Sabra Health Care REIT, Inc 8-K, filed Jan 3, 2022
Sabra Health Care REIT, Inc. (SBRA)
About this 8-K
Sabra Health Care REIT, Inc filed this 8-K on January 3, 2022, reporting on events of December 30, 2021.
Items reported
- Item 5.02: Director or officer change, or executive pay
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Overview
As previously disclosed in a Form 8-K filed by Sabra Health Care REIT, Inc. (“Sabra” or the “Company”) on August 4, 2021, Harold Andrews, the Company’s Executive Vice President, Chief Financial Officer (Principal Financial Officer) and Secretary, retired from Sabra effective December 31, 2021. Mr. Andrews will remain in a consulting role with Sabra following his retirement pursuant to a two-year consulting agreement, as described below.
Appointment of Chief Financial Officer
On December 30, 2021, Sabra’s Board of Directors appointed Michael Costa, Sabra’s Executive Vice President – Finance and Chief Accounting Officer (Principal Accounting Officer), to succeed Mr. Andrews as the Company’s Executive Vice President, Chief Financial Officer (Principal Financial Officer) and Secretary, in each case effective January 1, 2022. In this position, Mr. Costa will also continue to serve as the Company’s principal accounting officer. Mr. Costa, 43, has served as Sabra’s Executive Vice President – Finance since August 2017 and as Sabra’s Chief Accounting Officer (Principal Accounting Officer) since January 2021. From June 2016 through August 2017, Mr. Costa served as Sabra’s Vice President – Finance and Controller. From Sabra’s inception in 2010 until June 2016, Mr. Costa served as Sabra’s Controller.
On December 28, 2021, the Compensation Committee of Sabra’s Board of Directors approved an employment agreement between the Company and Mr. Costa (the “Employment Agreement”), which agreement is effective as of January 1, 2022. The Employment Agreement provides for an initial annual base salary of $450,000 that is subject to annual merit increases and an annual incentive bonus pursuant to the Company’s Executive Bonus Plan. The Employment Agreement also provides that Mr. Costa is entitled to participate in the Company’s benefit programs for its senior executives, to accrue paid time off in accordance with the Company’s policy for senior executive officers and to be reimbursed for his business expenses.
In the event that Mr. Costa’s employment is terminated by the Company without “good cause” or by Mr. Costa for “good reason” (as those terms are defined in the Employment Agreement), he will be entitled to a lump sum cash severance payment equal to the sum of his annual base salary then in effect and the average of the annual bonus he actually earned for the preceding three years, multiplied by a severance multiplier equal to 1.5, plus any accrued and unpaid bonus for any prior fiscal year and a prorated bonus payment for the year in which the termination occurs. Mr. Costa and his family members will also be entitled to continued coverage under the Company’s health plans or, at Mr. Costa’s option, a monthly cash payment equal to the applicable COBRA premium for such continued coverage, for a period of up to 18 months, except that if such termination occurs on or within two years following a change in control of the Company, the period will be up to 24 months following the date of termination. In the event Mr. Costa’s employment is terminated by the Company without good cause or by Mr. Costa for good reason on or within two years following a change in control of the Company, he will be entitled to a lump sum cash severance payment equal to the sum of his annual base salary then in effect and the average of the annual bonus he actually earned for the preceding three years, multiplied by a severance multiplier of two, plus any accrued and unpaid bonus for any prior fiscal year and a prorated target bonus payment for the year in which the termination occurs (which would be calculated assuming the Company achieves 100% of the financial performance target(s) applicable to the bonus for such fiscal year). Mr. Costa’s right to receive severance payments pursuant to the Employment Agreement is conditioned upon his execution and delivery of (and not revoking) a general release in favor of the Company. In addition, if any payments under the Employment Agreement trigger the excise tax imposed by Section 4999 of the Internal Revenue Code, payments to Mr. Costa will be reduced as provided in the agreement to a level that does not trigger the excise tax if the total after-tax benefit of such reduction exceeds the total after-tax benefit if such reduction is not made.
Pursuant to the Employment Agreement, Mr. Costa agrees that he will not disclose any confidential information of the Company at any time during or after employment with the Company. In addition, Mr. Costa has agreed that, for a period of one year following a termination of employment with the Company, he will not solicit the Company’s employees or customers or interfere with any of the Company’s business relationships.
The term of the Employment Agreement is for an initial period of three years and annually renews for a one-year period on each anniversary of the January 1, 2022 effective date; provided, however, that if after the first year of the term, either party to the agreement provides 60 days’ notice prior to the anniversary of the effective date of the agreement, the agreement will terminate on the anniversary of the effective date occurring in the second year following the year in which such notice was provided.
In connection with his appointment, Mr. Costa will also enter into an indemnification agreement with the Company, the form of which is described below and filed as Exhibit 10.3 to this Current Report on Form 8-K.
There is no arrangement or understanding between Mr. Costa and any other person pursuant to which he was selected as an officer. Mr. Costa has no family relationship with any director, executive officer, or person nominated or chosen by the Company to become a director or executive officer, and he has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Consulting Agreement with Former Chief Financial Officer
On December 30, 2021, the Company entered into a consulting agreement with Mr. Andrews (the “Consulting Agreement”), effective as of December 31, 2021, pursuant to which Mr. Andrews will provide consulting services to the Company as an independent contractor for two years following his retirement. The consulting services will consist of such services as are reasonably requested by Sabra through the Company’s Board of Directors or Chief Executive Officer in connection with transitioning Mr. Costa into the position of Chief Financial Officer.
The Consulting Agreement provides for an annual consulting fee of $500,000, reimbursements for expenses incurred in performing services under the Consulting Agreement, and certain reimbursements for the cost of COBRA premiums. In addition, the unvested portion of the time-based and performance-based equity awards granted to Mr. Andrews during his previous employment with the Company will continue to vest during the term of the Consulting Agreement. The services provided pursuant to the Consulting Agreement are non-exclusive, and Mr. Andrews will not be entitled to any fringe benefits under the Consulting Agreement.
As a condition to entering into the Consulting Agreement, Mr. Andrews must provide the Company with (and not revoke) a valid, executed general release agreement in favor of the Company. In addition, Mr. Andrews has agreed that he will not disclose any confidential information of the Company at any time during or after the term of the Consulting Agreement. The Consulting Agreement will terminate in accordance with its terms on December 31, 2023.
New Form of Indemnification Agreement
On December 30, 2021, Sabra’s Board of Directors approved an updated form of director and officer indemnification agreement (the “Indemnification Agreement”) to be entered into between Sabra and each person holding office as a director or officer of Sabra on or after such date. The Indemnification Agreement provides that Sabra will, in certain circumstances, indemnify each of the covered directors and officers to the maximum extent permitted by Maryland law for claims arising in such person’s capacity as a director or officer of Sabra. The rights of each director or officer party to an Indemnification Agreement are in addition to any other rights such person may have under Sabra’s charter, bylaws, or otherwise under Maryland law. The Indemnification Agreement will replace the Company’s existing indemnification agreements in place with the Company’s directors and executive officers.
The foregoing summary of each of the Employment Agreement, Consulting Agreement and Indemnification Agreement is qualified in its entirety by reference to the full text of these agreements, which are attached hereto as Exhibits 10.1, 10.2 and 10.3, respectively, and are incorporated in this Item 5.02 by reference.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit |
Description | |
| 10.1 | Employment Agreement, dated January 1, 2022, by and between Michael Costa and Sabra Health Care REIT, Inc. | |
| 10.2 | Consulting Agreement, dated December 30, 2021, by and between Harold W. Andrews, Jr. and Sabra Health Care REIT, Inc. | |
| 10.3 | Form of Indemnification Agreement to be entered into with each of the directors and officers of Sabra. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SABRA HEALTH CARE REIT, INC. | ||||||
| Date: January 3, 2022 | /s/ Richard K. Matros | |||||
| Name: | Richard K. Matros | |||||
| Title: | Chair, President and Chief Executive Officer | |||||
Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered into this 1st day of January, 2022 (the “Effective Date”), by and between Michael L. Costa (“Executive”) and Sabra Health Care REIT, Inc., a Maryland corporation (“Sabra” or the “Company”).
WHEREAS, Executive has been appointed as Executive Vice President, Chief Financial Officer (“CFO”) and Secretary of Sabra as of the Effective Date;
WHEREAS, Executive currently serves as Sabra’s Executive Vice President – Finance and Chief Accounting Officer, but is relinquishing those offices as of the Effective Date; and
WHEREAS, Executive and Sabra desire this Agreement to be effective immediately and to govern the employment relationship between Executive and the Company from and after the Effective Date, and, as of the Effective Date, supersedes and negates all previous agreements and understandings with respect to such relationship (including, without limitation, any prior employment agreement or severance benefit agreement).
NOW, THEREFORE, in consideration of the above recitals and the mutual covenants and agreements contained herein, Executive and Sabra agree as follows:
Section 1: Term of Employment. Sabra agrees to continue to employ Executive and Executive agrees to accept continued employment with Sabra, subject to the terms and conditions of this Agreement. Unless earlier terminated pursuant to the provisions of Sections 4 and 5 hereof, the initial term of employment of Executive under this Agreement is for a period of three (3) years, commencing on the Effective Date, and terminating on the third anniversary of the Effective Date. On the first anniversary of the Effective Date, and on each anniversary of the Effective Date thereafter, this Agreement shall be renewed for a one (1) year period (the period from and after the Effective Date until the termination of this Agreement is referred to as the “Term”) unless (i) earlier terminated pursuant to the provisions of Sections 4 and 5 hereof, or (ii) written notice of non-renewal is given by either party to the other at least sixty (60) days prior to the anniversary of the Effective Date occurring in any given year, in which case this Agreement shall be terminated on anniversary of the Effective Date occurring in the second year following the year in which such notice of non-renewal was provided.
Section 2: Duties and Responsibilities. As of the Effective Date, Executive is employed as Executive Vice President, CFO and Secretary. During the Term, Executive shall devote his full employment time, efforts, skills and attention exclusively to advancing and rendering profitable the business interests of Sabra, its direct and indirect subsidiaries and their lines of business; provided, however, that to the extent the following activities do not materially interfere or conflict with his duties and responsibilities hereunder and as imposed by applicable laws, rules and regulations, Executive may (i) engage in charitable, civic and religious affairs and (ii), with the prior written consent of the Chief Executive Officer of Sabra (“Chief Executive Officer”), serve as a member of the board of directors of other companies, subject to the provisions of Sabra’s Corporate Governance Guidelines, as in effect from time to time. Executive agrees to report to and render such services, commensurate with his position as Executive Vice President, CFO and
Secretary, as the Chief Executive Officer may from time to time reasonably direct. In the event that Executive serves as director or senior executive officer of one or more direct or indirect subsidiaries of Sabra, he shall do so without additional compensation.
