Exhibit 10.11
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
October 13, 2000 by and between HEALTH CARE PROPERTY INVESTORS, INC., a Maryland
corporation ("Corporation"), and XXXXXXX X. XXXXX ("Officer").
RECITAL
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WHEREAS, Corporation and Officer have entered into that certain Amended and
Restated Employment Agreement, dated as of January 31, 1991 (the "Original
Agreement");
WHEREAS, Corporation and Officer desire to (i) enter into a new employment
agreement upon the terms set forth in this Agreement and (ii) terminate the
Original Agreement;
WHEREAS, Corporation desires to continue to employ Officer as its Chairman,
President and Chief Executive Officer, and Officer is willing to accept such
employment by Corporation, on the terms and subject to the conditions set forth
in this Agreement;
WHEREAS, as of the Effective Date (defined below), the parties hereby
intend that the Original Agreement shall automatically terminate and be of no
further force and effect, and neither parties have any further rights or
obligations thereunder; and
WHEREAS, the provisions of this Agreement shall be effective as of January
1, 2000 (the "Effective Date").
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
AGREEMENT
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THE PARTIES AGREE AS FOLLOWS:
1. Duties. During the term of this Agreement, Officer agrees to be
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employed by and to serve Corporation as its top executive Officer, including the
title Chairman, President and Chief Executive Officer, and Corporation agrees to
employ and retain Officer in such capacities. Officer shall devote such of his
business time, energy, and skill to the affairs of Corporation as shall be
necessary to perform the duties of such positions. Officer shall report only to
Corporation's Board of Directors (the "Board") and at all times during the term
of this Agreement shall have powers and duties at least commensurate with his
position as Chairman, President and Chief Executive Officer of Corporation.
Officer's principal place of business with respect to his services to
Corporation shall be within 20 miles of Newport Beach, California.
2. Term of Employment.
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(a) Definitions. For purposes of this Agreement the following terms
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shall have the following meanings:
(i) "Termination For Cause" shall mean termination by Corporation
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of Officer's employment by Corporation by reason of Officer's: (A) willful and
continued failure to substantially perform his duties with Corporation (other
than any such failure resulting from his incapacity due to physical or mental
illness or any such actual or anticipated failure after his issuance of a Notice
of Termination (as defined in Section 2(a)(viii)) either (1) for Good Reason (as
defined in Section 2(a)(iii), or (2) in connection with a Covered Resignation
(as defined in Section 2(a)(iv)), after a written demand for substantial
performance is delivered to Officer by the Board, which demand specifically
identifies the manner in which the Board believes that Officer has not
substantially performed his duties, (B) willful and continued failure to
substantially follow and comply with the specific and lawful directives of the
Board, as reasonably determined by the Board (other than any such failure
resulting from Officer's incapacity due to physical or mental illness or any
such actual or anticipated failure after his issuance of a Notice of Termination
for Good Reason or in connection with a Covered Resignation), after a written
demand for substantial performance is delivered to Officer by the Board, which
demand specifically identifies the manner in which the Board believes that
Officer has not substantially performed his duties, (C) willful commission of an
act of fraud or dishonesty resulting in material economic or financial injury to
Corporation, or (D) willful engagement in illegal conduct or gross misconduct,
in each case which is materially and demonstrably injurious to Corporation;
provided, however, that Officer's employment shall not be deemed to have been
terminated in a Termination For Cause if such termination took place as a result
of any act or omission believed by Officer in good faith to have been in the
interest of Corporation. Notwithstanding the foregoing, Officer shall not be
deemed to have been terminated in a Termination for Cause pursuant to clauses
(A), (B) or (D) hereof unless and until there shall have been delivered to
Officer a copy of a resolution duly adopted by the affirmative vote of not less
than three-quarters (3/4) of the entire membership of the Board at a meeting of
the Board (after reasonable notice to Officer, an opportunity for Officer,
together with Officer's counsel, to be heard before the Board and a reasonable
opportunity to cure), finding that in the Board's good faith opinion Officer was
guilty of conduct set forth above in this Section 2(a)(i) and specifying the
particulars thereof in reasonable detail. willful dishonesty towards, fraud
upon, or deliberate injury or attempted injury to, Corporation or by reason of
Officer's willful material breach of this Agreement which has resulted in
material injury to Corporation;
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(ii) "Termination Other Than For Cause" shall mean termination by
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Corporation of Officer's employment by Corporation before a Change in Control
(as defined in Section 2(a)(vii)), other than in a Termination For Cause, and
shall include constructive termination of Officer's employment by reason of
material breach of this Agreement by Corporation, such constructive termination
to be effective upon delivery of a Notice of Termination from Officer to
Corporation of such constructive termination.
(iii) "Good Reason" shall mean shall mean, without Officer's express
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written consent, the occurrence after a Change in Control of any of the
following circumstances unless, in the case of Sections 2(a)(iii)(A), (E), (F),
or (G), such circumstances are fully corrected (provided such circumstances are
capable of correction) prior to the Date of Termination (as defined in Section
2(a)(ix) specified in the Notice of Termination given in respect thereof:
(A) the assignment to Officer of any duties inconsistent with the
position in Corporation that Officer held immediately prior to the Change in
Control, a significant adverse alteration in the nature or status of Officer's
responsibilities or the conditions of Officer's employment from those in effect
immediately prior to such Change in Control, or any other action by Corporation
that results in a material diminution in Officer's position, authority, duties
or responsibilities;
(B) Corporation's reduction of Officer's annual base salary as in
effect on the Effective Date or as the same may be increased from time to time;
(C) the relocation of Corporation's offices at which Officer is
principally employed immediately prior to the date of the Change in Control
(Officer's "Principal Location") to a location more than thirty (30) miles from
such location, or Corporation's requiring Officer, without Officer's written
consent, to be based anywhere other than Officer's Principal Location, except
for required travel on Corporation's business to an extent substantially
consistent with Officer's present business travel obligations;
(D) Corporation's failure to pay to Officer any portion of
Officer's current compensation or to pay to Officer any portion of an
installment of deferred compensation under any deferred compensation program of
Corporation within seven (7) days of the date such compensation is due;
(E) Corporation's failure to continue in effect any material
compensation or benefit plan in which Officer participate immediately prior to
the Change in Control, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan, or
Corporation's failure to continue Officer's participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of Officer's
participation relative to other participants, as existed at the time of the
Change in Control;
(F) Corporation's failure to obtain a satisfactory agreement from
any successor to assume and agree to perform this Agreement, as contemplated in
Section 7(j) hereof; or
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(G) any purported termination of Officer's employment that is
not effected pursuant to a Notice of Termination satisfying the requirements of
Section 2(i) hereof (and, if applicable, the requirements of Section 2(a)(i)
hereof), which purported termination shall not be effective for purposes of this
Agreement.
