<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1997
------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to _______________________
HEALTH CARE REIT, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 34-1096634
- -------------------------------- -----------------------
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One SeaGate, Suite 1500, Toledo, Ohio 43604
- ------------------------------------- ----------------------
(Address of principal executive office) (Zip Code)
(Registrant's telephone number, including area code) (419) 247-2800
-------------------------
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X . No .
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes _____. No _____.
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of April 30, 1997.
Class: Shares of Common Stock, $1.00 par value
Outstanding 21,887,294 shares
<PAGE> 2
HEALTH CARE REIT, INC.
INDEX
Page
----
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - March 31, 1997
and December 31, 1996 3
Consolidated Statements of Income - Three
months ended March 31, 1997 and 1996 4
Consolidated Statements of Shareholders'
Equity - Three months ended March 31, 1997
and 1996 5
Consolidated Statements of Cash Flows-
Three months ended March 31, 1997 and 1996 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II. OTHER INFORMATION
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
EXHIBIT INDEX 14
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<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
--------------------
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
HEALTH CARE REIT, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1997 1996
(UNAUDITED) (NOTE)
----------------- -----------------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Real estate investments:
Loans receivable:
Mortgage loans $ 367,327 $ 292,442
Construction loans 27,303 61,013
Working capital loans 7,425 4,727
----------------- -----------------
402,055 358,182
Investment in operating leases 196,653 153,623
Investment in direct financing leases 10,804 10,876
----------------- -----------------
609,512 522,681
Less allowance for losses 9,937 9,787
----------------- -----------------
NET REAL ESTATE INVESTMENTS 599,575 512,894
Other Assets:
Investment securities available for sale 966 768
Deferred loan expenses 2,002 1,432
Cash and cash equivalents 121 581
Receivables and other assets 5,768 4,156
----------------- -----------------
8,857 6,937
----------------- -----------------
TOTAL ASSETS $ 608,432 $ 519,831
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Borrowings under line of credit arrangements $ 100,500 $ 92,125
Senior notes 82,000 82,000
Other long-term obligations 10,097 10,270
Accrued expenses and other liabilities 11,401 9,900
----------------- -----------------
TOTAL LIABILITIES $ 203,998 $ 194,295
Shareholders' equity:
Preferred Stock, $1.00 par value:
Authorized - 10,000,000 shares
Issued and outstanding - None
Common Stock, $1.00 par value:
Authorized - 40,000,000 shares
Issued and outstanding - 21,737,294
in 1997 and 18,320,291 in 1996 21,737 18,320
Capital in excess of par value 373,443 298,281
Undistributed net income 8,288 8,167
Unrealized gains on investment securities
available for sale 966 768
----------------- -----------------
TOTAL SHAREHOLDERS' EQUITY 404,434 325,536
----------------- -----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 608,432 $ 519,831
================= =================
</TABLE>
NOTE: The balance sheet at December 31, 1996 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See notes to consolidated financial statements
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<PAGE> 4
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
HEALTH CARE REIT, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1997 1996
---------------------- -----------------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C>
GROSS INCOME:
Interest and other income $ 10,616 $ 8,104
Operating leases:
Rent 4,963 1,960
Direct financing leases:
Lease income 357 368
Loan and commitment fees 584 420
Interest and other income 49 38
------------ ---------------
Gross Income $ 16,569 $ 10,890
EXPENSES:
Interest:
Line of credit arrangements $ 2,161 $ 2,296
Senior notes and other long-
term obligations 1,850 1,215
Loan expense 217 187
Provision for depreciation 1,185 475
Provision for losses 150 150
General and administrative expenses 1,180 890
--------------- -----------------
Total expenses 6,743 5,213
--------------- -----------------
Net Income $ 9,826 $ 5,677
=============== =================
Average number of shares outstanding 19,301 12,052
Net income per share $ 0.51 $ 0.47
Dividends per share $ 0.52 $ 0.52
</TABLE>
See notes to consolidated financial statements
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<PAGE> 5
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
HEALTH CARE REIT, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1997 1996
------------------------------------
(IN THOUSANDS)
<S> <C> <C>
Balances at beginning of period $ 325,536 $ 187,598
Net income 9,826 5,677
Proceeds from issuance of shares under the
dividend reinvestment plan - 36,577 in
1997 and 33,323 in 1996 887 691
Proceeds from issuance of shares under the
employee stock incentive plans - 50,426
in 1997 and 15,000 in 1996 1,087 261
Net Proceeds from sale of 3,330,000 shares in 1997 76,605
Change in net unrecognized gain on
investment securities available for sale 198 725
Cash dividends paid (9,705) (6,259)
--------------- --------------
Balances at end of period $ 404,434 $ 188,693
=============== ==============
</TABLE>
See notes to consolidated financial statements
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<PAGE> 6
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
HEALTH CARE REIT, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1997 1996
-----------------------------
(IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 9,826 $ 5,677
Adjustments to reconcile net income to net cash
Provision for depreciation 1,199 470
Provision for losses 150 150
Amortization of loan and organization expenses 218 188
Loan and commitment fees earned less than cash received 452 957
Direct financing lease income less than cash received 72 53
Interest income in excess of cash received (9) (133)
Increase in accrued expenses and other liabilities 1,049 1,418
Increase in other receivables and prepaid items (1,315) (397)
-------- --------
NET CASH PROVIDED FROM OPERATING ACTIVITIES 11,642 8,383
INVESTING ACTIVITIES
Investment in operating-lease properties (44,216) (8,380)
Investment in loans receivable (44,576) (32,376)
Principal collected on loans 713 1,974
Other (7) 5
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (88,086) (38,777)
FINANCING ACTIVITIES
Net borrowings under line of credit arrangements 8,375 35,900
Principal payments on long-term obligations (173) (49)
Net proceeds from the issuance of Common Stock 78,275 952
Increase in deferred loan expense (788) (12)
Cash distributions to shareholders (9,705) (6,259)
-------- --------
NET CASH PROVIDED FROM FINANCING ACTIVITIES 75,984 30,532
-------- --------
Increase/(decrease) in cash and cash equivalents (460) 138
Cash and cash equivalents at beginning of period 581 860
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 121 $ 998
======== ========
Supplemental Cash Flow Information -- Interest Paid $ 3,359 $ 1,957
======== ========
</TABLE>
See notes to consolidated financial statements
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<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HEALTH CARE REIT, INC. AND SUBSIDIARIES
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered for a fair presentation have been
included. Operating results for the three months ended March 31, 1997 are not
necessarily an indication of the results that may be expected for the year ended
December 31, 1997. For further information, refer to the financial statements
and footnotes thereto included in the Company's annual report on Form 10-K for
the year ended December 31, 1996.
Net income per share has been computed by dividing net income by the average
number of common shares and common stock equivalents outstanding.
NOTE B - REAL ESTATE INVESTMENTS
During the three months ended March 31, 1997, the Company provided permanent
mortgage financings of $26,304,000, invested $36,891,000 in operating leases and
made construction advances of $26,183,000. During the three months ended March
31, 1997, the Company received principal payments on real estate mortgages of
$685,000 and had net advances on working capital loans of $2,698,000.
With respect to the above-mentioned construction advances, funding associated
with seventeen construction loans represented $18,859,000, and funding for
construction in progress in connection with eight properties owned directly by
the Company totaled $7,324,000. During the three months ended March 31, 1997,
five of the construction loans completed the construction phase of the Company's
investment process and were converted to investments in permanent mortgage
loans, with an aggregate investment of $52,492,000. Also during the three months
ended March 31, 1997, one of the construction properties in progress completed
the construction phase of the Company's investment process and was converted to
a permanent operating lease, with an investment balance of $1,588,000.
At March 31, 1997, the Company had $147,140,000 in unfunded commitments.
NOTE C - INDEBTEDNESS AND SHAREHOLDERS' EQUITY
In January 1997, in connection with the underwriters' exercise of an over
allotment option associated with the Company's December 18, 1996 offering of
2,200,000 shares of common stock, the Company issued 330,000 shares of Common
Stock, $1.00 par value per share, at the price of $23.875 per share, which
generated net proceeds of $7,485,000 to the Company.
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<PAGE> 8
In March 1997, the Company issued 3,000,000 shares of Common Stock, $1.00 par
value per share, at the price of $24.375 per share, which generated net proceeds
to the Company of $69,120,000.
In March 1997, the Company closed a $175 million unsecured credit facility which
replaced the Company's then existing secured credit facility. Simultaneous with
the closing of the new credit facility, all senior noteholders released
collateral which had served as security for the Company's $82 million of senior
indebtedness. The senior unsecured notes are rated `BBB-' (triple-B-minus) by
Duff & Phelps Credit Rating Co.
The Company has a total of $185,000,000 in unsecured credit facilities bearing
interest at the lenders' prime rate or LIBOR plus 1.125%, of which $84,500,000
was available at March 31, 1997.
NOTE D - INVESTMENT SECURITIES AVAILABLE FOR SALE
Investment securities available for sale are stated at fair value with
unrealized gains and losses reported in a separate component of shareholders'
equity. At March 31, 1997, available-for-sale securities are the common stock of
a corporation, which were obtained by the Company at no cost.
NOTE E - CONTINGENT LIABILITIES
As disclosed in the financial statements for the year ended December 31, 1996,
the Company was contingently liable for certain obligations amounting to
approximately $18,815,000. No significant change in these contingencies had
occurred as of March 31, 1997.
