<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, 1998
------------------------------------
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 24, 1998.
Class: Shares of Common Stock, $1.00 par value
Outstanding 25,376,697 shares
<PAGE> 2
HEALTH CARE REIT, INC.
INDEX
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - March 31, 1998
and December 31, 1997 3
Consolidated Statements of Income - Three
months ended March 31, 1998 and 1997 4
Consolidated Statements of Shareholders'
Equity - Three months ended March 31, 1998
and 1997 5
Consolidated Statements of Cash Flows-
Three months ended March 31, 1998 and 1997 6
Notes to Unaudited Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Part II. OTHER INFORMATION
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
EXHIBIT INDEX 14
</TABLE>
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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
1998 1997
(Unaudited) (Note)
----------- -----------
ASSETS (In thousands)
<S> <C> <C>
Real estate investments:
Real property owned:
Land $ 27,654 $ 22,445
Buildings & improvements 300,451 239,549
Construction in progress 62,676 47,050
--------- ---------
390,781 309,044
Less accumulated depreciation (13,638) (11,769)
--------- ---------
Total real property owned 377,143 297,275
Loans receivable 429,686 412,734
Direct financing leases 7,825 7,935
--------- ---------
814,654 717,944
Less allowance for losses on loans receivable (4,537) (4,387)
--------- ---------
Net real estate investments 810,117 713,557
Other Assets:
Direct investments 8,680 4,964
Marketable securities 5,009 4,671
Cash and cash equivalents 1,689 1,381
Deferred loan expenses 2,584 2,275
Receivables and other assets 7,927 7,479
--------- ---------
25,889 20,770
--------- ---------
Total assets $ 836,006 $ 734,327
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Borrowings under line of credit obligations $ 49,000 $ 78,400
Senior unsecured notes 262,000 162,000
Bonds and mortgages payable 8,650 8,670
Accrued expenses and other liabilities 19,255 15,333
--------- ---------
TOTAL LIABILITIES 338,905 264,403
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 - 25,367,997
in 1998 and 24,341,030 in 1997 25,368 24,341
Capital in excess of par value 461,102 435,603
Undistributed net income 9,102 8,841
Accumulated other
comprehensive income 5,010 4,671
Unamortized restricted stock (3,481) (3,532)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 497,101 469,924
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 836,006 $ 734,327
========= =========
</TABLE>
NOTE: The balance sheet at December 31, 1997 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 unaudited 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
1998 1997
------------------------------------
(In thousands except per share data)
REVENUES:
<S> <C> <C>
Interest on loans receivable $ 11,922 $ 10,616
Operating lease rent 7,644 4,963
Direct financing lease income 214 357
Loan and commitment fees 1,226 584
Other income 220 49
-------- --------
Total revenue $ 21,226 $ 16,569
EXPENSES:
Interest expense $ 4,240 $ 4,011
Loan expense 176 217
Provision for depreciation 1,870 1,185
Provision for losses 150 150
General and administrative expenses 1,381 1,180
-------- --------
Total expenses $ 7,817 $ 6,743
-------- --------
Net income $ 13,409 $ 9,826
======== ========
Average number of shares outstanding:
Basic 24,259 19,286
Diluted 24,642 19,450
Net income per share:
Basic $ 0.55 $ 0.51
Diluted 0.54 0.51
</TABLE>
See notes to unaudited 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, 1998
------------------------------------------------------------------------------------------------
Capital In Unamortized Accum. Other
Common Excess of Restricted Undistributed Comprehensive
In thousands Stock Par Value Stock Net Income Income Total
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $24,341 $435,603 $ (3,532) $ 8,841 $ 4,671 $ 469,924
Comprehensive income:
Net income 13,409 13,409
Unrealized gains on securities 339 339
---------
Comprehensive income 13,748
---------
Proceeds from issuance of shares
from dividend reinvestment plan 79 2,053 2,132
Proceeds from issuance of shares
from stock incentive plan 35 638 673
Proceeds from sale of shares 913 22,808 23,721
Reserved for restricted stock
net of amortization 51 51
Cash dividends paid (13,148) (13,148)
------- -------- ---------- ----------- ---------- ----------
Balance at end of period $25,368 $461,102 $ (3,481) $ 9,102 $ 5,010 $ 497,101
======= ======== ========== ========== ========== =========
</TABLE>
<TABLE>
<CAPTION>
Three months ended March 31, 1997
------------------------------------------------------------------------------------------------
Capital In Unamortized Accum. Other
Common Excess of Restricted Undistributed Comprehensive
Stock Par Value Stock Net Income Income Total
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $18,320 $298,281 $ 0 $ 8,167 $ 768 $ 325,536
Comprehensive income:
Net income 9,826 9,826
Unrealized gains on securities 198 198
---------
Comprehensive income 10,024
---------
Proceeds from issuance of shares
from dividend reinvestment plan 37 850 887
Proceeds from issuance of shares
from stock incentive plan 50 1,037 1,087
Proceeds from sale of shares 3,330 73,275 76,605
Cash dividends paid (9,705) (9,705)
------- -------- --------- ----------- ---------- ----------
Balance at end of period $21,737 $373,443 $ 0 $ 8,288 $ 966 $ 404,434
======= ========= ========= ========== ========== =========
</TABLE>
See notes to unaudited 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
1998 1997
----------------------------------
(In thousands)
OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 13,409 $ 9,826
Adjustments to reconcile net income to net cash
Provision for depreciation 1,897 1,199
Provision for losses 150 150
Amortization 291 218
Loan and commitment fees earned less than cash received 523 452
Direct financing lease income less than cash received 110 72
Rental income in excess of cash received (569) (333)
Interest income in excess of cash received (5) (9)
Increase in accrued expenses and other liabilities 3,400 1,382
(Increase)/decrease in receivables and other assets 86 (1,315)
---------- ------------
NET CASH PROVIDED FROM OPERATING ACTIVITIES 19,292 11,642
INVESTING ACTIVITIES
Investment in real properties (68,419) (44,216)
Investment in loans receivable (38,040) (44,576)
Investment in equity related investments (3,716) 0
Principal collected on loans 7,774 713
Other 6 (7)
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (102,395) (88,086)
FINANCING ACTIVITIES
Net (payments)/advances under line of credit arrangements (29,400) 8,375
Principal payments on long-term obligations (20) (173)
Net proceeds from the issuance of shares 26,462 78,275
Proceeds from issuance of Senior Notes 100,000 0
Increase in deferred loan expense (483) (788)
Cash distributions to shareholders (13,148) (9,705)
------------ ------------
NET CASH PROVIDED FROM FINANCING ACTIVITIES 83,411 75,984
Increase/(decrease) in cash and cash equivalents 308 (460)
------------ ------------
Cash and cash equivalents at beginning of period 1,381 581
------------ -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,689 $ 121
============ ===========
Supplemental Cash Flow Information -- Interest Paid $ 1,973 $ 3,359
============ ===========
</TABLE>
See notes to unaudited consolidated financial statements
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<PAGE> 7
NOTES TO UNAUDITED 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, 1998 are not
necessarily an indication of the results that may be expected for the year
ending December 31, 1998. For further information, refer to the financial
statements and footnotes thereto included in the Company's annual report on Form
10-K/A for the year ended December 31, 1997.