Officer's right to terminate Officer's employment pursuant to this Section
2(a)(iii) shall not be affected by Officer's incapacity due to physical or
mental illness. Officer's continued employment shall not constitute consent to,
or a waiver of rights with respect to, any circumstance constituting Good Reason
hereunder. Any good faith determination by Officer that Good Reason exists shall
be presumed correct and shall be binding upon Corporation.
(iv) "Covered Resignation" shall mean a termination by Officer of
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Officer's employment by Corporation which occurs within the thirty (30) day
period following the first anniversary of the occurrence of a Change in Control.
(v) "Voluntary Termination" shall mean termination by Officer of
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Officer's employment by Corporation other than (i) constructive termination as
described in subsection 2(a)(ii), (ii) a "Termination Upon a Change in Control,"
and (iii) a termination by reason of Officer's death or disability as described
in Sections 2(e) and 2(f).
(vi) "Termination Upon a Change in Control" shall mean a termination
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by Officer of Officer's employment with Corporation following a "Change in
Control" for Good Reason or pursuant to a Covered Resignation or a termination
by Corporation of Officer's employment with Corporation following a "Change in
Control" without Cause.
(vii) "Change in Control" shall be deemed to occur if:
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(A) any Person (as defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) is or becomes
the Beneficial Owner (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of Corporation representing 25% or more of the
combined voting power of Corporation's then outstanding securities ("Outstanding
Corporation Voting Securities"); provided, however, that for purposes of this
subsection (A), the following shall not constitute a Change in Control: (1) any
acquisition by Corporation or any corporation controlled by Corporation, (2) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by Corporation or any corporation controlled by Corporation, or (3)
any acquisition by a Person of 25% of the Outstanding Corporation Voting
Securities as a result of an acquisition of common stock of Corporation by
Corporation which, by reducing the number of shares of common stock of
Corporation outstanding, increases the proportionate number of shares
beneficially owned by such Person to 25% or more of the Outstanding Corporation
Voting Securities; provided, however, that if a Person shall become the
beneficial owner of 25% or more of the Outstanding Corporation Voting Securities
by reason of a share acquisition by Corporation as described above and shall,
after such share acquisition by Corporation, become the beneficial owner of any
additional shares of common stock of Corporation, then such acquisition shall
constitute a Change in Control;
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(B) during any period of two consecutive years (not including
any period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other than
a director designated by a person who has entered into an agreement with
Corporation to effect a transaction described in Sections 2(a)(vii)(A), (C) or
(D)) whose election by the Board or nomination for election by Corporation's
stockholders was approved by a vote of at least two-thirds (K) of the directors
then still in office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved
(hereinafter referred to as "Continuing Directors"), cease for any reason to
constitute at least a majority thereof;
(C) the consummation by Corporation of a merger or
consolidation of Corporation with any other corporation (or other entity), other
than a merger or consolidation which would result in the voting securities of
Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 66-K% of the combined voting power of the voting
securities of Corporation or such surviving entity outstanding immediately after
such merger or consolidation; provided, however, that a merger or consolidation
effected to implement a recapitalization of Corporation (or similar transaction)
in which no Person acquires more than 25% of the combined voting power of
Corporation's then outstanding securities shall not constitute a Change in
Control; or
(D) the stockholders of Corporation approve a plan of complete
liquidation of Corporation or an agreement for the sale or disposition by
Corporation of all or substantially all of Corporation's assets.
(viii) "Notice of Termination" shall mean a notice that shall indicate
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the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Officer's employment under the provision so indicated.
(ix) "Date of Termination" shall mean (A) if Officer's employment is
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terminated due to Officer's death, the date of Officer's death; (B) if Officer's
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that Officer shall not have returned to the full-
time performance of Officer's duties during such thirty (30)-day period), and
(C) if Officer's employment is terminated pursuant to Section 2(a)(i), Section
2(a)(iii) or Section 2(a)(iv) or for any other reason (other than death or
Disability (as defined in Section 2(e)), the date specified in the Notice of
Termination (which, in the case of a Termination for Cause shall not be less
than thirty (30) days from the date such Notice of Termination is given, and in
the case of a termination for Good Reason or in connection with a Covered
Resignation shall not be less than sixty (60) days from the date such Notice of
Termination is given). Notwithstanding anything to the contrary contained in
this Section 2(a)(ix), if within fifteen (15) days after any Notice of
Termination is given, the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, then the Date
of Termination shall be the date on which the dispute is finally determined,
either by mutual written agreement of the parties, or otherwise; provided,
however, that the Date of Termination shall be extended by a notice of dispute
only if such notice is given
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in good faith and the party giving such notice pursues the resolution of such
dispute with reasonable diligence.
(b) Basic Term. The term of employment hereunder shall commence on the
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Effective Date and continue for a continuous period of three (3) years, subject
to earlier termination as provided in this Section 2, (the "Employment Period").
Therefore, unless either party provides written notice to the other of its
intent not to extend the Employment Period at least sixty (60) days prior to
each anniversary of this Agreement, the Employment Period shall be extended by
an additional year, so that at all times the Employment Period shall be for a
period of at least three (3) years, unless earlier terminated as provided in
this Agreement; provided, further, that if a Change in Control occurs during the
Employment Period, the term of this Agreement shall continue in effect for a
period of not less than thirty-six (36) months beyond the month in which such
Change in Control occurred.
(c) Termination For Cause. Termination For Cause may be effected by
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Corporation at any time during the term of this Agreement and shall be effected
by written notification to Officer. Upon Termination For Cause, Officer shall
immediately be paid all accrued salary, bonus compensation to the extent earned,
vested deferred compensation (other than pension plan or profit sharing plan
benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of corporation in which Officer is a participant to the
full extent of Officer's rights under such plans, accrued vacation pay and any
appropriate business expenses incurred by Officer in connection with his duties
hereunder, all to the Date of Termination, but Officer shall not be paid any
other compensation or reimbursement of any kind, including without limitation,
severance compensation.
