Document:

Exhibit 10.3

  

EXECUTION COPY

Brookdale Senior Living Inc.

111 Westwood Place, Suite 400

 Brentwood, Tennessee 37027

May 22, 2014

Granger Cobb

c/o Emeritus Corporation

3131 Elliott Avenue, Suite 500

 Seattle, Washington 98121

Dear Granger:

Reference is hereby made to that certain Agreement and Plan of Merger, dated as of February 20, 2014 (the "Merger Agreement"), by and among Brookdale Senior Living Inc., a Delaware corporation (the "Company"), Broadway Merger Sub Corporation, a Delaware corporation and a direct wholly owned subsidiary of the Company (the "Merger Sub"), and Emeritus Corporation, a Washington corporation (the "Target"), pursuant to which Merger Sub.  will merge with and into the Target (the "Merger" and the date on which the Merger closes, the "Closing Date").

This letter agreement (this "Agreement") amends and restates in its entirety that certain letter agreement dated February 20, 2014 between you and the Company and sets forth the terms and conditions of certain matters relating to you in connection with the Merger, including:

(i)            the termination of your employment with the Target and its affiliates, effective as of the Closing Date;

(ii)            your appointment to, and service as a member of, the Board of Directors of the Company (the "Board") following the Closing Date, subject to you being designated by the Target in accordance with Section 6.14 of the Merger Agreement and the reasonable approval of the Nominating and Corporate Governance Committee of the Board (the "Designation and Approval"); and

(iii)            your service as a consultant to the Company following the Closing Date.

1.            Termination of Employment.

(a)            Date of Termination.  If you are still employed by the Target effective as of immediately prior to the completion of the Merger, your employment with the Target will terminate effective as of the completion of the Merger (the "Employment Termination").

(b)            Severance Payment.  The Employment Termination will be treated for purposes of your Amended and Restated Employment Agreement with the Target, dated January 1, 2012 (the "Employment Agreement"), as a termination of your employment by the Target without Cause for purposes of Section 7(e) of the Employment Agreement.  Accordingly,

	 	 	 

 

if you (i) execute the Form of Release attached as Exhibit A to the Employment Agreement (the "Release") within 45 days following the Closing Date and do not revoke it during any applicable revocation period, and (ii) otherwise comply with all applicable terms and conditions of the Employment Agreement and Section 5 of this Agreement, you will receive a lump sum cash payment, less applicable tax withholdings (including any withholdings for excise taxes imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code")), equal to $4,589,938 (the "Severance Payment").  The Severance Payment, together with any Accrued Obligations (as defined in the Employment Agreement, and explicitly including without limitation the 2013 Annual Bonus if unpaid as of the Closing Date) will be paid to you in full satisfaction of your rights under the Employment Agreement.

(c)            Timing of Severance Payment.  The Severance Payment will be paid to you within ten business days following the date on which the Release becomes irrevocable; provided that in no event will the Severance Payment be made to you after the later of (x) December 31 of the year in which the Employment Termination occurs and (y) the 15th day of the third month following the date on which the Employment Termination occurs.

(d)            Continuing Obligations.  Following the Employment Termination, you will continue to be subject to all applicable ongoing obligations, including without limitation any such obligations under the Employment Agreement.

(e)            Computations under Sections 280G and 4999 of the Code.  The Target has engaged Ernst & Young (the "Firm") to perform all computations and determinations under Sections 280G and 4999 of the Code with respect to the payments to be made to you in connection with this Agreement and the Merger.  The Firm shall provide its determinations and any supporting calculations to Target, the Company and you for review, comment, and approval within five (5) business days after the Employment Termination occurs, or such earlier time as is requested by Target.  The parties agree to work together in good faith with respect to such calculations and determinations and not to take or cause to be taken any position or other action inconsistent with the Firm's determination that is finally approved by the Company in its sole discretion following consultation with the Firm, the Target and you for any tax reporting purpose, upon examination of any tax return, or in any litigation, investigation or otherwise, unless otherwise required by a determination (within the meaning of Section 1313(a) of the Code or any comparable provision of law).

2.            Appointment to the Company's Board of Directors.

(a)            Appointment and Service.  Subject to the Designation and Approval, the Company shall use reasonable best efforts to appoint you to serve as a member of the Board (a "Company Director") in Class I, effective as of the Closing Date and continuing until the earlier of (i) the expiration of your class term and (ii) your termination as a Company Director either voluntarily by you or for cause.