Note B - Real Estate Investments
During the three months ended March 31, 1998, the Company provided permanent
mortgage financings of $27,071,000, invested $43,455,000 in real property,
made construction advances of $35,933,000, and funded $3,716,000 of equity
related investments. During the three months ended March 31, 1998, the Company
received principal payments on real estate mortgages of $7,361,000 and had net
payments on working capital loans of $413,000.
With respect to the above-mentioned construction advances, funding associated
with 14 construction loans represented $10,969,000, and funding for
construction in progress in connection with 27 properties owned directly by the
Company totaled $24,964,000. During the three months ended March 31, 1998, two
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 $7,595,000. Also during the three months
ended March 31, 1998, three of the construction properties in progress
completed the construction phase of the Company's investment process and were
converted to permanent operating leases, with an aggregate investment balance
of $9,337,000.
Note C - Indebtedness and Shareholders' Equity
In March 1998, the Company completed the sale of $100 million of 7.625% Senior
Unsecured Notes due March 15, 2008.
In March, 1998, the Company issued 913,242 shares of Common Stock, $1.00 par
value per share, at the price of $27.375 per share, which generated net proceeds
to the Company of $23,721,000.
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%. A total of
approximately $136,000,000 was available at March 31, 1998, subject to
compliance with the terms and conditions of the unsecured credit facilities.
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<PAGE> 8
Note D - Direct Investments
Management determines the appropriate classification of a direct investment at
the time of acquisition and reevaluates such designation as of each balance
sheet date. Debt securities which are classified as held to maturity are stated
at historical cost. Equity investments are stated at historical cost. At March
31, 1998, direct investments included the preferred stock of two private
corporations and subordinated debt in four private corporations.
Note E - Marketable Securities
Marketable securities are stated at market value with unrealized gains and
losses reported in a separate component of shareholders' equity. At March 31,
1998, marketable securities reflected the market value of the common stock of
two publicly owned corporations, which were obtained by the Company at no cost,
and the fair value of the common stock related to warrants in one publicly owned
corporation in excess of the exercise price.
Note F - Contingent Liabilities
As disclosed in the financial statements for the year ended December 31, 1997,
the Company was contingently liable for certain obligations amounting to
$15,565,000. No significant change in these contingencies had occurred as of
March 31, 1998.
Note G - Distributions Paid to Shareholders
On February 20, 1998, the Company paid a dividend of $0.54 per share to
shareholders of record on February 3, 1998. This dividend related to the period
from October 1, 1997 through December 31, 1997.
Note H - Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per
share (in thousands, except per share data):
<TABLE>
<CAPTION>
Three months ended March 31
---------------------------
1998 1997
---- ----
<S> <C> <C>
Numerator for basic and diluted earnings per
share-income available to common shareholders $13,409 $ 9,826
======= =======
Denominator for basic earnings per share -
weighted average shares 24,259 19,286
Effect of dilutive securities:
Employee stock options 143
Nonvested restricted shares 240 164
------- -------
Dilutive potential common shares 383 164
------- -------
Denominator for diluted earnings per share -
adjusted weighted average shares 24,642 19,450
======= =======
Basic earnings per share $ 0.55 $ 0.51
Diluted earnings per share $ 0.54 $ 0.51
</TABLE>
-8-
<PAGE> 9
Note I - Comprehensive Income
As of January 1, 1998, the Company adopted Statement 130, Reporting
Comprehensive Income. Statement 130 establishes new rules for the reporting and
display of comprehensive income and its components. The adoption of this
Statement had no impact on the Company's net income or shareholders' equity.
Statement 130 requires unrealized gains or losses on the Company's marketable
securities to be included in other comprehensive income. Prior to adoption of
Statement 130 unrealized gains and losses were reported seperately in
shareholders' equity. Prior year financial statements have been reclassified to
conform to the requirements of Statement 130.
During the first quarter of 1998 and 1997, total comprehensive income amounted
to $13,748,000 and $10,024,000.
Note J - Subsequent Events
On April 21, 1998, the Company declared a dividend of $0.545 per share payable
on May 20, 1998 to shareholders of record on May 5, 1998. The dividend relates
to the period from January 1, 1998 through March 31, 1998.
-9-
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At March 31, 1998, the Company's net real estate investments totaled
approximately $810,117,000, which included 54 skilled nursing facilities, 120
assisted living facilities, 12 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, 1998, the Company had shareholders' equity of $497,101,000 and a
total outstanding debt balance of $319,650,000, which represents a debt to
equity ratio of 0.64 to 1.0.
In March 1998, the Company completed the sale of $100 million of 7.625% Senior
Unsecured Notes due March 15, 2008.
In March 1998, the Company issued 913,242 shares of Common Stock, $1.00 par
value per share, at the price of $27.375 per share, which generated net proceeds
to the Company of $23,721,000.
