EXHIBIT 10.2
2007 AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This 2007 Amended and Restated Employment Agreement (the "Agreement")
is made as of February 6, 2007, effective as of March 1, 2007, by and between
LTC PROPERTIES, INC., a corporation organized under the laws of the State of
Maryland ("LTC" or the "Company"), and XXXXX X. XXXXXXXXXXX ("Executive"), and
amends and restates the Employment Agreement dated July 1, 1992, by and between
LTC and Executive (the "Prior Employment Agreement"), as amended, effective as
of July 1, 1998.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. Effective Date, Appointment, Title and Duties. The
effective date of this Agreement is March 1, 2007 ("Effective Date"). LTC hereby
accepts the resignation of Executive from his position of Chief Executive
Officer and hereby employs Executive to serve as its Executive Chairman of the
Board, subject to the terms hereof. In such capacity, Executive shall report to
the Board of Directors of the Company, and shall have such duties, powers and
responsibilities as are customarily assigned to the Executive Chairman of the
Board of a publicly-held corporation. In addition, Executive shall have such
other duties and responsibilities as the Board of Directors may reasonably
assign him, with his consent, including serving with the consent or at the
request of the Company on the board of directors of affiliated corporations,
provided that such duties are commensurate with and customary for a senior
executive officer bearing Executive's experience, qualifications, title and
position.
2. Term of Agreement. The initial term of this Agreement shall
be for a four (4) year period, commencing on the Effective Date and ending
February 28, 2011. Unless the employment hereunder shall have been terminated in
accordance with the provisions hereof, the term of this Agreement shall be
extended beyond February 28, 2011 such that at each and every moment of time
hereafter the remaining term shall not be less than four (4) years. For purposes
of this Agreement, a resignation by Executive which is for "Good Reason," as
described in Section 5 below shall not constitute a termination of this
Agreement.
3. Acceptance of Position. Executive accepts the position of
Executive Chairman of the Board of LTC, and agrees that during the term of this
Agreement he will faithfully perform his duties. Executive will devote
approximately two full business days per week to the business and affairs of
LTC. During the term of his employment by LTC, Executive will not engage, for
his own account or for the account of any other person or entity, in a business
which competes with LTC. It is acknowledged and agreed that Executive may serve
as an officer and/or director of companies in which LTC owns voting or
non-voting stock. In addition, it is acknowledged and agreed that Executive may,
from time to time, serve as a member of the board of directors of other
companies without the consent of LTC, provided that Executive will disclose such
other board memberships to the LTC board of directors. Any compensation or
remuneration which Executive receives in consideration of his service on the
board of directors of other companies or for other non-competitive activities
outside of his service hereunder shall be the sole and exclusive property of
Executive, and LTC shall have no right or entitlement at any time to any such
compensation or remuneration.
4. Salary and Benefits. During the term of this Agreement:
(a) LTC shall pay to Executive a base salary at an annual
rate of not less than Two Hundred Forty Thousand Dollars ($240,000) per annum,
paid in approximately equal installments at intervals based on any reasonable
Company policy. LTC agrees from time to time to consider increases in such base
salary in the discretion of the Board of Directors. Any increase, once granted,
shall automatically amend this Agreement to provide that thereafter Executive's
base salary shall not be less than the annual amount to which base salary has
been increased.
(b) During the term hereof, Executive shall participate in
all health, retirement, Company-paid insurance, sick leave, disability, expense
reimbursement and other benefit programs which LTC makes available to any of its
senior executives from time to time.
(c) Health Insurance Benefits. LTC shall provide to
Executive and his two daughters LTC health insurance benefits, of a type and
nature no less favorable to Executive than the health insurance benefits made
available by LTC to Executive and to LTC's other senior executives at the time
of the execution of this Agreement, for so long as Executive is employed
hereunder and for the lifetime of the Executive, provided that the Company may
terminate such health insurance for Executive's two daughters at such time as
they attain the age of twenty-two (22) years. The benefits described in the
preceding sentence shall be referred to herein as Executive's "Health Insurance
Benefits".