Section 3: Compensation, Benefits and Related Matters.
| a. | Annual Base Salary. Sabra shall pay during the Term to Executive a base salary at an annual rate of $450,000 (“Base Salary”), such salary to be payable in accordance with Sabra’s customary payroll practices (but not less frequently than monthly). Annually during the Term, on or prior to each anniversary of the Effective Date, the Base Salary shall be reviewed for possible merit increases, and any increase in Executive’s annual base salary rate shall thereafter constitute “Base Salary” for purposes of this Agreement. |
| b. | Cash Bonus/Incentive Compensation. In addition to the Base Salary provided for in Section 3(a) above, Executive shall be entitled to receive an annual bonus (“Bonus”) in accordance with the Sabra Health Care REIT, Inc. Executive Bonus Plan (the “Plan”), as it may be amended from time to time by the Compensation Committee; provided, however, that no amendment shall be effective if it reduces the percentage of Base Salary that would constitute the target amount of the Bonus as compared to the prior year, unless such amendment has been agreed to in writing by Executive. The Bonus shall be payable at the same time as other annual bonuses are paid to senior management personnel with respect to that fiscal year (but no later than March 15 of the following calendar year). Notwithstanding the foregoing, but subject to the provisions of Section 5, in order to have earned and to be paid any such Bonus, Executive must be employed by Sabra on the date of such payment. |
| c. | Equity Awards. Executive shall participate in such equity incentive plans of the Company as are made available generally to senior executive officers of the Company. Any grants under such plans shall be made by the Board of Directors of Sabra (the “Board of Directors”) (or appropriate committee thereof) in its sole discretion and such plans are subject to change during the Term at the sole discretion of the Company. |
| d. | Retirement and Benefit Plans. During the Term, Executive shall be entitled to participate in all retirement plans, health benefit programs, insurance programs and other similar employee welfare benefit arrangements available generally to senior executive officers of Sabra from time to time. Such plans, programs and arrangements are subject to change during the Term at the sole discretion of the Company. |
| e. | Paid Time Off. During the Term, Executive shall be entitled to paid time off in accordance with Sabra’s policy for senior executive officers. |
| f. | Indemnification Liability/Insurance. Executive shall be entitled to indemnification by Sabra to the fullest extent permitted by applicable law and the |
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| charter and bylaws of Sabra. In addition, Sabra shall maintain during Executive’s employment customary directors’ and officers’ liability insurance and Executive shall be covered by such insurance. |
| g. | Taxes. All compensation payable to Executive shall be subject to withholding for all applicable federal, state and local income and employment taxes, and similar mandatory withholdings. |
| h. | Expenses. Executive shall be entitled to reimbursement for expenses incurred by him in connection with the discharge of his duties hereunder. All such expense reimbursement shall be subject to and shall be submitted, documented and paid in accordance with the expense reimbursement policies of the Company, as such policies may change from time to time. Executive agrees that he will provide such documentation to the Company promptly after expenses are incurred. |
Section 4: Termination. Sabra may, at any time, in its sole discretion, terminate Executive as Executive Vice President, CFO and Secretary and from all other positions with Sabra and its direct and indirect subsidiaries; provided, however, that Sabra shall provide Executive with at least five (5) business days prior written notice of such termination and shall make the payments associated with such termination in accordance with Section 5. Notwithstanding any provision in Section 1 hereof, the Term shall end on the date of Executive’s termination of employment in accordance with this Agreement.
| a. | Termination by Sabra for “Good Cause.” Sabra may at any time, by written notice to Executive at least five (5) business days prior to the date of termination specified in such notice and specifying the acts or omissions believed to constitute Good Cause (as defined below), terminate Executive as Executive Vice President, CFO and Secretary and from all other positions with Sabra and its direct and indirect subsidiaries for Good Cause. Sabra may relieve Executive of his duties and responsibilities pending a final determination of whether Good Cause exists, and such action shall not constitute Good Reason (as defined below) for purposes of this Agreement. Payment to Executive upon a termination for Good Cause is set forth in Section 5(a). “Good Cause” for termination shall mean any one of the following: |
| 1. | Any felony criminal conviction (including conviction pursuant to a nolo contendere plea) under the laws of the United States or any state or other political subdivision thereof which, in the sole discretion of the Chief Executive Officer, renders Executive unsuitable for the position of Executive Vice President, CFO and Secretary; |
| 2. | Any act of financial malfeasance or financial impropriety, as determined by the Chief Executive Officer in good faith; |
| 3. | Executive’s continued willful failure to perform the duties reasonably requested by the Chief Executive Officer and commensurate with his position as Executive Vice President, CFO and Secretary (other than any |
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| such failure resulting from his incapacity due to his physical or mental condition) after a written demand for substantial performance is delivered to him by the Chief Executive Officer, which demand specifically identifies the manner in which the Chief Executive Officer believes that he has not substantially performed his duties, and which performance is not substantially corrected by him within ten (10) days of receipt of such demand; |
| 4. | Any material workplace misconduct or willful failure to comply with Sabra’s general policies and procedures as they may exist from time to time by Executive which, in the good faith determination of the Chief Executive Officer, renders Executive unsuitable for the position of Executive Vice President, CFO or Secretary; |
| 5. | Any material breach by Executive of the provisions of this Agreement which has not been cured by Executive thirty (30) days following delivery of notice to Executive specifying such material breach, or the repetition of any such material breach after it has been cured; or |
| 6. | Any act of moral turpitude, as determined by the Chief Executive Officer in good faith. |
| b. | Termination by Sabra without Good Cause. Sabra may at any time, by written notice to Executive at least five (5) business days prior to the date of termination specified in such notice, terminate Executive as Executive Vice President, CFO and Secretary and from all other positions with Sabra and its direct and indirect subsidiaries. If such termination is made by Sabra other than by reason of Executive’s death, Disability (as defined in Section 4(e)) or expiration of the Term, and Good Cause does not exist, such termination shall be treated as a termination without Good Cause and Executive shall be entitled to payment in accordance with Section 5(b). |
| c. | Termination by Executive for Good Reason. Executive may, at any time at his option within sixty (60) days following the initial existence of the particular event or condition that constitutes Good Reason (as defined below), resign for Good Reason as Executive Vice President, CFO and Secretary and from all other positions with Sabra and its direct and indirect subsidiaries by written notice to Sabra at least thirty (30) days prior to the date of termination specified in such notice; provided, however, that Sabra has not substantially corrected the event or condition that would constitute Good Reason prior to the date of termination. Payment to Executive upon a termination for Good Reason is set forth in Section 5(b). Executive’s continued employment shall not, by itself, constitute consent to or a waiver of rights with respect to any circumstances constituting Good Reason hereunder. |
“Good Reason” shall mean the occurrence of any one of the following events or conditions without Executive’s written consent:
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(i) A meaningful and detrimental reduction in Executive’s authority, duties or responsibilities or a meaningful and detrimental change in his reporting responsibilities; (ii) A material failure of Sabra to comply with the compensation provisions set forth in Sections 3(a) and 3(b) or benefits provisions set forth in Sections 3(d) through 3(f) (collectively, the “Benefits”) (other than a reduction of Benefits uniformly applicable to other members of senior management); or (iii) A material relocation of Executive’s principal work location from its current location in Orange County, California;
provided that Sabra is provided with written notice of such breach within thirty (30) days following the initial existence of the particular event or condition claimed to constitute Good Reason, (ii) Sabra fails to remedy such event or condition within thirty (30) days of receiving such written notice thereof, and (iii) Executive terminates his employment with Sabra within the time periods prescribed under this Section 4(c).
| d. | Voluntary Resignation. Executive may, at any time at his option with thirty (30) calendar days written notice to Sabra, voluntarily resign without Good Reason as Executive Vice President, CFO and Secretary and from all other positions with Sabra and its direct and indirect subsidiaries. Payment to Executive upon his voluntary resignation without Good Reason is set forth in Section 5(a). Resignation from Sabra shall automatically constitute resignation from all positions of any subsidiary. |
| e. | Death or Disability. Executive’s employment under this Agreement and the Term shall terminate automatically as of the date of Executive’s death. Sabra may, at any time by written notice to Executive at least five (5) business days prior to the date of termination specified in such notice, terminate Executive as Executive Vice President, CFO and Secretary and from all other positions with Sabra and its direct or indirect subsidiaries by reason of his Disability. “Disability” shall mean any physical or mental condition or illness that prevents Executive from performing his duties hereunder in any material respect for a period of 120 substantially consecutive calendar days, as determined by a physician selected by Sabra or, if Executive is incapacitated, reasonably acceptable to the Director of Medicine or equivalent senior physician at Hoag Hospital. Payment to Executive upon his termination by reason of his death or Disability is set forth in Section 5(a). |
Section 5: Payments Upon Termination.
