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Exhibit 10.1
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT, dated as of the 1st day of January,
1997 (the "Agreement"), by and between HEALTH CARE REIT, INC., a Delaware
corporation, (the "Company"), and XXXXXX X. XXXXXXX (the "Executive").
WHEREAS, the Company wishes to assure itself of the services
of the Executive for the period provided in this Agreement and the Executive is
willing to serve in the employ of the Company for such period upon the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties, intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT
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The Company hereby agrees to employ the Executive as the
Company's Chief Executive Officer and President, upon the terms and conditions
herein contained, and the Executive hereby agrees to accept such employment and
to serve as the Company's Chief Executive Officer and President, and to perform
the duties and functions customarily performed by the Chief Executive Officer of
a publicly traded corporation during the term of this Agreement. In such
capacity, the Executive shall report only to the Company's Board of Directors,
and shall have the powers and responsibilities set forth in Article IV of the
Company's By-Laws as well as such additional powers and responsibilities
consistent with his position as the Board of Directors may assign to him.
Throughout the term of this Agreement, the Executive shall
devote his best efforts and all of his business time and services to the
business and affairs of the Company.
2. TERM OF AGREEMENT
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The term of employment under this Agreement shall commence as
of January 1, 1997 (the "Effective Date"). The initial term of this Agreement
shall be for a period of three (3) years ending December 31, 1999. Upon the
expiration of such initial employment period, the term of employment hereunder
shall automatically be extended without further action by the parties for
successive three (3) year renewal terms, unless either party shall give at least
six (6) months advance written notice to the other of his or its intention that
this Agreement shall terminate upon the expiration of the initial term or the
current renewal term, as the case may be.
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Notwithstanding the foregoing, the Company shall be entitled
to terminate this Agreement immediately, subject to a continuing obligation to
make any payments required under Section 5 below, if the Executive (i) becomes
disabled as described in Section 5(b), (ii) is terminated for Cause, as defined
in Section 5(c), or (iii) voluntarily terminates his employment before the
current term of this Agreement expires, as described in Section 5(d).
3. SALARY AND BONUS
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The Executive shall receive a base salary during the term of
this Agreement at a rate of not less than $350,000 per annum in substantially
equal semi-monthly installments. The Compensation Committee of the Board shall
consult with the Executive and review the Executive's base salary at annual
intervals, and may adjust the Executive's annual base salary from time to time
as the Committee deems to be appropriate.
The Executive shall also be eligible to receive a bonus from
the Company each year during the term of this Agreement, with the actual amount
of such bonus to be determined by the Compensation Committee of the Company's
Board, using such performance measures as the Committee deems to be appropriate.
4. ADDITIONAL COMPENSATION AND BENEFITS
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The Executive shall receive the following additional
compensation and welfare and fringe benefits:
(a) STOCK OPTIONS. The Executive shall be granted nonstatutory
stock options with respect to 80,000 shares of common stock, and 5,223
shares of restricted stock, pursuant to the terms of the Company's 1995
Stock Incentive Plan. During the remaining term of the Agreement, any
additional stock option or restricted stock awards under the 1995 Stock
Incentive Plan shall be at the discretion of the Compensation Committee
of the Company's Board.
(b) DISABILITY INSURANCE. During the term of this Agreement,
the Company shall maintain a disability insurance policy on the
Executive with the maximum aggregate annual benefit commercially
available to the Company, up to a maximum of sixty percent (60%) of his
annual base salary. The Company 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 Company to obtain such
insurance coverage.
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(c) MEDICAL INSURANCE. The Company shall provide the
Executive and his dependents with health insurance coverage no
less favorable than that from time to time made available to
other key employees.
(d) BUSINESS CLUBS. The Company shall pay all
initiation fees and dues charged by up to two dining clubs,
country clubs, athletic clubs, or similar organizations of
which the Executive is a member or desires to become a member.
(e) CONFERENCES. The Company shall pay for the Executive and
his wife to attend up to three business-related conferences,
conventions or seminars within the continental United States each year
during the term of this Agreement, including registration fees, travel
expenses and reasonable hotel and meal allowances.
(f) VACATION. The Executive shall be entitled to up to five
weeks of vacation during each year during the term of this Agreement
and any extensions thereof, prorated for partial years.
(g) MEDICAL EXAMINATIONS. The Company shall pay or
reimburse the Executive for the cost of a physical examination
by a physician acceptable to the Executive in alternate years.
(h) BUSINESS EXPENSES. The Company shall reimburse the
Executive for all reasonable expenses he incurs in promoting the
Company's business, including expenses for travel and similar items,
upon presentation by the Executive from time to time of an itemized
account of such expenditures.
