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.
