires to provide such services.
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 6 hereof, from and after the
Closing Date of the Merger (which shall be the "Effective Date" of this
Agreement), Executive shall be employed by the Company in the capacity of its
Co-Chief Executive Officer; in such capacity Executive 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 the Executive's
current principal location of employment with ARC, although Executive
understands and agrees that Executive may be required to travel from time to
time for business reasons. 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. Executive will 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) engaging in personal
investment activities for the Executive and the Executive's family that do not
give rise to any conflict of interests with the Company or its affiliates, (ii)
subject to prior approval of the Board, accepting directorships unrelated to the
Company that do not give rise to any conflict of interests with the Company or
its affiliates and (iii) engaging in charitable and civic activities, so long as
such outside interests do not interfere with the performance of the Executive's
duties hereunder. The Company acknowledges and approves the current activities
of the Executive as set forth on Schedule 1 hereto.
2. TERM AND WAIVER.
(a) Term. Subject to Section 6 hereof, Executive's employment
under the terms and conditions of this Agreement will commence on the Effective
Date. The term of this Agreement (the "Term") shall consist of the Initial Term
and a maximum of two (2) Renewal Terms which, in any case, may be earlier
terminated pursuant to Section 5; provided, that in no event shall the Term
extend beyond December 31, 2011. The initial term of this Agreement (the
"Initial Term") shall commence on the Effective Date and end on December 31,
2009. The Initial Term shall automatically renew for up to two (2) additional
one (1)-year periods (each such one-year period, a "Renewal Term") unless either
party delivers to the other party at least ninety (90) days prior to the end of
the Initial Term or the first Renewal Term a written notice indicating that it
intends not to extend the Term hereof. The delivery by the Company to Executive
of written notice indicating that it intends not to extend the Term as provided
in this Section 2 prior to the expiration of the Initial Term or the expiration
of the first Renewal Term (i.e., so that the Term would end before December 31,
2011) shall constitute "Good Reason" (as defined below) for purposes of this
Agreement. However, the delivery by the Company pursuant to this Section 2 of a
notice not to extend the Term shall not be deemed a termination of Executive's
employment by the Company without Cause for purposes of this Agreement. If the
Term expires on December 31, 2011, and Executive is employed by the Company
thereafter, such employment shall be "at-will" and this Agreement will be of no
further force and effect. Expiration of the Term upon December 31, 2011, shall
not be considered a termination of employment entitling Executive to severance
pay or benefits under Section 5(b) or 5(c) hereof.
(b) Waiver. The Executive hereby waives any right which he might
otherwise have, now or in the future, to have the transactions contemplated in
the Merger Agreement treated as a Change in Control, Potential Change in
Control, or any similar term with respect to him under any ARC compensation or
benefit plan, program, agreement or arrangement, other than ARC's Supplemental
Executive Retirement Plan and the ARC 1997 Stock Incentive Plan and award
agreements entered into thereunder. Without intending to limit the application
of such waiver in any way, the parties hereto agree and acknowledge that the
waiver applies to the Amended and Restated Executive Change in Control Severance
Benefits Plan and the Executive waives the right to benefit from any provision
thereof, including, without limitation, any right to reimbursement for any
excise tax incurred under Section 4999 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code").
3. COMPENSATION.
(a) Base Salary. In consideration of Executive's full and faithful
satisfaction of Executive's duties under this Agreement, the Company agrees to
pay to Executive a salary in the amount of two hundred thousand dollars
($200,000) per annum (the "Base Salary"), payable in such installments as the
Company pays its similarly placed employees (but not less frequently than each
calendar month), subject to usual and customary deductions for withholding taxes
and similar charges, and customary employee contributions to health, welfare and
retirement programs in which Executive is enrolled. The Base Salary shall be
reviewed on an annual basis in accordance with Executive's annual performance
evaluation and adjusted at the Company's sole discretion; provided, however, in
no event shall the Base Salary be reduced without Executive's approval.
