Document:

Exhibit 10.3

 

FORM OF
 EMPLOYEE MATTERS AGREEMENT
 BY AND BETWEEN 
 VENTAS, INC.
 AND
 CARE CAPITAL PROPERTIES, INC.

 

DATED AS OF           , 2015

 

EMPLOYEE MATTERS AGREEMENT

 

This EMPLOYEE MATTERS AGREEMENT (the “Agreement”), dated as of            , 2015, is by and among VENTAS, INC., a Delaware corporation (“Ventas”), and CARE CAPITAL PROPERTIES, INC., a Delaware corporation (“SpinCo” and together with Ventas, each a “Party” and collectively, the “Parties”).

 

WHEREAS, the board of directors of Ventas has determined that it is in the best interests of Ventas and its shareholders to create a new publicly traded company which shall operate the SpinCo Business;

 

WHEREAS, in furtherance of the foregoing, the board of directors of Ventas has determined that it is appropriate and desirable to separate the SpinCo Business from the Ventas Business (the “Separation”);

 

WHEREAS, in furtherance of the foregoing, the Parties have entered into a Separation and Distribution Agreement, dated as of            , 2015 (the “Separation Agreement”) (any capitalized terms used but not defined herein shall have the meanings given to them in the Separation Agreement), and have entered or will enter into other Ancillary Agreements that will govern certain matters relating to the Distribution and the relationship of Ventas, SpinCo and their respective Affiliates prior to and following the Distribution Date; and

 

WHEREAS, pursuant to the Separation Agreement, the Parties have agreed to enter into this Agreement for the purpose of allocating assets, liabilities and responsibilities with respect to certain human resources, employee compensation and benefits matters between them to the extent not provided in, or varying from, the Separation Agreement.

 

NOW, THEREFORE, in consideration of the premises and of the respective agreements and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound hereby, agree as follows:

 

ARTICLE I
 DEFINITIONS

 

1.1                               Definitions.  The following terms shall have the following meanings:

 

“Additional Contribution” has the meaning ascribed thereto in Section 3.1.2 of this Agreement.

 

 

“Affiliate” has the meaning ascribed thereto in the Separation Agreement.

 

“Agreement” has the meaning ascribed thereto in the preamble to this Agreement.

 

“Ancillary Agreements” has the meaning ascribed thereto in the Separation Agreement.

 

“Assets” has the meaning ascribed thereto in the Separation Agreement.

 

“Benefit Plan” means, with respect to an entity, each plan, program, arrangement, agreement or commitment that is an employment, consulting, non-competition or deferred compensation agreement, or an executive compensation, incentive bonus or other bonus, employee pension, profit-sharing, savings, retirement, supplemental retirement, stock option, stock purchase, stock appreciation rights, restricted stock, operating partnership unit, other equity-based compensation, severance pay, salary continuation, life, health, hospitalization, sick leave, vacation pay, paid time-off, disability or accident insurance plan, program, arrangement, agreement or commitment, corporate-owned or key-man life insurance or other compensatory or employee benefit plan, program, arrangement, agreement or commitment, including any “employee benefit plan” (as defined in Section 3(3) of ERISA), sponsored or maintained by such entity (or to which such entity contributes or is required to contribute).

 

“COBRA” means the continuation coverage requirements for “group health plans” under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and as codified in Code Section 4980B and Sections 601 through 608 of ERISA, and any similar state group health plan continuation Law, together with all regulations and proposed regulations promulgated thereunder, including any amendments or other modifications of such Laws and regulations that may be made from time to time.

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

“Confidentiality Agreement” means the standard-form Confidentiality Agreement that Ventas and its Affiliates regularly enter into with their employees (and any predecessors to such form).

 

“Daily Stock Price” for a particular day for the SpinCo Common Stock or Ventas Common Stock, as applicable, means the closing price of the applicable stock on the New York Stock Exchange for such day, as reported by the Wall Street Journal.

 

“Distribution” has the meaning set forth in the recitals to the Separation Agreement.

 

“Distribution Date” has the meaning ascribed thereto in the Separation Agreement.

 

“Effective Time” has the meaning ascribed thereto in the Separation Agreement.

 

“Employee” means any individual who is a full or part-time common law employee of the applicable entity.

 

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

 

“Force Majeure” has the meaning ascribed thereto in the Separation Agreement.

 

“Former Employee” means any former Employee or former non-employee director of Ventas or an Affiliate of Ventas or of SpinCo or an Affiliate of SpinCo, as of immediately prior to the Effective Time, whether having last been employed or retained by a member of the Ventas Group or a member of the SpinCo Group, including retired and other inactive terminated Employees.  Without limiting the generality of the foregoing, individuals who are on long-term disability leave as of the Effective Time shall be considered Former Employees for purposes of this Agreement.

 

“Governmental Authority” has the meaning ascribed thereto in the Separation Agreement.

 

“Group” means either the SpinCo Group or the Ventas Group, as the context requires.

 

“HIPAA” means the Health Insurance Portability and Accountability Act of 1996, as amended.

 

“Individual Agreement” means any individual (a) employment contract, (b) retention, severance or change in control agreement, (c) expatriate (including any international assignee) contract or agreement (including agreements and obligations regarding repatriation, relocation, equalization of taxes and living standards in the host country), or (d) other agreement containing restrictive covenants (including confidentiality, non-competition and non-solicitation provisions) with a Ventas Group Employee or SpinCo Group Employee that is in effect immediately prior to the Distribution Date.

 

“Law” has the meaning ascribed thereto in the Separation Agreement.

 

“Liabilities” has the meaning ascribed thereto in the Separation Agreement.

 

“Parties” has the meaning ascribed thereto in the preamble to this Agreement.

 

“Person” means an individual, a general or limited partnership, a corporation, a trust, a joint venture, an unincorporated organization, a limited liability entity, any other entity and any Governmental Authority.

 

“Record Date” means the close of business on the date to be determined by the Ventas board of directors as of the record date for determining holders of Ventas Common Stock entitled to receive SpinCo Common Stock pursuant to the Distribution.

 

“Separation” has the meaning ascribed thereto in the recitals to this Agreement.

 

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“Separation Agreement” has the meaning ascribed thereto in the recitals to this Agreement.

 

“Severance Benefits” has the meaning ascribed thereto in Section 6.3.1 of this Agreement.

 

“SpinCo” has the meaning ascribed thereto in the preamble to this Agreement.

 

“SpinCo 401(k) Plan” has the meaning ascribed thereto in Section 3.1.1 of this Agreement.

 

“SpinCo Annual Bonus Plan” has the meaning ascribed thereto in Section 6.1 of this Agreement.

 

“SpinCo Benefit Plan” means any Benefit Plan sponsored, maintained or contributed to by a member of the SpinCo Group after the Effective Time, but excluding any Ventas Benefit Plan.

 

“SpinCo Business” has the meaning ascribed thereto in the Separation Agreement.

 

“SpinCo Common Stock” means a share of common stock, par value $0.01 per share, of SpinCo.

 

“SpinCo Equity Plan” has the meaning ascribed thereto in Section 5.2 of this Agreement.

 

“SpinCo Group” has the meaning ascribed thereto in the Separation Agreement.

 

“SpinCo Group Employee” means, as of immediately prior to the Effective Time (x) each Employee of Ventas and its Subsidiaries who was formerly employed by                           and who commences employment with Ventas and its Subsidiaries pursuant to                           , and (y) each individual listed on Schedule A, including, in each case, any such Employee who is on an approved leave at such time, unless the applicable individual is absent as of the Effective Time due to long-term disability leave.

 

“SpinCo Group Non-Employee Director” means any Person who, immediately following the Effective Time, is a non-employee director of any member of the SpinCo Group.

 

“SpinCo Participant” means any SpinCo Group Employee who was, prior to the Effective Time, a participant in the applicable Ventas Benefit Plan or is, after the Effective Time, a participant in the applicable SpinCo Benefit Plan, or is a beneficiary, dependent or alternate payee of such a participant.

 

“SpinCo Ratio” means the quotient obtained by dividing the Ventas Stock Value by the SpinCo Stock Value.

 

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“SpinCo Restricted Share Award” means an award of restricted shares of SpinCo Common Stock granted pursuant to the SpinCo Equity Plan.

 

“SpinCo Stock Option” means a stock option to purchase shares of SpinCo Common Stock granted pursuant to a SpinCo Equity Plan.

 

[“SpinCo Stock Value” means the average of the per-share Daily Stock Prices of SpinCo Common Stock on the New York Stock Exchange on the first [·] trading days that immediately follow the Distribution Date.](1)

 

“SpinCo Welfare Plans” means Welfare Plans that are maintained or contributed to by a member of the SpinCo Group, but excluding the Ventas Welfare Plans.

 

“Subsidiary” has the meaning ascribed thereto in the Separation Agreement.

 

“Transfer” has the meaning ascribed thereto in Section 3.1.2 of this Agreement.

 

“Transferred Account Balances” has the meaning ascribed thereto in Section 4.2 of this Agreement.

 

“Transition Services Agreement” has the meaning ascribed thereto in the Separation Agreement.

 

“U.S.” means the United States of America.

 

“Ventas 401(k) Plan” means the Ventas, Inc. 401(k) Profit Sharing Plan.

 

“Ventas Annual Bonus Plans” has the meaning ascribed thereto in Section 6.1 of this Agreement.

 

“Ventas Benefit Plan” means any Benefit Plan sponsored, maintained or contributed to by Ventas or any of its Affiliates.

 

“Ventas Business” has the meaning ascribed thereto in the Separation Agreement.

 

“Ventas Common Stock” means a share of common stock, par value $0.25 per share, of Ventas.

 

“Ventas Deferred Compensation Plans” means the Ventas Executive Deferred Stock Compensation Plan and the Ventas Nonemployee Directors’ Deferred Stock Compensation Plan.

 

(1)  Note to Draft:  Under continued review, subject to Compensation Committee approval.

 

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“Ventas DSUs” means deferred stock units in respect of Ventas Common Stock issued pursuant to the Ventas Deferred Compensation Plans.

 

“Ventas Equity Plans” means the Ventas, Inc. 2012 Incentive Plan, the Ventas, Inc. 2006 Incentive Plan (as amended December 8, 2008), the Ventas, Inc. 2006 Stock Plan for Directors and the Ventas, Inc. 2004 Stock Plan for Directors.

 

“Ventas ESPP” means the Ventas Employee and Director Stock Purchase Plan.

 

“Ventas Group” has the meaning ascribed thereto in the Separation Agreement.

 

“Ventas Group Employee” means any Employee of Ventas and its Subsidiaries immediately prior to the Effective Time who is not a SpinCo Group Employee, including any such Employee (who is not a SpinCo Group Employee) who is on an approved leave at such time.

 

“Ventas Group Non-Employee Director” means any Person who, immediately following the Effective Time, is a non-employee director of any member of the Ventas Group.

 

“Ventas Participant” means any Ventas Group Employee or Former Employee and who is, at any time prior to, on, or after the Effective Time, a participant in the applicable Ventas Benefit Plan or is a beneficiary, dependent or alternate payee of such a participant.

 

[“Ventas Post-Separation Stock Value” means the average of the per-share Daily Stock Prices of Ventas Common Stock on the New York Stock Exchange on the first [•] trading days that immediately follow the Distribution Date.](2)

 

“Ventas Ratio” means the quotient obtained by dividing the Ventas Stock Value by the Ventas Post-Separation Stock Value.

 

“Ventas Restricted Share Award” means an award of restricted shares of Ventas Common Stock granted pursuant to a Ventas Equity Plan.

 

“Ventas RSU Award” means an award of restricted stock units in respect of Ventas Common Stock granted pursuant to a Ventas Equity Plan.

 

“Ventas Stock Option” means a stock option to purchase shares of Ventas Common Stock granted pursuant to a Ventas Equity Plan.

 

“Ventas Stock Value” [means the closing per-share price of Ventas Common Stock trading “regular way with due bills” on the New York Stock Exchange on the Distribution

 

(2)  Note to Draft:  Under continued review, subject to Compensation Committee approval.