| a. | Payment Upon Termination for Good Cause, Resignation without Good Reason, Death or Disability. In the event of termination of employment during the Term pursuant to Sections 4(a), 4(d) or 4(e), Executive, or his estate where applicable, shall be paid any earned but unpaid Base Salary through the date of Executive’s separation from service with Sabra (the “Severance Date”) and any accrued and unused paid time off through the Severance Date, which shall be paid to Executive or his estate or beneficiary, as applicable, in a lump sum in cash upon |
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| or promptly following (and in all events within thirty (30) days after) the Severance Date (collectively, the “Accrued Obligations”). In addition, in the case of a termination of employment pursuant to Section 4(e), but not Sections 4(a) or 4(d), Executive or his estate shall be paid (i) any accrued and unpaid Bonus for any prior fiscal year, which shall be paid to Executive or his estate or beneficiary, as applicable, in a lump sum in cash at the time that annual bonuses are paid to senior management personnel with respect to that fiscal year, but in any event within seventy-four (74) days after the Severance Date, and (ii) a pro rata portion of the Bonus for the fiscal year in which the termination occurs (determined by multiplying the Bonus Executive would have received, if any, based upon actual performance had his employment continued through the end of the fiscal year by a fraction, the numerator of which is the number of days during the year of termination that Executive is employed by the Company and the denominator of which is 365 or 366, as applicable), which shall be paid at the time that annual bonuses are paid to senior management personnel with respect to that fiscal year, but in any event within seventy-four (74) days after the conclusion of the fiscal year to which such Bonus relates. Executive shall also receive his vested benefits in accordance with the terms of Sabra’s compensation and benefit plans, and his participation in such plans and all other perquisites shall cease as of the Severance Date, except to the extent Executive may elect to continue coverage under any welfare benefit plans as required by Part 6, Title I of the Employee Retirement Income Security Act of 1974, as amended. Upon a termination under Section 4(a), 4(d) or 4(e), Executive shall not be entitled to any compensation or benefits under this Agreement except as set forth in this Section 5(a). |
| b. | Payment Upon Termination by Sabra without Good Cause or by Executive for Good Reason. In the event of a termination of Executive’s employment during the Term pursuant to Sections 4(b) or 4(c), subject to the provisions of Section 7(f): |
| 1. | Executive shall be entitled to a severance benefit in an amount equal to (i) the sum of Executive’s then current annual Base Salary and the average of Executive’s Bonus actually earned (including the value on the vesting date of any restricted stock unit awards actually becoming payable to Executive in lieu of a cash Bonus) for the three (3) calendar years immediately preceding the calendar year in which the Severance Date occurs (the “Average Bonus”), multiplied by 1.5, plus (ii) any accrued and unpaid Bonus for any prior fiscal year, plus (iii) a pro rata portion of the Bonus for the fiscal year in which the termination occurs (determined by multiplying the Bonus Executive would have received, if any, based upon actual performance had his employment continued through the end of the fiscal year by a fraction, the numerator of which is the number of days during the year of termination that Executive is employed by the Company and the denominator of which is 365 or 366, as applicable). The amount payable pursuant to clause (i) above shall be paid to Executive in a lump sum cash payment on (or within ten (10) days following) the sixtieth (60th) day following the Severance Date. The amount payable pursuant to clause (ii) above shall be paid to Executive at the time that annual bonuses are paid to |
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| senior management personnel with respect to the applicable fiscal year, but in any event within seventy-four (74) days after the Severance Date. The amount payable pursuant to clause (iii) shall be paid to Executive at the time that annual bonuses are paid to senior management personnel with respect to the applicable fiscal year in which the Severance Date occurs, but in any event within seventy-four (74) days after the conclusion of such fiscal year. |
| 2. | In the event such termination occurs on or within two years following the closing date of a Change in Control, Executive shall not be entitled to the amount described in Section 5(b)(1) above but shall instead be entitled to an amount equal to (i) the sum of his then current annual Base Salary and the Average Bonus, multiplied by 2, plus (ii) any accrued and unpaid Bonus for any prior fiscal year, plus (iii) a pro rata portion of the target Bonus for the fiscal year in which the termination occurs (assuming the Company achieves 100% of the financial performance target or targets for such fiscal year that are utilized in determining the amount of the Bonus and determined by multiplying the amount Executive would have received had his employment continued through the end of the fiscal year by a fraction, the numerator of which is the number of days during the performance year of termination that Executive is employed by the Company and the denominator of which is 365 or 366, as applicable). The amounts payable pursuant to clauses (i) and (iii) above shall be paid to Executive in a lump sum on (or within ten (10) days following) the sixtieth (60th) day following the Severance Date. The amount payable pursuant to clause (ii) above shall be paid to Executive at the time that annual bonuses are paid to senior management personnel with respect to the applicable fiscal year, but in any event within seventy-four (74) days after the Severance Date. |
| 3. | Executive’s participation in any other retirement and benefit plans and perquisites shall cease as of the Severance Date, except Sabra shall pay or reimburse Executive for his premiums charged to continue medical coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) under Sabra’s health plans for Executive and his eligible dependents (as determined under Sabra’s health plans), or, at Executive’s option (which shall be communicated by written notice to Sabra prior to the month such election is to take effect), provide a separate cash payment monthly equal to the amount of the COBRA premium until the earlier of (i) the eighteen (18)-month anniversary (or, in the case of a Change in Control termination referred to in Section 5(b)(2) above, twenty-four (24)-month anniversary) of the last day of the month in which the Severance Date occurs or (ii) the date of Executive becomes eligible to participate in a plan of another employer or (iii), as to any of his eligible dependents, the date on which the eligible dependent becomes eligible to participate in a plan of another employer. Any cash payment due to Executive pursuant to this Section 5(b)(3) shall be paid by Sabra not later than the end of the month to which such payment relates. |
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| 4. | Upon any such termination, Executive shall be entitled to receive any Accrued Obligations payable to Executive as set forth in Section 5(a). |
| 5. | Notwithstanding the foregoing, Executive’s right to receive the severance payments described in this Section 5(b) shall be and is conditioned upon his execution and delivery of (and not revoking) a general release in favor of Sabra, which Sabra shall provide to Executive within seven (7) days following the Severance Date and shall not be inconsistent with the terms of this Agreement, and such other documents and instruments as are reasonably required by Sabra, each of which Executive shall deliver to Sabra within twenty-one (21) days (or forty-five (45) days if such longer period of time is required to make the release maximally enforceable under applicable law) after Sabra provides the form of release to Executive. |
A termination of Executive’s employment during the Term without Good Cause (other than by reason of his death or Disability) within six (6) months preceding a Change in Control shall be treated as if such termination occurred on the date of such Change in Control if it is reasonably demonstrated that the termination was at the request of the third party who has taken steps reasonably calculated to effect such Change in Control or otherwise arose in connection with or in anticipation of such Change in Control. In such case, Executive shall be entitled (in addition to the benefits described in Section 5(b)(1) which were triggered in connection with the original Severance Date) to the difference between the non-discounted present value of the benefits described in Section 5(b)(2) less the non-discounted present value of the benefits described in Section 5(b)(1) (each determined as of the Severance Date), which difference shall be paid to Executive upon or within thirty (30) days following the closing of such Change in Control.
| c. | “Change in Control.” For purposes of this Section 5, a “Change in Control” shall occur if any of the following events occurs: |
| 1. | Any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company (an “Acquiring Person”), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of more than 33 1/3% of the then outstanding voting stock of the Company; |
| 2. | Consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 51% of the combined voting power of the voting securities of the Company or surviving entity outstanding immediately after such merger or consolidation; |
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| 3. | Consummation of a sale or other disposition by the Company of all or substantially all of the Company’s assets; |
| 4. | During any period of not more than two (2) consecutive years (beginning on or after the Effective Date), individuals who at the beginning of such period constitute the Board of Directors and any new director (other than a director who is a representative or nominee of an Acquiring Person) whose election by the Board of Directors or nomination for election by the Company’s shareholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the period or whose election or nomination was previously so approved, no longer constitute a majority of the Board of Directors; |
provided, however, in no event shall any acquisition of securities, a change in the composition of the Board of Directors or a merger or other consolidation pursuant to a plan of reorganization under chapter 11 of the Bankruptcy Code with respect to the Company (“Chapter 11 Plan”), or a liquidation under the Bankruptcy Code constitute a Change in Control and provided further that in no event shall any transaction be considered a Change in Control if it does not constitute a change in the ownership or effective control of Sabra or a change in the ownership of a substantial portion of Sabra’s assets, each within the meaning of Section 409A of the United States Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury Regulations promulgated thereunder (“Section 409A”). In addition, notwithstanding Sections 5(c)(1), 5(c)(2), 5(c)(3) and 5(c)(4), a Change in Control shall not be deemed to have occurred in the event of a sale or conveyance in which the Company continues as a holding company of an entity or entities that conduct the business or businesses formerly conducted by the Company, or any transaction undertaken for the purpose of reincorporating the Company under the laws of another jurisdiction, if such transaction does not materially affect the beneficial ownership of the Company’s capital stock. A Change in Control shall not, by itself, constitute Good Reason hereunder.
| d. | Cooperation. Following the expiration or a termination of this Agreement for any reason, Executive shall provide such cooperation as is reasonably required by the Company, including, without limitation, consulting with the Company with respect to litigation and/or matters that relate to facts and circumstances that occurred during the term of his employment by the Company, and executing such documents and instruments relating to such term of employment as are reasonably requested by Sabra. |
Section 6: Reduction in Compensation to Avoid Excise Tax. Notwithstanding anything herein to the contrary, if the excise tax imposed by Section 4999 of the Code or any similar or successor tax (the “Excise Tax”) applies to any payments, benefits and/or amounts received (or otherwise to be received) by Executive pursuant to Section 5(b) or otherwise, including, without limitation, amounts received or deemed received, within the meaning of any provision of the Code, by Executive as a result of (and not by way of limitation) any automatic vesting, lapse of restrictions and/or accelerated target or performance achievement provisions, or otherwise, applicable to
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outstanding grants or awards to Executive under any of Sabra’s incentive plans (collectively, the “Total Payments”), then the Total Payments shall be reduced (but not below zero) so that the maximum amount of the Total Payments (after reduction) shall be one dollar ($1.00) less than the amount which would cause the Total Payments to be subject to the Excise Tax; provided that such reduction to the Total Payments shall be made only if the total after-tax benefit to Executive is greater after giving effect to such reduction than if no such reduction had been made. If such a reduction is required, the Company shall reduce or eliminate the Total Payments by first reducing or eliminating any accelerated vesting of stock options that then have a term of one year or less and are then under-water, then by reducing or eliminating any cash severance benefits, then by reducing or eliminating any accelerated vesting of any other stock options, then by reducing or eliminating any accelerated vesting of other equity awards, and then by reducing or eliminating any other remaining Total Payments, in each case in reverse order beginning with the payments which are to be paid the farthest in time from the date of the related change in control event. The preceding provisions of this Section 6 shall take precedence over the provisions of any other plan, arrangement or agreement governing Executive’s rights and entitlements to any benefits or compensation. The Company agrees that, prior to and in connection with any Change in Control, the Company will reasonably consider alternatives (if any) Executive may have to eliminate or mitigate the impact of any Excise Tax on his Total Payments.
| a. | Determination of Reduction. The amount of the reduction in compensation shall be determined by an accounting firm retained by Sabra (the “Accounting Firm”) using such formulas as the Accounting Firm deems appropriate. No compensation to Executive shall be reduced pursuant to the provisions of this Section 6 if the Accounting Firm determines that the payments to Executive are not subject to an Excise Tax. |
| b. | Payment of Excise Tax. If a reduction in compensation that results in no Excise Tax being payable does not result in Executive having a more positive after-tax financial position than he would have enjoyed without the reduction but with the resulting application of the Excise Tax, then, at the option of Executive, he can choose to pay the amount of the Excise Tax and avoid the reduction in compensation. The amount of the Excise Tax shall be determined by the Accounting Firm using such formulas as the Accounting Firm deems appropriate. In the event the Executive chooses to pay the Excise Tax, he will have no right of reimbursement or payment of additional compensation from the Company. |
Section 7: Protection of Sabra’s Interests.