(b) Bonus Compensation. In addition to any salary payable pursuant
to Section 3(a) above, for the first fiscal year of the Company commencing after
the Effective Date, Executive shall be eligible to receive in respect of such
fiscal year a bonus (the "Bonus"), based on the achievement, as determined by
the Board in its sole discretion, of certain performance standards as agreed to
by Executive and the Board, with a target Bonus of two hundred thousand dollars
($200,000) (the "Target Bonus"), payable in a combination of 50% cash and 50%
vested shares of common stock of the Company ("Common Stock") (the stock portion
of any such Bonus, the "Bonus Stock Grant"). The number of shares comprising any
Bonus Stock Grant shall be determined by dividing the applicable portion of the
Bonus being awarded in Common Stock by the fair market value (as determined by
the Board in good faith) of the Common Stock on the date of grant. Any Bonus
Stock Grant described in this Section may be separately granted pursuant to the
terms of a stock agreement, and this Section is not intended to duplicate such
grant.
In addition to any salary payable pursuant to Section 3(a) above, for each
succeeding fiscal year of the Company Executive shall also be eligible to
receive an annual bonus, based on achievement of certain performance standards,
as determined by the Board in its sole discretion, payable in a combination of
cash and vested shares of Common Stock, as determined by the Board in its sole
discretion, and to the extent permitted by law and applicable stock exchange
listing requirements; provided, however, that to the extent that any amount of
such annual bonus exceeds the Target Bonus, such excess amount may be paid in
the form of unvested Common Stock, as determined by the Board in its sole
discretion.
For calendar year 2006, Executive's bonus will be calculated according to the
2006 bonus formula of ARC in effect prior to the consummation of the Merger, as
adjusted as mutually agreed-upon by the Company and the Executive to give effect
to the impact of the Merger (the "2006 Bonus").]
The cash portion of each Bonus, the 2006 Bonus and any other annual
bonus shall be paid to Executive within a reasonable time after the end of the
fiscal year, but in no event later than thirty (30) days (the "Outside Payment
Date") following completion of the Company's audit for the applicable fiscal
year, which the Company shall endeavor in good faith to complete within three
months of the last day of the applicable fiscal year; provided, however, that
the Outside Payment Date may not be later than the later of (i) two and one-
half (2-1/2) months after the end of the applicable fiscal year; and (ii) two
and one- half (2-1/2) months after the end of the calendar year; and the stock
grant portion, if any, of each Bonus shall be made on such date as the Board
determines in its discretion, though no later than the applicable Outside
Payment Date. Notwithstanding anything to the contrary contained herein, no
Bonus in respect of any fiscal year of the Company will be due to Executive
unless Executive is employed by the Company on the last day of the fiscal year
in respect of which the Bonus is awarded.
(c) Initial Restricted Stock Grant. As soon as practicable after
the Executive's purchase of shares of common Stock pursuant to Section 6 hereof,
the Company shall cause the Executive to be granted a number of shares of Common
Stock equal to the number of such shares the Executive has acquired pursuant to
Section 6 hereof. The grant shall be pursuant to the terms of, and subject to
the restrictions set forth in, a separate stock agreement (the "Initial
Restricted Stock Grant") under the Company's Omnibus Stock Incentive Plan.
Eighty percent (80%) of the restricted shares subject to the Initial Restricted
Stock Grant shall vest upon the attainment of performance goals (the
"Performance-Vesting Shares"). Twenty percent (20%) of the restricted shares
subject to the Initial Restricted Stock Grant shall vest based upon continued
employment (the "Time-Vesting Shares"). This Section 3(c) is not intended to
duplicate the Initial Restricted Stock Grant, which shall substantially
incorporate the following terms and conditions and the terms and conditions set
forth on Exhibit A hereto (Exhibit A's terms and conditions also being
incorporated in this Employment Agreement):
As to Performance-Vesting Shares:
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o The first vesting date for the Performance-Vesting Shares shall be
December 31, 2008. Up to fifty percent (50%) of the
Performance-Vesting Shares may vest on that date, depending on the
degree to which a performance goal based on the cash earnings of
the Company during the fourth quarter of the preceding fiscal
year, 2007, has been met, in accordance with the schedule set
forth on Exhibit B hereto. Any of such shares which do not vest on
the first vesting date shall not be forfeited, but shall remain
subject to the terms and conditions of the Initial Restricted
Stock Grant.
