FOURTH AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit 10.6
FOURTH AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
THIS FOURTH AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated this 29th day of December, 2008
(the “Agreement”), is entered into 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
January 1, 1997, which Employment Agreement was amended and restated, effective January 1, 2000,
further amended and restated, effective January 1, 2004, and further amended and restated,
effective January 1, 2007;
WHEREAS, the Compensation Committee of the Corporation’s Board of Directors has approved
certain modifications to the terms of such amended and restated employment agreement solely for
purposes of compliance with the requirements of Section 409A of the Internal Revenue Code, as
amended (the “Code”), and the rules and regulations promulgated thereunder; and
WHEREAS, the Corporation wishes to assure itself of the services of the Executive for the
period provided in this Agreement, including the Executive’s participation in the selection,
evaluation and development of a successor to the Executive, and the Executive is willing to serve
in the employ of the Corporation for such period upon the terms and conditions set forth in this
Agreement, which is effective as of January 1, 2009.
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 and Chief
Executive Officer, upon the terms and conditions herein contained, and the Executive hereby agrees
to accept such employment and to serve as the Corporation’s Chairman and Chief Executive Officer,
and to perform the duties and functions customarily performed by the Chairman and Chief Executive
Officer of a publicly traded corporation (including participating in the selection, evaluation and
development of the Executive’s successor).
In such capacities, 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 (defined below) 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 expire on January 31, 2010 (the “Three Year
Term”). Executive shall have the option to extend this Agreement for an additional year (the
“Option”) by providing the Corporation with written notice of his intention to extend the Agreement
at least six (6) months prior to the expiration of the Three Year Term. The “Three Year Term,” as
it may be extended by the “Option,” is sometimes referred to herein as the “Term.”
The Corporation shall be entitled to terminate this Agreement immediately for any reason
subject to the continuing obligations of the Corporation under this Agreement.
3. SALARY AND BONUS
The Executive shall receive a base salary during the Term of this Agreement at a rate of not
less than $570,000.00 per annum for 2007, and at a rate of not less than $570,000.00 per annum for
subsequent years. All amounts shall be payable in substantially equal semi-monthly installments.
During the Term, 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 an annual 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. Such bonus, if any, shall be paid to the Executive no later than sixty
(60) days after the end of the year to which the bonus relates.
4. ADDITIONAL COMPENSATION AND BENEFITS
The Executive shall receive the following additional compensation and welfare and fringe
benefits during the term of the Agreement:
(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 2005 Long-Term Incentive Plan (the “Plan”). During the Term of the Agreement, any
additional stock options, restricted stock or other awards under the Plan shall be at the
discretion 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.
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(c) Health Insurance. During the Term of this Agreement, 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. During the Term of this Agreement, the Corporation shall pay all
initiation fees and dues charged by up to two (2) dining clubs, country clubs, athletic clubs, or
similar organizations of which the Executive is a member or desires to become a member.
(e) Conferences. During the Term of this Agreement, 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. During the Term of this Agreement, 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. During the Term of this Agreement, 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. During the Term of this Agreement, 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, during the Term, to participate in such other executive
compensation and retirement plans of the Corporation as are applicable generally to other officers.
The Executive shall be eligible during the Term to participate in the Corporation’s supplemental
executive retirement plan, in such other retirement plans of the Corporation as are applicable
generally to other officers, and 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. SPECIAL RETENTION AND INCENTIVE AWARD
In addition to the salary, bonus, additional compensation, benefits and any other
compensation, awards or benefits that have been or may be granted to the Executive, the Executive
is eligible for a special retention and incentive award (the “Special Award”) of up to
120,000 shares of the Corporation’s common stock, par value $1.00 per share (the “Shares), subject
to the terms described below. On the date this Agreement is entered into, 60,000 of the Shares
shall be granted to the Executive as restricted shares (the “Restricted Shares”) and 60,000 of the
Shares shall be granted to the Executive in performance awards (the “Performance Award Shares”),
all pursuant to the terms of the Plan (the Restricted Shares and the Performance Award Shares are
sometimes referred to collectively herein as the “Shares”). Except as provided in
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Section 6 herein, the Shares will vest and have dividend treatment as follows:
(a) The 60,000 Restricted Shares shall vest at the end of the Three Year Term, subject to the
Executive’s continued employment for the Three Year Term. The Executive will be entitled to
current receipt of dividends on the 60,000 Restricted Shares.