During the three months ended March 31, 1998, the proceeds derived from the
Company's capital raising activities were used to invest in additional health
care properties and reduce bank debt under the Company's revolving lines of
credit arrangements.
As of March 31, 1998, the Company has effective shelf registrations on file with
the Securities and Exchange Commission under which the Company may issue up to
$516,269,000 of securities including debt, convertible debt, common and
preferred stock. The Company anticipates issuing securities under such shelf
registrations to invest in additional health care facilities and to repay
borrowings under the Company's line of credit arrangements.
As of March 31, 1998, the Company had approximately $256,702,000 in unfunded
commitments. Under the Company's line of credit arrangements, available funding
totaled $136,000,000, subject to compliance with the terms and conditions
of the line of credit arrangements. 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 the three months ended March 31, 1998 were $21,226,000 as compared
with $16,569,000 for the three months ended March 31, 1997. Revenue growth
resulted primarily from increased interest income of $1,306,000, increased
operating lease income of $2,681,000 and increased loan and commitment fees of
$642,000 as a result of additional real estate investments made during the past
twelve months.
Expenses for the three months ended March 31, 1998 totaled $7,817,000, an
increase of $1,074,000 from expenses of $6,743,000 for the same period in 1997.
The increase in total expenses for the three month period ended March 31, 1998
was related to an increase in interest expense, an additional expense
associated with the provision for depreciation and an increase in general and
administrative expenses.
Interest expense for the three months ended March 31, 1998 was $4,240,000 as
compared to $4,011,000 for the same period in 1997. The increase in the 1998
period was primarily due to the issuance of $80,000,000 Senior Notes in April
1997 and the issuance of $100,000,000 Senior Notes in March 1998. The increase
in the 1998 period was offset by the amount of capitalized interest recorded
during the first three months of 1998.
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<PAGE> 11
The Company capitalizes certain interest costs associated with funds used to
finance the construction of properties owned directly by the Company. The amount
capitalized is based upon the borrowings outstanding during the construction
period using the rate of interest which approximates the Company's cost of
financing. The Company's interest expense is reduced by the amount capitalized.
Capitalized interest for the three month period in 1998 totaled $1,226,000, as
compared with $247,000 for the same period in 1997.
The provision for depreciation for the three month period ended March 31, 1998
totaled $1,870,000, an increase of $685,000 over the comparable period in 1997
as a result of additional investments in properties owned directly by the
Company.
General and administrative expense for the three month period ended March 31,
1998 totaled $1,381,000, as compared with $1,180,000 for the same period in
1997. The expenses for the three month period in 1998 were 6.51% of revenues as
compared with 7.12% for the same period in 1997.
As a result of the various factors mentioned above, net income for the three
month period ended March 31, 1998 was $13,409,000, or $0.54 per diluted share,
as compared with $9,826,000, or $0.51 per diluted share, for the comparable
period in 1997.
IMPACT OF INFLATION
During the past three years, inflation has not significantly affected the
earnings of the Company because of the moderate inflation rate. Additionally,
earnings of the Company are primarily long-term investments with fixed interest
rates. These investments are mainly financed with a combination of equity,
senior notes and borrowings under the revolving lines of credit. During
inflationary periods, which generally are accompanied by rising interest rates,
the Company's ability to grow may be adversely affected because the yield on new
investments may increase at a slower rate than new borrowing costs. Presuming
the current inflation rate remains moderate and long-term interest rates do not
increase significantly, the Company believes that equity and debt financing will
continue to be available.
OTHER INFORMATION
This document and supporting schedules may contain "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.
The Company has assessed its current computer software for proper functioning
with respect in dates in the year 2000 and thereafter. The year 2000 issue and
related costs are not expected to have a material impact on the operations of
the Company.
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<PAGE> 12
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On January 15, 1998, the Company issued a press release in which it announced
record new investments of $262.6 million for 1997.
On January 20, 1998, the Company issued a press release in which it announced
that the Board of Directors voted to pay a quarterly dividend of $0.54 per share
on February 20, 1998 payable to shareholders of record as of February 3, 1998.
On February 4, 1998, the Company issued a press release in which it announced
financial results for the fourth quarter and year ended December 31, 1997.
On February 10, 1998, the Company issued a press release in which it announced
an investment grade rating by Standard & Poor's.
On February 17, 1998, the Company issued a press release in which it announced
participation in a joint venture to invest in European health care facilities.
On March 11, 1998, the Company issued a press release in which it announced the
sale of $100 million of senior unsecured notes.
On March 26, 1998, the Company issued a press release in which it announced the
sale of 913,242 shares of common stock.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Reports
10.1 Amended and Restated Employment Agreement effective as
of January 1, 1998 by and between Health Care REIT, Inc.
and George L. Chapman
10.2 Amended and Restated Employment Agreement effective as
of January 1, 1998 by and between Health Care REIT, Inc.
and Raymond W. Braun
10.3 Amended and Restated Employment Agreement effective as
of January 1, 1998 by and between Health Care REIT, Inc.
and Edward F. Lange, Jr.
10.4 Amended and Restated Employment Agreement effective as
of January 1, 1998 by and between Health Care REIT, Inc.
and Erin C. Ibele
27 Financial Data Schedule
99.1 Press release dated January 15, 1998
99.2 Press release dated January 20, 1998
99.3 Press release dated February 4, 1998
99.4 Press release dated February 10, 1998
99.5 Press release dated February 17, 1998
99.6 Press release dated March 11, 1998
99.7 Press release dated March 26, 1998
(b) Reports on Form 8-K
Form 8-K filed on March 11, 1998
Form 8-K filed on March 26, 1998
-12-
<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.
<TABLE>
<CAPTION>
HEALTH CARE REIT, INC.
<S> ` <C>
Date: April 28, 1998 By: GEORGE L. CHAPMAN
------------------------ -------------------------
George L. Chapman,
Chairman, Chief Executive Officer, and
President
Date: April 28, 1998 By: EDWARD F. LANGE, JR.