 

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Date (or, if the Distribution Date is not a trading day, the first trading day immediately preceding the Distribution Date).](3)

 

“Ventas Welfare Plans” means the Ventas Welfare Plans in which SpinCo Group Employees participate immediately prior to the Effective Time.

 

“Welfare Plan” means a plan that provides for health, welfare or other insurance benefits (within the meaning of Section 3(1) of ERISA).

 

“Welfare Plan Transition Period” means, unless otherwise agreed by the parties, the period from the Effective Time through December 31, 2015.

 

ARTICLE II
 EMPLOYMENT GENERALLY

 

2.1                               Continuation of Employment.  Except as required by applicable local Law, Ventas and its Affiliates shall take all actions necessary to ensure that, as of immediately prior to the Effective Time, (i) all SpinCo Group Employees are employed by a member of the SpinCo Group and (ii) all Ventas Group Employees are employed by a member of the Ventas Group.

 

2.2                               Service Recognition.  SpinCo shall give, or shall cause its Affiliates to give, each SpinCo Group Employee full credit for all purposes under any SpinCo Benefit Plan for such SpinCo Group Employee’s service with Ventas or any of its Affiliates prior to the Effective Time to the same extent such service was recognized by the corresponding Ventas Benefit Plan immediately prior to the Effective Time; provided, however, that such service shall not be recognized to the extent that such recognition would result in the duplication of benefits or as otherwise provided by applicable Law.

 

2.3                               No Severance Benefits.  The Distribution and the assignment, transfer, or continuation of employment of any Employee of Ventas or any of its Affiliates in connection therewith (including in accordance with Section 2.1 hereof) shall not be deemed a termination of employment entitling such Employee to severance or other similar termination payments or benefits under any applicable Law, Ventas Benefit Plan or SpinCo Benefit Plan.

 

2.4                               Former Employees.  SpinCo shall have no liability with respect to Former Employees, if any, as of the Effective Time. Ventas shall retain all liabilities with respect to Former Employees.

 

(3)  Note to Draft:  Under continued review, subject to Compensation Committee approval.

 

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ARTICLE III
 RETIREMENT PLANS

 

3.1                               The Ventas 401(k) Plan and SpinCo 401(k) Plan.

 

3.1.1                          Establishment of Plan and Trust.  SpinCo or one of its Affiliates shall adopt a retirement plan and related trust which are qualified and tax-exempt pursuant to Code Sections 401(a) and 501(a), respectively, and which are intended to meet the requirements of Code Section 401(k) (the “SpinCo 401(k) Plan”), and any trust agreement or other plan documents reasonably necessary in connection therewith, and shall cause a trustee to be appointed for the SpinCo 401(k) Plan.  Such actions shall be completed prior to, or as soon as reasonably practicable following, the Effective Time.

 

3.1.2                          Assumption of Liabilities; Transfer of Assets.  As soon as practicable after the Effective Time and subject to Applicable Law:  (a) Ventas shall cause the accounts (including any outstanding loan balances) of each SpinCo Group Employee in the Ventas 401(k) Plan to be transferred to the SpinCo 401(k) Plan and its related trust; (b) the SpinCo 401(k) Plan shall assume and be solely responsible for all Liabilities under the SpinCo 401(k) Plan relating to the accounts that are so transferred as of and following the time of such transfer; and (c) SpinCo shall cause such transferred accounts to be accepted by the SpinCo 401(k) Plan and its related trust and shall cause the SpinCo 401(k) Plan to satisfy all protected benefit requirements under the Code and applicable Law with respect to the transferred accounts (the “Transfer”).  Such Transfer shall be made in (i) cash but only to the extent it is not practicable to transfer in kind (as determined by the administrator of the Ventas 401(k) Plan) and (ii) promissory notes evidencing the transfer of outstanding loans.  As soon as practicable after the Effective Time and subject to Applicable Law, Ventas shall contribute to the account of each SpinCo Group Employee who is a participant in the SpinCo 401(k) Plan, to the extent not previously made, any matching contribution that it would ordinarily have made on behalf of such SpinCo Group Employee in the year in which the Effective Time occurs with respect to contributions actually made to the Ventas 401(k) Plan by such SpinCo Group Employee on or prior to the Effective Time (the “Additional Contribution”), and SpinCo shall cause such amount to be accepted by the SpinCo 401(k) Plan and its related trust for the benefit of each such SpinCo Group Employee.

 

3.2                               Reservation of Rights.  Except as provided in Section 3.1, the Parties hereby acknowledge that nothing in this Article III shall be construed to require (a) Ventas or any of its Affiliates to continue the Ventas 401(k) Plan before or after the Effective Time, and (b) SpinCo or any of its Affiliates to continue the SpinCo 401(k) Plan after the Effective Time following its establishment and receipt of the Asset and Liability transfer described in Section 3.1.  The Parties agree that (i) Ventas reserves the right, in its sole discretion, to amend or terminate the Ventas 401(k) Plan at any time following the date of this Agreement in accordance with its terms and applicable Law, and (ii) SpinCo reserves the right, in its sole discretion, to amend or terminate the SpinCo 401(k) Plan at any time following the date of this Agreement in accordance with its terms and applicable Law; provided; however that no such amendment to either the Ventas 401(k) Plan or the SpinCo 401(k) Plan shall prevent the actions described in Section 3.1.

 

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ARTICLE IV
 HEALTH AND WELFARE PLANS

 

4.1                               SpinCo Health and Welfare Plans.

 

4.1.1                          Welfare Plan Transition Period; Cessation of Participation in Ventas Health and Welfare Plans.  During the Welfare Plan Transition Period, SpinCo Group Employees shall continue (and employees of the SpinCo Group hired during the Welfare Plan Transition Period shall be eligible, so long as the SpinCo Group provides Ventas with all necessary notifications, eligibility verifications, and forms) to participate in the Ventas Welfare Plans providing medical, dental, life insurance, accidental death & dismemberment, employee assistance, and short-term and long-term disability benefits, on substantially the same terms applicable to similarly situated Ventas Group Employees.  SpinCo shall reimburse Ventas for the cost of such participation, in accordance with the provisions of Article II of the Transition Services Agreement, and such continued participation shall constitute “Services” for purposes of the Transition Services Agreement.  No later than the last day of the Welfare Plan Transition Period, SpinCo (acting directly or through its Affiliates) shall establish the SpinCo Welfare Plans.  It is the intention of the parties that SpinCo shall make available to SpinCo Group Employees (including for this purpose employees of the SpinCo Group hired during the Welfare Plan Transition Period) and their covered dependents who participate in Ventas Welfare Plans immediately prior to the conclusion of the Welfare Plan Transition Period the opportunity to enroll as of the day immediately following the conclusion of the Welfare Plan Transition Period in SpinCo Welfare Plans.

 

4.1.2                          Allocation of Health and Welfare Plan Liabilities.  All outstanding Liabilities relating to, arising out of, or resulting from health and welfare claims incurred by or on behalf of SpinCo Group Employees or their covered dependents under the Ventas Welfare Plans on or before the Distribution Date, or, in the case of claims under the Ventas Welfare Plans for medical, dental, life insurance, accidental death & dismemberment, employee assistance, and short-term and long-term disability benefits, on or before the conclusion of the Welfare Plan Transition Period, including, in all cases, claims incurred but not reported, shall (subject to the provisions of Article II of the Transition Services Agreement) be retained by Ventas.

 

4.1.3                          Waiver of Conditions.  To the extent permitted by applicable Law and the terms of the applicable SpinCo Welfare Plan, SpinCo (acting directly or through its Affiliates) shall take commercially reasonable efforts to cause the SpinCo Welfare Plans to (a) waive all limitations as to preexisting conditions, exclusions, and service conditions with respect to participation and coverage requirements applicable to any SpinCo Group Employee, other than limitations that were in effect with respect to the SpinCo Group Employee under the generally corresponding Ventas Welfare Plan immediately prior to the conclusion of the Welfare Plan Transition Period , and (b) waive any waiting period limitation or evidence of insurability requirement applicable to a SpinCo Group Employee other than limitations or requirements that were in effect with respect to such SpinCo Group Employee under the corresponding Ventas Welfare Plan immediately prior to the conclusion of the Welfare Plan Transition Period.  Such waivers shall apply to initial enrollment in the SpinCo Welfare Plans effective immediately following the conclusion of the Welfare Plan Transition Period.  Following the initial enrollment, pre-existing condition limitations, exclusions, and services conditions under the SpinCo Welfare Plans shall apply only to the extent allowable under HIPAA.

 

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4.2                               Flexible Spending Accounts.  With respect to each SpinCo Group Employee, the parties shall use commercially reasonable efforts to ensure that any health or dependent care flexible spending accounts as of the Effective Time of such SpinCo Group Employee (whether positive or negative) (the “Transferred Account Balances”) under Ventas Welfare Plans that are health or dependent care flexible spending account plans are transferred, as soon as practicable after the Effective Time, from the Ventas Welfare Plans to SpinCo or its applicable Subsidiary.  SpinCo or its applicable Subsidiary shall assume responsibility as of the Effective time for all outstanding health or dependent care claims under the corresponding Ventas Welfare Plans of each SpinCo Group Employee for the calendar year in which the Effective Time occurs.

 

4.3                               COBRA and HIPAA Compliance.  Ventas shall continue to be responsible for compliance with the health care continuation requirements of COBRA (including the requirements under the American Recovery and Reinvestment Act), and the corresponding provisions of the Ventas Welfare Plans, with respect to any Employee of any member of the Ventas Group or the SpinCo Group or any of such employee’s covered dependents who incurs a qualifying event or loss of coverage under COBRA at or before the Effective Time (including as a result of the Separation and Distribution).  SpinCo shall be responsible for compliance with the health care continuation requirements of COBRA, and the corresponding provisions of the SpinCo Welfare Plans, with respect to any SpinCo Group Employee or any of such employee’s covered dependents who incurs a qualifying event or loss of coverage under the SpinCo Welfare Plans after the Effective Time (including during the Welfare Plan Transition Period, provided that coverage for the duration of such period shall be provided pursuant to the Ventas Welfare Plans).

 

4.4                               Time-Off Benefits.  SpinCo shall credit each SpinCo Group Employee immediately following the Effective Time with the amount of accrued but unused paid time-off as such SpinCo Group Employee had under the applicable Ventas paid time-off policy immediately prior to the Effective Time.

 

4.5                               Incurred Claim Definition.  For purposes of this Article IV, a claim or Liability is deemed to be incurred, unless otherwise provided in the governing plan document or insurance contract:  (a) with respect to medical, dental, and/or prescription drug benefits, upon the rendering of health services giving rise to such claim or Liability; (b) with respect to life insurance, accidental death and dismemberment and business travel accident insurance, upon the occurrence of the event giving rise to such claim or Liability; (c) with respect to disability benefits, upon the date of an Employee’s disability, as determined by the disability benefit insurance carrier or claim administrator, giving rise to such claim or Liability; and (d) with respect to a period of continuous hospitalization, upon the date of admission to the hospital.

 

4.6                               Workers Compensation.  The ownership and administration of workers compensation insurance shall be governed by Section 5.1 of the Separation Agreement regarding insurance matters.  For the avoidance of doubt, nothing in this Agreement shall be interpreted to allocate between the Parties the claims and Liabilities under any workers compensation insurance policies.

 

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ARTICLE V
 EQUITY-BASED INCENTIVE PLANS; DEFERRED COMPENSATION PLANS

 

5.1                               Adjustment of Equity Awards.

 

5.1.1                          Ventas Stock Options held by Ventas Group Employees, Ventas Group Non-Employee Directors, SpinCo Group Non-Employee Directors, and Former Employees.  Each Ventas Stock Option held by a Ventas Group Employee, a Ventas Group Non-Employee Director, SpinCo Group Non-Employee Director, or Former Employee that is outstanding and unexercised as of immediately prior to the Effective Time shall be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to such Ventas Stock Option immediately prior to the Effective Time; provided, however, that from and after the Effective Time:

 

(a)                                 the number of shares of Ventas Common Stock subject to such Ventas Stock Option, rounded down to the nearest whole number of shares, shall be equal to the product obtained by multiplying (i) the number of shares of Ventas Common Stock subject to such Ventas Stock Option immediately prior to the Effective Time by (ii) the Ventas Ratio; and

 

(b)                                 the per share exercise price of such Ventas Stock Option, rounded up to the nearest whole cent, shall be equal to the quotient obtained by dividing (i) the per share exercise price of such Ventas Stock Option immediately prior to the Effective Time by (ii) the Ventas Ratio.