(b)            Compensation for Service.  Except as set forth in Section 2(c), during the Consulting Period (as defined below), you will not be entitled to any compensation (including cash retainers and equity awards) in respect of your service as a Company Director, other than reimbursement for out of pocket and travel expenses incurred in connection with your service as

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a Company Director in a manner consistent with the Company's expense reimbursement policy for other members of the Board.  If you remain as a Company Director following the expiration of the Consulting Period, you will receive the same compensation for your service as a Company Director as is provided by the Company to other non-employee members of the Board in respect of their service on the Board.

(c)            Health Insurance.  At all times during your service as a Company Director, including during the Consulting Period, you will be eligible to participate in a health insurance plan maintained by the Company or one of its affiliates on terms and conditions similar to those provided to former executives of the Company who serve on the Board, to the extent permitted by the terms of such plan.  You will be eligible to elect COBRA continuation coverage following your termination of service as a Company Director.

3.            Service as a Consultant to the Company.

(a)            Consulting Period.  You will be retained by the Company as a consultant (a "Consultant"), serving in the role of Senior Advisor, for the period beginning on the Closing Date and ending on the later of (i) the third anniversary of the Closing Date or (ii) such later date as mutually agreed between you and the Company (as applicable, the "Consulting Period").  Notwithstanding the foregoing, either you or the Company may terminate the Consulting Period at any time by providing at least 90 days of advance written notice to the other.  Upon the termination of the Consulting Period for any reason, you will be entitled only to receive payment of any earned but unpaid portion of the Consulting Fee and any expenses that you incurred in respect of the Consulting Services that are not reimbursed as of the date of such termination.

(b)            Consulting Services.  During the Consulting Period, you will, in each case as requested by the Company's Chief Executive Officer (the "CEO") or his designee, (i) provide services and advice regarding integration and transition planning and implementation matters relating to the Merger, (ii) serve as an advisor to the CEO and the other members of the Company's senior management team, (iii) serve as an advisory member to the Company's Senior Management Executive Committee and (iv) assist with other special projects (collectively, the "Consulting Services").  You will be required to maintain a presence at the Company's headquarters in the Nashville, Tennessee area as needed during the Consulting Period and may otherwise be required to travel as reasonably necessary in respect of your performance of the Consulting Services.

(c)            Time Commitment.  While the Company does not expect that you will be required to provide the Consulting Services on a full-time basis during the Consulting Period, you acknowledge and agree that you will devote such time, effort and attention as you and the Company determine in good faith to be reasonably necessary to perform the Consulting Services in a satisfactory manner.

(d)            Consulting Fee and Other Consideration.

(i)            Consulting Fee.  You will receive a cash consulting fee of $265,000 for each full calendar year during the Consulting Period (pro-rated for any partial calendar year), payable in substantially equal biweekly installments (the "Consulting Fee").

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(ii)            Grant of Restricted Shares.  Subject to the approval of the Compensation Committee of the Board, you will receive a grant of a number of restricted shares of the Company's common stock on the Closing Date equal to (x) $1,000,000, divided by (y) the closing price of a share of the Company's common stock on the grant date (the "Restricted Shares").  The Restricted Shares will vest in equal annual installments on each of the first three anniversaries of the grant date, subject to your continued service as a Consultant through the applicable vesting date.  The Restricted Shares will be subject to all of the terms and conditions of the applicable Company equity incentive plan and a written award agreement which will contain, among other terms, non-competition and non-solicitation provisions substantially similar to the non-competition and non-solicitation provisions provided for in the Company's form of restricted share agreement for executive officers of the Company; provided that any references in such agreement to employment or termination of employment will instead refer to your status as a Consultant and the termination of the Consulting Period.

(iii)            Insurance Premiums.  During the Consulting Period, the Company will reimburse you for up to $35,000 for each full calendar year during the Consulting Period (pro-rated for any partial calendar year) in respect of premiums that you pay for life insurance and disability arrangements that are in effect immediately prior to the Closing Date and that you elect to continue to maintain on an individual basis.  The Company is not required to maintain any such arrangements following the date of the Employment Termination.

(iv)            Expense Reimbursement.  The Company will reimburse you for all  reasonable out of pocket and travel expenses that you incur in connection with the performance of the Consulting Services in accordance with the Company's expense reimbursement policy in effect from time to time.