(i) In the event LTC ceases to offer health insurance
coverage to its senior executives or LTC elects in its sole discretion to
discontinue providing Executive with Executive's Health Insurance Benefits, LTC
shall have the option (a) at the Company's expense, to purchase health insurance
coverage no less favorable to Executive than Executive's Health Insurance
Benefits, or (b) terminate all further Health Insurance Benefits to Executive
and in lieu thereof make a one time payment of Two Hundred Fifty Thousand
Dollars ($250,000) to Executive (a "Health Insurance Buyout").
(ii) In order to effect a Health Insurance Buyout, LTC
shall give no less than sixty (60) days' prior written notice to Executive that
LTC has elected to terminate Executive's Health Insurance Benefits. Such notice
shall not be effective nor shall it relieve LTC of its obligations under this
Section 4(c) unless it is accompanied by payment in full of the aforesaid Two
Hundred Fifty Thousand Dollars ($250,000).
(iii) Executive's rights to the benefits set forth in
this Section 4(c) and the subsections of this Section 4(c) shall survive any
termination or expiration of this Agreement and the termination of Executive's
employment, regardless of whether such termination is by the Executive or by the
Company and regardless of whether such termination is for any or no reason or
with or without Good Reason or Cause.
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(d) Executive shall be eligible to participate in any LTC
incentive stock option or bonus plan offered by LTC to its senior Executives,
subject to the terms thereof and the discretion of the Board of Directors.
(e) Executive shall be entitled to reasonable vacation
time, not less than four (4) weeks per year, provided that not more than two (2)
weeks of such vacation time may be taken consecutively without prior notice to
and non-objection by the Compensation Committee of the Board of Directors or, if
there is no Compensation Committee, the Board of Directors.
(f) The Company and Executive are parties to Restricted
Stock Agreements dated March 12, 1999 and December 7, 2005 between the Company
and Executive (the "RS Agreements). As set forth in the RS Agreements, Executive
has previously been awarded certain restricted stock awards (the "Prior RSA's")
under the LTC Properties, Inc. Amended and Restated 1992 Stock Option Plan, as
amended on December 2, 1995 and the LTC Properties, Inc. 2004 Restricted Stock
Plan. As of the execution of this Agreement, an aggregate of fifty-four thousand
nine hundred sixty (54,960) shares of the Prior RSA's remain subject to certain
restrictions, which restrictions lapse, among other things, with the passage of
time. The RS Agreements are hereby deemed modified and amended as of the
Effective Date to provide that (i) no prior existing schedule for the lapsing of
such restrictions shall have any further force and effect, and (ii) all
restrictions applicable to such shares shall lapse only and immediately upon any
termination of Executive's employment by any party, for any reason, regardless
of whether such termination of employment is with or without Cause and
regardless of whether such termination of employment is with or without Good
Reason.
5. Certain Terms Defined. For purposes of this Agreement:
(a) Executive shall be deemed to be "disabled" if a physical or
mental condition shall occur and persist which, in the written opinion of a
licensed physician selected by the Board of Directors in good faith, has
rendered Executive unable to perform the duties of Executive Chairman of the
Board of LTC for a period of sixty (60) days or more and, in the written opinion
of such physician, the condition will continue for an indefinite period of time,
rendering Executive unable to return to his duties.
(b) A termination of Executive's employment by LTC shall be deemed
for "Cause" if, and only if, it is based upon (i) conviction of a felony; (ii)
material disloyalty to the Company such as embezzlement, misappropriation of
corporate assets or, except as provided in Section 3 of this Agreement, breach
of Executive's agreement not to engage in business for another enterprise of the
type engaged in by the Company; or (iii) the engaging in unethical or illegal
behavior which is of a public nature, brings LTC into disrepute, and results in
material damage to the Company. The Company shall have the right to suspend
Executive, with pay, for a reasonable period to investigate allegations of
conduct which, if proven, would establish a right to terminate this Agreement
for Cause, or to permit a felony charge to be tried. Immediately upon the
conclusion of such temporary period, unless Cause to terminate this Agreement
has been established, Executive shall be restored to all duties and
responsibilities as if such suspension had never occurred.