In addition to the benefits provided pursuant to the preceding
paragraphs of this Section 4, the Executive shall be eligible to participate in
such other executive compensation and retirement plans of the Company as are
applicable generally to other officers, and in such welfare benefit plans,
programs, practices and policies of the Company as are generally applicable to
other key employees, unless such participation would duplicate, directly or
indirectly, benefits already accorded to the Executive.
5. PAYMENTS UPON TERMINATION
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(a) INVOLUNTARY TERMINATION. If the Executive's employment is
terminated by the Company 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 payable with respect to
periods preceding the termination date. The Executive shall also receive any
nonforfeitable benefits payable to him under the terms of any deferred
compensation, incentive or other benefit plan
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maintained by the Company, payable in accordance with the terms of the
applicable plan.
If the termination is neither a termination for Cause as
described in paragraph (c) nor a voluntary termination by the Executive as
described in paragraph (d), then the Company shall also be obligated to make a
series of monthly severance payments to the Executive for each month during the
remaining term of this Agreement, but not less than twenty-four (24) months.
Each monthly payment shall be equal to one-twelfth (1/12th) of the sum of (i)
the Executive's annual base salary, as in effect on the date of termination, and
(ii) the greater of (A) the average of the annual bonuses paid to the Executive
for the two (2) fiscal years preceding the termination or (B) a minimum bonus
equal to fifty percent (50%) of his annual base salary. If the Executive obtains
a replacement position with any new employer (including a position as an
officer, employee, consultant, or agent, or self-employment as a partner or sole
proprietor), the payments shall be reduced by all amounts the Executive receives
as compensation for services performed during such period. The Executive shall
be under no duty to mitigate the amounts owed to him under this paragraph (a) by
seeking such a replacement position.
In addition, if the termination is neither a termination for
Cause as described in paragraph (c) nor a voluntary termination by the Executive
as described in paragraph (d), then:
(i) Any stock option or restricted stock awards granted to the
Executive under the Company's 1995 Stock Incentive Plan shall become
fully vested and, in the case of stock options, exercisable in full;
(ii) The Executive shall be provided continued coverage at the
Company's expense under any life, medical and disability insurance
programs maintained by the Company in which the Executive participated
at the time of his termination for the remaining term of the Agreement,
but not less than twelve (12) months, or until, if earlier, the date he
obtains comparable coverage from a new employer; and
(iii) The Executive may elect, by delivering written notice to
the Company within 30 days following such termination of his
employment, to receive from the Company a lump sum severance payment in
lieu of the monthly severance payments described in the preceding
paragraph in an amount equal to the present value of such payments.
Such present value shall be calculated using a discount rate equal to
the interest rate on 90-day Treasury bills, as reported in the WALL
STREET JOURNAL (or similar publication) for the date the election is
received by the Company. The Company shall deliver the payment to the
Executive, in the form of a bank cashier's check, within 10 business
days following the date on
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which the Company receives written notice of the Executive's
election.
(b) DISABILITY. The Company shall be entitled to terminate
this Agreement, if the Board determines that the Executive has been unable to
attend to his duties for at least ninety (90) days because of a medically
diagnosable physical or mental condition, and has received a written opinion
from a physician acceptable to the Board that such condition prevents the
Executive from resuming full performance of his duties and is likely to continue
for an indefinite period. Upon such termination, the Executive shall be entitled
to receive his base salary accrued through the date of termination, any accrued
but unpaid vacation pay, plus any bonuses payable with respect to periods
preceding the termination date. In addition, the Company shall pay to Executive
a monthly disability benefit equal to one-twenty-fourth (1/24th) of his current
annual base salary at the time he became permanently disabled. Payment of such
disability benefit shall commence on the last day of the month following the
date of the termination by reason of permanent disability and cease with the
earliest of (i) the month in which the Executive returns to active employment,
either with the Company or otherwise, (ii) the end of the initial term of this
Agreement, or the current renewal term, as the case may be, or (iii) the
twenty-fourth month after the date of the termination. Any amounts payable under
this Section 5(b) shall be reduced by any amounts paid to the Executive under
any long-term disability plan or other disability program or insurance policies
maintained or provided by the Company.
(c) TERMINATION FOR CAUSE. If the Executive's employment is
terminated by the Company for Cause, the amount the Executive shall be entitled
to receive from the Company shall be limited to his base salary accrued through
the date of termination, any accrued but unpaid vacation pay, any bonuses
payable with respect to the fiscal year of the Company most recently ended, and
any nonforfeitable benefits payable to the Executive under the terms of deferred
compensation or incentive plans maintained by the Company.