(v)            Executive Assistant.  During the Consulting Period, the Company  will provide you with an executive assistant.  Unless otherwise determined by you and for so long as she remains employed the Company or one of its affiliates, your current assistant will be made available to fulfill this role and will not be subject to Section 5(b).

(e)            Status as Independent Contractor; Inability to Bind; Taxes.

(i)            Except as provided in Section 2 above, your relationship to the Company during the Consulting Period will only be that of an independent contractor and you will perform the Consulting Services as an independent contractor.  Nothing in this Agreement will be construed to constitute the Company and you as partners or as joint venturers, as agent of the other, or as employer and employee.

(ii)            You will not have any right or authority to assume or create any obligation or responsibility, express or implied, on behalf of or in the name of the Company or any of its subsidiaries, or to bind such entities in any manner in respect of your services as a Consultant, and will not make any contrary representation to any third party.  You will not direct the work of any employee of the Company or make any management decisions on behalf of the Company in respect of your services as a Consultant.

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(iii)            You will be solely responsible for the payment of any federal, state, local or other taxes, including but not limited to, estimated taxes and self-employment taxes, as well as any interest or penalties which may be assessed, imposed or incurred as a result of the compensation paid to you under Section 3(d).

4.            Terms of Merger Agreement.  Except as expressly provided in Section 5(f), nothing in this Agreement is intended to limit or modify your right to receive any payments that you are entitled to receive in accordance with the Merger Agreement as a result of the Merger, including without limitation, (i) payment of the Merger Consideration (as defined in the Merger Agreement) in respect of any shares of Target common stock that you hold immediately prior to the Closing Date in accordance with Section 2.01 of the Merger Agreement, (ii) payment in respect of your outstanding equity awards relating to Target common stock in accordance with Section 2.03 of the Merger Agreement and (iii) payment of your account balance in respect of the termination of the Emeritus Corporation Non-Qualified Deferred Compensation Plan in accordance with Section 6.08(d) of the Merger Agreement.

5.            Restrictive Covenants.  You hereby acknowledge that the following provisions are reasonable in light of the arrangements referenced in this Agreement, represent a material inducement of the Company to enter into this Agreement, and that the Company would not have entered into this Agreement without your agreement to be bound by such provisions.

(a)            Noncompetition.  You hereby agree that during the period commencing on the Closing Date and ending on the thirtieth (30th) month following the later of (i) in the event that you do not become a Company Director or Consultant, the Closing Date or (ii) in the event that you become a Company Director and/or Consultant, the later of the termination of your service as a Company Director or Consultant for any reason or for no reason (the applicable date in (i) or (ii), the "Applicable Date"), you 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 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.  You further covenant and agree 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 you, 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:  "Area" means a 15 mile radius of any senior living facility owned, managed or operated by the Company (or its successor) as of the Applicable Date; 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.  You hereby agree that during the period commencing on the Closing Date and ending on the thirtieth (30th) month following the Applicable Date, you shall not, directly or indirectly, 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

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successors, assigns, subsidiaries or affiliates for the purpose of associating with any competitor of 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.

(c)            Solicitation of Clients, Etc.  You hereby agree that during the period commencing on the Closing Date and ending on the thirtieth (30th) month following the Applicable Date, you 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, for the purpose of associating with any competitor of 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 Section 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 the Consulting Period or your service as a Company Director, as applicable.

(d)            Disparaging Comments.  You agree that commencing on the Closing Date and thereafter, you shall not make any disparaging or defamatory comments regarding the Company or, after the Applicable Date, make any comments concerning any aspect of the termination of your relationship with the Company.  Your obligations under this subsection shall not apply to disclosures required by applicable law, regulation or order of any court or governmental agency.

(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 you to do so.  You agree that you shall not at any time on or after the Closing Date, 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, any financing strategies and practices, pricing information and methods, training and operational procedures, advertising, marketing, and sales information or methodologies or financial information concerning the Company's or any of its affiliated companies' or customers' practices, businesses, procedures, systems, plans or policies (collectively, "Confidential Information"), nor shall you utilize any such Confidential Information in any way or communicate with or contact any such customer other than in connection with your services to the Company as set forth herein.  You hereby confirm that all Confidential Information constitutes the Company's exclusive property, and that all of the restrictions on your activities contained herein 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

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With respect to any Confidential Information that constitutes a "trade secret" pursuant to applicable law, the restrictions described above shall remain in force for so long as the particular information remains a trade secret or for the two year period immediately following the Applicable Date, whichever is longer.  With respect to any Confidential Information that does not constitute a "trade secret" pursuant to applicable law, the restrictions described above shall remain in force for the period commencing on the Closing Date and ending on the second anniversary of the Applicable Date.

