Document:

EXHIBIT 10.4

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of June 3, 2014 is entered into between Washington Prime Group Inc., an Indiana corporation (the “Company”), and C. Marc Richards (“Executive”).

 

WHEREAS, in connection with the employment of the Executive with the Company as of the Effective Date (as defined below), including Executive providing services to the Partnership (as defined below), the Company and Executive wish to enter into an agreement provide for such services and compensation therefor under the terms and subject to the conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual promises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1.                                      Definitions.

 

1.1                               “Cause” means: (a) Executive’s willful failure to perform or substantially perform the Executive’s duties with the Company; (b) illegal conduct or gross misconduct by the Executive that is willful and demonstrably and materially injurious to the Company’s business, financial condition or reputation; (c) the Executive’s indictment for, or entry of a plea of guilty or nolo contendere with respect to, a felony crime or a crime involving moral turpitude, fraud, forgery, embezzlement or similar conduct; or (d) Executive’s willful and material breach of any noncompetition or nonsolicitation restrictive covenants or confidentiality provisions set forth in any written agreement with the Company;  provided, however, that an action in (a) or (d) above will not be considered Cause unless the Executive has failed to cure such action (to the sole satisfaction of the Company) within 30 days after receiving written notice from the Company specifying with particularity the events allegedly giving rise to Cause.

 

1.2                               “Change in Control” means (i) any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act’) (other than any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company or any of its subsidiaries), together with all “affiliates” and “associates” (as such terms are defined in Rule 12b-2 under the Exchange Act) of such person, shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than twenty-five percent (25%) of the Company’s then outstanding voting securities entitled to vote generally in the election of directors (“Outstanding Voting Securities”), (ii) a majority of the directors then comprising the Board of Directors (the “Incumbent Board”) are replaced within a twelve month period; provided, however, that any individual becoming a director whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board of Directors, (iii) consummation of a reorganization, merger, consolidation or similar transaction involving the Company, unless, following any such transaction, (A) the beneficial owners of the Outstanding Voting Securities immediately prior to such transaction beneficially own more than sixty percent (60%) of the outstanding voting securities of the entity resulting from such transaction (including the entity that as a result of such transaction directly or indirectly owns the Company or all or substantially all of the Company’s assets) in substantially the same proportions as their ownership immediately prior to such transaction, (B) no person (excluding the Company, any employee benefit plan or related trust of the Company or such corporation resulting from such transaction and any person beneficially owning immediately prior to such transaction, directly or indirectly, twenty-five percent (25%) or more of the Outstanding Voting Securities) beneficially owns, directly or indirectly, twenty-five percent (25%) or more of the combined voting power of the then-outstanding voting securities of the corporation resulting from such transaction entitled to vote generally in the election of directors, and (C) at least a majority of the members of the board of directors of the corporation resulting from such transaction were members of the Incumbent Board at the time of the execution of the initial agreement providing for such transaction, (iv) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation with respect to which following such sale or other disposition, (x) the beneficial owners of the Outstanding Voting Securities immediately prior to such transaction beneficially own more than sixty percent (60%) of the outstanding voting securities of the entity resulting from such transaction (including the entity

 

 

that as a result of such transaction directly or indirectly owns the Company or all or substantially all of the Company’s assets) in substantially the same proportions as their ownership immediately prior to such transaction, (y) no person (excluding the Company, any employee benefit plan or related trust of the Company or such corporation resulting from such transaction and any person beneficially owning immediately prior to such transaction, directly or indirectly, twenty-five percent (25%) or more of the Outstanding Voting Securities) beneficially owns, directly or indirectly, twenty-five percent (25%) or more of the combined voting power of the then-outstanding voting securities of the corporation resulting from such transaction entitled to vote generally in the election of directors, and (z) at least a majority of the members of the board of directors of the corporation resulting from such transaction were members of the Incumbent Board at the time of the execution of the initial agreement providing for such transaction; or (v) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

 

1.3                               “Effective Date” means June 3, 2014.