 

5.1.2                          Ventas Stock Options held by SpinCo Group Employees.  Each Ventas Stock Option held by a SpinCo Group Employee that is outstanding and unexercised as of immediately prior to the Effective Time shall be converted into a SpinCo Stock Option and shall otherwise be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to such Ventas Stock Option immediately prior to the Effective Time (except that references to Ventas in the applicable plan and award agreement shall be deemed to refer to SpinCo, unless clearly dictated otherwise by context); provided, however, that from and after the Effective Time:

 

(a)                                 the number of shares of SpinCo Common Stock subject to such SpinCo Stock Option, rounded down to the nearest whole number of shares, shall be equal to the product obtained by multiplying (i) the number of shares of Ventas Common Stock subject to such Ventas Stock Option immediately prior to the Effective Time by (ii) the SpinCo Ratio; and

 

(b)                                 the per share exercise price of such SpinCo Stock Option, rounded up to the nearest whole cent, shall be equal to the quotient obtained by dividing (i) the per share exercise price of such Ventas Stock Option immediately prior to the Effective Time by (ii) the SpinCo Ratio.

 

5.1.3                          Ventas RSU Awards, Ventas Restricted Share Awards, and Ventas DSUs held by Ventas Group Employees, Ventas Group Non-Employee Directors, SpinCo Group Non-Employee Directors, and Former Employees. Each Ventas RSU Award, Ventas Restricted Share Award, and Ventas DSU held by a Ventas Group Employee, Ventas Non-Employee Director, SpinCo Non-Employee Director, or Former Employee, as applicable, that is outstanding as of

 

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immediately prior to the Effective Time shall be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to such Ventas RSU Award, Ventas Restricted Share Award, or Ventas DSU, as applicable, immediately prior to the Effective Time; provided, however, that from and after the Effective Time, the number of shares of Ventas Common Stock to which such Ventas RSU Award, Ventas Restricted Share Award, or Ventas DSU, as applicable, relates shall be equal to the product, rounded to the nearest whole number of shares, obtained by multiplying (a) the number of shares of Ventas Common Stock to which such Ventas RSU Award, Ventas Restricted Share Award, or Ventas DSU, as applicable, related immediately prior to the Effective Time by (b) the Ventas Ratio.

 

5.1.4                          Ventas Restricted Share Awards held by SpinCo Group Employees.  Each Ventas Restricted Share Award held by a SpinCo Group Employee that is outstanding as of immediately prior to the Effective Time shall be converted into a SpinCo Restricted Share Award, and shall otherwise be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to such Ventas Restricted Share Award immediately prior to the Effective Time (except that references to Ventas in the applicable plan and award agreement shall be deemed to refer to SpinCo, unless clearly dictated otherwise by context); provided, however, that from and after the Effective Time, the number of shares of SpinCo Common Stock to which such SpinCo Restricted Share Award relates shall be equal to the product, rounded to the nearest whole number of shares, obtained by multiplying (a) the number of shares of Ventas Common Stock to which such Ventas Restricted Share Award related immediately prior to the Effective Time by (b) the SpinCo Ratio.

 

5.1.5                          For clarity, neither the Distribution nor the assignment, transfer, or continuation of employment or service of any Employee of Ventas or any of its Affiliates or of any non-employee director of any member of the Ventas Group in connection with the Distribution (including in accordance with Section 2.1 hereof) shall be deemed to be a termination of employment or service for purposes of the Ventas Equity Plans and the applicable award agreements thereunder.

 

5.2                               Establishment of SpinCo Equity Plan.  As of or prior to the Effective Time, SpinCo shall adopt an equity compensation plan (the “SpinCo Equity Plan”) pursuant to which equity awards may be granted to SpinCo Group Employees.  The SpinCo Equity Plan shall generally provide for the same types of awards as the Ventas Equity Plan. Ventas and SpinCo shall take all actions as may be necessary or advisable to adopt and obtain shareholder and/or board of directors approval of the SpinCo Equity Plan (and the awards in respect of shares of SpinCo Common Stock thereunder) in order to satisfy the requirement of Rule 16b-3 under the Exchange Act, and the applicable rules and regulations of any applicable exchange on which shares of SpinCo Common Stock will be traded.  The SpinCo Equity Plan shall be approved prior to the Effective Time by a member of the Ventas Group as SpinCo’s sole shareholder.

 

5.3                               Liabilities for Settlement of Awards.  Ventas shall be responsible for all Liabilities (and entitled to the tax deduction) associated with awards that relate to Ventas Common Stock following the Effective Time, including without limitation such awards held by Former Employees and SpinCo Group Non-Employee Directors, and SpinCo shall be responsible for all Liabilities (and entitled to the tax deduction) associated with awards that relate

 

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to SpinCo Common Stock following the Effective Time.  SpinCo shall notify Ventas of the occurrence of any settlement event with respect to Ventas Common Stock-based awards of a SpinCo Group Non-Employee Director as practicable but in no event later than 30 days thereafter and shall promptly provide to Ventas any other relevant information for purposes of such settlement.

 

5.4                               Deferred Compensation Plans.

 

5.4.1                     Ventas shall retain, or cause the applicable member of the Ventas Group to retain, all Assets and all Liabilities arising out of or relating to the Ventas Deferred Compensation Plans, and shall make payments to all participants in such Ventas Deferred Compensation Plans who are SpinCo Group Employees or SpinCo Group Non-Employee Directors in accordance with the terms of the applicable Ventas Deferred Compensation Plans.  SpinCo shall notify Ventas of the occurrence of any payment event with respect to a SpinCo Group Employee or SpinCo Group Non-Employee Director under the Ventas Deferred Compensation Plans as promptly as practicable but in no event later than 30 days thereafter and shall promptly provide to Ventas any other relevant information for purposes of payments pursuant to the Ventas Deferred Compensation Plans to SpinCo Group Employees or SpinCo Group Non-Employee Directors.

 

5.4.2                     Ventas and SpinCo acknowledge that none of the transactions contemplated by the Separation Agreement will, in and of itself, constitute a “separation from service” under Section 409A of the Code or trigger a payment or distribution of compensation under the Ventas Deferred Compensation Plans and, consequently, that the payment or distribution of any compensation to which any Ventas Group Former Employee, Ventas Group Non-Employee Director or SpinCo Group Non-Employee Director is entitled under the Ventas Deferred Compensation Plans will occur only at such time or times as provided in the applicable plan document and the applicable deferral election.

 

ARTICLE VI
 ADDITIONAL COMPENSATION MATTERS; SEVERANCE

 

6.1                               Incentive Awards.

 

6.1.1                          Annual Incentive Plan.  Immediately prior to the Effective Time, SpinCo Group Employees shall cease participating in each Ventas annual bonus plan or policy (“Ventas Annual Bonus Plans”) and, as of the Effective Time, there shall be an accrual on the financial statements of SpinCo equal to the amount accrued by Ventas on its financial statements for the period beginning January 1, 2015 and ending immediately prior to the Effective Time for SpinCo Group Employees under such plans as appropriate based on the results achieved to date and the forecasted achievement of applicable annual targets.  As of the Effective Time, SpinCo Group Employees who were eligible to participate in the Ventas Annual Bonus Plans shall be eligible to participate in the SpinCo annual bonus plans or policies (“SpinCo Annual Bonus Plans”).  SpinCo shall be solely responsible for funding, paying and discharging all obligations under the SpinCo Annual Bonus Plans in respect of the annual bonus payable to the SpinCo Group Employees in respect of the calendar year in which the Effective Time occurs (and Ventas shall have no liability with respect to annual bonuses for such year).

 

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6.1.2                          Long-Term Incentive Plan.  SpinCo shall be solely responsible for granting any equity-based compensation in respect of the service of SpinCo Group Employees with the Ventas Group or the SpinCo Group, prior to and following the Effective Time, respectively.  As of the Effective Time, there shall be an accrual on the financial statements of SpinCo equal to the amount accrued by Ventas on its financial statements for the period beginning January 1, 2015 and ending immediately prior to the Effective Time for equity-based compensation awards previously accrued but ungranted to SpinCo Group Employees based on the results achieved to date and the forecasted achievement of applicable annual targets.  Ventas shall have no responsibility of fulfilling its obligations for any previously accrued but ungranted equity-based compensation awards in respect of the service of SpinCo Group Employees with the Ventas Group or the SpinCo Group, prior to and following the Effective Time.  As such, Ventas shall have no liability with respect to such equity-based compensation.

 

6.2                               Individual Agreements. The parties hereto intend that, as of, and contingent upon, the Effective Time, all Individual Agreements between any SpinCo Group Employee and any member of the Ventas Group shall, other than with respect to restrictive covenants contained therein (including any provisions with respect to the ability to enforce such restrictive covenants), have been superseded by Individual Agreements between the applicable SpinCo Group Employee and a member of the SpinCo Group. To the extent that any such Individual Agreement has not been so superseded as of the Effective Time, such Individual Agreement, other than with respect to restrictive covenants contained therein (including any provisions with respect to the ability to enforce such restrictive covenants), is hereby assigned, as of the Effective Time, by Ventas (acting directly or through the applicable member of the Ventas Group) to SpinCo or a member of the SpinCo Group, it being understood that an Individual Agreement consisting in substance solely of restrictive covenants (including, without limitation, Confidentiality Agreements) shall not be so assigned.  With respect to restrictive covenants set forth in Individual Agreements (including in Confidentiality Agreements), Ventas or the applicable member of the Ventas Group may continue to enforce such covenants following the Effective Time as provided in such Individual Agreements; provided, however, that (a) the Effective Time shall be treated as the date of termination of employment for purposes of the duration of any such restrictive covenants and (b)  in no event may a member of the Ventas Group enforce any such restrictive covenant against a SpinCo Group Employee or former SpinCo Group Employee for actions taken in such individual’s capacity as a SpinCo Group Employee that are reasonably related to the SpinCo Business, and in no event shall service to the SpinCo Group be deemed to violate any non-competition covenants in favor of any member of the Ventas Group. The parties shall take commercially reasonable efforts to effectuate the intent of this Section 6.2.

 

6.3                               Severance Liabilities.

 

6.3.1                     Severance Liabilities of SpinCo.  SpinCo shall be solely responsible for all Liabilities in respect of all the costs of providing benefits under any applicable severance, separation, redundancy, termination or similar plan, program, practice, contract, agreement, law or regulation (such benefits to include any medical or other welfare benefits, outplacement benefits, accrued vacation, and taxes) (collectively, “Severance Benefits”) relating to the termination or alleged termination of employment of any SpinCo Group Employee that occurs on or after the Distribution Date.

 

6.3.2                     Severance Liabilities of Ventas.  Ventas shall be solely responsible for all Liabilities in respect of all the costs of providing the Severance Benefits relating to the

 

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termination or alleged termination of employment of any Ventas Group Employee that occurs before, on, or after the Distribution Date.

 

6.4                               Code Section 409A.  Notwithstanding anything to the contrary herein, if any of the provisions of this Agreement would result in imposition of taxes and/or penalties under Section 409A of the Code, Ventas and SpinCo shall cooperate in good faith to modify the applicable provision so that such taxes and/or penalties do not apply in order to comply with the provisions of Section 409A of the Code, other applicable provisions of the Code and/or any rules, regulations or other regulatory guidance issued under such statutory provisions.