Nothing contained in this Section shall limit any common law or statutory obligation that you may have to the Company or any of its affiliates.  For purposes of this Section, the "Company" refers to the Company and any incorporated or unincorporated affiliates of the Company, including any entity which becomes your employer or other service recipient as a result of any reorganization or restructuring of the Company for any reason.

(f)            Recovery of Compensation.  Notwithstanding any other provision of this Agreement to the contrary, if you materially breach any of the restrictive covenants set forth in paragraphs (a), (b), and/or (c) of this Section 5 on or following the Closing Date, then (i) you shall immediately forfeit your right to receive the Severance Payment, to the extent then unpaid, and (ii) the Company shall be entitled to require that (x) you repay to the Company an amount in cash equal to the gross amount of the Severance Payment previously paid to you, if applicable, and (y) you return each share of the common stock of the Company ("Brookdale Stock") that you receive in respect of your Company Restricted Stock (as defined in the Merger Agreement) in connection with the Merger, or to the extent you no longer hold all such shares of Brookdale Stock, that you repay to the Company an amount in cash equal to the fair market value of such shares of Brookdale Stock that you no longer hold, determined based on the greater of the closing market price of such shares of Brookdale Stock as of the Closing Date or on the date on which you sold or otherwise transferred such shares of Brookdale Stock.  The Company will provide you with written notice of the breach and give you ten (10) days to either cure the breach, to the extent curable, or explain why you do not believe there has been a breach.  You shall be required to repay the applicable amount, and return any applicable shares of Brookdale Stock, within fourteen (14) days following the end of the cure period.  This paragraph (f) shall be cumulative and not exclusive, and shall be in addition to any other remedy at law or in equity available to the Company.

6.            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 facsimile), or the third (3rd) business day after mailing by first class mail to the recipient at the address indicated below:

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The Company:

Brookdale Senior Living Inc.

111 Westwood Place, Suite 400

Brentwood, Tennessee 37027

Fax No.:  (615) 564-8204

 Attention:  Chief Executive Officer

Granger Cobb:

At the address contained in the Company's personnel files.

(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 constitutes 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, without limitation, that certain letter agreement dated February 20, 2014 between you and the Company.

(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.  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.

(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

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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)            Operation of Agreement.  This Agreement will be binding immediately upon its execution by the parties, but it will only become effective as of the Closing Date.  In the event that the Merger does not occur, this Agreement will have no force or effect and all of the terms and conditions hereof will be canceled without any obligation of either party hereto.

[Signature Page Follows]

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Please execute this Agreement in the appropriate space below to memorialize your acknowledgement and acceptance of the terms and conditions of this Agreement.  Please do not hesitate to contact me if you have any questions regarding this Agreement.

	 	
Brookdale Senior Living Inc.

	 
	 	 	 
	 	 	 
	 	
/s/ T. Andrew Smith

	 
	 	
Name: T. Andrew Smith

	 
	 	
Title:  Chief Executive Officer

	 

	
Acknowledged and Agreed as of May 22, 2014:

	 	 
	 	 	 
	 	 	 
	
/s/ Granger Cobb

	 	 
	
Granger Cobb

	 	 

[Signature Page to Cobb Letter Agreement]Exhibit 10.4

RESTRICTED SHARE AGREEMENT

UNDER THE BROOKDALE SENIOR LIVING INC.

 2014 OMNIBUS INCENTIVE PLAN

This Award Agreement (this "Restricted Share Agreement"), dated as of July 31, 2014 (the "Date of Grant"), is made by and between Brookdale Senior Living Inc., a Delaware corporation (the "Company"), and Granger Cobb (the "Participant").  Capitalized terms not defined herein shall have the meaning ascribed to them in the Brookdale Senior Living Inc. 2014 Omnibus Incentive Plan (as amended and/or restated from time to time, the "Plan").  Where the context permits, references to the Company shall include any successor to the Company.

 

1.              ­Grant of Restricted Shares.  The Company hereby grants to the Participant 28,860 shares of Common Stock (such shares, the "Restricted Shares"), subject to all of the terms and conditions of this Restricted Share Agreement and the Plan.

 

2.              ­Lapse of Restrictions.

 

(a)            Vesting.