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(c) A resignation by Executive shall not be deemed to be voluntary
and shall be deemed to be a resignation with "Good Reason" if it is based upon
(i) a diminution in Executive's title (except as permitted in Section 6(d) of
this Agreement), duties, or salary; (ii) a material reduction in benefits; (iii)
a direction by the Board of Directors that Executive report to any person or
group other than the Board of Directors, or (iv) a geographic relocation of
Executive's place of work a distance of more than fifty (50) miles from LTC's
offices located 00000 Xxx Xxxxx Xxxxx, Xxxxx 000, Xxxxxxxx Xxxxxxx, XX 00000.
Executive's statement that a resignation was based upon one of the events stated
in this section shall be conclusive and binding for purposes of this Agreement
if the resignation occurs within twelve (12) months following the event.
(d) "Affiliate" means the Company's successors, any Person whose
actions result in a Change in Control or any corporation affiliated (or which,
as a result of the completion of the transactions causing a Change in Control
shall become affiliated) with the Company within the meaning of Section 1504 of
the Code.
(e) "Base Salary" means, as of any date of termination of
employment, the highest base salary of Executive in the then current fiscal year
or otherwise in effect at any time subsequent to the Effective Date.
(f) "Beneficial Owner" shall have the meaning given to such term in
Rule 13d-3 under the Exchange Act.
(g) A "Change in Control" occurs if:
(i) any Person or related group of Persons (other than Executive
and his Related Persons, the Company or a Person that directly or indirectly
controls, is controlled by, or is under common control with, the Company) is or
becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing thirty percent (30%) or more of the combined voting power
of the Company's then outstanding securities; or
(ii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation (or other entity), other
than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than sixty-six and two-thirds percent (66-(2)/3%) of
the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation;
provided, however, that a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person
acquires thirty percent (30%) or more of the combined voting power of the
Company's then outstanding securities shall not constitute a Change in Control;
or
(iii) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets; or
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(iv) a majority of the members of the Board of Directors of the
Company cease to be Continuing Directors.
(h) "Code" means the Internal Revenue Code of 1986, as amended.
(i) "Continuing Directors" means, as of any date of determination,
any member of the Board of Directors who (i) was a member of such Board of
Directors on the date of the Agreement or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board of Directors at the time of
such nomination or election.
(j) "Exchange Act" means the Exchange Act of 1934, as amended.
(k) "Person" is given the meaning as such term is used in Sections
13(d) and 14(d) of the Exchange Act; provided, however, that unless this
Agreement provides to the contrary, the term shall not include the entity, any
trustee or other fiduciary holding securities under an employee benefit plan of
the entity, or any corporation owned, directly or indirectly, by the
stockholders of the entity in substantially the same proportions as their
ownership of stock of the entity.
(l) "Related Person" means any immediate family member (spouse,
partner, parent, sibling or child whether by birth or adoption) of the Executive
and any trust, estate or foundation, the beneficiary of which is the Executive
and/or an immediate family member of the Executive.
6. Certain Benefits Upon Termination. Executive's employment shall be
terminated upon the earlier of (i) the voluntary resignation of Executive with
or without Good Reason; (ii) Executive's death or permanent disability, or (iii)
upon the termination of Executive's employment by LTC for any reason at any
time. In the event of such termination, the below provisions of this Section 6
shall apply, and, in the event of a Change in Control, whether or not
Executive's employment is terminated thereby, Section 6(e) shall apply.