 

ARTICLE VII
 GENERAL AND ADMINISTRATIVE

 

7.1                               Sharing of Participant Information.  Ventas and SpinCo shall share, and Ventas shall cause each other member of the Ventas Group to share, and SpinCo shall cause each other member of the SpinCo Group to share with each other and their respective agents and vendors (without obtaining releases) all participant information necessary for the efficient and accurate administration of each of the SpinCo Benefit Plans and the Ventas Benefit Plans.  Ventas and SpinCo and their respective authorized agents shall, subject to applicable laws, be given reasonable and timely access to, and may make copies of, all information relating to the subjects of this Agreement in the custody of the other Party, to the extent necessary for such administration.  Until the Distribution Date, all participant information shall be provided in the manner and medium applicable to participating companies in Ventas Benefit Plans generally, and thereafter all participant information shall be provided in a manner and medium as may be mutually agreed to by Ventas and SpinCo.

 

7.2                               Reasonable Efforts/Cooperation.  Each of the Parties hereto will use its commercially reasonable efforts to promptly take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate the transactions contemplated by this Agreement.  Without limiting the generality of the foregoing, subject to applicable Law, Ventas shall make commercially reasonable efforts to provide SpinCo with access to, or copies of, (a) the employee records and files of the SpinCo Group Employees, including, to the extent necessary to the administration of SpinCo Benefit Plans, and (b) employee data, beneficiary designations, and similar information utilized for purposes of the Ventas Benefit Plans.  Each of the Parties hereto shall cooperate fully on any issue relating to the transactions contemplated by this Agreement for which the other Party seeks a determination letter or private letter ruling from the Internal Revenue Service, an advisory opinion from the Department of Labor or any other filing (including, but not limited to, securities filings (remedial or otherwise)), consent or approval with respect to or by a Governmental Authority in any jurisdiction in the U.S. or abroad.

 

7.3                               No Third-Party Beneficiaries.  Except as expressly provided for in this Agreement or the Separation Agreement, no provision of this Agreement or any of the other Transaction Documents shall be construed to create any right, or accelerate entitlement, to any compensation or benefit whatsoever on the part of any Ventas Group Employee, SpinCo Group Employee or any Former Employee, or future Employee of Ventas or any of its Affiliates or SpinCo or any of its Affiliates under any Ventas Benefit Plan or SpinCo Benefit Plan or

 

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otherwise, nor shall any such provision be construed as an amendment to any employee benefit plan or other employee compensatory or benefit arrangement.  Furthermore, nothing in this Agreement is intended to confer upon any Employee or Former Employee any right to continued employment or continued service, any recall or similar rights to an Employee on layoff or any type of approved leave, or to change the employment status of any Employee from “at will.”

 

7.4                               Not a Change in Control.  The Parties acknowledge and agree that the transactions contemplated by the Separation Agreement and this Agreement do not constitute a “change in control” for purposes of any Ventas Benefit Plan or SpinCo Benefit Plan.

 

ARTICLE VIII
 MISCELLANEOUS

 

8.1                               Relationship of Parties.  Nothing in this Agreement shall be deemed or construed by the Parties or any third party as creating the relationship of principal and agent, partnership or joint venture between the Parties, it being understood and agreed that no provision contained herein, and no act of the Parties, shall be deemed to create any relationship between the Parties other than the relationship set forth herein.

 

8.2                               Affiliates.  Each of Ventas and SpinCo shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement to be performed by each of their respective Affiliates.

 

8.3                               Representations.  Ventas represents on behalf of itself and on behalf of other members of the Ventas Group, and SpinCo represents on behalf of itself and on behalf of other members of the SpinCo Group, as follows:

 

8.3.1                          Corporate Power.  Each such Person has the requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby and thereby.

 

8.3.2                          Due Execution.  This Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof.

 

8.4                               Governing Law.  This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of any party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware irrespective of the choice of laws principles of the State of Delaware including all matters of validity, construction, effect, enforceability, performance and remedies.

 

8.5                               Survival of Covenants.  Except as expressly set forth in any other Ancillary Agreement, the covenants and other agreements contained in this Agreement, and Liability for the breach of any obligations contained herein or therein, shall survive each of the transactions described in the Plan of Reorganization (as defined in the Separation Agreement) and the Distribution and shall remain in full force and effect.

 

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8.6                               Force Majeure.  No Party shall be deemed in default of this Agreement or, unless otherwise expressly provided therein, any other Ancillary Agreement for any delay or failure to fulfill any obligation (other than a payment obligation) hereunder or thereunder so long as and to the extent to which any delay or failure in the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure.  In the event of any such excused delay, the time for performance of such obligations (other than a payment obligation) shall be extended for a period equal to the time lost by reason of the delay.  A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide written notice to the other Party of the nature and extent of any such Force Majeure condition; and (b) use commercially reasonable efforts to remove any such causes and resume performance under the Ancillary Agreements, as applicable, as soon as reasonably practicable.

 

8.7                               Notices.  All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) in accordance with Section 10.5 of the Separation Agreement.

 

8.8                               Termination.  Notwithstanding any provision to the contrary, this Agreement may be terminated and the Distribution abandoned at any time prior to the Effective Time by and in the sole discretion of Ventas without the prior approval of any Person, including SpinCo.  In the event of such termination, this Agreement shall become void and no Party, or any of its officers and directors, shall have any liability to any Person by reason of this Agreement.  After the Effective Time, this Agreement may not be terminated except by an agreement in writing signed by each of the Parties.

 

8.9                               Severability.  If any provision of this Agreement or any Ancillary Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or thereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby.  Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties

 

8.10                        Entire Agreement.  Except as otherwise expressly provided in this Agreement, this Agreement (including the Schedules hereto) and the applicable provisions of the Separation Agreement together constitute the entire agreement of the Parties with respect to the subject matter of this Agreement and supersedes all prior agreements and undertakings, both written and oral, between or on behalf of the Parties with respect to the subject matter of this Agreement.

 

8.11                        Indemnification; Dispute Resolutions.  Article IV of the Separation Agreement governs the Parties’ indemnification rights and obligations and Article VII of the Separation Agreement governs the resolution of any dispute between the Parties.

 

8.12                        Assignment.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided, however, that neither party hereto may assign its rights or delegate its obligations under this Agreement

 

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without the express prior written consent of the other party.  Notwithstanding the foregoing, no such consent shall be required for the assignment of a party’s rights and obligations under this Agreement and the Ancillary Agreements (except as may be otherwise provided in any such Ancillary Agreement) in whole (i.e., the assignment of a party’s rights and obligations under this Agreement and all Ancillary Agreements all at the same time) in connection with a change of control of a party so long as the resulting, surviving or transferee Person assumes all the obligations of the relevant party thereto by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the other party.  Except as provided in Article IV of the Separation Agreement with respect to Indemnifying Parties (as defined in the Separation Agreement), this Agreement is for the sole benefit of the Parties and members of their respective Group and their permitted successors and assigns and nothing in this Agreement, express or implied, is intended to or shall  confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

8.13                        Specific Performance.  Subject to the provisions of Article VII of the Separation Agreement, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are or are to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief (on an interim or permanent basis) of its rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.  The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, may be inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived.  Any requirements for the securing or posting of any bond with such remedy are waived by each of the Parties.

 

8.14                        Amendment.  No provision of this Agreement may be amended or modified except by a written instrument signed by all the Parties.  No waiver by any Party of any provision of this Agreement shall be effective unless explicitly set forth in writing and executed by the Party so waiving.  The waiver by any Party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other subsequent breach.

 

8.15                        Rules of Construction.  Interpretation of this Agreement shall be governed by the following rules of construction (a) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (b) references to the terms Article, Section, paragraph, clause, Exhibit and Schedule are references to the Articles, Sections, paragraphs, clauses, Exhibits and Schedules of this Agreement unless otherwise specified, (c) the terms “hereof,” “herein,” “hereby,” “hereto,” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits hereto, (d) references to “$” shall mean U.S. dollars, (e) the word “including” and words of similar import when used in this Agreement shall mean “including without limitation,” unless otherwise specified, (f) the word “or” shall not be exclusive, (g) references to “written” or “in writing” include in electronic form, (h) unless the context requires otherwise, references to “Party” shall mean Ventas or SpinCo, as appropriate, and references to “Parties” shall mean Ventas and SpinCo, (i) provisions shall apply, when appropriate, to successive events and

 

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transactions, (j) the table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement, (k) Ventas and SpinCo have each participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or burdening either Party by virtue of the authorship of any of the provisions in this Agreement or any interim drafts of this Agreement, and (l) a reference to any Person includes such Person’s successors and permitted assigns.

 

8.16                        Counterparts.  This Agreement may be executed in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format (PDF) shall be as effective as delivery of a manually executed counterpart of any such Agreement.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.

 

	
 
    	
VENTAS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CARE CAPITAL PROPERTIES, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

20Exhibit 10.4

 

FORM OF EMPLOYMENT AGREEMENT

 

THIS AGREEMENT (the “Agreement”) is made and entered into by and between Care Capital Properties, Inc. (the “Company”), RAYMOND J. LEWIS (the “Executive”), and solely for the limited purposes set forth in Section 11(a) hereof, Ventas, Inc. (“Ventas”), executed on            , 2015 and effective as of the date (the “Effective Date”) of consummation of the distribution (the “Spinoff”) of the shares of the Company to the shareholders of Ventas.

 

WHEREAS, the Company desires to employ the Executive as its Chief Executive Officer effective on the Effective Date on the terms and conditions, and for the consideration, hereinafter set forth, and the Executive desires to be employed by the Company on and following the Effective Date, on such terms and conditions and for such consideration.

 

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

 

1.              Effectiveness of Agreement; Term.

 

This Agreement shall become effective on the Effective Date.  Upon the occurrence of the Effective Date, the Company hereby agrees to employ the Executive, and the Executive hereby agrees to be employed by the Company, subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the third anniversary of the Effective Date (the “Employment Period”); provided, that, on the third anniversary of the Effective Date and each annual anniversary of such date thereafter (such date and each annual anniversary thereof, a “Renewal Date”), unless previously terminated in accordance with the provisions of Section 3 hereof, the Employment Period shall be automatically extended so as to terminate one year from such Renewal Date unless, at least 90 days prior to a Renewal Date, either party shall give written notice (any such notice, a “Non-Renewal Notice”) to the other that the Employment Period shall not be so extended; provided, further, that, notwithstanding the foregoing, the Company may not give a Non-Renewal Notice during the Protected Period (as defined below).  Notwithstanding the foregoing, if Ventas decides, and publicly announces, that it will not be consummating the Spinoff, or if the Effective Date has not occurred as of June 30, 2016, this Agreement shall become null and void ab initio, and neither the Company nor the Executive shall have any rights hereunder (and, for clarity, the employment agreement between the Executive and Ventas, dated September 18, 2002, as amended March 19, 2007 and December 31, 2008 (the “Prior Employment Agreement”) shall in such case remain in full force and effect).

 

 

2.              Terms of Employment.

 

a.              Position and Duties.

 

i.                  During the Employment Period, the Executive shall serve the Company as its Chief Executive Officer and shall perform customary and appropriate duties as may be reasonably assigned to the Executive from time to time by the Board of Directors of the Company (the “Board”).  The Executive shall report solely and directly to the Board.  The Executive shall perform his services at the principal offices of the Company in the Chicago, Illinois area and shall travel for business purposes to the extent reasonably necessary or appropriate in the performance of such services.  The Executive will be appointed to the Board as of the Effective Date.  The Executive shall not receive compensation for service on the Board in addition to the compensation herein provided for his services.

 

ii.               During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive may be entitled, the Executive agrees to devote substantially all of his attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities.  During the Employment Period, it shall not be a violation of this paragraph for the Executive to serve on corporate, civic or charitable boards or committees (subject, in each case, to any applicable Company policy requiring Company consent to such service) or fulfill speaking engagements, so long as such activities do not interfere with the performance of the Executive’s responsibilities in accordance with this Agreement and the Executive complies with applicable provisions of the Company’s code of business conduct and ethics.

 

b.              Compensation.

 

i.                  Base Salary.  During the Employment Period, the Executive shall receive an annual base salary at the rate of $750,000, subject to review for increase (but not decrease) by the Executive Compensation Committee of the Board (the “Committee”); provided, that, at no time shall the Committee be required to adjust the Annual Base Salary in connection with such review (such base salary, as adjusted pursuant to such Committee review from time to time, the “Annual Base Salary”).