 

1.4                               “Good Reason” means the occurrence of any one of the following events without the prior written consent of the Executive: (a) a material diminution of the Executive’s base pay, duties, responsibilities, authorities, powers or functions as of the Effective Date; (b) a relocation that would result in the Executive’s principal location of employment being moved 50 miles or more away from his or her principal location as of the Effective Date and, as a result, the Executive’s commute increasing by 50 miles or more; or (c) the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and perform the obligations of the Company hereunder as contemplated by Section 4.8; provided, however, that an action  described in (a) through (c) above will not be considered Good Reason unless the Executive has given the Company written notice thereof within 60 days after its occurrence, specifying with particularity the action that gives rise to Good Reason, and the Company has failed to remedy such action within 60 days after receiving such notice.

 

2.                                      Terms of Employment.

 

2.1                               The Company hereby agrees to employ the Executive, and the Executive hereby agrees to serve the Company, subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the three-year anniversary thereof (the “Employment Period”);  provided that, on such three-year anniversary of the Effective Date and each annual anniversary of such date thereafter (each such date, a “Renewal Date”), unless previously terminated in accordance with the terms hereof, the Employment Period shall be automatically extended so as to terminate one year from such Renewal Date unless, at least 30 days prior to the Renewal Date, either party gives notice to the other that the Employment Period shall not be so extended.

 

2.2                               During the Employment Period, Executive shall serve the Company as its Chief Financial Officer and shall perform customary and appropriate duties as may be reasonably assigned to the Executive from time to time by the Company and shall provide services to Washington Prime Group. L.P. The Executive shall report to the Chief Executive Officer.

 

2.3                               During the Employment Period, Executive shall receive an annual base salary at the rate of $450,000, subject to increase from time to time, less applicable income tax and other legally required withholding and any deductions that Executive voluntarily authorizes in writing. In addition, Executive will be eligible (a) for an annual bonus under the Company’s annual incentive plan, with a target annual bonus initially established at 100% to 200% of base salary; (b) to participate in long-term cash and equity incentive plans and programs, if available, applicable generally to executives of the Company, and (c) to participate in welfare benefit and fringe benefit plans, practices, policies and programs provided by the Company, if available.

 

3.                                      Separation Pay.

 

3.1                               Not for Cause Separation Pay. If after the Effective Date (a)(i) the Company terminates Executive’s employment other than for Cause or (ii) Executive terminates his or her employment for Good Reason (within six months after such Good Reason event occurs) and (b) a Change in Control has not occurred, the Company shall pay to the Executive a lump sum payment equal to the Executive’s annual base salary in effect immediately prior to the date of termination (the “Not for Cause Separation Payment”), contingent upon the Executive executing and returning to the Company (and not revoking) a general release of claims against the Company in a form reasonably acceptable to the parties hereto (a “Release”), which Release must be delivered to the Company and the period in which it may be revoked must have expired not later than thirty 30 days after the date of termination (the “Release Deadline”). Except as

 

 

provided in Section 3.3, the Not for Cause Separation Payment shall be payable (if the conditions of this Section 3.1 are satisfied) in a lump sum on the fifth business day following the Release Deadline.

 

3.2                               Change in Control Separation Pay.  If (a)(i) the Company terminates Executive’s employment other than for Cause or (ii) Executive terminates his or her employment for Good Reason (within six months after such Good Reason event occurs) and (b) a Change in Control has occurred within the 24-month period preceding the effective date of termination, the Company shall pay to the Executive, in lieu of the payments and benefits described in Section 3.1, a lump sum payment equal to the sum of (i) the Executive’s annual base salary in effect immediately prior to the date of termination and (ii) the Executive’s target annual bonus for the year in which the date of termination occurs (the “Change in Control Separation Payment”), contingent upon the Executive executing and returning to the Company  (and not revoking) a Release, which Release must be delivered to the Company and the period in which it may be revoked must have expired not later than the Release Deadline. Except as provided in Section 3.3, the Change in Control Separation Payment shall be payable (if the conditions of this Section 3.2 are satisfied) in a lump sum on the fifth business day following the Release Deadline. In addition, if the Change in Control Separation Payment becomes payable as provided herein, and unless otherwise agreed to by the Executive, any service-based vesting conditions on any outstanding long-term incentive awards held by Executive will be waived on the fifth business day following the Release Deadline.

