EXHIBIT 10.1
FOURTH AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS FOURTH AMENDED AND RESTATED EMPLOYMENT AGREEMENT
, dated this 29th day of December, 2008
(the Agreement), is entered into by and between HEALTH CARE REIT, INC., a Delaware corporation,
(the Corporation), and GEORGE L. CHAPMAN (the Executive).
WHEREAS
, the Corporation and the Executive entered into an Employment Agreement, effective
January 1, 1997, which Employment Agreement was amended and restated, effective January 1, 2000,
further amended and restated, effective January 1, 2004, and further amended and restated,
effective January 1, 2007;
WHEREAS
, the Compensation Committee of the Corporations Board of Directors has approved
certain modifications to the terms of such amended and restated employment agreement solely for
purposes of compliance with the requirements of Section 409A of the Internal Revenue Code, as
amended (the Code), and the rules and regulations promulgated thereunder; and
WHEREAS
, the Corporation wishes to assure itself of the services of the Executive for the
period provided in this Agreement, including the Executives participation in the selection,
evaluation and development of a successor to the Executive, and the Executive is willing to serve
in the employ of the Corporation for such period upon the terms and conditions set forth in this
Agreement, which is effective as of January 1, 2009.
NOW THEREFORE
, in consideration of the mutual covenants herein contained, the parties,
intending to be legally bound, hereby agree as follows:
1.
EMPLOYMENT
The Corporation hereby agrees to employ the Executive as the Corporations Chairman and Chief
Executive Officer, upon the terms and conditions herein contained, and the Executive hereby agrees
to accept such employment and to serve as the Corporations Chairman and Chief Executive Officer,
and to perform the duties and functions customarily performed by the Chairman and Chief Executive
Officer of a publicly traded corporation (including participating in the selection, evaluation and
development of the Executives successor).
In such capacities, the Executive shall report only to the Corporations Board of Directors,
and shall have the powers and responsibilities set forth in Article IV of the Corporations By-Laws
as well as such additional powers and responsibilities consistent with his position as the Board of
Directors may assign to him.
Throughout the Term (defined below) of this Agreement, the Executive shall devote his best
efforts and all of his business time and services to the business and affairs of the Corporation.
2.
TERM OF AGREEMENT
The term of employment under this Agreement shall expire on January 31, 2010 (the Three Year
Term). Executive shall have the option to extend this Agreement for an additional year (the
Option) by providing the Corporation with written notice of his intention to extend the Agreement
at least six (6) months prior to the expiration of the Three Year Term. The Three Year Term, as
it may be extended by the Option, is sometimes referred to herein as the Term.
The Corporation shall be entitled to terminate this Agreement immediately for any reason
subject to the continuing obligations of the Corporation under this Agreement.
3.
SALARY AND BONUS
The Executive shall receive a base salary during the Term of this Agreement at a rate of not
less than $570,000.00 per annum for 2007, and at a rate of not less than $570,000.00 per annum for
subsequent years. All amounts shall be payable in substantially equal semi-monthly installments.
During the Term, the Compensation Committee of the Board shall consult with the Executive and
review the Executives base salary at annual intervals, and may adjust the Executives annual base
salary from time to time as the Committee deems to be appropriate.
The Executive shall also be eligible to receive an annual bonus from the Corporation each year
during the Term of this Agreement, with the actual amount of such bonus to be determined by the
Compensation Committee of the Corporations Board, using such performance measures as the Committee
deems to be appropriate. Such bonus, if any, shall be paid to the Executive no later than sixty
(60) days after the end of the year to which the bonus relates.
4.
ADDITIONAL COMPENSATION AND BENEFITS
The Executive shall receive the following additional compensation and welfare and fringe
benefits during the term of the Agreement:
(a)
Stock Options and Other Long-Term Incentives.
The Executive has been granted
nonstatutory stock options and shares of restricted stock pursuant to the terms of the
Corporations 2005 Long-Term Incentive Plan (the Plan). During the Term of the Agreement, any
additional stock options, restricted stock or other awards under the Plan shall be at the
discretion of the Corporations Board.
(b)
Disability Insurance.
During the Term of this Agreement, the Corporation shall
maintain a disability insurance policy on the Executive with the maximum aggregate annual benefit
commercially available to the Corporation, up to a maximum of sixty percent (60%) of his annual
base salary. The Corporation shall provide at its expense all supplemental disability coverage
needed to provide this aggregate benefit. The Executive will submit to such medical examination
and supply such information as is necessary for the Corporation to obtain such insurance coverage.
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(c)
Health Insurance.
During the Term of this Agreement, the Corporation shall
provide the Executive and his dependents with health insurance coverage no less favorable than that
from time to time made available to other key employees.
(d)
Business Clubs
. During the Term of this Agreement, the Corporation shall pay all
initiation fees and dues charged by up to two (2) dining clubs, country clubs, athletic clubs, or
similar organizations of which the Executive is a member or desires to become a member.
(e)
Conferences
. During the Term of this Agreement, the Corporation shall pay for the
Executive and his wife to attend up to three (3) business-related conferences, conventions or
seminars within the continental United States each year during the Term of this Agreement,
including registration fees, travel expenses and reasonable hotel and meal allowances.
(f)
Vacation
. During the Term of this Agreement, the Executive shall be entitled to
up to five (5) weeks of vacation during each year during the Term of this Agreement and any
extensions thereof, prorated for partial years.
(g)
Medical Examinations.
During the Term of this Agreement, the Corporation shall
pay or reimburse the Executive for the cost of a physical examination by a physician acceptable to
the Executive in alternate years.
(h)
Business Expenses.
During the Term of this Agreement, the Corporation shall
reimburse the Executive for all reasonable expenses he incurs in promoting the Corporations
business, including expenses for travel and similar items, upon presentation by the Executive from
time to time of an itemized account of such expenditures.
In addition to the benefits provided pursuant to the preceding paragraphs of this Section 4,
the Executive shall be eligible, during the Term, to participate in such other executive
compensation and retirement plans of the Corporation as are applicable generally to other officers.
The Executive shall be eligible during the Term to participate in the Corporations supplemental
executive retirement plan, in such other retirement plans of the Corporation as are applicable
generally to other officers, and welfare benefit plans, programs, practices and policies of the
Corporation as are generally applicable to other key employees, unless such participation would
duplicate, directly or indirectly, benefits already accorded to the Executive.
5.
SPECIAL RETENTION AND INCENTIVE AWARD
In addition to the salary, bonus, additional compensation, benefits and any other
compensation, awards or benefits that have been or may be granted to the Executive, the Executive
is eligible for a special retention and incentive award (the Special Award) of up to
120,000 shares of the Corporations common stock, par value $1.00 per share (the Shares), subject
to the terms described below. On the date this Agreement is entered into, 60,000 of the Shares
shall be granted to the Executive as restricted shares (the Restricted Shares) and 60,000 of the
Shares shall be granted to the Executive in performance awards (the Performance Award Shares),
all pursuant to the terms of the Plan (the Restricted Shares and the Performance Award Shares are
sometimes referred to collectively herein as the Shares). Except as provided in
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Section 6 herein, the Shares will vest and have dividend treatment as follows:
(a) The 60,000 Restricted Shares shall vest at the end of the Three Year Term, subject to the
Executives continued employment for the Three Year Term. The Executive will be entitled to
current receipt of dividends on the 60,000 Restricted Shares.
(b) The 60,000 Performance Award Shares shall be paid in shares of common stock within sixty
(60) days following the end of the Three Year Term, subject to the Executives continued employment
for the Three Year Term, if the Board of Directors has determined that the Corporations strategic
plan of diversifying into new markets such as senior housing, medical office building, hospital
facilities or other areas as specified by the Board has been implemented successfully. The
Executive shall be granted dividend equivalent rights (DERs) on the 60,000 Performance Award
Shares. The DER payments on 30,000 of the Performance Award Shares will be paid to the Executive
as dividends are declared and paid on shares of common stock; provided the Executive is employed on
the dividend payment date. The DER payments on the remaining 30,000 Performance Award Shares will
accrue as dividends are declared on shares of common stock, be deemed reinvested in additional
common shares and will be paid in such additional shares if and when the underlying Performance
Award Shares are earned and paid.
6.
PAYMENTS UPON TERMINATION
(a)
Involuntary Termination
. If the Executives employment is involuntarily
terminated by the Corporation during the Term of this Agreement, the Executive shall be entitled to
receive his base salary accrued through the date of termination, any accrued but unpaid vacation
pay, plus any bonuses earned but unpaid with respect to fiscal years or other periods preceding the
termination date. Such payments shall be made to the Executive within sixty (60) days following
the date of involuntary termination. The Executive shall also receive any nonforfeitable benefits
payable to him under the terms of any deferred compensation, incentive or other benefit plans
maintained by the Corporation, payable in accordance with the terms of the applicable plan.
If the termination is not a termination for Cause, as described in paragraph (c), a voluntary
termination by the Executive as described in paragraph (d), or a result of the Executives death or
disability, then the Corporation shall also be obligated to make a lump sum severance payment to
the Executive equal to the present value of a series of monthly severance payments for each month
during the remaining term of this Agreement, but not less than twelve (12) months (the Severance
Period), each in an amount equal to one-twelfth (1/12th) of the sum of (i) the Executives annual
base salary, as in effect on the date of termination, and (ii) the greater of (A) the average of
the annual bonuses paid to the Executive for the last two (2) fiscal years preceding the
termination date or (B) a minimum bonus equal to one hundred percent (100%) of his annual base
salary. Such present value shall be calculated using a discount rate equal to the interest rate on
90-day Treasury bills, as reported in the
Wall Street Journal
(or similar publication) on
the date of involuntary termination. Such lump sum payment shall be made to the Executive within
sixty (60) days following the date of such involuntary termination and shall be in the form of a
bank cashiers check. If the Executive obtains a replacement position with any new employer
(including a position as an officer, employee, consultant, or agent, or self-employment as a
partner or sole proprietor), the
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Executive shall be obligated to repay to the Corporation an amount equal to all amounts the
Executive receives as compensation for services performed during the Severance Period; provided
however, that the aggregate repayment obligation shall not exceed the amount of the lump sum
payment under this paragraph (a). The Executive shall be under no duty to mitigate the amounts
owed to him under this paragraph (a) by seeking such a replacement position.
In addition, if the termination is not a termination for Cause as described in paragraph (c),
a voluntary termination by the Executive as described in paragraph (d), or a result of the
Executives death or disability, then:
(i) The 60,000 Restricted Shares granted to the Executive pursuant to Section 5(a)
shall become vested and 30,000 of the Performance Award Shares granted to the Executive
pursuant to Section 5(b) shall become earned and payable and shall be paid within sixty (60)
days of the Executives termination of employment. The remaining 30,000 Performance Award
Shares granted to the Executive pursuant to Section 5(b) may become earned and payable to
the extent the Board determines that the goals specified in Section 5(b) have been attained
and, if earned and payable, shall be paid within sixty (60) days of the Executives
termination of employment;
(ii) Any stock options, restricted stock (except for the Shares granted pursuant to the
Special Award which Shares are treated in Section 6(a)(i)) or other awards granted to the
Executive under any deferred compensation, incentive or other benefit plan maintained by the
Corporation shall become fully vested and earned and payable and, in the case of stock
options, exercisable in full; and
(iii) The Executive shall be provided continued coverage at the Corporations expense
under any life, health and disability insurance programs maintained by the Corporation in
which the Executive participated at the time of his termination for the remaining Term of
the Agreement (but not less than twelve (12) months and not more than the period during
which the Executive would be entitled to continuation coverage under Section 4980B of the
Code, if the Executive elected such coverage and paid the applicable premiums), or until, if
earlier, the date the Executive obtains comparable coverage under benefit plans maintained
by a new employer.
(b)
Disability
. The Corporation shall be entitled to terminate the Executives
employment if the Board determines that the Executive has been unable to attend to his duties for
at least ninety (90) days because of a medically diagnosable physical or mental condition, and has
received a written opinion from a physician acceptable to the Board that such condition prevents
the Executive from resuming full performance of his duties and is likely to continue for an
indefinite period. Upon such involuntary termination, the Executive shall be entitled to receive
his base salary accrued through the date of termination, any accrued but unpaid vacation pay, plus
any bonuses earned but unpaid with respect to fiscal years or other periods preceding the
termination date. Such payments shall be made to the Executive within sixty (60) days following
the date of involuntary termination. In addition, the Corporation shall make a series of monthly
disability payments to Executive, each equal to one-twelfth (1/12th) of the sum of (i) his annual
base salary, as in effect at the time Executive became permanently disabled, and (ii) the greater
of (A) the average of the
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annual bonuses paid to the Executive for the last two (2) fiscal years preceding the
date of disability or (B) a minimum bonus equal to one hundred percent (100%) of the Executives
annual base salary. Payment of such disability benefit shall be paid in accordance with the
Corporations normal payroll practices, shall commence with the month following the month in which
the involuntary termination occurs and continue each month for the remaining Term of this Agreement
(but not less than twenty-four (24) months), but shall terminate at an earlier date if the
Executive returns to active employment, either with the Corporation or otherwise. Any amounts
payable under this Section 6(b) shall be reduced by any amounts paid to the Executive under any
long-term disability plan or other disability program or insurance policies maintained or provided
by the Corporation. Upon termination due to a disability, (i) all stock options, restricted stock
or other awards held by the Executive under any deferred compensation, incentive or other benefit
plan maintained by the Corporation shall become fully vested or earned and payable, as the case may
be, and in the case of stock options, exercisable in full in accordance with the terms of the
applicable plan or plans and (ii) the Special Award shall become fully vested, or earned and
payable, as the case may be, and shall be paid within sixty (60) days following the date of the
Executives termination of employment.
(c)
Termination for Cause
. If the Executives employment is terminated by the
Corporation for Cause, the amount the Executive shall be entitled to receive from the Corporation
shall be limited to his base salary accrued through the date of termination, any accrued but unpaid
vacation pay, plus any bonuses earned but unpaid with respect to the fiscal year of the Corporation
most recently ended, and any nonforfeitable benefits payable to the Executive under the terms of
any deferred compensation, incentive or other benefit plans maintained by the Corporation. Such
payments shall be made to the Executive within sixty (60) days of the date of the Executives
termination. Also, if the Executives employment is terminated by the Corporation for Cause, all
unvested or unearned Shares, as the case may be, granted pursuant to the Special Award shall be
forfeited.
For purposes of this Agreement, the term Cause shall be limited to (i) action by the
Executive involving willful disloyalty to the Corporation, such as embezzlement, fraud,
misappropriation of corporate assets or a breach of the covenants set forth in Sections 10 and 11
below; or (ii) the Executive being convicted of a felony; or (iii) the Executive being convicted of
any lesser crime or offense committed in connection with the performance of his duties hereunder or
involving moral turpitude; or (iv) the intentional and willful failure by the Executive to
substantially perform his duties hereunder as directed by the Board (other than any such failure
resulting from the Executives incapacity due to physical or mental disability) after a demand for
substantial performance is made on the Executive by the Board of Directors.
(d)
Voluntary Termination by the Executive
. If the Executive resigns or otherwise
voluntarily terminates his employment before the end of the Term of this Agreement (other than in
connection with a Change in Corporate Control as described in Section 7), the amount the Executive
shall be entitled to receive from the Corporation shall be limited to his base salary accrued
through the date of termination, any accrued but unpaid vacation pay, plus any bonuses earned but
unpaid with respect to any fiscal years or other periods preceding the termination date, and any
nonforfeitable benefits payable to the Executive under the terms of any deferred compensation,
incentive or other benefit plans of the Corporation. Such payment shall be made to the Executive
within sixty (60) days following the date of resignation or voluntary
termination.
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Also, if the Executives employment is voluntarily terminated as set forth in this
Section, all unvested or unearned Shares, as the case may be, granted pursuant to the Special Award
shall be forfeited.
For purposes of this paragraph, a resignation by the Executive shall not be deemed to be
voluntary if the Executive is (1) assigned to a position other than the Chairman and Chief
Executive Officer of the Corporation during the Term (other than for Cause or by reason of
permanent disability) or assigned duties materially inconsistent with such position if either such
change in assignment constitutes a material diminution in the Executives authority, duties or
responsibilities, or (2) directed to report to anyone other than the Corporations Board of
Directors; provided that the Executive has notified the Corporation within the first ninety (90)
days following the initial date of such change in assignment or reporting duties that the Executive
regards such change in assignment or reporting duties as grounds justifying resignation under this
paragraph and the Corporation has failed to cure such change in assignment or reporting duties
within ninety (90) days following its receipt of such notice from the Executive; and provided
further that the Executive resigns under this paragraph within one (1) year following the initial
existence of a change in assignment or reporting duties described herein.
7.
EFFECT OF CHANGE IN CORPORATE CONTROL
(a) In the event of a Change in Corporate Control, the vesting of any stock options,
restricted stock or other awards granted to the Executive under any deferred compensation,
incentive or other benefit plan maintained by the Corporation shall all be accelerated and all such
awards shall become immediately vested and payable in full and, in the case of stock options,
exercisable in full in accordance with the applicable terms thereof and the Shares granted pursuant
to the Special Award shall become fully vested, or earned and payable, as the case may be, and
shall be paid within sixty (60) days following the date of the Change in Corporate Control.
(b) If, at any time during the period of twelve (12) consecutive months following the
occurrence of a Change in Corporate Control, and during the Term of this Agreement, the Executive
is involuntarily terminated (other than for Cause) or elects to voluntarily resign his employment,
the Executive shall be entitled to receive, in lieu of the lump sum severance payment described in
Section 6(a) above, a lump sum severance payment equal to the present value of a series of monthly
severance payments for thirty-six (36) months, each in an amount equal to one-twelfth (1/12th) of
the sum of (i) the Executives annual base salary, as in effect at the time of the Change in
Corporate Control, and (ii) the greater of (A) the average of the annual bonuses paid to the
Executive for the last two (2) fiscal years of the Corporation ending prior to the Change in
Corporate Control or (B) a minimum bonus equal to one hundred percent (100%) of the Executives
annual base salary. Such present value shall be calculated using a discount rate equal to the
interest rate on 90-day Treasury bills, as reported in the
Wall Street Journal
(or similar
publication) on the date of the Change in Corporate Control. Such lump sum payment shall be made
to the Executive within sixty (60) days following the date of such involuntary termination or
voluntary resignation and shall be in the form of a bank cashiers check.
In addition, if the Executive is involuntarily terminated (other than for Cause) or elects to
voluntarily resign his employment within twelve (12) months after a Change in Corporate
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Control, he shall be entitled to continued coverage at the Corporations expense under any life,
health and disability insurance programs maintained by the Corporation in which the Executive
participated at the time of his termination, which coverage shall be continued until the expiration
of the Term of the Agreement (but not less than twelve (12) months and not more than the period
during which the Executive would be entitled to continuation coverage under Section 4980B of the
Code if the Executive elected such coverage and paid the applicable premiums) or until, if earlier,
the date the Executive obtains comparable coverage under benefit plans maintained by a new
employer.
(c) For purposes of this Agreement, a Change in Corporate Control shall include any of the
following events:
(1) The acquisition in one or more transactions of more than twenty percent (20%) of
the Corporations outstanding Common Stock (or the equivalent in voting power of any class
or classes of securities of the Corporation entitled to vote in elections of directors) by
any corporation, or other person or group (within the meaning of Section 14(d)(3) of the
Securities Exchange Act of 1934, as amended);
(2) Any transfer or sale of substantially all of the assets of the Corporation, or any
merger or consolidation of the Corporation into or with another corporation in which the
Corporation is not the surviving entity, or any merger or consolidation of the Corporation
into or with another corporation in which the Corporation is the surviving entity and, in
connection with such merger or consolidation, all or part of the outstanding shares of
Common Stock shall be changed into or exchanged for other stock or securities of the
Corporation or any other person, or cash, or any other property.
(3) Any election of persons to the Board of Directors which causes a majority of the
Board of Directors to consist of persons other than Continuing Directors. For this
purpose, those persons who were members of the Board of Directors on January 1, 2007, shall
be Continuing Directors. Any person who is nominated for election as a member of the
Board after January 1, 2007, shall also be considered a Continuing Director for this
purpose if, and only if, his or her nomination for election to the Board of Directors is
approved or recommended by a majority of the members of the Board (or of the relevant
Nominating Committee) and at least five (5) members of the Board are themselves Continuing
Directors at the time of such nomination; or
(4) Any person, or group of persons, announces a tender offer for at least twenty
percent (20%) of the Corporations Common Stock.
(d) Notwithstanding anything else in this Agreement, if any payment, accelerated vesting or
other benefit provided by the Corporation to the Executive in connection with a Change in Corporate
Control, whether paid or payable pursuant to the terms of this Agreement or otherwise (a Parachute
Payment) is determined to be a parachute payment subject to the excise tax imposed by Section 4999
of the Code or any other tax having the same effect (such excise tax or other tax, together with
any interest and penalties incurred by the Executive with respect to such taxes, are collectively
referred to herein as the Excise Tax), the
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Corporation shall make an additional payment (the Gross-Up Payment) to the Executive in an amount
such that the net amount of the Gross-Up Payment the Executive retains, after payment by the
Executive of all taxes imposed upon the Gross-Up Payment, including, without limitation, the Excise
Tax and any federal, state or local income taxes (and any interest and penalties imposed with
respect thereto) on the Gross-Up Payment, will be equal to the Excise Tax liability imposed upon
the Executive with respect to all Parachute Payments (other than the Gross-Up Payment). The
Gross-Up Payment shall be paid to the Executive no later than the date the Executive is required to
pay the Excise Tax.
(e) If any dispute arises between the Corporation (or any successor) and the Executive
regarding Executives right to severance payments under Section 6 or Section 7, the Executive shall
be entitled to recover his attorneys fees and costs incurred in connection with such dispute. The
following additional terms and conditions shall apply to the reimbursement of any attorneys fees
and costs: (i) the attorneys fees and costs must be incurred by the Executive within five years
following the date of the Executives termination or resignation, (ii) the attorneys fees and costs
shall be paid by the Corporation by the end of the taxable year following the year in which the
attorneys fees and costs were incurred, (iii) the amount of any attorneys fees and costs paid by
the Corporation in one taxable year shall not affect the amount of any attorneys fees and costs to
be paid by the Corporation in any other taxable year, and (iv) the Executives right to receive
attorneys fees and costs may not be liquidated or exchanged for any other benefit.
8.
DEATH
If the Executive dies during the Term of this Agreement, the Corporation shall pay to the
Executives estate a lump sum payment equal to the sum of the Executives base salary accrued
through the date of death, any accrued but unpaid vacation pay, plus any bonuses earned but unpaid
with respect to fiscal years or other periods preceding the date of death. In addition, the
Corporation shall pay to the Executives surviving spouse (or such other beneficiary as the
Executive may designate in writing) a lump sum payment equal to the present value of a series of
monthly payments for each month during the remaining Term of the Agreement (but not less than
twenty-four (24) months), each in an amount equal to one-twelfth (1/12
th
) of the sum of
(i) the Executives annual base salary, as in effect on the date of death, and (ii) the greater of
(A) the average of the annual bonuses paid to the Executive for the last two (2) fiscal years
preceding the date of death or (B) a minimum bonus equal to one hundred percent (100%) of the
Executives annual base salary. Such present value shall be calculated using a discount rate equal
to the interest rate on 90-day Treasury bills, as reported in the
Wall Street Journal
(or
similar publication) for the date of death. Both the lump sum payment to the Executives estate
and the lump sum payment to the Executives surviving spouse (or other designated beneficiary)
shall be paid within sixty (60) days following the date of the Executives death. In addition,
upon the Executives death (x) the death benefits payable by reason of the Executives death under
any retirement, deferred compensation, life insurance or other employee benefit plan maintained by
the Corporation shall be paid to the beneficiary designated by the Executive, (y) the stock
options, restricted stock or other awards held by the Executive under any deferred compensation,
incentive or other benefit plan maintained by the Corporation shall become fully vested, and, in
the case of stock options, exercisable in full, in accordance with the terms of the applicable plan
or plans and (z) the Special
Award shall become
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fully vested, or earned and payable, as the case may be, and shall be paid
within sixty (60) days following the date of the Executives death.
9.
WITHHOLDING AND SECTION 409A COMPLIANCE
The Corporation shall, to the extent permitted by law, have the right to withhold and deduct
from any payment hereunder any federal, state or local taxes of any kind required by law to be
withheld with respect to any such payment.
This Agreement is intended to comply with the requirements of Section 409A of the Code, and
shall be interpreted and construed consistently with such intent. The payments to the Executive
pursuant to this Agreement are also intended to be exempt from Section 409A of the Code to the
maximum extent possible, under either the separation pay exemption pursuant to Treasury Regulation
Section 1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury Regulation Section
1.409A-1(b)(4). In the event the terms of this Agreement would subject the Executive to taxes or
penalties under Section 409A of the Code (409A Penalties), the Corporation and the Executive
shall cooperate diligently to amend the terms of the Agreement to avoid such 409A Penalties, to the
extent possible. To the extent any amounts under this Agreement are payable by reference to
Executives termination, termination of employment, or similar phrases, such term shall be
deemed to refer to the Executives separation from service (as defined in Treasury Regulation
Section 1.409A-1(h) (without regard to any permissible alternative definition thereunder) with the
Corporation and all entities treated as a single employer with the Corporation under Sections
414(b) and (c) of the Code but substituting a 50% ownership level for the 80% ownership level set
forth therein). Notwithstanding any other provision in this Agreement, if the Executive is a
Specified Employee (as defined Treasury Regulation Section 1.409A-1(i) on December
31
st
of the prior calendar year), as of the date of the Executives separation from
service, then to the extent any amount payable under this Agreement (i) constitutes the payment of
nonqualified deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable
upon the Executives separation from service and (iii) under the terms of this Agreement would be
payable prior to the six-month anniversary of the Executives separation from service, such payment
shall be delayed and paid to the Executive, together with interest at an annual rate equal to the
interest rate specified by KeyBank for a six-month certificate of deposit, on the first day of the
first calendar month beginning at least six months following the date of termination, or, if
earlier, within ninety (90) days following the Executives death to the Executives surviving
spouse (or such other beneficiary as the Executive may designate in writing). Any reimbursement or
advancement payable to the Executive pursuant to this Agreement shall be conditioned on the
submission by the Executive of all expense reports reasonably required by the Corporation under any
applicable expense reimbursement policy, and shall be paid to the Executive within thirty (30) days
following receipt of such expense reports, but in no event later than the last day of the calendar
year following the calendar year in which the Executive incurred the reimbursable expense. Any
amount of expenses eligible for reimbursement, or in-kind benefit provided, during a calendar year
shall not affect the amount of expenses eligible for reimbursement, or in-kind benefit to be
provided, during any other calendar year. The right to any reimbursement or in-kind benefit
pursuant to this Agreement shall not be subject to liquidation or exchange for any other benefit.
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10.
PROTECTION OF CONFIDENTIAL INFORMATION
The Executive agrees that he will keep all confidential and proprietary information of the
Corporation or relating to its business confidential, and that he will not (except with the
Corporations prior written consent), while in the employ of the Corporation or thereafter,
disclose any such confidential information to any person, firm, corporation, association or other
entity, other than in furtherance of his duties hereunder, and then only to those with a need to
know. The Executive shall not make use of any such confidential information for his own purposes
or for the benefit of any person, firm, corporation, association or other entity (except the
Corporation) under any circumstances during or after the Term of his employment. The foregoing
shall not apply to any information which is already in the public domain, or is generally disclosed
by the Corporation or is otherwise in the public domain at the time of disclosure.
The Executive recognizes that because his work for the Corporation may bring him into contact
with confidential and proprietary information of the Corporation, the restrictions of this Section
10 are required for the reasonable protection of the Corporation and its investments and for the
Corporations reliance on and confidence in the Executive.
11.
COVENANT NOT TO COMPETE
The Executive hereby agrees that he will not, either during the employment Term or during the
period of one (1) year from the time the Executives employment under this Agreement is terminated
by him voluntarily or by the Corporation for Cause, engage in any business activities on behalf of
any enterprise which competes with the Corporation in the business of the passive ownership of
health care facilities, or passive investing in or lending to health care-related enterprises. The
Executive will be deemed to be engaged in such competitive business activities if he participates
in such a business enterprise as an employee, officer, director, consultant, agent, partner,
proprietor, or other participant; provided that the ownership of no more than two percent (2%) of
the stock of a publicly traded corporation engaged in a competitive business shall not be deemed to
be engaging in competitive business activities.
The Executive agrees that he shall not, for a period of one year from the time his employment
under this Agreement ceases (for whatever reason), or, if later, during the Severance Period (in
the event of an involuntary termination under Section 6(a) or 6(b) of this Agreement) or for a
period of thirty-six (36) months after an involuntary termination or voluntary resignation
following a Change in Corporate Control under Section 7 of this Agreement, solicit any employee or
full-time consultant of the Corporation for the purposes of hiring or retaining such employee or
consultant.
12.