For purposes of this Agreement, the term "Cause" shall be
limited to (i) action by the Executive involving willful disloyalty to the
Company, such as embezzlement, fraud, misappropriation of corporate assets or a
breach of the covenants set forth in Sections 9 and 10 below; or (ii) the
Executive being convicted of a felony; or (iii) the Executive being convicted of
any lesser crime or offense committed in connection with the performance of his
duties hereunder or involving moral turpitude; or (iv) the intentional and
willful failure by the Executive to substantially perform his duties hereunder
as directed by the Board (other than any such failure resulting from the
Executive's incapacity due to physical or mental disability) after a demand for
substantial performance is made on the Executive by the Board of Directors.
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(d) VOLUNTARY TERMINATION BY THE EXECUTIVE. If the Executive
resigns or otherwise voluntarily terminates his employment before the end of the
current term of this Agreement (other than in connection with a Change in
Corporate Control as described in Section 6), the amount the Executive shall be
entitled to receive from the Company shall be limited to his base salary accrued
through the date of termination, any accrued but unpaid vacation pay, plus any
bonuses payable with respect to the fiscal year of the Company most recently
ended, and any nonforfeitable benefits payable to the Executive under the terms
of any deferred compensation or incentive plans of the Company.
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 Chief Executive Officer and President of the Company
(other than for Cause or by reason of permanent disability), (2) assigned duties
materially inconsistent with such position, or (3) directed to report to anyone
other than the Company's Board of Directors.
6. EFFECT OF CHANGE IN CORPORATE CONTROL
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(a) In the event of a Change in Corporate Control, the vesting
of any stock options, restricted stock awards or other incentive-based awards
granted to the Executive under the terms of the Company's 1995 Stock Incentive
Plan shall be accelerated (to the extent permitted by the terms of such Plan)
and such awards shall become immediately vested in full and, in the case of
stock options, exercisable in full.
(b) If, at any time during the period of twelve (12)
consecutive months following the occurrence of a Change in Corporate Control,
and during the term of this Agreement, the Executive is involuntarily terminated
(other than for Cause) or elects to voluntarily resign his employment, the
Executive shall be entitled to receive, in lieu of the monthly payments
described in Section 5(a) above, monthly severance payments for each month
during the remaining term of this Agreement, but not less than twenty-four (24)
months. Each monthly payment shall be equal to one-twelfth (1/12th) of the sum
of (i) the Executive's annual base salary, as in effect 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 fiscal years of the
Company ending prior to the Change in Corporate Control or, (B) a minimum bonus
equal to fifty percent (50%) of the Executive's annual base salary.
(c) If the Executive is involuntarily terminated (other than
for Cause) or elects to voluntarily resign his employment within twelve months
after a Change in Corporate Control, he may elect, by delivering written notice
to the Company within 30 days following such termination of his employment, to
receive from the
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Company a lump sum severance payment in lieu of the monthly payments described
in the preceding paragraph. The amount of this payment shall be equal to the
present value of the monthly payments described in the preceding paragraph. Such
present value shall be calculated using a discount rate equal to the interest
rate on 90-day Treasury bills, as reported in the WALL STREET JOURNAL (or
similar publication) for the date the election is received by the Company. The
Company shall deliver the payment to the Executive, in the form of a bank
cashier's check, within 10 business days following the date on which the Company
receives written notice of the Executive's election.
In addition, if the Executive is involuntarily terminated
(other than for Cause) or elects to voluntarily resign his employment within
twelve months after a Change in Corporate Control, he shall be entitled to
continued coverage at the Company's expense under any life, medical and
disability insurance programs maintained by the Company in which the Executive
participated at the time of his termination, which coverage shall be continued
until the expiration of the current term of the Agreement (but not less than
twelve (12) months) or (ii) if earlier, the date the Executive obtains
comparable coverage under benefit plans maintained by a new employer.
(d) For purposes of this Agreement, a "Change in Corporate
Control" shall include any of the following events:
(1) The acquisition in one or more transactions of more than twenty
percent (20%) of the Company's outstanding Common Stock (or the
equivalent in voting power of any classes or classes of securities of
the Company 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
Company, or any merger or consolidation of the Company into or with
another corporation in which the Company is not the surviving entity,
or any merger or consolidation of the Company into or with another
corporation in which the Company 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 Company or any other person, or
cash, or any other property.
(3) Any election of persons to the Board of Directors which causes a
majority of the Board of Directors to consist of persons other than
"Continuing Directors". For this purpose, those persons who were
members of the Board of Directors on May 1, 1995, shall be "Continuing
Directors". Any person who is nominated for election as a member of the
Board after May
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1, 1995, shall also be considered a "Continuing Director" for this
purpose if, and only if, his or her nomination for election to the
Board of Directors is approved or recommended by a majority of the
members of the Board (or of the relevant Nominating Committee) and at
least five (5) members of the Board are themselves Continuing Directors
at the time of such nomination; or
(4) Any person, or group of persons, announces a tender offer for at
least twenty percent (20%) of the Company's Common Stock.