----------------------- ---------------------------
Edward F. Lange, Jr.,
Chief Financial Officer
Date: April 28, 1998 By: MICHAEL A. CRABTREE
----------------------- -------------------------
Michael A. Crabtree,
Chief Accounting Officer
</TABLE>
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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
Regulation S-K Exhibit Description
-------------- -------------------
<S> <C>
10.1 Amended and Restated Employment Agreement effective as
of January 1, 1998 by and between Health Care REIT, Inc.
and George L. Chapman
10.2 Amended and Restated Employment Agreement effective as
of January 1, 1998 by and between Health Care REIT, Inc.
and Raymond W. Braun
10.3 Amended and Restated Employment Agreement effective as
of January 1, 1998 by and between Health Care REIT, Inc.
and Edward F. Lange, Jr.
10.4 Amended and Restated Employment Agreement effective as
of January 1, 1998 by and between Health Care REIT, Inc.
and Erin C. Ibele
27 Financial Data Schedule
99.1 Press release dated January 15, 1998
99.2 Press release dated January 20, 1998
99.3 Press release dated February 4, 1998
99.4 Press release dated February 10, 1998
99.5 Press release dated February 17, 1998
99.6 Press release dated March 11, 1998
99.7 Press release dated March 26, 1998
</TABLE>
<PAGE> 1
Exhibit 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated this 20th day of March, 1998,
but effective as of January 1, 1998, (the "Agreement"), by and between HEALTH
CARE REIT, INC., a Delaware corporation, (the "Corporation"), and GEORGE L.
CHAPMAN (the "Executive").
WHEREAS, the Corporation and the Executive entered into an
Employment Agreement, effective as of January 1, 1997;
WHEREAS, at its November, 1997 meeting, the Compensation
Committee of the Corporation's Board of Directors approved certain modifications
to the terms of such Employment Agreement.
WHEREAS, the Corporation 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 Corporation for such period
upon the terms and conditions set forth in this Amended and Restated Employment
Agreement.
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties, intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT
The Corporation hereby agrees to employ the Executive as the
Corporation's 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 Corporation'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
Corporation's Board of Directors, and shall have the powers and responsibilities
set forth in Article IV of the Corporation's By-Laws as well as such additional
powers and responsibilities consistent with his position as the Board of
Directors may assign to him.
Throughout the term of this Agreement, the Executive shall
devote his best efforts and all of his business time and services to the
business and affairs of the Corporation.
2. TERM OF AGREEMENT
The term of employment under this Agreement shall 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
<PAGE> 2
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.
Notwithstanding the foregoing, the Corporation 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 for 1997, and at a
rate of not less than $400,000 per annum for subsequent years, payable 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 Corporation each year during the term of this Agreement, with the actual
amount of such bonus to be determined by the Compensation Committee of the
Corporation's Board, using such performance measures as the Committee deems to
be appropriate.
4. ADDITIONAL COMPENSATION AND BENEFITS
The Executive shall receive the following additional
compensation and welfare and fringe benefits:
(a) Stock Options and Other Long-Term Incentives. The
Executive has been granted nonstatutory stock options and shares of
restricted stock pursuant to the terms of the Corporation's 1995 Stock
Incentive Plan. During the remaining term of the Agreement, any
additional stock options, restricted stock or other awards under the
1995 Stock Incentive Plan shall be at the discretion of the
Compensation Committee of the Corporation's Board.
(b) Disability Insurance. During the term of this Agreement,
the Corporation shall maintain a disability insurance policy on the
Executive with the maximum aggregate annual benefit commercially
available to the Corporation, up to a maximum of sixty percent (60%) of
his annual base salary. The Corporation shall provide at its expense
all supplemental disability coverage needed to provide this aggregate
benefit. The Executive will submit to such medical examination and
supply such information as is necessary for the Corporation to obtain
such insurance coverage.
(c) Health Insurance. The Corporation shall provide the
Executive and his dependents with health insurance coverage no less
favorable than that from time to time made available to other key
employees.
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(d) Business Clubs. The Corporation shall pay all initiation
fees and dues charged by up to two (2) dining clubs, country clubs,
athletic clubs, or similar organizations of which the Executive is a
member or desires to become a member.
(e) Conferences. The Corporation shall pay for the Executive
and his wife to attend up to three (3) business-related conferences,
conventions or seminars within the continental United States each year
during the term of this Agreement, including registration fees, travel
expenses and reasonable hotel and meal allowances.
(f) Vacation. The Executive shall be entitled to up to five
(5) weeks of vacation during each year during the term of this
Agreement and any extensions thereof, prorated for partial years.
(g) Medical Examinations. The Corporation shall pay or
reimburse the Executive for the cost of a physical examination by a
physician acceptable to the Executive in alternate years.
(h) Business Expenses. The Corporation shall reimburse the
Executive for all reasonable expenses he incurs in promoting the
Corporation's business, including expenses for travel and similar
items, upon presentation by the Executive from time to time of an
itemized account of such expenditures.
In addition to the benefits provided pursuant to the preceding
paragraphs of this Section 4, the Executive shall be eligible to participate in
such other executive compensation and retirement plans of the Corporation as are
applicable generally to other officers, and in such welfare benefit plans,
programs, practices and policies of the Corporation as are generally applicable
to other key employees, unless such participation would duplicate, directly or
indirectly, benefits already accorded to the Executive.
5. PAYMENTS UPON TERMINATION
(a) Involuntary Termination. If the Executive's employment is
terminated by the Corporation during the term of this Agreement, the Executive
shall be entitled to receive his base salary accrued through the date of
termination, any accrued but unpaid vacation pay, plus any bonuses earned but
unpaid with respect to fiscal years or other periods preceding the termination
date. The Executive shall also receive any nonforfeitable benefits payable to
him under the terms of any deferred compensation, incentive or other benefit
plans maintained by the Corporation, payable in accordance with the terms of the
applicable plan.