INJUNCTIVE RELIEF
The Executive acknowledges and agrees that it would be difficult to fully compensate the
Corporation for damages resulting from the breach or threatened breach of the covenants set forth
in Sections 10 and 11 of this Agreement and accordingly agrees that the Corporation shall be
entitled to temporary and injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions, to enforce such provisions in any action
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or proceeding instituted in the United States District Court for the Northern District of Ohio or
in any court in the State of Ohio having subject matter jurisdiction. This provision with respect
to injunctive relief shall not, however, diminish the Corporations right to claim and recover
damages.
It is expressly understood and agreed that although the parties consider the restrictions
contained in this Agreement to be reasonable, if a court determines that the time or territory or
any other restriction contained in this Agreement is an unenforceable restriction on the activities
of the Executive, no such provision of this Agreement shall be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to such extent as such court may
judicially determine or indicate to be reasonable.
13.
NOTICES
All notices or communications hereunder shall be in writing and sent certified or registered
mail, return receipt requested, postage prepaid, addressed as follows (or to such other address as
such party may designate in writing from time to time):
If to the Corporation:
Health Care REIT, Inc.
One SeaGate, Suite 1500
Toledo, OH 43604
Attention: Erin C. Ibele, Senior Vice President- Administration and
Corporate Secretary
If to the Executive:
George L. Chapman
2604 Riverview Dr.
Maumee, OH 43537
The actual date of receipt, as shown by the receipt therefor, shall determine the time at which
notice was given.
14.
SEPARABILITY
If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole
or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof
which shall remain in full force and effect.
15.
ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the heirs and representatives
of the Executive and the assigns and successors of the Corporation, but neither this Agreement nor
any rights hereunder shall be assignable or otherwise subject to hypothecation by the Executive.
12
16.
ENTIRE AGREEMENT
This Agreement represents the entire agreement of the parties and shall supersede any and all
previous contracts, arrangements or understandings between the Corporation and the Executive. The
Agreement may be amended at any time by mutual written agreement of the parties hereto.
17.
GOVERNING LAW
This Agreement shall be construed, interpreted, and governed in accordance with the laws of
the State of Ohio, other than the conflict of laws provisions of such laws.
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IN WITNESS WHEREOF
, the Corporation has caused this Agreement to be duly executed, and the
Executive has hereunto set his hand, as of the day and year first above written.
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Attest:
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HEALTH CARE REIT, INC.
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/s/ Erin C. Ibele
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By:
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/s/ Jeffrey H. Miller
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Erin C. Ibele, Senior Vice President-
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Jeffrey H. Miller, Executive Vice
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Administration and Corporate Secretary
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President and General Counsel
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Witness:
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EXECUTIVE:
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/s/ Rita Rogge
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/s/ George L. Chapman
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George L. Chapman
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14
EXHIBIT 10.2
THIRD AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT
, dated this 29th day of December, 2008
(the Agreement), is entered into by and between HEALTH CARE REIT, INC., a Delaware corporation,
(the Corporation), and RAYMOND W. BRAUN (the Executive).
WHEREAS
, the Corporation and the Executive entered into an Employment Agreement, effective as
of January 1, 1997;
WHEREAS
, the Corporation and the Executive entered into an Amended and Restated Employment
Agreement, effective as of January 1, 2000;
WHEREAS
, the Corporation and the Executive entered into a Second Amended and Restated
Employment Agreement, effective as of January 1, 2004;
WHEREAS
, the Compensation Committee of the Corporations Board of Directors has approved
certain modifications to the terms of such Second Amended and Restated Employment Agreement solely
for purposes of compliance with the requirements of Section 409A of the Internal Revenue Code, as
amended (the Code), and the rules and regulations promulgated thereunder; and
WHEREAS,
the Corporation wishes to assure itself of the services of the Executive for the
period provided in this Agreement and the Executive is willing to serve in the employ of the
Corporation for such period upon the terms and conditions set forth in this Agreement, which is
effective as of January 1, 2009.
NOW THEREFORE
, in consideration of the mutual covenants herein contained, the parties,
intending to be legally bound, hereby agree as follows:
1.
EMPLOYMENT
The Corporation hereby agrees to employ the Executive as the Corporations President and Chief
Financial Officer, upon the terms and conditions herein contained, and the Executive hereby agrees
to accept such employment and to serve as the Corporations President and Chief Financial Officer,
and to perform the duties and functions customarily performed by the President and Chief Financial
Officer of a publicly traded corporation during the term of this Agreement. In such capacity, the
Executive shall report only to the Corporations Chief Executive Officer (CEO), and shall have
the powers and responsibilities set forth in Article IV of the Corporations By-Laws as well as
such additional powers and responsibilities consistent with his position as the CEO may assign to
him.
Throughout the term of this Agreement, the Executive shall devote his best efforts and all of
his business time and services to the business and affairs of the Corporation.
2.
TERM OF AGREEMENT
The current term of employment under this Agreement shall expire on January 31, 2009. Upon
the expiration of such term, the term of employment hereunder shall automatically be extended
without further action by the parties for successive two (2) year renewal terms, unless either
party shall give at least six (6) months advance written notice to the other of his or its
intention that this Agreement shall terminate upon the expiration of the current term or the then
current renewal term, as the case may be.
Notwithstanding the foregoing, the Corporation shall be entitled to terminate this Agreement
immediately, subject to a continuing obligation to make any payments required under Section 5
below, if the Executive (i) becomes disabled as described in Section 5(b), (ii) is terminated for
Cause, as defined in Section 5(c), or (iii) voluntarily terminates his employment before the
current term of this Agreement expires, as described in Section 5(d).
3.
SALARY AND BONUS
The Executive shall receive a base salary during the term of this Agreement at a rate of not
less than $285,402 per annum for 2004, and at a rate of not less than $285,402 per annum for
subsequent years, payable in substantially equal semi-monthly installments. The Compensation
Committee of the Board shall consult with the CEO and review the Executives base salary at annual
intervals, and may adjust the Executives annual base salary from time to time as the Committee
deems to be appropriate.
The Executive shall also be eligible to receive an annual bonus from the Corporation each year
during the term of this Agreement, with the actual amount of such bonus to be determined by the
Compensation Committee of the Corporations Board, using such performance measures as the Committee
deems to be appropriate. Such bonus, if any, shall be paid to the Executive no later than sixty
(60) days after the end of the year to which the bonus relates.
4.
ADDITIONAL COMPENSATION AND BENEFITS
The Executive shall receive the following additional compensation and welfare and fringe
benefits during the term of the Agreement:
(a)
Stock Options and Other Long-Term Incentives
. The Executive has been
granted incentive stock options, nonstatutory stock options and shares of restricted stock
pursuant to the terms of the Corporations 1995 Stock Incentive Plan. During the remaining
term of the Agreement, any additional stock options, restricted stock or other awards under
the 1995 Stock Incentive Plan shall be at the discretion of the Compensation Committee of
the Corporations Board.
(b)
Health Insurance
. The Corporation shall provide the Executive and his
dependents with health insurance, life insurance and disability coverage on terms no less
favorable than that from time to time made available to other key employees.
2
(c)
Vacation
. The Executive shall be entitled to up to three (3) weeks of
vacation during each year during the term of this Agreement and any extensions thereof,
prorated for partial years.
(d)
Business Expenses
. The Corporation shall reimburse the Executive for all
reasonable expenses he incurs in promoting the Corporations business, including expenses
for travel and similar items, upon presentation by the Executive from time to time of an
itemized account of such expenditures.
(e)
Business Clubs
. The Corporation shall pay all initiation fees and dues
charged by up to one (1) dining club, country club, athletic club, or similar organization
of which the Executive is a member or desires to become a member.
In addition to the benefits provided pursuant to the preceding paragraphs of this Section 4,
the Executive shall be eligible to participate in such other executive compensation and retirement
plans of the Corporation as are applicable generally to other officers, and in such welfare benefit
plans, programs, practices and policies of the Corporation as are generally applicable to other key
employees, unless such participation would duplicate, directly or indirectly, benefits already
accorded to the Executive.
5.
PAYMENTS UPON TERMINATION
(a)
Involuntary Termination
. If the Executives employment is involuntarily
terminated by the Corporation during the term of this Agreement, the Executive shall be entitled to
receive his base salary accrued through the date of termination, any accrued but unpaid vacation
pay, plus any bonuses earned but unpaid with respect to fiscal years or other periods preceding the
termination date. Such payments shall be made to the Executive within sixty (60) days following
the date of involuntary termination. The Executive shall also receive any nonforfeitable benefits
payable to him under the terms of any deferred compensation, incentive or other benefit plans
maintained by the Corporation, payable in accordance with the terms of the applicable plan.
If the termination is not a termination for Cause, as described in paragraph (c), a voluntary
termination by the Executive as described in paragraph (d), or a result of the Executives death or
disability, then the Corporation shall also be obligated to make a lump sum severance payment to
the Executive equal to the present value of a series of monthly severance payments for each month
during the remaining term of this Agreement, but not less than twelve (12) months (the Severance
Period), each in an amount equal to one-twelfth (1/12th) of the sum of (i) the Executives annual
base salary, as in effect on the date of termination, and (ii) the greater of (A) the annual bonus
paid to the Executive for the last fiscal year preceding the termination date or (B) a minimum
bonus equal to fifty-five percent (55%) of his annual base salary. Such present value shall be
calculated using a discount rate equal to the interest rate on 90-day Treasury bills, as reported
in the
Wall Street Journal
(or similar publication) on the date of involuntary termination.
Such lump sum payment shall be made to the Executive within sixty (60) days following the date of
such involuntary termination and shall be in the form of a bank cashiers check. If the Executive
obtains a replacement position with any new employer (including a position as an officer, employee,
consultant, or agent, or self-employment as a partner or sole proprietor), the Executive
shall be
3
obligated to repay to the Corporation an amount equal to all amounts the Executive
receives as compensation for services performed during the Severance Period; provided however, that
the aggregate repayment obligation shall not exceed the amount of the lump sum payment under this
paragraph (a). The Executive shall be under no duty to mitigate the amounts owed to him under this
paragraph (a) by seeking such a replacement position.
In addition, if the termination is not a termination for Cause as described in paragraph (c),
a voluntary termination by the Executive as described in paragraph (d), or a result of the
Executives death or disability, then:
(i) Any stock options, restricted stock or other awards granted to the Executive under
the Corporations 1995 Stock Incentive Plan shall become fully vested and, in the case of
stock options, exercisable in full; and
(ii) The Executive shall be provided continued coverage at the Corporations expense
under any life, health and disability insurance programs maintained by the Corporation in
which the Executive participated at the time of his termination for the remaining term of
the Agreement (but not less than six (6) months and not more than the period during which
the Executive would be entitled to continuation coverage under Section 4980B of the Code, if
the Executive elected such coverage and paid the applicable premiums), or until, if earlier,
the date the Executive obtains comparable coverage under benefit plans maintained by a new
employer.
(b)
Disability
. The Corporation shall be entitled to terminate the Executives
employment if the Board determines that the Executive has been unable to attend to his duties for
at least ninety (90) days because of a medically diagnosable physical or mental condition, and has
received a written opinion from a physician acceptable to the Board that such condition prevents
the Executive from resuming full performance of his duties and is likely to continue for an
indefinite period. Upon such involuntary termination, the Executive shall be entitled to receive
his base salary accrued through the date of termination, any accrued but unpaid vacation pay, plus
any bonuses earned but unpaid with respect to fiscal years or other periods preceding the
termination date. Such payments shall be made to the Executive within sixty (60) days following
the date of involuntary termination. In addition, the Corporation shall make a series of monthly
disability payments to Executive, each equal to one-twelfth (1/12
th
) of the sum of
(i) his annual base salary, as in effect at the time Executive became permanently disabled, and
(ii) the greater of (A) the annual bonus paid to the Executive for the last fiscal year preceding
the date of disability or (B) a minimum bonus equal to fifty-five percent (55%) of the Executives
annual base salary. Payment of such disability benefit shall be paid in accordance with the
Corporations normal payroll practices, shall commence with the month following the month in which
the involuntary termination occurs and continue each month for the remaining current term of this
Agreement (but not less than twelve (12) months), but shall terminate at an earlier date if the
Executive returns to active employment, either with the Corporation or otherwise. Any amounts
payable under this Section 5(b) shall be reduced by any amounts paid to the Executive under any
long-term disability plan or other disability program or insurance policies maintained or provided
by the Corporation.
4
(c)
Termination for Cause
. If the Executives employment is terminated by the
Corporation for Cause, the amount the Executive shall be entitled to receive from the Corporation
shall be limited to his base salary accrued through the date of termination, any accrued but unpaid
vacation pay, plus any bonuses earned but unpaid with respect to the fiscal year of the Corporation
most recently ended, and any nonforfeitable benefits payable to the Executive under the terms of
any deferred compensation, incentive or other benefit plans maintained by the Corporation. Such
payments shall be made to the Executive within sixty (60) days following the date of termination.
For purposes of this Agreement, the term Cause shall be limited to (i) action by the
Executive involving willful disloyalty to the Corporation, such as embezzlement, fraud,
misappropriation of corporate assets or a breach of the covenants set forth in Sections 9 and 10
below; or (ii) the Executive being convicted of a felony; or (iii) the Executive being convicted of
any lesser crime or offense committed in connection with the performance of his duties hereunder or
involving moral turpitude; or (iv) the intentional and willful failure by the Executive to
substantially perform his duties hereunder as directed by the Corporations CEO (other than any
such failure resulting from the Executives incapacity due to physical or mental disability) after
a demand for substantial performance is made on the Executive by the Board of Directors.
(d)
Voluntary Termination by the Executive
. If the Executive resigns or otherwise
voluntarily terminates his employment before the end of the current term of this Agreement (other
than in connection with a Change in Corporate Control, as described in Section 6), the amount the
Executive shall be entitled to receive from the Corporation shall be limited to his base salary
accrued through the date of termination, any accrued but unpaid vacation pay, plus any bonuses
earned but unpaid with respect to any fiscal years or other periods preceding the termination date,
and any nonforfeitable benefits payable to the Executive under the terms of any deferred
compensation, incentive or other benefit plans of the Corporation. Such payment shall be made to
the Executive within sixty (60) days following the date of resignation or voluntary termination.
For purposes of this paragraph, a resignation by the Executive shall not be deemed to be
voluntary if the Executive is (1) assigned to a position other than the President or Chief
Financial Officer of the Corporation (other than for Cause or by reason of permanent disability) or
assigned duties materially inconsistent with such position if either such change in assignment
constitutes a material diminution in the Executives authority, duties or responsibilities, or (2)
directed to report to anyone other than the Corporations CEO if such change in reporting duties
constitutes a material diminution in the authority, duties or responsibilities of the supervisor to
whom the Executive is required to report; provided that the Executive has notified the Corporation
within the first ninety (90) days following the initial date of such change in assignment or
reporting duties that the Executive regards such change in assignment or reporting duties as
grounds justifying resignation under this paragraph and the Corporation has failed to cure such
change in assignment or reporting duties within ninety (90) days following its receipt of such
notice from the Executive; and provided further that the Executive resigns under this paragraph
within one (1) year following the initial existence of a change in assignment or reporting duties
described herein.
5
6.
EFFECT OF CHANGE IN CORPORATE CONTROL
(a) In the event of a Change in Corporate Control, the vesting of any stock options,
restricted stock or other awards granted to the Executive under the terms of the Corporations 1995
Stock Incentive Plan shall be accelerated (to the extent permitted by the terms of such Plan) and
such awards shall become immediately vested in full and, in the case of stock options, exercisable
in full.
(b) If, at any time during the period of twelve (12) consecutive months following the
occurrence of a Change in Corporate Control, and during the term of this Agreement, the Executive
is involuntarily terminated (other than for Cause) or elects to voluntarily resign his employment,
the Executive shall be entitled to receive a lump sum severance payment equal to the present value
of a series of monthly severance payments for twenty-four (24) months, each in an amount equal to
one-twelfth (1/12th) of the sum of (i) the Executives annual base salary, as in effect at the time
of the Change in Corporate Control, and (ii) the greater of (A) the annual bonus paid to the
Executive for the last fiscal year of the Corporation ending prior to the Change in Corporate
Control or (B) a minimum bonus equal to fifty-five percent (55%) of his annual base salary. Such
present value shall be calculated using a discount rate equal to the interest rate on 90-day
Treasury bills, as reported in the
Wall Street Journal
(or similar publication) on the date
of the Change in Corporate Control. Such lump sum payment shall be made to the Executive within
sixty (60) days following the date of such involuntary termination or voluntary resignation and
shall be in the form of a bank cashiers check.
In addition, if the Executive is involuntarily terminated (other than for Cause) or elects to
voluntarily resign his employment within twelve (12) months after a Change in Corporate Control, he
shall be entitled to continued coverage at the Corporations expense under any life, health and
disability insurance programs maintained by the Corporation in which the Executive participated at
the time of his termination, which coverage shall be continued until the expiration of the current
term of the Agreement (but not less than six (6) months and not more than the period during which
the Executive would be entitled to continuation coverage under Section 4980B of the Code if the
Executive elected such coverage and paid the applicable premiums) or until, if earlier, the date
the Executive obtains comparable coverage under benefit plans maintained by a new employer.
(c) For purposes of this Agreement, a Change in Corporate Control shall include any of the
following events:
(1) The acquisition in one or more transactions of more than twenty percent (20%) of the
Corporations outstanding Common Stock (or the equivalent in voting power of any class or
classes of securities of the Corporation entitled to vote in elections of directors) by any
corporation, or other person or group (within the meaning of Section 14(d)(3) of the
Securities Exchange Act of 1934, as amended);
(2) Any transfer or sale of substantially all of the assets of the Corporation, or any
merger or consolidation of the Corporation into or with another corporation in which the
Corporation is not the surviving entity;
6
(3) Any election of persons to the Board of Directors which causes a majority of the Board
of Directors to consist of persons other than Continuing Directors. For this purpose,
those persons who were members of the Board of Directors on May 1, 1995, shall be
Continuing Directors. Any person who is nominated for election as a member of the Board
after May 1, 1995, shall also be considered a Continuing Director for this purpose if, and
only if, his or her nomination for election to the Board of Directors is approved or
recommended by a majority of the members of the Board (or of the relevant Nominating
Committee) and at least five (5) members of the Board are themselves Continuing Directors at
the time of such nomination; or
(4) Any person, or group of persons, announces a tender offer for at least twenty percent
(20%) of the Corporations Common Stock, and the Board of Directors appoints a special
committee of the Board to consider the Corporations response to such tender offer.
(d) Notwithstanding anything else in this Agreement, if any payment, accelerated vesting or
other benefit provided by the Corporation to the Executive in connection with a Change in Corporate
Control, whether paid or payable pursuant to the terms of this Agreement or otherwise (a Parachute
Payment) is determined to be a parachute payment subject to the excise tax imposed by Section 4999
of the Code (such excise tax, together with any interest and penalties incurred by the Executive
with respect to such excise tax, are referred to as the Excise Tax), the Corporation shall make
an additional payment (the Gross-Up Payment) to the Executive in an amount such that the net
amount of the Gross-Up Payment the Executive retains, after payment by the Executive of all taxes
imposed upon the Gross-Up Payment, including, without limitation, the Excise Tax and any federal,
state or local income taxes (and any interest and penalties imposed with respect thereto) on the
Gross-Up Payment, will be equal to the Excise Tax liability imposed upon the Executive with respect
to all Parachute Payments (other than the Gross-Up Payment). The Gross-Up Payment shall be paid to
the Executive no later than the date the Executive is required to pay the Excise Tax.
7.
DEATH
If the Executive dies during the term of this Agreement, the Corporation shall pay to the
Executives estate a lump sum payment equal to the sum of the Executives base salary accrued
through the date of death, any accrued but unpaid vacation pay, plus any bonuses earned but unpaid
with respect to fiscal years or other periods preceding the date of death. In addition, the
Corporation shall pay to the Executives surviving spouse (or such other beneficiary as the
Executive may designate in writing) a lump sum payment equal to the present value of a series of
monthly payments for each month during the remaining term of the Agreement (but not less than
twelve (12) months), each in an amount equal to one-twelfth (1/12
th
) of the sum of
(i) the Executives annual base salary, as in effect on the date of death, and (ii) the greater of
(A) the annual bonus paid to the Executive for the last fiscal year preceding the date of death or
(B) a minimum bonus equal to fifty-five percent (55%) of the Executives annual base salary. Such
present value shall be calculated using a discount rate equal to the interest rate on 90-day
Treasury bills, as reported in the
Wall Street Journal
(or similar publication) for the
date of death. Both the lump sum payment to the Executives estate and the lump sum payment to the
Executives
surviving spouse (or other designated beneficiary) shall be paid within sixty (60) days following
the date of the Executives death. In addition, the
7
death benefits payable by reason of the
Executives death under any retirement, deferred compensation, life insurance or other employee
benefit plan maintained by the Corporation shall be paid to the beneficiary designated by the
Executive, and the stock options, restricted stock or other awards held by the Executive under the
Corporations stock plans shall become fully vested, and, in the case of stock options, exercisable
in full, in accordance with the terms of the applicable plan or plans.
8.
WITHHOLDING
The Corporation shall, to the extent permitted by law, have the right to withhold and deduct
from any payment hereunder any federal, state or local taxes of any kind required by law to be
withheld with respect to any such payment.
9.
PROTECTION OF CONFIDENTIAL INFORMATION
The Executive agrees that he will keep all confidential and proprietary information of the
Corporation or relating to its business confidential, and that he will not (except with the
Corporations prior written consent), while in the employ of the Corporation or thereafter,
disclose any such confidential information to any person, firm, corporation, association or other
entity, other than in furtherance of his duties hereunder, and then only to those with a need to
know. The Executive shall not make use of any such confidential information for his own purposes
or for the benefit of any person, firm, corporation, association or other entity (except the
Corporation) under any circumstances during or after the term of his employment. The foregoing
shall not apply to any information which is already in the public domain, or is generally disclosed
by the Corporation or is otherwise in the public domain at the time of disclosure.
The Executive recognizes that because his work for the Corporation may bring him into contact
with confidential and proprietary information of the Corporation, the restrictions of this Section
9 are required for the reasonable protection of the Corporation and its investments and for the
Corporations reliance on and confidence in the Executive.
10.
COVENANT NOT TO COMPETE
The Executive hereby agrees that he will not, either during the employment term or during the
period of one (1) year from the time the Executives employment under this Agreement is terminated
by him voluntarily, by the Corporation for Cause, or because the Executive chooses not to extend
the term of this Agreement, engage in any business activities on behalf of any enterprise which
competes with the Corporation in the business of the passive ownership of health care facilities,
or passive investing in or lending to health care-related enterprises. The Executive will be
deemed to be engaged in such competitive business activities if he participates in such a business
enterprise as an employee, officer, director, consultant, agent, partner, proprietor, or other
participant; provided that the ownership of no more than two percent (2%) of the stock of a
publicly traded corporation engaged in a competitive business shall not be deemed to be engaging in
competitive business activities.
8
The Executive agrees that he shall not, for a period of one year from the time his employment
under this Agreement ceases (for whatever reason), or, if later, during the Severance Period (in
the event of an involuntary termination under Section 5(a) or 5(b) of this Agreement) or for a
period of twenty-four (24) months after an involuntary termination or voluntary resignation
following a Change in Corporate Control under Section 6 of this Agreement, solicit any employee or
full-time consultant of the Corporation for the purposes of hiring or retaining such employee or
consultant.
11.
INJUNCTIVE RELIEF
The Executive acknowledges and agrees that it would be difficult to fully compensate the
Corporation for damages resulting from the breach or threatened breach of the covenants set forth
in Sections 9 and 10 of this Agreement and accordingly agrees that the Corporation shall be
entitled to temporary and injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions, to enforce such provisions in any action or proceeding
instituted in the United States District Court for the Northern District of Ohio or in any court in
the State of Ohio having subject matter jurisdiction. This provision with respect to injunctive
relief shall not, however, diminish the Corporations right to claim and recover damages.
It is expressly understood and agreed that although the parties consider the restrictions
contained in this Agreement to be reasonable, if a court determines that the time or territory or
any other restriction contained in this Agreement is an unenforceable restriction on the activities
of the Executive, no such provision of this Agreement shall be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to such extent as such court may
judicially determine or indicate to be reasonable.
12.
NOTICES
All notices or communications hereunder shall be in writing and sent certified or registered
mail, return receipt requested, postage prepaid, addressed as follows (or to such other address as
such party may designate in writing from time to time):
If to the Corporation:
Health Care REIT, Inc.
One SeaGate, Suite 1500
Toledo, OH 43604
Attention: Corporate Secretary
If to the Executive:
Raymond W. Braun
543 Troon Rd.
Holland, OH 43528
9
The actual date of receipt, as shown by the receipt therefor, shall determine the time at which
notice was given.
13.
SEPARABILITY
If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole
or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof
which shall remain in full force and effect.
14.
ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the heirs and representatives
of the Executive and the assigns and successors of the Corporation, but neither this Agreement nor
any rights hereunder shall be assignable or otherwise subject to hypothecation by the Executive.
15.
ENTIRE AGREEMENT
This Agreement represents the entire agreement of the parties and shall supersede any and all
previous contracts, arrangements or understandings between the Corporation and the Executive. The
Agreement may be amended at any time by mutual written agreement of the parties hereto.
16.
SECTION 409A COMPLIANCE
This Agreement is intended to comply with the requirements of Section 409A of the Code, and
shall be interpreted and construed consistently with such intent. The payments to the Executive
pursuant to this Agreement are also intended to be exempt from Section 409A of the Code to the
maximum extent possible, under either the separation pay exemption pursuant to Treasury Regulation
Section 1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury Regulation Section
1.409A-1(b)(4). In the event the terms of this Agreement would subject the Executive to taxes or
penalties under Section 409A of the Code (409A Penalties), the Corporation and the Executive
shall cooperate diligently to amend the terms of the Agreement to avoid such 409A Penalties, to the
extent possible. To the extent any amounts under this Agreement are payable by reference to
Executives termination, termination of employment, or similar phrases, such term shall be
deemed to refer to the Executives separation from service (as defined in Treasury Regulation
Section 1.409A-1(h) (without regard to any permissible alternative definition thereunder) with the
Corporation and all entities treated as a single employer with the Corporation under Sections
414(b) and (c) of the Code but substituting a 50% ownership level for the 80% ownership level set
forth therein). Notwithstanding any other provision in this Agreement, if the Executive is a
Specified Employee (as defined Treasury Regulation Section 1.409A-1(i) on December
31
st
of the prior calendar year), as of the date of the Executives separation from
service, then to the extent any amount payable under this Agreement (i) constitutes the payment of
nonqualified deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable
upon the Executives separation from service and (iii) under the terms of this Agreement would be
payable prior to the six-month
10
anniversary of the Executives
separation from service, such payment shall be delayed and paid to the Executive, together with
interest at an annual rate equal to the interest rate specified by KeyBank for a six-month
certificate of deposit, on the first day of the first calendar month beginning at least six months
following the date of termination, or, if earlier, within ninety (90) days following the
Executives death to the Executives surviving spouse (or such other beneficiary as the Executive
may designate in writing). Any reimbursement or advancement payable to the Executive pursuant to
this Agreement shall be conditioned on the submission by the Executive of all expense reports
reasonably required by the Corporation under any applicable expense reimbursement policy, and shall
be paid to the Executive within thirty (30) days following receipt of such expense reports, but in
no event later than the last day of the calendar year following the calendar year in which the
Executive incurred the reimbursable expense. Any amount of expenses eligible for reimbursement, or
in-kind benefit provided, during a calendar year shall not affect the amount of expenses eligible
for reimbursement, or in-kind benefit to be provided, during any other calendar year. The right to
any reimbursement or in-kind benefit pursuant to this Agreement shall not be subject to liquidation
or exchange for any other benefit.
17.
GOVERNING LAW
This Agreement shall be construed, interpreted, and governed in accordance with the laws of
the State of Ohio, other than the conflict of laws provisions of such laws.
IN WITNESS WHEREOF
, the Corporation has caused this Agreement to be duly executed, and the
Executive has hereunto set his hand, as of the day and year first above written.
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Attest:
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HEALTH CARE REIT, INC.
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/s/ Erin C. Ibele
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By:
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/s/ Jeffrey H. Miller
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Erin C. Ibele, Senior Vice President-
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Jeffrey H. Miller, Executive Vice
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Administration and Corporate Secretary
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President and General Counsel
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Witness:
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EXECUTIVE:
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/s/ Rita Rogge
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/s/ Raymond W. Braun
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Raymond W. Braun
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11
EXHIBIT 10.3
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
, dated this 29th day of December, 2008
(the Agreement), is entered into by and between HEALTH CARE REIT, INC., a Delaware corporation,
(the Corporation), and CHARLES J. HERMAN, Jr. (the Executive).
WHEREAS
, the Corporation and the Executive entered into an Employment Agreement, effective as
of August 1, 2000;
WHEREAS
, the Corporation and the Executive entered into an Amended and Restated Employment
Agreement, effective as of January 1, 2004;
WHEREAS
, the Compensation Committee of the Corporations Board of Directors has approved
certain modifications to the terms of such Amended and Restated Employment Agreement solely for
purposes of compliance with the requirements of Section 409A of the Internal Revenue Code, as
amended (the Code), and the rules and regulations promulgated thereunder; and
WHEREAS,
the Corporation wishes to assure itself of the services of the Executive for the
period provided in this Agreement and the Executive is willing to serve in the employ of the
Corporation for such period upon the terms and conditions set forth in this Agreement, which is
effective as of January 1, 2009.