| a. | Ownership of Property. Executive acknowledges and agrees that any and all property developed, discovered or created by him during the pendency of his employment by the Company, including, without limitation, any and all copyrights, trademarks, trade secrets or other intellectual property is and shall remain the sole and exclusive property of the Company and Executive hereby sells, assigns and otherwise transfers all of his right, title and interest in and to such property, if any, to the Company. |
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| b. | Confidentiality. Executive agrees that he will not at any time, during or after the term of this Agreement, except in performance of his obligations to Sabra hereunder or with the prior written consent of the Board of Directors, directly or indirectly disclose to any person or organization any secret or “Confidential Information” that Executive may learn or has learned by reason of his association with Sabra and its direct and indirect subsidiaries. For purposes of all of this Section 7 only, “Sabra” shall also include Sabra’s direct and indirect subsidiaries. The term “Confidential Information” means any information not previously disclosed to the public or to the trade by Sabra’s management with respect to Sabra’s products, services, business practices, facilities and methods, salary and benefit information, trade secrets and other intellectual property, systems, procedures, manuals, confidential reports, product price lists, pricing information, customer lists, financial information (including revenues, costs or profits associated with any of Sabra’s products or lines of business), business plans, prospects or opportunities. Notwithstanding the foregoing, Executive may truthfully respond to a lawful and valid subpoena or other legal process, but to the extent permitted by law shall give the Company the earliest possible notice thereof, shall, as much in advance of the return date as possible, make available to the Company and its counsel the documents and other information sought, and shall assist the Company and such counsel in resisting or otherwise responding to such process. Executive understands that nothing in this Agreement is intended to limit his right (i) to discuss the terms, wages, and working conditions of his employment to the extent permitted and/or protected by applicable labor laws, (ii) to report Confidential Information in a confidential manner either to a federal, state or local government official or to an attorney where such disclosure is solely for the purpose of reporting or investigating a suspected violation of law, or (iii) to disclose Confidential Information in an anti-retaliation lawsuit or other legal proceeding, so long as that disclosure or filing is made under seal and Executive does not otherwise disclose such Confidential Information, except pursuant to court order. The Company encourages Executive, to the extent legally permitted, to give the Company the earliest possible notice of any such report or disclosure. Pursuant to the Defend Trade Secrets Act of 2016, Executive acknowledges that he may not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of Confidential Information that: (a) is made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document that is filed in a lawsuit or other proceeding, provided that such filing is made under seal. Further, Executive understands that the Company will not retaliate against him in any way for any such disclosure made in accordance with the law. In the event a disclosure is made, and Executive files any type of proceeding against the Company alleging that the Company retaliated against him because of his disclosure, Executive may disclose the relevant Confidential Information to his attorney and may use the Confidential Information in the proceeding if (x) Executive files any document containing the Confidential Information under seal, and (y) Executive does not otherwise disclose the Confidential Information except pursuant to court or arbitral order. |
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| c. | Exclusive Property. Executive confirms that all Confidential Information is and shall remain the exclusive property of Sabra. All business records, papers and documents kept or made by Executive relating to the business of Sabra shall be and remain the property of Sabra. Upon the expiration or termination of Executive’s employment with Sabra for any reason or upon the request of Sabra at any time, Executive shall promptly deliver to Sabra, and shall not without the consent of the Board of Directors, retain copies of, Confidential Information, or any written materials not previously made available to the public, or records and documents made by Executive or coming into Executive’s possession concerning the business or affairs of Sabra. |
| d. | Nonsolicitation. Executive shall not, during his employment under this Agreement, and for one (1) year following the termination of this Agreement, for whatever reason or cause, in any manner induce, attempt to induce, or assist others to induce, or attempt to induce, any employee, agent, representative or other person associated with Sabra or any customer, or client of Sabra to terminate his or her association or contract with Sabra, nor in any manner, directly or indirectly, interfere with the relationship between Sabra and any of such persons or entities. |
| e. | Non-Disparagement. Executive shall not during his employment under this Agreement and for one (1) year following termination of the Agreement, for whatever reason, make any statements that are intended to or that would reasonably be expected to harm Sabra or any of its subsidiaries or affiliates, their respective predecessors, successors, assigns and employees and their respective past, present or future officers, directors, shareholders, employees, trustees, fiduciaries, administrators, agents or representatives. Sabra and its officers and directors will not make any statements that are intended to or that would reasonably be expected to harm Executive or his reputation or that reflect negatively on Executive’s performance, skills or ability. |
| f. | Violation of Covenants. |
| 1. | Without intending to limit the remedies available to Sabra, Executive acknowledges that a breach of any of the covenants in this Section 7 may result in material irreparable injury to Sabra for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of such a breach or threat thereof, Sabra shall be entitled to obtain a temporary restraining order and/or a preliminary or permanent injunction restraining Executive from engaging in activities prohibited by this Section 7 or such other relief as may be required to specifically enforce any of the covenants in this Section 7. |
| 2. | In the event that Executive breaches any of the covenants in this Section 7, Sabra shall be entitled to cease payment of any further compensation or benefits pursuant to Section 5(b) or otherwise (other than compensation payable pursuant to Sections 5(b)(1)(ii) and 5(b)(2)(ii)) and recover from |
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| Executive any amounts paid to him pursuant to the provisions of Section 5(b)(1)(i), Section 5(b)(2)(i) or Section 5(b)(2)(iii). |
Section 8: Miscellaneous Provisions.
| a. | Amendments, Waivers, Etc. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by both parties. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. |
| b. | Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. |
| c. | Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties hereto with respect to the matters covered hereby. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement and this Agreement shall supersede all prior agreements, negotiations, correspondence, undertakings and communications of the parties, oral or written, with respect to the subject matter hereof, including, without limitation, any prior employment agreement or severance benefit agreement. |
| d. | Resolution of Disputes. Any disputes arising under or in connection with this Agreement may, at the election of Executive or Sabra, be resolved by binding arbitration, to be held in Orange County, California in accordance with the rules and procedures of the American Arbitration Association. If arbitration is elected, Executive and Sabra shall mutually select the arbitrator. If Executive and Sabra cannot agree on the selection of an arbitrator, each party shall select an arbitrator and the two arbitrators shall select a third arbitrator who shall resolve the dispute. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Nothing herein shall limit the ability of Sabra to obtain the injunctive relief described in Section 7(f) pending final resolution of matters that are sent to arbitration. |
| e. | Attorneys’ Fees. Sabra shall pay or reimburse Executive on an after-tax basis for all costs and expenses (including, without limitation, court costs, costs of arbitration and reasonable legal fees and expenses which reflect common practice with respect to the matters involved) incurred by Executive if Executive prevails on the merits of any claim, action or proceeding (i) contesting or otherwise relating to the existence of Good Cause in the event of Executive’s termination of employment during the Term for Good Cause; (ii) enforcing any right, benefit or obligation under this Agreement, or otherwise enforcing the terms of this Agreement or any provision thereof; or (iii) asserting or otherwise relating to the existence of Good |
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| Reason in the event of Executive’s termination of employment during the Term for Good Reason. |
| f. | Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California, without giving effect to any choice of law or conflicting provision or rule (whether of the state of California or any other jurisdiction) that would cause the laws of any jurisdiction other than the state of California to be applied. |
| g. | Notice. For the purpose of this Agreement, notice, demands and all other communication provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand delivery or overnight courier or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed as follows or to other addresses as each party may have furnished to the other: |
To Sabra:
Sabra Health Care REIT, Inc.
Attention: Board of Directors
18500 Von Karman, Suite 550
Irvine, California 92612
To Executive:
At the address last shown on the Company’s records
| h. | Section 409A. |
| 1. | If Executive is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of Executive’s separation from service (within the meaning of Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder) and any payment or benefit provided in Section 5 hereof constitutes a “deferral of compensation” within the meaning of Section 409A, Executive shall not be entitled to any such payment or benefit until the earlier of: (i) the date which is six (6) months after his separation from service for any reason other than death, or (ii) the date of his death. The provisions of this paragraph shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Section 409A. Any amounts otherwise payable to Executive upon or in the six (6) month period following his separation from service that are not so paid by reason of this Section 8(h)(1) shall be paid (without interest) as soon as practicable (and in all events within thirty (30) days) after the date that is six (6) months after Executive’s separation from service (or, if earlier, as soon as practicable, and in all events within thirty (30) days, after the date of his death). |
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| 2. | To the extent that any reimbursements pursuant to Sections 3(h), 5(b)(3) and 8(e) are taxable to Executive, any reimbursement payment due to Executive pursuant to such provision shall be paid to Executive on or before the last day of Executive’s taxable year following the taxable year in which the related expense was incurred. The benefits and reimbursements pursuant to Sections 3(h), 5(b)(3)and 8(e) are not subject to liquidation or exchange for another benefit and the amount of such benefits and reimbursements that Executive receives in one taxable year shall not affect the amount of such benefits and reimbursements that Executive receives in any other taxable year. |
| 3. | It is intended that any amounts payable under this Agreement and Sabra’s and Executive’s exercise of authority or discretion hereunder shall either be exempt from or comply with and avoid the imputation of any tax, penalty or interest under Section 409A. This Agreement shall be construed and interpreted consistent with that intent. |
| i. | Withholding Taxes. Notwithstanding anything else herein to the contrary, the Company may withhold (or cause there to be withheld, as the case may be) from any amounts otherwise due or payable under or pursuant to this Agreement such federal, state and local income, employment, or other taxes as may be required to be withheld pursuant to any applicable law or regulation. Except for such withholding rights, Executive is solely responsible for any and all tax liability that may arise with respect to the compensation provided under or pursuant to this Agreement. |
| j. | Successors and Assigns. |
| 1. | This Agreement is personal to Executive and without the prior written consent of the Company shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives. |
| 2. | This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. Without limiting the generality of the preceding sentence, 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” and “Sabra” shall mean the Company as hereinbefore defined and any successor or assignee, as applicable, which assumes and agrees to perform this Agreement by operation of law or otherwise. |
| k. | Section Headings. The section headings of, and titles of paragraphs and subparagraphs contained in, this Agreement are for the purpose of convenience |
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| only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation thereof. |
| l. | Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which together shall constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories. Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose. |
[Signature Page to Follow]
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The parties hereto have executed this Agreement as of the date first above written.
| MICHAEL L. COSTA | ||
| /s/ Michael L. Costa | ||
| SABRA HEALTH CARE REIT, INC. | ||
| /s/ Richard K. Matros | ||
| By: | Richard K. Matros | |
| Its: | Chief Executive Officer, President and Chair | |
[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]
Exhibit 10.2
CONSULTING AGREEMENT
This Consulting Agreement (“Agreement”), dated as of December 30, 2021 and effective as of December 31, 2021 (the “Effective Date”), is made and entered into by and between Harold W. Andrews, Jr. (“Consultant”) and Sabra Health Care REIT, Inc. (“Company”).
WHEREAS, Consultant will be retiring from his position as Chief Financial Officer of the Company effective December 31, 2021;
WHEREAS, Company and Consultant desire to enter into a relationship whereby Consultant will provide consulting services to the Company for two years following his retirement, as described below; and
WHEREAS, it is the parties’ intention that Consultant be an independent contractor and not Company’s employee, and that, to the fullest extent allowed by law, Consultant retain sole and absolute discretion and judgment in the manner and means of performing the Services.