 

3.3                               Section 409A. Notwithstanding the foregoing provisions of this Section 3, if the Executive is a “specified employee” (within the meaning of Section 409A (“409A”) of the Internal Revenue Code of 1986, as amended (the “Code”)) when the termination occurs, amounts and benefits that are deferred compensation (within the meaning of 409A) that would otherwise be payable or provided under Section 3 during the six-month period immediately following the date of termination shall instead be paid, with interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code, on the first business day after the earlier of (a) the date of the Executive’s death and (b) the date that is six months following the date of termination. For the avoidance of doubt, (x) the parties hereto acknowledge that the severance payments and benefits described in this Agreement are intended to be exempt from and/or not considered “deferred compensation” under 409A, (y) with respect to any payments or benefits that are nonqualified deferred compensation within the meaning of 409A, any reference to “termination of employment” within the meaning of this Section 3 means a “separation for service” under 409A and (z) each payment under this Agreement shall be treated as a separate payment for purposes of 409A.

 

3.4                               Withholding Tax. The Company may withhold from any payments to the Executive under this Agreement any required federal, state, city, or other withholding taxes.

 

4.                                      General Provisions.

 

4.1                               Notices. Any notice required or permitted hereunder shall be made in writing, addressed as set forth below, (a) by actual delivery of the notice into the hands of the other party (deemed received on the date of actual receipt), (b) by the mailing of the notice by first class mail, certified or registered mail, return receipt requested, postage prepaid (deemed received on the third business day after the mailing date) or (c) by nationally recognized overnight delivery service (deemed received on the next business day following the date of its delivery by the sender to such service). Any notice to the Company shall be delivered to Washington Prime Group Inc., Bethesda Crossing, 7315 Wisconsin Avenue, Bethesda, Maryland 20814, Attention: Chief Executive Officer. Any notice to the Executive shall be delivered to Executive’s last address on record at the Company.

 

4.2                               Amendment and Waiver; Non-Waiver of Breach. No amendment or modification of this Agreement shall be valid or binding upon (a) the Company unless made in writing and signed by a duly authorized officer of the Company or (b) the Executive unless made in writing and signed by him or her. No failure by either party to declare a default due to any breach of any obligation under this Agreement by the other, nor failure by either party to act quickly with regard thereto, shall be considered to be a waiver of any such obligation, or of any future breach.

 

4.3                               Severability. If any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect.

 

 

4.4                               Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Indiana, without reference to principles of conflict of laws.  Venue for a dispute in respect of this Agreement shall be the federal courts located in Washington, D.C.

 

4.5                               Entire Agreement. This Agreement contains all of the terms agreed upon by the Company and the Executive with respect to the subject matter hereof and supersedes all prior agreements, arrangements and communications between the parties dealing with the subject matter hereof, whether oral or written. To the extent this Agreement conflicts with any terms, conditions or agreements set forth in any Company plan, policy or manual, the terms of this Agreement shall govern.

 

4.6                               Headings; Counterparts. Numbers and titles to paragraphs and sections hereof are for information purposes only and, where inconsistent with the text, are to be disregarded. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which, when taken together, shall be and constitute one and the same instrument.

 

4.7                               Knowing and Voluntary Execution. Each of the parties hereto has carefully read and considered all of the terms of this Agreement. Each of the parties has freely, willing and knowingly entered into this Agreement with the intent to be bound by it.

 

4.8                               Assignment; Successors and Assigns. This Agreement may, and shall be, assigned or transferred to, and shall be binding upon and shall inure to the benefit of, any successor of the Company, and any such successor shall be deemed substituted for all purposes for the “Company” under the terms of this Agreement (other than for the purpose of determining whether a Change in Control has occurred). Notwithstanding such assignment, the Company (if it survives) shall remain, along with such successor, jointly and severally liable for all its obligations hereunder. Except as herein provided, this Agreement may not otherwise be assigned by the Company or Executive.

 

[Signature Page Follows]

 

 

[Signature Page to Employment Agreement]

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of the day and year first above set forth.

 

 

	
 
    	
WASHINGTON   PRIME GROUP INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark S. Ordan
    
	
 
    	
 
    	
Name:   Mark S. Ordan
    
	
 
    	
 
    	
Title:   Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/   C. Marc Richards
    
	
 
    	
C.   Marc RichardsAMENDMENT NO. 1 TO

THIRD AMENDED AND RESTATED ADVISORY
AGEEMENT

 

This AMENDMENT NO.
1 TO THIRD AMENDED AND RESTATED ADVISORY AGREEMENT (this “Amendment”) is entered into as of June 1, 2014, by
and among American Realty Capital Healthcare Trust, Inc., a Maryland corporation (the “Company”), American Realty
Capital Healthcare Trust Operating Partnership, L.P., a Delaware limited partnership (the “OP”) and American
Realty Capital Healthcare Advisors, LLC, a Delaware limited liability company (the “Advisor”).

