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Exhibit 10.1
THIRD AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS THIRD AMENDED AND
RESTATED EMPLOYMENT AGREEMENT , dated the 22nd day of
January 2007 and effective the 1st day of January 2007
(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, and further amended and
restated, effective January 1, 2004;
WHEREAS , the Compensation
Committee of the Corporation’s Board of Directors has
approved a special retention and incentive award for the Executive
and has also approved certain modifications to the terms of such
amended and restated employment agreement; 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.
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.
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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 a bonus from the
Corporation each year during the Term of this Agreement, with the
actual amount of such bonus to be determined by the Compensation
Committee of the Corporation’s Board, using such performance
measures as the Committee deems to be appropriate.
4. ADDITIONAL
COMPENSATION AND BENEFITS
The
Executive shall receive the following additional compensation and
welfare and fringe benefits:
(a)
Stock Options and Other Long-Term Incentives. The Executive
has been granted nonstatutory stock options and shares of
restricted stock pursuant to the terms of the Corporation’s
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 at 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 as dividends are
declared on shares of common stock. 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.
6. PAYMENTS UPON
TERMINATION
(a)
Involuntary Termination . If the Executive’s
employment is terminated by the Corporation during the Term of this
Agreement, the Executive shall be entitled to receive his base
salary accrued through the date of termination, any accrued but
unpaid vacation pay, plus any bonuses earned but unpaid with
respect to fiscal years or other periods preceding the termination
date. The Executive shall also receive any nonforfeitable benefits
payable to him under the terms of any deferred compensation,
incentive or other benefit plans maintained by the Corporation,
payable in accordance with the terms of the applicable plan.
If
the termination is not a termination for Cause, as described in
paragraph (c), a voluntary termination by the Executive as
described in paragraph (d), or a result of the Executive’s
death or disability, then the Corporation shall also be obligated
to make a series of monthly severance payments to the Executive for
each month during the remaining Term of this Agreement, but not
less than twenty-four (24) months. Each monthly payment shall
be equal to one-twelfth (1/12th) of the sum of (i) the
Executive’s annual base salary, as in effect on the date of
termination, and (ii) the greater of (A) the average of the
annual bonuses paid to the Executive for the last two (2) fiscal
years preceding the termination date or (B) a minimum bonus
equal to one hundred percent (100%) 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 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:
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(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.
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;
(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;
(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), or until, if earlier, the date
the Executive obtains comparable coverage under benefit plans
maintained by a new employer; and
(iv) The Executive may elect, by
delivering written notice to the Corporation within thirty
(30) days following such termination of his employment, to
receive from the Corporation a lump sum severance payment in lieu
of the monthly severance payments described in Section 6(a) in an
amount equal to the present value of such payments. Such present
value shall be calculated using a discount rate equal to the
interest rate on 90-day Treasury bills, as reported in the !Wall
Street Journal (or similar publication) for the date the
election is received by the Corporation. The Corporation shall
deliver the payment to the Executive, in the form of a bank
cashier’s check, within ten (10) business days following
the date on which the Corporation receives written notice of the
Executive’s election.
(b)
Disability . The Corporation shall be entitled to terminate
this Agreement, if the Board determines that the Executive has been
unable to attend to his duties for at least ninety (90) days
because of a medically diagnosable physical or mental condition,
and has received a written opinion fro
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