NOW THEREFORE
, in consideration of the mutual covenants herein contained, the parties,
intending to be legally bound, hereby agree as follows:
1.
EMPLOYMENT
The Corporation hereby agrees to employ the Executive as the Corporations Vice President of
Operations, upon the terms and conditions herein contained, and the Executive hereby agrees to
accept such employment and to serve in such position, and to be responsible for originating new
transactions, underwriting, monitoring, research and such related duties that are customarily
performed by a Vice President of Operations of a publicly traded corporation during the term of
this Agreement. In such capacity, the Executive shall report only to the Corporations Chief
Executive Officer (CEO) and President and Chief Financial Officer (CFO), and shall have the
powers and responsibilities set forth in Article IV of the Corporations By-Laws (if specified) as
well as such additional powers and responsibilities consistent with his position as the CEO and CFO
may assign to him.
Throughout the term of this Agreement, the Executive shall devote his best efforts and all of
his business time and services to the business and affairs of the Corporation.
2.
TERM OF AGREEMENT
The current term of employment under this Agreement shall expire on January 31, 2009. Upon
the expiration of such term, the term of employment hereunder shall automatically be extended
without further action by the parties for successive two (2) year renewal terms, unless either
party shall give at least six (6) months advance written notice to the other of his or its
intention that this Agreement shall terminate upon the expiration of the current term or the then
current renewal term, as the case may be.
Notwithstanding the foregoing, the Corporation shall be entitled to terminate this Agreement
immediately, subject to a continuing obligation to make any payments required under Section 5
below, if the Executive (i) becomes disabled as described in Section 5(b), (ii) is terminated for
Cause, as defined in Section 5(c), or (iii) voluntarily terminates his employment before the
current term of this Agreement expires, as described in Section 5(d).
3.
SALARY AND BONUS
The Executive shall receive a base salary during the term of this Agreement at a rate of not
less than $218,545 per annum for 2004, and at a rate of not less than $218,545 per annum for
subsequent years, payable in substantially equal semi-monthly installments. The Compensation
Committee of the Board shall consult with the CEO and review the Executives base salary at annual
intervals, and may adjust the Executives annual base salary from time to time as the Committee
deems to be appropriate.
The Executive shall also be eligible to receive an annual bonus from the Corporation each year
during the term of this Agreement, with the actual amount of such bonus to be determined by the
Compensation Committee of the Corporations Board, using such performance measures as the Committee
deems to be appropriate. Such bonus, if any, shall be paid to the Executive no later than sixty
(60) days after the end of the year to which the bonus relates.
4.
ADDITIONAL COMPENSATION AND BENEFITS
The Executive shall receive the following additional compensation and welfare and fringe
benefits during the term of the Agreement:
(a)
Stock Options and Other Long-Term Incentives
. The Executive has been
granted incentive stock options, nonstatutory stock options, and shares of restricted stock
pursuant to the terms of the Corporations 1995 Stock Incentive Plan. During the remaining
term of the Agreement, any additional stock options, restricted stock or other awards under
the 1995 Stock Incentive Plan shall be at the discretion of the Compensation Committee of
the Corporations Board.
(b)
Health Insurance
. The Corporation shall provide the Executive and his
dependents with health insurance, life insurance, and disability coverage on terms no less
favorable than that from time to time made available to other key employees.
2
(c)
Vacation
. The Executive shall be entitled to up to three (3) weeks of
vacation during each year during the term of this Agreement and any extensions thereof, all
prorated for partial years.
(d)
Business Expenses
. The Corporation shall reimburse the Executive for all
reasonable expenses he incurs in promoting the Corporations business, including expenses
for travel and similar items, upon presentation by the Executive from time to time of an
itemized account of such expenditures.
In addition to the benefits provided pursuant to the preceding paragraphs of this Section 4,
the Executive shall be eligible to participate in such other executive compensation and retirement
plans (if eligible) of the Corporation as are applicable generally to other officers, and in such
welfare benefit plans, programs, practices and policies of the Corporation as are generally
applicable to other key employees, unless such participation would duplicate, directly or
indirectly, benefits already accorded to the Executive.
5.
PAYMENTS UPON TERMINATION
(a)
Involuntary Termination
. If the Executives employment is involuntarily
terminated by the Corporation during the term of this Agreement, the Executive shall be entitled to
receive his base salary accrued through the date of termination, any accrued but unpaid vacation
pay, plus any bonuses earned but unpaid with respect to fiscal years or other periods preceding the
termination date. Such payments shall be made to the Executive within sixty (60) days following
the date of involuntary termination. The Executive shall also receive any nonforfeitable benefits
payable to him under the terms of any deferred compensation, incentive or other benefit plan
maintained by the Corporation, payable in accordance with the terms of the applicable plan.
If the termination is not a termination for Cause, as described in paragraph (c), a voluntary
termination by the Executive as described in paragraph (d), or a result of the Executives death or
disability, then the Corporation shall also be obligated to make a lump sum severance payment to
the Executive equal to the present value of a series of monthly severance payments for each month
during the remaining term of this Agreement, but not less than twelve (12) months (the Severance
Period), each in an amount equal to one-twelfth (1/12th) of the sum of (i) the Executives annual
base salary, as in effect on the date of termination, and (ii) the greater of (A) the annual bonus
paid to the Executive for the last fiscal year preceding the termination date or (B) a minimum
bonus equal to thirty percent (30%) of his annual base salary. Such present value shall be
calculated using a discount rate equal to the interest rate on 90-day Treasury bills, as reported
in the
Wall Street Journal
(or similar publication) on the date of involuntary termination.
Such lump sum payment shall be made to the Executive within sixty (60) days following the date of
such involuntary termination and shall be in the form of a bank cashiers check. If the Executive
obtains a replacement position with any new employer (including a position as an officer, employee,
consultant, or agent, or self-employment as a partner or sole proprietor), the Executive shall be
obligated to repay to the Corporation an amount equal to all amounts the Executive receives as
compensation for services performed during the Severance Period; provided however, that the
aggregate repayment obligation shall not exceed the amount of the lump sum payment under this
3
paragraph (a). The Executive shall be under no duty to mitigate the amounts owed to him under this
paragraph (a) by seeking such a replacement position.
In addition, if the termination is not a termination for Cause as described in paragraph (c),
a voluntary termination by the Executive as described in paragraph (d), or a result of the
Executives death or disability, then:
(i) Any stock options, restricted stock or other awards granted to the Executive under
the Corporations 1995 Stock Incentive Plan shall become fully vested and, in the case of
stock options, exercisable in full; and
(ii) The Executive shall be provided continued coverage at the Corporations expense
under any life, health and disability insurance programs maintained by the Corporation in
which the Executive participated at the time of his termination for the remaining term of
the Agreement (but not less than six (6) months and not more than the period during which
the Executive would be entitled to continuation coverage under Section 4980B of the Code, if
the Executive elected such coverage and paid the applicable premiums), or until, if earlier,
the date the Executive obtains comparable coverage under benefit plans maintained by a new
employer.
(b)
Disability
. The Corporation shall be entitled to terminate the Executives
employment if the Board determines that the Executive has been unable to attend to his duties for
at least ninety (90) days because of a medically diagnosable physical or mental condition, and has
received a written opinion from a physician acceptable to the Board that such condition prevents
the Executive from resuming full performance of his duties and is likely to continue for an
indefinite period. Upon such involuntary termination, the Executive shall be entitled to receive
his base salary accrued through the date of termination, any accrued but unpaid vacation pay, plus
any bonuses earned but unpaid with respect to fiscal years or other periods preceding the
termination date. Such payments shall be made to the Executive within sixty (60) days following
the date of involuntary termination. In addition, the Corporation shall make a series of monthly
disability payments to Executive, each equal to one-twelfth (1/12
th
) of the sum of
(i) his annual base salary, as in effect at the time Executive became permanently disabled, and
(ii) the greater of (A) the annual bonus paid to the Executive for the last fiscal year preceding
the date of disability or (B) a minimum bonus equal to thirty percent (30%) of the Executives
annual base salary. Payment of such disability benefit shall be paid in accordance with the
Corporations normal payroll practices, shall commence with the month following the month in which
the involuntary termination occurs and continue each month for the remaining current term of this
Agreement (but not less than twelve (12) months), but shall terminate at an earlier date if the
Executive returns to active employment, either with the Corporation or otherwise. Any amounts
payable under this Section 5(b) shall be reduced by any amounts paid to the Executive under any
long-term disability plan or other disability program or insurance policies maintained or provided
by the Corporation.
(c)
Termination for Cause
. If the Executives employment is terminated by the
Corporation for Cause, the amount the Executive shall be entitled to receive from the Corporation
shall be limited to his base salary accrued through the date of termination, any accrued but unpaid
vacation pay, plus any bonuses earned but unpaid with respect to the fiscal year of the Corporation
4
most recently ended, and any nonforfeitable benefits payable to the Executive under the terms of
any deferred compensation, incentive or other benefit plans maintained by the Corporation. Such
payments shall be made to the Executive within sixty (60) days following the date of termination.
For purposes of this Agreement, the term Cause shall be limited to (i) action by the
Executive involving willful disloyalty to the Corporation, such as embezzlement, fraud,
misappropriation of corporate assets or a breach of the covenants set forth in Sections 9 and 10
below; or (ii) the Executive being convicted of a felony; or (iii) the Executive being convicted of
any lesser crime or offense committed in connection with the performance of his duties hereunder or
involving moral turpitude; or (iv) the intentional and willful failure by the Executive to
substantially perform his duties hereunder as directed by the Corporations CEO (other than any
such failure resulting from the Executives incapacity due to physical or mental disability) after
a demand for substantial performance is made on the Executive by the Board of Directors.
(d)
Voluntary Termination by the Executive
. If the Executive resigns or otherwise
voluntarily terminates his employment before the end of the current term of this Agreement (other
than in connection with a Change in Corporate Control, as described in Section 6), the amount the
Executive shall be entitled to receive from the Corporation shall be limited to his base salary
accrued through the date of termination, any accrued but unpaid vacation pay, plus any bonuses
earned but unpaid with respect to any fiscal years or other periods preceding the termination date,
and any nonforfeitable benefits payable to the Executive under the terms of any deferred
compensation, incentive or other benefit plans of the Corporation. Such payment shall be made to
the Executive within sixty (60) days following the date of resignation or voluntary termination.
For purposes of this paragraph, a resignation by the Executive shall not be deemed to be
voluntary if the Executive is (1) assigned to a position other than the Vice President of
Operations of the Corporation (other than for Cause or by reason of permanent disability) or
assigned duties materially inconsistent with such position if either such change in assignment
constitutes a material diminution in the Executives authority, duties or responsibilities, or (2)
directed to report to anyone other than the Corporations CEO or CFO if such change in reporting
duties constitutes a material diminution in the authority, duties or responsibilities of the
supervisor to whom the Executive is required to report; provided that the Executive has notified
the Corporation within the first ninety (90) days following the initial date of such change in
assignment or reporting duties that the Executive regards such change in assignment or reporting
duties as grounds justifying resignation under this paragraph and the Corporation has failed to
cure such change in assignment or reporting duties within ninety (90) days following its receipt of
such notice from the Executive; and provided further that the Executive resigns under this
paragraph within one (1) year following the initial existence of a change in assignment or
reporting duties described herein.
6.
EFFECT OF CHANGE IN CORPORATE CONTROL
(a) In the event of a Change in Corporate Control, the vesting of any stock options,
restricted stock or other awards granted to the Executive under the terms of the Corporations 1995
Stock Incentive Plan shall be accelerated (to the extent permitted by the terms of
5
such Plan) and such awards shall become immediately vested in full and, in the case of stock
options, exercisable in full.
(b) If, at any time during the period of twelve (12) consecutive months following the
occurrence of a Change in Corporate Control, and during the term of this Agreement, the Executive
is involuntarily terminated (other than for Cause) or elects to voluntarily resign his employment,
the Executive shall be entitled to receive a lump sum severance payment equal to the present value
of a series of monthly severance payments for twenty-four (24) months, each in an amount equal to
one-twelfth (1/12th) of the sum of (i) the Executives annual base salary, as in effect at the time
of the Change in Corporate Control, and (ii) the greater of (A) the annual bonus paid to the
Executive for the last fiscal year of the Corporation ending prior to the Change in Corporate
Control or (B) a minimum bonus equal to thirty percent (30%) of his annual base salary. Such
present value shall be calculated using a discount rate equal to the interest rate on 90-day
Treasury bills, as reported in the
Wall Street Journal
(or similar publication) on the date
of the Change in Corporate Control. Such lump sum payment shall be made to the Executive within
sixty (60) days following the date of such involuntary termination or voluntary resignation and
shall be in the form of a bank cashiers check.
In addition, if the Executive is involuntarily terminated (other than for Cause) or elects to
voluntarily resign his employment within twelve (12) months after a Change in Corporate Control, he
shall be entitled to continued coverage at the Corporations expense under any life, health and
disability insurance programs maintained by the Corporation in which the Executive participated at
the time of his termination, which coverage shall be continued until the expiration of the current
term of the Agreement (but not less than six (6) months and not more than the period during which
the Executive would be entitled to continuation coverage under Section 4980B of the Code if the
Executive elected such coverage and paid the applicable premiums) or until, if earlier, the date
the Executive obtains comparable coverage under benefit plans maintained by a new employer.
(c) For purposes of this Agreement, a Change in Corporate Control shall include any of the
following events:
(1) The acquisition in one or more transactions of more than twenty percent (20%) of the
Corporations outstanding Common Stock (or the equivalent in voting power of any class or
classes of securities of the Corporation entitled to vote in elections of directors) by any
corporation, or other person or group (within the meaning of Section 14(d)(3) of the
Securities Exchange Act of 1934, as amended);
(2) Any transfer or sale of substantially all of the assets of the Corporation, or any
merger or consolidation of the Corporation into or with another corporation in which the
Corporation is not the surviving entity;
(3) Any election of persons to the Board of Directors which causes a majority of the Board
of Directors to consist of persons other than Continuing Directors. For this purpose,
those persons who were members of the Board of Directors on May 1, 1995, shall be
Continuing Directors. Any person who is nominated for election as a member of the
6
Board after May 1, 1995, shall also be considered a Continuing Director for this purpose
if, and only if, his or her nomination for election to the Board of Directors is approved or
recommended by a majority of the members of the Board (or of the relevant Nominating
Committee) and at least five (5) members of the Board are themselves Continuing Directors at
the time of such nomination; or
(4) Any person, or group of persons, announces a tender offer for at least twenty percent
(20%) of the Corporations Common Stock, and the Board of Directors appoints a special
committee of the Board to consider the Corporations response to such tender offer.
(d) Notwithstanding anything else in this Agreement, if any payment, accelerated vesting or
other benefit provided by the Corporation to the Executive in connection with a Change in Corporate
Control, whether paid or payable pursuant to the terms of this Agreement or otherwise (a Parachute
Payment) is determined to be a parachute payment subject to the excise tax imposed by Section 4999
of the Code (such excise tax, together with any interest and penalties incurred by the Executive
with respect to such excise tax, are referred to as the Excise Tax), the Corporation shall make
an additional payment (the Gross-Up Payment) to the Executive in an amount such that the net
amount of the Gross-Up Payment the Executive retains, after payment by the Executive of all taxes
imposed upon the Gross-Up Payment, including, without limitation, the Excise Tax and any federal,
state or local income taxes (and any interest and penalties imposed with respect thereto) on the
Gross-Up Payment, will be equal to the Excise Tax liability imposed upon the Executive with respect
to all Parachute Payments (other than the Gross-Up Payment). The Gross-Up Payment shall be paid to
the Executive no later than the date the Executive is required to pay the Excise Tax.
7.
DEATH
If the Executive dies during the term of this Agreement, the Corporation shall pay to the
Executives estate a lump sum payment equal to the sum of the Executives base salary accrued
through the date of death, any accrued but unpaid vacation pay, plus any bonuses earned but unpaid
with respect to fiscal years or other periods preceding the date of death. In addition, the
Corporation shall pay to the Executives surviving spouse (or such other beneficiary as the
Executive may designate in writing) a lump sum payment equal to the present value of a series of
monthly payments for each month during the remaining term of the Agreement (but not less than
twelve (12) months), each in an amount equal to one-twelfth (1/12
th
) of the sum of
(i) the Executives annual base salary, as in effect on the date of death, and (ii) the greater of
(A) the annual bonus paid to the Executive for the last fiscal year preceding the date of death or
(B) a minimum bonus equal to thirty percent (30%) of the Executives annual base salary. Such
present value shall be calculated using a discount rate equal to the interest rate on 90-day
Treasury bills, as reported in the
Wall Street Journal
(or similar publication) for the
date of death. Both the lump sum payment to the Executives estate and the lump sum payment to the
Executives surviving spouse (or other designated beneficiary) shall be paid within sixty (60) days
following the date of the Executives death. In addition, the death benefits payable by reason of
the Executives death under any retirement, deferred compensation, life insurance or other employee
benefit plan maintained by the Corporation shall be paid to the beneficiary designated by the
Executive, and the stock options, restricted stock or other awards held
7
by the Executive under the Corporations stock
plans shall become fully vested, and, in the case of stock options, exercisable in full, in
accordance with the terms of the applicable plan or plans.
8.
WITHHOLDING
The Corporation shall, to the extent permitted by law, have the right to withhold and deduct
from any payment hereunder any federal, state or local taxes of any kind required by law to be
withheld with respect to any such payment.
9.
PROTECTION OF CONFIDENTIAL INFORMATION
The Executive agrees that he will keep all confidential and proprietary information of the
Corporation or relating to its business confidential, and that he will not (except with the
Corporations prior written consent), while in the employ of the Corporation or thereafter,
disclose any such confidential information to any person, firm, corporation, association or other
entity, other than in furtherance of his duties hereunder, and then only to those with a need to
know. The Executive shall not make use of any such confidential information for his own purposes
or for the benefit of any person, firm, corporation, association or other entity (except the
Corporation) under any circumstances during or after the term of his employment. The foregoing
shall not apply to any information which is already in the public domain, or is generally disclosed
by the Corporation or is otherwise in the public domain at the time of disclosure.
The Executive recognizes that because his work for the Corporation may bring him into contact
with confidential and proprietary information of the Corporation, the restrictions of this Section
9 are required for the reasonable protection of the Corporation and its investments and for the
Corporations reliance on and confidence in the Executive.
10.
COVENANT NOT TO COMPETE
The Executive hereby agrees that he will not, either during the employment term or during the
period of one (1) year from the time the Executives employment under this Agreement is terminated
by him voluntarily, by the Corporation for Cause, or because the Executive chooses not to extend
the term of this Agreement, engage in any business activities on behalf of any enterprise which
competes with the Corporation in the business of the passive ownership of health care facilities,
or passive investing in or lending to health care-related enterprises. The Executive will be
deemed to be engaged in such competitive business activities if he participates in such a business
enterprise as an employee, officer, director, consultant, agent, partner, proprietor, or other
participant; provided that the ownership of no more than two percent (2%) of the stock of a
publicly traded corporation engaged in a competitive business shall not be deemed to be engaging in
competitive business activities.
The Executive agrees that he shall not, for a period of one year from the time his employment
under this Agreement ceases (for whatever reason), or, if later, during the Severance Period (in
the event of an involuntary termination under Section 5(a) or 5(b) of this Agreement) or for a
period of twenty-four (24) months after an involuntary termination or voluntary resignation
following a Change in Corporate Control under Section 6 of this Agreement, solicit any employee or
8
full-time consultant of the Corporation for the purposes of hiring or retaining such employee or
consultant.
11.
INJUNCTIVE RELIEF
The Executive acknowledges and agrees that it would be difficult to fully compensate the
Corporation for damages resulting from the breach or threatened breach of the covenants set forth
in Sections 9 and 10 of this Agreement and accordingly agrees that the Corporation shall be
entitled to temporary and injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions, to enforce such provisions in any action or proceeding
instituted in the United States District Court for the Northern District of Ohio or in any court in
the State of Ohio having subject matter jurisdiction. This provision with respect to injunctive
relief shall not, however, diminish the Corporations right to claim and recover damages.
It is expressly understood and agreed that although the parties consider the restrictions
contained in this Agreement to be reasonable, if a court determines that the time or territory or
any other restriction contained in this Agreement is an unenforceable restriction on the activities
of the Executive, no such provision of this Agreement shall be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to such extent as such court may
judicially determine or indicate to be reasonable.
12.
NOTICES
All notices or communications hereunder shall be in writing and sent certified or registered
mail, return receipt requested, postage prepaid, addressed as follows (or to such other address as
such party may designate in writing from time to time):
If to the Corporation:
Health Care REIT, Inc.
One SeaGate, Suite 1500
Toledo, OH 43604
Attention: Chief Executive Officer
If to the Executive:
Charles J. Herman, Jr.
2924 Secretariat Road
Toledo, Ohio 43615
The actual date of receipt, as shown by the receipt therefor, shall determine the time at which
notice was given.
9
13.
SEPARABILITY
If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole
or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof
which shall remain in full force and effect.
14.
ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the heirs and representatives
of the Executive and the assigns and successors of the Corporation, but neither this Agreement nor
any rights hereunder shall be assignable or otherwise subject to hypothecation by the Executive.
15.
ENTIRE AGREEMENT
This Agreement represents the entire agreement of the parties and shall supersede any and all
previous contracts, arrangements or understandings between the Corporation and the Executive. The
Agreement may be amended at any time by mutual written agreement of the parties hereto.
16.
SECTION 409A COMPLIANCE
This Agreement is intended to comply with the requirements of Section 409A of the Code, and
shall be interpreted and construed consistently with such intent. The payments to the Executive
pursuant to this Agreement are also intended to be exempt from Section 409A of the Code to the
maximum extent possible, under either the separation pay exemption pursuant to Treasury Regulation
Section 1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury Regulation Section
1.409A-1(b)(4). In the event the terms of this Agreement would subject the Executive to taxes or
penalties under Section 409A of the Code (409A Penalties), the Corporation and the Executive
shall cooperate diligently to amend the terms of the Agreement to avoid such 409A Penalties, to the
extent possible. To the extent any amounts under this Agreement are payable by reference to
Executives termination, termination of employment, or similar phrases, such term shall be
deemed to refer to the Executives separation from service (as defined in Treasury Regulation
Section 1.409A-1(h) (without regard to any permissible alternative definition thereunder) with the
Corporation and all entities treated as a single employer with the Corporation under Sections
414(b) and (c) of the Code but substituting a 50% ownership level for the 80% ownership level set
forth therein). Notwithstanding any other provision in this Agreement, if the Executive is a
Specified Employee (as defined Treasury Regulation Section 1.409A-1(i) on December
31
st
of the prior calendar year), as of the date of the Executives separation from
service, then to the extent any amount payable under this Agreement (i) constitutes the payment of
nonqualified deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable
upon the Executives separation from service and (iii) under the terms of this Agreement would be
payable prior to the six-month anniversary of the Executives separation from service, such payment
shall be delayed and paid to the Executive, together with interest at an annual rate equal to the
interest rate specified by KeyBank for a six-month certificate of deposit, on the first day of the
first calendar month
10
beginning at least six months
following the date of termination, or, if earlier, within ninety (90) days following the
Executives death to the Executives surviving spouse (or such other beneficiary as the Executive
may designate in writing). Any reimbursement or advancement payable to the Executive pursuant to
this Agreement shall be conditioned on the submission by the Executive of all expense reports
reasonably required by the Corporation under any applicable expense reimbursement policy, and shall
be paid to the Executive within thirty (30) days following receipt of such expense reports, but in
no event later than the last day of the calendar year following the calendar year in which the
Executive incurred the reimbursable expense. Any amount of expenses eligible for reimbursement, or
in-kind benefit provided, during a calendar year shall not affect the amount of expenses eligible
for reimbursement, or in-kind benefit to be provided, during any other calendar year. The right to
any reimbursement or in-kind benefit pursuant to this Agreement shall not be subject to liquidation
or exchange for any other benefit.
17.
GOVERNING LAW
This Agreement shall be construed, interpreted, and governed in accordance with the laws of
the State of Ohio, other than the conflict of laws provisions of such laws.
IN WITNESS WHEREOF
, the Corporation has caused this Agreement to be duly executed, and the
Executive has hereunto set his hand, as of the day and year first above written.
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Attest:
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HEALTH CARE REIT, INC.
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/s/ Erin C. Ibele
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By:
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/s/ Jeffrey H. Miller
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Erin C. Ibele, Senior Vice President-
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Jeffrey H. Miller, Executive Vice
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Administration and Corporate Secretary
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President and General Counsel
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Witness:
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EXECUTIVE:
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/s/ Rita Rogge
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/s/ Charles J. Herman, Jr.
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Charles J. Herman, Jr.
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11
EXHIBIT
10.4
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
, dated this 29th day of December, 2008
(the Agreement), is entered into by and between HEALTH CARE REIT, INC., a Delaware corporation,
(the Corporation), and SCOTT A. ESTES (the Executive).
WHEREAS
, the Corporation and the Executive entered into an Employment Agreement, effective as
of April 28, 2003;
WHEREAS
, the Corporation and the Executive entered into an Amended and Restated Employment
Agreement, effective as of March 1, 2006;
WHEREAS
, the Compensation Committee of the Corporations Board of Directors has approved
certain modifications to the terms of such Amended and Restated Employment Agreement solely for
purposes of compliance with the requirements of Section 409A of the Internal Revenue Code, as
amended (the Code), and the rules and regulations promulgated thereunder; and
WHEREAS,
the Corporation wishes to assure itself of the services of the Executive for the
period provided in this Agreement and the Executive is willing to serve in the employ of the
Corporation for such period upon the terms and conditions set forth in this Agreement, which is
effective as of January 1, 2009.
NOW THEREFORE
, in consideration of the mutual covenants herein contained, the parties,
intending to be legally bound, hereby agree as follows:
1.
EMPLOYMENT
The Corporation hereby agrees to employ the Executive as the Corporations Senior Vice
President and Chief Financial Officer, upon the terms and conditions herein contained, and the
Executive hereby agrees to accept such employment and to serve in such positions, and to perform
the duties and functions customarily performed by the Senior Vice President and Chief Financial
Officer of a publicly traded corporation during the term of this Agreement. In such capacity, the
Executive shall report only to the Corporations Chief Executive Officer (CEO) and President
(President), and shall have the powers and responsibilities set forth in Article IV of the
Corporations By-Laws as well as such additional powers and responsibilities consistent with his
position as the CEO and President may assign to him.
Throughout the term of this Agreement, the Executive shall devote his best efforts and all of
his business time and services to the business and affairs of the Corporation.
2.
TERM OF AGREEMENT
The current term of employment under this Agreement shall expire on January 31, 2009. Upon
the expiration of such term, the term of employment hereunder shall automatically be extended
without further action by the parties for successive two (2) year renewal terms, unless either
party shall give at least six (6) months advance written notice to the other of his or its
intention that this Agreement shall terminate upon the expiration of the current term or the then
current renewal term, as the case may be.
Notwithstanding the foregoing, the Corporation shall be entitled to terminate this Agreement
immediately, subject to a continuing obligation to make any payments required under Section 5
below, if the Executive (i) becomes disabled as described in Section 5(b), (ii) is terminated for
Cause, as defined in Section 5(c), or (iii) voluntarily terminates his employment before the
current term of this Agreement expires, as described in Section 5(d).
3.
SALARY AND BONUS
The Executive shall receive a base salary during the term of this Agreement at a rate of not
less than $225,000 per annum for 2006, and at a rate of not less than $225,000 per annum for
subsequent years, payable in substantially equal semi-monthly installments. The Compensation
Committee of the Board shall consult with the CEO and review the Executives base salary at annual
intervals, and may adjust the Executives annual base salary from time to time as the Committee
deems to be appropriate.
The Executive shall also be eligible to receive an annual bonus from the Corporation each year
during the term of this Agreement, with the actual amount of such bonus to be determined by the
Compensation Committee of the Corporations Board, using such performance measures as the Committee
deems to be appropriate. Such bonus, if any, shall be paid to the Executive no later than sixty
(60) days after the end of the year to which the bonus relates.
4.
ADDITIONAL COMPENSATION AND BENEFITS
The Executive shall receive the following additional compensation and welfare and fringe
benefits during the term of the Agreement:
(a)
Stock Options and Other Long-Term Incentives
. The Executive has been
granted incentive stock options, nonstatutory stock options and shares of restricted stock
pursuant to the terms of the Corporations 1995 Stock Incentive Plan and 2005 Long-Term
Incentive Plan. During the remaining term of the Agreement, any additional stock options,
restricted stock or other awards granted under the 2005 Long-Term Incentive Plan shall be at
the discretion of the Compensation Committee of the Corporations Board.