NOW THEREFORE, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:
1. Appointment as Consultant. Company hereby appoints Consultant to act as an independent consultant to provide the Services as of the Effective Date.
2. Consulting Services. Consultant shall perform consulting services during the Term as reasonably requested by Company through Company’s Board of Directors or Chief Executive Officer in connection with transitioning Consultant’s successor, Michael Costa, into the position of Chief Financial Officer of the Company (collectively, the “Services”).
3. Independent Contractor Status. As of the Effective Date, Consultant is not an employee of Company for any purpose whatsoever, including state and federal taxes and workers’ compensation insurance, but is an independent contractor. Neither this Agreement, the relationship created between the parties hereto pursuant to this Agreement, nor any course of dealing between the parties hereto is intended to create, or shall create, an employment relationship, a joint venture, partnership or any similar relationship. Company is interested only in the results obtained by Consultant, who shall have sole control of the manner and means of performing under this Agreement. Consultant’s work performing the Services is work that is outside Company’s usual course of business.
4. Nature of Consultant’s Relationship to Company. The nature of Consultant’s independent contractor relationship with Company shall be further defined as follows:
(a) State and Federal Taxes. Company will not withhold any monies for any state, local or federal taxing authorities from any amounts earned by Consultant pursuant to this Agreement. To the extent required by law, Company shall prepare and file a Form 1099 with the Internal Revenue Service (“IRS”) reporting the amounts paid to Consultant. Consultant shall pay, when and as due, any and all taxes incurred as a result of Consultant’s
earnings hereunder, including estimated taxes. Consultant hereby indemnifies Company for any claims, losses, costs, fees, liabilities, damages or injuries suffered by Company arising out of Consultant’s breach of this paragraph.
(b) Fringe Benefits. Consultant shall receive no fringe benefits under this Agreement whatsoever, and accordingly, shall receive no insurance benefits (medical, dental or otherwise), disability income, vacation, holiday pay, sick pay, or any other benefits from and after the Effective Date. Consultant hereby waives the right to receive any such benefits that Company provides to its employees, except with regards to any benefits (and reimbursement therefor) Consultant may be entitled to pursuant to COBRA or Cal-COBRA, as applicable.
(c) Consultant’s Expenses. Consultant shall be reimbursed for any expenses incurred by Consultant in performing the Services hereunder, including, but not limited to, travel, long distance telephone, Federal Express, and hotels, provided, that Company’s prior approval shall be required once total monthly expenses exceed $2,500. Consultant shall obtain and maintain at Consultant’s sole expense any licenses or insurance required by federal, state or local law.
(d) Non-Exclusivity of Services. Consultant is free to pursue any and all outside activities and/or employment as Consultant desires, and Company acknowledges that Consultant will likely be involved in other business activities, contracting and/or employment.
5. Compensation. As payment for the Services during the Term, Company shall pay Consultant a consulting fee of $500,000 per year, which shall be paid in substantially equal installments on a monthly basis. In addition, for the period beginning on the Effective Date through June 30, 2023, the Company shall reimburse Consultant for the cost of COBRA premiums (together with the consulting fee, the “Consulting Fees”). Subject to Consultant’s compliance with the terms of this Agreement, any earned Consulting Fees shall be paid in arrears by the fifteenth (15th) day of the month following the month in which the Services were performed.
6. Equity. While serving as Chief Financial Officer of the Company, Consultant was granted time-based and performance-based equity awards, a portion of which remain unvested as of the Effective Date. The unvested portion of such awards will continue to vest during the Term in accordance with the terms of such awards.
7. Term. The term of this Agreement shall commence on the Effective Date and shall terminate on December 31, 2023 (the “Term”).
8. Confidential Information.
(a) Consultant shall not disclose or use at any time, either during the Term or thereafter, any Confidential Information (as defined below) of which Consultant is or becomes aware, whether or not such information is developed by Consultant, except to the extent that such disclosure or use is directly related to and required by Consultant’s performance in good faith of duties for Company. Consultant will take all appropriate steps to safeguard Confidential Information in Consultant’s possession and to protect it
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against disclosure, misuse, espionage, loss and theft. Consultant shall deliver to Company at the termination of this Agreement, or at any time Company may request, all memoranda, notes, plans, records, reports, computer tapes and software and other documents and data (and copies thereof) relating to the Confidential Information of the business of Company which Consultant may then possess or have under Consultant’s control. Notwithstanding the foregoing, Consultant may truthfully respond to a lawful and valid subpoena or other legal process, but shall give Company the earliest possible notice thereof, shall, as much in advance of the return date as possible, make available to Company and its counsel the documents and other information sought, and shall assist Company and such counsel in resisting or otherwise responding to such process. Nothing in this Agreement prohibits Consultant from reporting possible violations of federal law or regulation to any governmental agency or entity, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. Consultant does not need the prior authorization to make any such reports or disclosures and is not required to notify Company of such reports or disclosures. Pursuant to the Defend Trade Secrets Act of 2016, Consultant acknowledges that he may not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of Confidential Information that: (a) is made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document that is filed in a lawsuit or other proceeding, provided that such filing is made under seal. Further, Consultant understands that Company will not retaliate against him in any way for any such disclosure made in accordance with the law. In the event a disclosure is made, and Consultant files any type of proceeding against Company alleging that Company retaliated against him because of his disclosure, Consultant may disclose the relevant Confidential Information to his attorney and may use the Confidential Information in the proceeding if (x) Consultant files any document containing the Confidential Information under seal, and (y) Consultant does not otherwise disclose the Confidential Information except pursuant to court or arbitral order.
(b) As used in this Agreement, the term “Confidential Information” means information that is not generally known to the public and that is used, developed or obtained by Company in connection with its business, including, but not limited to, information, observations and data obtained by Consultant while providing Services to Company or any predecessors thereof (including those obtained prior to the Effective Date) concerning (i) the business or affairs of Company (or such predecessors), (ii) products or services, (iii) fees, costs and pricing structures, (iv) designs, (v) analyses, (vi) drawings, photographs and reports, (vii) computer software, including operating systems, applications and program listings, (viii) flow charts, manuals and documentation, (ix) data bases, (x) accounting and business methods, (xi) inventions, devices, new developments, methods and processes, whether patentable or unpatentable and whether or not reduced to practice, (xii) customers and clients and customer or client lists, (xiii) other copyrightable works, (xiv) all production methods, processes, technology and trade secrets, and (xv) all similar and related information in whatever form. Confidential Information will not include any information that has been published (other than a disclosure by Consultant in breach of this Agreement) in a form generally available to the public prior to the date Consultant proposes to disclose or use such information. Confidential Information will not be deemed to have
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been published merely because individual portions of the information have been separately published, but only if all material features comprising such information have been published in combination.
9. No Breach of Contract. Consultant hereby represents to Company that: (i) the execution and delivery of this Agreement by Consultant and Company and the performance by Consultant of the Services hereunder do not and shall not constitute a breach of, conflict with, or otherwise contravene or cause a default under, the terms of any other agreement or policy to which Consultant is a party or otherwise bound or any judgment, order or decree to which Consultant is subject; (ii) that Consultant has no information (including, without limitation, confidential information and trade secrets) relating to any other individual, company or other entity which would prevent, or be violated by, Consultant entering into this Agreement or performing the Services hereunder; (iii) Consultant is not bound by any employment, consulting, non-compete, confidentiality, trade secret or similar agreement (other than this Agreement) with any other individual, company or other entity which would prevent, or be violated by, Consultant entering into this Agreement or performing the Services hereunder; and (iv) Consultant understands Company will rely upon the accuracy and truth of the representations and warranties of Consultant set forth herein and Consultant consents to such reliance.
10. Release. As a condition precedent to entering into this Agreement, Consultant shall provide the Company with a valid, executed general release agreement in substantially the form attached hereto as Exhibit A (the “Release”), and such Release shall have not been revoked by Consultant pursuant to any revocation rights afforded by applicable law. The Company shall provide the final form of Release to the Executive on the date hereof, and the Executive shall be required to execute and return the Release to the Company no later than twenty one (21) days following the date hereof.
11. Entire Agreement; Interpretation. This Agreement constitutes the entire agreement and understanding of the parties with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements and understandings relating to the subject matter hereof, written or otherwise. This Agreement may be amended or modified only by a written instrument of each of the parties to this Agreement.
12. Assignment; Binding Effect. This Agreement shall inure to the benefit of, and be enforceable by, Company and its successors and assigns; however, this Agreement is personal to Consultant and may not be assigned by Consultant in whole or in part.
13. Severability. If any term, covenant, condition or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions shall remain in full force and effect and shall in no way be affected, impaired or invalidated.
14. Governing Law. This Agreement shall be controlled, construed and enforced in accordance with the laws of the State of Maryland, without regard to conflicts of laws principles.
15. Counterparts. This Agreement may be executed in any number of counterparts, each of which when executed shall be deemed to be an original and all of which together shall be
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deemed to be one and the same instrument. Photographic or other electronic copies of such signed counterparts may be used in lieu of the originals for any purpose.
16. Notices. Any notice to Company required or permitted under this Agreement shall be given in writing to Company, by email addressed to the Chief Executive Officer of the Company, or if there is no such officer at such time, the Chairman of the Board of Directors of Company, in each case by email to the email address for such officer or director. Any such notice to Consultant shall be given in a like manner at his email address then shown in Company’s files.
17. Legal Counsel. Each party recognizes that this is a legally binding contract and acknowledges and agrees that each party has had the opportunity to consult with legal counsel of its choice.
* * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the date first written above.
| “CONSULTANT” | ||||
| By: | /s/ Harold W. Andrews, Jr. | |||
| Harold W. Andrews, Jr. | ||||
| “COMPANY” | ||||
| Sabra Health Care REIT, Inc. | ||||
| By: | /s/ Richard K. Matros | |||
| Name: | Richard K. Matros | |||
| Title: | Chief Executive Officer, President and Chair | |||
[SIGNATURE PAGE TO CONSULTING AGREEMENT]
EXHIBIT A
FORM OF GENERAL RELEASE AGREEMENT
1. Release. Harold W. Andrews, Jr. (“Executive”), on Executive’s own behalf and on behalf of Executive’s descendants, dependents, heirs, executors, administrators, assigns and successors, and each of them, hereby acknowledges full and complete satisfaction of and releases and discharges and covenants not to sue Sabra Health Care REIT, Inc. (the “Company”), its divisions, subsidiaries, parents, or affiliated corporations, past and present, and each of them, as well as its and their assignees, successors, directors, officers, stockholders, partners, representatives, attorneys, agents or employees, past or present, or any of them (individually and collectively, “Releasees”), from and with respect to any and all claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected, arising out of or in any way connected with Executive’s employment or any other relationship with or interest in the Company or the termination thereof, including without limiting the generality of the foregoing, any claim for severance pay, profit sharing, bonus or similar benefit, pension, retirement, life insurance, health or medical insurance or any other fringe benefit, or disability, or any other claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected resulting from any act or omission by or on the part of Releasees committed or omitted prior to the date of this General Release Agreement (this “Agreement”) set forth below, including, without limiting the generality of the foregoing, any claim under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Family and Medical Leave Act, the California Fair Employment and Housing Act, California Labor Code Section 132a, the California Family Rights Act, or any other federal, state or local law, regulation, ordinance, constitution or common law (collectively, the “Claims”); provided, however, that the foregoing release does not apply to any obligation of the Company to Executive pursuant to any of the following: (1) any obligations under the Consulting Agreement dated as of December [•], 2021 by and between the Company and Executive (the “Consulting Agreement”); (2) any equity-based awards previously granted by the Company to Executive, to the extent that such awards continue after the termination of Executive’s employment with the Company in accordance with the applicable terms of such awards; (3) any right to indemnification that Executive may have pursuant to the Company’s bylaws, its corporate charter or under any written indemnification agreement with the Company (or any corresponding provision of any subsidiary or affiliate of the Company) with respect to any loss, damages or expenses (including but not limited to attorneys’ fees to the extent otherwise provided) that Executive may in the future incur with respect to Executive’s service as an employee, officer or director of the Company or any of its subsidiaries or affiliates; (4) with respect to any rights that Executive may have to insurance coverage for such losses, damages or expenses under any Company (or subsidiary or affiliate) directors and officers liability insurance policy; (5) any rights to continued medical and dental coverage that Executive may have under COBRA; (6) any rights to payment of benefits that Executive may have under a retirement plan sponsored or maintained by the Company that is intended to qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended; or (7) any deferred compensation or supplemental retirement benefits that Executive may be entitled to under a nonqualified deferred compensation or supplemental retirement plan of the Company. In addition, this release does not cover any Claim that cannot be so released as a matter of applicable law. Notwithstanding anything to the contrary herein, nothing in this Agreement prohibits Executive from filing a charge with or participating in
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an investigation conducted by any state or federal government agencies. However, Executive does waive, to the maximum extent permitted by law, the right to receive any monetary or other recovery, should any agency or any other person pursue any claims on Executive’s behalf arising out of any claim released pursuant to this Agreement. For clarity, and as required by law, such waiver does not prevent Executive from accepting a whistleblower award from the Securities and Exchange Commission pursuant to Section 21F of the Securities Exchange Act of 1934, as amended. Executive acknowledges and agrees that he or she has received any and all leave and other benefits that he or she has been and is entitled to pursuant to the Family and Medical Leave Act of 1993.
2. Acknowledgement of Payment of Wages. Executive acknowledges that Executive has received all amounts owed for his or her regular and usual salary (including, but not limited to, any bonus, incentive or other wages), and usual benefits through the date of this Agreement.
3. Waiver of Unknown Claims. This Agreement is intended to be effective as a general release of and bar to each and every Claim hereinabove specified. Accordingly, Executive hereby expressly waives any rights and benefits conferred by Section 1542 of the California Civil Code and any similar provision of any other applicable state law as to the Claims. Section 1542 of the California Civil Code provides:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.”
Executive acknowledges that the Executive later may discover claims, demands, causes of action or facts in addition to or different from those which Executive now knows or believes to exist with respect to the subject matter of this Agreement and which, if known or suspected at the time of executing this Agreement, may have materially affected its terms. Nevertheless, Executive hereby waives, as to the Claims, any claims, demands, and causes of action that might arise as a result of such different or additional claims, demands, causes of action or facts.
4. ADEA Waiver. Executive expressly acknowledges and agrees that by entering into this Agreement, Executive is waiving any and all rights or claims that he or she may have arising under the Age Discrimination in Employment Act of 1967, as amended (the “ADEA”), and that this waiver and release is knowing and voluntary. Executive and the Company agree that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the date Executive signs this Agreement. Executive further expressly acknowledges and agrees that:
(a) In return for this Agreement, Executive will receive consideration beyond that which he was already entitled to receive before executing this Agreement;
(b) Executive is hereby advised in writing by this Agreement to consult with an attorney before signing this Agreement;
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(c) Executive was given a copy of this Agreement on December [•], 2021, and informed that he or she had twenty one (21) days within which to consider this Agreement and that if he or she wished to execute this Agreement prior to the expiration of such 30-day period he or she will have done so voluntarily and with full knowledge that Executive is waiving his or her right to have twenty one (21) days to consider this Agreement; and that such twenty one (21) day period to consider this Agreement would not and will not be re-started or extended based on any changes, whether material or immaterial, that are or were made to this Agreement in such twenty one (21) day period after Executive received it;
(d) Executive was informed that he had seven (7) days following the date of execution of this Agreement in which to revoke this Agreement, and this Agreement and the Consulting Agreement will become null and void if Executive elects revocation during that time. Any revocation must be in writing and must be received by the Company during the seven-day revocation period. In the event that Executive exercises this revocation right, neither the Company nor Executive will have any obligation under this Agreement. Any notice of revocation should be sent by Executive in writing to the Company (attention Richard K. Matros, Chief Executive Officer), 18500 Von Karman Avenue, Suite 550, Irvine, CA 92612, so that it is received within the seven-day period following execution of this Agreement by Executive; and
(e) Nothing in this Agreement prevents or precludes Executive from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties or costs for doing so, unless specifically authorized by federal law.
5. No Transferred Claims. Executive represents and warrants to the Company that Executive has not heretofore assigned or transferred to any person not a party to this Agreement any released matter or any part or portion thereof.
6. Miscellaneous. The following provisions shall apply for purposes of this Agreement:
(a) Number and Gender. Where the context requires, the singular shall include the plural, the plural shall include the singular, and any gender shall include all other genders.
(b) Section Headings. The section headings of, and titles of paragraphs and subparagraphs contained in, this Agreement are for the purpose of convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation thereof.
(c) Governing Law. This Agreement, and all questions relating to its validity, interpretation, performance and enforcement, as well as the legal relations hereby created between the parties hereto, shall be governed by and construed under, and interpreted and enforced in accordance with, the laws of the State of California, notwithstanding any California or other conflict of law provision to the contrary.
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(d) Severability. If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of this Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of this Agreement are declared to be severable.
(e) Modifications. This Agreement may not be amended, modified or changed (in whole or in part), except by a formal, definitive written agreement expressly referring to this Agreement, which agreement is executed by both of the parties hereto.
(f) Waiver. No waiver of any breach of any term or provision of this Agreement shall be construed to be, nor shall be, a waiver of any other breach of this Agreement. No waiver shall be binding unless in writing and signed by the party waiving the breach.
(g) Counterparts. This Agreement may be executed in counterparts, and each counterpart, when executed, shall have the efficacy of a signed original. Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose.
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The undersigned have read and understand the consequences of this Agreement and voluntarily sign it. The undersigned declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
EXECUTED this ________ day of ________ 202__, at ______________________ County, __________.
| “EXECUTIVE”
|
|
Harold W. Andrews, Jr. |
EXECUTED this ________ day of ________ 202__, at ______________________ County, __________.
| “COMPANY” | ||
| Sabra Health Care REIT, Inc. | ||
| By: |
| |
| Name: | ||
| Title: | ||
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Exhibit 10.3
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (“Agreement”) is made and entered into as of the ___ day of ________, 20___, by and between Sabra Health Care REIT, Inc., a Maryland corporation (the “Company”), and _____________ (“Indemnitee”).
WHEREAS, at the request of the Company, Indemnitee currently serves as [a director] [and] [an officer] of the Company and may, therefore, be subjected to claims, suits or proceedings arising as a result of such service;
WHEREAS, as an inducement to Indemnitee to serve or continue to serve as such [director] [and] [officer], the Company has agreed to indemnify Indemnitee and to advance expenses and costs incurred by Indemnitee in connection with any such claims, suits or proceedings, to the maximum extent permitted by law; and
WHEREAS, the parties by this Agreement desire to set forth their agreement regarding indemnification and advance of expenses;
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
Section 1. Definitions. For purposes of this Agreement:
(a) “Change in Control” means the occurrence of one or more of the following events:
(1) any sale, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company and its subsidiaries taken as a whole to any “person” or “group” (as such terms are defined in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), together with any affiliates thereof (other than to the Company or its subsidiaries); provided, however, that for the avoidance of doubt, the lease of all or substantially all of the assets of the Company and its subsidiaries taken as a whole shall not constitute a Change of Control;
(2) a “person” or “group” (as such terms are defined in Sections 13(d) and 14(d)(2) of the Exchange Act), becomes the ultimate “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power of the voting stock of the Company on a fully diluted basis;
(3) the approval by the holders of capital stock of the Company of any plan or proposal for the liquidation or dissolution of the Company; or
(4) individuals who on the date hereof constitute the Board of Directors of the Company (together with any new or replacement directors whose election by the Board of Directors of the Company or whose nomination by the Board of Directors of the Company for election by the Company’s shareholders was approved by a vote of at least a majority of the members of the Board of Directors
of the Company then still in office who either were members of the Board of Directors of the Company as of the date hereof or whose election or nomination for election was so approved) cease for any reason to constitute a majority of the members of the Board of Directors of the Company then in office.
(b) “Corporate Status” means the status of a person as a present or former director, officer, employee or agent of the Company or as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company. As a clarification and without limiting the circumstances in which Indemnitee may be serving at the request of the Company, service by Indemnitee shall be deemed to be at the request of the Company: (i) if Indemnitee serves or served as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any corporation, partnership, limited liability company, joint venture, trust or other enterprise (1) of which a majority of the voting power or equity interest is or was owned directly or indirectly by the Company or (2) the management of which is controlled directly or indirectly by the Company and (ii) if, as a result of Indemnitee’s service to the Company or any of its affiliated entities, Indemnitee is subject to duties to, or required to perform services for, an employee benefit plan or its participants or beneficiaries, including as a deemed fiduciary thereof.
(c) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification and/or advance of Expenses is sought by Indemnitee.
(d) “Effective Date” means the date set forth in the first paragraph of this Agreement.
(e) “Expenses” means any and all reasonable and out-of-pocket attorneys’ fees and costs, retainers, court costs, arbitration and mediation costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, ERISA excise taxes and penalties and any other disbursements or expenses incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in or otherwise participating in a Proceeding. Expenses shall also include Expenses incurred in connection with any appeal resulting from any Proceeding including, without limitation, the premium for, security for and other costs relating to any cost bond supersedeas bond or other appeal bond or its equivalent.