 

RECITALS

 

A.           WHEREAS,
the parties hereto are party to that certain Third Amended and Restated Advisory Agreement, dated April 7, 2014 (the “Agreement”),
pursuant to which the day-to-day business and affairs of the Company are managed by the Advisor.

 

B.           WHEREAS,
the Company and the OP have entered into that certain Agreement and Plan of Merger, dated as of June 1, 2014, by and among Ventas,
Inc., a Delaware corporation (“Parent”), Stripe Sub, LLC, a Delaware limited liability company and a direct
wholly owned subsidiary of Parent (“Merger Sub”), Stripe OP, LP, a Delaware limited partnership (the “OP
Merger Sub”), the Company and the OP (the “Merger Agreement”), pursuant to which, among other things,
the Company will be merged with and into Merger Sub, with Merger Sub being the surviving entity, and the OP Merger Sub will be
merged with and into the OP, with the OP being the surviving entity (the “Transaction”), upon the terms and
subject to the conditions set forth in the Merger Agreement.

 

C.           WHEREAS,
Section 6.8 of the Merger Agreement requires the Company to terminate certain agreements, including the Agreement and the Advisor
has agreed to terminate these agreements without notice.

 

D.           WHEREAS,
Section 17 of the Agreement provides that Agreement may be terminated upon sixty (60) days’ prior written notice.

 

E.           WHEREAS,
in connection with the Merger Agreement, the Company entered into an agreement terminating the 2014 Multi-Year Outperformance Agreement
(the “OPP”) between the Company, the OP and the Advisor (the “OPP Amendment”).

 

F.           WHEREAS,
pursuant to the OPP Amendment, any Award LTIP Units (as defined in the OPP) granted to the Advisor under the OPP will be automatically
cancelled and forfeited as of the Closing.

 

G.           WHEREAS,
consistent with Section 6.8 of the Merger Agreement, and in consideration of the Advisor’s forfeiture of the Award LTIP Units,
termination of the Property Management and Leasing Agreement at Closing without the requisite 60 day notice, termination of the
Agreement at Closing without the requisite 60 day notice and the contribution of American Realty Capital Healthcare Special Limited
Partnership, LLC’s (the “SLP”) right to distributions from the OP as evidenced by the Listing Note Agreement
between the OP and the SLP dated April 7, 2014 (the “Listing Note”) to the OP, the OP will issue to the SLP
5,613,374 OP Units (as defined in the Listing Note).

 

H.           WHEREAS,
(i) pursuant to Section 24 of the Agreement, the parties hereto desire to amend the Agreement to be effective concurrent with the
Closing.         

 

    	1

    	 

    

  

AGREEMENT

 

In consideration of
the mutual agreements and covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:

 

1.          Amendment
of the Agreement.

 

(a)          Section
1 of the Agreement is hereby amended by adding the following new definition in appropriate alphabetical order:

 

““Closing”
has the meaning set forth in the Agreement and Plan of Merger, dated as of June 1, 2014, by and among Ventas, Inc., a Delaware
corporation (“Parent”), Stripe Sub, LLC, a Delaware limited liability company, Stripe OP, LP, a Delaware limited
partnership, the Company and the OP (the “Merger Agreement”).”

 

(b)          Section
17 of the Agreement is hereby amended and restated as follows:

 

“17.          TERMINATION
BY THE PARTIES. This Agreement may be terminated upon sixty (60) days’ prior written notice (a) by the Independent Directors
of the Company or the Advisor, without Cause and without penalty, (b) by the Advisor for Good Reason, or (c) by the Advisor upon
a Change of Control; provided, that termination of this Agreement with Cause shall be upon forty-five (45) days’
prior written notice. Notwithstanding the foregoing, this Agreement shall terminate automatically and immediately, without notice
and without the need for further action by any party, immediately prior to, and contingent upon, the Closing. From and after the
termination of this Agreement, and contingent upon the Closing, the Advisor hereby automatically, and without the need for further
action by any party, irrevocably and unconditionally releases, waives and relinquishes any rights or claims, whether accrued,
absolute, contingent or otherwise, it may have against the Operating Partnership, the Company, Parent
and any of their successors or Affiliates (other than claims pursuant to Section 21 of this Agreement). The provisions of Sections
15 and 20 through 31 (inclusive) of this Agreement shall survive any expiration or earlier
termination of this Agreement.”