(i)            General.  Subject to the provisions set forth below, the Restricted Shares granted pursuant to Section 1 hereof shall vest (and the restrictions on transfer set forth in Section 2(b) hereof shall lapse) at such times (each, a "vesting date") and in the amounts set forth below, subject to the continued service by the Participant as a consultant to the Company or one of its Subsidiaries or Affiliates as of each such vesting date:

9620 on July 31, 2015

9620 on July 31, 2016

9620 on July 31, 2017

Notwithstanding the foregoing, upon the occurrence of a Change in Control, the restrictions on transfer with respect to the Restricted Shares normally subject to vesting at the next vesting date shall immediately lapse and such Restricted Shares shall be fully vested effective upon the date of the Change in Control.  Notwithstanding anything herein to the contrary, no fractional shares shall be issuable upon any vesting date.  With respect to all Restricted Shares, the Participant shall be entitled to receive, and retain, all ordinary and extraordinary cash and stock dividends which may be declared on the Restricted Shares with a record date on or after the Date of Grant and before any forfeiture thereof (regardless of whether a share later vests or is forfeited).

(ii)            Following Certain Terminations of Service.  Subject to the following paragraph, upon termination of the Participant's service as a consultant to the Company and its Subsidiaries and Affiliates for any reason, any Restricted Shares as to which the restrictions on transferability described in this Section shall not already have lapsed shall be immediately forfeited by the Participant and transferred to, and reacquired by, the Company without consideration of any kind and neither the Participant nor any of the Participant's successors, heirs, assigns, or personal representatives shall thereafter have any further rights or interests in such Restricted Shares.

Notwithstanding the foregoing, in the event that the Participant's service as a consultant is terminated by the Company (or its successor) or a Subsidiary or Affiliate without Cause, or in the event that the Participant's service as a consultant is terminated by death or Disability (either before or after a Change in Control), the restrictions on transfer with respect to the Restricted Shares normally subject to vesting at the next vesting date shall immediately lapse and such Restricted Shares shall be fully vested, with any remaining Restricted Shares being forfeited upon the date of such termination.  Notwithstanding the foregoing or any provision hereof to the contrary, in the event that the Participant's service as a consultant is terminated by the Company (or its successor) or a Subsidiary or Affiliate without Cause on or after the effective date of a Change in Control but prior to twelve (12) months following such Change in Control, then any Restricted Shares that are not vested as of the date of such termination shall immediately vest.

 

(b)            Restrictions.  Until the restrictions on transfer of the Restricted Shares lapse as provided in Section 2(a) hereof, or as otherwise provided in the Plan, no transfer of the Restricted Shares or any of the Participant's rights with respect to the Restricted Shares, whether voluntary or involuntary, by operation of law or otherwise, shall be permitted.  Unless the Administrator determines otherwise, upon any attempt to transfer Restricted Shares or any rights in respect of Restricted Shares before the lapse of such restrictions, such Restricted Shares, and all of the rights related thereto, shall be immediately forfeited by the Participant and transferred to, and reacquired by, the Company without consideration of any kind.

 

3.              ­Adjustments.  Pursuant to Section 5 of the Plan, in the event of a change in capitalization as described therein, the Administrator shall make such equitable changes or adjustments, as it deems neces­sary or appropriate, in its discretion, to the number and kind of securities or other property (including cash) issued or issuable in respect of out­standing Restricted Shares.

 

4.              ­Legend on Certificates.  The Participant agrees that any certificate issued for Restricted Shares (or, if applicable, any book entry statement issued for Restricted Shares) prior to the lapse of any outstanding restrictions relating thereto shall bear the following legend (in addition to any other legend or legends required under applicable federal and state securities laws):

THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE (THE "RESTRICTIONS") AS SET FORTH IN THE BROOKDALE SENIOR LIVING INC. 2014 OMNIBUS INCENTIVE PLAN AND A RESTRICTED SHARE AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND BROOKDALE SENIOR LIVING INC., COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE COMPANY.  ANY ATTEMPT TO DISPOSE OF THESE SHARES IN CONTRAVENTION OF THE RESTRICTIONS, INCLUDING BY WAY OF SALE, ASSIGNMENT, TRANSFER, PLEDGE, HYPOTHECATION OR OTHERWISE, SHALL BE NULL AND VOID AND WITHOUT EFFECT AND SHALL RESULT IN THE FORFEITURE OF SUCH SHARES AS PROVIDED BY SUCH PLAN AND AGREEMENT.

