FOURTH AMENDED AND
RESTATED
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 GEORGE L. CHAPMAN (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:
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.
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.
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 termi
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