(d) Termination Other Than For Cause. Notwithstanding anything else in this
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Agreement, Corporation may effect a Termination Other Than For Cause at any time
upon giving a Notice of Termination to Officer of such termination. Upon any
Termination Other Than For Cause, Officer shall immediately be paid all accrued
salary, bonus compensation to the extent earned, vested deferred compensation
(other than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of
Corporation in which Officer is a participant to the full extent of Officer's
rights under such plans, accrued vacation pay and any appropriate business
expenses incurred by Officer in connection with his duties hereunder, all to the
Date of Termination, and all severance compensation provided in Section 5(b),
but no other compensation or reimbursement of any kind.
(e) Termination by Reason of Disability. If, during the term of this
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Agreement, Officer, in the reasonable judgment of the Board of Directors of
Corporation, has failed to perform his duties under this Agreement on account of
illness or physical or mental incapacity, and such illness or incapacity
continues for a period of more than six (6) consecutive months ("Disability"),
Corporation shall have the right to terminate Officer's employment hereunder by
written notification to Officer and payment to Officer of all accrued salary,
bonus compensation to the extent earned, vested deferred compensation (other
than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of
Corporation in which Officer is a participant to the full extent of Officer's
rights under such plans (including accelerated vesting of any awards granted to
Officer
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under Corporation's Stock Incentive Plan), accrued vacation pay and any
appropriate business expenses incurred by Officer in connection with his duties
hereunder, all to the Date of Termination, with the exception of medical and
dental benefits which shall continue through the expiration of the Agreement,
but Officer shall not be paid any other compensation or reimbursement of any
kind, including without limitation, severance compensation.
(f) Death. In the event of Officer's death during the term of this
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Agreement, Officer's employment shall be deemed to have terminated as of the
last day of the month during which his death occurs and Corporation shall pay to
his estate or such beneficiaries as Officer may from time to time designate all
accrued salary, bonus compensation to the extent earned, vested deferred
compensation (other than pension plan or profit sharing plan benefits which will
be paid in accordance with the applicable plan), any benefits under any plans of
Corporation in which Officer is a participant to the full extent of Officer's
rights under such plans (including accelerated vesting of any awards granted to
Officer under Corporation's Stock Incentive Plan), accrued vacation pay and any
appropriate business expenses incurred by Officer in connection with his duties
hereunder, all to the Date of Termination, but Officer's estate shall not be
paid any other compensation or reimbursement of any kind, including without
limitation, severance compensation.
(g) Voluntary Termination. In the event of a Voluntary Termination,
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corporation shall immediately pay all accrued salary, bonus compensation to the
extent earned, vested deferred compensation (other than pension plan or profit
sharing plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of corporation in which Officer is a
participant to the full extent of Officer's rights under such plans, accrued
vacation pay and any appropriate business expenses incurred by Officer in
connection with his duties hereunder, all to the Date of Termination, but no
other compensation or reimbursement of any kind, including without limitation,
severance compensation.
(h) Termination Upon a Change in Control. In the event of a Termination
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Upon a Change in Control, Officer shall immediately be paid all accrued salary,
bonus compensation to the extent earned, vested deferred compensation (other
than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of
Corporation in which Officer is a participant to the full extent of Officer's
rights under such plans, accrued vacation pay and any appropriate business
expenses incurred by Officer in connection with his duties hereunder, all to the
Date of Termination, and all severance compensation provided in Section 5(a),
but no other compensation or reimbursement of any kind.
(i) Notice of Termination. Corporation may effect a termination of this
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Agreement pursuant to the provisions of this Section 2 upon giving 30 days'
written notice to Officer of such termination. Officer may effect a termination
of this Agreement pursuant to the provisions of this Section 2 upon giving 60
days' written notice to Corporation of such termination.
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3. Salary, Benefits and Bonus Compensation
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(a) Base Salary. As payment for the services to be rendered by Officer
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as provided in Section 1 and subject to the terms and conditions of Section 2,
Corporation agrees to pay to Officer a "Base Salary" for the period beginning on
the Effective Date and ending on December 31, 2000 at the rate of $516,000 per
annum payable in equal semi-monthly installments. The Base Salary for each year
(or portion thereof) beginning January 1, 2001 shall be as determined by the
Board of Directors which shall authorize an increase in Officer's Base Salary in
an amount which, at a minimum, shall be equal to the cumulative cost-of-living
increment on the Base Salary as reported in the "Consumer Price Index, Los
Angeles - Riverside - Orange County, California, All Items," published by the
U.S. Department of Labor (using January 1, 2000 as the base date for
computation). Officer's Base Salary shall be reviewed annually by the
Compensation Committee of the Board of Directors (the "Compensation Committee").
(b) Bonuses. Officer shall be eligible to receive a bonus for each year
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(or portion thereof) during the term of this Agreement and any extensions
thereof, with the actual amount of any such bonus to be determined in the sole
discretion of the Compensation Committee of the Board of Directors based upon
its evaluation of Officer's performance during such year. All such bonuses shall
be payable within 45 days after the end of the year to which such bonus relates.
All such bonuses shall be reviewed annually by the Compensation Committee.
(c) Additional Benefits. During the term of this Agreement, Officer
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shall be entitled to the following fringe benefits:
(i) Officer Benefits. Officer shall be eligible to participate in
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such of Corporation's benefits and deferred compensation plans as are now
generally available or later made generally available to executive Officers of
corporation, including, without limitation, Corporation's Stock Incentive Plan,
profit sharing plans, annual physical examination, dental and medical plans,
personal catastrophe and disability insurance, retirement plans and a
supplementary Executive Retirement Plan. For purposes of establishing the length
of service under any benefit plans or programs of Corporation, Officer's
employment with Corporation will be deemed to have commenced on April 1, 1985,
the date Officer commenced services as a director of Corporation, to the extent
permitted under applicable law and the terms of such plans or programs.
(ii) Automobile. Officer shall be eligible to participate in
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Corporation's CEO Automobile Policy as in effect as of the Effective Date.