If the termination is not a termination for Cause, as
described in paragraph (c), a voluntary termination by the Executive as
described in paragraph (d), or a result of the Executive's death or disability,
then the Corporation shall also be obligated to make a series of monthly
severance payments to the Executive for each month during the remaining term of
this Agreement, but not less than twenty-four (24) months. Each monthly payment
shall be equal to one-twelfth
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(1/12th) of the sum of (i) the Executive's annual base salary, as in effect on
the date of termination, and (ii) the greater of (A) the average of the annual
bonuses paid to the Executive for the last two (2) fiscal years preceding the
termination date or (B) a minimum bonus equal to 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 not a termination for Cause
as described in paragraph (c), a voluntary termination by the Executive as
described in paragraph (d), or a result of the Executive's death or disability,
then:
(i) Any stock options, restricted stock or other awards
granted to the Executive under the Corporation'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
Corporation's expense under any life, health and disability insurance
programs maintained by the Corporation in which the Executive
participated at the time of his termination for the remaining term of
the Agreement (but not less than twelve (12) months), or until, if
earlier, the date the Executive obtains comparable coverage under
benefit plans maintained by a new employer; and
(iii) The Executive may elect, by delivering written notice to
the Corporation within thirty (30) days following such termination of
his employment, to receive from the Corporation a lump sum severance
payment in lieu of the monthly severance payments described in 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 Corporation. The Corporation shall deliver the
payment to the Executive, in the form of a bank cashier's check, within
ten (10) business days following the date on which the Corporation
receives written notice of the Executive's election.
(b) Disability. The Corporation shall be entitled to terminate
this Agreement, if the Board determines that the Executive has been unable to
attend to his duties for at least ninety (90) days because of a medically
diagnosable physical or mental condition, and has received a written opinion
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 earned but unpaid with respect to
fiscal years or other periods preceding the termination date. In addition, the
Corporation shall make a series of monthly disability payments to Executive,
each equal to one-twelfth (1/12th) of the sum of (i) his annual base salary, as
in effect at the time Executive became
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permanently disabled, and (ii) the greater of (A) the average of the annual
bonuses paid to the Executive for the last two (2) fiscal years preceding the
date of disability or (B) a minimum bonus equal to fifty percent (50%) of the
Executive's annual base salary. Payment of such disability benefit shall
commence with the month following the date of the termination by reason of
permanent disability and continue each month for the remaining current term of
this Agreement (but not less than twenty-four (24) months), but shall terminate
at an earlier date if the Executive returns to active employment, either with
the Corporation or otherwise. Any amounts payable under this Section 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 Corporation.
(c) Termination for Cause. If the Executive's employment is
terminated by the Corporation for Cause, the amount the Executive shall be
entitled to receive from the Corporation shall be limited to his base salary
accrued through the date of termination, any accrued but unpaid vacation pay,
plus any bonuses earned but unpaid with respect to the fiscal year of the
Corporation most recently ended, and any nonforfeitable benefits payable to the
Executive under the terms of deferred compensation, incentive or other benefit
plans maintained by the Corporation.
For purposes of this Agreement, the term "Cause" shall be
limited to (i) action by the Executive involving willful disloyalty to the
Corporation, such as embezzlement, fraud, misappropriation of corporate assets
or a breach of the covenants set forth in Sections 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.
(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 Corporation shall be limited to his base salary
accrued through the date of termination, any accrued but unpaid vacation pay,
plus any bonuses earned but unpaid with respect to any fiscal years or other
periods preceding the termination date, and any nonforfeitable benefits payable
to the Executive under the terms of any deferred compensation, incentive or
other benefit plans of the Corporation.
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 Corporation
(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 Corporation's Board of Directors.
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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 or other awards granted to the Executive
under the terms of the Corporation'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 (2) fiscal years of the
Corporation 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 (12)
months after a Change in Corporate Control, he may elect, by delivering written
notice to the Corporation within thirty (30) days following such termination of
his employment, to receive from the Corporation a lump sum severance payment in
lieu of the monthly 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 Corporation. The Corporation shall deliver the
payment to the Executive, in the form of a bank cashier's check, within ten (10)
business days following the date on which the Corporation receives written
notice of the Executive's election.
In addition, if the Executive is involuntarily terminated
(other than for Cause) or elects to voluntarily resign his employment within
twelve (12) months after a Change in Corporate Control, he shall be entitled to
continued coverage at the Corporation's expense under any life, health and
disability insurance programs maintained by the Corporation in which the
Executive participated at the time of his termination, which coverage shall be
continued until the expiration of the current term of the Agreement (but not
less than twelve (12) months) or until, if earlier, the date the Executive
obtains comparable coverage under benefit plans maintained by a new employer.
(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 Corporation's outstanding Common Stock (or the
equivalent in voting power of any
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classes or classes of securities of the Corporation entitled to vote
in elections of directors) by any corporation, or other person or
group (within the meaning of Section 14(d)(3) of the Securities
Exchange Act of 1934, as amended);
(2) Any transfer or sale of substantially all of the assets of the
Corporation, or any merger or consolidation of the Corporation into or
with another corporation in which the Corporation is not the surviving
entity, or any merger or consolidation of the Corporation into or with
another corporation in which the Corporation is the surviving entity
and, in connection with such merger or consolidation, all or part of
the outstanding shares of Common Stock shall be changed into or
exchanged for other stock or securities of the Corporation or any other
person, or cash, or any other property.
(3) Any election of persons to the Board of Directors which causes a
majority of the Board of Directors to consist of persons other than
"Continuing Directors". For this purpose, those persons who were
members of the Board of Directors on 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 Corporation's Common Stock.
(e) Notwithstanding anything else in this Agreement, if any
payment, accelerated vesting or other benefit provided by the Corporation to the
Executive in connection with a Change in Corporate Control, whether paid or
payable pursuant to the terms of this Agreement or otherwise (a "Parachute
Payment") is determined to be a parachute payment subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code (such excise tax, together
with any interest and penalties incurred by the Executive with respect to such
excise tax, are referred to as the "Excise Tax"), the Corporation shall make an
additional payment (the "Gross-Up Payment") to the Executive in an amount such
that the net amount of the Gross-Up Payment the Executive retains, after payment
by the Executive of all taxes imposed upon the Gross-Up Payment, including,
without limitation, the Excise Tax and any federal, state or local income taxes
(and any interest and penalties imposed with respect thereto) on the Gross-Up
Payment, will be equal to the Excise Tax liability imposed upon the Executive
with respect to all Parachute Payments (other than the Gross-Up Payment).