NOTE F - DISTRIBUTIONS PAID TO SHAREHOLDERS
On February 20, 1997, the Company paid a dividend of $0.52 per share to
shareholders of record on February 4, 1997. This dividend related to the period
from October 1, 1996 through December 31, 1996.
NOTE G - EARNINGS PER SHARE
In February, 1997, the Financial Accounting Standards Board issued Statement No.
128, Earning per Share, which is required to be adopted on December 31, 1997. At
that time, the Company will be required to change the method currently used to
compute earnings per share. The impact on primary earnings per share and fully
diluted earnings per share is not expected to be material.
NOTE H - SUBSEQUENT EVENTS
On April 22, 1997, the Company declared a dividend of $0.525 per share payable
on May 20, 1997 to shareholders of record on May 5, 1997. The dividend relates
to the period from January 1, 1997 through March 31, 1997.
-8-
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At March 31, 1997, the Company's net real estate investments totaled
approximately $599,575,000, which included 59 skilled nursing facilities, 73
assisted living facilities, 11 retirement centers, six specialty care facilities
and two behavioral care facilities. The Company funds its investments through a
combination of long-term and short-term financing, utilizing both debt and
equity.
As of March 31, 1997, the Company had shareholders' equity of $404,434,000 and a
total outstanding debt balance of $192,597,000, which represents a debt to
equity ratio of 0.48 to 1.0.
In January 1997, in connection with the underwriters exercise of an over
allotment option associated with the Company's December 18, 1996 offering of
2,200,000 shares of common stock, the Company issued 330,000 shares of Common
Stock, $1.00 par value per share, at the price of $23.875 per share, which
generated net proceeds of $7,485,000 to the Company.
In March 1997, the Company issued 3,000,000 shares of Common Stock, $1.00 par
value per share, at the price of $24.375 per share, which generated net proceeds
to the Company of $69,120,000.
During the three months ended March 31, 1997, the proceeds derived from the
Company's capital raising activities were used to reduce bank debt under the
Company's revolving lines of credit arrangements.
In March 1997, the Company closed a $175 million unsecured credit facility which
replaced the Company's then existing secured credit facility. Simultaneous with
the closing of the new credit facility, all senior noteholders released
collateral which had served as security for the Company's $82 million of senior
indebtedness. The senior unsecured notes are rated `BBB-' (triple-B-minus) by
Duff & Phelps Credit Rating Co.
As of March 31, 1997, the Company had approximately $147,140,000 in unfunded
commitments. Under the Company's line of credit arrangements, available funding
totaled $84,500,000. The Company believes its liquidity and various sources of
available capital are sufficient to fund operations, finance future investments,
and meet debt service and dividend requirements.
RESULTS OF OPERATIONS
- ---------------------
Revenues for three months ended March 31, 1997 were $16,569,000 compared to
$10,890,000 for the three months ended March 31, 1996. Revenue growth resulted
primarily from increased interest income of $2,512,000 and increased operating
lease income of $3,003,000 as a result of additional real estate investments
made during the past twelve months.
Expenses for the three months ended March 31, 1997 totaled $6,743,000, an
increase of $1,530,000 from expenses of $5,213,000 for the same period in 1996.
The increase in total expenses was primarily related to an increase in interest
expense, additional expense associated with the provision for depreciation, and
increased other operating expenses.
Interest expense for the three months ended March 31, 1997 was $4,011,000
compared to $3,511,000 for the same period in 1996. The increase in the 1997
period was primarily due to the issuance of $30,000,000 Senior Notes in April
1996.
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<PAGE> 10
The provision for depreciation for the three month period ended March 31, 1997
totaled $1,185,000, an increase of $710,000 over the comparable period in 1996
as a result of additional operating lease investments.
General and administrative expenses for the three month period in 1997 totaled
$1,180,000, as compared to $890,000 for the same period in 1996. The expenses
for the three month period in 1997 were 7.12% of revenues as compared to 8.17%
for the same period in 1996.
As a result of the various factors mentioned above, net income for the three
month period ended March 31, 1997 was $9,826,000 as compared to $5,677,000 for
the same period in 1996. Net income per share for the three month period ended
March 31, 1997 was $.51 versus $.47 for the comparable 1996 period. The per
share increases resulted from an increase in net income offset by an increase in
average shares outstanding during the 1997 period.
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<PAGE> 11
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
-----------------
On January 9, 1997, the Company issued a press release in which it announced
that during the fourth quarter of 1996 it had funded $78.6 million of new
investments.
On January 10, 1997, the Company issued a press release in which it announced
that the underwriters for the Company's December 18, 1996 offering of 2,200,000
common shares exercised an over allotment option to purchase 330,000 additional
shares at a purchase price of $23.875 per share.
On January 15, 1997, the Company issued a press release in which it announced
that during 1996 it had funded $230 million of new investments.
On January 16, 1997, the Company issued a press release in which it announced
that it had filed a shelf registration with the Securities and Exchange
Commission enabling the Company to offer in the future up to an aggregate of
$300 million of securities.
On January 20, 1997, the Company issued a press release in which it announced
that the Board of Directors voted to pay a quarterly cash dividend of $.52 per
share, payable to shareholders of record on February 20, 1997.
On January 21, 1997, the Company issued a press release in which it announced
that Raymond W. Braun had been appointed Chief Operating Officer of the Company.
On February 4, 1997, the Company issued a press release in which it announced
that during the month of January 1997 it had funded $62.8 million of new
investments.
On February 5, 1997, the Company issued a press release in which it announced
financial results for the fourth quarter 1996 and the year ended 1996.
On March 7, 1997, the Company issued a press release in which it announced that
it had filed a prospectus supplement for an offering of 3,000,000 shares of
Common Stock.
On March 31, 1997, the Company issued a press release in which it announced that
it had closed a $175 million unsecured credit facility.
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<PAGE> 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Reports
10.1 Employment Agreement dated as of January 1, 1997 by
and between Health Care REIT, Inc. and George L.
Chapman
10.2 Employment Agreement dated as of January 1, 1997 by
and between Health Care REIT, Inc. and Raymond W.
Braun
10.3 Employment Agreement dated as of January 1, 1997 by
and between Health Care REIT, Inc. and Edward F.
Lange, Jr.
10.4 Employment Agreement dated as of January 1, 1997 by
and between Health Care REIT, Inc. and Erin C. Ibele
10.5 Stock Plan for Non-Employee Directors
27 Financial Data Schedule
99.1 Press release dated January 9, 1997
99.2 Press release dated January 10, 1997
99.3 Press release dated January 15, 1997
99.4 Press release dated January 16, 1997
99.5 Press release dated January 20, 1997
99.6 Press release dated January 21, 1997
99.7 Press release dated February 4, 1997
99.8 Press release dated February 5, 1997
99.9 Press release dated March 7, 1997
99.10 Press release dated March 31, 1997
(b) Reports on Form 8-K
Form 8-K filed on March 6, 1997
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<PAGE> 13
Pursuant to the requirement of the Securities and Exchange Act of 1934, the
Registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HEALTH CARE REIT, INC.
Date: May 12, 1997 By: GEORGE L. CHAPMAN
------------------------ -------------------------
George L. Chapman,
Chairman, Chief Executive
Office, and President
Date: May 12, 1997 By: EDWARD F. LANGE, JR.
----------------------- ---------------------------
Edward F. Lange, Jr.,
Chief Financial Officer
Date: May 12, 1997 By: MICHAEL A. CRABTREE
----------------------- -------------------------
Michael A. Crabtree,
Chief Accounting Officer
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<PAGE> 14
EXHIBIT INDEX
The following documents are included in this Form 10-Q as Exhibits:
<TABLE>
<CAPTION>
DESIGNATION
NUMBER UNDER
ITEM 601 OF PAGE
REGULATION S-K EXHIBIT DESCRIPTION NUMBER
-------------- ------------------- ------
<S> <C>
10.1 Employment Agreement dated as
of January 1, 1997 by and
between Health Care REIT,
Inc. and George L. Chapman
10.2 Employment Agreement dated as
of January 1, 1997 by and
between Health Care REIT,
Inc. and Raymond W. Braun
10.3 Employment Agreement dated as
of January 1, 1997 by and
between Health Care REIT,
Inc. and Edward F. Lange, Jr.
10.4 Employment Agreement dated as
of January 1, 1997 by and
between Health Care REIT,
Inc. and Erin C. Ibele
10.5 Stock Plan for Non-Employee Directors
27 Financial Data Schedule
99.1 Press release dated January 9, 1997
99.2 Press release dated January 10, 1997
99.3 Press release dated January 15, 1997
99.4 Press release dated January 16, 1997
99.5 Press release dated January 20, 1997
99.6 Press release dated January 21, 1997
99.7 Press release dated February 4, 1997
99.8 Press release dated February 5, 1997
99.9 Press release dated March 7, 1997
99.10 Press release dated March 31, 1997
</TABLE>
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<PAGE> 1
Exhibit 10.1
EMPLOYMENT AGREEMENT
--------------------
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 GEORGE L. CHAPMAN (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
----------
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
-----------------
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.
<PAGE> 2
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
----------------
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
------------------------------------
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.
-2-
<PAGE> 3
(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
-------------------------
(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
-3-
<PAGE> 4
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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<PAGE> 5
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.