(iii) Vacation. Officer shall be entitled to six weeks of
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vacation during each year during the term of this Agreement and any extensions
thereof, prorated for partial years.
(iv) Life Insurance. For the term of this Agreement and any
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extensions thereof, Corporation shall at its expense procure and keep in effect
term life insurance on the life of Officer, payable to such beneficiaries as
Officer may from time to time designate,
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in the aggregate amount of $2,000,000. Such policy shall be owned by Officer or
by a member of his immediate family.
(v) Reimbursement for Expenses. During the term of this
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Agreement, Corporation shall reimburse Officer for reasonable and properly
documented out-of-pocket business and/or entertainment expenses incurred by
Officer in connection with his duties under this Agreement.
4. Accelerated Vesting Upon a Change in Control.
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(a) Restricted Stock. Notwithstanding any provisions of
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Corporation's stock option plans, incentive plans, or other similar plans, the
restricted period with respect to any restricted stock granted to Officer
thereunder shall lapse and such shares shall be distributed to Officer
immediately prior to the Change in Control, unless it would adversely affect
Corporation's ability to use pooling of interest accounting in a Change in
Control transaction in which such accounting is intended to be used.
(b) Stock Options. All outstanding options granted to Officer under
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any of Corporation's stock option plans, incentive plans or other similar plans
(or options substituted therefor covering the stock of a successor corporation)
shall become fully vested and exercisable immediately prior to the Change in
Control as to all shares of stock covered thereby, unless it would adversely
affect Corporation's ability to use pooling of interest accounting in a Change
in Control transaction in which such accounting is intended to be used.
5. Severance Compensation.
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(a) Severance Compensation in the Event of a Termination Upon a
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Change in Control. In the event Officer's employment is terminated in a
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Termination Upon a Change in Control within the two (2) year period immediately
following the date of a Change in Control, Officer shall be entitled to the
benefits provided below:
(i) Corporation shall pay to Officer (A) Officer's full base
salary, when due, through the Date of Termination at the rate in effect at the
time Notice of Termination is given, at the time specified in Section
5(a)(viii), (B) the unpaid portion, if any, of any annual bonus, plus an amount
equal to Officer's annual bonus, pro rated from January 1 of the termination
year through the Date of Termination, and (C) all other amounts to which Officer
is entitled under any compensation plan of Corporation at the time such payments
are due;
(ii) In lieu of any further salary payments to Officer for
periods subsequent to the Date of Termination, Corporation shall pay as
severance pay to Officer, at the time specified in Section 5(a)(viii), a lump
sum severance payment (together with the payments provided in Sections 5(a)(iii)
and (iv) below, the "Severance Payments") equal to the sum of three (3) times
Officer's annual base salary as in effect as of the Date of Termination or
immediately prior to the Change in Control, whichever is greater, and three (3)
times Officer's targeted annual bonus as in effect as of the Date of Termination
or the highest annual bonus received by Officer in the three (3) years
immediately prior to the Change in Control, whichever is greater;
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(iii) For a period of three (3) years, Corporation shall
continue to provide Officer and Officer's eligible family members, based on the
cost sharing arrangement between Officer and Corporation on the date of the
Change in Control, with medical and dental health benefits at least equal to
those which would have been provided to Officer and them if Officer's employment
had not been terminated or, if more favorable to Officer, as in effect generally
at any time thereafter, provided, however, that if Officer become re-employed
with another employer and are eligible to receive medical and dental health
benefits under another employer's plans, Corporation's obligations under this
Section 5(a)(iii) shall be reduced to the extent comparable benefits are
actually received by Officer during the twelve (12) month period following
Officer's termination, and any such benefits actually received by Officer shall
be reported to Corporation. In the event Officer are ineligible under the terms
of such benefit plans or programs to continue to be so covered, in such event,
Corporation shall provide Officer with substantially equivalent coverage through
other sources or will provide Officer with a lump sum payment in such amount
that, after all taxes on that amount, shall be equal to the cost to Officer of
providing Officer such benefit coverage. At the termination of the benefits
coverage under the second preceding sentence, Officer, Officer's spouse and
Officer's dependents shall be entitled to continuation coverage pursuant to
section 4980B of the Internal Revenue Code of 1986, as amended (the "Code"),
sections 601-608 of the Employee Retirement Income Security Act of 1974, as
amended, and under any other applicable law, to the extent required by such
laws, as if Officer had terminated employment with Corporation on the date such
benefits coverage terminates. The lump sum shall be determined on a present
value basis using the interest rate provided in section 1274(b)(2)(B) of the
Code on the Date of Termination.
(iv) Officer shall be fully vested in Officer's accrued
benefits under any qualified or nonqualified pension, profit sharing, deferred
compensation or supplemental plans maintained by Corporation for Officer's
benefit, except to that the extent the acceleration of vesting of such benefits
would violate any applicable law or require Corporation to accelerate the
vesting of the accrued benefits of all participants in such plan or plans, in
which case Corporation may elect to pay Officer a lump sum payment at the time
specified in Section 5(a)(viii) in an amount equal to the value of such unvested
accrued benefits in lieu of accelerating the vesting of Officer's benefits, plus
Corporation shall pay Officer an amount equal to the amount Corporation would
have contributed to Officer's account under Corporation's 401(k) plan as a
matching contribution had Officer remained employed by Corporation for three (3)
years after Officer's Date of Termination and had Officer made the maximum
elected deferral contributions.