 

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ii.               Annual Bonus.

 

1.              In general.  In addition to the Annual Base Salary, the Executive shall be eligible to be awarded, for each fiscal year of the Company, or portion of a fiscal year, during the Employment Period beginning on or after the Effective Date, an annual bonus (the “Annual Bonus”) pursuant to the terms of the Company’s annual incentive plan, as in effect from time to time, which shall not be inconsistent with the terms of this Agreement.  The Executive’s target Annual Bonus opportunity shall be 200% of the rate of the Annual Base Salary (the “Target Bonus”).  The Annual Bonus shall be paid on the date on which annual bonuses are paid to senior executives of the Company generally, but not later than two and a half months after the end of the fiscal year for which the Annual Bonus is awarded, unless the Executive shall elect to defer the receipt of such Annual Bonus pursuant to an arrangement that meets the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

 

2.              Initial Annual Bonus.  Notwithstanding anything herein to the contrary, for the fiscal year which includes the Effective Date, the Executive’s annual bonus (the “Initial Annual Bonus”) shall equal the Executive’s target annual cash bonus for such year (determined on a blended basis, utilizing the Executive’s pre-Spinoff target bonus rate under the applicable Ventas annual bonus plan, policy or program for senior executives then in effect for periods of employment through the Effective Date, and the Target Bonus for periods of employment following the Effective Date), and shall be payable by Ventas, the Company or a combination of the two (as determined by Ventas) at the same time that annual bonuses are paid to Company executives generally, subject to the Executive’s continued employment through the payment date.

 

iii.            Equity Compensation.

 

1.              The Executive shall be granted under the Company’s then-effective equity-based incentive plan (as amended or restated from time to time, the “Plan”) a number of shares of Company restricted stock equal to $2,500,000 divided by the closing price of a share of Company common stock on the Effective Date (the “Initial Equity Grant”).  The restricted shares subject to the Initial Equity Grant shall vest in equal ratable installments on each 

 

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of the first, second, and third anniversaries of the Effective Date, in each case subject, except as set forth in Section 4 below, to the Executive’s continued employment hereunder through the applicable vesting date.  In no event may the shares subject to the Initial Equity Grant be transferred until the earlier of (i) the Executive’s termination of employment with the Company and its subsidiaries, or (ii) the third anniversary of the Effective Date; provided, however, that this restriction shall not apply to any shares withheld or sold to satisfy the Executive’s minimum statutory tax withholding obligation in respect of the vesting of the restricted shares subject to the Initial Equity Grant.

 

2.              Subject to the approval of the Committee, the Executive shall be eligible for an annual grant of equity awards (in such form and with such terms as determined by the Committee in its sole discretion, except as set forth in Section 4 hereof) in respect of each fiscal year during the Employment Period, commencing with the fiscal year beginning January 1, 2016 (each, an “Annual LTI Award”).  Each Annual LTI Award shall have a target grant date fair value (as determined by the Company in reasonable good faith) equal to 200% of the rate of Annual Base Salary.

 

iv.           Employee Benefits.  The Executive will be eligible to participate in retirement, welfare, and other employee benefit plans as in effect from time to time for executives of the Company and its affiliates generally.

 

v.              Expenses.  During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all business expenses incurred by the Executive in accordance with the Company’s business expense reimbursement policies.

 

3.              Termination of Employment.

 

a.              Death or Disability.  The Executive’s employment shall terminate automatically upon the Executive’s death during the Employment Period.  If the Disability (as defined below) of the Executive has occurred during the Employment Period, the Company may provide the Executive with written notice in accordance with Section 11(b) of this Agreement of its intention to terminate the Executive’s employment.  In such event, the Executive’s employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the 

 

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“Disability Effective Date”), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive’s duties.  For purposes of this Agreement, “Disability” shall mean the absence of the Executive from the Executive’s duties with the Company on a full-time basis for a length of time equal to or greater than 60 consecutive days or 120 total days within any 12-month period as a result of incapacity due to mental or physical illness.  Any determination of whether such an absence constitutes a Disability shall be made by a licensed physician mutually selected by a panel of two other licensed physicians, one selected by the Company and one selected by the Executive.

 

b.              With or Without Cause.  The Company may terminate the Executive’s employment during the Employment Period either with or without Cause.  For purposes of this Agreement, “Cause” shall mean:

 

i.                  The Executive’s indictment for, conviction of, or plea of nolo contendere to, any felony or a misdemeanor involving fraud, dishonesty or moral turpitude;

 

ii.               The Executive’s willful or intentional material breach of the Executive’s duties and responsibilities;

 

iii.            The Executive’s willful or intentional material misconduct in the performance of the Executive’s duties; or

 

iv.           The Executive’s willful or intentional failure to comply with any lawful instruction or directive of the Board.

 

c.               Good Reason; Without Good Reason.  The Executive’s employment may be terminated by the Executive (x) for Good Reason or (y) without Good Reason.  “Good Reason” means the occurrence of any one of the following events to the extent not consented to, or suggested by, the Executive:

 

i.                  Material diminution in the Executive’s position, authority or duties (including the assignment to the Executive of any duties materially and adversely inconsistent with the Executive’s position, authority or duties hereunder);

 

ii.               Material reduction (other than pursuant to a uniform reduction applicable to other senior executives of the Company) of the Annual Base Salary or target Annual Bonus opportunity, or the Company failing to make an annual equity grant to the Executive in respect of service for the full year 2015 with a grant date value at least equal to the accrual in respect of the Executive's equity-based compensation award for the portion of 2015 prior to the Effective Date, as reflected on the financial statements of Ventas immediately prior to the Effective Date;

 

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iii.            Requirement to relocate the Executive’s principal business office to any location more than 30 miles from its location on the Effective Date;

 

iv.           Any material breach by the Company of this Agreement;

 

v.              The failure of the Company to obtain the assumption of this Agreement by any successor to the Company; or

 

vi.           Delivery of a Non-Renewal Notice from the Company to the Executive.

 

provided, however, that the actions set forth above will not be considered Good Reason unless the Executive shall describe the basis for the occurrence of the Good Reason event in reasonable detail in a Notice of Termination (as defined below) provided to the Company in writing within 30 days of the Executive’s knowledge of the actions giving rise to Good Reason, and the Company has failed to cure such actions within 30 days of receiving such Notice of Termination (and if the Company does effect a cure within that period, such Notice of Termination shall be ineffective).  Unless the Executive gives the Company notice within 90 days of the initial existence of any event which, after any applicable Notice of Termination and the lapse of any applicable 30-day grace period, would constitute Good Reason, such event will cease to be an event constituting Good Reason.

 

d.              Notice of Termination.  Any termination of employment by the Company or the Executive shall be communicated by a Notice of Termination (as defined below) to the other party hereto given in accordance with Section 11(b) of this Agreement.  For purposes of this Agreement, a “Notice of Termination” shall mean a written notice that (i) indicates the termination provision in this Agreement relied upon and (ii) specifies the Date of Termination (as defined below) if other than the date of receipt of such notice.  The failure by the Company or the Executive to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Cause or Good Reason shall not waive any right of the Company or the Executive, respectively, hereunder or preclude the Company or the Executive, respectively, from asserting such fact or circumstance in enforcing the Company’s or the Executive’s rights hereunder.

 

e.               Date of Termination.  “Date of Termination” shall mean (i) if the Executive’s employment is terminated by the Company for Cause or other than for Cause, death or Disability, the date of receipt of the Notice of Termination or any later date specified therein (which date shall not be more than 30 days after the giving of such notice), (ii) if the Executive’s employment is terminated by reason of death or by the Company for Disability, the date of death of the Executive or the Disability Effective Date, as applicable, (iii) if the Executive’s employment is terminated 

 

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by the Executive for Good Reason, 30 days from the date of the Company’s receipt of the Notice of Termination (subject to the Company’s right to cure the Good Reason event), provided that the Company may elect to waive such 30-day period, and (iv) if the Executive’s employment is terminated by the Executive without Good Reason, 30 days from the date of the Company’s receipt of the Notice of Termination, provided that the Company may elect to waive such 30-day period.  Notwithstanding the foregoing, in no event shall the Date of Termination occur until the Executive experiences a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and, notwithstanding anything contained herein to the contrary, the date on which such separation from service takes place shall be the “Date of Termination.”

 

4.              Obligations of the Company upon Termination.

 

a.              By the Company Other Than for Cause, Death or Disability; By the Executive for Good Reason.  If, during the Employment Period, (x) the Company shall terminate the Executive’s employment other than for Cause, death or Disability or (y) the Executive shall terminate employment for Good Reason, subject to the Executive’s delivery (and non-revocation) of an executed release of claims against the Company and its officers, directors, employees and affiliates in a form substantially similar to the form attached hereto as Exhibit A (the “Release”), which Release must be delivered to the Company within 50 days after the Date of Termination (the “Release Deadline”):

 

i.                  the Company shall pay to the Executive the following amounts:

 

1.              a lump sum cash payment within 30 days after the Date of Termination equal to the aggregate of the following amounts: (A) the Executive’s Annual Base Salary and vacation pay through the Date of Termination, and (B) the Executive’s accrued Annual Bonus for the fiscal year immediately preceding the fiscal year in which the Date of Termination occurs (other than any portion of such Annual Bonus that was previously deferred, which portion shall instead be paid in accordance with the applicable deferral election) if such bonus has not been paid as of the Date of Termination, in each case, to the extent not previously paid (the sum of the amounts described in this Section 4(a)(i)(1) shall be hereinafter referred to as the “Accrued Obligations”);

 

2.              an amount equal to the product of (A) (x) unless such termination occurs pursuant to Section 3(c)(vi), two (2.5, 

 

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if such termination occurs during the 12-month period (the “Protected Period”) commencing on the date of a Change of Control (as defined below)) or (y) if such termination occurs pursuant to Section 3(c)(vi), one, times (B) the sum of (x) the Executive’s Annual Base Salary, plus (y) the Executive’s Target Bonus as in effect for the fiscal year of the Company in which the Date of Termination occurs, payable in a lump sum on the 60th day following the Date of Termination; and

 

3.              unless such termination occurs pursuant to Section 3(c)(vi), a prorated Annual Bonus for the fiscal year during which the Date of Termination occurs, payable based upon actual performance at the same time that annual bonuses are payable to Company executives generally (the “Prorated Bonus”); provided that, if the Date of Termination occurs during the Protected Period, the Prorated Bonus shall be based upon the target Annual Bonus and shall be paid on the 60th day following the Date of Termination.

 

ii.               the Company shall, from the Date of Termination through the 24-month anniversary thereof or, if such termination occurs pursuant to Section 3(c)(vi), through the 12-month anniversary thereof (or, in each case, if earlier, the date upon which the Executive is eligible to receive comparable health benefits from a subsequent employer), provide the Executive with monthly reimbursement in respect of the Executive’s medical, dental and vision coverage expenses, with the reimbursement to equal an amount that, on an after-tax basis, is equal to the excess of the monthly COBRA premium as of the Executive’s Date of Termination for the medical, dental and vision coverage the Executive had immediately prior to the Executive’s Date of Termination over the monthly dollar amount the Executive would have paid to the Company for such medical, dental and vision coverage if the Executive had remained employed (the benefits provided pursuant to this Section 4(a)(ii), the “Post-Employment Health Care Benefits”);

 

iii.            full vesting of any outstanding and unvested portions of the Initial Equity Grant;

 

iv.           vesting of any portion of an Annual LTI Award that would have vested based upon continued service had the Executive remained employed through the first anniversary of the Date of Termination; provided that if the Date of Termination occurs 

 

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during the Protected Period, all unvested Annual LTI Awards shall vest in full, with any performance-vesting conditions in effect as of the Date of Termination deemed to be achieved based upon the greater of actual performance through the Date of Termination or target levels; and

 

v.              to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or that the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies through the Date of Termination (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”).