(e) Notwithstanding anything else in this Agreement, the
amount of severance compensation payable to the Executive as a result of a
Change in Corporate Control under this Section 6, or otherwise, shall be limited
to the maximum amount the Company would be entitled to deduct pursuant to
Section 280G of the Internal Revenue Code of 1986, as amended.
(f) If any dispute arises between the Company (or any
successor) and the Executive regarding Executive's right to severance payments
under Section 5 or Section 6, the Executive shall be entitled to recover his
attorneys fees and costs incurred in connection with such dispute.
7. DEATH
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If the Executive dies during the term of this Agreement, the
Company 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 plus the total
unpaid amount of any accrued vacation pay or bonuses earned with respect to the
fiscal year of the Company most recently ended. In addition, the death benefits
payable by reason of the Executive's death under any retirement, deferred
compensation or other employee benefit plan maintained by the Company shall be
paid to the beneficiary designated by the Executive, and the stock options or
other stock awards held by the Executive under the Company's stock plans shall
become fully vested, in accordance with the terms of the applicable plan or
plans.
8. WITHHOLDING
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The Company shall, to the extent permitted by law, have the
right to withhold and deduct from any payment hereunder any federal, state or
local taxes of any kind required by law to be withheld with respect to any such
payment.
9. PROTECTION OF CONFIDENTIAL INFORMATION
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The Executive agrees that he will keep all confidential
and proprietary information of the Company or relating to its
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business confidential, and that he will not (except with the Company's prior
written consent), while in the employ of the Company 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 Company) 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 Company or is otherwise in the public domain at the
time of disclosure.
The Executive recognizes that because his work for the Company
may bring him into contact with confidential and proprietary information of the
Company, the restrictions of this Section 9 are required for the reasonable
protection of the Company and its investments and for the Company's reliance on
and confidence in the Executive.
10. COVENANT NOT TO COMPETE
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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 Company for Cause, engage in any business activities on behalf of any
enterprise which competes with the Company in the business of the passive
ownership of health care facilities, or passive investing in or lending to
health care-related enterprises. The Executive will be deemed to be engaged in
such competitive business activities if he participates in such a business
enterprise as an employee, officer, director, consultant, agent, partner,
proprietor, or other participant; provided that the ownership of no more than
two percent (2%) of the stock of a publicly traded corporation engaged in a
competitive business shall not be deemed to be engaging in competitive business
activities.
The Executive agrees that he shall not, for a period of one
year from the time his employment under this Agreement ceases (for whatever
reason), or, if later, during any period in which he is receiving monthly
severance payments under Section 5 or Section 6 of this Agreement, solicit any
employee or full-time consultant of the Company for the purposes of hiring or
retaining such employee or consultant. For this purpose, the Executive shall be
considered to be receiving monthly severance payments under Section 5 or Section
6 of this Agreement during any period for which he would have received such
severance payments had he not elected to receive a lump sum severance payment or
had such payments not been offset by compensation received from a successor
employer.
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11. INJUNCTIVE RELIEF
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The Executive acknowledges and agrees that it would be
difficult to fully compensate the Company for damages resulting from the breach
or threatened breach of the covenants set forth in Sections 9 and 10 of this
Agreement and accordingly agrees that the Company shall be entitled to temporary
and injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions, to enforce such provisions in any action
or proceeding instituted in the United States District Court for the Northern
District of Ohio or in any court in the State of Ohio having subject matter
jurisdiction. This provision with respect to injunctive relief shall not,
however, diminish the Company'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.
12. NOTICES
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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 COMPANY:
Health Care REIT, Inc.
Xxx XxxXxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Corporate Secretary
IF TO THE EXECUTIVE:
Xxxxxx X. Xxxxxxx
Xxx XxxXxxx, Xxxxx 0000
Xxxxxx, XX 00000
The actual date of receipt, as shown by the receipt therefor, shall determine
the time at which notice was given.
13. SEPARABILITY
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If any provision of this Agreement shall be declared to be
invalid or unenforceable, in whole or in part, such invalidity
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or unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
14. ASSIGNMENT
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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 Company, but neither this Agreement nor any rights hereunder shall be
assignable or otherwise subject to hypothecation by the Executive.
15. ENTIRE AGREEMENT
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This Agreement represents the entire agreement of the parties
and shall supersede any and all previous contracts, arrangements or
understandings between the Company and the Executive. The Agreement may be
amended at any time by mutual written agreement of the parties hereto.
16. GOVERNING LAW
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This Agreement shall be construed, interpreted, and governed
in accordance with the laws of the State of Ohio, other than the conflict of
laws provisions of such laws.
IN WITNESS WHEREOF, the Company 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.
By
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Corporate Secretary Vice President and Chief
Operating Officer
WITNESS: EXECUTIVE:
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Xxxxxx X. Xxxxxxx
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