 

2.          Effective
Time. This Amendment is effective as of the date hereof. If the Merger Agreement is terminated in accordance with its terms
without a Closing (as defined in the Merger Agreement), this Amendment shall automatically terminate, with no further action necessary
by any party, and be of no further force or effect.

 

3.          Miscellaneous.

 

(a)          Limited
Effect. Except as otherwise specifically set forth in this Amendment, all other terms and conditions of the Agreement shall
remain in full force and effect.

 

(b)          Entire
Agreement. The Agreement and this Amendment supersede all prior agreements between the parties with respect to the subject
matter thereof and constitute a complete and exclusive statement of the terms of the agreement between the parties with respect
to the subject matter thereof. In the event of any conflict between the terms of the Agreement and this Amendment, this Amendment
shall control.

 

(c)          Governing
Law. This Agreement will be governed by the internal laws of the State of New York.

 

    	2

    	 

    

 

(d)          Construction.
The parties have participated jointly in the drafting of this Amendment, and each party was represented by counsel in the negotiation
of this Amendment. In the event an ambiguity or question of intent or interpretation arises, this Amendment shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue
of the authorship of any of the provisions of this Amendment. The parties agree that if any provision of this Amendment is found
to be invalid or unenforceable, it will not affect the validity or enforceability of any other provision.

 

(e)          Waiver
of Legal Conflicts. Each of the parties hereto acknowledges and agrees that, at their request, Proskauer Rose LLP acted as
counsel to all such parties in connection with this Amendment. Accordingly, each of the parties agrees to, and does, waive any
conflict of interest which may be deemed to arise as the result of such representation and agrees not to seek to disqualify or
otherwise prevent Proskauer Rose LLP from representing the other parties hereto (or any other clients of Proskauer Rose LLP) in
any matters by reason of its work on, or representation of, such party in connection with this Amendment or its possession of confidential
information relating to such party. Proskauer Rose LLP shall be entitled to rely upon this Section 3(e) as a third party
beneficiary hereof.

 

(f)          Counterparts;
Facsimile. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original and all of
which, taken together, shall constitute one and the same instrument. Original signatures hereto may be delivered by facsimile which
shall be deemed originals.

 

(g)          Definitions.
Capitalized terms used but not defined herein have the meanings ascribed to them in the Agreement.

 

(h)          Third
Party Beneficiary; Amendment. Parent is hereby made an express third party beneficiary of this Amendment. The Agreement shall
not be further amended or modified, and this Amendment shall not be rescinded, further amended or otherwise modified, without Parent’s
written consent.

 

*****

 

    	3

    	 

    

 

IN WITNESS WHEREOF,
the parties have executed and delivered this Amendment as of the date first written above.

  

	 	AMERICAN REALTY CAPITAL HEALTHCARE TRUST, INC.
	 	 	 
	 	By:	/s/ Thomas P. D’Arcy	 
	 	 	Name: Thomas P. D’Arcy
	 	 	Title:   Chief Executive Officer
	 	 	 
	 	AMERICAN REALTY CAPITAL HEALTHCARE TRUST OPERATING PARTNERSHIP, L.P.
	 	 	 
	 	By:  AMERICAN REALTY CAPITAL HEALTHCARE TRUST, INC.,
	 	 	Its general partner
	 	 	 
	 	By:	/s/ Thomas P. D’Arcy	 
	 	 	Name: Thomas P. D’Arcy
	 	 	Title:   Chief Executive Officer
	 	 	 
	 	AMERICAN REALTY CAPITAL HEALTHCARE ADVISORS, LLC
	 	 	 
	 	By: AMERICAN REALTY CAPITAL HEALTHCARE SPECIAL LIMITED PARTNERSHIP, LLC,
	 	 	Its Member
	 	 	 
	 	By:	AMERICAN REALTY CAPITAL V, LLC,
	 	 	Its Managing Member
	 	 	 
	 	By:	/s/ Nicholas S. Schorsch	 
	 	 	Name: Nicholas S. Schorsch
	 	 	Title:  Authorized Signatory

 

Signature Page to Amendment No. 1 to

Third Amended and Restated Advisory Agreement

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