(v) Corporation shall furnish Officer for six (6) years
following the Date of Termination (without reference to whether the term of this
Agreement continues in effect) with directors' and officers' liability insurance
insuring Officer against insurable events which occur or have occurred while
Officer were a director or officer of Corporation, such insurance to have policy
limits aggregating not less than the amount in effect immediately prior to the
Change in Control, and otherwise to be in substantially the same form and to
contain substantially the same terms, conditions and exceptions as the liability
issuance policies provided for officers and directors of Corporation in force
from time to time, provided, however, that such terms, conditions and exceptions
shall not be, in the aggregate, materially less favorable to Officer than those
in effect on the Effective Date; provided, further, that if the aggregate annual
premiums for such insurance at any time during such period exceed one hundred
and fifty
10
percent (150%) of the per annum rate of premium currently paid by Corporation
for such insurance, then Corporation shall provide the maximum coverage that
will then be available at an annual premium equal to one hundred and fifty
percent (150%) of such rate;
(vi) In any situation where under applicable law
Corporation has the power to indemnify (or advance expenses to) Officer in
respect of any judgments, fines, settlements, loss, cost or expense (including
attorneys' fees) of any nature related to or arising out of Officer's activities
as an agent, employee, officer or director of Corporation or in any other
capacity on behalf of or at the request of Corporation, Corporation shall
promptly on written request, indemnify (and advance expenses to) Officer to the
fullest extent permitted by applicable law, including but not limited to making
such findings and determinations and taking any and all such actions as
Corporation may, under applicable law, be permitted to have the discretion to
take so as to effectuate such indemnification or advancement. Such agreement by
Corporation shall not be deemed to impair any other obligation of Corporation
respecting Officer's indemnification otherwise arising out of this or any other
agreement or promise of Corporation or under any statute;
(vii) Any outstanding restricted stock purchase loans made
to Officer by Corporation in an amount not to exceed $2,000,000, and Officer's
obligation to repay all outstanding principal and accrued interest thereunder,
shall be forgiven and cancelled by Corporation. In addition, Corporation shall
pay Officer an additional payment (the "Tax Payment") in an amount required to
fully reimburse Officer with respect to all federal, state and local income
taxes and employment taxes with respect to the forgiveness of the loans and with
respect to such taxes, such that upon receipt of the Tax Payment Officer shall
have no remaining obligations with respect to such taxes.
(viii) (A) Anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or distribution to
Officer or for Officer's benefit (whether paid or payable or distributed or
distributable) pursuant to the terms of this Agreement or otherwise pursuant to
or by reason of any other agreement, policy, plan, program or arrangement,
including without limitation any stock option, stock appreciation right or
similar right, or the lapse or termination of any restriction on or the vesting
or exercisability of any of the foregoing (the "Payments") would be subject to
the excise tax imposed by section 4999 of the Code by reason of being
"contingent on a change in the ownership or control" of Corporation, within the
meaning of Section 280G of the Code or to any similar tax imposed by state or
local law, or any interest or penalties with respect to such excise tax (such
tax or taxes, together with any such interest or penalties, are collectively
referred to as the "Excise Tax"), then Officer shall be entitled to receive from
Corporation an additional payment (the "Gross-Up Payment") in an amount such
that the net amount of the Payments and the Gross-Up Payment retained by Officer
after the calculation and deduction of all Excise Taxes (including any interest
or penalties imposed with respect to such taxes) on the payment and all federal,
state and local income tax, employment tax and Excise Tax (including any
interest or penalties imposed with respect to such taxes) on the Gross-Up
Payment provided for in this Section 5(a)(viii), and taking into account any
lost or reduced tax deductions on account of the Gross-Up Payment, shall be
equal to the Payments;
11
(B) All determinations required to be made under this
Section 5(a)(viii), including whether and when the Gross-Up Payment is required
and the amount of such Gross-Up Payment, and the assumptions to be utilized in
arriving at such determinations shall be made by the Accountants (as defined
below) which shall provide Officer and Corporation with detailed supporting
calculations with respect to such Gross-Up Payment within fifteen (15) business
days of the receipt of notice from Officer or Corporation that Officer has
received or will receive a Payment. For purposes of making the determinations
and calculations required herein, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of Section
280G and 4999 of the Code, provided that the Accountant's determinations must be
made on the basis of "substantial authority" (within the meaning of Section 6662
of the Code). For the purposes of this Section 5(a)(viii), the "Accountants"
shall mean Corporation's independent certified public accountants serving
immediately prior to the Change in Control. In the event that the Accountants
are also serving as accountant or auditor for the individual, entity or group
effecting the Change in Control, Officer shall appoint another nationally
recognized public accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the Accountants hereunder).
All fees and expenses of the Accountants shall be borne solely by Corporation.
(C) For the purposes of determining whether any of
the Payments will be subject to the Excise Tax and the amount of such Excise
Tax, such Payments will be treated as "parachute payments" within the meaning of
section 280G of the Code, and all "parachute payments" in excess of the "base
amount" (as defined under section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless and except to the extent that in the opinion
of the Accountants such Payments (in whole or in part) either do not constitute
"parachute payments" or represent reasonable compensation for services actually
rendered (within the meaning of section 280G(b)(4) of the Code) in excess of the
"base amount," or such "parachute payments" are otherwise not subject to such
Excise Tax. For purposes of determining the amount of the Gross-Up Payment
Officer shall be deemed to pay Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which the
Gross-Up Payment is to be made and to pay any applicable state and local income
taxes at the highest applicable marginal rate of taxation for the calendar year
in which the Gross-Up Payment is to be made, net of the maximum reduction in
Federal income taxes which could be obtained from the deduction of such state or
local taxes if paid in such year (determined without regard to limitations on
deductions based upon the amount of Officer's adjusted gross income); and to
have otherwise allowable deductions for Federal, state and local income tax
purposes at least equal to those disallowed because of the inclusion of the
Gross-Up Payment in Officer's adjusted gross income. To the extent practicable,
any Gross-Up Payment with respect to any Payment shall be paid by Corporation at
the time Officer are entitled to receive the Payments and in no event will any
Gross-Up Payment be paid later than five days after the receipt by Officer of
the Accountant's determination. Any determination by the Accountants shall be
binding upon Corporation and Officer.
(D) As a result of uncertainty in the application of
section 4999 of the Code at the time of the initial determination by the
Accountants hereunder, it is possible that the Gross-Up Payment made will have
been an amount less than Corporation should have paid pursuant to this Section
5(a)(viii) (the "Underpayment"). In the event that
12
Corporation exhausts its remedies pursuant to Section 5(a)(viii)(C) and Officer
are required to make a payment of any Excise Tax, the Underpayment shall be
promptly paid by Corporation to or for Officer's benefit;
(E) Officer and Corporation shall each provide the
Accountants access to and copies of any books, records and documents in the
possession of Corporation or Officer, as the case may be, reasonably requested
by the Accountants, and otherwise cooperate with the Accountants in connection
with the preparation and issuance of the determination contemplated by this
Section 5(a)(viii); and
(F) Officer shall notify Corporation in writing of
any claim by the Internal Revenue Service that, if successful, would require the
payment by Corporation of the Gross-Up Payment. Such notification shall be given
as soon as practicable after Officer are informed in writing of such claim and
shall apprise Corporation of the nature of such claim and the date on which such
claim is requested to be paid. Officer shall not pay such claim prior to the
expiration of the 30-day period following the date on which Officer give such
notice to Corporation (or such shorter period ending on the date that any
payment of taxes, interest and/or penalties with respect to such claim is due).