(a) If Executive's employment by LTC is terminated by LTC at any time
without Cause, or if Executive terminates his employment for Good Reason, unless
the termination is due to a Change of Control and all required payments are made
to Executive thereunder, the Provisions of Section 6(e) shall remain in full
force and effect until the earlier of (i) a Change of Control and all required
payments to Executive thereunder, and (ii) four (4) years from the effective
date of termination.
(b) If Executive voluntarily terminates his employment without Good
Reason, (i) LTC shall have no obligation to pay Executive any salary other than
accrued and unpaid salary and accrued vacation pay; (ii) Executive will no
longer be subject to any Change of Control provision; and, (iii) Executive's
Health Insurance Benefits as set forth in Section 4(c) of this Agreement shall
survive such termination, and the restrictions on Executive's Prior RSA's shall
lapse as set forth in Section 4(f) of this Agreement.
(c) If Executive's employment by LTC terminates for any reason other
than as a result of (i) a termination for Cause, or (ii) a voluntary resignation
by Executive without Good Reason, or (iii) a Change in Control of the Company,
then LTC shall pay Executive a lump sum severance payment equal to four times
his Base Salary; provided that if employment terminates by reason of Executive's
death or disability, then such salary shall be paid only to the extent the
Company has available "key man" life, disability or similar insurance relating
to the death or disability of Executive.
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(d) In the event the Company nominates Executive to a proposed slate
of Directors and recommends his election, but Executive is not elected, the
terms and provisions of this Agreement shall remain in full force and effect;
provided, however, Executive's position and title shall be changed to Senior
Advisor/Consultant to the Chief Executive Officer, but there shall be no
reduction in his compensation or benefits.
(e) Upon a Change in Control of the Company, whether or not
Executive's employment is terminated thereby, (i) LTC shall pay Executive a lump
sum severance payment in cash equal to Five Million Dollars ($5,000,000), (ii)
all stock options shall automatically become exercisable, Executive's employment
shall be terminated, and as provided in Section 4(f) hereof, restrictions on all
Prior RSA's shall automatically lapse concurrently upon such termination;
provided, however, Executive's Health Care Benefits and the Health Insurance
Buyout Right under Section 4 shall remain in full force and effect and shall
survive such termination.
(f) COBRA. If Executive's employment by LTC terminates for any
reason, except for LTC's termination of Executive's employment for Cause or a
voluntary resignation by Executive without a Good Reason, LTC shall offer to
Executive the opportunity to participate in all Company-provided medical and
dental plans to the extent Executive elects and remains eligible for coverage
under COBRA for a maximum period of eighteen (18) months at Company expense to
the extent the benefits thereunder are not duplicative of Executive's Health
Insurance Benefits; provided, however, in the event Executive's employment by
LTC terminates upon a Change in Control of the Company, then Executive shall not
be given the opportunity to participate in any of such medical and dental plans
except to the extent required by law and except as required in accordance with
Executive's Health Insurance Benefits. The provisions of this Section 6(f) are
intended to specify Executive's rights under COBRA and are not intended to limit
or reduce Executive's Health Insurance Benefits.
(g) In the event that Executive's employment terminates by reason of
his death, all benefits provided in this Section 6 shall be paid to his estate
or as his executor shall direct, but payment may be deferred until Executive's
executor or personal representative has been appointed and qualified pursuant to
the laws in effect in Executive's jurisdiction of residence at the time of his
death; provided, however, Executive's Health Insurance Benefits as they relate
to his daughters shall remain in full force and effect until Executive's
daughters attain the age of 22 years.
(h) LTC shall make all payments pursuant to the foregoing subsections
(a) through (g) concurrently with the date of termination of Executive's
employment or consummation of a Change in Control of the Company, as applicable.