-5-
<PAGE> 6
(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
-------------------------------------
(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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<PAGE> 7
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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<PAGE> 8
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
-----
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
-----------
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
--------------------------------------
The Executive agrees that he will keep all confidential
and proprietary information of the Company or relating to its
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<PAGE> 9
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
-----------------------
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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<PAGE> 10
11. INJUNCTIVE RELIEF
-----------------
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
-------
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.
One SeaGate, Suite 1500
Toledo, OH 43604
Attention: Corporate Secretary
IF TO THE EXECUTIVE:
George L. Chapman
One SeaGate, Suite 1500
Toledo, OH 43604
The actual date of receipt, as shown by the receipt therefor, shall determine
the time at which notice was given.
13. SEPARABILITY
------------
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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<PAGE> 11
or unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
14. 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 Company, but neither this Agreement nor any rights hereunder shall be
assignable or otherwise subject to hypothecation by the Executive.
15. ENTIRE AGREEMENT
----------------
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
-------------
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
- ------------------------------ ------------------------------------
Corporate Secretary Vice President and Chief
Operating Officer
WITNESS: EXECUTIVE:
- ------------------------------ ---------------------------------------
George L. Chapman
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<PAGE> 1
Exhibit 10.2
EMPLOYMENT AGREEMENT
--------------------
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 RAYMOND W. BRAUN
(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
----------
The Company hereby agrees to employ the Executive as the
Company's Vice President and Chief Operating Officer, upon the terms and
conditions herein contained, and the Executive hereby agrees to accept such
employment and to serve in such positions, and to perform the duties and
functions customarily performed by the Vice President and Chief Operating
Officer of a publicly traded corporation during the term of this Agreement. In
such capacity, the Executive shall report only to the Company's Chief Executive
Officer ("CEO"), 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 CEO 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
-----------------
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 two (2) years, ending December 31, 1998. 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 two (2) 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.
<PAGE> 2
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
----------------
The Executive shall receive a base salary during the term of
this Agreement at a rate of not less than $175,000 per annum in substantially
equal semi-monthly installments. The Compensation Committee of the Board shall
consult with the CEO 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
------------------------------------
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 40,000 shares of common stock, and 2,177
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) MEDICAL INSURANCE. The Company shall provide the Executive
and his dependents with health insurance, life insurance and disability
coverage on terms no less favorable than that from time to time made
available to other key employees.
(c) VACATION. The Executive shall be entitled to up to three
weeks of vacation during each year during the term of this Agreement
and any extensions thereof, prorated for partial years.
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<PAGE> 3
(d) 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
-------------------------
(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 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 twelve (12) 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 annual bonus paid to the Executive for the fiscal
year preceding the termination or (B) a minimum bonus equal to forty percent
(40%) 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:
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<PAGE> 4
(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 six (6) 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 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 Executive shall receive such
salary continuation benefits as are provided for in the terms of any long-term
disability plan or other disability program or insurance policies maintained for
his benefit 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
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<PAGE> 5
terms of deferred compensation, incentive or other benefit 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 Company's CEO (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
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, incentive or other benefit 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 Vice President or Chief Operating Officer 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 CEO.
6. EFFECT OF CHANGE IN CORPORATE CONTROL
-------------------------------------
(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
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<PAGE> 6
entitled to receive monthly severance payments for each month during the
remaining term of this Agreement, but not less than twelve (12) 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 annual bonus paid to the
Executive for the last fiscal year of the Company ending prior to the Change in
Corporate Control or (B) a minimum bonus equal to forty percent (40%) of his
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 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 six
(6) 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
-6-
<PAGE> 7
into or with another corporation in which the Company is not
the surviving entity;
(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 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, and the Board
of Directors appoints a special committee of the Board to consider the
Company's response to such tender offer.
(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.
7. DEATH
-----
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
-----------
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.
-7-
<PAGE> 8
9. PROTECTION OF CONFIDENTIAL INFORMATION
--------------------------------------
The Executive agrees that he will keep all confidential and
proprietary information of the Company or relating to its 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
-----------------------
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, by
the Company for Cause, or because the Executive chooses not to extend the term
of this Agreement, 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
-8-
<PAGE> 9
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.
11. INJUNCTIVE RELIEF
-----------------
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
-------
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.
One SeaGate, Suite 1500
Toledo, OH 43604
Attention: Corporate Secretary
IF TO THE EXECUTIVE:
Raymond W. Braun
One SeaGate, Suite 1500
Toledo, OH 43604
The actual date of receipt, as shown by the receipt therefor, shall determine
the time at which notice was given.
-9-
<PAGE> 10
13. 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.
14. 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 Company, but neither this Agreement nor any rights hereunder shall be
assignable or otherwise subject to hypothecation by the Executive.
15. ENTIRE AGREEMENT
----------------
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
-------------
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
- ------------------------------ ----------------------------
Corporate Secretary Chief Executive Officer
WITNESS: EXECUTIVE:
- ------------------------------ ----------------------------
Raymond W. Braun
-10-
<PAGE> 1
Exhibit 10.3
EMPLOYMENT AGREEMENT
--------------------
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 EDWARD F. LANGE, JR. (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
----------
The Company hereby agrees to employ the Executive as the
Company's Vice President, Chief Financial Officer and Treasurer, upon the terms
and conditions herein contained, and the Executive hereby agrees to accept such
employment and to serve in such positions, and to perform the duties and
functions customarily performed by the Chief Financial Officer of a publicly
traded corporation during the term of this Agreement. In such capacity, the
Executive shall report only to the Company's Chief Executive Officer ("CEO"),
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 CEO 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
-----------------
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 two (2) years, ending December 31, 1998. 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 two (2) 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.
<PAGE> 2
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
----------------
The Executive shall receive a base salary during the term of
this Agreement at a rate of not less than $170,000 per annum in substantially
equal semi-monthly installments. The Compensation Committee of the Board shall
consult with the CEO 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
------------------------------------
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 37,500 shares of common stock, and 2,114
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) MEDICAL INSURANCE. The Company shall provide the Executive
and his dependents with health insurance, life insurance and disability
coverage on terms no less favorable than that from time to time made
available to other key employees.
(c) VACATION. The Executive shall be entitled to up to three
weeks of vacation during each year during the term of this Agreement
and any extensions thereof, prorated for partial years.
-2-
<PAGE> 3
(d) 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
-------------------------
(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 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 twelve (12) 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 annual bonus paid to the Executive for the fiscal
year preceding the termination or (B) a minimum bonus equal to thirty-seven and
one-half percent (37.5%) 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:
-3-
<PAGE> 4
(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 six (6) 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 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 Executive shall receive such
salary continuation benefits as are provided for in the terms of any long-term
disability plan or other disability program or insurance policies maintained for
his benefit 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
-4-
<PAGE> 5
terms of deferred compensation, incentive or other benefit 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 Company's CEO (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
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, incentive or other benefit 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 Vice President, Chief Financial Officer and Treasurer 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 CEO.
6. EFFECT OF CHANGE IN CORPORATE CONTROL
-------------------------------------
(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 monthly severance payments for each month
-5-
<PAGE> 6
during the remaining term of this Agreement, but not less than twelve (12)
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 annual bonus paid
to the Executive for the last fiscal year of the Company ending prior to the
Change in Corporate Control or (B) a minimum bonus equal to thirty-seven and
one-half percent (37.5%) of his 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 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 six
(6) 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
-6-
<PAGE> 7
into or with another corporation in which the Company is not
the surviving entity;
(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 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, and the Board
of Directors appoints a special committee of the Board to consider the
Company's response to such tender offer.
(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.
7. DEATH
-----
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
-----------
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.
-7-
<PAGE> 8
9. PROTECTION OF CONFIDENTIAL INFORMATION
--------------------------------------
The Executive agrees that he will keep all confidential and
proprietary information of the Company or relating to its 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
-----------------------
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, by
the Company for Cause, or because the Executive chooses not to extend the term
of this Agreement, 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 6 of this
Agreement during any period for which he would have
-8-
<PAGE> 9
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.
11. INJUNCTIVE RELIEF
-----------------
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
-------
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.
One SeaGate, Suite 1500
Toledo, OH 43604
Attention: Corporate Secretary
IF TO THE EXECUTIVE:
Edward F. Lange, Jr.
One SeaGate, Suite 1500
Toledo, OH 43604
The actual date of receipt, as shown by the receipt therefor, shall determine
the time at which notice was given.
-9-
<PAGE> 10
13. 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.
14. 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 Company, but neither this Agreement nor any rights hereunder shall be
assignable or otherwise subject to hypothecation by the Executive.
15. ENTIRE AGREEMENT
----------------
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
-------------
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
- ------------------------------ ------------------------------
Corporate Secretary Chief Executive Officer
WITNESS: EXECUTIVE:
- ------------------------------ --------------------------------
Edward F. Lange, Jr.
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Exhibit 10.4
EMPLOYMENT AGREEMENT
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 ERIN C. IBELE (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 Vice President and Corporate Secretary, upon the terms and conditions
herein contained, and the Executive hereby agrees to accept such employment and
to serve in such positions, and to perform the duties and functions customarily
performed by the Vice President and Corporate Secretary of a publicly traded
corporation during the term of this Agreement. In such capacity, the Executive
shall report only to the Company's Chief Executive Officer ("CEO"), 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
her position as the CEO may assign to her.