If Corporation notifies Officer in writing prior to the expiration of such
period that it desires to contest such claim, Officer shall:
(i) give Corporation any information
reasonably requested by Corporation relating to such claim;
(ii) take such action in connection with
contesting such claim as Corporation shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by Corporation;
(iii) cooperate with Corporation in good faith
in order to effectively contest such claim; and
(iv) permit Corporation to participate in any
proceedings relating to such claims; provided, however, that Corporation shall
bear and pay directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall indemnify Officer
for and hold Officer harmless from, on an after-tax basis, any Excise Tax or
income tax (including interest and penalties with respect thereto) imposed as a
result of such representation and payment of all related costs and expenses.
Without limiting the foregoing provisions of this Section 5(a)(viii),
Corporation shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct Officer to pay the tax
claimed and xxx for a refund or contest the claim in any permissible manner, and
Officer agree to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as Corporation shall determine; provided, however, that if
Corporation directs Officer to pay such claim and xxx for a refund, Corporation
shall advance the amount of such payment to Officer, on an interest-free basis,
and shall indemnify Officer for and hold Officer harmless from, on an after-tax
basis, any Excise Tax or
13
income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to
such advance (including as a result of any forgiveness by Corporation of such
advance); provided, further, that any extension of the statute of limitations
relating to the payment of taxes for the taxable year of Officer with respect to
which such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, Corporation's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and Officer shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority;
(ix) The payments provided for in Sections 5(a)(i), (ii)
and (iii) shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, Corporation shall pay to Officer on
such day an estimate, as determined in good faith by Corporation, of the minimum
amount of such payments and shall pay the remainder of such payments (together
with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon
as the amount thereof can be determined but in no event later than the thirtieth
day after the Date of Termination. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been due, such
excess shall constitute a loan by Corporation to Officer, payable on the fifth
day after demand by Corporation (together with interest at the rate provided in
section 1274(b)(2)(B) of the Code).
(x) Officer shall not be required to mitigate the amount
of any payment provided for in this Section 5(a) by seeking other employment or
otherwise nor, except as provided in Section 5(a)(iii), shall the amount of any
payment or benefit provided for in this Section 5(a) be reduced by any
compensation earned by Officer as the result of employment by another employer
or self-employment, by retirement benefits, by offset against any amount claimed
to be owed by Officer to Corporation, or otherwise.
(b) Severance Compensation in the Event of a Termination Other
----------------------------------------------------------
Than for Cause. In the event Officer's employment is terminated in a Termination
--------------
Other than for Cause, Officer shall be entitled to the benefits provided below:
(i) Corporation shall pay to Officer (A) Officer's full
base salary, when due, through the Date of Termination at the rate in effect at
the time Notice of Termination is given, at the time specified in Section
5(b)(iv), (B) the unpaid portion, if any, of any annual bonus, plus an amount
equal to Officer's annual bonus, pro rated from January 1 of the termination
year through the Date of Termination, and (C) all other amounts to which Officer
is entitled under any compensation plan of Corporation at the time such payments
are due;
(ii) In lieu of any further salary payments to Officer for
periods subsequent to the Date of Termination, Corporation shall pay as
severance pay to Officer, at the time specified in Section 5(b)(iv), a lump sum
severance payment (together with the payments provided in Sections 5(b)(iii)
below, the "Severance Payments") equal to the sum of two (2) times Officer's
annual base salary as in effect as of the Date of Termination, and two (2) times
Officer's targeted annual bonus as in effect as of the Date of Termination or
the highest annual
14
bonus received by Officer in the three (3) years immediately prior to the Date
of Termination, whichever is greater; and
(iii) Officer shall be entitled to accelerated vesting of
any awards granted to Officer under Corporation's Stock Incentive Plans.
(iv) The payments provided for in Sections 5(b)(i) and
(ii) shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, Corporation shall pay to Officer on
such day an estimate, as determined in good faith by Corporation, of the minimum
amount of such payments and shall pay the remainder of such payments (together
with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon
as the amount thereof can be determined but in no event later than the thirtieth
day after the Date of Termination. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been due, such
excess shall constitute a loan by Corporation to Officer, payable on the fifth
day after demand by Corporation (together with interest at the rate provided in
section 1274(b)(2)(B) of the Code)
(v) Officer shall not be required to mitigate the amount
of any payment provided for in this Section 5(b) by seeking other employment or
otherwise nor shall the amount of any payment or benefit provided for in this
Section 5(b) be reduced by any compensation earned by Officer as the result of
employment by another employer or self-employment, by retirement benefits, by
offset against any amount claimed to be owed by Officer to Corporation, or
otherwise.
(c) No Severance Compensation Upon Other Termination. In the
------------------------------------------------
event of a Voluntary Termination, Termination For Cause, termination by reason
of Officer's Disability pursuant to Section 2(e), or termination by reason of
Officer's death pursuant to Section 2(f), Officer or his estate shall not be
paid any severance compensation.
6. Covenants
---------
(a) Confidentiality. Officer hereby agrees that commencing on
---------------
the Date of Termination, Officer shall not, directly or indirectly, disclose or
make available to any person, firm, corporation, association or other entity for
any reason or purpose whatsoever, any Confidential Information (as defined
below). Officer agrees that, upon termination of Officer's employment with
Corporation, all Confidential Information in Officer's possession that is in
written or other tangible form (together with all copies or duplicates thereof,
including computer files) shall be returned to Corporation and shall not be
retained by Officer or furnished to any third party, in any form except as
provided herein; provided, however, that Officer shall not be obligated to treat
as confidential, or return to Corporation copies of any Confidential Information
that (a) was publicly known at the time of disclosure to Officer, (b) becomes
publicly known or available thereafter other than by any means in violation of
this Agreement or any other duty owed to Corporation by any person or entity, or
(c) is lawfully disclosed to Officer by a third party. As used in this
Agreement, the term "Confidential Information" means: information disclosed to
Officer or known by Officer as a consequence of or through Officer's
relationship with Corporation, about the customers, employees, business methods,
public relations methods,
15
organization, procedures or finances, including, without limitation, information
of or relating to customer lists, of Corporation and its affiliates.