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(i) LTC shall have no liability under this Section 6 if Executive's
employment pursuant to this Agreement is terminated by LTC for Cause or by
Executive without a Good Reason; provided, however, that if Executive's
employment pursuant to this Agreement is terminated by LTC for Cause or by
Executive without a Good Reason at any time after a Change of Control which did
not result in Executive's employment being terminated, such post-Change of
Control termination by LTC for Cause or by Executive without a Good Reason shall
not affect in any way Executive's Health Insurance Benefits or the Health
Insurance Buyout Right, the one time severance payment described in Paragraph
6(e), above or any other rights, benefits or entitlements to which Executive may
be entitled as a result of such Change of Control.
(j) Gross-Up.
(i) If it shall be determined that any payment, distribution or
benefit received or to be received by Executive from the Company (whether
payable pursuant to the terms of this Agreement or any other plan, arrangements
or agreement with the Company or an Affiliate (as defined above) ("Payments")
would be subject to the excise tax imposed by Section 4999 of the Code (the
"Excise Tax"), then Executive shall be entitled to receive an additional payment
(the "Excise Tax Gross-Up Payment) in an amount such that the net amount
retained by Executive, after the calculation and deduction of any Excise Tax on
the Payments and any federal, state and local income taxes and excise tax on the
Excise Tax Gross-Up Payment provided for in this Section 6(j), shall be equal to
the Payments. In determining this amount, the amount of the Excise Tax Gross-Up
Payment attributable to federal income taxes shall be reduced by the maximum
reduction in federal income taxes that could be obtained by the deduction of the
portion of the Excise Tax Gross-Up Payment attributable to state and local
income taxes. Finally, the Excise Tax Gross-Up Payment shall be reduced by
income or excise tax withholding payments made by the Company or any affiliate
of either to any federal, state or local taxing authority with respect to the
Excise Tax Gross-Up Payment that was not deducted from compensation payable to
Executive.
(ii) All determinations required to be made under this Section
6(j), including whether and when an Excise Tax Gross-Up Payment is required and
the amount of such Excise Tax Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, except as specified in Section
6(j)(i) above, shall be made by the Company's independent auditors (the
"Accounting Firm"), which shall provide detailed supporting calculations both to
the Company and Executive within fifteen (15) business days after the Company
makes any Payments to Executive. Such determination of tax liability made by the
Accounting Firm shall be subject to review by Executive's tax advisor and, if
Executive's tax advisor does not agree with such determination reached by the
Accounting Firm, then the Accounting Firm and Executive's tax advisor shall
jointly designate a nationally recognized public accounting firm, which shall
make such determination. All reasonable fees and expenses of the accountants and
tax advisors retained by either Executive or the Company shall be borne by the
Company. Any Excise Tax Gross-Up Payment, as determined pursuant to this Section
6(j), shall be paid by the Company to Executive within five days after the
receipt of such determination. Any determination by a jointly designated public
accounting firm shall be binding upon the Company and Executive.
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(iii) As a result of the uncertainty in the application of
Subsection 4999 of the Code at the time of the initial determination hereunder,
it is possible that Excise Tax Gross-Up Payments will not have been made by the
Company that should have been made consistent with the calculations required to
be made hereunder ("Underpayment"). In the event that Executive thereafter is
required to make a payment of any Excise Tax, any such Underpayment calculated
in accordance with and in the same manner as the Excise Tax Gross-Up Payment in
Section 6(j)(i) above shall be promptly paid by the Company to or for the
benefit of Executive. In the event that the Excise Tax Gross-Up Payment exceeds
the amount subsequently determined to be due, such excess shall constitute a
loan from the Company (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
7. [Intentionally Omitted.]
8. Indemnification. LTC shall indemnify Executive and hold him harmless
from and against all claims, losses, damages, expense or liabilities (including
expenses of defense and settlement) based upon or in any way arising from or
connected with his employment by LTC, to the maximum extent permitted by law. To
the fullest extent permitted by law, LTC shall advance to Executive all expenses
necessary in connection with the defense of any action or claim which is brought
if indemnification cannot be determined to be available prior to the conclusion
of such action or the investigation of such claim. The provisions of this
Section 8 shall survive any termination or expiration of this Agreement. LTS
shall investigate in good faith the availability and cost of directors' and
officers' insurance and shall include Executive as an insured in any directors'
and officers' insurance policy it maintains.