(f) If any dispute arises between the Corporation (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.
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7. DEATH
If the Executive dies during the term of this Agreement, the
Corporation shall pay to the Executive's estate a lump sum payment equal to the
sum of the Executive's base salary accrued through the date of death, any
accrued but unpaid vacation pay, plus any bonuses earned but unpaid with respect
to fiscal years or other periods preceding the date of death. In addition, the
Corporation shall pay to the Executive's surviving spouse (or such other
beneficiary as the Executive may designate in writing) a lump sum payment equal
to the present value of a series of monthly payments for each month during the
remaining term of the Agreement (but not less than twenty-four (24) months),
each in an amount equal to one-twelfth (1/12th) of the sum of (i) the
Executive's annual base salary, as in effect on the date of death, and (ii) the
greater of (A) the average of the annual bonuses paid to the Executive for the
last two (2) fiscal years preceding the date of death or (B) a minimum bonus
equal to fifty percent (50%) of the Executive's annual base salary. Such present
value shall be calculated using a discount rate equal to the interest rate on
90-day Treasury bills, as reported in the Wall Street Journal (or similar
publication) for the date of death. In addition, the death benefits payable by
reason of the Executive's death under any retirement, deferred compensation,
life insurance or other employee benefit plan maintained by the Corporation
shall be paid to the beneficiary designated by the Executive, and the stock
options, restricted stock or other awards held by the Executive under the
Corporation's stock plans shall become fully vested, and, in the case of stock
options, exercisable in full, in accordance with the terms of the applicable
plan or plans.
8. WITHHOLDING
The Corporation shall, to the extent permitted by law, have
the right to withhold and deduct from any payment hereunder any federal, state
or local taxes of any kind required by law to be withheld with respect to any
such payment.
9. PROTECTION OF CONFIDENTIAL INFORMATION
The Executive agrees that he will keep all confidential and
proprietary information of the Corporation or relating to its business
confidential, and that he will not (except with the Corporation's prior written
consent), while in the employ of the Corporation or thereafter, disclose any
such confidential information to any person, firm, corporation, association or
other entity, other than in furtherance of his duties hereunder, and then only
to those with a "need to know." The Executive shall not make use of any such
confidential information for his own purposes or for the benefit of any person,
firm, corporation, association or other entity (except the Corporation) under
any circumstances during or after the term of his employment. The foregoing
shall not apply to any information which is already in the public domain, or is
generally disclosed by the Corporation or is otherwise in the public domain at
the time of disclosure.
The Executive recognizes that because his work for the
Corporation may bring him into contact with confidential and proprietary
information of the Corporation, the restrictions of this Section 9 are required
for the reasonable protection of the Corporation and its investments and for the
Corporation's reliance on and confidence in the Executive.
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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 Corporation for Cause, engage in any business activities on behalf of any
enterprise which competes with the Corporation in the business of the passive
ownership of health care facilities, or passive investing in or lending to
health care-related enterprises. The Executive will be deemed to be engaged in
such competitive business activities if he participates in such a business
enterprise as an employee, officer, director, consultant, agent, partner,
proprietor, or other participant; provided that the ownership of no more than
two percent (2%) of the stock of a publicly traded corporation engaged in a
competitive business shall not be deemed to be engaging in competitive business
activities.
The Executive agrees that he shall not, for a period of one
year from the time his employment under this Agreement ceases (for whatever
reason), or, if later, during 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 Corporation 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.
11. INJUNCTIVE RELIEF
The Executive acknowledges and agrees that it would be
difficult to fully compensate the Corporation for damages resulting from the
breach or threatened breach of the covenants set forth in Sections 9 and 10 of
this Agreement and accordingly agrees that the Corporation shall be entitled to
temporary and injunctive relief, including temporary restraining orders,
preliminary injunctions and permanent injunctions, to enforce such provisions in
any action or proceeding instituted in the United States District Court for the
Northern District of Ohio or in any court in the State of Ohio having subject
matter jurisdiction. This provision with respect to injunctive relief shall not,
however, diminish the Corporation's right to claim and recover damages.
It is expressly understood and agreed that although the
parties consider the restrictions contained in this Agreement to be reasonable,
if a court determines that the time or territory or any other restriction
contained in this Agreement is an unenforceable restriction on the activities of
the Executive, no such provision of this Agreement shall be rendered void but
shall be deemed amended to apply as to such maximum time and territory and to
such extent as such court may judicially determine or indicate to be reasonable.
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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 CORPORATION:
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 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 Corporation, 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 Corporation and the Executive. The Agreement may be
amended at any time by mutual written agreement of the parties hereto.
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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 Corporation has caused this Agreement
to be duly executed, and the Executive has hereunto set his hand, as of the day
and year first above written.
ATTEST: HEALTH CARE REIT, INC.
/s/ ERIN C. IBELE By /s/ RAYMOND W. BRAUN
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Erin C. Ibele Raymond W. Braun
Corporate Secretary Vice President and Chief
Operating Officer
WITNESS: EXECUTIVE:
/s/ ERIN C. IBELE /s/ GEORGE L. CHAPMAN
- ---------------------------------- ------------------------------------
Erin C. Ibele George L. Chapman
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<PAGE> 1
Exhibit 10.2
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated this 20th day of March,
1998, but effective as of January 1, 1998, (the "Agreement"), by and between
HEALTH CARE REIT, INC., a Delaware corporation, (the "Corporation"), and RAYMOND
W. BRAUN (the "Executive").
WHEREAS, the Corporation and the Executive entered into an
Employment Agreement, effective as of January 1, 1997;
WHEREAS, at its November, 1997 meeting, the Compensation
Committee of the Corporation's Board of Directors approved certain modifications
to the terms of such Employment Agreement.