o The second vesting date for the Performance-Vesting Shares shall
be December 31, 2009. Up to hundred percent (100%) of the
Performance-Vesting Shares still subject to the Initial Restricted
Stock Grant (including shares which failed to vest at the first
vesting date) may vest on the second vesting date, depending on
the degree to which a performance goal based on the cash earnings
of the Company during the fourth quarter of the preceding fiscal
year, 2008, has been met, in accordance with the schedule set
forth on Exhibit B hereto. Any of such shares which do not vest on
the second vesting date shall be forfeited.
o If the Executive's employment shall be terminated by the Company
without Cause or by the Executive for Good Reason at any time
prior to the second vesting date, the shares of Common Stock
subject to the Initial Restricted Stock Grant at the time of such
termination shall remain subject to the Initial Restricted Stock
Grant until the vesting date which immediately follows such
termination. Upon such vesting date the same number of shares
shall vest as would have vested if the Executive had remained
employed by the Company on such vesting date. If the Executive's
employment terminates for any other reason while shares of Common
Stock remain subject to the terms and conditions of the Initial
Restricted Stock Grant, all such shares shall be forfeited at such
termination.
As to Time-Vesting Shares:
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o Subject to the Executive's continuing to be employed by the
Company on the relevant vesting date, one-third (1/3) of the
Time-Vesting Shares shall vest on each of the following three
vesting dates: December 31, 2007, December 31, 2008, and December
31, 2009; provided that, upon the occurrence of a Change of
Control, 100% of the Time-Vesting Shares that are not vested at
that time shall immediately vest.
o If the Executive's employment shall be terminated by the Company
without Cause or by the Executive with Good Reason at any time
prior to December 31, 2007, one-third of the Time-Vesting Shares
remaining subject to the Initial Restricted Stock Grant shall vest
and any remaining Time-Vesting Shares shall be immediately
forfeited. If the Executive's employment is so terminated after
December 31, 2007, and prior to December 31, 2008, one-half of the
Time-Vesting Shares remaining subject to the Initial Restricted
Stock Grant shall vest and any remaining Time-Vesting Shares shall
be immediately forfeited. If the Executive's employment is so
terminated after December 31, 2008, and prior to December 31,
2009, all of the Time-Vesting Shares remaining subject to the
Initial Restricted Stock Grant shall vest. If the Executive's
employment terminates for any other reason while Time-Vesting
Shares remain subject to the terms and conditions of the Initial
Restricted Stock Grant, all such shares shall be forfeited at such
termination.
As to all Shares subject to the Initial Restricted Stock Grant:
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o With respect to all shares of Common Stock subject to the Initial
Restricted Stock Grant, the Executive shall be entitled to
receive, and retain, all ordinary and extraordinary cash and stock
dividends which may be declared on the Company's Common Stock
after the date of grant and before any forfeiture thereof
(regardless of whether a share later vests or is forfeited).
o All shares of Common Stock which vest under the Initial Restricted
Stock Grant shall be subject to the Company's general policies
regarding the sale of Common Stock by executives in effect from
time to time.
During his employment with the Company, the Executive shall be eligible to
receive grants under the Company's Omnibus Stock Incentive Plan.
(d) Withholding. All taxable compensation payable to Executive
pursuant to this Section 3 or otherwise pursuant to this Agreement shall be
subject to customary withholding taxes and such other excise or employment 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 an employee.