(b)
Health Insurance
. The Corporation shall provide the Executive and his
dependents with health insurance, life insurance and disability coverage on terms no less
favorable than that from time to time made available to other key employees.
2
(c)
Vacation
. The Executive shall be entitled to up to three (3) weeks of
vacation during each year during the term of this Agreement and any extensions thereof,
prorated for partial years.
(d)
Business Expenses
. The Corporation shall reimburse the Executive for all
reasonable expenses he incurs in promoting the Corporations business, including expenses
for travel and similar items, upon presentation by the Executive from time to time of an
itemized account of such expenditures.
In addition to the benefits provided pursuant to the preceding paragraphs of this Section 4,
the Executive shall be eligible to participate in such other executive compensation and retirement
plans of the Corporation as are applicable generally to other officers, and in such welfare benefit
plans, programs, practices and policies of the Corporation as are generally applicable to other key
employees, unless such participation would duplicate, directly or indirectly, benefits already
accorded to the Executive.
5.
PAYMENTS UPON TERMINATION
(a)
Involuntary Termination
. If the Executives employment is involuntarily
terminated by the Corporation during the term of this Agreement, the Executive shall be entitled to
receive his base salary accrued through the date of termination, any accrued but unpaid vacation
pay, plus any bonuses earned but unpaid with respect to fiscal years or other periods preceding the
termination date. Such payments shall be made to the Executive within sixty (60) days following
the date of involuntary termination. The Executive shall also receive any nonforfeitable benefits
payable to him under the terms of any deferred compensation, incentive or other benefit plans
maintained by the Corporation, payable in accordance with the terms of the applicable plan.
If the termination is not a termination for Cause, as described in paragraph (c), a voluntary
termination by the Executive as described in paragraph (d), or a result of the Executives death or
disability, then the Corporation shall also be obligated to make a lump sum severance payment to
the Executive equal to the present value of a series of monthly severance payments for each month
during the remaining term of this Agreement, but not less than twelve (12) months (the Severance
Period), each in an amount equal to one-twelfth (1/12th) of the sum of (i) the Executives annual
base salary, as in effect on the date of termination, and (ii) the greater of (A) the annual bonus
paid to the Executive for the last fiscal year preceding the termination date or (B) a minimum
bonus equal to thirty-five percent (35%) of his annual base salary. Such present value shall be
calculated using a discount rate equal to the interest rate on 90-day Treasury bills, as reported
in the
Wall Street Journal
(or similar publication) on the date of involuntary termination.
Such lump sum payment shall be made to the Executive within sixty (60) days following the date of
such involuntary termination and shall be in the form of a bank cashiers check. If the Executive
obtains a replacement position with any new employer (including a position as an officer, employee,
consultant, or agent, or self-employment as a partner or sole proprietor), the Executive shall be
obligated to repay to the Corporation an amount equal to all amounts the Executive receives as
compensation for services performed during the Severance Period; provided however, that the
aggregate repayment obligation shall not exceed the amount of the lump sum payment
under this
3
paragraph (a). The Executive shall be under no duty to mitigate the amounts owed to him
under this paragraph (a) by seeking such a replacement position.
In addition, if the termination is not a termination for Cause as described in paragraph (c),
a voluntary termination by the Executive as described in paragraph (d), or a result of the
Executives death or disability, then:
(i) Any stock options, restricted stock or other awards granted to the Executive under
the Corporations 1995 Stock Incentive Plan or 2005 Long-Term Incentive Plan shall become
fully vested and, in the case of stock options, exercisable in full; and
(ii) The Executive shall be provided continued coverage at the Corporations expense
under any life, health and disability insurance programs maintained by the Corporation in
which the Executive participated at the time of his termination for the remaining term of
the Agreement (but not less than six (6) months and not more than the period during which
the Executive would be entitled to continuation coverage under Section 4980B of the Code, if
the Executive elected such coverage and paid the applicable premiums), or until, if earlier,
the date the Executive obtains comparable coverage under benefit plans maintained by a new
employer.
(b)
Disability
. The Corporation shall be entitled to terminate the Executives
employment if the Board determines that the Executive has been unable to attend to his duties for
at least ninety (90) days because of a medically diagnosable physical or mental condition, and has
received a written opinion from a physician acceptable to the Board that such condition prevents
the Executive from resuming full performance of his duties and is likely to continue for an
indefinite period. Upon such involuntary termination, the Executive shall be entitled to receive
his base salary accrued through the date of termination, any accrued but unpaid vacation pay, plus
any bonuses earned but unpaid with respect to fiscal years or other periods preceding the
termination date. Such payments shall be made to the Executive within sixty (60) days following
the date of involuntary termination. In addition, the Corporation shall make a series of monthly
disability payments to Executive, each equal to one-twelfth (1/12
th
) of the sum of
(i) his annual base salary, as in effect at the time Executive became permanently disabled, and
(ii) the greater of (A) the annual bonus paid to the Executive for the last fiscal year preceding
the date of disability or (B) a minimum bonus equal to thirty-five percent (35%) of the Executives
annual base salary. Payment of such disability benefit shall be paid in accordance with the
Corporations normal payroll practices, shall commence with the month following the month in which
the involuntary termination occurs and continue each month for the remaining current term of this
Agreement (but not less than twelve (12) months), but shall terminate at an earlier date if the
Executive returns to active employment, either with the Corporation or otherwise. Any amounts
payable under this Section 5(b) shall be reduced by any amounts paid to the Executive under any
long-term disability plan or other disability program or insurance policies maintained or provided
by the Corporation.
(c)
Termination for Cause
. If the Executives employment is terminated by the
Corporation for Cause, the amount the Executive shall be entitled to receive from the Corporation
shall be limited to his base salary accrued through the date of termination, any accrued but unpaid
vacation pay, plus any bonuses earned but unpaid with respect to the fiscal year of the Corporation
4
most recently ended, and any nonforfeitable benefits payable to the Executive under the terms of
any deferred compensation, incentive or other benefit plans maintained by the Corporation. Such
payments shall be made to the Executive within sixty (60) days following the date of termination.
For purposes of this Agreement, the term Cause shall be limited to (i) action by the
Executive involving willful disloyalty to the Corporation, such as embezzlement, fraud,
misappropriation of corporate assets or a breach of the covenants set forth in Sections 9 and 10
below; or (ii) the Executive being convicted of a felony; or (iii) the Executive being convicted of
any lesser crime or offense committed in connection with the performance of his duties hereunder or
involving moral turpitude; or (iv) the intentional and willful failure by the Executive to
substantially perform his duties hereunder as directed by the Corporations CEO or President (other
than any such failure resulting from the Executives incapacity due to physical or mental
disability) after a demand for substantial performance is made on the Executive by the Board of
Directors.
(d)
Voluntary Termination by the Executive
. If the Executive resigns or otherwise
voluntarily terminates his employment before the end of the current term of this Agreement (other
than in connection with a Change in Corporate Control, as described in Section 6), the amount the
Executive shall be entitled to receive from the Corporation shall be limited to his base salary
accrued through the date of termination, any accrued but unpaid vacation pay, plus any bonuses
earned but unpaid with respect to any fiscal years or other periods preceding the termination date,
and any nonforfeitable benefits payable to the Executive under the terms of any deferred
compensation, incentive or other benefit plans of the Corporation. Such payment shall be made to
the Executive within sixty (60) days following the date of resignation or voluntary termination.
For purposes of this paragraph, a resignation by the Executive shall not be deemed to be
voluntary if the Executive is (1) assigned to a position other than the Senior Vice President and
Chief Financial Officer of the Corporation (other than for Cause or by reason of permanent
disability) or assigned duties materially inconsistent with such position if either such change in
assignment constitutes a material diminution in the Executives authority, duties or
responsibilities, or (2) directed to report to anyone other than the Corporations CEO or President
if such change in reporting duties constitutes a material diminution in the authority, duties or
responsibilities of the supervisor to whom the Executive is required to report; provided that the
Executive has notified the Corporation within the first ninety (90) days following the initial date
of such change in assignment or reporting duties that the Executive regards such change in
assignment or reporting duties as grounds justifying resignation under this paragraph and the
Corporation has failed to cure such change in assignment or reporting duties within ninety (90)
days following its receipt of such notice from the Executive; and provided further that the
Executive resigns under this paragraph within one (1) year following the initial existence of a
change in assignment or reporting duties described herein.
6.
EFFECT OF CHANGE IN CORPORATE CONTROL
(a) In the event of a Change in Corporate Control, the vesting of any stock options,
restricted stock or other awards granted to the Executive under the terms of the Corporations 1995
Stock Incentive Plan or 2005 Long-Term Incentive Plan shall be accelerated (to
5
the extent permitted by the terms of such plans) and such awards shall become immediately vested in
full and, in the case of stock options, exercisable in full.
(b) If, at any time during the period of twelve (12) consecutive months following the
occurrence of a Change in Corporate Control, and during the term of this Agreement, the Executive
is involuntarily terminated (other than for Cause) or elects to voluntarily resign his employment,
the Executive shall be entitled to receive a lump sum severance payment equal to the present value
of a series of monthly severance payments for twenty-four (24) months, each in an amount equal to
one-twelfth (1/12th) of the sum of (i) the Executives annual base salary, as in effect at the time
of the Change in Corporate Control, and (ii) the greater of (A) the annual bonus paid to the
Executive for the last fiscal year of the Corporation ending prior to the Change in Corporate
Control or (B) a minimum bonus equal to thirty-five percent (35%) of his annual base salary. Such
present value shall be calculated using a discount rate equal to the interest rate on 90-day
Treasury bills, as reported in the
Wall Street Journal
(or similar publication) on the date
of the Change in Corporate Control. Such lump sum payment shall be made to the Executive within
sixty (60) days following the date of such involuntary termination or voluntary resignation and
shall be in the form of a bank cashiers check.
In addition, if the Executive is involuntarily terminated (other than for Cause) or elects to
voluntarily resign his employment within twelve (12) months after a Change in Corporate Control, he
shall be entitled to continued coverage at the Corporations expense under any life, health and
disability insurance programs maintained by the Corporation in which the Executive participated at
the time of his termination, which coverage shall be continued until the expiration of the current
term of the Agreement (but not less than six (6) months and not more than the period during which
the Executive would be entitled to continuation coverage under Section 4980B of the Code if the
Executive elected such coverage and paid the applicable premiums) or until, if earlier, the date
the Executive obtains comparable coverage under benefit plans maintained by a new employer.
(c) For purposes of this Agreement, a Change in Corporate Control shall include any of the
following events:
(1) The acquisition in one or more transactions of more than twenty percent (20%) of the
Corporations outstanding Common Stock (or the equivalent in voting power of any class or
classes of securities of the Corporation entitled to vote in elections of directors) by any
corporation, or other person or group (within the meaning of Section 14(d)(3) of the
Securities Exchange Act of 1934, as amended);
(2) Any transfer or sale of substantially all of the assets of the Corporation, or any
merger or consolidation of the Corporation into or with another corporation in which the
Corporation is not the surviving entity;
(3) Any election of persons to the Board of Directors which causes a majority of the Board
of Directors to consist of persons other than Continuing Directors. For this purpose,
those persons who were members of the Board of Directors on May 5, 2005, shall be
Continuing Directors. Any person who is nominated for election as a member of the
6
Board after May 5, 2005, shall also be considered a Continuing Director for this purpose
if, and only if, his or her nomination for election to the Board of Directors is approved or
recommended by a majority of the members of the Board (or of the relevant Nominating
Committee) and at least five (5) members of the Board are themselves Continuing Directors at
the time of such nomination; or
(4) Any person, or group of persons, announces a tender offer for at least twenty percent
(20%) of the Corporations Common Stock, and the Board of Directors appoints a special
committee of the Board to consider the Corporations response to such tender offer.
(d) Notwithstanding anything else in this Agreement, if any payment, accelerated vesting or
other benefit provided by the Corporation to the Executive in connection with a Change in Corporate
Control, whether paid or payable pursuant to the terms of this Agreement or otherwise (a Parachute
Payment) is determined to be a parachute payment subject to the excise tax imposed by Section 4999
of the Code (such excise tax, together with any interest and penalties incurred by the Executive
with respect to such excise tax, are referred to as the Excise Tax), the Corporation shall make
an additional payment (the Gross-Up Payment) to the Executive in an amount such that the net
amount of the Gross-Up Payment the Executive retains, after payment by the Executive of all taxes
imposed upon the Gross-Up Payment, including, without limitation, the Excise Tax and any federal,
state or local income taxes (and any interest and penalties imposed with respect thereto) on the
Gross-Up Payment, will be equal to the Excise Tax liability imposed upon the Executive with respect
to all Parachute Payments (other than the Gross-Up Payment). The Gross-Up Payment shall be paid to
the Executive no later than the date the Executive is required to pay the Excise Tax.
7.
DEATH
If the Executive dies during the term of this Agreement, the Corporation shall pay to the
Executives estate a lump sum payment equal to the sum of the Executives base salary accrued
through the date of death, any accrued but unpaid vacation pay, plus any bonuses earned but unpaid
with respect to fiscal years or other periods preceding the date of death. In addition, the
Corporation shall pay to the Executives surviving spouse (or such other beneficiary as the
Executive may designate in writing) a lump sum payment equal to the present value of a series of
monthly payments for each month during the remaining term of the Agreement (but not less than
twelve (12) months), each in an amount equal to one-twelfth (1/12
th
) of the sum of
(i) the Executives annual base salary, as in effect on the date of death, and (ii) the greater of
(A) the annual bonus paid to the Executive for the last fiscal year preceding the date of death or
(B) a minimum bonus equal to thirty-five percent (35%) of the Executives annual base salary. Such
present value shall be calculated using a discount rate equal to the interest rate on 90-day
Treasury bills, as reported in the
Wall Street Journal
(or similar publication) for the
date of death. Both the lump sum payment to the Executives estate and the lump sum payment to the
Executives surviving spouse (or other designated beneficiary) shall be paid within sixty (60) days
following the date of the Executives death. In addition, the death benefits payable by reason of
the Executives death under any retirement, deferred compensation, life insurance or other employee
benefit plan maintained by the Corporation shall be paid to the beneficiary designated by the
Executive, and the stock options, restricted stock or other awards held by the Executive under the
Corporations stock plans shall become fully vested, and, in
7
the case of stock options, exercisable
in full, in accordance with the terms of the applicable plan or plans.
8.
WITHHOLDING
The Corporation shall, to the extent permitted by law, have the right to withhold and deduct
from any payment hereunder any federal, state or local taxes of any kind required by law to be
withheld with respect to any such payment.
9.
PROTECTION OF CONFIDENTIAL INFORMATION
The Executive agrees that he will keep all confidential and proprietary information of the
Corporation or relating to its business confidential, and that he will not (except with the
Corporations prior written consent), while in the employ of the Corporation or thereafter,
disclose any such confidential information to any person, firm, corporation, association or other
entity, other than in furtherance of his duties hereunder, and then only to those with a need to
know. The Executive shall not make use of any such confidential information for his own purposes
or for the benefit of any person, firm, corporation, association or other entity (except the
Corporation) under any circumstances during or after the term of his employment. The foregoing
shall not apply to any information which is already in the public domain, or is generally disclosed
by the Corporation or is otherwise in the public domain at the time of disclosure.
The Executive recognizes that because his work for the Corporation may bring him into contact
with confidential and proprietary information of the Corporation, the restrictions of this Section
9 are required for the reasonable protection of the Corporation and its investments and for the
Corporations reliance on and confidence in the Executive.
10.
COVENANT NOT TO COMPETE
The Executive hereby agrees that he will not, either during the employment term or during the
period of one (1) year from the time the Executives employment under this Agreement is terminated
by him voluntarily, by the Corporation for Cause, or because the Executive chooses not to extend
the term of this Agreement, engage in any business activities on behalf of any enterprise which
competes with the Corporation in the business of the passive ownership of health care facilities,
or passive investing in or lending to health care-related enterprises. The Executive will be
deemed to be engaged in such competitive business activities if he participates in such a business
enterprise as an employee, officer, director, consultant, agent, partner, proprietor, or other
participant; provided that the ownership of no more than two percent (2%) of the stock of a
publicly traded corporation engaged in a competitive business shall not be deemed to be engaging in
competitive business activities.
The Executive agrees that he shall not, for a period of one year from the time his employment
under this Agreement ceases (for whatever reason), or, if later, during the Severance Period (in
the event of an involuntary termination under Section 5(a) or 5(b) of this Agreement) or for a
period of twenty-four (24) months after an involuntary termination or voluntary resignation
following a Change in Corporate Control under Section 6 of this Agreement, solicit any employee or
8
full-time consultant of the Corporation for the purposes of hiring or retaining such employee or
consultant.
11.
INJUNCTIVE RELIEF
The Executive acknowledges and agrees that it would be difficult to fully compensate the
Corporation for damages resulting from the breach or threatened breach of the covenants set forth
in Sections 9 and 10 of this Agreement and accordingly agrees that the Corporation shall be
entitled to temporary and injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions, to enforce such provisions in any action or proceeding
instituted in the United States District Court for the Northern District of Ohio or in any court in
the State of Ohio having subject matter jurisdiction. This provision with respect to injunctive
relief shall not, however, diminish the Corporations right to claim and recover damages.
It is expressly understood and agreed that although the parties consider the restrictions
contained in this Agreement to be reasonable, if a court determines that the time or territory or
any other restriction contained in this Agreement is an unenforceable restriction on the activities
of the Executive, no such provision of this Agreement shall be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to such extent as such court may
judicially determine or indicate to be reasonable.
12.
NOTICES
All notices or communications hereunder shall be in writing and sent certified or registered
mail, return receipt requested, postage prepaid, addressed as follows (or to such other address as
such party may designate in writing from time to time):
If to the Corporation:
Health Care REIT, Inc.
One SeaGate, Suite 1500
Toledo, OH 43604
Attention: Senior Vice President-Administration and Corporate Secretary
If to the Executive:
Scott A. Estes
5026 W. Dauber Dr.
Toledo, OH 43615
The actual date of receipt, as shown by the receipt therefor, shall determine the time at which
notice was given.
9
13.
SEPARABILITY
If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole
or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof
which shall remain in full force and effect.
14.
ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the heirs and representatives
of the Executive and the assigns and successors of the Corporation, but neither this Agreement nor
any rights hereunder shall be assignable or otherwise subject to hypothecation by the Executive.
15.
ENTIRE AGREEMENT
This Agreement represents the entire agreement of the parties and shall supersede any and all
previous contracts, arrangements or understandings between the Corporation and the Executive. The
Agreement may be amended at any time by mutual written agreement of the parties hereto.
16.
SECTION 409A COMPLIANCE
This Agreement is intended to comply with the requirements of Section 409A of the Code, and
shall be interpreted and construed consistently with such intent. The payments to the Executive
pursuant to this Agreement are also intended to be exempt from Section 409A of the Code to the
maximum extent possible, under either the separation pay exemption pursuant to Treasury Regulation
Section 1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury Regulation Section
1.409A-1(b)(4). In the event the terms of this Agreement would subject the Executive to taxes or
penalties under Section 409A of the Code (409A Penalties), the Corporation and the Executive
shall cooperate diligently to amend the terms of the Agreement to avoid such 409A Penalties, to the
extent possible. To the extent any amounts under this Agreement are payable by reference to
Executives termination, termination of employment, or similar phrases, such term shall be
deemed to refer to the Executives separation from service (as defined in Treasury Regulation
Section 1.409A-1(h) (without regard to any permissible alternative definition thereunder) with the
Corporation and all entities treated as a single employer with the Corporation under Sections
414(b) and (c) of the Code but substituting a 50% ownership level for the 80% ownership level set
forth therein). Notwithstanding any other provision in this Agreement, if the Executive is a
Specified Employee (as defined Treasury Regulation Section 1.409A-1(i) on December
31
st
of the prior calendar year), as of the date of the Executives separation from
service, then to the extent any amount payable under this Agreement (i) constitutes the payment of
nonqualified deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable
upon the Executives separation from service and (iii) under the terms of this Agreement would be
payable prior to the six-month anniversary of the Executives separation from service, such payment
shall be delayed and paid to the Executive, together with interest at an annual rate equal to the
interest rate specified by KeyBank for a six-month certificate of deposit, on the first day of the
first calendar month
10
beginning at least six months
following the date of termination, or, if earlier, within ninety (90) days following the
Executives death to the Executives surviving spouse (or such other beneficiary as the Executive
may designate in writing). Any reimbursement or advancement payable to the Executive pursuant to
this Agreement shall be conditioned on the submission by the Executive of all expense reports
reasonably required by the Corporation under any applicable expense reimbursement policy, and shall
be paid to the Executive within thirty (30) days following receipt of such expense reports, but in
no event later than the last day of the calendar year following the calendar year in which the
Executive incurred the reimbursable expense. Any amount of expenses eligible for reimbursement, or
in-kind benefit provided, during a calendar year shall not affect the amount of expenses eligible
for reimbursement, or in-kind benefit to be provided, during any other calendar year. The right to
any reimbursement or in-kind benefit pursuant to this Agreement shall not be subject to liquidation
or exchange for any other benefit.
17.
GOVERNING LAW
This Agreement shall be construed, interpreted, and governed in accordance with the laws of
the State of Ohio, other than the conflict of laws provisions of such laws.
IN WITNESS WHEREOF
, the Corporation has caused this Agreement to be duly executed, and the
Executive has hereunto set his hand, as of the day and year first above written.
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Attest:
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HEALTH CARE REIT, INC.
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/s/ Erin C. Ibele
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By:
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/s/ Jeffrey H. Miller
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Erin C. Ibele, Senior Vice President-
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Jeffrey H. Miller, Executive Vice
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Administration and Corporate Secretary
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President and General Counsel
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Witness:
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EXECUTIVE:
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/s/ Rita Rogge
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/s/ Scott A. Estes
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Scott A. Estes
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11
Exhibit 10.5
AMENDED AND RESTATED
CONSULTING AGREEMENT
THIS AMENDED AND RESTATED CONSULTING AGREEMENT
(the
Agreement
), dated this 29th day
of December, 2008, is entered into by and between
HEALTH CARE REIT, INC.,
a Delaware corporation
(the
Corporation
), and
FRED S. KLIPSCH
(the
Consultant
).
WHEREAS
, the Corporation and the Consultant entered into a Consulting Agreement, effective as
of December 20, 2006 (the
Effective Date
);
WHEREAS
, the Consultant served as an executive officer of Windrose Medical Properties Trust
(the
Trust
), which is the sole general partner of Windrose Medical Properties L.P. (the
LP
);
WHEREAS
, the Corporation and certain of its subsidiaries, simultaneously with the execution of
such Consulting Agreement, entered into an Agreement and Plan of Merger with the Trust and the LP
(
Merger Agreement
) providing for the merger of the Trust into a wholly owned subsidiary
of the Corporation and the merger of a wholly owned subsidiary of the Corporation into the LP
(collectively, the
Mergers
);
WHEREAS
, the Compensation Committee of the Corporations Board of Directors has approved
certain modifications to the terms of such Consulting Agreement solely for purposes of compliance
with the requirements of Section 409A of the Internal Revenue Code, as amended (the
Code
), and the rules and regulations promulgated thereunder;
WHEREAS
, the Corporation wishes to assure itself of the services of the Consultant for the
period provided in this Agreement and the Consultant is willing to provide services to the
Corporation for such period upon the terms and conditions set forth in this Agreement, which is
effective as of January 1, 2009.
NOW THEREFORE
, in consideration of the mutual covenants herein contained, the parties,
intending to be legally bound, agree as follows:
1.
CONSULTING SERVICES
.
Effective as of the Effective Date, the Corporation retains the Consultant as Vice Chairman of
the Corporation, and the Consultant agrees to perform such services as the parties mutually agree
that are customarily performed by such officer in a publicly traded corporation, upon the terms and
conditions herein contained. In such capacity, the Consultant shall report to the Chairman and
Chief Executive Officer of the Corporation.
Throughout the Term of this Agreement, the Consultant shall devote his best efforts to the
business and affairs of the Corporation and shall devote such time to the performance of the duties
described herein as the parties mutually agree. The Corporation acknowledges that the Consultant
has an ownership interest in, and management responsibilities
with, Klipsch Group Inc., and may have other positions, duties and responsibilities involving the
Klipsch Group, Inc. that are permissible in all respects hereunder.
2.
TERM OF AGREEMENT
.
The term of this Agreement (
Term
) shall be for two years beginning on the Effective
Date and expiring on the day before the second anniversary of the Effective Date.
Notwithstanding the foregoing, the Corporation or the Consultant shall be entitled to
terminate this Agreement before the Term expires, as described in Section 5, subject to a
continuing obligation to make any payments required under Section 5 below.
3.
COMPENSATION
.
(a)
Retention Bonus
. The Consultant shall receive a retention bonus on the later of
(x) the Effective Date or (y) January 2, 2007 of (i) $975,500 plus (ii) shares of the Corporations
common stock having a value of $930,000 (
Initial Stock Award
) based on the closing price
of the Corporations common stock as of the Effective Date. All such shares shall be fully vested
on the Effective Date and shall be fully registered under state and federal securities laws and
approved for listing on the New York Stock Exchange so as to be freely tradable by the Consultant
at the time of receipt; provided, however, that (x) until the first anniversary of the payment of
the retention bonus, no portion of the stock granted as part of the Initial Stock Award may be sold
and (y) until the second anniversary of the payment of the retention bonus, no more than one-half
of the stock granted as part of the Initial Stock Award may be sold.
(b)
Base Fee
. The Consultant shall receive a base consulting fee (
Base Fee
)
during the Term as follows, payable in equal semi-monthly installments in a manner consistent with
the Corporations customary practice for payroll payments:
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Year
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Annual Base Fee
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Year 1
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$
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350,000
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Year 2
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$
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250,000
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(c)
Performance Bonus
. The Consultant shall also be eligible to receive an annual
bonus (
Performance Bonus
) from the Corporation each fiscal year during the Term. The
amount of the Performance Bonus shall be determined by the Compensation Committee of the
Corporations Board, using such performance measures as the Compensation Committee deems to be
appropriate; provided, however, that the target amount of such Performance Bonus for 2007 and 2008
shall be between 60% and 120% of the Consultants Base Fee. Such bonus, if any, shall be paid to
the Consultant no later than sixty (60) days after the end of the year to which the bonus relates.
(d)
Cash Payment.
On January 2, 2007, the Corporation will pay to the Consultant, in
cash, the amount of $1,680,000, which amount shall be in lieu of the cash payments payable to the
Consultant upon a change of control under (i) the Change of Control Severance Agreement dated
August 1, 2002 between the Consultant and the Trust and the LP or
2
(ii) the Employment Agreement dated February 21, 2005 between the Consultant and the Trust and the
LP (other than payment of (A) any accrued but unpaid salary through the Effective Date, (B) any
bonus that has been earned but which remains unpaid as of the Effective Date and (C) reimbursement
of any expenses that the Consultant incurred on behalf of the Trust or the LP, all of which shall
continue to be payable to the Consultant by the Trust and the LP).
(e)
2006 Bonus
. Notwithstanding anything herein to the contrary, and in addition to
any other payments described herein, if not paid by the Trust or the LP prior to the Effective
Date, the Corporation shall pay to the Consultant on December 19, 2006, the cash amount of
$210,000, representing the full amount of the Consultants bonus for 2006 from the Trust and the LP
in accordance with the bonus criteria for the Consultant in place for the 2006 fiscal year.
4.
BUSINESS EXPENSES
.
The Corporation shall reimburse the Consultant for all reasonable expenses he incurs in
promoting the Corporations business, including expenses for travel (including first class air
travel) and similar items, upon presentation by the Consultant from time to time of an itemized
account of such expenditures.
5.
PAYMENTS UPON TERMINATION
.
(a)
Termination
. If the Consultants services are terminated by the Corporation or
the Consultant terminates providing services to the Corporation before the end of the Term, for any
reason other than death or disability, the Consultant shall be entitled to receive his Base Fee
accrued through the date of termination, plus any Performance Bonuses earned but unpaid with
respect to fiscal years or other periods (including partial fiscal years) preceding the termination
date. Such payments shall be made to the Consultant within sixty (60) days following the date of
termination.
The Corporation shall also be obligated to make a series of monthly severance payments to the
Consultant for each month during the remainder of the Term. Each monthly payment shall be equal to
the Consultants monthly Base Fee during the balance of the Term and shall be paid to the
Consultant at such time as the monthly Base Fee would otherwise be payable (beginning with the
month following the month in which the termination occurs).
In addition, the Corporation shall make the eight consecutive quarterly payments to the
Consultant described in Section 7, with the first such payment commencing on the date of
termination.