(b) Noncompetition. Officer acknowledges and agrees that
--------------
Officer's services pursuant to this Agreement are unique and extraordinary, and
that Officer will have access to and control of Confidential Information of
Corporation which is vital to the success of Corporation's business. Officer
further acknowledges that because of Officer's knowledge of Corporation's
Confidential Information it is unlikely that Officer could work for a competitor
of Corporation without divulging such confidential information. Officer further
acknowledges that the business of Corporation is national in scope and cannot be
confined to any particular geographic area of the United States. For the
foregoing reasons, and in consideration for the benefits offered by Corporation
under this Agreement, Officer hereby agrees that (i) during the term of this
Agreement and for a twelve month period, commencing with Officer's Date of
Termination (collectively, the "Covenant Period"), Officer shall not accept
employment nor engage as a consultant with a competitor of Corporation in the
health care real estate investment trust industry (a "Competitor") if such
position would be comparable to a position Officer held at any time with
Corporation and where Officer cannot satisfy Corporation, in its reasonable
judgement, that the new employer is prepared to and takes adequate steps to
preclude and prevent inevitable disclosure of Corporation's Confidential
Information and (ii) that eligibility for severance payments and other benefits
under this Agreement are contingent upon Officer's agreement and compliance with
the covenant as stated above in clause (i) of this Section 6(b). No further
payments nor eligibility for benefits continuation will be available to Officer
as of the date Officer commences employment/consulting in violation of these
covenants. It is a specific condition of the Agreement that if Officer commences
employment or engage as a consultant with a Competitor if such position would be
comparable to a position Officer held at any time with Corporation, Officer
shall advise Competitor in writing of Officer's obligations pursuant to this
Agreement and specifically disclose all covenants contained in this Section 6.
It is also a specific condition of this Agreement that so long as Officer is
receiving any payments or benefits under this Agreement with respect to any type
of termination, Officer shall be obligated to immediately notify Corporation as
to the specifics of the new position that Officer is planning to commence as an
employee or consultant for a Competitor, and take affirmative steps to assure
Corporation that Officer will not divulge any of Corporation's Confidential
Information in Officer's new employment or consulting arrangement.
(c) Non-Solicitation. Officer hereby agrees that, for the period
----------------
commencing on the Date of Termination and terminating on the first anniversary
thereof, Officer shall not, either on his own account or jointly with or as a
manager, agent, officer, employee, consultant, partner, joint venturer, owner or
shareholder or otherwise on behalf of any other person, firm or corporation,
directly or indirectly solicit or attempt to solicit away from Corporation any
of its officers or employees or offer employment to any person who, on or during
the six (6) months immediately preceding the date of such solicitation or offer,
is or was an officer or employee of Corporation; provided, however, that a
general advertisement to which an employee of Corporation responds shall in no
event be deemed to result in a breach of this Section 6(c).
16
7. Miscellaneous.
-------------
(a) Payment Obligations. Corporation's obligation to pay Officer
-------------------
the compensation and to make the arrangements provided herein shall be
unconditional, and Officer shall have no obligation whatsoever to mitigate
damages hereunder. If litigation after a Change in Control shall be brought to
enforce or interpret any provision contained herein, Corporation, to the extent
permitted by applicable law and Corporation's Certificate of Incorporation and
Bylaws, hereby indemnifies Officer for Officer's reasonable attorneys' fees and
disbursements incurred in such litigation.
(b) Business Clubs. Officer may designate up to three dining
--------------
clubs, country clubs, athletic clubs, or similar organizations and Corporation
shall acquire membership interests in such clubs and organizations which shall
be used by Officer for business purposes on behalf of Corporation; provided,
however, that if such clubs or organizations prohibit purchase of membership
interests by Corporation, then Corporation shall advance to Officer the amount
required to purchase membership interests in such clubs or organizations and
Officer shall hold such membership interests for the benefit of Corporation. In
the event Corporation has advanced to Officer the cost of the membership
interests for any of such clubs or organizations, then upon the termination of
Officer's employment with Corporation for any reason Officer shall promptly sell
such membership interests for the benefit of Corporation and shall deliver the
full amount of the proceeds to Corporation. Any gains or losses incurred upon
the sale by Officer of any membership interests held for the benefit of
Corporation shall be solely for Corporation's account.
(c) Confidentiality. Officer agrees that all confidential and
---------------
proprietary information relating to the business of Corporation shall be kept
and treated as confidential both during and after the term of this Agreement,
except as may be permitted in writing by Corporation's Board of Directors or as
such information is within the public domain or comes within the public domain
without any breach of this Agreement.
(d) Waiver. The waiver of the breach of any provision of this
------
Agreement shall not operate or be construed as a waiver of any subsequent breach
of the same or other provision hereof.
(e) Entire Agreement; Modifications. Except as otherwise
-------------------------------
provided herein, this Agreement represents the entire understanding among the
parties with respect to the subject matter hereof, and this Agreement supersedes
any and all prior understandings, agreements, plans and negotiations, whether
written or oral, with respect to the subject matter hereof, including without
limitation, any understandings, agreements or obligations respecting any past or
future compensation, bonuses, reimbursements or other payments to Officer from
Corporation. All modifications to the Agreement must be in writing and signed by
the party against whom enforcement of such modification is sought.
(f) Notices. All notices and other communications under this
-------
Agreement shall be in writing and shall be given by telegraph or first class
mail, certified or registered with return receipt requested, and shall be deemed
to have been duly given three days after mailing or 12 hours after transmission
of a telegram to the respective persons named below:
17
If to Corporation: Health Care Property Investors, Inc.
0000 XxxXxxxxx Xxxxx, 0xx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Chairman of the Board
If to Officer: Xxxxxxx X. Xxxxx
Xxx Xxxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Any party may change such party's address for notices by notice duly given
pursuant to this Section 7(e).
(g) Headings. The Section headings herein are intended for
--------
reference and shall not by themselves determine the construction or
interpretation of this Agreement.
