STOCK OPTION AGREEMENT
EXHIBIT 10.1
THIS STOCK OPTION AGREEMENT (the “Agreement”), made this 21st day of January, 2008 between
Health Care REIT, Inc., a Delaware corporation (the “Corporation”), and Xxxxxxxxx X. Xxxxxx (the
“Participant”).
WITNESSETH:
WHEREAS, the Participant is an 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 Corporation’s Board of Directors decided that the
Participant should be granted stock options to purchase shares of the Corporation’s 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 2,483 shares of the Common Stock of
the Corporation, at the option price of $40.83 per share (the “Options”).
The Options shall consist of options to purchase 0 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 2,483 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 two 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:
| 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 Jan. 15, 2009 to
Jan. 14, 2010
|
Up to 1,242 shares | None | ||
From Jan. 15, 2010 to
Jan. 21, 2018
|
Up to 2,483 shares (less any shares previously purchased by exercising Nonstatutory Options) | None |
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.
3. Termination Date of Options.
The Options granted herein, and the related Dividend Equivalent Rights under Section 8 below,
shall terminate on January 21, 2018, 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.
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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 Participant’s 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 Participant’s 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.
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 Participant’s 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 that would have been payable on the shares of Common Stock 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 date the Options are exercised to acquire
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such
shares (“Dividend Equivalent Rights”). An unfunded bookkeeping account shall be created for the
Participant and the Participant’s 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 while any
Options remain outstanding and unexercised, the Participant’s account shall be credited with a
dollar amount equal to the dividends that would have been 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 Participant’s 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
unexercised portion of 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 Participant’s 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 unexercised portion of 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 (whether under Section 2 above or Sections 9, 10 or 11 below), 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 paragraph, 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; plus after shares have become exercisable (iii)
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, which distributions shall be paid
quarterly on or about the time of the dividend pay dates. The Participant’s account shall be
debited by a dollar amount equal to the distribution. This distribution shall be delivered to the
Participant in the form of a cash payment. No distribution shall be made until the Participant has
made arrangements with the Corporation to withhold all applicable payroll taxes from the
distribution, or to satisfy the tax withholding obligations in some other manner, as described in
Section 7 above.
Upon expiration or termination of the Options, all rights and claims to the Dividend
Equivalent Rights will be terminated.
9. Termination of Engagement; Change in Corporate Control.
In the event of a Change in Corporate Control (as described below), or if the Participant’s
engagement with the Corporation is terminated before the Options expire or have
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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 engagement (as applicable), but in no event later than January 21, 2018, and the
Options shall expire at the end of such period.
(a) In the event of a Change in Corporate Control, or if the Participant’s engagement
is terminated involuntarily without “Cause” (as defined in the Participant’s Consulting
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 Participant’s 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 termination pursuant to Section 2.
Participant shall not be entitled to receive a cash payment of any balance then credited to
the Participant’s Dividend Equivalent Rights account pursuant to Section 8.
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
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);
(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 January 21, 2008, shall
be “Continuing Directors.” Any person who is nominated for election as a member of the
Board after January 21, 2008 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 Corporation’s Common Stock.
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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 Participant’s executor,
administrator, or any person to whom the Options may be transferred by the Participant’s 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 January 21, 2018, and (ii) to receive a cash payment of any balance then
credited to the Participant’s Dividend Equivalent Rights account pursuant to 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 Permanent and Total Disability or Retirement After Age 65.
If the termination of the Participant’s engagement occurs after a finding of the Participant’s
permanent and total disability, or as a result of retirement after age 65, (i) any portion of the
Options not previously exercisable under Section 2 shall become exercisable, and the Options may be
exercised at any time during the period of twelve (12) months following the date of termination of
engagement, or retirement, as the case may be, but in no event later than January 21, 2018, and
(ii) the Participant shall be entitled to receive a cash payment of any balance then credited to
the Participant’s Dividend Equivalent Rights account pursuant to Section 8.
12. Nontransferability.
The Participant’s 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 Participant’s 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.
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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.
15. Options Not to Affect Engagement.
Neither this Agreement nor the Options granted hereunder shall confer upon the Participant any
right to a continuing engagement with the Corporation. This Agreement shall not in any way modify
or restrict any rights the Corporation may have to terminate such engagement under the terms of the
Participant’s Consulting 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.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above
written.
| ATTEST: | HEALTH CARE REIT, INC. | |||||||
/s/ Xxxx X. Xxxxx
|
By: /s/ Xxxxxx X. Xxxxxxx
|
|||||||
and Corporate Secretary
|
Chief Executive Officer | |||||||
| /s/ Xxxx X. Xxxxx | /s/ Xxxxxxxxx X. Xxxxxx | |||||||
| Xxxxxxxxx X. Xxxxxx | ||||||||
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