9. Attorney Fees. In the event that any action or proceeding is brought
to enforce the terms and provisions of this Agreement, the prevailing party
shall be entitled to recover reasonable attorneys' fees.
10. Notices. All notices and other communications provided to either
party hereto under this Agreement shall be in writing and delivered by certified
or registered mail to such party at its address set forth below its signature
hereto, or at such other address as may be designated by such party in a notice
to the other party. Any notice, if mailed and properly addressed with postage
prepaid, shall be deemed given when received.
11. Construction. In construing this Agreement, above, if any portion
of this Agreement shall be found to be invalid or unenforceable, the remaining
terms and provisions of this Agreement shall be given effect to the maximum
extent permitted without considering the void, invalid or unenforceable
provision. In construing this Agreement, the singular shall include the plural,
the masculine shall include the feminine and neuter genders as appropriate, and
no meaning or effect shall be given to the captions of the sections in this
Agreement, which are inserted for convenience of reference only without
limitation to the foregoing. Without limitation to the foregoing, nothing in
this Agreement is intended to violate the Xxxxxxxx-Xxxxx Act of 2002, and to the
extent that any provision of this Agreement would constitute such a violation,
such provision shall be modified to the extent required by such Act, or, to the
extent such provision cannot be so modified and is found to be invalid or
unenforceable, the remaining terms and provisions shall be given effect to the
maximum extent permitted without considering the void, invalid or unenforceable
provision.
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Notwithstanding any other provision of the Agreement, to the
extent that (i) any amount paid pursuant to the Agreement is treated as
nonqualified deferred compensation pursuant to Section 409A of the Internal
Revenue Code of 1986 (the "Code") and (ii) the Executive is a "specified
employee" pursuant to Section 409A(2)(B) of the Code, then such payments shall
be made on the date which is six (6) months after the date of the Executive's
separation from service. In connection with the payment of any obligation that
is delayed pursuant to this Rider, the Company shall establish an irrevocable
trust to hold funds to be used for payment of such obligations. Upon the date
that such amount would otherwise be payable, the Company shall deposit into such
irrevocable trust an amount equal to the obligation. However, notwithstanding
the establishment of the irrevocable trust, the Company's obligations under the
Agreement upon the Executive's termination of employment shall constitute a
general, unsecured obligation of the Company and any amount payable to the
Executive shall be paid solely out of the Company's general assets, and the
Executive shall have no right to any specific assets of the Company. The funds,
if any, contained or contributed to the irrevocable trust shall remain available
for the claims of the Company's general creditors.
12. Headings. The section headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
13. Governing Law. The provisions of this Agreement shall be construed
and interpreted in accordance with the internal laws of the State of California
as at the time in effect.
14. Entire Agreement. This Agreement constitutes the entire agreement
and supersedes all other prior agreements (including the Prior Employment
Agreement) and undertakings, both written and oral, among Executive and the
Company, with respect to the subject matter hereof.
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IN WITNESS WHEREOF, this Agreement has been executed on the
date set forth below, to be effective as of the date specified in the first
paragraph of this Agreement.
LTC PROPERTIES, INC.,
a Maryland Corporation
Dated Signed: February 6, 2007 By: /s/Xxxxx Xxxxxxx
---------------------- ------------------------------
Chief Executive Officer
Address:
By: /s/ Xxxxxxx Xxxxxx
------------------------------------ ------------------------------
Chairman of Compensation
------------------------------------ Committee
------------------------------------
Executive:
Date Signed: February 6, 2007 /s/ Xxxxx Xxxxxxxxxxx
----------------------- ------------------------------
Xxxxx X. Xxxxxxxxxxx
Address:
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