4. BENEFITS AND PERQUISITES.
(a) Retirement and Welfare Benefits. During the Term, Executive
will be entitled to all the usual benefits offered to employees at Executive's
level, including sick time, participation in the Company's medical, dental and
insurance programs, as well as the ability to participate in the Company's
401(k) retirement savings plan, subject to the applicable limitations and
requirements imposed by the terms of such benefit plans, in each case in
accordance with the terms of such plans as from time to time in effect. Nothing
in this Section 4, however, shall require the Company to maintain any benefit
plan or provide any type or level of benefits to its employees, including
Executive.
(b) Life Insurance. During the Term, the Company will provide
Executive with basic life insurance benefits, calculated based on
one-and-one-half (1 1/2) times Executive's annual base salary being paid to the
Executive by ARC immediately prior to the Executive's entering into this
Agreement, up to a maximum of $550,000, at no cost to Executive.
(c) Vacation/Paid Time Off. Notwithstanding anything to the
contrary in the Company's vacation or paid time off ("PTO") policies, for each
calendar year starting with 2007, Executive shall be entitled to four (4) weeks
(20 business days) vacation and paid time off under the Company's "PTO" plan for
each calendar year, and in the event Executive does not utilize all such four
(4) weeks during any calendar year, (a) Executive shall be paid for up to two
(2) weeks (10 business days) of such unused vacation/PTO at a weekly rate equal
to the then applicable Base Salary divided by 52, and (b) the remaining unused
days of vacation/PTO shall be deemed forfeited at the end of such calendar year.
(d) Reimbursement of Expenses. The Company shall reimburse
Executive for any expenses reasonably and necessarily incurred by Executive 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 shall be terminated at the
earliest to occur of the following: (i) at the end of the Term unless Executive
agrees to continue working for the Company, (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 with the Company (or its successors) may be terminated (i) by the
Company for "Cause" (as defined below), effective on the date on which a written
notice to such effect is delivered to Executive; (ii) 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; (iii) 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 (iv) 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 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 accrued
but unpaid Base Salary (payable as provided in Section 3(a)) and accrued and
unused vacation pay through the date of such termination (collectively, the
"Accrued Benefits"). If the definition of "Cause" set forth below conflicts with
such definition in any stock incentive plan or agreement of the Company or any
of its affiliates, the definition set forth herein shall control.
(b) Termination by Company without Cause or by Executive for Good
Reason. (i) If Executive's employment 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 hereof and not within twelve (12) months following a "Change of
Control" (as defined below), then Executive shall be entitled to, upon
Executive's providing the Company with a signed release of claims in a form
adopted by the Company's Board of Directors from time to time and subject to
Executive's continued compliance with the provisions of any restrictive
covenants 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: (A) the Accrued Benefits, (B)
an amount equal to six (6) months Base Salary payable in the same manner as
provided under Section 3(a), and (C) continuation of Executive's coverage under
the Company's medical plan until the earlier of (x) the date the Executive
becomes eligible for the medical benefits program of a new employer or (y) the
six-(6)-month anniversary of the date of such termination.
(ii) In the event of a Change of Control and termination of
the Executive's employment by the Company (or its successor) without Cause or by
Executive for Good Reason within twelve (12) months following such Change of
Control, then Executive shall be entitled to, upon Executive's providing the
Company with a signed release of claims in a form adopted by the Company's Board
of Directors from time to time and subject to Executive's continued compliance
with the provisions of any restrictive covenants in any other agreement or
agreements between Executive and the Company or to which Executive is a party:
(A) the Accrued Benefits, (B) an amount equal to twelve (12) months Base Salary
(at the rate in effect at the date of such termination, or if higher,
immediately prior to the Change of Control) payable in the same manner as
provided under Section 3(a), and (C) continuation of Executive's coverage under
the Company's medical plan or comparable medical plans to be paid by the Company
until the earlier of (x) the date Executive becomes eligible for the medical
benefits program of a new employer or (y) the twelve-(12)-month anniversary of
the date of such termination.