Throughout the term of this Agreement, the Executive shall
devote her best efforts and all of her business time and services to the
business and affairs of the Company.
2. TERM OF AGREEMENT
-----------------
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 two (2) years, ending December 31, 1998. 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 two (2) year renewal terms, unless either party shall give at least
six (6) months advance written notice to the other of her 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.
Notwithstanding the foregoing, the Company shall be entitled
to terminate this Agreement immediately, subject to a
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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 her employment before the current term of this Agreement expires, as
described in Section 5(d).
3. SALARY AND BONUS
----------------
The Executive shall receive a base salary during the term of
this Agreement at a rate of not less than $80,000 per annum in substantially
equal semi-monthly installments. The Compensation Committee of the Board shall
consult with the CEO 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
------------------------------------
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 20,000 shares of common stock, and 995
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) MEDICAL INSURANCE. The Company shall provide the Executive
and her dependents with health insurance, life insurance and disability
coverage on terms no less favorable than that from time to time made
available to other key employees.
(c) VACATION. The Executive shall be entitled to up to three
weeks of vacation during each year during the term of this Agreement
and any extensions thereof, prorated for partial years.
(d) BUSINESS EXPENSES. The Company shall reimburse the
Executive for all reasonable expenses she incurs in promoting the
Company's business, including expenses for travel and
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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
-------------------------
(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 her 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 her under the terms of any deferred
compensation, incentive or other benefit plan 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 twelve (12) 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 annual bonus paid to the Executive for the fiscal
year preceding the termination or (B) a minimum bonus equal to twenty-five
percent (25%) of her 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 her 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
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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 her termination for the remaining term of the Agreement,
but not less than six (6) months, or until, if earlier, the date she
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 her
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 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 her 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 her duties and is likely to continue
for an indefinite period. Upon such termination, the Executive shall be entitled
to receive her 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 Executive shall receive such
salary continuation benefits as are provided for in the terms of any long-term
disability plan or other disability program or insurance policies maintained for
her benefit 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 her 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, incentive or other benefit plans maintained by the Company.
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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 her
duties hereunder or involving moral turpitude; or (iv) the intentional and
willful failure by the Executive to substantially perform her duties hereunder
as directed by the Company's CEO (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 her 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 her 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, incentive or other benefit 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 Vice President or Corporate Secretary 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 CEO.
6. EFFECT OF CHANGE IN CORPORATE CONTROL
-------------------------------------
(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 her employment, the
Executive shall be entitled to receive monthly severance payments for each month
during the remaining term of this Agreement, but not less than twelve (12)
months. Each monthly payment shall be equal to one-
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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 annual bonus paid to the Executive for the last fiscal year of the
Company ending prior to the Change in Corporate Control or (B) a minimum bonus
equal to twenty-five percent (25%) of her annual base salary.
(c) If the Executive is involuntarily terminated (other than
for Cause) or elects to voluntarily resign her employment within twelve months
after a Change in Corporate Control, she may elect, by delivering written notice
to the Company within 30 days following such termination of her employment, to
receive from the 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 her employment within
twelve months after a Change in Corporate Control, she 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 her termination, which coverage shall be continued
until the expiration of the current term of the Agreement (but not less than six
(6) 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;
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(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 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, and the Board
of Directors appoints a special committee of the Board to consider the
Company's response to such tender offer.
(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.
7. DEATH
-----
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
-----------
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.
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9. PROTECTION OF CONFIDENTIAL INFORMATION
--------------------------------------
The Executive agrees that she will keep all confidential and
proprietary information of the Company or relating to its business confidential,
and that she 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 her duties hereunder, and then only to those with a "need
to know." The Executive shall not make use of any such confidential information
for her 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 her 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 her work for the Company
may bring her 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
-----------------------
The Executive hereby agrees that she 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 her voluntarily, by
the Company for Cause, or because the Executive chooses not to extend the term
of this Agreement, 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 she 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 she shall not, for a period of one
year from the time her employment under this Agreement ceases (for whatever
reason), or, if later, during any period in which she 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
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6 of this Agreement during any period for which she would have received such
severance payments had she not elected to receive a lump sum severance payment
or had such payments not been offset by compensation received from a successor
employer.
11. INJUNCTIVE RELIEF
-----------------
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.
One SeaGate, Suite 1500
Toledo, OH 43604
Attention: Chief Executive Officer and
President
IF TO THE EXECUTIVE:
Erin C. Ibele
One SeaGate, Suite 1500
Toledo, OH 43604
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The actual date of receipt, as shown by the receipt therefor, shall determine
the time at which notice was given.
13. 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.
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
----------------
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
-------------
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 her hand, as of the day and
year first above written.
ATTEST: HEALTH CARE REIT, INC.
By
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Vice President and Chief Chief Executive Officer
Operating Officer
WITNESS: EXECUTIVE:
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Erin C. Ibele
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Exhibit 10.5
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
-------------------------------------
1. PURPOSE OF THE PLAN. Health Care REIT, Inc., a Delaware corporation,
hereby adopts this Stock Plan for Non-Employee Directors providing for the
granting of stock options to directors of the Company who are not employees of
the Company. The general purpose of the Plan is to secure for the Company and
its stockholders the benefits of the incentive inherent in increased ownership
of Common Stock of the Company by members of the Board of Directors of the
Company who are not employees of the Company. It is also expected that the Plan
will encourage qualified persons to become directors of the Company.
The Stock Plan for Non-Employee Directors has been approved by the Board of
Directors effective as of January 20, 1997, subject to approval by the Company's
stockholders at the annual meeting of the stockholders.
2. CERTAIN DEFINITIONS. In addition to the words and terms elsewhere
defined in this Plan, certain capitalized words and terms used in this Plan
shall have the meanings given to them by the definitions and descriptions in
this Section 2. Unless the context or use indicates another or different meaning
or intent, then such definition shall be equally applicable to both the singular
and plural forms of any of the capitalized words and terms herein defined. The
following words and terms are defined terms under this Plan:
2.1 Award means the grant of an Option or Restricted Stock under this
Plan.
2.2 Board of Directors means the Board of Directors of the Company.
2.3 Code means the Internal Revenue Code of 1986, as the same shall be
amended from time to time.
2.4 Common Stock means the Common Stock, par value $1.00 per share, of
the Company.
2.6 Company means Health Care REIT, Inc., a Delaware corporation.
2.7 Effective Date means January 20, 1997, the date the adoption of
the Plan was approved by the Board of Directors.
2.8 Fair Market Value means the fair market value of a share of Common
Stock as determined by the Board of Directors by reference to the closing
price for shares of Common Stock for the most recent available date, as
reported on the New York Stock Exchange.
2.9 Holder means a Non-Employee Director who has received an Award of
Options or Restricted Stock under this Plan.
2.10 Non-Employee Director means a member of the Board of Directors
who is not an employee of the Company.
2.11 Nonstatutory Stock Option means a stock option that does not
qualify as an incentive stock option within the meaning of Section 422 of
the Code.
2.12 Option means a right granted to a Non-Employee Director pursuant
to the Plan to purchase a specified number of shares of Common Stock at a
specified Option Price during a
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specified period and on such other terms and conditions as may be specified
pursuant to the Plan. All Options granted under this Plan shall be
Nonstatutory Stock Options.
2.13 Option Price means, with respect to any Option, the price per
share the Holder will be required to pay to the Company to exercise the
Option and acquire the shares of Common Stock subject to the Option.
2.14 Plan means this Stock Plan for Non-Employee Directors.
2.15 Restricted Stock means shares of Common Stock issued to an
eligible Non-Employee Director, subject to such transfer restrictions and
other conditions as may be specified in accordance with Section 7 of the
Plan.
2.16 Stock Option Agreement means the agreement specified in Section
10 hereof.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 12
hereof, the number of shares of Common Stock which may be issued upon exercise
of Options or as Awards of Restricted Stock under the Plan shall be 100,000
shares of the Common Stock. On January 1 of each year subsequent to the
Effective Date, the aggregate number of shares of Common Stock available for
issuance under this Plan shall be increased by an additional 42,000 shares. Such
shares may be, in whole or in part, authorized and unissued shares of Common
Stock or treasury shares which have been reacquired by the Company. If any
Option shall expire or terminate for any reason without having been exercised in
full, the unexercised shares subject thereto shall again be available for
purposes of the Plan. If any Shares of Restricted Stock are forfeited, the
forfeited shares again be available for purposes of the Plan.
4. ADMINISTRATION.
4.1 Powers. The Plan shall be administered by the Board of Directors,
which shall have all of the powers vested in it by the terms of the Plan, such
powers to include authority (within the limitations described herein) to
prescribe the form of the agreement embodying Awards made under the Plan.
Subject to the express provisions of the Plan, the Board of Directors shall have
plenary authority to interpret the Plan, to adopt, amend and rescind the rules
and regulations relating to the Plan and to make all other determinations and to
take all other actions deemed necessary or advisable for the administration of
the Plan. Any decision of the Board of Directors in the administration of the
Plan, as described herein, shall be final and conclusive.