(b) The 60,000 Performance Award Shares shall be paid in shares of common stock within sixty
(60) days following the end of the Three Year Term, subject to the Executive’s continued employment
for the Three Year Term, if the Board of Directors has determined that the Corporation’s strategic
plan of diversifying into new markets such as senior housing, medical office building, hospital
facilities or other areas as specified by the Board has been implemented successfully. The
Executive shall be granted dividend equivalent rights (“DERs”) on the 60,000 Performance Award
Shares. The DER payments on 30,000 of the Performance Award Shares will be paid to the Executive
as dividends are declared and paid on shares of common stock; provided the Executive is employed on
the dividend payment date. The DER payments on the remaining 30,000 Performance Award Shares will
accrue as dividends are declared on shares of common stock, be deemed reinvested in additional
common shares and will be paid in such additional shares if and when the underlying Performance
Award Shares are earned and paid.
6. PAYMENTS UPON TERMINATION
(a) Involuntary Termination. If the Executive’s employment is involuntarily
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. Such payments shall be made to the Executive within sixty (60) days following
the date of involuntary termination. 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 lump sum severance payment to
the Executive equal to the present value of a series of monthly severance payments for each month
during the remaining Term of this Agreement, but not less than twenty-four (24) months (the
“Severance Period”), each in an amount equal to one-twelfth (1/12th) of the sum of (i) the
Executive’s annual base salary, as in effect on the date of 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 one hundred percent (100%) of his
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) on the date of involuntary termination. Such lump sum payment shall be made to the
Executive within sixty (60) days following the date of such involuntary termination and shall be in
the form of a bank cashier’s check. If the Executive obtains a replacement position with any new
employer (including a position as an officer, employee, consultant, or agent, or self-employment as
a partner or sole proprietor), the Executive shall be obligated to repay to the Corporation an
amount equal to all amounts the
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Executive receives as compensation for services performed during the Severance Period; provided
however, that the aggregate repayment obligation shall not exceed the amount of the lump sum
payment under this paragraph (a). 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) The 60,000 Restricted Shares granted to the Executive pursuant to Section 5(a)
shall become vested and 30,000 of the Performance Award Shares granted to the Executive
pursuant to Section 5(b) shall become earned and payable and shall be paid within sixty (60)
days of the Executive’s termination of employment. The remaining 30,000 Performance Award
Shares granted to the Executive pursuant to Section 5(b) may become earned and payable to
the extent the Board determines that the goals specified in Section 5(b) have been attained
and, if earned and payable, shall be paid within sixty (60) days of the Executive’s
termination of employment;
(ii) Any stock options, restricted stock (except for the Shares granted pursuant to the
Special Award which Shares are treated in Section 6(a)(i)) or other awards granted to the
Executive under any deferred compensation, incentive or other benefit plan maintained by the
Corporation shall become fully vested and earned and payable and, in the case of stock
options, exercisable in full; and
(iii) 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 and not more than the period during
which the Executive would be entitled to continuation coverage under Section 4980B of the
Code, if the Executive elected such coverage and paid the applicable premiums), or until, if
earlier, the date the Executive obtains comparable coverage under benefit plans maintained
by a new employer.
(b) Disability. The Corporation shall be entitled to terminate the Executive’s
employment 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 involuntary 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. Such payments shall be made to the Executive within sixty (60) days following
the date of involuntary termination. 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
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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 one hundred percent (100%) of the Executive’s
annual base salary. Payment of such disability benefit shall be paid in accordance with the
Corporation’s normal payroll practices, shall commence with the month following the month in which
the involuntary termination occurs and continue each month for the remaining Term of this Agreement
(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 6(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. Upon termination due to a disability, (i) all stock options, restricted stock
or other awards held by the Executive under any deferred compensation, incentive or other benefit
plan maintained by the Corporation shall become fully vested or earned and payable, as the case may
be, and in the case of stock options, exercisable in full in accordance with the terms of the
applicable plan or plans and (ii) the Special Award shall become fully vested, or earned and
payable, as the case may be, and shall be paid within sixty (60) days following the date of the
Executive’s termination of employment.
(c) Termination for Cause. If the Executive’s employment is terminated by the
Corporation for Cause, the amount the Executive shall be entitled to receive from the Corporation
shall be limited to his base salary accrued through the date of termination, any accrued but unpaid
vacation pay, plus any bonuses earned but unpaid with respect to the fiscal year of the Corporation
most recently ended, and any nonforfeitable benefits payable to the Executive under the terms of
any deferred compensation, incentive or other benefit plans maintained by the Corporation. Such
payments shall be made to the Executive within sixty (60) days of the date of the Executive’s
termination. Also, if the Executive’s employment is terminated by the Corporation for Cause, all
unvested or unearned Shares, as the case may be, granted pursuant to the Special Award shall be
forfeited.