5.              ­Certain Changes.  The Administrator may accelerate the date on which the restrictions on transfer set forth in Section 2(b) hereof shall lapse or otherwise adjust any of the terms of the Restricted Shares; provided that, subject to Section 5 of the Plan, no action under this Section shall adversely affect the Participant's rights hereunder.

 

6.              Notices.  All notices and other communications under this Restricted Share Agreement shall be in writing and shall be given by facsimile or first class mail, certified or registered with return receipt requested, and shall be deemed to have been duly given three days after mailing or 24 hours after transmission by facsimile to the respective parties, as follows:  (i) if to the Company, at Brookdale Senior Living Inc., 111 Westwood Place, Suite 400, Brentwood, TN 37027, Facsimile: (615) 564-8204, Attn:  General Counsel and (ii) if to the Participant, using the contact information on file with the Company.  Either party hereto may change such party's address for notices by notice duly given pursuant hereto.

 

7.              Securities Laws Requirements.  The Company shall not be obligated to transfer any Common Stock to the Participant free of the restrictive legend described in Section 4 hereof or of any other restrictive legend, if such transfer, in the opinion of counsel for the Company, would violate the Securities Act of 1933, as amended (the "Securities Act") (or any other federal or state statutes having similar requirements as may be in effect at that time).

 

8.              ­No Obligation to Register.  The Company shall be under no obligation to register the Restricted Shares pursuant to the Securities Act or any other federal or state securities laws.

 

9.              ­­Protections Against Violations of Agreement.  No purported sale, assignment, mortgage, hypothecation, transfer, pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation of a security interest in or lien on, any of the Restricted Shares by any holder thereof in violation of the provisions of this Restricted Share Agreement will be valid, and the Company will not transfer any of said Restricted Shares on its books nor will any of such Restricted Shares be entitled to vote, nor will any distributions be paid thereon, unless and until there has been full compliance with said provisions to the satisfaction of the Company.  The foregoing restrictions are in addition to and not in lieu of any other remedies, legal or equitable, available to enforce said provisions.

 

10.              ­Taxes.  The Participant shall be solely responsible for the payment of any applicable taxes, including but not limited to, estimated taxes and self-employment taxes, as well as any interest or penalties which may be assessed, imposed or incurred with respect to the Restricted Shares.

The Participant may make an election under Section 83(b) of the Code to recognize taxable income with respect to the Restricted Shares on the Date of Grant.  The Participant shall promptly notify the Company of any such election made pursuant to Section 83(b) of the Code.  A form of such election is attached hereto as Exhibit A.

THE PARTICIPANT ACKNOWLEDGES THAT IT IS THE PARTICI­PANT'S SOLE RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b) OF THE CODE, EVEN IF THE PARTICIPANT

REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON THE PARTICIPANT'S BEHALF.

The Participant acknowledges that the tax laws and regulations applicable to the Restricted Shares and the disposition of the Restricted Shares following vesting are complex and subject to change.

 

11.              ­Failure to Enforce Not a Waiver.  The failure of the Company to enforce at any time any provision of this Restricted Share Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof.

 

12.              Restrictive Covenants.  The Participant acknowledges that during the period of his service as a consultant to the Company or any Subsidiary or Affiliate, he or she shall have access to the Company's Confidential Information (as defined below) and will meet and develop relationships with the Company's employees, clients, customers and suppliers.

(a)          Noncompetition. The Participant agrees that during the period of his service as a consultant and for the one (1) year period immediately following the termination of his service as a consultant for any reason or for no reason, the Participant 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 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. The Participant 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 the Participant, 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: "Area" means a 15 mile radius of any senior living facility owned, managed or operated by the Company (or its successor) at the time the Participant's service as a consultant 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.  The Participant agrees that during the period of his service as a consultant and for the two (2) year period immediately following the termination of his service as a consultant for any reason, the Participant shall not, directly or indirectly, 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 for the purpose of associating with any competitor of 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.

(c)          Solicitation of Clients, Etc.  The Participant agrees that during the

period of his service as a consultant and for the two (2) year period immediately following the termination of his service as a consultant for any reason, the Participant 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, for the purpose of associating with any competitor of 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 Section 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 the period of the Participant's service as a consultant.