4.2 Delegation to Committee Permitted. Notwithstanding anything to the
contrary contained herein, the Board of Directors may at any time, or from time
to time, appoint a Committee of at least two members, who shall be members of
the Compensation Committee of the Board of Directors (or such other persons as
the Board of Directors may designate), and delegate to the Committee the
authority of the Board of Directors to administer the Plan. Upon such
appointment and delegation, the Committee shall have all the powers, privileges
and duties of the Board of Directors, and shall be substituted for the Board of
Directors in the administration of the Plan, except the power to appoint members
of the Committee and to terminate, modify or amend the Plan. The Board of
Directors may from time to time appoint members of the Committee in substitution
for or in addition to members previously appointed, may fill vacancies in the
Committee and may discharge the Committee. The Committee shall select one of its
members as its chairman and shall hold its meetings at such times and places as
its shall deem advisable. A majority of its members shall constitute a quorum
and all determinations shall be made by a majority of such quorum. Any
determination reduced to writing and signed by a majority of the members shall
be fully as effective as if it had been made by a majority vote at a meeting
duly called and held.
5. ELIGIBILITY. Options and Restricted Stock Awards under this Plan shall
be granted only to Non-Employee Directors.
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6. OPTIONS.
6.1 Grant of Options.
(a) As of the Effective Date, each Non-Employee
Director serving on the Board of Directors automatically shall
be granted an Option to purchase 10,000 shares of Common
Stock, effective as of January 20, 1997, subject to approval
of the Plan by the stockholders of the Company as required
under Section 14 hereof.
(b) Each new Non-Employee Director who is first
appointed or elected to the Board of Directors after the
Effective Date automatically shall be granted an Option to
purchase 10,000 shares of Common Stock on the day he or she is
first appointed or elected to the Board of Directors.
(c) Each Non-Employee Director who has been granted
Options under paragraph (a) or (b) automatically shall be
granted an additional Option to purchase 5,000 shares of
Common Stock on January 15 of each subsequent year (or, if
January 15 is not a business day, on the first business day
following January 15) during the term of this Plan.
6.2 Option Prices. The purchase price of the Common Stock
under each Option shall be equal to the Fair Market Value of the Common Stock on
the grant date (subject to adjustment as provided in Section 12 hereof).
6.3 Term of Options; Limitations on Exercise. The term of each
Option shall be for ten years from the date of grant, and, except as set forth
in Section 8 hereof, shall expire six months after the cessation of the Holder's
status as a Non-Employee Director or upon the earlier expiration at the end of
its ten year term. Each Option granted pursuant to Section 6.1(a) shall become
exercisable on the first anniversary of the date of grant of such Option.
One-third of the shares of Common Stock subject to each Option granted pursuant
to Section 6.1(b) or Section 6.1(c) shall become exercisable on a cumulative
basis on each of the first three anniversaries of the date of the grant of such
Option.
6.4 Exercise of Options. Any part of an Option granted and
presently exercisable under the Plan shall be exercisable in whole, or in part,
at any time during the term of the Option. Payment shall be made in cash, in
whole shares of Common Stock already owned by the Holder of the Option, partly
in cash and partly in such Common Stock, or in any other manner acceptable to
the Company. Such notice shall state that the Holder of the Option elects to
exercise the Option, the number of shares in respect of which it is being
exercised and the manner of payment for such shares, and shall either (i) be
accompanied by payment of the full Option Price of such shares, or (ii) provide
for such arrangements for the payment of the full Option Price of such shares as
may be satisfactory to the Company.
The Non-Employee Director shall be deemed to have paid the
full optimum price due upon exercise of his Options, if his irrevocable notice
of exercise to the Corporation is accompanied by an irrevocable instruction to
the Corporation to deliver the shares of Common Stock issuable upon exercise of
the Options promptly to a broker-dealer designated by Non-Employee Director
(which may include the Corporation's transfer agent) for the Non-Employee
Director's account, together with an irrevocable instruction to such
broker-dealer to sell at least that portion of the shares necessary to pay the
option price (and any related expenses specified by the parties), and such
portion of the sale proceeds is delivered directly to the Corporation no later
than the settlement date This cashless exercise alternative shall not be
available if, at the time of such exercise, the Corporation determines that this
procedure would subject the Non-Employee Director to liability under Section
16(b) of the Securities Exchange Act of 1934.
-3-
<PAGE> 4
6.5 Nontransferability of Options. No Options shall be
transferable otherwise than by will or the laws of descent and distribution, and
an Option may be exercised during the lifetime of the Holder thereof only by
such Holder.
Notwithstanding the foregoing, the Board of Directors may, in
its discretion, permit a Holder to transfer all or a portion of his or her
Options to members of his or her immediate family, to trusts for the benefit of
members of his immediate family, or to family limited partnerships in which
immediate family members are the only partners, provided that the Holder may
receive no consideration for such transfers, and that such Options shall still
be subject to termination in accordance with Section 6.3 and Section 9 in the
hands of the transferee.
6.6 Modifications. The Board of Directors shall have the
authority to modify, in any manner it deems desirable or appropriate, the terms
of the Option Awards to be made to one or more classifications of Non-Employee
Directors in equivalent circumstances (for example, by age or length of service)
under this Section 7, including the size or vesting schedules of such Option
Awards; PROVIDED that, any modification shall be applied uniformly to all
Non-Employee Directors in equivalent circumstances, and FURTHER PROVIDED, that
the modification shall not increase the number of shares available under the
Plan in any one calendar year beyond the aggregate limit set forth in Section 3.
7. RESTRICTED STOCK.
7.1 Annual Grants of Restricted Stock. On January 20, 1997,
and on January 15 of each subsequent year (or, if January 15 is not a business
day, on the first business day following January 15), each Non-Employee Director
shall be granted an Award consisting of 250 shares of Restricted Stock; provided
that, such an Award shall not be effective unless the Non-Employee has agreed
and acknowledged in writing in such form as may be requested by the Company that
he or she holds such Restricted Stock subject to the transfer restrictions and
other conditions set forth in this Section 7 of the Plan.
7.2 Issuance of Restricted Stock. When a Non-Employee Director
is granted shares of Restricted Stock, the Company shall issue the shares
immediately, and shall register the stock certificates or certificates
representing such shares in the name of the Non-Employee Director. Each such
stock certificate shall bear an appropriate legend referring to the transfer
restrictions and other conditions applicable to such shares of Restricted Stock
under the terms of the Plan. The Company shall deliver the stock certificates
for each Restricted Stock Award to a custodian or an escrow agent designated by
the Board, to be held in escrow until the latest of the following dates:
(a) the date the Plan has been approved by the
stockholders of the Company, as specified in Section 14
below;
(b) six months after the date the Restricted
Stock was granted to the Non-Employee Director; or
(c) if later, the date on which the transfer
restrictions imposed on the Restricted Stock Award by Section
7.3 have expired or been waived.
The Board may designate an executive officer of the Company to act as the
custodian or escrow agent for such stock certificates.
Non-Employee Directors will not be required to make any
payment or provide consideration to the Company for the issuance of Restricted
Stock Awards, other than providing services to the Company as members of the
Board of Directors.
-4-
<PAGE> 5
7.3 Rights As A Stockholder. A Non-Employee Director granted a
Restricted Stock Award shall have all of the rights of a stockholder of the
Company with respect to the shares of Restricted Stock included in the Award,
including the right to vote the shares and receive all dividends and other
distributions declared with respect to such shares, but the shares of Restricted
Stock held by the Non-Employee Director shall be subject to the following terms
and conditions:
(a) During a period set by the Board of Directors of
not less than six (6) months, commencing with the date on
which the Restricted Stock Award was granted (the "Restriction
Period"), the Non-Employee Director will not be permitted to
sell, transfer, pledge or assign the shares of Restricted
Stock awarded to him or her.
(b) If, at any time during the Restriction Period set
by the Board for the Restricted Stock Award, the Non-Employee
Director's service on the Board of Directors terminates for
any reason other than death, disability or retirement at or
after age 65, the shares of Restricted Stock included in that
Award shall be forfeited, unless the Board of Directors
determines that a waiver of such forfeiture would be
appropriate, desirable and in the best interests of the
Company. A Non-Employee Director shall not forfeit any shares
of Restricted Stock if his or her service as a director
terminates as a result of death, disability or retirement.
(c) Notwithstanding the other provisions of this
Section 7.3, the Board of Directors may adopt rules which
would permit a gift by a Non-Employee Director of shares of
Restricted Stock to a spouse, child, stepchild, grandchild or
a family limited partnership or a transfer to a trust the
beneficiary or beneficiaries of which shall be either such a
relative or persons or the Non-Employee Director, provided
that the Restricted Stock so transferred shall remain subject
to the restrictions in paragraphs (a) and (b).
7.4 Modifications. The Board of Directors shall have the
authority to modify, in any manner it deems desirable or appropriate, the terms
of the Restricted Stock Awards to be made to one or more classifications of
Non-Employee Directors in equivalent circumstances (for example, by age or
length of service) under this Section 7, including the size or Restriction
Periods of such Restricted Stock Awards; PROVIDED that, any modification shall
be applied uniformly to all Non-Employee Directors in equivalent circumstances,
and FURTHER PROVIDED that the modification shall not cause the number of shares
available under the Plan in any one calendar year beyond the aggregate limit set
forth in Section 3.
8. ACCELERATION ON CHANGE IN CORPORATE CONTROL. Notwithstanding any
contrary waiting period set forth herein, each outstanding Option granted under
the Plan shall become exercisable in full for the aggregate number of shares
covered thereby, and all transfer restrictions and forfeiture conditions imposed
on Awards of Restricted Stock shall be waived, in the event of a Change in
Corporate Control. The acceleration of the exercise of Options or the waiver of
restrictions on Restricted Stock as provided in this Section 8 may be limited as
the Board of Directors deems appropriate to ensure that the penalty provisions
of Section 4999 of the Code will not apply to any stock received by the Holder
from the Company.