 

Notwithstanding the foregoing provisions of Section 4(a), in the event that the Executive is a “specified employee” (within the meaning of Section 409A of the Code and with such classification to be determined in accordance with the methodology established by the applicable employer) (a “Specified Employee”), amounts and benefits (other than the Accrued Obligations) that are deferred compensation (within the meaning of Section 409A of the Code) that would otherwise be payable or provided under Section 4(a) 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 (“Interest”), on the first business day after the date that is six months following the Date of Termination (the “409A Payment Date”).  For the avoidance of doubt, the parties hereto acknowledge that the severance payments and benefits described in this Agreement are intended to be exempt from the operation of Section 409A of the Code and not “deferred compensation” within the meaning of Section 409A.

 

b.              Death or Disability.  If the Executive’s employment is terminated by reason of the Executive’s death or Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive’s legal representatives under this Agreement, other than (i) payment of Accrued Obligations, (ii) payment of the Prorated Bonus, (iii) full vesting of any outstanding and unvested portions of the Initial Equity Grant, (iv) vesting of any portion of an Annual LTI Awards that would have vested based upon continued service had the Executive remained employed through the first anniversary of the Date of Termination, and (v) Other Benefits; provided that in the case of termination due to Disability, the benefits set forth in this sentence (other than Accrued Obligations and Other Benefits) shall be contingent upon the Executive’s execution prior to the Release Deadline (and non-revocation) of the Release.  The Accrued Obligations shall be paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination.  The term “Other Benefits” as utilized in this Section 4(b) shall include death benefits as in effect on the 

 

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date of the Executive’s death with respect to senior executives of the Company.

 

c.               Cause; Without Good Reason.  If the Executive’s employment shall be terminated (i) by the Company for Cause, or (ii) by the Executive without Good Reason, this Agreement shall terminate without further obligations to the Executive other than the obligation to provide the Executive with the Accrued Obligations and the Other Benefits; provided, however, that if the Executive’s employment shall be terminated for Cause, the term “Accrued Obligations” shall not be deemed to include the Executive’s Annual Bonus for the fiscal year immediately preceding the fiscal year in which the Date of Termination occurs.  The Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination.

 

5.              Definition of Change of Control.   For purposes of this Agreement, “Change of Control” shall mean the occurrence of any of the following events:

 

a.              An acquisition (other than directly from the Company) of any voting securities of the Company (the “Voting Securities”) by any “Person” (having the meaning ascribed to such term in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the “1934 Act”), and as used in Section 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d)) immediately after which such Person has beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) (“Beneficial Ownership” and/or “Beneficially Owned”) of 35% or more of the combined voting power of the Company’s then-outstanding Voting Securities; provided, however, that in determining whether a Change of Control has occurred, Voting Securities which are acquired in a Non-Control Acquisition (as hereinafter defined) shall not constitute an acquisition which would cause a Change of Control. A Non-Control Acquisition shall mean an acquisition by (i) the Company or any company, corporation, partnership, limited liability company or other Person in which the Company directly or indirectly owns a majority interest (“Subsidiary”), (ii) an employee benefit plan (or a trust forming a part thereof) maintained by the Company or any Subsidiary, or (ii) any Person in connection with a Non-Control Transaction (as hereinafter defined);

 

b.              The individuals who, as of the Effective Date, are members of the Board of Directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that if the election, or nomination for election by the Company’s stockholders, of any new director was approved by a vote of at least a majority of the Incumbent Board, such new director shall, for purposes of this Section 5(b), be considered a member of the Incumbent Board;

 

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and provided, further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened election contest (as described in former Rule 14a-11 promulgated under the 1934 Act) (“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 of the Company (a “Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest;

 

c.               Consummation of merger, consolidation or reorganization involving the Company, unless such transaction is a Non-Control Transaction. For purposes of this Agreement, the term “Non-Control Transaction” shall mean a merger, consolidation or reorganization of the Company in which:

 

i.                  The stockholders of the Company, immediately before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least 45% of the combined voting power of the voting securities of the corporation or entity resulting from such merger, consolidation or reorganization (the “Surviving Company”) over which any Person has Beneficial Ownership in substantially the same proportion as their Beneficial Ownership of the Voting Securities immediately before such merger, consolidation or reorganization;

 

ii.               The individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least a majority of the members of the board of directors or equivalent body of the Surviving Company; and

 

iii.            No Person (other than the Company, any Subsidiary, any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Company or any Person who, immediately prior to such merger, consolidation or reorganization, had Beneficial Ownership of 35% or more of the then-outstanding Voting Securities) has Beneficial Ownership of 35% or more of the combined voting power of the Surviving Company’s then-outstanding voting securities.

 

d.              A complete liquidation or dissolution of the Company; or

 

e.               The sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary).

 

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Notwithstanding the foregoing, a Change of Control shall not be deemed to occur solely because any Person (the “Subject Person”) acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person; provided, however, that if a Change of Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then-outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change of Control shall occur.

 

Notwithstanding anything herein to the contrary, with respect to any compensation hereunder that is “nonqualified deferred compensation” for purposes of Section 409A of the Code, only to the extent necessary to comply with Section 409A of the Code, a Change of Control must constitute a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, within the meaning of Section 409A(a)(2)(A)(v) of the Code.

 

6.              Non-exclusivity of Rights.  Except as specifically provided, nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies and for which the Executive qualifies pursuant to its terms, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company or any of its affiliated companies.  Amounts that are vested benefits or that the Executive is otherwise entitled to receive pursuant to the terms of any plan, program, policy or practice of or any contract or agreement with the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, program, policy or practice or contract or agreement except as explicitly modified by this Agreement.

 

7.              No Mitigation.  In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced, regardless of whether the Executive obtains other employment.

 

8.              Restrictive Covenants.

 

a.              Confidentiality.

 

i.                  The Executive shall not, unless written permission is granted by the Company, disclose to or communicate in any manner with the press or any other media about the Executive’s employment with the Company, the terms of this Agreement, the termination of the Executive’s employment with the Company, the Company’s 

 

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businesses or affairs, the Company’s officers, directors, employees and/or consultants, or any matter related to any of the foregoing.

 

ii.               The Executive acknowledges that it is the policy of the Company and its Subsidiaries to maintain as secret and confidential all information and techniques acquired, developed, possessed or used by the Company and its Subsidiaries relating to their business, operations, actual or potential products, strategies, assets, liabilities, potential assets and liabilities, employees, customers, tenants, operators, borrowers, managers, proposed or prospective customers, tenants, operators, borrowers and managers, business partners, communities, buildings and facilities (including, without limitation: information protected by the Company’s attorney/client, work product, or tax advisor/audit privileges; tax matters and information; financial analysis and models; the Company’s strategic plans; negotiations with third parties; methods, policies, processes, formulas, techniques, know-how and other knowledge; trade practices, trade secrets, or financial matters; lists of customers or customers’ purchases; lists of suppliers, representatives, or other distributors; lists of and information (business, financial and otherwise) about tenants, operators, borrowers, managers and customers and their respective businesses and operations; requirements for systems, programs, machines, or their equipment; information regarding the Company’s bank accounts, credit agreement or financial projections, results or information; information regarding the Company’s directors or officers or their personal affairs), whether or not any such information or any of the material described above is explicitly designated or marked as “confidential” (“Confidential Information”).  “Confidential Information” shall not include information that (A) is or becomes generally available to the public other than as a result of a disclosure by the Executive in violation of this Agreement, (B) was available to the Executive on a nonconfidential basis prior to the Executive’s employment with the Company, or (C) is compelled to be disclosed by any law, regulation or order of a court or governmental agency, provided that prior written notice is given to the Company and the Executive cooperates with the Company in any efforts by the Company to limit the scope of such obligation and/or to obtain confidential treatment of any material disclosed pursuant to such obligation.  The Executive recognizes that all such Confidential Information is the sole and exclusive property of the Company and its Subsidiaries, and that disclosure of Confidential Information would cause damage to the Company and its Subsidiaries.  

 

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The Executive shall not disclose, directly or indirectly, any Confidential Information obtained during the Executive’s employment with the Company, and will take all necessary precautions to prevent disclosure, to any unauthorized individual or entity inside or outside the Company, and will not use the Confidential Information or permit its use for the benefit of the Executive or other third party other than the Company.  These obligations shall continue for so long as the Confidential Information remains Confidential Information.

 

b.              Noncompetition, Nonsolicitation, Noninterference.  The Executive shall not during the Executive’s employment with the Company and, subject to Section 8(k) below, during the two-year period after the termination of the Executive’s employment with the Company for any reason (the “Restricted Period”), either directly or indirectly (through another business or person) engage in or facilitate any of the following activities anywhere in the United States:

 

i.                  Hiring, recruiting, engaging as a consultant or adviser, employing or attempting or soliciting to hire, recruit or employ any person employed by the Company or any Subsidiary or affiliate, or causing or attempting to cause any third party to do any of the foregoing; nothing in this Section 8(b)(i) shall, however, restrict the Executive from general employment advertising on a broad basis not targeted at or designed for any such employee;

 

ii.               Causing or attempting to cause any person employed at any time during the Restricted Period by the Company or any Subsidiary or affiliate to terminate his relationship with the Company or any Subsidiary or affiliate;

 

iii.            Soliciting, enticing away, or endeavoring to entice away, or otherwise interfering with any independent contractor, customer, tenant, operator, manager or any proposed independent contractor, customer, tenant, operator, or manager with whom the Company or any Subsidiary or affiliate has ongoing contact, financial partner or proposed financial partner with whom the Company or any Subsidiary or affiliate has ongoing contact, vendor, supplier or other similar business relation, who at any time during the Restricted Period or who at any time during the period commencing one year prior to the Date of Termination, to the Executive’s knowledge, maintained a material business relationship with the Company or any Subsidiary or affiliate or with whom the Company or any Subsidiary or affiliate is targeting for a material business relationship or is engaged in discussions with to commence a material 

 

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business relationship at the time of termination of the Executive’s employment with the Company; or

 

iv.           Performing services as an employee, director, officer, consultant, independent contractor or advisor of, or investing in, whether in the form of equity or debt, owning any interest or otherwise having an ownership or other interest in or a connection to any Prohibited Entity (as defined below); or performing services as an employee, director, officer, consultant, independent contractor or advisor of any other company, entity or person if those services relate directly to a business or businesses that directly and materially compete with the Company anywhere in the United States.  Nothing in this Section 8(b)(iv) shall, however, restrict the Executive from (A) making an investment in and owning up to 2% of the common stock of any company whose stock is listed on a national exchange, provided that such investment does not give the Executive the right or ability to control or influence the policy decisions of any direct competitor, or (B) except as provided in Section 8(c) below, performing services as an employee, director, officer, consultant, independent contractor or advisor of an operating company that provides healthcare goods or services other than leasing or financing of real property (for example, a hospital or nursing facility).  For purposes of this Agreement, a “Prohibited Entity” is any company, entity or person that derives more than 20% of its consolidated gross revenues from a business or businesses that directly and materially compete with the Company.

 

c.               Other Prohibited Activities.  The Executive acknowledges that the Executive’s position at the Company provides the Executive with access to highly sensitive information concerning the Company’s lessees, managers, borrowers and operators and their affiliates and leases, operating agreements, management agreements and other contractual agreements with such lessees, managers, borrowers and operators and their affiliates which are critical to the Company’s ability to effectively function and to the properties to be purchased by the Company, and that if the Executive were to provide services for such lessees, managers, borrowers and operators and/or their affiliates such services would cause irreparable damages to the Company.  The Executive shall not during the Executive’s employment and the Restricted Period, either directly or indirectly (through another business or person), engage in or facilitate any of the following activities anywhere in the United States or in any location outside the United States where the Company conducts or plans to conduct business: performing services as an employee, director, officer, consultant, independent contractor or advisor of, or investing in, whether in the form of equity or debt, owning any interest or 

 

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otherwise having an ownership or other interest in any of the Company’s then-current lessees, managers, borrowers or operators or any of their respective parent, sister, subsidiary or affiliated entities (other than any such lessee, manager, borrower or operator that, together with its parent, sister, subsidiary and affiliated entities, contributes less than 5% of the Company’s consolidated net operating income (NOI), computed on a pro forma annualized basis consistent with the Company’s most recent supplemental disclosure, and is not in default under any of its agreements with the Company nor has an ongoing dispute with the Company) in any manner, including, without limitation, as an owner, principal, partner, officer, director, stockholder, employee, consultant, contractor, agent, broker, representative or otherwise.  Nothing in this Section 8(c) shall, however, restrict the Executive from making an investment in and owning, directly or indirectly, up to 2% of the common stock of any company whose stock is listed on a national exchange; provided that such investment does not give the Executive the right or ability to control or influence the policy decisions of any lessee, manager, borrower or operator or any of its parent, sister, subsidiary or affiliate entities.