(h) Governing Law. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of California applicable to
contracts entered into and wholly to be performed within the State of California
by California residents.
(i) Arbitration; Dispute Resolution, Etc.
------------------------------------
(i) Arbitration Procedure. Any disagreement, dispute,
---------------------
controversy or claim arising out of or relating to this Agreement or the
interpretation of this Agreement or any arrangements relating to this Agreement
or contemplated in this Agreement or the breach, termination or invalidity
thereof shall be settled by final and binding arbitration administered by the
JAMS/Endispute in Los Angeles, California in accordance with its then existing
JAMS/Endispute Arbitration Rules and Procedures for Employment Disputes. In the
event of such an arbitration proceeding, Officer and Corporation shall select a
mutually acceptable neutral arbitrator from among the JAMS/Endispute panel of
arbitrators. In the event Officer and Corporation cannot agree on an arbitrator,
the Administrator of JAMS/Endispute will appoint an arbitrator. Neither Officer
nor Corporation nor the arbitrator shall disclose the existence, content, or
results of any arbitration hereunder without the prior written consent of all
parties. Except as provided herein, the Federal Arbitration Act shall govern the
interpretation, enforcement and all proceedings under this Section 14. The
arbitrator shall apply the substantive law (and the law of remedies, if
applicable) of the state of California, or federal law, or both, as applicable
and the arbitrator is without jurisdiction to apply any different substantive
law. The arbitrator shall have the authority to entertain a motion to dismiss
and/or a motion for summary judgment by any party and shall apply the standards
governing such motions under the Federal Rules of Civil Procedure. The
arbitrator shall render an award and a written, reasoned opinion in support
thereof. Judgment upon the award may be entered in any court having jurisdiction
thereof. Corporation shall pay all fees and expenses of the Arbitrator
regardless of the result and shall provide all witnesses and evidence reasonably
required by Officer to present Officer's case.
(ii) Compensation During Dispute, Etc. Officer's
--------------------------------
compensation during any disagreement, dispute, controversy, claim, suit, action
or proceeding (collectively, a "Dispute") arising out of or relating to this
Agreement or the interpretation of this Agreement shall be as follows: If there
is a termination by Corporation followed by a Dispute as
18
to whether Officer is entitled to the payments and other benefits provided under
this Agreement, then, during the period of that Dispute Corporation shall pay
Officer fifty percent (50%) of the amount specified in Sections 5(c)(i) and
5(c)(ii) hereof, and Corporation shall provide Officer with the other benefits
provided in Section 5(c) of this Agreement, if, but only if, Officer agrees in
writing that if the Dispute is resolved against Officer, Officer shall promptly
refund to Corporation all payments Officer receives under Sections 5(c)(i) and
5(c)(ii) of this Agreement plus interest at the rate provided in Section 1274(d)
of the Code, compounded quarterly. If the Dispute is resolved in Officer's
favor, promptly after resolution of the dispute Corporation shall pay Officer
the sum that was withheld during the period of the Dispute plus interest at the
rate provided in Section 1274(d) of the Code, compounded quarterly.
(iii) Legal Fees. In addition to all other amounts payable
----------
to Officer under this Agreement, Corporation shall pay to Officer all legal fees
and expenses incurred by Officer in connection with any Dispute arising out of
or relating to this Agreement or the interpretation thereof (including, without
limitation, all such fees and expenses, if any, incurred in contesting or
disputing any termination of Officer's employment or in seeking to obtain or
enforce any right or benefit provided by this Agreement, or in connection with
any tax audit or proceeding to the extent attributable to the application of
section 4999 of the Code to any payment or benefit provided hereunder),
regardless of the outcome of such proceeding; provided, however, that in the
event Officer commences such action, Officer shall not be entitled to recover
such fees and costs if the court determines that Officer brought the claim in
bad faith or the claim was frivolous. Any attorney's fees incurred by Officer
shall be paid by Corporation in advance of the final disposition of such action
or challenge, as such fees and expenses are incurred; provided, however, that
Officer agrees to repay such amounts, net of any income taxes paid or payable by
Officer with respect to such amounts, if such amounts are incurred in connection
with an action commenced by Officer if it is ultimately determined by the court
that Officer brought such action in bad faith or the claim was frivolous.
(j) Severability. Should a court or other body of competent
------------
jurisdiction determine that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, and all other provisions of this Agreement
shall be deemed valid and enforceable to the extent possible.
(k) Survival of Corporation's Obligations. Corporation's
-------------------------------------
obligations hereunder shall not be terminated by reason of any liquidation,
dissolution, bankruptcy, cessation of business, or similar event relating to
Corporation. This Agreement shall not be terminated by any merger or
consolidation or other reorganization of Corporation. In the event any such
merger, consolidation or reorganization shall be accomplished by transfer of
stock or by transfer of assets or otherwise, the provisions of this Agreement
shall be binding upon and inure to the benefit of the surviving or resulting
corporation or person. This Agreement shall be binding upon and inure to the
benefit of the executors, administrators, heirs, successors and assigns of the
parties; provided, however, that except as herein expressly provided, this
Agreement shall not be assignable either by Corporation (except to an affiliate
of Corporation in which event Corporation shall remain liable if the affiliate
fails to meet any obligations to make payments or provide benefits or otherwise)
or by Officer.
19
(l) Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which taken together shall constitute one and the same
Agreement.
(m) Withholdings. All compensation and benefits to Officer
------------
hereunder shall be reduced by all federal, state, local and other withholdings
and similar taxes and payments required by applicable law.
(n) Indemnification. In addition to any rights to
---------------
indemnification to which Officer is entitled to under Corporation's Certificate
of Incorporation and Bylaws, Corporation shall indemnify Officer at all times
during and after the term of this Agreement to the maximum extent permitted
under Section 2-418 of the General Corporation Law of the State of Maryland or
any successor provision thereof and any other applicable state law, and shall
pay Officer's expenses in defending any civil or criminal action, suit, or
proceeding in advance of the final disposition of such action, suit, or
proceeding, to the maximum extent permitted under such applicable state laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
HEALTH CARE PROPERTY INVESTORS, INC.
By _________________________________
Title ______________________________
____________________________________
Xxxxxxx X. Xxxxx
20