(f) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement or of other indemnitees under similar indemnification agreements), or (ii) any other party to or participant or witness in the Proceeding giving rise to a claim for indemnification or advance of Expenses hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a
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conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
(g) “Proceeding” means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing, claim, demand or discovery request or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative or investigative (formal or informal) nature, including any appeal therefrom, except one pending or completed on or before the Effective Date, unless otherwise specifically agreed in writing by the Company and Indemnitee. If Indemnitee reasonably believes that a given situation may lead to or culminate in the institution of a Proceeding, such situation shall also be considered a Proceeding.
Section 2. Services by Indemnitee. Indemnitee serves or will serve as [a director] [and] [an officer] of the Company. However, this Agreement shall not impose any independent obligation on Indemnitee or the Company to continue Indemnitee’s service to the Company. This Agreement shall not be deemed an employment contract between the Company (or any other entity) and Indemnitee.
Section 3. General. The Company shall indemnify, and advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) otherwise to the maximum extent permitted by Maryland law in effect on the Effective Date and as amended from time to time; provided, however, that no change in Maryland law shall have the effect of reducing the benefits available to Indemnitee hereunder based on Maryland law as in effect on the Effective Date. The rights of Indemnitee provided in this Section 3 shall include, without limitation, the rights set forth in the other sections of this Agreement, including any additional indemnification permitted by the Maryland General Corporation Law (the “MGCL”), including, without limitation, Section 2-418 of the MGCL.
Section 4. Standard for Indemnification. If, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be, made a party to any Proceeding, the Company shall indemnify Indemnitee against all judgments, penalties, fines and amounts paid in settlement and all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with any such Proceeding unless it is established that (a) the act or omission of Indemnitee was material to the matter giving rise to the Proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty, (b) Indemnitee actually received an improper personal benefit in money, property or services or (c) in the case of any criminal Proceeding, Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.
Section 5. Certain Limits on Indemnification. Notwithstanding any other provision of this Agreement (other than Section 6), Indemnitee shall not be entitled to:
(a) indemnification hereunder if the Proceeding was one by or in the right of the Company and Indemnitee is adjudged, in a final adjudication of the Proceeding not subject to further appeal, to be liable to the Company;
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(b) indemnification hereunder if Indemnitee is adjudged, in a final adjudication of the Proceeding not subject to further appeal, to be liable on the basis that personal benefit in money, property or services was improperly received in any Proceeding charging improper personal benefit to Indemnitee, whether or not involving action in Indemnitee’s Corporate Status; or
(c) indemnification or advance of Expenses hereunder if the Proceeding was brought by Indemnitee, unless: (i) the Proceeding was brought to enforce indemnification under this Agreement, and then only to the extent in accordance with and as authorized by Section 12 of this Agreement, or (ii) the Company’s charter or Bylaws, a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors or an agreement approved by the Board of Directors to which the Company is a party expressly provide otherwise.
Section 6. Court-Ordered Indemnification. Notwithstanding any other provision of this Agreement, a court of appropriate jurisdiction, upon application of Indemnitee and such notice as the court shall require, may order indemnification of Indemnitee by the Company in the following circumstances:
(a) if such court determines that Indemnitee is entitled to reimbursement under Section 2-418(d)(1) of the MGCL, the court shall order indemnification, in which case Indemnitee shall be entitled to recover the Expenses of securing such reimbursement; or
(b) if such court determines that Indemnitee is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not Indemnitee (i) has met the standards of conduct set forth in Section 2-418(b) of the MGCL or (ii) has been adjudged liable for receipt of an improper personal benefit under Section 2-418(c) of the MGCL, the court may order such indemnification as the court shall deem proper without regard to any limitation on such court-ordered indemnification contemplated by Section 2-418(d)(2)(ii) of the MGCL.
Section 7. Indemnification for Expenses of an Indemnitee Who is Wholly or Partially Successful. Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent that Indemnitee was or is, by reason of Indemnitee’s Corporate Status, made a party to (or otherwise becomes a participant in) any Proceeding and is successful, on the merits or otherwise, in the defense of such Proceeding, the Company shall indemnify Indemnitee for all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee under this Section 7 for all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with each such claim, issue or matter, allocated on a reasonable and proportionate basis. For purposes of this Section 7 and, without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
Section 8. Advance of Expenses for Indemnitee. If, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be, made a party to any Proceeding, the Company shall, without requiring a preliminary determination of Indemnitee’s ultimate entitlement to indemnification hereunder, advance all Expenses incurred by or on behalf of
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Indemnitee in connection with such Proceeding. The Company shall make such advance of incurred Expenses within ten days after the receipt by the Company of a statement or statements requesting such advance from time to time, whether prior to or after final disposition of such Proceeding, which advance may be in the form of, in the reasonable discretion of Indemnitee (but without duplication), (a) payment of such Expenses directly to third parties on behalf of Indemnitee, (b) advance of funds to Indemnitee in an amount sufficient to pay such Expenses or (c) reimbursement to Indemnitee for Indemnitee’s payment of such Expenses. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written affirmation by Indemnitee and a written undertaking by or on behalf of Indemnitee, in substantially the form attached hereto as Exhibit A or in such form as may be required under applicable law as in effect at the time of the execution thereof. To the extent that Expenses advanced to Indemnitee do not relate to a specific claim, issue or matter in the Proceeding, such Expenses shall be allocated on a reasonable and proportionate basis. The undertaking required by this Section 8 shall be an unlimited general obligation by or on behalf of Indemnitee and shall be accepted without reference to Indemnitee’s financial ability to repay such advanced Expenses and without any requirement to post security therefor.
Section 9. Indemnification and Advance of Expenses as a Witness or Other Participant. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is or may be, by reason of Indemnitee’s Corporate Status, made a witness or otherwise asked to participate in any Proceeding, whether instituted by the Company or any other person, and to which Indemnitee is not a party, Indemnitee shall be advanced and indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith within ten days after the receipt by the Company of a statement or statements requesting any such advances or indemnification from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee. In connection with any such advances of Expenses, the Company may require Indemnitee to provide an undertaking and affirmation substantially in the form attached hereto as Exhibit A or in such form as may be required under applicable law as in effect at the time of execution thereof.
Section 10. Procedure for Determination of Entitlement to Indemnification.
(a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary or appropriate to determine whether and to what extent Indemnitee is entitled to indemnification. Indemnitee may submit one or more such requests from time to time and at such time(s) as Indemnitee deems appropriate in Indemnitee’s sole discretion. The officer of the Company receiving any such request from Indemnitee shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant to Section 10(a) above, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall promptly be made in the specific case: (i) if a Change in Control has occurred, by Independent Counsel, in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee, which Independent Counsel shall be selected by Indemnitee and approved
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by the Board of Directors in accordance with Section 2-418(e)(2)(ii) of the MGCL, which approval shall not be unreasonably withheld; or (ii) if a Change in Control has not occurred, (A) by a majority vote of the Disinterested Directors or by the majority vote of a group of Disinterested Directors designated by the Disinterested Directors to make the determination, (B) if Independent Counsel has been selected by the Board of Directors in accordance with Section 2-418(e)(2)(ii) of the MGCL and approved by Indemnitee, which approval shall not be unreasonably withheld or delayed, by Independent Counsel, in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee or (C) if so directed by the Board of Directors, by the stockholders of the Company, other than directors or officers who are parties to the Proceeding. If it is so determined that Indemnitee is entitled to indemnification, the Company shall make payment to Indemnitee within ten days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary or appropriate to such determination in the discretion of the Board of Directors or Independent Counsel if retained pursuant to clause (ii)(B) of this Section 10(b). Any Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company shall indemnify and hold Indemnitee harmless therefrom.
(c) The Company shall pay the reasonable fees and expenses of Independent Counsel, if one is appointed.
Section 11. Presumptions and Effect of Certain Proceedings.
(a) In making any determination with respect to entitlement to indemnification hereunder, the person or persons (including any court having jurisdiction over the matter) making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 10(a) of this Agreement, and the Company shall have the burden of overcoming that presumption in connection with the making of any determination contrary to that presumption.
(b) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, upon a plea of nolo contendere or its equivalent, or entry of an order of probation prior to judgment, does not create a presumption that Indemnitee did not meet the requisite standard of conduct described herein for indemnification.
(c) The knowledge and/or actions, or failure to act, of any other director, officer, employee or agent of the Company or any other director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise shall not be imputed to Indemnitee for purposes of determining any other right to indemnification under this Agreement.
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Section 12. Remedies of Indemnitee.
(a) If (i) a determination is made pursuant to Section 10(b) of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advance of Expenses is not timely made pursuant to Sections 8 or 9 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 10(b) of this Agreement within 60 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Sections 7 or 9 of this Agreement within ten days after receipt by the Company of a written request therefor, or (v) payment of indemnification pursuant to any other section of this Agreement or the charter or Bylaws of the Company is not made within ten days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication in an appropriate court located in the State of Maryland, or in any other court of competent jurisdiction, or in an arbitration conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association, of Indemnitee’s entitlement to indemnification or advance of Expenses. Indemnitee shall commence a proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 12(a); provided, however, that the foregoing clause shall not apply to a proceeding brought by Indemnitee to enforce Indemnitee’s rights under Section 7 of this Agreement. Except as set forth herein, the provisions of Maryland law (without regard to its conflicts of laws rules) shall apply to any such arbitration. The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.
(b) In any judicial proceeding or arbitration commenced pursuant to this Section 12, Indemnitee shall be presumed to be entitled to indemnification or advance of Expenses, as the case may be, under this Agreement and the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advance of Expenses, as the case may be. If Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 12, Indemnitee shall not be required to reimburse the Company for any advances pursuant to Section 8 of this Agreement until a final determination is made with respect to Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed). The Company shall, to the fullest extent not prohibited by law, be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 12 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all of the provisions of this Agreement.
(c) If a determination shall have been made pursuant to Section 10(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 12, absent a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification that was not disclosed in connection with the determination.
(d) In the event that Indemnitee is successful in seeking, pursuant to this Section 12, a judicial adjudication of or an award in arbitration to enforce Indemnitee’s rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company for, any and all Expenses actually and
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reasonably incurred by Indemnitee in such judicial adjudication or arbitration. If it shall be determined in such judicial adjudication or arbitration that Indemnitee is entitled to receive part but not all of the indemnification or advance of Expenses sought, the Expenses incurred by Indemnitee in connection with such judicial adjudication or arbitration shall be appropriately prorated.
(e) Interest shall be paid by the Company to Indemnitee at the maximum rate allowed to be charged for judgments under the Courts and Judicial Proceedings Article of the Annotated Code of Maryland for amounts which the Company pays or is obligated to pay for the period (i) commencing with either the tenth day after the date on which the Company was requested to advance Expenses in accordance with Sections 8 or 9 of this Agreement or the 60th day after the date on which the Company was requested to make the determination of entitlement to indemnification under Section 10(b) of this Agreement, as applicable, and (ii) ending on the date such payment is made to Indemnitee by the Company.