(b)
Disability
. The Corporation shall be entitled to terminate Consultants services
if the Board determines that the Consultant has been unable to attend to his duties for at least
90 days because of a medically diagnosable physical or mental condition, and has received a written
opinion from a physician acceptable to the Board that such condition prevents the Consultant from
resuming full performance of his duties and is likely to continue for an indefinite period. Upon
such termination, the Consultant shall be entitled to receive his Base Fee accrued through the date
of termination, plus any Performance Bonuses earned but unpaid with respect to fiscal years or
other periods (including partial fiscal years) preceding the termination
3
date. Such payments shall be made to the Consultant within sixty (60) days following the date of
termination. In addition, the Corporation shall make a series of monthly disability payments to
the Consultant, each equal to his monthly Base Fee, during the balance of the Term (provided that
in no event will the Consultant fail to receive, in each month during the Term, an amount equal to
the monthly Base Fee). Payment of such disability benefit shall commence with the month following
the month in which the termination occurs and shall continue each month for the remainder of the
Term, but shall terminate at an earlier date if the Consultant returns to active service as a
consultant to the Corporation. Any amounts payable under this Section 5(b) shall be reduced by any
amounts paid to the Consultant under any long-term disability plan or other disability program or
disability insurance policies maintained or provided by the Corporation.
(c)
Death
. If the Consultant dies during the Term, the Corporation shall pay to the
Consultants estate a lump sum payment equal to the sum of the Consultants Base Fee accrued
through the date of death, plus any Performance Bonus earned but unpaid with respect to fiscal
years or other periods (including partial fiscal years) preceding the date of death. In addition,
the Corporation shall pay to the Consultants surviving spouse (or such other beneficiary as the
Consultant may designate in writing) a lump sum payment equal to the present value of (i) the
monthly Base Fee that would have been paid during the remainder of the Term plus (ii) the sum of
the payments described in the third paragraph of Section 7 if the Consultants services terminate
for a reason other than death. Such present value shall be calculated using a discount rate equal
to the interest rate on 90-day Treasury bills, as reported in
The Wall Street Journal
(or similar
publication) for the date of death. Both the lump sum payment to the Consultants estate and the
lump sum payment to the Consultants surviving spouse (or other designated beneficiary) shall be
paid within sixty (60) days following the date of the Consultants death. In addition, stock
options, restricted stock or other awards held by the Consultant under the Corporations stock
plans shall become fully vested, and, in the case of stock options, exercisable in full, in
accordance with the terms of the applicable plan or plans.
(d)
Section 409A
. This Section 5(d) applies if any benefit or payment under this
Agreement is subject to Section 409A of the Code. In the event the terms of this Agreement would
subject the Consultant to taxes or penalties under Section 409A of the Code (
409A
Penalties
), the Corporation and the Consultant shall cooperate diligently to amend the terms
of the Agreement to avoid such 409A Penalties, to the extent possible. To the extent any amounts
under this Agreement are payable by reference to Consultants termination, termination of
services, or similar phrases, such term shall be deemed to refer to the Executives separation
from service (as defined in Treasury Regulation Section 1.409A-1(h) (without regard to any
permissible alternative definition thereunder) with the Corporation and all entities treated as a
single employer with the Corporation under Sections 414(b) and (c) of the Code but substituting a
50% ownership level for the 80% ownership level set forth therein). Notwithstanding any other
provision in this Agreement, if the Consultant is a Specified
Employee (as defined Treasury Regulation Section 1.409A-1(i) on December 31
st
of the prior calendar year), as of the
date of the Consultants separation from service, then to the extent any amount payable under this
Agreement (i) constitutes the payment of nonqualified deferred compensation, within the meaning of
Section 409A of the Code, (ii) is payable upon the Consultants separation from service and (iii)
under the terms of this Agreement would be payable prior to the six-month anniversary of the
Consultants separation from service, such payment shall be delayed and paid to the Consultant,
together with interest at an annual rate equal to the interest rate specified by
4
KeyBank for a six-month certificate of deposit, on the first day of the first calendar month
beginning at least six months following the date of termination, or, if earlier, within ninety (90)
days following the Consultants death to the Consultants surviving spouse (or such other
beneficiary as the Consultant may designate in writing). Any reimbursement or advancement payable
to the Consultant pursuant to this Agreement shall be conditioned on the submission by the
Consultant of all expense reports reasonably required by the Corporation under any applicable
expense reimbursement policy, and shall be paid to the Consultant within thirty (30) days following
receipt of such expense reports, but in no event later than the last day of the calendar year
following the calendar year in which the Consultant incurred the reimbursable expense. Any amount
of expenses eligible for reimbursement, or in-kind benefit provided, during a calendar year shall
not affect the amount of expenses eligible for reimbursement, or in-kind benefit to be provided,
during any other calendar year. The right to any reimbursement or in-kind benefit pursuant to this
Agreement shall not be subject to liquidation or exchange for any other benefit.
6.
PROTECTION OF CONFIDENTIAL INFORMATION
.
The Consultant shall keep all confidential and proprietary information of the Corporation or
relating to its business confidential, and he will not (except with the Corporations prior written
consent), while providing services to the Corporation or thereafter, disclose any such confidential
information to any person, firm, corporation, association or other entity, other than in
furtherance of his duties hereunder, and then only to those with a need to know. The Consultant
shall not make use of any such confidential information for his own purposes or for the benefit of
any person, firm, corporation, association or other entity (except the Corporation) under any
circumstances during or after the Term. The foregoing shall not apply to any information which is
already in the public domain, or is generally disclosed by the Corporation or is otherwise in the
public domain at the time of disclosure.
The Consultant recognizes that because his services to the Corporation may bring him into
contact with confidential and proprietary information of the Corporation, the restrictions of this
Section 6 are required for the reasonable protection of the Corporation and its investments and for
the Corporations reliance on and confidence in the Consultant.
7.
COVENANT NOT TO COMPETE
.
The Corporation and the Consultant acknowledge and agree that as a former executive officer of
the Trust, the Consultant has knowledge and experience in the business of the Trust and that the
limitations on the Consultants activities and the payments described in this Section 7 are
reasonable and appropriate. The Consultant shall not, either during the Term or during the period
of two years from the time the Consultants services under this Agreement are terminated for any
reason, engage in any business activities on behalf of any enterprise which competes with the
Corporation in the business of the passive ownership of senior housing or health care facilities,
or passive investing in or lending to senior housing or health care-related enterprises, including,
without limitation, medical office buildings, hospitals of any kind, independent living facilities,
assisted living facilities, skilled nursing facilities, inpatient rehabilitation facilities,
ambulatory surgery centers, active adult projects or any similar types of facilities or projects.
The Consultant will be deemed to be engaged in such competitive business
5
activities if he participates in such a business enterprise as an employee, officer, director,
trustee, consultant, agent, partner, proprietor or other participant; provided that the ownership
of no more than 2% of the stock of a publicly traded entity engaged in a competitive business shall
not be deemed to be engaging in competitive business activities.
The Consultant shall not, for a period of two years from the time his services under this
Agreement cease (for whatever reason), solicit any employee or full-time consultant of the
Corporation for the purposes of hiring or retaining such employee or consultant other than
Daniel R. Loftus, in his capacity as an attorney. Notwithstanding the foregoing, the Consultant
may solicit, hire or retain either Daniel R. Loftus or Paula Conroy at any time after they cease to
be employed by the Corporation.
In consideration for compliance with this covenant, the Consultant will receive a payment of
$75,000 each quarter with the first quarterly payment commencing on the date the Consultants
services are terminated under this Agreement for any reason, including expiration of the Term or
disability (but not death) and continuing for seven consecutive quarters thereafter, for a total of
eight consecutive quarterly payments. The quarterly payments (other than the first quarterly
payment) shall be made to the Consultant within sixty (60) days following the end of each quarter.
Notwithstanding the provisions of any other agreement between the Consultant and the Trust,
the LP or any of their affiliates, including but not limited to Sections 7 and 8 of the Employment
Agreement dated February 21, 2005 between the Consultant and the Trust and the LP, the parties
agree that the provisions of any such other agreement that purport to restrict the business,
employment or investment activities of the Consultant or impose confidentiality obligations on the
Consultant shall be null and void and of no further force and effect as of the Effective Time and
thereafter the provisions of Section 6 and this Section 7 shall be the sole provisions relating to
restriction on the business, employment or business, the Trust, the LP activities or
confidentiality obligations binding upon the Consultant or enforceable by the Corporation or any of
their subsidiaries or affiliates.
8.
INJUNCTIVE RELIEF
.
The Consultant acknowledges and agrees that it would be difficult to fully compensate the
Corporation for damages resulting from the breach or threatened breach of the covenants set forth
in Sections 6 and 7 of this Agreement. Accordingly, the Corporation shall be entitled to temporary
and injunctive relief, including temporary restraining orders, preliminary injunctions and
permanent injunctions, to enforce such provisions in any action or proceeding instituted in the
United States District Court for the Northern District of Ohio or in any court in the State of Ohio
having subject matter jurisdiction. This provision with respect to injunctive relief shall not,
however, diminish the Corporations right to claim and recover damages.
It is expressly understood and agreed that although the parties consider the restrictions
contained in this Agreement to be reasonable, if a court determines that the time or territory or
any other restriction contained in this Agreement is an unenforceable restriction on the activities
of the Consultant, no such provision of this Agreement shall be rendered void but
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shall be deemed amended to apply as to such maximum time and territory and to such extent as such
court may judicially determine or indicate to be reasonable.
9.
NOTICES
.
All notices or communications hereunder shall be in writing and sent by certified or
registered mail, return receipt requested, postage prepaid, addressed as follows (or to such other
address as such party may designate in writing from time to time):
If to the Corporation:
Health Care REIT, Inc.
One SeaGate, Suite 1500
Toledo, Ohio 43604
Attention: Chief Executive Officer
If to the Consultant:
Fred S. Klipsch
Windrose Medical Properties Trust
3502 Woodview Trace, Suite 210
Indianapolis, Indiana 46268
The actual date of receipt, as shown by the receipt therefor, shall determine the time at which
notice was given.
10.
SEPARABILITY
.
If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole
or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof,
which shall remain in full force and effect.
11.
ASSIGNMENT
.
This Agreement shall be binding upon and inure to the benefit of the heirs and representatives
of the Consultant and the assigns and successors of the Corporation, but neither this Agreement nor
any rights hereunder shall be assignable or otherwise subject to hypothecation by the Consultant.
The Corporation may assign this Agreement with prior written notice to the Consultant, but such
assignment shall not release the Corporation from any liability hereunder.
12.
ENTIRE AGREEMENT
.
This Agreement represents the entire agreement of the parties and shall supersede any and all
previous contracts, arrangements or understandings between the Corporation, the LP or the Trust and
the Consultant, including the Change of Control Severance Agreement dated on or about August 16,
2002 and the Confidentiality Agreement dated on or about August 16, 2002
7
among the Consultant and the Trust and the LP. This Agreement may be amended at any time by mutual
written agreement of the parties hereto.
13.
GOVERNING LAW
.
This Agreement shall be construed, interpreted and governed in accordance with the laws of the
State of Ohio, other than the conflict of laws provisions of such laws.
14.
SURVIVAL
.
Sections 5, 6, 7, 8, 10, 12, 13 and 15 shall survive any expiration or termination of this
Agreement.
15.
EXCISE TAX INDEMNIFICATION
.
The Consultant shall be entitled to a payment or payments under this Section 15 if any payment
or benefit provided under this Agreement or any other plan, agreement or arrangement with the
Corporation, the Trust, the LP or any of their affiliates constitutes an excess parachute payment
(as defined in Section 280G(b)(1) of the Code, but without regard to Section 280G(b)(2)(A)(ii) of
the Code) and the Consultant incurs a liability under Section 4999 of the Code. The amount payable
to the Consultant under this Section 15 shall be the amount required to indemnify the Consultant
and hold him harmless from the application of Sections 280G and 4999 of the Code, together with any
interest or penalties related thereto, with respect to benefits, payments, accelerated
exercisability and vesting and other rights under this Agreement or otherwise, and any income,
employment, hospitalization, excise and other taxes and penalties attributable to the
indemnification payment. The benefit payable under this Section 15 shall be calculated and paid
not later than the date (or extended filing date) on which the tax return reflecting liability for
the excise tax under Section 4999 of the Code is required to be filed with the Internal Revenue
Service. To the extent that any other plan, agreement or arrangement requires that the Consultant
be indemnified and held harmless from the application of Sections 280G and 4999 of the Code, any
such indemnification and the amount required to be paid to the Executive under this Section 15
shall be coordinated so that such indemnification is paid only once and the obligations of the
Corporation, the Trust, the LP or any of their affiliates shall be satisfied to the extent of any
such other payment (and vice versa).
The Consultant and the Corporation agree that the application of Sections 280G and 4999 of the
Code may not be clear in all cases. The Consultant agrees that the Corporation may take the
position that all or part of a payment or payments are not excess parachute payments (as defined
above) and do not result in liability under Section 4999 of the Code. The Consultant agrees that
his individual tax returns will be prepared in a manner that is consistent with the Corporations
position on such matters if the Consultants professional tax preparer concludes, in his or her
professional opinion, that the Corporations position is reasonable based on published rulings,
regulations and other authority. If the Consultants individual income tax return is prepared in
accordance with the preceding sentence, i.e., in a manner consistent with the Corporations
position, then (in addition to any benefit payable under the preceding paragraph) the Corporation
shall indemnify the Consultant, and hold him harmless, from any liability for tax, penalty,
interest or otherwise arising from the position stated on the Consultants individual
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income tax return related to the application of Section 280G or 4999 of the Code to payments
from the Corporation, the Trust, the LP or any of their affiliates. Indemnification payments
required pursuant to the preceding sentence shall be paid by the Corporation (i) by the end of the
year following the year in which the taxes are remitted to the taxing authority, or (ii) in cases
where no tax is remitted, by the end of the year following the year in which the tax audit is
completed or there is a final and nonappealable settlement or other resolution of the tax
litigation. If the Consultants professional tax preparer does not agree that the Corporations
position is reasonable based on published rulings, regulations and other authority, then the
Consultants individual tax return will reflect any liability under Section 4999 of the Code that
such professional tax preparer determines is appropriate and the Corporation shall indemnify the
Consultant and hold him harmless in accordance with the preceding paragraph.
16.
INDEMNIFICATION
.
From and after the Effective Date, the Corporation hereby agrees to indemnify, defend and hold
harmless the Consultant from and against any claim, loss, damage, liability or expense to which the
Consultant shall become subject, under any agreement, common law or otherwise, arising out of or
based upon any guaranty executed by the Consultant in favor of Wells Fargo, as Trustee, in
connection with the Mount Vernon, Georgia facility.
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IN WITNESS WHEREOF
, this Agreement is executed by the Corporation and the Consultant as of the
date set forth above.
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Attest:
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HEALTH CARE REIT, INC.
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/s/ Erin C. Ibele
Erin C. Ibele, Senior Vice President-
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By:
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/s/ Jeffrey H. Miller
Jeffrey H. Miller, Executive Vice
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Administration and Corporate Secretary
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President and General Counsel
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Witness:
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CONSULTANT:
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By:
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/s/ Fred S. Klipsch
Fred S. Klipsch
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10
Exhibit 10.6
AMENDMENT TO STOCK OPTION AGREEMENTS
This
AMENDMENT TO STOCK OPTION AGREEMENTS, dated this ___ day of December, 2008 (the
Amendment), is entered into by and between HEALTH CARE REIT, INC., a Delaware corporation (the
Corporation), and
(the Participant).
Whereas
,
the Corporation and the Participant entered into the Stock Option Agreements
(with Dividend Equivalent Rights) listed on Schedule A attached hereto (each an Agreement and
collectively, the Agreements); and
Whereas
,
the Corporation and the Participant now desire to amend the Agreements as
stated herein and effective as of January 1, 2009 in order to ensure compliance with Section 409A
of the Internal Revenue Code, as amended (the Code), and the rules and regulations promulgated
thereunder.
Now Therefore,
in consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:
1.
Amendment of Section 8
.
Section 8 of each Agreement is hereby deleted in its entirety and replaced with the following:
8.
Dividend Equivalent Rights
.
The Participant is hereby granted rights to receive deferred payments equivalent in value to
the dividends payable on the shares of Common Stock (Dividend Equivalent Rights) issuable under
the Options if such shares were outstanding on the dividend record dates between the date the
Options were granted to the Participant and the termination date specified on Schedule A, or if
earlier, the date of a Change in Corporate Control, the termination of the Participants employment
with the Corporation, or the Participants death, Disability (as defined in the Plan) or retirement
(collectively, the Triggering Events and each, a Triggering Event). An unfunded bookkeeping
account shall be created for the Participant and the Participants rights to the balances credited
to such account shall be no greater than those of an unsecured creditor of the Corporation.
On each dividend record date occurring after the date of grant of the Options and before the
date the Options become exercisable, the Participants account shall be credited with a dollar
amount equal to the dividends payable with respect to the shares of Common Stock issuable under the
Options if such shares were outstanding on the dividend record date:
(a) In the case of a cash dividend declared on the Common Stock, the amount credited to
the Participants account with respect thereto shall be equal to the dividend declared per
share of Common Stock multiplied by the number of shares of Common Stock subject to the
Options as of the dividend record date; and
(b) In the case of a stock dividend declared on the Common Stock, the amount credited
to the Participants account with respect thereto shall be equal to the dividend
declared per share of Common Stock multiplied by (i) the number of shares of Common Stock
subject to the Options and (ii) the current fair market value of a share of Common Stock on
the dividend payment date.
When the Options with respect to which the Participant has been granted Dividend Equivalent
Rights first become exercisable pursuant to Section 2, 9, 10, 11 or 12, the Participant shall be
entitled to receive from the Corporation a distribution equal to (i) the dollar amount then
accumulated in his or her account, as described above, and not previously distributed as provided
in this section, multiplied by (ii) a fraction the numerator of which shall be the number of shares
subject to the Options that first become exercisable on such date and the denominator of which
shall be the sum of such number and the total number of shares subject to Options that have not yet
become exercisable. The Participants account shall be debited by a dollar amount equal to the
distribution. If the Options with respect to which the Participant has been granted Dividend
Equivalent Rights first become exercisable pursuant to Section 2, 10, 11 or 12, the distribution
shall be delivered to the Participant in the form of a cash payment within 60 days following the
date such Option first becomes exercisable under Section 2, 10, 11 or 12. If the Options with
respect to which the Participant has been granted Dividend Equivalent Rights first become
exercisable under Section 9, the distribution shall be delivered to the Participant in the form of
a cash payment within 60 days following the first to occur of: (a) the date such Option would
otherwise have become exercisable under Section 2, and (b) the date of the Participants
termination of employment.
In addition, after the Options have become exercisable, the Participant shall be entitled to
receive from the Corporation each quarter distributions equal to the quarterly dividend declared
per share of Common Stock multiplied by the number of shares of Common Stock that have become
exercisable until the termination date specified on Schedule A, or if earlier, on the date of a
Triggering Event. Such distributions shall be paid in cash within 90 days following the end of
each calendar quarter. In connection with the distributions described in this section, the
Participant shall satisfy all tax withholding obligations in a manner described in Section 7 above.
The right to receive Dividend Equivalent Rights shall survive the exercise of the Options by
the Participant. However, all rights and claims to the Dividend Equivalent Rights will terminate
on the termination date specified on Schedule A, or if earlier, on the date of a Triggering Event
without regard to any additional periods of time during which the Options may continue to be
exercised.
2.
Amendment of Section 11.
Section 11 of each Agreement is hereby deleted in its entirety and replaced with the
following:
11.
Effect of Disability
.
If a Participant incurs a Disability, (i) any portion of the Options not previously
exercisable under Section 2 shall become exercisable and shall continue to be exercisable for a
period of twelve (12) months following the date of termination of employment, but in no event later
than the termination date of the Options specified in Section 3, and (ii) the Participant shall be
entitled to receive a cash payment of any balance then credited to the Participants Dividend
Equivalent Rights account pursuant to Section 8.
2
3.
Addition of New Section 18.
Each Agreement is hereby amended to add a new Section 18 at the end thereof, immediately
following Section 17 to read as follows:
18.
Section 409A Compliance
.
This Agreement is intended to comply with the requirements of Section 409A of the Code and
shall be interpreted and construed consistently with such intent. To the extent any amounts under
this Agreement are payable by reference to the Participants termination of employment, such term
shall be deemed to refer to the Participants separation from service (as defined in Treasury
Regulation Section 1.409A-1(h) (without regard to any permissible alternative definition
thereunder)) with the Corporation and all entities treated as a single employer with the
Corporation under Section 414(b) and (c) of the Code but substituting a 50% ownership level for the
80% ownership level set forth therein. Notwithstanding any other provision in this Agreement, if
the Participant is a specified employee, as defined in Section 409A of the Code, as of the date
of the Participants separation from service, then to the extent any amount payable under this
Agreement (i) constitutes the payment of nonqualified deferred compensation, within the meaning of
Section 409A of the Code, (ii) is payable upon the Participants separation from service and (iii)
under the terms of this Agreement would be payable prior to the six-month anniversary of the
Participants separation from service, such payment shall be delayed until the earlier to occur of
(a) the six-month anniversary of the separation from service or (b) the date of Participants
death.
4.
Further Amendments; Full Force and Effect of Remainder of the
Agreements
.
In the event the terms of the Agreements and/or this Amendment would subject the Participant
to taxes or penalties under Section 409A of the Code (409A Penalties), the Corporation and the
Participant shall cooperate diligently to amend the terms of the Agreements and/or this Amendment
to avoid such 409A Penalties, to the extent possible. In addition, the Participant expressly
authorizes the Corporation to modify the termination dates specified on Schedule A after the date
hereof if such modifications (a) remain neutral to the Corporation and the Participant, or (b)
extend the period of time during which the Participant will receive Dividend Equivalent Rights. In
the event it is determined by the Corporation (in its sole discretion) that the modifications set
forth in this Amendment are not required by Section 409A of the Code and the rules and regulations
promulgated thereunder, then the Corporation may determine (in its sole discretion) that all or any
sections of this Amendment shall be null and void. Except as amended hereby, the Agreements will
remain in full force and effect according to their terms.
3
In Witness Whereof
,
the parties have executed this Amendment on the date and year
first above written.
|
|
|
ATTEST
|
|
HEALTH CARE REIT, INC.
|
|
|
|
|
|
|
|
|
|
WITNESS:
|
|
PARTICIPANT:
|
|
|
|
|
|
|
4
SCHEDULE A
|
|
|
|
|
Termination Date of
|
Stock Option Agreement (with
|
|
Dividend Equivalent
|
Dividend Equivalent Rights)
|
|
Rights
|
1. Stock Option Agreement (with Dividend
Equivalent Rights), dated January 26, 2004,
between the Corporation and the Participant
|
|
June 30, 2013
|
|
|
|
2. Stock Option Agreement (with Dividend
Equivalent Rights), dated January 24, 2005,
between the Corporation and the Participant
|
|
September 30, 2013
|
|
|
|
3. Stock Option Agreement (with Dividend
Equivalent Rights), dated January 23, 2006,
between the Corporation and the Participant
|
|
December 31, 2014
|
|
|
|
4. Stock Option Agreement (with Dividend
Equivalent Rights), dated January 22, 2007,
between the Corporation and the Participant
|
|
September 30, 2016
|
|
|
|
5. Stock Option Agreement (with Dividend
Equivalent Rights), dated January 21, 2008,
between the Corporation and the Participant
|
|
March 31, 2017
|
Exhibit
10.7
AMENDMENT TO STOCK OPTION AGREEMENTS
This
AMENDMENT TO STOCK OPTION AGREEMENTS, dated this ___ day of December, 2008 (the
Amendment), is entered into by and between HEALTH CARE REIT, INC., a Delaware corporation (the
Corporation), and
(the Participant).
Whereas
,
the Corporation and the Participant entered into the Stock Option Agreements
(with Dividend Equivalent Rights) listed on Schedule A attached hereto (each an Agreement and
collectively, the Agreements); and
Whereas
,
the Corporation and the Participant now desire to amend the Agreements as
stated herein and effective as of January 1, 2009 in order to ensure compliance with Section 409A
of the Internal Revenue Code, as amended (the Code), and the rules and regulations promulgated
thereunder.
Now Therefore,
in consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:
1.
Amendment of Section 8
.
Section 8 of each Agreement is hereby deleted in its entirety and replaced with the following:
8.
Dividend Equivalent Rights
.
The Participant is hereby granted rights to receive deferred payments equivalent in value to
the dividends payable on the shares of Common Stock (Dividend Equivalent Rights) issuable under
the Options if such shares were outstanding on the dividend record dates between the date the
Options were granted to the Participant and the termination date specified on Schedule A, or if
earlier, the date of a Change in Corporate Control, the termination of the Participants employment
with the Corporation, or the Participants death, Disability (as defined in the Plan) or retirement
after age 65 (collectively, the Triggering Events and each, a Triggering Event). An unfunded
bookkeeping account shall be created for the Participant and the Participants rights to the
balances credited to such account shall be no greater than those of an unsecured creditor of the
Corporation.
On each dividend record date occurring after the date of grant of the Options and before the
date the Options become exercisable, the Participants account shall be credited with a dollar
amount equal to the dividends payable with respect to the shares of Common Stock issuable under the
Options if such shares were outstanding on the dividend record date:
(a) In the case of a cash dividend declared on the Common Stock, the amount credited to
the Participants account with respect thereto shall be equal to the dividend declared per
share of Common Stock multiplied by the number of shares of Common Stock subject to the
Options as of the dividend record date; and
(b) In the case of a stock dividend declared on the Common Stock, the amount credited
to the Participants account with respect thereto shall be equal to the dividend declared
per share of Common Stock multiplied by (i) the number of shares of Common Stock subject to
the Options and (ii) the current fair market value of a share of Common Stock on the
dividend payment date.
When the Options with respect to which the Participant has been granted Dividend Equivalent
Rights first become exercisable pursuant to Section 2, 9, 10 or 11, the Participant shall be
entitled to receive from the Corporation a distribution equal to (i) the dollar amount then
accumulated in his or her account, as described above, and not previously distributed as provided
in this section, multiplied by (ii) a fraction the numerator of which shall be the number of shares
subject to the Options that first become exercisable on such date and the denominator of which
shall be the sum of such number and the total number of shares subject to Options that have not yet
become exercisable. The Participants account shall be debited by a dollar amount equal to the
distribution. If the Options with respect to which the Participant has been granted Dividend
Equivalent Rights first become exercisable pursuant to Section 2, 10 or 11, the distribution shall
be delivered to the Participant in the form of a cash payment within 60 days following the date
such Option first becomes exercisable under Section 2, 10 or 11. If the Options with respect to
which the Participant has been granted Dividend Equivalent Rights first become exercisable under
Section 9, the distribution shall be delivered to the Participant in the form of a cash payment
within 60 days following the first to occur of: (a) the date such Option would otherwise have
become exercisable under Section 2, and (b) the date of the Participants termination of
employment.
In addition, after the Options have become exercisable, the Participant shall be entitled to
receive from the Corporation each quarter distributions equal to the quarterly dividend declared
per share of Common Stock multiplied by the number of shares of Common Stock that have become
exercisable until the termination date specified on Schedule A, or if earlier, on the date of a
Triggering Event. Such distributions shall be paid in cash within 90 days following the end of
each calendar quarter. In connection with the distributions described in this section, the
Participant shall satisfy all tax withholding obligations in a manner described in Section 7 above.
The right to receive Dividend Equivalent Rights shall survive the exercise of the Options by
the Participant. However, all rights and claims to the Dividend Equivalent Rights will terminate
on the termination date specified on Schedule A, or if earlier, on the date of a Triggering Event
without regard to any additional periods of time during which the Options may continue to be
exercised.
2.
Amendment of Section 11.
Section 11 of each Agreement is hereby deleted in its entirety and replaced with the
following:
11.
Effect of Disability; Effect of Retirement After Age 65
.
If a Participant incurs a Disability, (i) any portion of the Options not previously
exercisable under Section 2 shall become exercisable and shall continue to be exercisable for a
period of twelve (12) months following the date of termination of employment, but in no event later
than the termination date of the Options specified in Section 3, and (ii) the Participant shall be
2
entitled to receive a cash payment of any balance then credited to the Participants Dividend
Equivalent Rights account pursuant to Section 8.
If the termination of the Participants employment occurs as a result of retirement after age
65, (i) any portion of the Options not previously exercisable under Section 2 shall become
exercisable, and shall continue to be exercisable for a period of twelve (12) months following the
date of retirement, but in no event later than the termination date of the Options specified in
Section 3, and (ii) the Participant shall be entitled to receive a cash payment of any balance then
credited to the Participants Dividend Equivalent Rights account pursuant to Section 8.
3.
Addition of New Section 17.
Each Agreement is hereby amended to add a new Section 17 at the end thereof, immediately
following Section 16 to read as follows:
17.
Section 409A Compliance
.
This Agreement is intended to comply with the requirements of Section 409A of the Code and
shall be interpreted and construed consistently with such intent. To the extent any amounts under
this Agreement are payable by reference to the Participants termination of employment, such term
shall be deemed to refer to the Participants separation from service (as defined in Treasury
Regulation Section 1.409A-1(h) (without regard to any permissible alternative definition
thereunder)) with the Corporation and all entities treated as a single employer with the
Corporation under Section 414(b) and (c) of the Code but substituting a 50% ownership level for the
80% ownership level set forth therein. Notwithstanding any other provision in this Agreement, if
the Participant is a specified employee, as defined in Section 409A of the Code, as of the date
of the Participants separation from service, then to the extent any amount payable under this
Agreement (i) constitutes the payment of nonqualified deferred compensation, within the meaning of
Section 409A of the Code, (ii) is payable upon the Participants separation from service and (iii)
under the terms of this Agreement would be payable prior to the six-month anniversary of the
Participants separation from service, such payment shall be delayed until the earlier to occur of
(a) the six-month anniversary of the separation from service or (b) the date of Participants
death.