For purposes of this Plan, 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
-5-
<PAGE> 6
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;
(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 20, 1997, shall be
"Continuing Directors". Any person who is nominated for election as a
member of the Board after January 20, 1997, 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.
9. CESSATION OF SERVICE AS A NON-EMPLOYEE DIRECTOR.
9.1 Death of Holder. If any Non-Employee Director shall
die prior to the end of his or her service as a member of the Board of
Directors, then:
(a) Each outstanding but unexercised Option granted
to him or her under the Plan shall become exercisable in full
for the aggregate number of shares covered thereby and each
Option may be exercised by the legatee(s) or personal
representative(s) of such Holder at any time within twelve
months after such Holder's death; PROVIDED, HOWEVER, that no
Option may be exercised after the expiration date of such
Option.
(b) Any transfer restrictions and conditions of
forfeiture applicable to his or her shares of Restricted
Stock shall be waived by the Company.
9.2 Total Disability. If a Non-Employee Director ceases
to serve as a member of the Board of Directors prior to the end of his or her
term as a result of Total Disability, then:
(a) Each outstanding but unexercised Option granted
under the Plan shall become exercisable in full for the
aggregate number of shares covered thereby from and after the
date of such cessation of service and such Option may be
exercised by such Holder (or his or her guardian(s) or
personal representative(s)) at any time within twelve months
after such cessation of service; PROVIDED, HOWEVER, that no
Option may be exercised after the expiration date of such
Option; and
(b) Any transfer restrictions and conditions of
forfeiture applicable to his or her shares of Restricted
Stock shall be waived by the Company.
9.3 Retirement; Failure to be Nominated for Reelection;
Failure to be Reelected. If a Non-Employee Director shall cease to serve as a
member of the Board of Directors as a result of such Holder's
-6-
<PAGE> 7
resignation from the Board (other than as a result of Total Disability) or such
Holder's decision not to stand for reelection at the expiration of his or her
term of office, or such Holder is not nominated by the Board to stand for
election at the Annual Stockholders' Meeting at which his or her term of office
expires, or, if nominated, such person is not reelected, then all Options held
by such Holder may be exercised at any time within six months after the date of
such cessation of service; PROVIDED, HOWEVER, (i) only Options exercisable by
the Holder at the time of the cessation of service as a Non-Employee Director
may be exercised after such cessation, and (ii) no Option may be exercised after
the expiration date of such Option. Further, any shares of Restricted Stock held
by that Non-Employee Director subject to forfeiture under Section 7.3 shall be
forfeited.
9.4 Removal by the Stockholders for Cause. If a Holder is
removed from the Board by the stockholders of the Company for cause (for these
purposes, cause shall include, but not be limited to, dishonesty, incompetence,
moral turpitude, other misconduct of any kind and the refusal to perform his or
her duties and responsibilities for any reason other than illness or
incapacity), then (a) all unexercised Options held by such Holder shall
immediately be cancelled and terminate, and (b) any shares of Restricted Stock
subject to forfeiture under Section 7.3 shall be forfeited.
10. NONALIENATION OF BENEFITS. No right or benefit under the Plan shall
be subject to anticipation, alienation, sale, assignment, hypothecation, pledge,
exchange, transfer, encumbrance or charge, and any attempt to anticipate, sell,
assign, hypothecate, pledge, exchange, transfer, encumber or charge the same
shall be void. No right or benefit hereunder shall in any manner be liable for
or subject to the debts, contracts, liabilities or torts of the person entitled
to such benefit.
11. WRITTEN AGREEMENTS. Each grant of an Option hereunder shall be
evidenced by a Stock Option Agreement, and each Restricted Stock Award shall be
evidenced by a Restricted Stock Agreement, each in such form and containing such
terms and provisions not inconsistent with the provisions of the Plan as the
Board of Directors from time to time shall approve.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any
change or changes in the outstanding Common Stock of the Company by reason of
any stock dividend, recapitalization, reorganization, merger, consolidation,
split-up, combination or any similar transaction, the Board of Directors shall
adjust the number of shares of Common Stock which may be issued under this Plan,
the number of shares of Common Stock subject to Options theretofore granted
under this Plan, the Option Price of such Options, the number of shares of
Restricted Stock and make any and all other adjustments deemed appropriate by
the Board of Directors in such manner as the Board of Directors deems
appropriate to prevent substantial dilution or enlargement of the rights granted
to a participating Non-Employee Director.
13. TERMINATION AND AMENDMENT. Unless the Plan shall theretofore have
been terminated as hereinafter provided, the Plan shall expire on January 20,
2007. The Board of Directors may terminate the Plan at any time, and the Board
of Directors at any time also may modify or amend the Plan in such respects as
it shall deem advisable. No termination, modification or amendment of the Plan
or any outstanding Stock Option Agreement may, without the consent of the Holder
to whom any Award shall theretofore have been granted, adversely affect the
rights of such Holder with respect to such Award. The Plan automatically shall
terminate in the event that it is not approved by the stockholders of the
Company as required under Section 14 hereof.
14. EFFECTIVENESS OF THE PLAN. The Plan shall become effective as of
January 20, 1997, provided, that the Plan is approved at the 1997 Annual
Stockholders' Meeting of the Company by the holders of a majority of the shares
of Common Stock represented at the meeting (in person or by proxy) and entitled
to vote thereon. If the Plan is not so approved it shall terminate
automatically, and all Options shall automatically be cancelled and be of no
further force or effect.
-7-
<PAGE> 8
15. RIGHTS OF A HOLDER AS A STOCKHOLDER. The Holder of an Option shall
have none of the rights of a stockholder with respect to the shares subject to
the Option until such shares shall be transferred to the Holder upon the
exercise of the Option.
16. GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company with
respect to Awards shall be subject to (i) all applicable laws, rules and
regulations and such approvals by any governmental agencies as may be required,
including, without limitation, the effectiveness of a registration statement
under the Securities Act of 1933, as amended, and (ii) the rules and regulations
of any securities exchange or securities market on which the Common Stock may be
listed or traded. Any Option or Restricted Stock award granted under this Plan
shall be subject to the requirement that, if at any time the Board of Directors
shall determine that any registration of the shares of Common Stock, or any
consent or approval of any governmental body, or any other agreement or consent,
is necessary as a condition of the granting of an Option or other Award, or the
issuance of Common Stock in satisfaction thereof, such Common Stock will not be
issued or delivered until such requirement is satisfied in a manner acceptable
to the Board of Directors.
17. WITHHOLDING. The Company's obligation to deliver shares of Common
Stock upon the exercise of any Option granted under the Plan shall be subject to
applicable Federal, state and local tax withholding requirements. Federal, state
and local withholding tax due upon the exercise of any Option may be paid in
shares of Common Stock upon such terms and conditions as the Board shall
determine; PROVIDED, HOWEVER, that the Board in its sole discretion may
disapprove such payment and require that such taxes be paid in cash.
18. SEVERABILITY. If any of the terms or provisions of this Plan conflict
with these requirements of Rule 16b-3 under the Exchange Act (as the same shall
be amended from time to time), then such terms or provisions shall be deemed
inoperative to the extent they so conflict with the requirements of said Rule
16b-3.
19. NON-EXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by the
Board nor the submission of the Plan to the stockholders of the Company for
approval shall be construed as creating any limitations on the power of the
Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options and the awarding of
stock and cash otherwise than under the Plan, and such arrangements may be
either generally applicable or applicable only in specific cases.
20. GOVERNING LAW. The Plan shall be governed by, and construed in
accordance with, the laws of the State of Delaware.
-8-
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<NAME> HEALTH CARE REIT, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 121
<SECURITIES> 966
<RECEIVABLES> 5,768
<ALLOWANCES> 9,937
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 204,320
<DEPRECIATION> 7,667
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<CURRENT-LIABILITIES> 0
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<COMMON> 21,737
0
0
<OTHER-SE> 382,697
<TOTAL-LIABILITY-AND-EQUITY> 608,432
<SALES> 0
<TOTAL-REVENUES> 16,569
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,582
<LOSS-PROVISION> 150
<INTEREST-EXPENSE> 4,011
<INCOME-PRETAX> 9,826
<INCOME-TAX> 0
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</TABLE>
<PAGE> 1
Exhibit 99.1
[HEALTH CARE REIT LOGO]
F O R I M M E D I A T E R E L E A S E
January 9, 1997
For more information contact:
Erin Ibele - (419) 247-2800
Ed Lange - (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES RECORD
NEW INVESTMENTS OF $78.6 MILLION FOR FOURTH QUARTER
Toledo, Ohio, January 9, 1997..... HEALTH CARE REIT, INC. (NYSE/HCN) announced
record quarterly investment activity for the fourth quarter of 1996 totaling
$78,554,000.
Fourth quarter investment activity, inclusive of recurring construction activity
of $36,637,000, included $32,644,000 of operating leases and $45,910,000 of
mortgage loans. These investments were comprised of $49,377,000 for 31 assisted
living facilities, $14,766,000 for nine nursing homes, $13,418,000 for three
specialty care facilities and $993,000 for one retirement center. Funding was
provided to 17 operators in 13 states.