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 10 and 11
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 Term of this Agreement (other than in
connection with a Change in Corporate Control as described in Section 7), 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. Such payment shall be made to the Executive
within sixty (60) days following the date of resignation or voluntary termination.
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Also, if the Executive’s employment is voluntarily terminated as set forth in this
Section, all unvested or unearned Shares, as the case may be, granted pursuant to the Special Award
shall be forfeited.
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 and Chief
Executive Officer of the Corporation during the Term (other than for Cause or by reason of
permanent disability) or assigned duties materially inconsistent with such position if either such
change in assignment constitutes a material diminution in the Executive’s authority, duties or
responsibilities, or (2) directed to report to anyone other than the Corporation’s Board of
Directors; provided that the Executive has notified the Corporation within the first ninety (90)
days following the initial date of such change in assignment or reporting duties that the Executive
regards such change in assignment or reporting duties as grounds justifying resignation under this
paragraph and the Corporation has failed to cure such change in assignment or reporting duties
within ninety (90) days following its receipt of such notice from the Executive; and provided
further that the Executive resigns under this paragraph within one (1) year following the initial
existence of a change in assignment or reporting duties described herein.
7. 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 any deferred compensation,
incentive or other benefit plan maintained by the Corporation shall all be accelerated and all such
awards shall become immediately vested and payable in full and, in the case of stock options,
exercisable in full in accordance with the applicable terms thereof and the Shares granted pursuant
to the Special Award shall become fully vested, or earned and payable, as the case may be, and
shall be paid within sixty (60) days following the date of the Change in Corporate Control.
(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 lump sum severance payment described in
Section 6(a) above, a lump sum severance payment equal to the present value of a series of monthly
severance payments for thirty-six (36) months, each in an amount equal to one-twelfth (1/12th) of
the sum of (i) the Executive’s annual base salary, as in effect 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 one hundred percent (100%) 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) on the date of the Change in Corporate Control. Such lump sum payment shall be made
to the Executive within sixty (60) days following the date of such involuntary termination or
voluntary resignation and shall be in the form of a bank cashier’s check.
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
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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 Term of the Agreement (but not less than twelve (12) months and not more than the period
during which the Executive would be entitled to continuation coverage under Section 4980B of the
Code if the Executive elected such coverage and paid the applicable premiums) or until, if earlier,
the date the Executive obtains comparable coverage under benefit plans maintained by a new
employer.
(c) For purposes of this Agreement, a “Change in Corporate Control” shall include any of the
following events:
(1) The acquisition in one or more transactions of more than twenty percent (20%) of
the Corporation’s outstanding Common Stock (or the equivalent in voting power of any class
or classes of securities of the Corporation entitled to vote in elections of directors) by
any corporation, or other person or group (within the meaning of Section 14(d)(3) of the
Securities Exchange Act of 1934, as amended);
(2) Any transfer or sale of substantially all of the assets of the Corporation, or any
merger or consolidation of the Corporation into or with another corporation in which the
Corporation is not the surviving entity, 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 January 1, 2007, shall
be “Continuing Directors.” Any person who is nominated for election as a member of the
Board after January 1, 2007, 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.
(d) 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 Code or any other tax having the same effect (such excise tax or other tax, together with
any interest and penalties incurred by the Executive with respect to such taxes, are collectively
referred to herein as the “Excise Tax”), the
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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). The
Gross-Up Payment shall be paid to the Executive no later than the date the Executive is required to
pay the Excise Tax.
(e) If any dispute arises between the Corporation (or any successor) and the Executive
regarding Executive’s right to severance payments under Section 6 or Section 7, the Executive shall
be entitled to recover his attorneys fees and costs incurred in connection with such dispute. The
following additional terms and conditions shall apply to the reimbursement of any attorneys fees
and costs: (i) the attorneys fees and costs must be incurred by the Executive within five years
following the date of the Executive’s termination or resignation, (ii) the attorneys fees and costs
shall be paid by the Corporation by the end of the taxable year following the year in which the
attorneys fees and costs were incurred, (iii) the amount of any attorneys fees and costs paid by
the Corporation in one taxable year shall not affect the amount of any attorneys fees and costs to
be paid by the Corporation in any other taxable year, and (iv) the Executive’s right to receive
attorneys fees and costs may not be liquidated or exchanged for any other benefit.