4.
Further Amendments; Full Force and Effect of Remainder of the
Agreements
.
In the event the terms of the Agreements and/or this Amendment would subject the Participant
to taxes or penalties under Section 409A of the Code (409A Penalties), the Corporation and the
Participant shall cooperate diligently to amend the terms of the Agreements and/or this Amendment
to avoid such 409A Penalties, to the extent possible. In addition, the Participant expressly
authorizes the Corporation to modify the termination dates specified on Schedule A after the date
hereof if such modifications (a) remain neutral to the Corporation and the Participant, or (b)
extend the period of time during which the Participant will receive Dividend Equivalent Rights. In
the event it is determined by the Corporation (in its sole discretion) that the modifications set
forth in this Amendment are not required by Section 409A of the Code and the rules and regulations
promulgated thereunder, then the Corporation may determine (in its sole discretion) that all or any
sections of this Amendment shall be null and void. Except as amended hereby, the Agreements will
remain in full force and effect according to their terms.
3
In Witness Whereof
,
the parties have executed this Amendment on the date and year
first above written.
|
|
|
ATTEST
|
|
HEALTH CARE REIT, INC.
|
|
|
|
|
|
|
|
|
|
WITNESS:
|
|
PARTICIPANT:
|
|
|
|
|
|
|
4
SCHEDULE A
|
|
|
|
|
Termination Date for
|
Stock Option Agreement (with
|
|
Dividend Equivalent
|
Dividend Equivalent Rights)
|
|
Rights
|
1. Stock Option Agreement (with
Dividend Equivalent Rights), dated
January 26, 2004, between the
Corporation and the Participant
|
|
June 30, 2013
|
|
|
|
2. Stock Option Agreement (with
Dividend Equivalent Rights), dated
January 24, 2005, between the
Corporation and the Participant
|
|
September 30, 2013
|
|
|
|
3. Stock Option Agreement (with
Dividend Equivalent Rights), dated
January 23, 2006, between the
Corporation and the Participant
|
|
December 31, 2014
|
|
|
|
4. Stock Option Agreement (with
Dividend Equivalent Rights), dated
January 22, 2007, between the
Corporation and the Participant
|
|
September 30, 2016
|
|
|
|
5. Stock Option Agreement (with
Dividend Equivalent Rights), dated
January 21, 2008, between the
Corporation and the Participant
|
|
March 31, 2017
|
Exhibit 10.8
STOCK OPTION AGREEMENT
THIS
STOCK OPTION AGREEMENT
(the Agreement), made this
___ day of
, 20___ between
Health Care REIT, Inc., a Delaware corporation (the Corporation), and
(the
Participant).
WITNESSETH:
WHEREAS
, the Participant is an employee and executive officer of the Corporation; and
WHEREAS
, the Corporation adopted the Health Care REIT, Inc. 2005 Long-Term Incentive Plan (the
Plan) in order to provide non-employee directors and select officers and key employees with
incentives to achieve long-term corporate objectives; and
WHEREAS
, the Compensation Committee of the Corporations Board of Directors decided that the
Participant should be granted stock options to purchase shares of the Corporations common stock,
$1.00 par value per share (Common Stock), on the terms and conditions set forth below, and in
accordance with the terms of the Plan.
NOW, THEREFORE
, in consideration of the covenants and agreements herein contained and
intending to be legally bound hereby, the parties hereto agree as follows:
1.
Grant of Options
.
Subject to the terms and conditions of this Agreement, the Corporation hereby grants to the
Participant the right and option to purchase up to a total of
shares of the Common Stock of
the Corporation, at the option price of $
per share (the Options).
The
Options shall consist of options to purchase
shares of Common Stock intended to
qualify as incentive stock options (ISOs) within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the Code), and options
to purchase
shares of Common
Stock not intended to qualify as ISOs (Nonstatutory Options).
2.
Period of Exercise
.
The Options shall become exercisable by the Participant in five installments. Subject to the
accelerated vesting provided for in Sections 9, 10, 11 and 12 below, at any time during the term of
the Options, the maximum number of shares of Common Stock the Participant may purchase by
exercising Nonstatutory Options, and the maximum number which the Participant may purchase by
exercising ISOs, shall be limited as specified in the following schedule:
|
|
|
|
|
|
|
MAXIMUM NUMBER OF
|
|
|
|
|
SHARES THAT MAY BE
|
|
MAXIMUM NUMBER OF
|
|
|
PURCHASED BY
|
|
SHARES THAT MAY BE
|
|
|
EXERCISING
|
|
PURCHASED BY
|
PERIOD
|
|
NONSTATUTORY OPTIONS
|
|
EXERCISING ISOs
|
From
, 20___ to
Jan.
, 20___
|
|
Up to
shares
|
|
Up to
shares
|
|
|
|
|
|
From
, 20___ to
Jan.
, 20___
|
|
Up to
shares
(less any shares
previously purchased by
exercising Nonstatutory
Options)
|
|
Up to
shares
(less any shares
previously purchased by
exercising ISOs)
|
|
|
|
|
|
From
, 20___ to
Jan.
, 20___
|
|
Up to
shares
(less any shares
previously purchased by
exercising Nonstatutory
Options)
|
|
Up to
shares
(less any shares
previously purchased by
exercising ISOs)
|
|
|
|
|
|
From
, 20___ to
Jan.
, 20___
|
|
Up to
shares
(less any shares
previously purchased by
exercising Nonstatutory
Options)
|
|
Up to
shares
(less any shares
previously purchased by
exercising ISOs)
|
|
|
|
|
|
From
, 20___ to
Jan.
, 20___
|
|
Up to
shares
(less any shares
previously purchased by
exercising Nonstatutory
Options)
|
|
Up to
shares
(less any shares
previously purchased by
exercising ISOs)
|
If, during any of these periods, the Participant fails to exercise the Options with respect to
all or any portion of the shares that may be acquired at such time, the Participant shall be
entitled to exercise the Options with respect to the remaining portion of such shares at any
subsequent time prior to the termination date of the Options.
The Options intended to be ISOs are subject to the $100,000 annual limit on vesting of ISOs as
set forth in Section 422(d) of the Code. To the extent the aggregate fair market value (determined
at the date of grant) of the shares of Common Stock with respect to which those ISOs first become
exercisable by the Participant during any calendar year under this Section 2 (when aggregated with
any prior ISOs granted to the Participant under stock option plans of the Corporation) exceeds
$100,000, whether by reason of accelerated vesting under Sections 9, 10, 11 or 12 or otherwise, the
Options shall consist of ISOs for the maximum number of shares that may be covered by ISOs without
violating Section 422(d) of the Code, and the remaining Options becoming exercisable in that year
shall be treated as Nonstatutory Options.
2
3.
Termination Date of Options
.
The Options granted herein, and the related Dividend Equivalent Rights under Section 8 below,
shall terminate on
, 20___, the tenth anniversary of the date of grant, and the
Participant shall have no right to exercise the Options at any time thereafter.
4.
Manner of Exercise
.
If the Participant elects to exercise the Options to purchase shares of Common Stock, the
Participant shall give written notice of such exercise to the Corporate Secretary of the
Corporation. The notice of exercise shall state the number of shares of Common Stock as to which
the Options are being exercised, and the Corporation shall determine whether the Options exercised
are ISOs or Nonstatutory Options.
The Participant may exercise the Options to purchase all, or any lesser whole number, of the
number of shares of Common Stock that the Participant is then permitted to purchase under Section
2.
5.
Payment for Shares
.
Full payment of the option price for the shares of Common Stock purchased by exercising the
Options shall be due at the time the notice of exercise is delivered pursuant to Section 4. Such
payment may be made (i) in cash, (ii) by delivery of shares of Common Stock currently owned by the
Participant with a fair market value equal to the option price, or (iii) in any other form
acceptable to the Corporation.
Alternatively, the Participant shall be deemed to have paid the full option price due upon
exercise of the Options, if the Participants notice of exercise is accompanied by an irrevocable
instruction to the Corporation to deliver the shares of Common Stock issuable upon exercise of the
Options (less any shares withheld to satisfy the Participants tax obligations pursuant to Section
7 below) promptly to a broker-dealer designated by Participant, together with an irrevocable
instruction to such broker-dealer to sell at least that portion of the shares necessary to pay the
option price (and any tax withholding related expenses specified by the parties), and that portion
of the sale proceeds needed to pay the option price is delivered directly to the Corporation no
later than the close of business on the settlement date.
6.
Issuance of Stock Certificates for Shares
.
The stock certificates (or other evidence of ownership) for any shares of Common Stock
issuable to the Participant upon exercise of the Options shall be delivered to the Participant (or
to the person to whom the rights of the Participant shall have passed by will or the laws of
descent and distribution) as promptly after the date of exercise as is feasible, but not before the
Participant has paid the option price for such shares and made any arrangements for tax
withholding, as required by Section 7.
3
7.
Tax Withholding
.
Whenever the Participant exercises Options, the Corporation shall notify the Participant of
the amount of tax (if any) that must be withheld by the Corporation under all applicable federal,
state and local tax laws. With respect to each exercise of the Options, the Participant agrees to
make arrangements with the Corporation to (a) remit the required amount to the Corporation in cash,
(b) authorize the Corporation to withhold a portion of the shares of
Common Stock otherwise issuable upon the exercise with a value equal to the required amount, (c)
deliver to the Corporation shares of Common Stock with a value equal to the required amount, (d)
authorize the deduction of the required amount from the Participants compensation, or
(e) otherwise provide for payment of the required amount in any other manner satisfactory to the
Corporation.
8.
Dividend Equivalent Rights
.
The Participant is hereby granted rights to receive deferred payments equivalent in value to
the dividends payable on the shares of Common Stock (Dividend Equivalent Rights) issuable under
the Options if such shares were outstanding on the dividend record dates between the date the
Options were granted to the Participant and
, 20___, or if earlier, the date of a Change
in Corporate Control, the termination of the Participants employment with the Corporation, or the
Participants death, Disability (as defined in the Plan) or retirement after age 65 (collectively,
the Triggering Events and each, a Triggering Event). An unfunded bookkeeping account shall be
created for the Participant and the Participants rights to the balances credited to such account
shall be no greater than those of an unsecured creditor of the Corporation.
On each dividend record date occurring after the date of grant of the Options and before the
date the Options become exercisable, the Participants account shall be credited with a dollar
amount equal to the dividends payable with respect to the shares of Common Stock issuable under the
Options if such shares were outstanding on the dividend record date:
(a) In the case of a cash dividend declared on the Common Stock, the amount credited to
the Participants account with respect thereto shall be equal to the dividend declared per
share of Common Stock multiplied by the number of shares of Common Stock subject to the
Options as of the dividend record date; and
(b) In the case of a stock dividend declared on the Common Stock, the amount credited
to the Participants account with respect thereto shall be equal to the dividend declared
per share of Common Stock multiplied by (i) the number of shares of Common Stock subject to
the Options and (ii) the current fair market value of a share of Common Stock on the
dividend payment date.
When the Options with respect to which the Participant has been granted Dividend Equivalent
Rights first become exercisable pursuant to Section 2, 9, 10, 11 or 12, the Participant shall be
entitled to receive from the Corporation a distribution equal to (i) the dollar amount then
accumulated in his or her account, as described above, and not previously distributed as provided
in this section, multiplied by (ii) a fraction the numerator of which shall be the number of shares
subject to the Options that first become exercisable on such date and the
4
denominator of which
shall be the sum of such number and the total number of shares subject to Options that have not yet
become exercisable. The Participants account shall be debited by a dollar amount equal to the
distribution. If the Options with respect to which the Participant has been granted Dividend
Equivalent Rights first become exercisable pursuant to Section 2, 10, 11 or 12, the distribution
shall be delivered to the Participant in the form of a cash payment within
60 days following the date such Option first becomes exercisable under Section 2, 10, 11 or 12. If
the Options with respect to which the Participant has been granted Dividend Equivalent Rights first
become exercisable under Section 9, the distribution shall be delivered to the Participant in the
form of a cash payment within 60 days following the first to occur of: (a) the date such Option
would otherwise have become exercisable under Section 2, and (b) the date of the Participants
termination of employment.
In addition, after the Options have become exercisable, the Participant shall be entitled to
receive from the Corporation each quarter distributions equal to the quarterly dividend declared
per share of Common Stock multiplied by the number of shares of Common Stock that have become
exercisable until
, 20___, or if earlier, on the date of a Triggering Event. Such
distributions shall be paid in cash within 90 days following the end of each calendar quarter. In
connection with the distributions described in this section, the Participant shall satisfy all tax
withholding obligations in a manner described in Section 7 above.
The right to receive Dividend Equivalent Rights shall survive the exercise of the Options by
the Participant. However, all rights and claims to the Dividend Equivalent Rights will terminate
on
, 20___, or if earlier, on the date of a Triggering Event without regard to any
additional periods of time during which the Options may continue to be exercised.
9.
Termination of Employment; Change in Corporate Control
.
In the event of a Change in Corporate Control (as described below), or if the Participants
employment with the Corporation is terminated before the Options expire or have been exercised with
respect to all of the shares of Common Stock subject to the Options (as provided in subsections (a)
and (b) below), the Participant shall have the right to exercise the Options during a period of
ninety (90) days following the date of the Change in Corporate Control or termination of employment
(as applicable), but in no event later than
, 20___, and the Options shall expire at the
end of such period.
(a) In the event of a Change in Corporate Control, or if the Participants employment
is terminated involuntarily without Cause (as defined in the Participants Employment
Agreement), any portion of the Options not previously exercisable under Section 2 shall
become immediately exercisable and the Participant shall be entitled to receive a cash
payment of any balance then credited to the Participants Dividend Equivalent Rights account
pursuant to Section 8.
(b) In the case of an involuntary termination not described in subsection (a) above, or
a voluntary termination by the Participant not following a Change in Corporate Control, the
maximum number of shares the Participant may purchase by exercising the Options shall be the
number of shares which could be purchased at the date of
5
termination pursuant to Section 2.
Participant shall not be entitled to receive a cash payment of any balance then credited to
the Participants Dividend Equivalent Rights account pursuant to Section 8.
For purposes of this Section 9, termination of employment as a result of the expiration of the
Participants Employment Agreement shall be considered a voluntary termination if the notice of
non-renewal was delivered by the Participant and an involuntary termination if the notice of
non-renewal was delivered by the Corporation and in both instances, the Participant is no longer
employed by the Corporation.
For purposes of this Section 9, a Change in Corporate Control shall include any of the
following events:
(i) The acquisition in one or more transactions of more than twenty percent of the
Corporations outstanding Common Stock (or the equivalent in voting power of any class or
classes of securities of the Corporation entitled to vote in elections of directors) by any
corporation, or other person or group (within the meaning of Section 14(d)(3) of the
Securities Exchange Act of 1934, as amended);
(ii) Any transfer or sale of substantially all of the assets of the Corporation, or any
merger or consolidation of the Corporation into or with another corporation in which the
Corporation is not the surviving entity;
(iii) Any election of persons to the Board of Directors which causes a majority of the
Board of Directors to consist of persons other than Continuing Directors. For this
purpose, those persons who were members of the Board of Directors on
, 20___, shall
be Continuing Directors. Any person who is nominated for election as a member of the
Board after
, 20___ shall also be considered a Continuing Director for this
purpose if, and only if, his or her nomination for election to the Board of Directors is
approved or recommended by a majority of the members of the Board (or of the relevant
Nominating Committee) and at least five (5) members of the Board are themselves Continuing
Directors at the time of such nomination; or
(iv) Any person, or group of persons, announces a tender offer for at least twenty
percent (20%) of the Corporations Common Stock.
10.
Effect of Death
.
If the Participant dies before the Options expire or have been exercised with respect to all
of the shares of Common Stock subject to the Options, any portion of the Options not previously
exercisable under Section 2 shall become exercisable, and the Participants executor,
administrator, or any person to whom the Options may be transferred by the Participants will or by
the laws of descent and distribution, shall have the right to (i) exercise the Options, to the
extent not previously exercised, at any time prior to the first anniversary of the date of death,
but in no event later than
, 20___, and (ii) to receive a cash payment of any balance then
credited to the Participants Dividend Equivalent Rights account pursuant to
6
Section 8 above. For
this purpose, the terms of this Agreement shall be deemed to apply to such person as if he or she
was the Participant.
11.
Effect of Disability
.
If a Participant incurs a Disability, (i) any portion of the Options not previously
exercisable under Section 2 shall become exercisable and shall continue to be exercisable for a
period of twelve (12) months following the date of termination of employment, but in no event later
than
, 20___, and (ii) the Participant shall be entitled to receive a cash payment of any
balance then credited to the Participants Dividend Equivalent Rights account pursuant to Section
8.
12.
Effect of Retirement
.
If the termination of the Participants employment occurs as a result of the Participants
retirement after age 55 and the sum of the Participants age and years of service to the
Corporation is equal to 65 or more, (i) Options shall vest as provided in Section 2 and shall be
exercisable during the period of five (5) years following the date of termination of employment,
but in no event later than
, 20___, and (ii) the Participant shall be entitled to receive
distributions relating to the Participants Dividend Equivalent Rights as provided in Section 8.
13.
Nontransferability
.
The Participants rights under this Agreement may not be assigned or transferred by the
Participant other than by will or the laws of descent and distribution. The Options may not be
exercised by anyone other than the Participant or, in the case of the Participants death, by the
person to whom the rights of the Participant shall have passed by will or the laws of descent and
distribution.
14.
Securities Laws
.
The Corporation may from time to time impose any conditions on the exercise of the Options as
it deems necessary or advisable to ensure that the Options granted hereunder, and each exercise
thereof, satisfy the applicable requirements of federal and state securities laws. Such conditions
to satisfy applicable federal and state securities laws may include, without limitation, the
partial or complete suspension of the right to exercise the Options until the offering of the
shares covered by the Options have been registered under the Securities Act of 1933, as amended, or
the printing of legends on all stock certificates issued to the Participant describing the
restrictions on transfer of such shares.
15.
Rights Prior to Issuance of Certificates
.
Neither the Participant nor any person to whom the rights of the Participant shall have passed
by will or the laws of descent and distribution shall have any of the rights of a
7
stockholder with
respect to any shares of Common Stock until the date of the issuance to him or her of certificates
(or other evidence of ownership) for such Common Stock as provided in Section 6 above.
16.
Options Not to Affect Employment
.
Neither this Agreement nor the Options granted hereunder shall confer upon the Participant any
right to continued employment with the Corporation. This Agreement shall not in any way modify or
restrict any rights the Corporation may have to terminate such employment under the terms of the
Participants Employment Agreement.
17.
Miscellaneous
.
(a) This Agreement may be executed in one or more counterparts all of which taken together
will constitute one and the same instrument.
(b) The terms of this Agreement may only be amended, modified or waived by a written agreement
executed by both of the parties hereto.
(c) The validity, performance, construction and effect of this Agreement shall be governed by
the laws of the State of Ohio, without giving effect to principles of conflicts of law; provided,
however, that matters of corporate law, including the issuance of shares of the Common Stock, shall
be governed by the Delaware General Corporation Law.
18.
Section 409A Compliance
.
This Agreement is intended to comply with the requirements of Section 409A of the Code and
shall be interpreted and construed consistently with such intent. To the extent any amounts under
this Agreement are payable by reference to the Participants termination of employment, such term
shall be deemed to refer to the Participants separation from service (as defined in Treasury
Regulation Section 1.409A-1(h) (without regard to any permissible alternative definition
thereunder)) with the Corporation and all entities treated as a single employer with the
Corporation under Section 414(b) and (c) of the Code but substituting a 50% ownership level for the
80% ownership level set forth therein. Notwithstanding any other provision in this Agreement, if
the Participant is a specified employee, as defined in Section 409A of the Code, as of the date
of the Participants separation from service, then to the extent any amount payable under this
Agreement (i) constitutes the payment of nonqualified deferred compensation, within the meaning of
Section 409A of the Code, (ii) is payable upon the Participants separation from service and (iii)
under the terms of this Agreement would be payable prior to the six-month anniversary of the
Participants separation from service, such payment shall be delayed until the earlier to occur of
(a) the six-month anniversary of the separation from service or (b) the date of Participants
death.
8
IN WITNESS WHEREOF
, the parties have executed this Agreement on the date and year first above
written.
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ATTEST
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HEALTH CARE REIT, INC.
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WITNESS:
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PARTICIPANT:
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9
EXHIBIT 10.9
STOCK OPTION AGREEMENT
THIS
STOCK OPTION AGREEMENT
(the Agreement), made this
___ day of
, 20___ between
Health Care REIT, Inc., a Delaware corporation (the Corporation), and
(the
Participant).
WITNESSETH:
WHEREAS
, the Participant is an employee and executive officer of the Corporation; and
WHEREAS
, the Corporation adopted the Health Care REIT, Inc. 2005 Long-Term Incentive Plan (the
Plan) in order to provide non-employee directors and select officers and key employees with
incentives to achieve long-term corporate objectives; and
WHEREAS
, the Compensation Committee of the Corporations Board of Directors decided that the
Participant should be granted stock options to purchase shares of the Corporations common stock,
$1.00 par value per share (Common Stock), on the terms and conditions set forth below, and in
accordance with the terms of the Plan.
NOW, THEREFORE
, in consideration of the covenants and agreements herein contained and
intending to be legally bound hereby, the parties hereto agree as follows:
1.
Grant of Options
.
Subject to the terms and conditions of this Agreement, the Corporation hereby grants to the
Participant the right and option to purchase up to a total of
shares of the Common Stock of
the Corporation, at the option price of $
per share (the Options).
The
Options shall consist of options to purchase
shares of Common Stock intended to
qualify as incentive stock options (ISOs) within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the Code), and options
to purchase
shares of Common
Stock not intended to qualify as ISOs (Nonstatutory Options).
2.
Period of Exercise
.
The Options shall become exercisable by the Participant in five installments. Subject to the
accelerated vesting provided for in Sections 9, 10 and 11 below, at any time during the term of the
Options, the maximum number of shares of Common Stock the Participant may purchase by exercising
Nonstatutory Options, and the maximum number which the Participant may purchase by exercising ISOs,
shall be limited as specified in the following schedule:
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MAXIMUM NUMBER OF
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SHARES THAT MAY BE
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MAXIMUM NUMBER OF
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PURCHASED BY
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SHARES THAT MAY BE
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EXERCISING
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PURCHASED BY
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PERIOD
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NONSTATUTORY OPTIONS
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EXERCISING ISOs
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From
, 20___ to
Jan.
, 20___
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Up to
shares
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Up to
shares
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From
, 20___ to
Jan.
, 20___
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Up to
shares
(less any shares
previously purchased by
exercising Nonstatutory
Options)
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Up to
shares
(less any shares
previously purchased by
exercising ISOs)
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From
, 20___ to
Jan.
, 20___
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Up to
shares
(less any shares
previously purchased by
exercising Nonstatutory
Options)
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Up to
shares
(less any shares
previously purchased by
exercising ISOs)
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From
, 20___ to
Jan.
, 20___
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Up to
shares
(less any shares
previously purchased by
exercising Nonstatutory
Options)
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Up to
shares
(less any shares
previously purchased by
exercising ISOs)
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From
, 20___ to
Jan.
, 20___
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Up to
shares
(less any shares
previously purchased by
exercising Nonstatutory
Options)
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Up to
shares
(less any shares
previously purchased by
exercising ISOs)
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If, during any of these periods, the Participant fails to exercise the Options with respect to
all or any portion of the shares that may be acquired at such time, the Participant shall be
entitled to exercise the Options with respect to the remaining portion of such shares at any
subsequent time prior to the termination date of the Options.
The Options intended to be ISOs are subject to the $100,000 annual limit on vesting of ISOs as
set forth in Section 422(d) of the Code. To the extent the aggregate fair market value (determined
at the date of grant) of the shares of Common Stock with respect to which those ISOs first become
exercisable by the Participant during any calendar year under this Section 2 (when aggregated with
any prior ISOs granted to the Participant under stock option plans of the Corporation) exceeds
$100,000, whether by reason of accelerated vesting under Sections 9, 10 or 11 or otherwise, the
Options shall consist of ISOs for the maximum number of shares that may be covered by ISOs without
violating Section 422(d) of the Code, and the remaining Options becoming exercisable in that year
shall be treated as Nonstatutory Options.
2
3.
Termination Date of Options
.
The Options granted herein, and the related Dividend Equivalent Rights under Section 8 below,
shall terminate on
, 20___, the tenth anniversary of the date of grant, and the
Participant shall have no right to exercise the Options at any time thereafter.
4.
Manner of Exercise
.
If the Participant elects to exercise the Options to purchase shares of Common Stock, the
Participant shall give written notice of such exercise to the Corporate Secretary of the
Corporation. The notice of exercise shall state the number of shares of Common Stock as to which
the Options are being exercised, and the Corporation shall determine whether the Options exercised
are ISOs or Nonstatutory Options.
The Participant may exercise the Options to purchase all, or any lesser whole number, of the
number of shares of Common Stock that the Participant is then permitted to purchase under Section
2.
5.
Payment for Shares
.
Full payment of the option price for the shares of Common Stock purchased by exercising the
Options shall be due at the time the notice of exercise is delivered pursuant to Section 4. Such
payment may be made (i) in cash, (ii) by delivery of shares of Common Stock currently owned by the
Participant with a fair market value equal to the option price, or (iii) in any other form
acceptable to the Corporation.
Alternatively, the Participant shall be deemed to have paid the full option price due upon
exercise of the Options, if the Participants notice of exercise is accompanied by an irrevocable
instruction to the Corporation to deliver the shares of Common Stock issuable upon exercise of the
Options (less any shares withheld to satisfy the Participants tax obligations pursuant to Section
7 below) promptly to a broker-dealer designated by Participant, together with an irrevocable
instruction to such broker-dealer to sell at least that portion of the shares necessary to pay the
option price (and any tax withholding related expenses specified by the parties), and that portion
of the sale proceeds needed to pay the option price is delivered directly to the Corporation no
later than the close of business on the settlement date.
6.
Issuance of Stock Certificates for Shares
.
The stock certificates (or other evidence of ownership) for any shares of Common Stock
issuable to the Participant upon exercise of the Options shall be delivered to the Participant (or
to the person to whom the rights of the Participant shall have passed by will or the laws of
descent and distribution) as promptly after the date of exercise as is feasible, but not before the
Participant has paid the option price for such shares and made any arrangements for tax
withholding, as required by Section 7.
3
7.
Tax Withholding
.
Whenever the Participant exercises Options, the Corporation shall notify the Participant of
the amount of tax (if any) that must be withheld by the Corporation under all applicable federal,
state and local tax laws. With respect to each exercise of the Options, the Participant agrees to
make arrangements with the Corporation to (a) remit the required amount to the Corporation in cash,
(b) authorize the Corporation to withhold a portion of the shares of
Common Stock otherwise issuable upon the exercise with a value equal to the required amount, (c)
deliver to the Corporation shares of Common Stock with a value equal to the required amount, (d)
authorize the deduction of the required amount from the Participants compensation, or
(e) otherwise provide for payment of the required amount in any other manner satisfactory to the
Corporation.
8.
Dividend Equivalent Rights
.
The Participant is hereby granted rights to receive deferred payments equivalent in value to
the dividends payable on the shares of Common Stock (Dividend Equivalent Rights) issuable under
the Options if such shares were outstanding on the dividend record dates between the date the
Options were granted to the Participant and
, 20___, or if earlier, the date of a Change
in Corporate Control, the termination of the Participants employment with the Corporation, or the
Participants death, Disability (as defined in the Plan) or retirement after age 65 (collectively,
the Triggering Events and each, a Triggering Event). An unfunded bookkeeping account shall be
created for the Participant and the Participants rights to the balances credited to such account
shall be no greater than those of an unsecured creditor of the Corporation.
On each dividend record date occurring after the date of grant of the Options and before the
date the Options become exercisable, the Participants account shall be credited with a dollar
amount equal to the dividends payable with respect to the shares of Common Stock issuable under the
Options if such shares were outstanding on the dividend record date:
(a) In the case of a cash dividend declared on the Common Stock, the amount credited to
the Participants account with respect thereto shall be equal to the dividend declared per
share of Common Stock multiplied by the number of shares of Common Stock subject to the
Options as of the dividend record date; and
(b) In the case of a stock dividend declared on the Common Stock, the amount credited
to the Participants account with respect thereto shall be equal to the dividend declared
per share of Common Stock multiplied by (i) the number of shares of Common Stock subject to
the Options and (ii) the current fair market value of a share of Common Stock on the
dividend payment date.