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate
investment trust which invests in health care facilities, primarily nursing
homes, assisted living facilities and retirement centers. At December 31, 1996,
the company had investments in 137 health care facilities in 28 states.
<PAGE> 1
Exhibit 99.2
[HEATH CARE REIT LOGO]
F O R I M M E D I A T E R E L E A S E
January 10, 1997
For more information contact:
Erin Ibele - (419) 247-2800
Ed Lange - (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES
EXERCISE OF OVER ALLOTMENT OPTION
Toledo, Ohio, January 10, 1997..... HEALTH CARE REIT, INC. (NYSE/HCN) announced
today that the underwriters' for the company's December 18, 1996 offering of
2,200,000 common shares have exercised an over allotment option to purchase
330,000 additional common shares at a purchase price of $23.875 per share. As a
result of this exercise, the offering has been increased to 2,530,000 shares at
a total purchase price of $60,403,750.
Alex. Brown & Sons Incorporated acted as the Manager of the underwriting group,
and Smith Barney Inc. and EVEREN Securities, Inc. acted as Co-Managers. The net
proceeds will be used to invest in additional health care properties.
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate
investment trust which invests in health care facilities, primarily nursing
homes, assisted living facilities and retirement centers. At December 31, 1996,
the company had investments in 137 health care facilities in 28 states.
<PAGE> 1
Exhibit 99.3
[HEALTH CARE REIT LOGO]
F O R I M M E D I A T E R E L E A S E
January 15, 1997
For more information contact:
Erin Ibele - (419) 247-2800
Ed Lange - (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES RECORD
NEW INVESTMENTS OF $230 MILLION FOR 1996
Toledo, Ohio, January 15, 1997..... HEALTH CARE REIT, INC. (NYSE/HCN) announced
record investment activity for 1996 totaling $230,051,000.
Investments for 1996, inclusive of recurring construction activity of
$109,683,000, included $66,088,000 of operating leases and $163,963,000 of
mortgage loans. These investments were comprised of $128,978,000 for 49 assisted
living facilities, $67,984,000 for 21 nursing homes, $30,610,000 for four
specialty care facilities and $2,479,000 for one retirement center. Funding was
provided to 20 operators in 19 states.
The 1996 investment activity contributed to a 46% increase in net real estate
investments which totaled approximately $512,894,000 at December 31, 1996, as
compared to $351,924,000 at December 31, 1995.
"We are extremely pleased with our 1996 investment results," stated George L.
Chapman, chairman and chief executive officer of the company. Chapman added,
"The investment growth we have achieved reflects the success of our strategy of
providing growth capital to emerging health care operators and our emphasis on
customer service."
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate
investment trust which invests in health care facilities, primarily nursing
homes, assisted living facilities and retirement centers. At December 31, 1996,
the company had investments in 137 health care facilities in 28 states and had
total assets of approximately $520 million.
<PAGE> 1
Exhibit 99.4
[HEATH CARE REIT LOGO]
F O R I M M E D I A T E R E L E A S E
PRESS RELEASE
January 16, 1997
For more information contact:
Erin Ibele (419) 247-2800
Ed Lange (419) 247-2800
HEALTH CARE REIT, INC. REPORTS
FILING A SHELF REGISTRATION
Toledo, Ohio, January 16, 1997....Health Care REIT, Inc.
(NYSE/ HCN) announced today that it has filed a shelf registration with the
Securities and Exchange Commission that will enable the Company to offer in the
future up to an aggregate of $300 million of securities, including common stock,
preferred stock and debt. The specific terms of the securities will be set forth
in an applicable prospectus supplement, and offers may be made only by a
prospectus.
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is
a real estate investment trust which invests in health care facilities,
primarily nursing homes, assisted living facilities and retirement centers. At
December 31, 1996, the company had investments in 137 health care facilities in
28 states and had total assets of approximately $520 million.
<PAGE> 1
Exhibit 99.5
[HEALTH CARE REIT LOGO]
F O R I M M E D I A T E R E L E A S E
PRESS RELEASE
January 20, 1997
For more information contact:
Erin Ibele (419) 247-2800
Ed Lange (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES DIVIDEND
Toledo, Ohio, January 20, 1997. . . . The Directors of HEALTH
CARE REIT, INC. (NYSE/HCN) voted to pay a quarterly cash dividend of $.52 per
share. The dividend will be payable February 20, 1997 to shareholders of record
on February 3, 1997. This will be the REIT's 103rd consecutive dividend
distribution.
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is
a real estate investment trust which invests in health care facilities,
primarily nursing homes, assisted living facilities and retirement centers. At
December 31, 1996, the company had investments in 137 health care facilities in
28 states and had total assets of approximately $520 million.
<PAGE> 1
Exhibit 99.6
[HEALTH CARE REIT LOGO]
F O R I M M E D I A T E R E L E A S E
PRESS RELEASE
January 21, 1997
For more information contact:
Erin Ibele (419) 247-2800
Ed Lange (419) 247-2800
HEALTH CARE REIT, INC.
NAMES RAYMOND W. BRAUN
CHIEF OPERATING OFFICER
Toledo, Ohio, January 21, 1997....HEALTH CARE REIT, INC. (NYSE/HCN) announced
today that Raymond W. Braun, vice president of the company, has been appointed
chief operating officer of the company.
Braun, 39, joined the company in 1993 as vice president and assistant general
counsel. Prior to his positions with the company, Braun was a partner with the
law firm of Shumaker, Loop & Kendrick, Toledo, Ohio. Braun earned a Bachelor of
Science degree from Bowling Green State University in 1980, and a law degree
from the University of Pennsylvania Law School in 1983.
George L. Chapman, chairman and chief executive officer of the company, stated,
"the company is pleased to announce the appointment of Ray Braun to the position
of chief operating officer in recognition of his outstanding performance as a
member of the management team. I am confident of Ray's continuing superior
leadership of the company's marketing, underwriting, and monitoring activities."
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate
investment trust which invests in health care facilities, primarily nursing
homes, assisted living facilities and retirement centers. At December 31, 1996,
the company had investments in 137 health care facilities in 28 states and had
total assets of approximately $520 million.
<PAGE> 1
Exhibit 99.7
[HEALTH CARE REIT LOGO]
F O R I M M E D I A T E R E L E A S E
February 4, 1997
For more information contact:
Erin Ibele - (419) 247-2800
Ed Lange - (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES RECORD
MONTHLY INVESTMENT ACTIVITY OF $62.8 MILLION
Toledo, Ohio, February 4, 1997..... HEALTH CARE REIT, INC. (NYSE/HCN) announced
record monthly investment activity for January, 1997 totaling $62,819,000.
January, 1997 investment activity, inclusive of recurring construction activity
of $8,013,000, included $35,197,000 of operating leases and $27,622,000 of
mortgage loans. These investments were comprised of $18,026,000 for 22 assisted
living facilities, $12,779,000 for five nursing homes, $22,940,000 for two
specialty care facilities and $9,074,000 for two retirement centers. Funding was
provided to 15 operators in 12 states.
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate
investment trust which invests in health care facilities, primarily nursing
homes, assisted living facilities and retirement centers. At December 31, 1996,
the company had investments in 137 health care facilities in 28 states and had
assets of approximately $520 million.
<PAGE> 1
Exhibit 99.8
[HEALTH CARE REIT LOGO]
FOR IMMEDIATE RELEASE
FEBRUARY 5, 1997
FOR MORE INFORMATION CONTACT:
ERIN IBELE - (419) 247-2800
ED LANGE - (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES FOURTH QUARTER
AND YEAR END 1996 RESULTS
1996 YEAR END RESULTS 1996 YEAR END HIGHLIGHTS
--------------------- ------------------------
- $54,402,000 Gross Income - 47% shareholder return
- $2.15 per share FFO - 45% asset growth
- $2.63 per share CAD - 162% growth in operating leases
- $2.08 per share Dividends - $230 million gross investments
- $440 million market capitalization
Toledo, Ohio, February 5, 1997 ........HEALTH CARE REIT, INC. (NYSE/HCN) today
announced record funds from operations of $2.15 per share for 1996. Total
revenues increased 24 percent for the fourth quarter and 22 percent for the year
ended 1996. Management noted that increased level of revenues and strong
operating results were attributable to the company's execution of its strategy
of providing growth capital to emerging health care operators and continued
emphasis on customer service.
For the three months ended December 31, 1996 net income totaled $9,046,000, or
$0.55 per share, on revenue of $14,818,000 as compared with net income of
$786,000, or $0.06 per share, on revenue of $11,978,000 for the three months
ended December 31, 1995. Funds from operations (FFO) for the fourth quarter of
1996, totaled $9,143,000, or $0.56 per share as compared with FFO of $(175,000),
or ($0.01) per share, for the fourth quarter of 1995.
For the year ended December 31, 1996, net income totaled $30,676,000, or $2.18
per share, on revenue of $54,402,000 as compared with net income of $13,635,000,
or $1.16 per share, on revenue of $44,596,000 for the year ended 1995. FFO for
the year ended 1996 was $30,296,000, or $2.15 per share, compared with FFO of
$11,132,000, or $0.95 per share, for the year ended 1995.
For the year ended December 31, 1996, cash flows from operating activities
available for distribution (CAD) totaled $37,075,000, or $2.63 per share, as
compared with CAD of $27,938,000, or $2.39 per share, for the comparable period
of 1995.