8. 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 (1/12th) of the sum of
(i) the Executive’s annual base salary, as in effect on the date of death, and (ii) the greater of
(A) the 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 one hundred percent (100%) 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. Both the lump sum payment to the Executive’s estate
and the lump sum payment to the Executive’s surviving spouse (or other designated beneficiary)
shall be paid within sixty (60) days following the date of the Executive’s death. In addition,
upon the Executive’s death (x) 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, (y) the stock
options, restricted stock or other awards held by the Executive under any deferred compensation,
incentive or other benefit plan maintained by the Corporation 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 and (z) the Special Award shall become
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fully vested, or earned and payable, as the case may be, and shall be paid
within sixty (60) days following the date of the Executive’s death.
9. WITHHOLDING AND SECTION 409A COMPLIANCE
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.
This Agreement is intended to comply with the requirements of Section 409A of the Code, and
shall be interpreted and construed consistently with such intent. The payments to the Executive
pursuant to this Agreement are also intended to be exempt from Section 409A of the Code to the
maximum extent possible, under either the separation pay exemption pursuant to Treasury Regulation
Section 1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury Regulation Section
1.409A-1(b)(4). In the event the terms of this Agreement would subject the Executive to taxes or
penalties under Section 409A of the Code (“409A Penalties”), the Corporation and the Executive
shall cooperate diligently to amend the terms of the Agreement to avoid such 409A Penalties, to the
extent possible. To the extent any amounts under this Agreement are payable by reference to
Executive’s “termination,” “termination of employment,” or similar phrases, such term shall be
deemed to refer to the Executive’s “separation from service” (as defined in Treasury Regulation
Section 1.409A-1(h) (without regard to any permissible alternative definition thereunder) with the
Corporation and all entities treated as a single employer with the Corporation under Sections
414(b) and (c) of the Code but substituting a 50% ownership level for the 80% ownership level set
forth therein). Notwithstanding any other provision in this Agreement, if the Executive is a
“Specified Employee” (as defined Treasury Regulation Section 1.409A-1(i) on December
31st of the prior calendar year), as of the date of the Executive’s separation from
service, then to the extent any amount payable under this Agreement (i) constitutes the payment of
nonqualified deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable
upon the Executive’s separation from service and (iii) under the terms of this Agreement would be
payable prior to the six-month anniversary of the Executive’s separation from service, such payment
shall be delayed and paid to the Executive, together with interest at an annual rate equal to the
interest rate specified by KeyBank for a six-month certificate of deposit, on the first day of the
first calendar month beginning at least six months following the date of termination, or, if
earlier, within ninety (90) days following the Executive’s death to the Executive’s surviving
spouse (or such other beneficiary as the Executive may designate in writing). Any reimbursement or
advancement payable to the Executive pursuant to this Agreement shall be conditioned on the
submission by the Executive of all expense reports reasonably required by the Corporation under any
applicable expense reimbursement policy, and shall be paid to the Executive within thirty (30) days
following receipt of such expense reports, but in no event later than the last day of the calendar
year following the calendar year in which the Executive incurred the reimbursable expense. Any
amount of expenses eligible for reimbursement, or in-kind benefit provided, during a calendar year
shall not affect the amount of expenses eligible for reimbursement, or in-kind benefit to be
provided, during any other calendar year. The right to any reimbursement or in-kind benefit
pursuant to this Agreement shall not be subject to liquidation or exchange for any other benefit.
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10. 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
10 are required for the reasonable protection of the Corporation and its investments and for the
Corporation’s reliance on and confidence in the Executive.
11. 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 the Severance Period (in
the event of an involuntary termination under Section 6(a) or 6(b) of this Agreement) or for a
period of thirty-six (36) months after an involuntary termination or voluntary resignation
following a Change in Corporate Control under Section 7 of this Agreement, solicit any employee or
full-time consultant of the Corporation for the purposes of hiring or retaining such employee or
consultant.
12. 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 10 and 11 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
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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.
13. 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: Xxxx X. Xxxxx, Senior Vice President- Administration and
Corporate Secretary
Xxx XxxXxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxx, Senior Vice President- Administration and
Corporate Secretary
If to the Executive:
Xxxxxx X. Xxxxxxx
0000 Xxxxxxxxx Xx.
Xxxxxx, XX 00000
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.
14. 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.
15. 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.
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16. 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.
17. 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.
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IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly executed, and the
Executive has hereunto set his hand, as of the day and year first above written.
| Attest: | HEALTH CARE REIT, INC. | |||||||
/s/ Xxxx X. Xxxxx
|
By: | /s/ Xxxxxxx X. Xxxxxx | ||||||
Administration and Corporate Secretary
|
President and General Counsel | |||||||
| Witness: | EXECUTIVE: | |||||||
| /s/ Xxxx Xxxxx | /s/ Xxxxxx X. Xxxxxxx | |||||||
| Xxxxxx X. Xxxxxxx | ||||||||
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