WHEREAS, the Corporation 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 Corporation for such period
upon the terms and conditions set forth in this Amended and Restated Employment
Agreement.
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties, intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT
The Corporation hereby agrees to employ the Executive as the
Corporation's 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 Corporation's Chief
Executive Officer ("CEO"), and shall have the powers and responsibilities set
forth in Article IV of the Corporation's By-Laws as well as such additional
powers and responsibilities consistent with his position as the 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 Corporation.
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
<PAGE> 2
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.
Notwithstanding the foregoing, the Corporation 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 for 1997, and at a
rate of not less than $200,000 per annum for subsequent years, payable 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 Corporation each year during the term of this Agreement, with the actual
amount of such bonus to be determined by the Compensation Committee of the
Corporation's Board, using such performance measures as the Committee deems to
be appropriate.
4. ADDITIONAL COMPENSATION AND BENEFITS
The Executive shall receive the following additional
compensation and welfare and fringe benefits:
(a) Stock Options and Other Long-Term Incentives. The
Executive has been granted incentive stock options, nonstatutory stock
options and shares of restricted stock pursuant to the terms of the
Corporation's 1995 Stock Incentive Plan. During the remaining term of
the Agreement, any additional stock options, restricted stock or other
awards under the 1995 Stock Incentive Plan shall be at the discretion
of the Compensation Committee of the Corporation's Board.
(b) Health Insurance. The Corporation 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
(3) weeks of vacation during each year during the term of this
Agreement and any extensions thereof, prorated for partial years.
(d) Business Expenses. The Corporation shall reimburse the
Executive for all reasonable expenses he incurs in promoting the
Corporation's business, including expenses
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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 Corporation as are
applicable generally to other officers, and in such welfare benefit plans,
programs, practices and policies of the Corporation as are generally applicable
to other key employees, unless such participation would duplicate, directly or
indirectly, benefits already accorded to the Executive.
5. PAYMENTS UPON TERMINATION
(a) Involuntary Termination. If the Executive's employment is
terminated by the Corporation during the term of this Agreement, the Executive
shall be entitled to receive his base salary accrued through the date of
termination, any accrued but unpaid vacation pay, plus any bonuses earned but
unpaid with respect to fiscal years or other periods preceding the termination
date. The Executive shall also receive any nonforfeitable benefits payable to
him under the terms of any deferred compensation, incentive or other benefit
plans maintained by the Corporation, payable in accordance with the terms of the
applicable plan.
If the termination is not a termination for Cause, as
described in paragraph (c), a voluntary termination by the Executive as
described in paragraph (d), or a result of the Executive's death or disability,
then the Corporation shall also be obligated to make a series of monthly
severance payments to the Executive for each month during the remaining term of
this Agreement, but not less than 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 last fiscal year preceding the
termination date 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 not a termination for Cause
as described in paragraph (c), a voluntary termination by the Executive as
described in paragraph (d), or a result of the Executive's death or disability,
then:
(i) Any stock options, restricted stock or other awards
granted to the Executive under the Corporation'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
Corporation's expense under any life, health and disability insurance
programs maintained by the Corporation in which the Executive
participated at the time of his termination for the
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remaining term of the Agreement (but not less than six (6) months), or
until, if earlier, the date the Executive obtains comparable coverage
under benefit plans maintained by a new employer; and
(iii) The Executive may elect, by delivering written notice to
the Corporation within thirty (30) days following such termination of
his employment, to receive from the Corporation a lump sum severance
payment in lieu of the monthly severance payments described in 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 Corporation. The Corporation shall deliver the
payment to the Executive, in the form of a bank cashier's check, within
ten (10) business days following the date on which the Corporation
receives written notice of the Executive's election.
(b) Disability. The Corporation shall be entitled to terminate
this Agreement, if the Board determines that the Executive has been unable to
attend to his duties for at least ninety (90) days because of a medically
diagnosable physical or mental condition, and has received a written opinion
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 earned but unpaid with respect to
fiscal years or other periods preceding the termination date. In addition, the
Corporation shall make a series of monthly disability payments to Executive,
each equal to one-twelfth (1/12th) of the sum of (i) his annual base salary, as
in effect at the time Executive became permanently disabled, and (ii) the
greater of (A) the annual bonus paid to the Executive for the last fiscal year
preceding the date of disability or (B) a minimum bonus equal to forty percent
(40%) of the Executive's annual base salary. Payment of such disability benefit
shall commence with the month following the date of the termination by reason of
permanent disability and continue each month for the remaining current term of
this Agreement (but not less than twelve (12) months), but shall terminate at an
earlier date if the Executive returns to active employment, either with the
Corporation or otherwise. Any amounts payable under this Section 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
Corporation.
(c) Termination for Cause. If the Executive's employment is
terminated by the Corporation for Cause, the amount the Executive shall be
entitled to receive from the Corporation shall be limited to his base salary
accrued through the date of termination, any accrued but unpaid vacation pay,
plus any bonuses earned but unpaid with respect to the fiscal year of the
Corporation most recently ended, and any nonforfeitable benefits payable to the
Executive under the terms of any deferred compensation, incentive or other
benefit plans maintained by the Corporation.
For purposes of this Agreement, the term "Cause" shall be
limited to (i) action by the Executive involving willful disloyalty to the
Corporation, such as embezzlement, fraud, misappropriation of corporate assets
or a breach of the covenants set forth in Sections 9 and 10
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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 Corporation'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 Corporation shall be limited to his base salary
accrued through the date of termination, any accrued but unpaid vacation pay,
plus any bonuses earned but unpaid with respect to any fiscal years or other
periods preceding the termination date, and any nonforfeitable benefits payable
to the Executive under the terms of any deferred compensation, incentive or
other benefit plans of the Corporation.