<PAGE> 2
FFO is the generally accepted measure of performance for real estate investment
trusts. Effective January 1996, the company adopted the definition of FFO
prescribed by the National Association of Real Estate Investment Trusts. The
corresponding amount of FFO for the fourth quarter and year ended 1996 has been
restated to reflect the new definition.
The company's results for 1995 were negatively influenced by nonrecurring
charges, primarily related to a $4,800,000 provision for losses and a $5,794,000
charge for the settlement of the management contract, an expense associated with
the merger of the company's advisor into the company.
Investment activity for the three and twelve month periods ended December 31,
1996, totaled $78,554,000 and $230,051,000, respectively.
During 1996 the company generated net proceeds from its capital activities of
approximately $162,112,000.
- In April 1996, the company issued Senior Secured Notes in the
aggregate principal amount of $30,000,000 which mature in 2001 and
2003 and have a weighted average interest rate of 7.18%
- In May 1996, the company completed the sale of 2,322,200 shares of
common stock at a price of $22.00 per share, which generated net
proceeds of $48,103,000.
- In September 1996, the company completed the sale of 1,587,800 shares
of common stock at a price of $22.00 per share, which generated net
proceeds of $34,111,000.
- In December 1996, the company completed the sale of 2,200,000 shares
of common stock at a price of $23.875 per share, which generated net
proceeds of $49,898,000.
"We are pleased with our results for the quarter and the year," stated George L.
Chapman, Chairman and Chief Executive Officer of Health Care REIT, Inc. "The
success of our stated growth strategy is supported by consistent quarterly
performance throughout 1996. Our relationship approach to investing generated
$230 million of new investments in 1996 and has produced commitments of $236
million, which we expect to fund during the next 12 to 18 months."
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate
investment trust, which invests in health care facilities, primarily nursing
homes, assisted living facilities and retirement centers. The company has
investments in 137 health care facilities in 28 states and has total assets of
approximately $520 million.
This document contains "forward-looking" statements as defined in the Private
Securities Litigation Reform Act of 1995. Forward-looking statements involve
known and unknown risks and uncertainties, which may cause the company's actual
results in the future to differ materially from expected results. These risks
and uncertainties include, among others, competition in the financing of health
care facilities, the availability of capital, and regulatory and other changes
in the health care sector, as described in the company's filings with the
Securities and Exchange Commission.
FINANCIAL SCHEDULES FOLLOW
<PAGE> 3
HEALTH CARE REIT, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Real estate related investments:
Loans receivable $358,182,032 $291,998,722
Operating-lease properties 153,622,844 58,628,509
Direct financing leases 10,876,071 11,246,492
------------ ------------
522,680,947 361,873,723
Less allowance for losses 9,786,940 9,950,000
------------ ------------
Net real estate related investments 512,894,007 351,923,723
Other Assets:
Deferred loan expenses 1,431,537 1,747,537
Cash and cash equivalents 581,390 860,350
Investment securities available for sale 768,451 845,297
Receivables and other assets 4,155,812 2,715,146
------------ ------------
6,937,190 6,168,330
------------ ------------
Total assets $519,831,197 $358,092,053
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Borrowings under line of credit arrangements $ 92,125,000 $106,700,000
Senior notes 82,000,000 52,000,000
Other long-term obligations 10,270,011 4,059,639
Accrued expenses and other liabilities 9,900,045 7,734,618
------------ ------------
Total liabilities 194,295,056 170,494,257
Shareholders' equity:
Preferred Stock, $1.00 par value:
Authorized - 10,000,000 shares
Issued and outstanding - None
Common Stock, $1.00 par value:
Authorized - 40,000,000 shares
Issued and outstanding - 18,320,291
shares in 1996 and 12,034,196
shares in 1995 18,320,291 12,034,196
Capital in excess of par value 298,280,949 168,800,194
Undistributed net income 8,166,450 5,918,109
Unrealized gains on investment
securities available for sale 768,451 845,297
------------ ------------
Total shareholders' equity 325,536,141 187,597,796
------------ ------------
Total liabilities and shareholders' equity $519,831,197 $358,092,053
============ ============
</TABLE>
<PAGE> 4
HEALTH CARE REIT, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Gross Income:
Interest on loans receivable $ 9,970,475 $ 7,857,916 $36,734,438 $30,836,649
Prepayment fees 673,998 1,365,000 3,058,556 4,081,923
Direct financing leases:
Lease income 365,503 382,163 1,464,091 1,528,655
Gain on exercise of options 421,167
Operating leases:
Rents 3,134,335 1,646,198 9,847,853 6,351,822
Gain on exercise of options 155,270
Loan and commitment fees 660,862 643,962 2,607,292 1,666,286
Interest and other income 12,375 82,654 113,148 130,592
----------- ----------- ----------- -----------
14,817,548 11,977,893 54,401,815 44,595,927
Expenses:
Interest:
Line of credit arrangements 1,536,659 1,833,683 8,243,975 7,472,418
Senior notes and other long-
term obligations 1,834,708 1,255,797 6,390,810 5,279,232
Loan expense 214,669 192,324 808,182 752,115
Management fees 577,279 2,385,535
Provision for depreciation 771,179 404,361 2,427,252 1,579,544
Provision for losses 150,000 800,000 600,000 4,800,000
Disposition of investment 807,791
Settlement of management contract 5,030,034 5,793,534
Other operating expenses 1,264,029 1,098,432 4,448,243 2,898,576
----------- ----------- ----------- -----------
5,771,244 11,191,910 23,726,253 30,960,954
----------- ----------- ----------- -----------
Net income $ 9,046,304 $ 785,983 $30,675,562 $13,634,973
=========== =========== =========== ===========
Net income per share $ 0.55 $ 0.06 $ 2.18 $ 1.16
Average number of shares outstanding 16,410,182 11,834,658 14,093,028 11,709,642
</TABLE>
<PAGE> 1
Exhibit 99.9
[HEALTH CARE REIT LOGO]
F O R I M M E D I A T E R E L E A S E
March 7, 1997
For more information contact:
Erin Ibele - (419) 247-2800
Ed Lange - (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES
SALE OF 3,000,000 SHARES OF COMMON STOCK
Toledo, Ohio, March 7, 1997..........Health Care REIT, Inc. (NYSE/HCN) announced
that it has filed a prospectus supplement with the Securities and Exchange
Commission for an offering of 3,000,000 shares of Common Stock at a market price
of $24.375 per share. It is anticipated that closing and delivery will occur on
or about March 11, 1997. The net proceeds of the offering are estimated to be
$69,015,000, which will be used to invest in additional health care properties.
The Company has granted to the underwriters of the offering an over-allotment
option to purchase up to an additional 450,000 shares. In the event the
underwriters exercise their full over-allotment option, the net proceeds to the
Company could increase to approximately $79,412,000.
"This is the largest offering of common stock ever completed by the Company,"
stated George L. Chapman, chairman and chief executive officer of the Company.
Chapman added, "The support provided by the capital markets is a significant
step in advancing the Company's overall capital plan."
Alex. Brown & Sons Incorporated is the Manager of the underwriting group, and
NatWest Securities Limited, Smith Barney Inc. and Everen Securities, Inc. are
Co-Managers.
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate
investment trust, which invests in health care facilities, primarily nursing
homes, assisted living facilities and retirement centers. The company has
investments in 137 health care facilities in 28 states and has total assets of
approximately $520 million.
<PAGE> 1
Exhibit 99.10
[HEALTH CARE REIT LOGO]
F O R I M M E D I A T E R E L E A S E
March 31, 1997
For more information contact:
Erin Ibele - (419) 247-2800
Ed Lange - (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES $175 MILLION
UNSECURED CREDIT FACILITY AND BALANCE SHEET
Toledo, Ohio, March 31, 1997..........HEALTH CARE REIT, INC. (NYSE/HCN)
announced today that it has closed a $175 million unsecured credit facility
which will replace the company's existing secured line. The credit facility was
arranged by KeyBank and Fleet Bank. Other lenders included National City Bank,
NationsBank, Sumitomo Bank Ltd., Bank One, Harris Trust, BHF-Bank, Comerica
Bank, Kredietbank, M & T Trust Company and National Bank of Detroit.
Simultaneous with the closing of the new credit facility, all senior noteholders
released collateral which had served as security for the company's $82 million
of senior indebtedness. The senior unsecured notes are currently rated `BBB-'
(triple -B- minus) by Duff & Phelps Credit Rating Co.
Effective with both closings, the company's balance sheet is unsecured.
Highlights associated with the unsecured credit facility and balance sheet are
as follows:
- Provides company flexibility in continuing its growth strategy
- Reduces cost of debt by approximately 0.25 percent to 0.375 percent
- Enhances company access to lower cost debt capital
- Eliminates costs and delays associated with property specific mortgages
"These achievements are significant for Health Care REIT. We are appreciative of
the support and commitment provided by the bank group and our senior
noteholders," stated George L. Chapman, chairman and chief executive officer.
"The new unsecured credit structure positions the company to continue its growth
strategy and advance the capital plan that is focused on reducing our cost of
capital."
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate
investment trust, which invests in health care facilities, primarily nursing
homes, assisted living facilities and retirement centers. The company has
investments in 137 health care facilities in 28 states and has total assets of
approximately $520 million.