When the Options with respect to which the Participant has been granted Dividend Equivalent
Rights first become exercisable pursuant to Section 2, 9, 10 or 11, the Participant shall be
entitled to receive from the Corporation a distribution equal to (i) the dollar amount then
accumulated in his or her account, as described above, and not previously distributed as provided
in this section, multiplied by (ii) a fraction the numerator of which shall be the number of shares
subject to the Options that first become exercisable on such date and the
4
denominator of which
shall be the sum of such number and the total number of shares subject to Options that have not yet
become exercisable. The Participants account shall be debited by a dollar amount equal to the
distribution. If the Options with respect to which the Participant has been granted Dividend
Equivalent Rights first become exercisable pursuant to Section 2, 10 or 11, the distribution shall
be delivered to the Participant in the form of a cash payment within 60
days following the date such Option first becomes exercisable under Section 2, 10 or 11. If the
Options with respect to which the Participant has been granted Dividend Equivalent Rights first
become exercisable under Section 9, the distribution shall be delivered to the Participant in the
form of a cash payment within 60 days following the first to occur of: (a) the date such Option
would otherwise have become exercisable under Section 2, and (b) the date of the Participants
termination of employment.
In addition, after the Options have become exercisable, the Participant shall be entitled to
receive from the Corporation each quarter distributions equal to the quarterly dividend declared
per share of Common Stock multiplied by the number of shares of Common Stock that have become
exercisable until
, 20___, or if earlier, on the date of a Triggering Event. Such
distributions shall be paid in cash within 90 days following the end of each calendar quarter. In
connection with the distributions described in this section, the Participant shall satisfy all tax
withholding obligations in a manner described in Section 7 above.
The right to receive Dividend Equivalent Rights shall survive the exercise of the Options by
the Participant. However, all rights and claims to the Dividend Equivalent Rights will terminate
on
, 20___, or if earlier, on the date of a Triggering Event without regard to any
additional periods of time during which the Options may continue to be exercised.
9.
Termination of Employment; Change in Corporate Control
.
In the event of a Change in Corporate Control (as described below), or if the Participants
employment with the Corporation is terminated before the Options expire or have been exercised with
respect to all of the shares of Common Stock subject to the Options (as provided in subsections (a)
and (b) below), the Participant shall have the right to exercise the Options during a period of
ninety (90) days following the date of the Change in Corporate Control or termination of employment
(as applicable), but in no event later than
, 20___, and the Options shall expire at the
end of such period.
(a) In the event of a Change in Corporate Control, or if the Participants employment
is terminated involuntarily without Cause (as defined in the Participants Employment
Agreement), any portion of the Options not previously exercisable under Section 2 shall
become immediately exercisable and the Participant shall be entitled to receive a cash
payment of any balance then credited to the Participants Dividend Equivalent Rights account
pursuant to Section 8.
(b) In the case of an involuntary termination not described in subsection (a) above, or
a voluntary termination by the Participant not following a Change in Corporate Control, the
maximum number of shares the Participant may purchase by exercising the Options shall be the
number of shares which could be purchased at the date of
5
termination pursuant to Section 2.
Participant shall not be entitled to receive a cash payment of any balance then credited to
the Participants Dividend Equivalent Rights account pursuant to Section 8.
For purposes of this Section 9, termination of employment as a result of the expiration of the
Participants Employment Agreement shall be considered a voluntary termination if the notice of
non-renewal was delivered by the Participant and an involuntary termination if the notice of
non-renewal was delivered by the Corporation and in both instances, the Participant is no longer
employed by the Corporation.
For purposes of this Section 9, a Change in Corporate Control shall include any of the
following events:
(i) The acquisition in one or more transactions of more than twenty percent of the
Corporations outstanding Common Stock (or the equivalent in voting power of any class or
classes of securities of the Corporation entitled to vote in elections of directors) by any
corporation, or other person or group (within the meaning of Section 14(d)(3) of the
Securities Exchange Act of 1934, as amended);
(ii) Any transfer or sale of substantially all of the assets of the Corporation, or any
merger or consolidation of the Corporation into or with another corporation in which the
Corporation is not the surviving entity;
(iii) Any election of persons to the Board of Directors which causes a majority of the
Board of Directors to consist of persons other than Continuing Directors. For this
purpose, those persons who were members of the Board of Directors on
, 20___, shall
be Continuing Directors. Any person who is nominated for election as a member of the
Board after
, 20___ shall also be considered a Continuing Director for this
purpose if, and only if, his or her nomination for election to the Board of Directors is
approved or recommended by a majority of the members of the Board (or of the relevant
Nominating Committee) and at least five (5) members of the Board are themselves Continuing
Directors at the time of such nomination; or
(iv) Any person, or group of persons, announces a tender offer for at least twenty
percent (20%) of the Corporations Common Stock.
10.
Effect of Death
.
If the Participant dies before the Options expire or have been exercised with respect to all
of the shares of Common Stock subject to the Options, any portion of the Options not previously
exercisable under Section 2 shall become exercisable, and the Participants executor,
administrator, or any person to whom the Options may be transferred by the Participants will or by
the laws of descent and distribution, shall have the right to (i) exercise the Options, to the
extent not previously exercised, at any time prior to the first anniversary of the date of death,
but in no event later than
, 20___, and (ii) to receive a cash payment of any balance then
credited to the Participants Dividend Equivalent Rights account pursuant to
6
Section 8 above. For
this purpose, the terms of this Agreement shall be deemed to apply to such person as if he or she
was the Participant.
11.
Effect of Disability; Effect of Retirement After Age 65
.
If a Participant incurs a Disability, (i) any portion of the Options not previously
exercisable under Section 2 shall become exercisable and shall continue to be exercisable for a
period of twelve (12) months following the date of termination of employment, but in no event later
than
, 20___, and (ii) the Participant shall be entitled to receive a cash payment of any
balance then credited to the Participants Dividend Equivalent Rights account pursuant to Section
8.
If the termination of the Participants employment occurs as a result of retirement after age
65, (i) any portion of the Options not previously exercisable under Section 2 shall become
exercisable, and shall continue to be exercisable for a period of twelve (12) months following the
date of retirement, but in no event later than
, 20___, and (ii) the Participant shall be
entitled to receive a cash payment of any balance then credited to the Participants Dividend
Equivalent Rights account pursuant to Section 8.
12.
Nontransferability
.
The Participants rights under this Agreement may not be assigned or transferred by the
Participant other than by will or the laws of descent and distribution. The Options may not be
exercised by anyone other than the Participant or, in the case of the Participants death, by the
person to whom the rights of the Participant shall have passed by will or the laws of descent and
distribution.
13.
Securities Laws
.
The Corporation may from time to time impose any conditions on the exercise of the Options as
it deems necessary or advisable to ensure that the Options granted hereunder, and each exercise
thereof, satisfy the applicable requirements of federal and state securities laws. Such conditions
to satisfy applicable federal and state securities laws may include, without limitation, the
partial or complete suspension of the right to exercise the Options until the offering of the
shares covered by the Options have been registered under the Securities Act of 1933, as amended, or
the printing of legends on all stock certificates issued to the Participant describing the
restrictions on transfer of such shares.
14.
Rights Prior to Issuance of Certificates
.
Neither the Participant nor any person to whom the rights of the Participant shall have passed
by will or the laws of descent and distribution shall have any of the rights of a stockholder with
respect to any shares of Common Stock until the date of the issuance to him or her of certificates
(or other evidence of ownership) for such Common Stock as provided in Section 6 above.
7
15.
Options Not to Affect Employment
.
Neither this Agreement nor the Options granted hereunder shall confer upon the Participant any
right to continued employment with the Corporation. This Agreement shall not in any way modify or
restrict any rights the Corporation may have to terminate such employment under the terms of the
Participants Employment Agreement.
16.
Miscellaneous
.
(a) This Agreement may be executed in one or more counterparts all of which taken together
will constitute one and the same instrument.
(b) The terms of this Agreement may only be amended, modified or waived by a written agreement
executed by both of the parties hereto.
(c) The validity, performance, construction and effect of this Agreement shall be governed by
the laws of the State of Ohio, without giving effect to principles of conflicts of law; provided,
however, that matters of corporate law, including the issuance of shares of the Common Stock, shall
be governed by the Delaware General Corporation Law.
17.
Section 409A Compliance
.
This Agreement is intended to comply with the requirements of Section 409A of the Code and
shall be interpreted and construed consistently with such intent. To the extent any amounts under
this Agreement are payable by reference to the Participants termination of employment, such term
shall be deemed to refer to the Participants separation from service (as defined in Treasury
Regulation Section 1.409A-1(h) (without regard to any permissible alternative definition
thereunder)) with the Corporation and all entities treated as a single employer with the
Corporation under Section 414(b) and (c) of the Code but substituting a 50% ownership level for the
80% ownership level set forth therein. Notwithstanding any other provision in this Agreement, if
the Participant is a specified employee, as defined in Section 409A of the Code, as of the date
of the Participants separation from service, then to the extent any amount payable under this
Agreement (i) constitutes the payment of nonqualified deferred compensation, within the meaning of
Section 409A of the Code, (ii) is payable upon the Participants separation from service and (iii)
under the terms of this Agreement would be payable prior to the six-month anniversary of the
Participants separation from service, such payment shall be delayed until the earlier to occur of
(a) the six-month anniversary of the separation from service or (b) the date of Participants
death.
8
IN WITNESS WHEREOF
, the parties have executed this Agreement on the date and year first above
written.
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ATTEST
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HEALTH CARE REIT, INC.
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WITNESS:
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PARTICIPANT:
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9
EXHIBIT 10.11
DEFERRED STOCK UNIT
GRANT AGREEMENT
FOR NON-EMPLOYEE DIRECTOR
THIS
DEFERRED STOCK UNIT GRANT AGREEMENT
(the Agreement), made this ___ day of
,
20___ (the Grant Date), between Health Care REIT, Inc., a Delaware corporation (the
Corporation), and
(the Director).
WITNESSETH:
WHEREAS
, the Director serves as a member of the Board of Directors of the Corporation;
WHEREAS
, the Corporation maintains the Health Care REIT, Inc. 2005 Long-Term Incentive Plan
(the Plan) in order to promote the growth and profitability of the Corporation by providing
officers, key employees and non-employee directors with incentives to achieve long-term corporate
objectives, to assist the Corporation in attracting and retaining officers, key employees and
non-employee directors of outstanding competence, and to provide such individuals with an
opportunity to acquire an equity interest in the Corporation;
WHEREAS
, the Plan authorizes awards under the Plan to be made to non-employee directors with
the approval of the Compensation Committee of the Board of Directors; and
WHEREAS
, the Compensation Committee has determined that each non-employee director of the
Corporation shall be granted Deferred Stock Units with respect to shares of the Corporations
common stock on the terms and conditions set forth below.
NOW, THEREFORE
, in consideration of the past and future services the Director has provided to
the Corporation as a member of the Board, and the various covenants and agreements herein
contained, and intending to be legally bound hereby, the parties hereto agree as follows:
1.
Grant of Deferred Stock Units
.
The Corporation hereby grants to the Director Deferred Stock Units with respect to a total of
shares of common stock, $1.00 par value per share, of the Corporation (the Common Stock),
subject to satisfaction of the vesting conditions and other terms set forth in this Agreement. The
Director shall not be required to make any payment to the Corporation (other than his or her
services as a director) in exchange for such Deferred Stock Units or in exchange for the issuance
of shares of Common Stock upon vesting of Deferred Stock Units.
2.
Deferred Delivery of Shares
.
The Director shall not be entitled to the issuance of shares of Common Stock or to receive any
distributions with respect to the Deferred Stock Units, except as provided in Section 9 below,
until such time as the Deferred Stock Units may vest under Section 3 below. Further,
except as
provided in Section 9 below, the Director shall not have any of the rights and privileges
of a stockholder of the Corporation (including voting rights and the right to receive dividends)
with respect to the shares of Common Stock to be issued pursuant to the Deferred Stock Units until
such time as the Deferred Stock Units vest and the shares of Common Stock are issued to the
Director.
3.
Vesting; When Deferred Stock Units Vest
.
Subject to the terms and conditions of this Agreement, the Deferred Stock Units shall vest in
three annual installments, on the first three anniversaries of the Grant Date, subject to the
Directors continued service as a member of the Board of Directors through such dates, or at such
earlier time as the Deferred Stock Units may vest pursuant to Sections 7 or 8 of this Agreement.
In the absence of any accelerated vesting under Sections 7 or 8, the Deferred Stock Units granted
under this Agreement shall vest with respect to the following numbers of shares on the following
vesting dates:
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VESTING
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NUMBER OF DSUs
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DATES
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THAT BECOME VESTED
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, 20___
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shares
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, 20___
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shares
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, 20___
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shares
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The Deferred Stock Units may not be sold, transferred, assigned, pledged or otherwise encumbered or
disposed of by the Director, and the shares of Common Stock potentially issuable to the Director
pursuant to these Deferred Stock Units may not be sold, transferred, assigned, pledged or otherwise
encumbered by the Director until such shares are so issued.
Any attempt to dispose of the Deferred Stock Units in a manner contrary to the restrictions
set forth in this Agreement shall be ineffective.
4.
Issuance of Stock Certificates for Shares
.
Whenever any or all of the Deferred Stock Units granted to the Director under this Agreement
become vested pursuant to Section 3 or Sections 7 or 8 below, the Corporation shall cause a number
of shares of Common Stock equal to the number of newly vested Deferred Stock Units to be issued to
the Director and a stock certificate or certificates representing these shares of Common Stock to
be registered in the name of the Director. The stock certificate or stock certificates
representing such shares of Common Stock shall be delivered to the Director (or to his or her
designated nominee) within sixty (60) days following the vesting date. Once shares of Common Stock
have been issued as a result of the vesting of Deferred Stock Units, the corresponding vested
Deferred Stock Unit shall be considered cancelled and shall be of no further force or effect.
2
5.
No Tax Withholding
.
The Corporation shall issue to the Internal Revenue Service and to the Director a Form 1099
and any other reporting form that may be required to report the amount of tax which the Director
has incurred under applicable federal, state and local tax laws. The Corporation will not withhold
such taxes, and the Director acknowledges that the Director may need to adjust his or her estimated
tax payments to take the additional taxable income into account.
6.
Termination of Service on the Board
.
(a) Except as provided in Sections 6(b), 7 or 8 below, if the Director resigns from service as
a member of the Board of Directors, decides not to stand for reelection at the expiration of the
Directors term of office, is not nominated by the Board to stand for election at the Annual
Stockholders Meeting at which the Directors term of office expires, or, if nominated, is not
reelected, then any Deferred Stock Units held by the Director which have not yet vested shall not
be forfeited, but shall remain unvested until such time as such Deferred Stock Units would
otherwise have become vested as provided in Section 3 (disregarding, for purposes of this Section
6(a), the requirement of continued service on the Board of Directors as specified in Section 3) and
shall be delivered pursuant to Section 4.
(b) Notwithstanding the foregoing, if the Director is removed from the Board by the
stockholders of the Corporation for cause, or the Director resigns or decides not to stand for
reelection following delivery of notice to the stockholders of a proposal to remove the Director
for cause (for these purposes, cause shall include, but not be limited to, dishonesty,
incompetence, moral turpitude, other misconduct of any kind and the refusal to perform the
Directors duties and responsibilities for any reason other than illness or incapacity), then all
Deferred Stock Units which have not previously become vested shall immediately be forfeited.
7.
Effect of Death or Disability
.
(a) If the Director ceases to serve as a member of the Board as a result of the Directors
death before the Deferred Stock Units granted under this Agreement have become vested, vesting of
any unvested Deferred Stock Units granted to the Director under this Agreement shall be
accelerated, and stock certificates for the number of shares of Common Stock equal to the number of
newly vested Deferred Stock Units shall be delivered to the Directors executor, administrator, or
any person to whom the Directors rights with respect to the Deferred Stock Units may be
transferred by the Directors will or by the laws of descent.
(b) If the Director ceases to serve as a member of the Board as a result of the Directors
total disability before the Deferred Stock Units granted under this Agreement have become vested,
vesting of any unvested Deferred Stock Units granted to the Director under this Agreement shall be
accelerated, and stock certificates for the number of shares of Common Stock equal to the number of
newly vested Deferred Stock Units shall be delivered to the Director pursuant to Section 4, free of
any restrictions. A Director shall have total disability
3
only if he or she is disabled within
the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the Code).
(c) Any stock certificates deliverable under Sections 7(a) or 7(b) shall be delivered within
sixty (60) days following the Directors death or total disability, as applicable.
8.
Effect of Change in Corporate Control
.
Notwithstanding the other terms of this Agreement, in the event of a Change in Corporate
Control (as defined below), the vesting of the Deferred Stock Units granted under this Agreement
shall be accelerated, any previously unvested Deferred Stock Units shall vest immediately, and the
Director shall become entitled to immediately receive a number of shares of Common Stock equal to
the number of previously unvested Deferred Stock Units. Any stock certificates deliverable under
this Section 8 shall be delivered within sixty (60) days following the Change in Corporate Control.
For purposes of this Section 8, a Change in Corporate Control shall mean a change in
ownership or effective control in respect of the Corporation within the meaning of Section 409A of
the Code.
9.
Dividend Equivalent Rights
.
During such time as any Deferred Stock Units remain outstanding and unvested, whenever the
Corporation pays dividends on the Common Stock, the Director will have the right to receive a cash
payment from the Corporation with respect to each Deferred Stock Unit in an amount equal to any
dividends paid on a share of Common Stock (a Dividend Equivalent Right). The Director will have
a Dividend Equivalent Right with respect to each Deferred Stock Unit that is outstanding on the
dividend record date. The Director will have no Dividend Equivalent Rights as of the dividend
record date in respect of any Deferred Stock Units that have vested and been exchanged for Common
Stock; provided that the Director is the record holder of such Common Stock on or before such
dividend record date. In all events, each Dividend Equivalent Right shall be paid within sixty
(60) days following the applicable dividend record date.
10.
Securities Laws
.
The Corporation may from time to time impose such conditions on the vesting of the Deferred
Stock Units, and/or the issuance of shares of Common Stock upon vesting of the Deferred Stock
Units, as it deems reasonably necessary to ensure that any grant of the Deferred Stock Units and
issuance of shares under this Agreement will satisfy the applicable requirements of federal and
state securities laws. Such conditions may include, without limitation, the partial or complete
suspension of the right to receive shares of Common Stock upon the vesting of the Deferred Stock
Units until the Common Stock has been registered under the Securities Act of 1933, as amended. In
all events, if the issuance of any shares of Common Stock is delayed by application of this Section
10, such issuance shall occur on the earliest date on which it would not violate applicable law.
4
11.
Grant Not to Affect Status as Director
.
Neither this Agreement nor the Deferred Stock Units granted hereunder shall confer upon the
Director any right to continue the Directors service as a member of the Board of Directors of the
Corporation.
12.
Adjustments to Deferred Stock Units
.
In the event of any change or changes in the outstanding Common Stock by reason of any stock
dividend, recapitalization, reorganization, merger, consolidation, split-up, combination or any
similar transaction, the number of Deferred Stock Units granted to the Director under this
Agreement shall be adjusted by the Compensation Committee pursuant to Section 11.2 of the Plan in
such manner as the Committee deems appropriate to prevent substantial dilution or enlargement of
the rights granted to the Director.
13.
Miscellaneous
.
(a) This Agreement may be executed in one or more counterparts, all of which taken together
will constitute one and the same instrument.
(b) The terms of this Agreement may only be amended, modified or waived by a written agreement
executed by both of the parties hereto.
(c) The provisions of the Plan are hereby made a part of this Agreement. In the event of any
conflict between the provisions of this Agreement and those of the Plan, the provisions of this
Agreement shall control.
(d) The Deferred Stock Units under this Agreement are deferred compensation subject to
Section 409A of the Code. This Agreement is intended to satisfy the requirements of Section 409A
of the Code and shall be interpreted in a manner consistent with such requirements. To the extent
that changes are necessary to ensure that the Deferred Stock Units comply with any additional
requirements imposed by future IRS guidance on the application of Section 409A of the Code, the
Director and the Corporation agree to cooperate
and work together in good faith to timely amend
this Agreement to comply with Section 409A of the Code.
(e) The validity, performance, construction and effect of this Agreement shall be governed by
the laws of the State of Ohio, without giving effect to principles of conflicts of law; provided,
however, that matters of corporate law, including the issuance of shares of Common Stock, shall be
governed by the Delaware General Corporation Law.
(f) Notwithstanding anything herein to the contrary, payments and the issuance of shares of
Common Stock hereunder will be delayed to the extent required to comply with Section 409A(a)(2)(B)
of the Code.
5
IN WITNESS WHEREOF
, the parties have executed this Deferred Stock Unit Grant Agreement on the
date and year first above written.
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ATTEST
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HEALTH CARE REIT, INC.
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WITNESS:
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DIRECTOR:
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6
Exhibit 10.12
Health Care REIT, Inc.
Supplemental Executive Retirement Plan
(SERP)
Amended and Restated
January 1, 2009
December 2008
TABLE OF CONTENTS
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Page
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PREAMBLE
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1
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ARTICLE I
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Definitions
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2
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ARTICLE II
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Eligibility
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5
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ARTICLE III
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Benefits
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5
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ARTICLE IV
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Vesting
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6
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ARTICLE V
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Distribution of Benefits
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6
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ARTICLE VI
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Funding
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9
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ARTICLE VII
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Plan Administration
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10
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ARTICLE VIII
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Amendment and Termination
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12
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ARTICLE IX
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General Provisions
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13
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ARTICLE X
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409A Amounts and Grandfathered Amounts
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14
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Health Care REIT, Inc.
Supplemental Executive Retirement Plan
PREAMBLE
WHEREAS
, Health Care REIT, Inc. (the Employer) desires to provide an enhanced retirement program
for selected executives in order to deliver a specified portion of final pay, ensuring a
competitive retirement income; and
WHEREAS
, the Employee Retirement Income Security Act of 1974 (ERISA) requires that limits be set
on the maximum contributions and benefits which may be made to or paid from a tax-qualified
retirement plan on behalf of or to a Participant in such a plan; and
WHEREAS
, the Employer 401(k) Profit Sharing Plan and the Health Care REIT, Inc. Money Purchase
Pension Plan includes benefit limitations imposed by §415 and §401(a)(17) of the Internal Revenue
Code; and
WHEREAS
, Employer established this Health Care REIT, Inc. Supplemental Executive Retirement Plan
(the Plan) effective January 1, 2001, so that selected executives as chosen by the Compensation
Committee of the Board of Directors (the Participants) may accrue benefits that cannot be
delivered under the qualified plans due to the limits placed on the benefit amounts by §§401(a)(17)
and 415 and related sections of the Internal Revenue Code of 1986, as may be amended from time to
time; and
WHEREAS
, the Plan is intended to comply with all applicable law, including §409A of the Code and
related Treasury guidance and Regulations, and shall be operated and interpreted in accordance with
this intention; and
WHEREAS
, §409A of the Code requires a number of technical changes to maintain the tax deferred
benefits promised under the Plan; and
WHEREAS
, the Employer desires to make certain other changes to the Plan consistent with its
purposes.
NOW, THEREFORE
, the Employer adopts this amendment and restatement of the Plan effective January 1,
2009 to comply with Code §409A for the purpose providing Participants with an opportunity to
receive a retirement benefit which cannot be delivered under the qualified plan because of
statutory limitations. Health Care REIT, Inc. promises to pay the benefits defined herein to each
Participant, or on his or her behalf to his or her heirs, personal representatives or
beneficiaries, subject to the terms and conditions specified hereinafter.
ARTICLE I DEFINITIONS
1.01
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Actuarial Equivalent
means the present value of the Normal Retirement Benefit or
Early Retirement Benefit calculated using a 7.5% interest rate and the 1983 Group Annuity
Mortality Table (GAM) (male), or the present value of the projected value of Employer
contributions to the Employees qualified retirement plan accounts using a 7.5% interest rate
and the 1983 GAM table (50/50 Blended) to determine the Offset Amount.
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1.02
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Aggregated Plans
means this Plan and any other like-type plan or arrangement of the
Employer in which a Participant participates and as to which the Plan or Applicable Guidance
requires the aggregation of all such nonqualified deferred compensation in applying Code
§409A.
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1.03
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Applicable Guidance
means as the context requires Code §§83, 409A, Treas. Reg.
§1.83, Treas. Reg. §1.409A-1 through -6, or other written Treasury or IRS guidance regarding
or affecting Code §§83 or 409A, including, as applicable, any Code §409A guidance in effect
prior to January 1, 2009.
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1.04
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Average Compensation
means the average of the three highest Plan Years of salary
and bonus compensation considering all Plan Years completed prior to the date of retirement.
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1.05
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Beneficiary
means any person(s) designated in writing by a Participant (on the form
provided and maintained by the Employer) to receive payment under the Plan in the event of the
Participants death. In the event the Participant is married at the time of death and has
designated no other beneficiary (or if the designated beneficiary has predeceased the
Participant), Beneficiary shall mean the participants spouse. In the event the Participant
is not married at death and has designated no beneficiary (or if the designated beneficiary
has predeceased the Participant), Beneficiary shall mean the Participants estate.
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1.06
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Board of Directors
means the Board of Directors of Health Care REIT, Inc.
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1.07
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Change in Control
means
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(a)
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The acquisition in one or more transactions of more than twenty percent (20%)
of the Corporations outstanding Common Stock (or the equivalent in voting power of any
class or classes of securities of the Corporation entitled to vote in elections of
directors) by any corporation, or other person or group (within the meaning of §
14(d)(3) of the Securities Exchange Act of 1934, as amended); or
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(b)
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Any transfer or sale of substantially all of the assets of the Corporation, or
any merger or consolidation of the Corporation into or with another corporation in
which the Corporation is not the surviving entity, or any merger of consolidation of
the Corporation into or with another corporation in which the Corporation is the
surviving entity and, in connection with such merger or consolidation, all or part of
the outstanding shares of Common Stock shall be changed into or exchanged for other
stock or securities of the Corporation or any other person, or cash, or any other
property; or
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(c)
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Any election of persons to the Compensation Committee of the Board of Directors
which causes a majority of the Compensation Committee of the Board of Directors to
consist of persons other than Continuing Directors. For this purpose, those persons
who were members of the Compensation Committee of the Board of Directors on May 1,
1995, shall be Continuing Directors. Any person who is nominated for election as a
member of the Board after May 1, 1995, shall also be considered a Continuing Director
for this purpose if, and only if, his or her nomination for election to the
Compensation Committee of the Board of Directors is approved or recommended by a majority of the members of
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the Board (or the relevant Nominating Committee) and at least five (5) members of
the Board are themselves Continuing Directors at the time of such nomination; or
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(d)
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Any person, or group of persons, announces a tender offer for at least twenty
percent (20%) of the Corporations Common Stock.
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1.08
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Code
means the Internal Revenue Code of 1986, as amended.
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1.09
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Compensation
means a Participants salary and bonus compensation paid during a Plan
Year.
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1.10
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Compensation Committee
means the Compensation Committee appointed by the Board of
Directors to act on behalf of Health Care REIT, Inc.
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1.11
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Early Retirement
means the Separation From Service with the Employer prior to
Normal Retirement Age.
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1.12
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Early Retirement Benefit
means the reduced monthly benefit a Participant is
entitled to receive as determined under Section 3.02 payable at Early Retirement.
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1.13
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Effective Date
of the Plan is January 1, 2001. The Effective Date of this
amendment and restatement is January 1, 2009.
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1.14
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Eligible Employee
means any Employee who is (or was) among a select group of
management or highly compensated employees of the Employer and is approved for participation
by the Compensation Committee of the Board of Directors.
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1.15
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Employee
means any individual employed by the Employer.
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1.16
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Employer
means Health Care REIT, Inc. Such term includes all corporations which
comprise a controlled group of corporations as defined in § 414(b) of the Code, of which
Health Care REIT, Inc. is a member.
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1.17
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ERISA
means the Employee Retirement Income Security Act of 1974, as amended.
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1.18
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Former Employee
means any individual formerly employed by the Employer.
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1.19
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409A Change in Control
means a change: (i) in the ownership of the Employer; (ii)
in the effective control of the Employer or (iii) in the ownership of a substantial portion of
the assets of the Employer, within the meaning of Treas. Reg. §1.409A-3(i)(5) or in Applicable
Guidance.
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1.20
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Lump Sum
means a single sum payment equal to the Actuarial Equivalent of the
monthly Normal or Early Retirement Benefit as provided in Section 3.02.
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1.21
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Normal Retirement
means a Participants Separation From Service with Employer on or
after his or her Normal Retirement Age.
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1.22
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Normal Retirement Age
means age 65.
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1.23
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Normal Retirement Benefit
means the monthly benefit a Participant is entitled to
receive as determined under Section 3.02 payable at Normal Retirement Age.
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1.24
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Offset Amount
means the Actuarial Equivalent of the projected value of Employer
contributions delivered through the Profit Sharing and Money Purchase Pension Plans at Normal
Retirement Age expressed as a monthly benefit payable for life. The projected value of
Employer contributions shall be determined using all contributions made on behalf of the
Participant for
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Plan Years completed prior to the date of Retirement and a 7.5% earnings rate
compounded annually.
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1.25
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Participant
means an Eligible Employee who, by reason of his or her
responsibilities with the Employer, is selected by the Compensation Committee to participate
in the Plan.