 

d.              Non-Disparagement.  The Executive agrees not to make, or cause to be made, any statement, observation or opinion, or communicate any information (whether oral or written, directly or indirectly) that (i) accuses or implies that the Company and/or any of its affiliates, together with their respective present or former officers, directors, partners, stockholders, employees and agents, and each of their predecessors, successors and assigns, engaged in any wrongful, unlawful, unethical or improper conduct, whether relating to the Executive’s employment (or termination thereof), the business or operations of the Company, or otherwise; or (ii) disparages, impugns or in any way reflects adversely upon the business, good will, products, business opportunities, competency, character, behavior or reputation of the Company and/or any of its affiliates, together with their respective present or former officers, directors, partners, stockholders, employees and agents, and each of their predecessors, successors and assigns. Nothing herein shall be deemed to preclude the Executive or the Company from providing truthful testimony or information pursuant to subpoena, court or other similar legal process or proceedings, or to report to or cooperate with any governmental, regulatory or self-regulatory body with jurisdiction over the Company, and to make disclosures that are protected under whistleblower or other provisions of applicable law or regulation.

 

e.               New Employer.  The Executive shall provide the terms and conditions of this Section 8 to any prospective new employer or new employer and shall permit the Company to contact any such company, entity or individual to confirm the Executive’s compliance with this Section 8 and 

 

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shall provide the Company with such information as it requests to allow such inquiry.

 

f.                Reasonableness of Restrictive Covenants.

 

i.                  The Executive acknowledges that the covenants contained in this Section 8 are reasonable in the scope of the activities restricted, the geographic area covered by the restrictions, and the duration of the restrictions, and that such covenants are reasonably necessary to protect the Company’s legitimate interests in its Confidential Information, its reputation, and in its relationships with its employees, customers, and suppliers.

 

ii.               The Company has consulted, and the Executive has had an opportunity to consult, with their respective legal counsel and to be advised concerning the reasonableness and propriety of such covenants.  The Executive acknowledges that the Executive’s observance of the covenants contained herein will not deprive the Executive of the ability to earn a livelihood or to support the Executive’s dependents.

 

g.               Right to Injunction.  In recognition of the confidential nature of the Confidential Information, and in recognition of the necessity of the limited restrictions imposed by Section 8, the Executive and the Company agree that it would be impossible to measure solely in money the damages which the Company would suffer if the Executive were to breach any of the Executive’s obligations hereunder.  The Executive acknowledges that any breach of any provision of this Agreement would irreparably injure the Company.  Accordingly, the Executive agrees that if the Executive breaches any of the provisions of Section 8, the Company shall be entitled, in addition to any other remedies to which the Company may be entitled under this Agreement or otherwise, to an injunction to be issued without bond by a court of competent jurisdiction, to restrain any breach, or threatened breach, of any provision of Section 8, and the Executive hereby waives any right to assert any claim or defense that the Company has an adequate remedy at law for any such breach or to require the Company to post bond or other security during the pendency of such injunction.

 

h.              Assistance.  During the two-year period following a termination of the Executive’s employment with the Company, the Executive shall from time to time provide the Company with such reasonable assistance and cooperation as the Company may reasonably from time to time request in connection with any investigation, claim, dispute, judicial, legislative, administrative or arbitral proceeding, or litigation (any of the foregoing, a “Proceeding”) arising out of matters within the knowledge of 

 

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the Executive and related to the Executive’s position as an employee of the Company.  Such assistance and cooperation shall include providing information, declarations or statements to the Company, signing documents, meeting with attorneys or other representatives of the Company, and preparing for and giving truthful testimony in connection with any Proceeding or related deposition.  In any such instance, the Executive shall provide such assistance and cooperation at times and in places mutually convenient for the Company and the Executive and which do not unreasonably interfere with the Executive’s business or personal activities.  The Company shall reimburse the Executive’s reasonable out-of-pocket costs and expenses in connection with such assistance and cooperation upon the Executive’s written request in such form and containing such information as the Company shall reasonably request.

 

i.                  Return Of Company Property/Passwords.  The Executive hereby expressly covenants and agrees that following termination of the Executive’s employment with the Company for any reason or at any time upon the Company’s request, the Executive will promptly return to the Company all property of the Company in his possession or control (whether maintained at his office, home or elsewhere), including, without limitation, all Company passwords, credit cards, keys, beepers, laptop computers, cell phones and all copies of all management studies, business or strategic plans, budgets, notebooks and other printed, typed or written materials, documents, diaries, calendars and data of or relating to the Company or its personnel or affairs.

 

j.                 Intellectual Property.  The Executive acknowledges and agrees that all ideas, methods, inventions, discoveries, improvements, work products or developments (“Intellectual Property”), will be deemed “works made for hire”, as such term is defined under the copyright laws of the United States, on behalf of the Company and the Executive acknowledges and agrees that the Company will be deemed to be the sole owner of the Intellectual Property, and all underlying rights therein, in all media now known or hereinafter devised, throughout the universe and in perpetuity without any further obligations to the Executive.  If the Intellectual Property, or any portion thereof, is deemed not to be “works made for hire”, the Executive hereby irrevocably conveys, transfers and assigns to the Company, all rights, in all media now known or hereinafter devised, throughout the universe and in perpetuity, in and to the Intellectual Property, including, without limitation, all of the Executive’s right, title and interest in the copyrights (and all renewals, revivals and extensions thereof) and patent rights underlying the Intellectual Property, including, without limitation, all rights of any kind or any nature now or hereafter recognized, including without limitation, the unrestricted right to make modifications, adaptations and revisions to the Intellectual Property, to exploit and allow others to exploit the Intellectual Property 

 

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and all rights to sue at law or in equity for any infringement, or other unauthorized use or conduct in derogation of the Intellectual Property, known or unknown, prior to the date hereof, including, without limitation, the right to receive all proceeds and damages therefrom.  In addition, the Executive hereby waives any so-called “moral rights” with respect to the Intellectual Property.  The Executive hereby waives any and all currently existing and future monetary rights in and to the Intellectual Property and all patents that may issue thereon, including, without limitation, any rights that would otherwise accrue to the Executive’s benefit by virtue of the Executive being an employee of or other service provider to the Company.

 

k.              Special Non-Renewal Rule.  In the event that the Executive’s termination of employment occurs pursuant to Section 3(c)(vi), the Restricted Period shall, for purposes of Sections 8(b)(iii), 8(b)(iv) and 8(c), conclude on the first anniversary of such termination.

 

l.                  Executive Covenants Generally.  If any of the covenants in this Section 8 is finally held to be invalid, illegal or unenforceable (whether in whole or in part), such covenant shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability and the remaining covenants shall not be affected thereby; provided, however, that if any of the covenants is finally held to be invalid, illegal or unenforceable because it exceeds the maximum scope determined to be acceptable to permit such provision to be enforceable, such covenant will be deemed to be modified to the minimum extent necessary to modify such scope in order to make such provision enforceable hereunder to afford the maximum protection to the Company under the law, and the Executive agrees to such modification.

 

m.          Interpretation.  For purposes of this Section 8, references to “the Company” shall mean the Company as hereinbefore defined and any of its controlled affiliated companies.

 

9.              Golden Parachute Excise Tax Modified Cutback.

 

Anything in this Agreement to the contrary notwithstanding, in the event Deloitte or such other accounting firm as shall be designated by the Company with the Executive’s consent (which shall not be unreasonably withheld) (the “Accounting Firm”) shall determine that receipt of all payments or distributions by the Company or the Affiliated Companies in the nature of compensation to or for the Executive’s benefit, whether paid or payable pursuant to this Agreement or otherwise (a “Payment”), would subject the Executive to the excise tax under Section 4999 of the Code, the Accounting Firm shall determine whether to reduce any of the Payments paid or payable pursuant to this Agreement (the “Agreement Payments”) to the “Reduced Amount” (as defined below).  The Agreement Payments shall be reduced to the “Reduced Amount” only if the Accounting Firm determines that the Executive would have a 

 

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greater “Net After-Tax Receipt” (as defined below) of aggregate Payments if the Executive’s Agreement Payments were reduced to the Reduced Amount.  If the Accounting Firm determines that the Executive would not have a greater Net After-Tax Receipt of aggregate Payments if the Executive’s Agreement Payments were so reduced, the Executive shall receive all Agreement Payments to which the Executive is entitled under this Agreement.

 

If the Accounting Firm determines that aggregate Agreement Payments should be reduced to the Reduced Amount, the Company shall promptly give the Executive notice to that effect and a copy of the detailed calculation thereof.  All determinations made by the Accounting Firm under this Section 9 shall be binding upon the Company and the Executive and shall be made as soon as reasonably practicable and in no event later than 15 days following the later of the Date of Termination or the date of the transaction which causes the application of Section 280G of the Code.  For purposes of reducing the Agreement Payments to the Reduced Amount, only amounts payable under this Agreement (and no other Payments) shall be reduced.  The reduction of the amounts payable hereunder, if applicable, shall be made by reducing the payments and benefits under the following sections in the following order:  (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata.  Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to Section 409A of the Code, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to Section 409A of the Code as deferred compensation.  All fees and expenses of the Accounting Firm shall be borne solely by the Company.

 

As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that amounts will have been paid or distributed by the Company to or for the benefit of the Executive pursuant to this Agreement which should not have been so paid or distributed (“Overpayment”) or that additional amounts which will have not been paid or distributed by the Company to or for the benefit of the Executive pursuant to this Agreement could have been so paid or distributed (“Underpayment”), in each case, consistent with the calculation of the Reduced Amount hereunder.  In the event that the Accounting Firm, based upon the assertion of a deficiency by the Internal Revenue Service against either the Company or the Executive which the Accounting Firm believes has a high probability of success determines that an Overpayment has been made, the Executive shall pay any such Overpayment to the Company together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code; provided, however, that no

 

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amount shall be payable by the Executive to the Company if and to the extent such payment would not either reduce the amount on which the Executive is subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes.  In the event that the Accounting Firm, based upon controlling precedent or substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be paid promptly (and in no event later than 60 days following the date on which the Underpayment is determined) by the Company to or for the benefit of the Executive together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code.

 

For purposes hereof, the following terms have the meanings set forth below:

 

“Reduced Amount” shall mean the greatest amount of Agreement Payments that can be paid that would not result in the imposition of the excise tax under Section 4999 of the Code if the Accounting Firm determines to reduce Agreement Payments pursuant to Section 9(a).

 

“Net After-Tax Receipt” shall mean the present value (as determined in accordance with Sections 280G(b)(2)(A)(ii) and 280G(d)(4) of the Code) of a Payment net of all taxes imposed on the Executive with respect thereto under Sections 1 and 4999 of the Code and under applicable state and local laws, determined by applying the highest marginal rate under Section 1 of the Code and under state and local laws which applied to the Executive’s taxable income for the immediately preceding taxable year, or such other rate(s) as the Accounting Firm determined to be likely to apply to the Executive in the relevant tax year(s).