Section 13. Defense of the Underlying Proceeding.
(a) Indemnitee shall notify the Company promptly in writing upon being served with any summons, citation, subpoena, complaint, indictment, request or other document relating to any Proceeding which may result in the right to indemnification or the advance of Expenses hereunder and shall include with such notice a description of the nature of the Proceeding and a summary of the facts underlying the Proceeding. The failure to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to indemnification or the advance of Expenses under this Agreement unless the Company’s ability to defend in such Proceeding or to obtain proceeds under any insurance policy is materially and adversely prejudiced thereby, and then only to the extent the Company is thereby actually so prejudiced.
(b) Subject to the provisions of the last sentence of this Section 13(b) and of Section 13(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to indemnification hereunder; provided, however, that the Company shall notify Indemnitee of any such decision to defend within 15 days following receipt of notice of any such Proceeding under Section 13(a) above. The Company shall not, without the prior written consent of Indemnitee, which shall not be unreasonably withheld or delayed, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise with respect to Indemnitee which (i) includes an admission of fault of Indemnitee, (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee or (iii) would impose any Expense, judgment, fine, penalty or limitation on Indemnitee. This Section 13(b) shall not apply to a Proceeding brought by Indemnitee under Section 12 of this Agreement.
(c) Notwithstanding the provisions of Section 13(b) above, if in a Proceeding to which Indemnitee is a party by reason of Indemnitee’s Corporate Status, (i) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld or delayed, that Indemnitee may have separate defenses or counterclaims to assert with respect to any issue which may not be consistent with other defendants in such
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Proceeding, (ii) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld or delayed, that an actual or apparent conflict of interest or potential conflict of interest exists between Indemnitee and the Company, or (iii) if the Company fails to assume the defense of such Proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee’s choice, subject to the prior approval of the Company, which approval shall not be unreasonably withheld or delayed, at the expense of the Company. In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any Proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee’s choice, subject to the prior approval of the Company, which approval shall not be unreasonably withheld or delayed, at the expense of the Company (subject to Section 12(d) of this Agreement), to represent Indemnitee in connection with any such matter.
Section 14. Non-Exclusivity; Survival of Rights; Subrogation.
(a) The rights of indemnification and advance of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the charter or Bylaws of the Company, any agreement or a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors, or otherwise. Unless consented to in writing by Indemnitee, no amendment, alteration or repeal of the charter or Bylaws of the Company, this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal, regardless of whether a claim with respect to such action or inaction is raised prior or subsequent to such amendment, alteration or repeal. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right or remedy shall be cumulative and in addition to every other right or remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion of any right or remedy hereunder, or otherwise, shall not prohibit the concurrent assertion or employment of any other right or remedy.
(b) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
Section 15. Insurance.
(a) The Company will use its reasonable best efforts to acquire directors and officers liability insurance, on terms and conditions deemed appropriate by the Board of Directors, with the advice of counsel, covering Indemnitee or any claim made against Indemnitee by reason of Indemnitee’s Corporate Status and covering the Company for any indemnification or advance of Expenses made by the Company to Indemnitee for any claims made against Indemnitee by reason of Indemnitee’s Corporate Status. In the event of a Change in Control, the Company shall maintain in force any and all directors and officers liability insurance policies that were maintained by the Company immediately prior to the Change in Control for a period of six years with the insurance
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carrier or carriers and through the insurance broker in place at the time of the Change in Control; provided, however, (i) if the carriers will not offer the same policy and an expiring policy needs to be replaced, a policy substantially comparable in scope and amount shall be obtained and (ii) if any replacement insurance carrier is necessary to obtain a policy substantially comparable in scope and amount, such insurance carrier shall have an AM Best rating that is the same or better than the AM Best rating of the existing insurance carrier; provided, further, however, in no event shall the Company be required to expend in the aggregate in excess of 250% of the annual premium or premiums paid by the Company for directors and officers liability insurance in effect on the date of the Change in Control. In the event that 250% of the annual premium paid by the Company for such existing directors and officers liability insurance is insufficient for such coverage, the Company shall spend up to that amount to purchase such lesser coverage as may be obtained with such amount.
(b) Without in any way limiting any other obligation under this Agreement, the Company shall indemnify Indemnitee for any payment by Indemnitee which would otherwise be indemnifiable hereunder arising out of the amount of any deductible or retention and the amount of any excess of the aggregate of all judgments, penalties, fines, settlements and Expenses incurred by Indemnitee in connection with a Proceeding over the coverage of any insurance referred to in Section 15(a). The purchase, establishment and maintenance of any such insurance shall not in any way limit or affect the rights or obligations of the Company or Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Company and Indemnitee shall not in any way limit or affect the rights or obligations of the Company under any such insurance policies. If, at the time the Company receives notice from any source of a Proceeding to which Indemnitee is a party or a participant (as a witness or otherwise) the Company has director and officer liability insurance in effect, the Company shall give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies.
(c) The Indemnitee shall cooperate with the Company or any insurance carrier of the Company with respect to any Proceeding.
Section 16. Coordination of Payments. The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable or payable or reimbursable as Expenses hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
Section 17. Contribution. If the indemnification provided in this Agreement is unavailable in whole or in part and may not be paid to Indemnitee for any reason, other than for failure to satisfy the standard of conduct set forth in Section 4 or due to the provisions of Section 5, then, with respect to any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), to the fullest extent permissible under applicable law, the Company, in lieu of indemnifying and holding harmless Indemnitee, shall pay, in the first instance, the entire amount incurred by Indemnitee, whether for Expenses, judgments, penalties, and/or amounts paid or to be paid in settlement, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company hereby waives and relinquishes any right of contribution it may have at any time against Indemnitee.
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Section 18. Reports to Stockholders. To the extent required by the MGCL, the Company shall report in writing to its stockholders the payment of any amounts for indemnification of, or advance of Expenses to, Indemnitee under this Agreement arising out of a Proceeding by or in the right of the Company with the notice of the meeting of stockholders of the Company next following the date of the payment of any such indemnification or advance of Expenses or prior to such meeting.
Section 19. Duration of Agreement; Binding Effect.
(a) This Agreement shall continue until and terminate on the later of (i) the date that Indemnitee shall have ceased to serve as a director, officer, employee or agent of the Company or as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company and (ii) the date that Indemnitee is no longer subject to any actual or possible Proceeding (including any rights of appeal thereto and any Proceeding commenced by Indemnitee pursuant to Section 12 of this Agreement).
(b) The indemnification and advance of Expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.
(c) The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.
(d) The Company and Indemnitee agree that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of proof, and further agree that such breach may cause Indemnitee irreparable harm. Accordingly, the parties hereto agree that Indemnitee may enforce this Agreement by seeking injunctive relief and/or specific performance hereof, without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance, Indemnitee shall not be precluded from seeking or obtaining any other relief to which Indemnitee may be entitled. Indemnitee shall further be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other undertakings in connection therewith. The Company acknowledges that, in the absence
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of a waiver, a bond or undertaking may be required of Indemnitee by a court, and the Company hereby waives any such requirement of such a bond or undertaking.
Section 20. Severability. If any provision or provisions of this Agreement shall be held to be invalid, void, illegal or otherwise unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, void illegal or otherwise unenforceable that is not itself invalid, void, illegal or otherwise unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, void, illegal or otherwise unenforceable, that is not itself invalid, void, illegal or otherwise unenforceable) shall be construed so as to give effect to the intent manifested thereby.
Section 21. Counterparts. This Agreement may be executed in one or more counterparts, (delivery of which may be by facsimile, or via e-mail as a portable document format (.pdf) or other electronic format), each of which will be deemed to be an original, and it will not be necessary in making proof of this Agreement or the terms of this Agreement to produce or account for more than one such counterpart. One such counterpart signed by the party against whom enforceability is sought shall be sufficient to evidence the existence of this Agreement.
Section 22. Headings. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
Section 23. Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor, unless otherwise expressly stated, shall such waiver constitute a continuing waiver.
Section 24. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, on the day of such delivery, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:
(a) If to Indemnitee, to the address set forth on the signature page hereto.
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(b) If to the Company, to:
Sabra Health Care REIT, Inc.
18500 Von Karman Avenue, Suite 550
Irvine, California 92612
Attn: Chief Executive Officer
or to such other address as may have been furnished in writing to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.
Section 25. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Maryland, without regard to its conflicts of laws rules.
Section 26. Prior Indemnification Agreement. This Agreement supersedes and replaces in its entirety any indemnification agreement between the Company and Indemnitee that was in effect as of immediately prior to the entry into this Agreement by the Company and Indemnitee.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
| COMPANY: | ||
| Sabra Health Care REIT, Inc. | ||
| By: |
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| Name: | Richard K. Matros | |
| Title: | Chair, President and Chief Executive Officer | |
| INDEMNITEE | ||
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| Name: | ||
| Address: |
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[Signature Page to Indemnification Agreement]
EXHIBIT A
AFFIRMATION AND UNDERTAKING TO REPAY EXPENSES ADVANCED
To: The Board of Directors of Sabra Health Care REIT, Inc.
Re: Affirmation and Undertaking
Ladies and Gentlemen:
This Affirmation and Undertaking is being provided pursuant to that certain Indemnification Agreement dated the ___ day of ________, 20___, by and between Sabra Health Care REIT, Inc., a Maryland corporation (the “Company”), and the undersigned Indemnitee (the “Indemnification Agreement”), pursuant to which I am entitled to advance of Expenses in connection with [Description of Proceeding] (the “Proceeding”).
Terms used herein and not otherwise defined shall have the meanings specified in the Indemnification Agreement.
I am subject to the Proceeding by reason of my Corporate Status or by reason of alleged actions or omissions by me in such capacity. I hereby affirm my good faith belief that at all times, insofar as I was involved as [a director] [and] [an officer] of the Company, in any of the facts or events giving rise to the Proceeding, I (1) did not act with bad faith or active or deliberate dishonesty, (2) did not receive any improper personal benefit in money, property or services and (3) in the case of any criminal proceeding, had no reasonable cause to believe that any act or omission by me was unlawful.
In consideration of the advance by the Company for Expenses incurred by me in connection with the Proceeding (the “Advanced Expenses”), I hereby agree that if, in connection with the Proceeding, it is established that (1) an act or omission by me was material to the matter giving rise to the Proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty or (2) I actually received an improper personal benefit in money, property or services or (3) in the case of any criminal proceeding, I had reasonable cause to believe that the act or omission was unlawful, then I shall promptly reimburse the portion of the Advanced Expenses relating to the claims, issues or matters in the Proceeding as to which the foregoing findings have been established.
IN WITNESS WHEREOF, I have executed this Affirmation and Undertaking on this ____ day of ________, 20___.
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| [Print name of Indemnitee] |