(d)          Disparaging Comments.  The Participant agrees that during the period of his service as a consultant and thereafter, the Participant shall not make any disparaging or defamatory comments regarding the Company or, after the termination of his service as a consultant, make any comments concerning any aspect of the termination of their relationship.  The obligations of the Participant under this subsection shall not apply to disclosures required by applicable law, regulation or order of any court or governmental agency.

(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 affiliated companies shall belong to the Company and shall be given up to the Company whenever the Company requires the Participant to do so.  The Participant agrees that the Participant shall not at any time during the period of his service as a consultant 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, (a) any financing strategies and practices, pricing information and methods, training and operational procedures, advertising, marketing, and sales information or methodologies or financial information and (b) 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 the Participant utilize any such Confidential Information in any way or communicate with or contact any such customer other than in connection with the Participant's service as a consultant to the Company or any Subsidiary or Affiliate.  The Participant hereby confirms that all Confidential Information constitutes the Company's exclusive property, and that all of the restrictions on the Participant's activities contained in this Restricted Share 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 Restricted Share Agreement. This confidentiality provision shall survive the termination of this Restricted Share Agreement and shall not be limited by any other confidentiality agreements entered into with the Company or any of its affiliates.

With respect to any Confidential Information that constitutes a "trade secret" pursuant to applicable law, the restrictions described above shall remain in force for so long as the particular

information remains a trade secret or for the two year period immediately following termination of the Participant's service as a consultant for any reason, whichever is longer.  With respect to any Confidential Information that does not constitute a "trade secret" pursuant to applicable law, the restrictions described above shall remain in force during the Participant's service as a consultant and for the two year period immediately following termination of the Participant's service as a consultant for any reason.

The Participant agrees that the Participant shall promptly disclose to the Company in writing all information and inventions generated, conceived or first reduced to practice by him or her alone or in conjunction with others, during or after working hours, while in the service of the Company as a consultant (all of which is collectively referred to in this Restricted Share Agreement as "Proprietary Information"); provided, however, that such Proprietary Information shall not include (a) any information that has otherwise been disclosed to the public not in violation of this Restricted Share Agreement and (b) general business knowledge and work skills of the Participant, even if developed or improved by the Participant while in the service of the Company as a consultant.  All such Proprietary Information shall be the exclusive property of the Company and is hereby assigned by the Participant to the Company.  The Participant's obligation relative to the disclosure to the Company of such Proprietary Information anticipated in this Section shall continue beyond the Participant's termination of service as a consultant and the Participant 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.

Nothing contained in this Section shall limit any common law or statutory obligation that the Participant may have to the Company or any of its affiliates.  For purposes of this Section, the "Company" refers to the Company and any incorporated or unincorporated affiliates of the Company, including any entity to which the Participant provides services as a consultant as a result of any reorganization or restructuring of the Company for any reason.  The Company shall be entitled, in connection with its tax planning or other reasons, to terminate the Participant's service as a consultant (which termination shall not be considered a termination for any purposes of this Restricted Share Agreement, any consulting agreement or otherwise) in connection with an invitation from another affiliate of the Company to accept service as a consultant with such affiliate in which case the terms and conditions hereof shall apply to the Participant's consulting relationship with such entity mutatis mutandis.

 

13.              ­Governing Law.  This Restricted Share Agreement shall be governed by and construed according to the laws of the State of Delaware without regard to its principles of conflict of laws.

 

14.              ­Incorporation of Plan.  The Plan is hereby incorporated by reference and made a part hereof, and the Restricted Shares and this Restricted Share Agreement shall be subject to all terms and conditions of the Plan.

 

15.              ­Amendments; Construction.  The Administrator may amend the terms of this Restricted Share Agreement prospectively or retroactively at any time, but no such amendment shall impair the rights of the Participant hereunder without his or her consent.  To the extent the terms of Section 12 above conflict with any prior agreement between the parties related to such subject matter, the more restrictive provision shall be deemed to apply.  Headings

to Sections of this Restricted Share Agreement are intended for convenience of reference only, are not part of this Restricted Share Agreement and shall have no effect on the interpretation hereof.

 

16.              ­Survival of Terms.  This Restricted Share Agreement shall apply to and bind the Participant and the Company and their respective permitted assignees and transferees, heirs, legatees, executors, administrators and legal successors.  The terms of Section 12 shall expressly survive the forfeiture of the Restricted Shares and this Restricted Share Agreement.

 

17.              ­Rights as a Stockholder.  The Participant shall have no right with respect to Restricted Shares to vote as a stockholder of the Company during the period in which such Restricted Shares remain subject to a substantial risk of forfeiture.