 

To the extent requested by the Executive, the Company shall cooperate with the Executive in good faith in valuing, and the Accounting Firm shall take into account the value of, services provided or to be provided by the Executive (including without limitation, the Executive’s agreeing to refrain from performing services pursuant to a covenant not to compete or similar covenant) before, on or after the date of a change in ownership or control of the Company (within the meaning of Q&A-2(b) of the final regulations under Section 280G of the Code), such that payments in respect of such services may be considered reasonable compensation within the meaning of Q&A-9 and Q&A-40 to Q&A-44 of the final regulations under Section 280G of the Code and/or exempt from the definition of the term “parachute payment” within the meaning of Q&A-2(a) of the final regulations under Section 280G of the Code in accordance with Q&A-5(a) of the final regulations under Section 280G of the Code.

 

10.       Successors.

 

a.              This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

 

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b.              This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

 

c.               The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law or otherwise.  As used in this Agreement, the term “affiliated companies” shall include any company controlled by, controlling or under common control with the Company.

 

11.       Miscellaneous.

 

a.              This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws.  The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.  This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.  As of the Effective Date, this Agreement shall supersede and replace any other agreement between the parties with respect to the subject matter hereof in effect immediately prior to the execution of this Agreement, including without limitation the Prior Employment Agreement and the CEO Employment Agreement Termsheet among the Executive, the Company, and Ventas, executed in April 2015 (the “Termsheet”), and the Executive shall not be entitled to any severance pay or benefits under any other severance plan, program or policy of the Company and the affiliated companies.  Notwithstanding the foregoing, the restrictive covenants in the Prior Employment Agreement shall remain in effect, and Ventas may continue to enforce such covenants, following the Effective Date; provided, however, that (i) the Effective Date shall be treated as the date of termination of employment for purposes of the duration of any such restrictive covenants and (ii)  in no event may Ventas enforce any such restrictive covenant against the Executive for actions taken in the Executive’s capacity as an employee of the Company that are reasonably related to the operations of the Company or an affiliated company, and in no event shall service to the Company or an affiliated company be deemed to violate any non-competition covenants in the Prior Employment Agreement.  Without limiting the generality of the foregoing, for the avoidance of doubt, no severance shall be due, and no 

 

22

 

equity compensation shall be subject to accelerated vesting, under the Prior Employment Agreement or otherwise in connection with supersession of the Prior Employment Agreement or otherwise in connection with the Spinoff.

 

b.              All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

	
If to the Executive:
    	
 
    	
At the most recent address
   on file at the Company.
    
	
 
    	
 
    	
 
    
	
If to the Company:
    	
 
    	
Care Capital Properties, Inc.
   353 N. Clark Street, Suite 2900
    
	
 
    	
 
    	
Chicago, IL   60654                             
    
	
 
    	
 
    	
Attention: General Counsel.
    

 

or to such other address as either party shall have furnished to the other in writing in accordance herewith.  Notice and communications shall be effective when actually received by the addressee.

 

c.               The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

 

d.              The Company may withhold from any amounts payable under this Agreement such federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

 

e.               The Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

 

f.                Any provision of this Agreement that by its terms continues after the expiration of the Employment Period or the termination of the Executive’s employment shall survive in accordance with its terms.

 

g.               The Company will pay all reasonable documented legal fees incurred by the Executive in connection with the drafting and negotiation of the Termsheet and this Agreement, provided that such payments shall be capped at, and not exceed, $15,000 in the aggregate.

 

h.              The Agreement is intended to comply with the requirements of Section 409A of the Code or an exemption or exclusion therefrom and shall 

 

23

 

in all respects be administered in accordance with Section 409A of the Code.  The Company and the Executive mutually intend to structure the payments and benefits described in this Agreement, and the Executive’s other compensation, to be exempt from or to comply with the requirements of Section 409A of the Code to the extent applicable.  Each payment under this Agreement shall be treated as a separate payment for purposes of Section 409A of the Code.  In no event may the Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement.  If the Executive dies following the Date of Termination and prior to the payment of any amounts delayed on account of Section 409A of the Code, such amounts shall be paid to the personal representative of the Executive’s estate within 30 days after the date of the Executive’s death.  All reimbursements and in-kind benefits provided under this Agreement that constitute deferred compensation within the meaning of Section 409A of the Code shall be made or provided in accordance with the requirements of Section 409A of the Code, including, without limitation, that (i) in no event shall reimbursements by the Company under this Agreement be made later than the end of the calendar year next following the calendar year in which the applicable fees and expenses were incurred, provided, that the Executive shall have submitted an invoice for such fees and expenses at least 10 days before the end of the calendar year next following the calendar year in which such fees and expenses were incurred; (ii) the amount of in-kind benefits and the Company is obligated to pay or provide in any given calendar year shall not affect the in-kind benefits that the Company is obligated to pay or provide in any other calendar year; (iii) the Executive’s right to have the Company pay or provide such reimbursements and in-kind benefits may not be liquidated or exchanged for any other benefit; and (v) in no event shall the Company’s obligations to make such reimbursements or to provide such in-kind benefits apply later than the Executive’s remaining lifetime (or if longer, through the 20th anniversary of the Effective Date).  Prior to a Change in Control but within the time period permitted by the applicable Treasury Regulations, the Company may, in consultation with the Executive, modify the Agreement, in the least restrictive manner necessary and without any diminution in the value of the payments to the Executive, in order to cause the provisions of the Agreement to comply with the requirements of Section 409A of the Code, so as to avoid the imposition of taxes and penalties on the Executive pursuant to Section 409A of the Code.

 

[Signature Page Follows]

 

24

 

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization from its Board, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

 

	
 
    	
 
    
	
 
    	
RAYMOND J. LEWIS
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Care Capital Properties, Inc.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:   
    	
Richard   T. Riney
    
	
 
    	
 
    	
Title:   
    	
Vice   President
    
	
 
    	
 
    
	
 
    	
Solely for purposes of   Section 11(a) hereof:
    
	
 
    	
VENTAS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:   
    	
Debra   Cafaro
    
	
 
    	
 
    	
Title:   
    	
Chief   Executive Officer
    

 

 

EXHIBIT A

 

GENERAL RELEASE

 

This General Release of all Claims (this “Agreement”) is entered into on                     , 20     by Raymond J. Lewis (the “Executive”) and Care Capital Properties, Inc. (the “Company”).

 

In consideration of the promises set forth in the Employment Agreement between the Executive, the Company and, for the limited purposes set forth therein, Ventas, Inc., executed on                  2015, effective on the “Effective Date” (as defined therein) (the “Employment Agreement”), the Executive agrees as follows:

 

1. General Release and Waiver of Claims.

 

(a) Release.  In consideration of the payments and benefits provided to the Executive under the Employment Agreement and after consultation with counsel, the Executive and each of the Executive’s respective heirs, executors, administrators, representatives, agents, successors and assigns (collectively, the “Releasors”) hereby irrevocably and unconditionally release and forever discharge the Company and its subsidiaries and affiliates and each of their respective officers, employees, directors, shareholders and agents (“Releasees”) from any and all claims, actions, causes of action, rights, judgments, obligations, damages, demands, accountings or liabilities of whatever kind or character (collectively, “Claims”), including, without limitation, any Claims under any federal, state, local or foreign law, that the Releasors may have, or in the future may possess, arising out of (i) the Executive’s employment relationship with and service as an employee, officer or director of the Company, and the termination of such relationship or service and (ii) any event, condition, circumstance or obligation that occurred, existed or arose on or prior to the date hereof; provided, however, that notwithstanding anything else herein to the contrary, this Agreement shall not affect: the obligations of the Company or the Executive set forth in the Employment Agreement or other obligations that, in each case, by their terms, are to be performed after the date hereof by the Company or the Executive (including, without limitation, obligations to the Executive under the Employment Agreement for any severance or similar payments or benefits, under any stock option, stock or equity-based award, plan or agreements, or payments or obligations under any pension plan or other benefit or deferred compensation plan, all of which shall remain in effect in accordance with their terms); any indemnification or similar rights the Executive has as a current or former officer or director of the Company, including, without limitation, any and all rights thereto referenced in the Employment Agreement, the Company’s bylaws, other governance documents, or any rights with respect to directors’ and officers’ insurance policies; the Executive’s right to reimbursement of business expenses; and any Claims the Releasors may have against the Releasees in the event that the Company or any member of the Releasees brings any Claims against the Executive or any member of the Releasors.

 

(b) Specific Release of ADEA Claims.  In further consideration of the payments and benefits provided to the Executive under the Employment Agreement, the Releasors hereby unconditionally release and forever discharge the Releasees from any and all Claims that the 

 

 

Releasors may have as of the date the Executive signs this Agreement arising under the Federal Age Discrimination in Employment Act of 1967, as amended, and the applicable rules and regulations promulgated thereunder (“ADEA”).  By signing this Agreement, the Executive hereby acknowledges and confirms the following: (i) the Executive was advised by the Company in connection with his termination to consult with an attorney of his choice prior to signing this Agreement and to have such attorney explain to the Executive the terms of this Agreement, including, without limitation, the terms relating to the Executive’s release of claims arising under ADEA, and the Executive has in fact consulted with an attorney; (ii) the Executive was given a period of not fewer than 21 days to consider the terms of this Agreement and to consult with an attorney of his choosing with respect thereto; and (iii) the Executive knowingly and voluntarily accepts the terms of this Agreement.  The Executive also understands that he has seven days following the date on which he signs this Agreement within which to revoke the release contained in this paragraph, by providing the Company a written notice of his revocation of the release and waiver contained in this paragraph.

 

(c) No Assignment.  The Executive represents and warrants that he has not assigned any of the Claims being released under this Agreement.

 

2. Proceedings.  The Executive has not filed, and agrees not to initiate or cause to be initiated on his behalf, any complaint, charge, claim or proceeding against the Releasees before any local, state or federal agency, court or other body, other than with respect to the obligations of the Company to the Executive under the Employment Agreement or in respect of any other matter described in the proviso to Section 1(a) (each, individually, a “Proceeding”), and agrees not to participate voluntarily in any Proceeding.  The Executive waives any right he may have to benefit in any manner from any relief (whether monetary or otherwise) arising out of any Proceeding.

 

3. Remedies.  In the event the Executive initiates or voluntarily participates in any Proceeding following his receipt of written notice from the Company and a failure to cease such participation within 30 days following receipt of such notice, or if he revokes the ADEA release contained in Paragraph 1(c) of this Agreement within the seven-day period provided under Paragraph 1(c), the Company may, in addition to any other remedies it may have, reclaim any amounts paid to him under the termination provisions of the Employment Agreement (including for this purpose stock or proceeds from the sale of stock purchased upon the exercise of stock options or delivered upon the vesting of another equity-based compensation award, to the extent the vesting of such stock option or other award accelerated on account of the Executive’s termination of employment) or terminate any benefits or payments that are subsequently due under the Employment Agreement, without waiving the release granted herein.

 

The Executive understands that by entering into this Agreement he will be limiting the availability of certain remedies that he may have against the Company and limiting also his ability to pursue certain claims against the Company.

 

 

4. Severability Clause.  In the event any provision or part of this Agreement is found to be invalid or unenforceable, only that particular provision or part so found, and not the entire Agreement, will be inoperative.

 

5. Nonadmission.  Nothing contained in this Agreement will be deemed or construed as an admission of wrongdoing or liability on the part of the Company.

 

6. Governing Law.  All matters affecting this Agreement, including the validity thereof, are to be governed by, and interpreted and construed in accordance with, the laws of the state of Delaware applicable to contracts executed in and to be performed in that State.

 

7. Notices.  All notices or communications hereunder shall be in writing, addressed as provided in Section 11(b) of the Employment Agreement.

 

THE EXECUTIVE ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT AND THAT HE FULLY KNOWS, UNDERSTANDS AND APPRECIATES ITS CONTENTS, AND THAT HE HEREBY EXECUTES THE SAME AND MAKES THIS AGREEMENT AND THE RELEASE AND AGREEMENTS PROVIDED FOR HEREIN VOLUNTARILY AND OF HIS OWN FREE WILL.

 

IN WITNESS WHEREOF, the Executive has executed this Agreement on the date first set forth below.

 

	
 
    	
 
    
	
 
    	
THE EXECUTIVE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Raymond J. Lewis
    
	
 
    	
 
    	
 
    
	
 
    	
Date of Execution:

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