AMENDED AND RESTATED EMPLOYMENT AGREEMENT
EXHIBIT 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated this 17th day of March, 2006 (the
“Agreement”), is entered into by and between HEALTH CARE REIT, INC., a Delaware corporation, (the
“Corporation”), and XXXXX X. XXXXX (the “Executive”).
WHEREAS, the Corporation and the Executive entered into an Employment Agreement, effective as
of April 28, 2003;
WHEREAS, the Compensation Committee of the Corporation’s Board of Directors has approved
certain modifications to the terms of such Employment Agreement; 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.
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 Corporation’s 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 Corporation’s Chief Executive Officer (“CEO”) and President
(“President”), and shall have the powers and responsibilities set forth in Article IV of the
Corporation’s 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, 2007. 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 Executive’s base salary at annual
intervals, and may adjust the Executive’s annual base salary from time to time as the Committee
deems to be appropriate.
The Executive shall also be eligible to receive a 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 Corporation’s Board, using such performance measures as the Committee
deems to be appropriate.
| 4. | ADDITIONAL COMPENSATION AND BENEFITS |
The Executive shall receive the following additional compensation and welfare and fringe
benefits:
(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 Corporation’s 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 Corporation’s 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.
(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 Corporation’s business, including expenses
for travel and similar items, upon presentation by the Executive from time to time of an
itemized account of such expenditures.
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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 Executive’s employment is 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. 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 Executive’s death or
disability, then the Corporation shall also be obligated to make a series of monthly severance
payments to the Executive for each month during the remaining term of this Agreement, but not less
than twelve (12) months. Each monthly payment shall be equal to one-twelfth (1/12th) of the sum of
(i) the Executive’s 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. 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 payments shall be reduced by all amounts the Executive receives as compensation
for services performed during such period. 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
Executive’s death or disability, then:
(i) Any stock options, restricted stock or other awards granted to the Executive under
the Corporation’s 1995 Stock Incentive Plan or 2005 Long-Term Incentive Plan shall become
fully vested and, in the case of stock options, exercisable in full;
(ii) The Executive shall be provided continued coverage at the Corporation’s 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), or until, if earlier, the date the
Executive obtains comparable coverage under benefit plans maintained by a new employer; and
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(iii) The Executive may elect, by delivering written notice to the Corporation within
thirty (30) days following such termination of his employment, to receive from the
Corporation a lump sum severance payment in lieu of the monthly severance payments described
in the preceding paragraph in an amount equal to the present value of such payments. 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 the election is received by the Corporation. The Corporation shall deliver the
payment to the Executive, in the form of a bank cashier’s check, within ten (10) business
days following the date on which the Corporation receives written notice of the Executive’s
election.
(b) Disability. The Corporation shall be entitled to terminate this Agreement, 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 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. 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 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 Executive’s annual base salary. Payment of such disability
benefit shall commence with the month following the date of the termination by reason of permanent
disability 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 Executive’s 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.
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 Corporation’s CEO or President (other
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than any such failure resulting from the Executive’s 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.
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), (2) assigned duties materially inconsistent with such position, or (3) directed to
report to anyone other than the Corporation’s CEO or President.
| 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 Corporation’s 1995
Stock Incentive Plan or 2005 Long-Term Incentive Plan shall be accelerated (to 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 monthly severance payments for twenty-four (24) months.
Each monthly payment shall be equal to one-twelfth (1/12th) of the sum of (i) the Executive’s
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.
(c) 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
may elect, by delivering written notice to the Corporation within thirty (30) days following such
termination of his employment, to receive from the Corporation a lump sum severance payment in lieu
of the monthly payments described in the preceding paragraph. The amount of this payment shall be
equal to the present value of the monthly payments described in the preceding paragraph. 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 the election is received by the Corporation. The Corporation shall deliver the payment
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to the Executive, in the form of a bank cashier’s check, within ten (10) business days following the date
on which the Corporation receives written notice of the Executive’s election.
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 Corporation’s 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) or until, if earlier, the date the
Executive obtains comparable coverage under benefit plans maintained by a new employer.
(d) 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
Corporation’s 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 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 Corporation’s Common Stock, and the Board of Directors appoints a special
committee of the Board to consider the Corporation’s response to such tender offer.
(e) 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 Internal Revenue 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
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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).
| 7. | DEATH |
If the Executive dies during the term of this Agreement, the Corporation shall pay to the
Executive’s estate a lump sum payment equal to the sum of the Executive’s 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 Executive’s 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 (1/12th) of the sum of (i)
the Executive’s 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 Executive’s 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. In addition, the death benefits payable by reason of the Executive’s 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 Corporation’s 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
Corporation’s 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.
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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 Corporation’s 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 Executive’s 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 any period in which he is
receiving monthly severance payments under Section 5 or 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. For this purpose, the Executive shall be considered to be receiving
monthly severance payments under Section 5 or Section 6 of this Agreement during any period for
which he would have received such severance payments had he not elected to receive a lump sum
severance payment or had such payments not been offset by compensation received from a successor
employer.
| 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 Corporation’s 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
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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.
Xxx XxxXxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Senior Vice President-Administration and Corporate Secretary
Xxx XxxXxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Senior Vice President-Administration and Corporate Secretary
If to the Executive:
Xxxxx X. Xxxxx
0000 X. Xxxxxx Xx.
Xxxxxx, XX 00000
0000 X. Xxxxxx Xx.
Xxxxxx, XX 00000
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.
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| 16. | 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.
Attest:
|
HEALTH CARE REIT, INC. | |||||||
/s/ Xxxx
X. Xxxxx
|
By | /s/ Xxxxxx X. Xxxxxxx | ||||||
Senior Vice President-Administration
|
Chief Executive Officer | |||||||
and Corporate Secretary |
||||||||
| Witness: | EXECUTIVE: | |||||||
| /s/ Xxxx Xxxxx | /s/ Xxxxx X. Xxxxx | |||||||
| Xxxxx X. Xxxxx | ||||||||
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