 

18.              Agreement Not a Contract for Services.  Neither the Plan, the granting of the Restricted Shares, this Restricted Share Agreement nor any other action taken pursuant to the Plan shall constitute or be evidence of any agree­ment or understanding, express or implied, that the Participant has a right to continue to provide services as an officer, director, employee, consultant or advisor of the Company or any Subsidiary or Affiliate for any period of time or at any specific rate of compensation.

 

19.              ­Authority of the Administrator.  The Administrator shall have full authority to interpret and construe the terms of the Plan and this Restricted Share Agreement.  The determination of the Administrator as to any such matter of interpretation or construction shall be final, binding and conclusive.

 

20.              ­Representations.  The Participant has reviewed with the Participant's own tax advisors the Federal, state, local and foreign tax consequences of the transactions contemplated by this Restricted Share Agreement.  The Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents.  The Participant understands that he or she (and not the Company) shall be responsible for any tax liability that may arise as a result of the transactions contem­plated by this Restricted Share Agreement.

 

21.              Severability.  Should any provision of this Restricted Share Agreement be held by a court of competent jurisdiction to be unenforceable, or enforceable only if modified, such holding shall not affect the validity of the remainder of this Restricted Share Agreement, the balance of which shall continue to be binding upon the parties hereto with any such modification (if any) to become a part hereof and treated as though contained in this original Restricted Share Agreement.  Moreover, if one or more of the provisions contained in this Restricted Share Agreement shall for any reason be held to be excessively broad as to scope, activity, subject or otherwise so as to be unenforceable, in lieu of severing such unenforceable provision, such provision or provisions shall be construed by the appropriate judicial body by limiting or reducing it or them, so as to be enforceable to the maximum extent compatible with the applicable law as it shall then appear, and such determination by such judicial body shall not affect the enforceability of such provision or provisions in any other jurisdiction.

22.              ­Acceptance.  The Participant hereby acknowledges receipt of a copy of the Plan and this Restricted Share Agreement.  The Participant has read and understands the terms and provisions of the Plan and this Restricted Share Agreement, and accepts the Restricted Shares subject to all the terms and conditions of the Plan and this Restricted Share Agreement.  The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under this Restricted Share Agreement.

[Signature Page to Follow]

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Restricted Share Agreement as of the day and year first above written.

 

 

	 	
BROOKDALE SENIOR LIVING INC.

	 
	 	 	 
	 	 	 
	 	
By:

	
/s/ T. Andrew Smith

	 
	 	
Name:

	
T. Andrew Smith

	 
	 	Title:	 Chief Executive Officer	 
	 			
	 	 	 	 
	 	Granger Cobb	
	 		
	 	
/s/ Granger Cobb

	 
	 	
Participant

	 

 

 

 

NOTE:  Should you wish to make an election under Section 83(b), please contact the

Compensation Department

EXHIBIT A

ELECTION UNDER SECTION 83(b) OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, to include in taxpayer's gross income for the current taxable year the amount of any compensation taxable to taxpayer in connection with taxpayer's receipt of the property described below:

1.            The name, address, taxpayer identification number and taxable year of the undersigned are as follows:

NAME OF TAXPAYER:                                                                                                                                                                          

NAME OF SPOUSE:  

ADDRESS:                                                                                                                                                                          

IDENTIFICATION NO. OF TAXPAYER:  

IDENTIFICATION NUMBER OF SPOUSE:  

TAXABLE YEAR:                                                                                                                                                                          

2.            The property with respect to which the election is made is described as follows:

_______ shares of Common Stock, par value $.01 per share, of Brookdale Senior Living Inc. ("Company").

3.            The date on which the property was transferred is: ________________, 20__.

4.            The property is subject to the following restrictions:

The property may not be transferred and is subject to forfeiture under the terms of an agreement between the taxpayer and the Company.  These restrictions lapse upon the satisfaction of certain conditions in such agreement.

5.            The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is:  $ ______________.

6.            The amount (if any) paid for such property is:  $ ______________.

The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned's receipt of the above-described property.  The transferee of such property is the person performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.

Dated: _________________, 20__                                                                                                                                                                                      

Taxpayer

The undersigned spouse of taxpayer joins in this election.

Dated: _________________, 20__                                                                                                                                                                                      

Spouse of Taxpayer

854094-NYCSR05A - MSW

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