(c) Death, Disability or Termination for other than Good Reason.
If Executive's employment is terminated by Executive for other than Good Reason
prior to the end of the Term, Executive shall not be entitled to receive any
further compensation or benefits under this Agreement or otherwise other than
the Accrued Benefits. If Executive's employment 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, upon Executive's (or Executive's estate, as
applicable) providing the Company with a signed release of claims in a form
adopted by the Company's Board of Directors from time to time, Executive (or
Executive's beneficiary or estate, as applicable) shall be entitled to (i) the
Accrued Benefits, (ii) receipt of a monthly payment equal to the Executive's
then applicable annual Base Salary on the date of death or on the date of
termination for Disability divided by twelve (such monthly payment, the "Monthly
Severance Payment") payable for twelve (12) months following such date (the
"Benefits Period"), which Monthly Severance Payment shall be paid to the
Executive, or the Executive's beneficiary or estate, as applicable, and (iii) in
the case of termination due to Disability, continuation, at the Company's
expense, of the Executive's coverage in any group health plan (which may be
provided by payment of COBRA continuation coverage premiums), life insurance,
long term disability and other employee benefit plans or programs, to the extent
permissible under the terms of such plans or law until the end of the Benefits
Period.
(d) 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 Exchange Act.
"Beneficial Owner" (or any variant thereof) has the meaning
defined in Rule 13d-3 under the Exchange Act.
"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 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; and (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.
"Change of Control" shall be deemed to have occurred if an
event set forth in any one of the following paragraphs shall have
occurred:
(i) any Person other than any Permitted Transferee is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
(not including in the securities beneficially owned by such Person any
securities acquired directly from the Company or any of its affiliates
as defined in Rule 12b-2 promulgated under Section 12 of the Securities
Exchange Act of 1934, as amended, the "Exchange Act" ) representing 50%
or more of the combined voting power of the Company's then outstanding
securities; or
(ii) there is consummated a merger or consolidation of the Company or
any direct or indirect subsidiary of the Company with any other
corporation, other than a merger or consolidation immediately following
which the individuals who comprise the Board immediately prior thereto
constitute at least a majority of the Board of the entity surviving
such merger or consolidation or, if the Company or the entity surviving
such merger is then a subsidiary, the ultimate parent thereof; or
(iii) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than (a) a sale or
disposition by the Company of all or substantially all of the Company's
assets to an entity, at least 50% of the combined voting power of the
voting securities of which are owned by stockholders of the Company
following the completion of such transaction in substantially the same
proportions as their ownership of the Company immediately prior to such
sale or (b) a sale or disposition of all or substantially all of the
Company's assets immediately following which the individuals who
comprise the Board immediately prior thereto constitute at least a
majority of the board of directors of the entity to which such assets
are sold or disposed or, if such entity is a subsidiary, the ultimate
parent thereof.
Notwithstanding the foregoing, a "Change of Control" shall not be deemed to have
occurred by virtue of 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. As used in the
foregoing definition of "Change of Control", the term "Company" shall not
include any successor of the Company.
"Disability" means, as determined by the Board of Directors in
good faith, Executive's inability, due to disability or incapacity, to
perform all of the 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 either (i) 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 the Executive intends to terminate the Executive's
employment for one of the reasons set forth below: (A) the failure by
the Company to pay to Executive any portion of Executive's Base Salary
or Bonus within thirty (30) days of the date such compensation is due,
or (B) the relocation of Executive's principal office at the Company to
a location outside a fifty (50) mile radius from the Executive's
present principal office location with ARC; or (C) 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 the
Executive's position as of immediately after the Effective Date and,
within ten (10) days following written notice by Executive to the
Company of Executive's objection to such reduction, the Company fails
to reinstate the Executive's duties, compensation and/or
responsibilities so reduced; or (ii) the delivery by the Company to
Executive of written notice indicating that it intends not to extend
the Term hereof pursuant to Section 2 hereof. 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 and responsibilities resulting upon (or shortly thereafter)
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.