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1.26
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Plan
means the Health Care REIT, Inc. Supplemental Executive Retirement Plan, as
amended from time to time, the Trust, if any, and all notices, forms, elections, and other
written documentation to which the Plan refers.
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1.27
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Plan Year
means the period beginning on the first day of January and ending on the
last day in December within the calendar year.
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1.28
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Separation From Service
means Employees termination of employment with Employer
whether on account of death, retirement or otherwise.
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(a)
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Insignificant or Significant Service/Presumptions
. The Employer will
determine whether an Employee has terminated employment (and incurred a Separation from
Service) based on the facts and circumstances as described in Treas. Reg.
§1.409A-1(h)(1)(ii). An Employee incurs a Separation from Service if the parties
reasonably anticipate, based on the facts and circumstances, the Employee will not
perform any additional services after a certain date or that the level of bona fide
services (whether performed as an Employee or as a Contractor) will permanently
decrease to no more than 20% of the average level of bona fide services performed
(whether performed as an Employee or as a Contractor) over the immediately preceding
36-month period (or, if less, the period the employee has rendered service to the
Employer) (average prior service). An Employee is presumed to have incurred a
Separation from Service if the Employees service level decreases to 20% or less than
the average prior service and an Employee is presumed to not have incurred a Separation
from Service if the Employees service level continues at a rate which is 50% or more
of the average prior service. No presumption applies where the Employees service level
is more than 20% and less than 50% of the average prior service.
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(b)
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Effect of Leave
. An Employee does not incur a Separation from Service
if the Employee is on military leave, sick leave, or other bona fide leave of absence
if such leave does not exceed a period of 6 months, or if longer, the period for which
a statute or contract provides the Employee with the right to reemployment with the
Employer. If a Participants leave exceeds 6 months but the Participant is not entitled
to reemployment under a statute or contract, the Participant incurs a Separation from
Service on the next day following the expiration of 6 months. A leave of absence
constitutes a bona fide leave of absence for this Section only if there is a reasonable
expectation that the Employee will return to perform services for the Employer. Where a
leave of absence is due to any medically determinable physical or mental impairment
that can be expected to result in death or to last for a continuous period of at least
6 months, and where the Participant cannot perform his/her duties or the duties of any
substantially similar position, in determining when a Separation from Service occurs,
the above 6 month period is 29 months unless the Employer or the Employee terminate the
leave sooner. For purposes of determining average prior service under Section 1.28(a)
during a paid leave of absence which is not a Separation From Service, the Employee is
treated as rendering bona fide services at a level that would have been required to
earn the amount paid during the leave.
If the leave of absence is unpaid, the leave period is disregarded in determining
average prior service.
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(c)
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Employer for Purposes of Separation Rules
. The Employer for
purposes of applying this Section (determining Separation from Service under the Plan)
means Employer as
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defined under Section 1.16 but by applying 50% in lieu of 80% in
applying Code §§414(b) and (c).
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1.29
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Specified Employee
means a Participant who is a key employee as described in Code
§416(i), disregarding paragraph (5) thereof. However, a Participant is not a Specified
Employee unless any stock of the Employer is publicly traded on an established securities
market or otherwise. If a Participant is a key employee at any time during the 12 months
ending on December 31 (the identification date), the Participant is a Specified Employee for
the 12 month period commencing on the April 1 following the identification date. The Employer,
in determining whether this Section and all related Plan provisions apply, will determine
whether the Employer has any publicly traded stock as of the date of a Participants
Separation from Service. In the case of a spin-off or merger, or in the case of nonresident
alien Employees, the Employer will apply the Specified Employee provisions of the Plan in
accordance with Treas. Reg. §1.409A-1(i) and other Applicable Guidance.
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1.30
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SERP Benefit
means an annual lifetime benefit equal to 35% of the Participants
Average Compensation payable at Normal Retirement Age.
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1.31
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Trust
means the trust described in Section 6.01 of the Plan.
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ARTICLE II ELIGIBILITY
2.01
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Eligibility
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Any Eligible Employee of Employer who is selected and approved by the Compensation Committee
of the Board of Directors shall be eligible to participate in the Plan.
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2.02
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Time of Participation
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Once selected, the Eligible Employee will become a Participant and begin accruing benefits
at the time specified by the Compensation Committee.
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ARTICLE III BENEFITS
3.01
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Benefits In General
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All Participants and Beneficiaries selected by the Compensation
Committee pursuant to Article II and whose benefits under the
Employers qualified plans are limited, directly or indirectly, by
§401(a)(17) and §415, and related sections of the Code, shall be
eligible to receive benefits pursuant to the Plan. In no event shall
a Participant or Beneficiary who is not entitled to benefits under
the qualified plans be eligible for, or receive, benefits from this
Plan.
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3.02
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SERP Benefits
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(a)
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Normal Retirement Benefit.
Upon Normal Retirement, a Participant shall
be entitled to a monthly benefit equal to his SERP Benefit less the Offset Amount.
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(b)
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Early Retirement Benefit
.
Upon Early Retirement, a Participant shall be
entitled to a monthly benefit equal to his SERP Benefit, reduced by the proration for
length of participation, less the Offset Amount, further reduced by an early retirement
reduction factor of
1
/
2
of 1% for each month prior to Normal Retirement Age.
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The proration for length of participation is the number of completed years of
participation (including fractional years) in the Plan divided by the total number
of years (not including fractional years) from the date of participation to Normal
Retirement Age, not-to-exceed 15 years.
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(c)
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Change in Control Benefit
. Upon a Participants Separation From Service
with Employer, either voluntarily or involuntarily for any reason, following a Change
in Control, the Participants benefit shall be calculated as follows:
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(i)
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Change in Control Benefit for CEO.
The CEO shall be
entitled to receive his Normal Retirement Benefit unreduced for length of
participation or the early retirement reduction.
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(ii)
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Change in Control Benefit for Other Participants
. The
Participant shall be entitled to receive his Early Retirement Benefit as of the
date of Separation From Service calculated by adding an additional five (5)
years of participation (up to but not beyond age 65) to the length of the
participation proration with no early retirement reduction.
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ARTICLE IV VESTING
4.01
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Vesting In General
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A Participant shall have a nonforfeitable interest in all benefits payable under the Plan.
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ARTICLE V DISTRIBUTION OF BENEFITS
5.01
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Distribution Events
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The retirement benefit payable under Section 3.02 shall be paid following the Participants
Separation from Service. Payment will commence at the time and payment will be made in the
form and method specified under Sections 5.02, 5.03, and 5.04 as the Plan permits.
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5.02
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Form, Timing, and Method
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At the time of enrollment into the Plan a Participant may make an election on the form
provided by the Compensation Committee as to the form and the period over which the
retirement benefit payable under Section 3.02 will be paid. Optional forms of payment
permitted are as follows:
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(a)
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Lump Sum
. A Lump Sum payment commencing on the first day of the month
following the Participants Early or Normal Retirement, or
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(b)
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Installments.
A series of equal monthly or annual payments, commencing
on the first day of the month following the Participants Early or Normal Retirement
and paid over a period certain not to exceed fifteen (15) years, equal to the Actuarial
Equivalent of the monthly Normal or Early Retirement Benefit as provided in Section 3.2
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(c)
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Default Payment Election.
In the event no election is made, or if the
election is invalid, the Participants Normal or Early Retirement benefit shall be paid
to the Participant in a Lump Sum commencing on the first day of the month following the
Participants Early or Normal Retirement.
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(d)
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Payment to Specified Employees
. Notwithstanding anything to the
contrary in the Plan or any Employee payment election, the Plan may not make payment of
any benefit, based on Separation from Service to a Participant who, on the date of
Separation from Service is a Specified Employee, earlier than 6 months following
Separation from Service (or if
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earlier, upon the Specified Employees death), except as
permitted under this Section 5.02(d). The value of the Participants delayed benefit
shall be adjusted for interest assuming the Participants benefit had commenced on the
first day of the month following his or her Early or Normal Retirement. An interest
rate of 7.5% shall be used to determine these values. This limitation shall only apply
if the stock of the Employer is traded on an established securities market.
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5.03
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Death Benefits Option
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Notwithstanding the above, in the event of the death of the Participant, the following death
benefits shall apply:
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(a)
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If the Participant had retired and was either receiving Plan benefits in
installment payments under Section 5.02(b), or was waiting for the Plan benefits in
installments to begin, then the designated Beneficiary shall receive the present value
of the balance of the installments, plus interest in a cash Lump Sum payment commencing
on the first day of the month following the Participants date of death, or as soon as
possible thereafter. An interest rate of 7.5% shall be used to determine these values.
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(b)
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If the Participant was either currently employed or had Separated From Service,
but his benefit had not yet commenced, then the designated Beneficiary shall receive
the present value of the Plan benefits (assuming the Participant had retired on the
date of his death), plus interest, in a cash Lump Sum payment commencing on the first
day of the month following the Participants date of death. An interest rate of 7.5%
shall be used to determine these values.
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(c)
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If the Participant had retired and was already paid a Plan benefit in a Lump
Sum pursuant to Section 5.02(a), then the designated Beneficiary is not entitled to any
additional benefit under the Plan.
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5.04
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Change in Control
|
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The Change in Control retirement benefit payable under Section 3.02(a) and (b) shall be paid
to the Participant in a cash Lump Sum, commencing on the first day of the month following
the Participants Separation From Service, subject to the
limitations of
Section 5.02(d).
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5.05
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Permissible Accelerations
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Notwithstanding Sections 5.01 through 5.04, the Employer, in its sole discretion and without
any Participant discretion or election, operationally may elect accelerations of the time or
schedule of payment from the Plan in any or all of the circumstances described in Treas.
Reg. §1.409A -3(j)(4)(ii) through (xiv). Such circumstances include, but are not limited to
(i) a payment to an individual other than the Participant required under a domestic
relations order under Code §414(p)(1)(B); (ii) as it relates to the deferred compensation, a
payment to pay the FICA tax under Code §§3101, 3121(a) and 3121(v)(2) and to pay income
taxes at source on wages under Code
§3401 or under corresponding provisions of state, local or foreign tax laws related to
payment of the FICA and to pay additional income tax at source on wages attributable to
pyramiding Section §3401 wages and taxes, but the total of all such payments may not exceed
the aggregate of the FICA amount and the income tax withholding related to the FICA amount;
(iii) a payment to any affected Participant at any time that the Plan fails to meet the
requirements of Code §409A and the regulations thereunder, provided that such payment may
not exceed the amount required to be included in income as a result of such failure; (iv)
payment upon Plan termination in accordance with Section 8.02 or other Applicable Guidance.
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5.06
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Tax Withholding
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With respect to any benefit payments under the Plan and from any amount taxable under Code
§409A, Employer shall deduct all appropriate income tax withholdings including Notice
2005-1, Notice 2006-79, Notice 2008-115 and other Applicable Guidance; however, the
Participant will be solely liable for any and all income taxes applicable on such benefit
payments.
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The benefits which accrue under the Plan are subject to FICA taxes (which include the
Old-Age, Survivors and Disability Insurance tax and/or Medicare tax, as the case may be)
which may become due before the benefits are actually paid as provided under Code §
3121(v)(2) and related IRS regulations.
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To ensure proper compliance with these regulations, Employer will calculate the amount of
FICA tax when it becomes due and notify the Participant of the amount of his or her share of
such tax. Employer will remit the entire tax to the IRS and arrange for the collection of
the Participants share of the tax from the Participant. The Participant will be solely
liable for his or her share of FICA taxes on benefits accrued under the Plan.
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With respect to any benefit payments under the Plan resulting from a Change in Control,
Employer shall pay without reimbursement from the Employee, all appropriate golden parachute
excise tax withholdings and will be solely liable for any and all excise taxes applicable on
such benefit payments. Any such payment shall be paid or reimbursed to the Employee by the
end of the calendar year next following the calendar year in which the Employee remits, or
is required to remit, such excise tax.
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5.07
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Beneficiary Designation
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A Participant may designate a Beneficiary (including one or more primary and contingent
Beneficiaries) to receive payment of any balance remaining at death. The Employer will
provide each Participant with a form for this purpose and no designation will be effective
unless made on that form and delivered to the Employer. A Participant may modify or revoke
an existing designation of Beneficiary by executing and delivering a new designation to the
Employer. In the absence of a properly designated Beneficiary, the Employer will pay a
deceased Participants benefit to the Participants surviving spouse and if none, to the
Participants estate. If a Beneficiary is a minor or otherwise is a person whom the Employer
reasonably determines to be legally incompetent, the Employer may cause the Plan or Trust to
pay the Participants benefit to a guardian, trustee or other proper legal representative of
the Beneficiary. The Plans or Trusts payment of the deceased Participants benefit to the
Beneficiary or proper legal representative of the Beneficiary completely discharges the
Employer, the Plan and Trust of all further obligations under the Plan.
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5.08
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Payments Treated as Made on Payment Date
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(a)
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Certain Late Payments
. The Plans payment of benefits under Sections
5.01 through 5.04 will be deemed made on the Plan required payment date or payment
election required payment date even if the Plan makes payment after such date, provided
the payment is made by the latest of: (i) the end of the calendar year in which the
payment is due; (ii) the 15th day of the third calendar month following the payment due
date provided that the Participant is not able, directly or indirectly, to designate
the calendar year of payment; (iii) in case the Employer cannot calculate the payment
amount on account of administrative impracticality which is beyond the Participants
control (or the control of the Participants Beneficiary), in the first calendar year
of the Participant in which payment is practicable; (iv) in case the making of the
payment on the specified date would jeopardize the Employers ability to continue as a
going concern, in the first calendar year of the Participant in which the payment would
not have such effect. The Employer may cause the Plan or Trust, if any, to pay a
Participants retirement benefit under
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Sections 5.01 through 5.04 on any date which
satisfies this Section 5.08 and that is administratively practicable following any Plan
specified payment date or the date specified in any valid payment election.
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(b)
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Disputed Payments
. In the event of a dispute between the Employer and a
Participant as to whether Deferred Compensation is payable to the Participant or as to
the amount thereof, or any other failure to pay, payment is treated as paid on the
designated payment date if such payment is made in accordance with Treas. Reg.
§1.409A-3(g).
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(c)
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Early Payments
. The Employer also may cause the Plan or trustee to pay
on a date no earlier than 30 days before the specified payment date provided the
Participant is not able, directly or indirectly, to designate the calendar year of the
payment. Such early payments are not an accelerated payment under Applicable
Guidance.
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5.09
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Other
|
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Notwithstanding any other provisions of the Plan, if any amounts held in trust are found,
due to the creation or operation of trust, in a final decision by a court of competent
jurisdiction, or under a determination by the Internal Revenue Service in a closing
agreement in audit or a final refund disposition (within the meaning of § 1313(a) of
Internal Revenue Code of 1986, as amended), to have been includable in the gross income of a
Participant or Beneficiary prior to payment of such amounts from Trust, the trustee for the
Trust shall, as soon as practicable, pay to such Participant or Beneficiary an amount equal
to the amount determined to have been includable in gross income in such determination, and
shall accordingly reduce the Participants or Beneficiarys future benefits payable under
the Plan by an equal amount. The trustee shall not make any distribution to a Participant
or Beneficiary pursuant to this paragraph 5.09 unless it has received a copy of the written
determination described above together with any legal opinion which it may request as to the
applicability thereof.
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5.10
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409A Transition Election
.
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Notwithstanding anything in the Plan to the contrary, any Participant prior to December 31,
2008, may elect to make an initial payment election relating to the form of payment pursuant
to Section 5.02. Such election is intended to comply with Applicable Guidance and (1) shall
be made no later than December 31, 2008, (2) may not be made for amounts otherwise payable
during the year of the election or provide for payment in such year, and (3) once made shall
be irrevocable except as permitted by Applicable Guidance. Any transition election made
under this Section shall be treated as an initial payment election under Section 5.02.
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ARTICLE VI FUNDING
6.01
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Unfunded Plan/Trust
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The Employer intends this Plan to be an unfunded plan that is wholly or partially exempt
under ERISA. No Participant, Beneficiary or successor thereto has any legal or equitable
right, interest or claim to any property or assets of the Employer, including assets under
the Plan except as the Plan otherwise permits. The Employers obligation to pay Plan
benefits is an unsecured promise to pay. The Employer may establish a trust or other
arrangement as Applicable Guidance may prescribe in respect of its obligations under this
Plan. If the Employer elects to create the trust, the applicable provisions of the Plan
continue to apply, including those of this Section 6.01. The trustee will pay Plan benefits
in accordance with the Plan terms or upon the Employers direction consistent with Plan
terms. Unless the Employer establishes the trust: (i) the Employer may elect to make
notional contributions in lieu of actual contributions to the Plan; and (ii) the Employer
may elect not to invest any actual Plan contributions. If the Employer elects to invest any
actual
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Plan contributions, such investments may be held for the Employers benefit in providing for
the Employers obligations under the Plan or for such other purposes as the Employer may
determine. Any assets held in the Plan remain subject to claims of the Employers general
creditors and no Participants or Beneficiarys claim to Plan assets has any priority over
any general unsecured creditor of the Employer.
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6.02
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Restriction on Trust Assets
.
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If the Employer establishes, directly or indirectly a trust (or any other arrangement
Applicable Guidance may describe), the trust and the trust assets must be and must remain
located within the United States, except with respect to a Participant who performs outside
the United States substantially all services giving rise to the Plan benefits. The trust may
not contain any provision limiting the trust assets to the payment of Plan benefits upon an
adverse change in the Employers financial condition as described in Applicable Guidance,
even if the assets remain subject to claims of the Employers general creditors. For this
purpose, the Employer, upon an adverse change in the Employers finacial condition as
described in Applicable Guidance, may not transfer assets to the trust. The Employer (and
any member of a controlled group which includes the Employer) during the restricted
period, as defined in Code §409(b)(3)(B), also may not transfer assets to the trust and the
trust may not be restricted to payment of Plan benefits, to the extent that such transfer or
restriction would violate the at-risk limitation of Code §409A(b)(3). Any trust the Employer
establishes under this Plan shall be further subject to Applicable Guidance, compliance with
which is necessary to avoid the transfer of assets to the trust being treated as a transfer
of property under Code § 83.
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6.03
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Change in Control
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Subject to the limitation of Section 6.02, in the event of a Change
in Control, Employer shall establish a trust, and make contributions
to the Trust within 30 days of the date of the Change in Control and
annually thereafter within 90 days after the end of each Plan Year,
such that the fair value of the assets in the Trust are sufficient to
fund the present value of all future payments under the Plan accrued
at the end of the Plan Year and calculated pursuant to the
assumptions set forth in Section 1.01. Any assets set aside in the
Trust shall not be deemed to be the property of the Participant and
shall be subject to claims of the creditors of Employer No
Participant or Beneficiary shall have any claim against, right to, or
security or other interest in, any fund, account or asset of Employer
from which any payment under the Plan may be made.
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ARTICLE VII PLAN ADMINISTRATION
7.01
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General Duty
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The Plan shall be administered by the Compensation Committee. Members of the Compensation
Committee shall be appointed by the Board of Directors and shall serve in such capacity
until resignation or removal by the Board of Directors. It shall be the principal duty of
the Compensation Committee to determine that the provisions of the Plan are carried out in
accordance with its terms.
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7.02
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Compensation Committees General Powers, Rights and Duties
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The Compensation Committee shall have full power to administer the Plan in all of its
details, subject to the applicable requirements of law. For this purpose, the Compensation
Committee has the powers, rights and duties specifically stated in the Plan, including, but
not limited to, the following powers, rights and duties:
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(a)
|
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to determine all questions arising under the Plan, including the power to
determine the rights or eligibility of Employees or Participants and any other persons,
and the amounts of their benefits under the Plan, to interpret the Plan, and to remedy
ambiguities, inconsistencies or omissions;
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(b)
|
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to adopt such rules of procedure and regulations, including the establishment
of any claims procedure that may be required by law, or as in its opinion may be
necessary for the proper and efficient administration of the Plan and as are consistent
with the Plan;
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(c)
|
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to direct payments or distributions in accordance with the provisions of the
Plan;
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(d)
|
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to develop such information as may be required by it for tax or other purposes
as respects the Plan; and
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(e)
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to employ agents, attorneys, accountants or other persons (who also may be
employed by Employer), and allocate or delegate to them such powers, rights and duties
as the Compensation Committee may consider necessary or advisable to properly carry out
the administration of the Plan.
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The Compensation Committees decision in any matter involving the interpretation and
application of the Plan shall be final and binding. In the event the Compensation Committee
is deciding any issue under the Plan which could affect the form or timing of the payment of
deferred compensation under the Plan to a Participant who is a member of the Compensation
Committee, then such member shall not vote or otherwise decide on such issue. All questions
or interpretations shall be governed by the local laws of the state of Ohio unless
specifically pre-empted by ERISA.
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7.03
|
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Indemnification of Administrator
|
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Employer agrees to indemnify and to defend to the fullest extent permitted by law any
Employee serving as a delegate or agent of the Compensation Committee (including any
Employee or former Employee who is serving or formerly served as a delegate or agent of the
Compensation Committee) against all liabilities, damages, costs and expenses (including
attorneys fees and amounts paid in settlement of any claims approved by Employer)
occasioned by any act or omission to act in connection with the Plan, if such act or
omission is or was in good faith.
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7.04
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ERISA Claims and Procedure
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Any person claiming a benefit under the Plan shall present the request to the Compensation
Committee in writing, which shall respond in writing as soon as may be feasible. If the
claim is denied, the Compensation Committees written notice of the denial shall state the
reasons for the denial, with specific references to the relevant provisions of the Plan, a
description of any additional information necessary, and an explanation of the review
procedures available. Any person whose claim for benefits is denied may request review by
written notice to the Compensation Committee. The Compensation Committee may, but shall not
be required to grant the claimant a hearing. The decision on review shall be made by the
Compensation Committee
within 60 days, and the Compensation Committee shall provide a written report on its
decision,
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stating the reasons and the relevant provisions of the Plan. The Compensation
Committees decisions on review shall be final and shall bind all parties concerned.
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7.05
|
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No Fiduciary Relationship
|
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Nothing in the Plan document and no action taken pursuant to the provisions hereof shall be
deemed to create a fiduciary relationship between any Employee, Participant or Beneficiary,
any member of the Compensation Committee or any shareholder of Employer Neither the
Compensation Committee, its members nor Employer shall have any liability for actions or
omissions in the interpretation or administration of the Plan, unless those actions or
omissions constitute willful wrongful acts or the absence of good faith.
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ARTICLE VIII AMENDMENT AND TERMINATION
8.01
|
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Amendment
|
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The Employer reserves the right to amend the Plan at any time to comply with Code §409A,
Treas. Reg. §1.409A and other Applicable Guidance or for any other purpose, provided that
such amendment will not result in taxation to any Participant under Code §409A. Except as
the Plan and Applicable Guidance otherwise may require, the Employer may make any such
amendments effective immediately.
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8.02
|
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Termination
|
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The Employer may terminate, but is not required to terminate, the Plan and distribute
benefits under the following circumstances:
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(a)
|
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Dissolution/Bankruptcy
. The Employer may terminate and liquidate the
Plan within 12 months following a dissolution of a corporate Employer taxable under
Code §331 or with approval of a Bankruptcy court under 11 U.S.C. §503(b)(1)(A),
provided that the balance is paid to the Participants and is included in the
Participants gross income in the latest calendar year: (i) in which the Plan
termination and liquidation occurs; (ii) in which the amounts no longer are subject to
a Substantial Risk of Forfeiture within the meaning specified in Treas. Reg.
§1.409A-1(d)(3) and Applicable Guidance; or (iii) in which the payment is
administratively practicable.
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(b)
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409A Change in Control
. The Employer may terminate and liquidate the
Plan by irrevocable action taken within the 30 days preceding or the 12 months
following a 409A Change in Control provided the Employer distributes all Plan account
balances (and must distribute the accounts under any Aggregated Plans which plan the
Employer also must terminate and liquidate as to each Participant who has experienced
the 409A Change in Control) within 12 months following the Employers irrevocable
action to terminate and liquidate the Plan.
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(c)
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Other.
The Employer may terminate the Plan for any other reason in the
Employers discretion provided that: (i) the termination and liquidation does not occur
proximate to a downturn in the Employers financial health; (ii) the Employer also
terminates all Aggregated Plans in which any Participant also is a participant; (iii)
the Plan makes no payments in the 12 months following the date of the Employers
irrevocable action to terminate and liquidate the Plan other than payments the Plan
would have made irrespective of Plan termination; (iv) the Plan makes all payments
within 24 months following the date of the Employers irrevocable action to terminate
and liquidate the
Plan; and (v) the Employer within 3 years following the date of the Employers
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irrevocable action to terminate and liquidate the Plan does not adopt a new plan
covering any Participant that would be an Aggregated Plan.
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(d)
|
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Applicable Guidance
. The Employer may terminate the Plan under such
other circumstances as Applicable Guidance may permit.
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8.03
|
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Cessation of Future Benefit Accrual
|
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The Employer may elect at any time to amend the Plan to cease future benefit accruals as of
a specified date. In such event, the Plan remains in effect (except those provisions
permitting the frozen benefit accrual type) until all benefits are paid in accordance with
the Plan terms, or, if earlier, upon the Employers termination of the Plan.
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ARTICLE IX GENERAL PROVISIONS
9.01
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Employment Rights
|
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The Plan does not constitute a contract of employment, and participation in the Plan will
not give any Participant the right to be retained in the employ of Employer nor any right or
claim to any benefit under the Plan, unless such right or claim has specifically accrued
under the terms of the Plan.
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9.02
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Interests Not Transferable
|
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Except as may be required by law, including the income and employment tax withholding
provisions of the Code, or of an applicable states income tax act, the interests of
Participants and their Beneficiaries under the Plan are not subject to the claims of their
creditors and may not be voluntarily or involuntarily sold, transferred, alienated, assigned
or encumbered.
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Nothing herein shall be deemed to grant to any Employee, Participant or Beneficiary any
ownership or equity interest in Employer or any right or option to acquire any such
interest. Any rights created under the Plan shall be unsecured contractual rights of
Participants and their Beneficiaries.
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9.03
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Facility of Payment
|
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When a Participant entitled to benefits under the Plan is under a legal disability, or, in
the Compensation Committees opinion, is in any way incapacitated so as to be unable to
manage his financial affairs, the Compensation Committee may direct that the benefits to
which such Participant otherwise would be entitled shall be made to such Participants legal
representative, or to such other person or persons as the Compensation Committee may direct
the application of such benefits for the benefit of such Participant. Any payment made in
accordance with the provisions of this Section shall be a full and complete discharge of any
liability for such payment.
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9.04
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Gender and Number
|
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Where the context permits, words denoting the masculine gender shall include the feminine
gender, the singular shall include the plural, and the plural shall include the singular.
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9.05
|
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Controlling State Law
|
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To the extent not superseded by the laws of the United States, the laws of the state of Ohio
shall be controlling in all matters relating to the Plan.
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9.06
|
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Severability
|
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In case any provisions of the Plan shall be held illegal or invalid for any reason, such
illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan
shall be construed and enforced as if such illegal and invalid provisions had never been set
forth in the Plan.
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9.07
|
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Statutory References
|
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All references to the Code and ERISA include reference to any comparable or succeeding
provisions of any legislation which amends, supplements or replaces such section or
subsection.
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9.08
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Headings
|
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Section headings and titles are for reference only. In the event of a conflict between a
title and the content of a section, the content of the section shall control.
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9.09
|
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Action by Employer
|
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Any action to be performed by Employer under the Plan shall be by resolution of its
Compensation Committee, by a duly authorized committee of its Compensation Committee, or by
a person or persons authorized by resolution of its Compensation Committee or by resolution
of such committee.
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9.10
|
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Reporting
|
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|
The Employer will report Deferred Compensation as defined in
Applicable Guidance for Employee Participants on Form W-2 for and on
Form 1099-MISC for contractor Participants in accordance with
Applicable Guidance.
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9.11
|
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Incorporation of Applicable Guidance
|
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In the event of Applicable Guidance that is contrary to any Plan
provision, the Employer, as of the effective date of the Applicable
Guidance, will operate the Plan in conformance therewith and will
disregard any inconsistent Plan provision. Any such Applicable
Guidance is deemed to be incorporated by reference into the Plan and
to supersede any contrary Plan provision during any period in which
the Employer is permitted to comply operationally with the Applicable
Guidance and before a formal Plan amendment is required.
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ARTICLE X 409A AMOUNTS AND GRANDFATHERED AMOUNTS
10.01
|
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The Employer is amending and restating this Plan to comply with the provisions of Code §409A
with respect to all deferred compensation under this Plan and does not intend to grandfather
under prior law any deferred compensation which vested on or before December 31, 2004.
Accordingly, all deferred compensation shall be subject to the provisions of Code §409A and
there shall be no grandfathered benefits as defined in Applicable Guidance.
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Executed
this 29
th
day of December, 2008.
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HEALTH CARE REIT, INC.
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By:
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/s/ Jeffrey H. Miller
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/s/
Erin C. Ibele
Witness
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Jeffrey H. Miller, Executive Vice
President and General Counsel
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