Exhibit 10.12
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT, dated this 30(th) day of October, 2000, but
effective as of January 1, 2000, (the "Agreement"), by and between HEALTH CARE
REIT, INC., a Delaware corporation, (the "Corporation"), and XXXXXX X. XXXXXXX
(the "Executive").
WHEREAS, the Corporation and the Executive entered into an Employment
Agreement, effective as of January 1, 1997;
WHEREAS, in March, 2000, the Compensation Committee of the
Corporation's Board of Directors approved certain modifications to the terms of
such Employment Agreement.
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 Amended and Restated Employment 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 Chairman, Chief Executive Officer and President, upon the terms
and conditions herein contained, and the Executive hereby agrees to accept such
employment and to serve as the Corporation's Chairman, Chief Executive Officer
and President, and to perform the duties and functions customarily performed by
the Chairman, Chief Executive Officer and President of a publicly traded
corporation during the term of this Agreement. In such capacity, the Executive
shall report only to the Corporation's Board of Directors, 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 Board of Directors 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 term of employment under this Agreement shall commence as of
January 1, 1997 (the "Effective Date"). The initial term of this Agreement shall
be for a period of three (3) years ending December 31, 1999. Upon the expiration
of such initial employment period, the term of employment hereunder shall
automatically be extended without further action by the parties for successive
three (3) 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 initial term or the 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 $350,000 per annum for 1997, and at a rate
of not less than $400,000 per annum for subsequent years, payable in
substantially equal semi-monthly installments. The Compensation Committee of the
Board shall consult with the Executive 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 nonstatutory stock options and shares of
restricted stock pursuant to the terms of the Corporation's 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 Corporation's 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.
(c) HEALTH INSURANCE. 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. The Corporation shall pay all initiation
fees and dues charged by up to two (2) dining clubs, country clubs,
athletic clubs, or similar organizations
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of which the Executive is a member or desires to become a member.
(e) CONFERENCES. 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. 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. 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. 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.
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 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 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 fifty
percent (50%) of his annual base salary. If the Executive obtains a replacement
position with any new employer
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(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 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 twelve (12) months), or until, if
earlier, the date the Executive obtains comparable coverage under
benefit plans maintained by a new employer; and
(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 average of the 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 fifty percent (50%) 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
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(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 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 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 Board (other 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 Chairman, Chief Executive Officer and President 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 Board of Directors.
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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 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, in lieu of the monthly payments described in Section 5(a)
above, monthly severance payments for thirty-six (36) 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 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 fifty percent
(50%) of the Executive's 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 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
twelve (12) 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);
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(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 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 Corporation's Common Stock.
(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 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).
(f) If any dispute arises between the Corporation (or any successor)
and the Executive regarding Executive's right to severance payments under
Section 5 or Section 6, the Executive shall be entitled to recover his attorneys
fees and costs incurred in connection with such dispute.
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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 twenty-four (24) months),
each in an amount equal to one-twelfth (1/12(th)) 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 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 fifty percent (50%) 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.
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.
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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 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 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 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.
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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: Corporate Secretary
IF TO THE EXECUTIVE:
Xxxxxx X. Xxxxxxx
0000 Xxxxxxxxx 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: XXXXXX X. XXXXXXX
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Corporate Secretary Executive Vice President,
Chief Operating Officer and
Chief Financial Officer
WITNESS: EXECUTIVE:
/s/ XXXX X. XXXXX /s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
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