"Permitted Transferee" shall mean, (i) any Affiliate ( a "FIG
Affiliate") of Fortress Investment Group LLC, a Delaware limited
liability company ("FIG"), (ii) any managing director, general partner,
director, limited partner, officer or employee of any FIG Affiliate,
(iii) any investment fund managed directly or indirectly by FIG or any
of its Affiliates (a "FIG Fund"), or (iv) any general partner, limited
partner, managing member or person occupying a similar role of or with
respect to any FIG Fund.
"Person" shall have the meaning given in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (i) the Company, its
Affiliates or any of their respective subsidiaries, (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or any of its Subsidiaries, (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company.
(e) Resignation as Officer or Director. Upon the termination of
employment for any reason, Executive shall resign each position (if any) that
Executive then holds as an officer or director of the Company or any of its
subsidiaries.
(f) Section 409A. To the extent required to comply with Section
409A of the Code, as determined by Executive's counsel, if requested by the
Executive, one or more payments under this Section 5 of this Agreement shall be
delayed to the six-month anniversary of the date of Executive's separation from
service, within the meaning of Section 409A of the Code. In addition, if and to
the extent required to prevent a violation of Section 409A of the Code as
determined by the Executive's counsel, if requested by the Executive, the
Executive will pay the entire cost of any health insurance benefits provided
under Section 5 of this Agreement for the first six (6) months after the
effective date of the termination, and the Company will reimburse the Executive
for the Company's share of such costs as provided in this Agreement on the
six-month anniversary of the Executive's "separation from service" as defined in
Section 409A of the Code.
6. EXECUTIVE'S INVESTMENT OBLIGATION. Notwithstanding any other
provision of this Agreement, this Agreement shall not become effective and shall
be null and void ab initio, unless, as of the Effective Date, the Executive
invests the sum of $9,508,073 in shares of Common Stock, at a price of $38.07
per share. The number of shares of Common Stock to be so acquired shall be
determined by dividing the investment amount by the above-stated price per share
of Common Stock, and rounding down to the nearest whole number. The shares so
purchased (the "Purchased Shares") shall be subject to an eighteen-(18)-month
"Holding Period" described on Exhibit C hereto and shall at all times be subject
to the Company's general policies regarding sale of Common Stock by executives
then in effect.
7. 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. 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.
8. GENERAL.
(a) Notices. Any notices provided hereunder must be in writing and
shall be deemed effective upon the earlier of one business day following
personal delivery (including personal delivery by telecopy or telex), or the
third business day after mailing by first class mail to the recipient at the
address indicated below:
To the Company:
General Counsel
Brookdale Senior Living Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
To Executive:
W. E. Sheriff
American Retirement Corporation
000 Xxxxxxxx Xxxxx
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
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
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, constitute the final, complete, and exclusive
embodiment of the entire agreement and understanding between the parties related
to the subject matter hereof and supersedes and preempts any prior or
contemporaneous understandings, agreements, or representations by or between the
parties, written or oral.
(d) Counterparts. This Agreement may be executed on separate
counterparts, any one of which need not contain signatures of more than one
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 will be governed by the laws of
the State of Illinois without giving effect to principles of conflicts of law of
such state.
(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 (to the extent such remedies are
otherwise available), 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 Chicago, Illinois
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 Income Security Act of 1974, as amended, the Age Discrimination in
Employment Act of 1967, as amended, and any other state or federal law.
9. 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.
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.
BROOKDALE SENIOR LIVING INC.
By: /s/ Xxxx X. Xxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer
EXECUTIVE
/s/ W. E. Sheriff
---------------------------------
W. E. Sheriff