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
Corporation (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 Corporation'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 or other awards granted to the Executive
under the terms of the Corporation'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
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 Corporation 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 (12)
months after a Change in Corporate Control, he may elect, by delivering written
notice to the Corporation within thirty (30) days following such termination of
his employment, to receive from the Corporation a lump sum severance payment in
lieu of the monthly payments described in the preceding paragraph. The
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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 Corporation. The Corporation shall deliver
the payment to the Executive, in the form of a bank cashier's check, within ten
(10) business days following the date on which the Corporation receives written
notice of the Executive's election.
In addition, if the Executive is involuntarily terminated
(other than for Cause) or elects to voluntarily resign his employment within
twelve (12) months after a Change in Corporate Control, he shall be entitled to
continued coverage at the Corporation's expense under any life, health and
disability insurance programs maintained by the Corporation in which the
Executive participated at the time of his termination, which coverage shall be
continued until the expiration of the current term of the Agreement (but not
less than six (6) months) or until, 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 Corporation's outstanding Common Stock (or the
equivalent in voting power of any classes or classes of securities of
the Corporation entitled to vote in elections of directors) by any
corporation, or other person or group (within the meaning of Section
14(d)(3) of the Securities Exchange Act of 1934, as amended);
(2) Any transfer or sale of substantially all of the assets of the
Corporation, or any merger or consolidation of the Corporation into or
with another corporation in which the Corporation is not the surviving
entity;
(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 Corporation's Common Stock, and the
Board of Directors appoints a special committee of the Board to
consider the Corporation's response to such tender offer.
(e) Notwithstanding anything else in this Agreement, if any
payment, accelerated vesting or other benefit provided by the Corporation to the
Executive in connection with a Change in Corporate Control, whether paid or
payable pursuant to the terms of this
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Agreement or otherwise (a "Parachute Payment") is determined to be a parachute
payment subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code (such excise tax, together with any interest and penalties incurred
by the Executive with respect to such excise tax, are referred to as the "Excise
Tax"), the Corporation shall make an additional payment (the "Gross-Up Payment")
to the Executive in an amount such that the net amount of the Gross-Up Payment
the Executive retains, after payment by the Executive of all taxes imposed upon
the Gross-Up Payment, including, without limitation, the Excise Tax and any
federal, state or local income taxes (and any interest and penalties imposed
with respect thereto) on the Gross-Up Payment, will be equal to the Excise Tax
liability imposed upon the Executive with respect to all Parachute Payments
(other than the Gross-Up Payment).
7. DEATH
If the Executive dies during the term of this Agreement, the
Corporation shall pay to the Executive's estate a lump sum payment equal to the
sum of the Executive's base salary accrued through the date of death, any
accrued but unpaid vacation pay, plus any bonuses earned but unpaid with respect
to fiscal years or other periods preceding the date of death. In addition, the
Corporation shall pay to the Executive's surviving spouse (or such other
beneficiary as the Executive may designate in writing) a lump sum payment equal
to the present value of a series of monthly payments for each month during the
remaining term of the Agreement (but not less than twelve (12) months), each in
an amount equal to one-twelfth (1/12th) of the sum of (i) the Executive's annual
base salary, as in effect on the date of death, and (ii) the greater of (A) the
annual bonus paid to the Executive for the last fiscal year preceding the date
of death or (B) a minimum bonus equal to forty percent (40%) of the Executive's
annual base salary. Such present value shall be calculated using a discount rate
equal to the interest rate on 90-day Treasury bills, as reported in the Wall
Street Journal (or similar publication) for the date of death. In addition, the
death benefits payable by reason of the Executive's death under any retirement,
deferred compensation, life insurance or other employee benefit plan maintained
by the Corporation shall be paid to the beneficiary designated by the Executive,
and the stock options, restricted stock or other awards held by the Executive
under the Corporation's stock plans shall become fully vested, and, in the case
of stock options, exercisable in full, in accordance with the terms of the
applicable plan or plans.
8. WITHHOLDING
The Corporation shall, to the extent permitted by law, have
the right to withhold and deduct from any payment hereunder any federal, state
or local taxes of any kind required by law to be withheld with respect to any
such payment.
9. PROTECTION OF CONFIDENTIAL INFORMATION
The Executive agrees that he will keep all confidential and
proprietary information of the Corporation or relating to its business
confidential, and that he will not (except with the Corporation's prior written
consent), while in the employ of the Corporation or thereafter, disclose any
such confidential information to any person, firm, corporation, association or
other entity, other
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than in furtherance of his duties hereunder, and then only to those with a "need
to know." The Executive shall not make use of any such confidential information
for his own purposes or for the benefit of any person, firm, corporation,
association or other entity (except the Corporation) under any circumstances
during or after the term of his employment. The foregoing shall not apply to any
information which is already in the public domain, or is generally disclosed by
the Corporation or is otherwise in the public domain at the time of disclosure.
The Executive recognizes that because his work for the
Corporation may bring him into contact with confidential and proprietary
information of the Corporation, the restrictions of this Section 9 are required
for the reasonable protection of the Corporation and its investments and for the
Corporation'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 Corporation 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 Corporation in the business of the passive
ownership of health care facilities, or passive investing in or lending to
health care-related enterprises. The Executive will be deemed to be engaged in
such competitive business activities if he participates in such a business
enterprise as an employee, officer, director, consultant, agent, partner,
proprietor, or other participant; provided that the ownership of no more than
two percent (2%) of the stock of a publicly traded corporation engaged in a
competitive business shall not be deemed to be engaging in competitive business
activities.
The Executive agrees that he shall not, for a period of one
year from the time his employment under this Agreement ceases (for whatever
reason), or, if later, during 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 Corporation 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.
11. INJUNCTIVE RELIEF
The Executive acknowledges and agrees that it would be
difficult to fully compensate the Corporation for damages resulting from the
breach or threatened breach of the covenants set forth in Sections 9 and 10 of
this Agreement and accordingly agrees that the Corporation shall be entitled to
temporary and injunctive relief, including temporary restraining orders,
preliminary injunctions and permanent injunctions, to enforce such provisions in
any action
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or proceeding instituted in the United States District Court for the Northern
District of Ohio or in any court in the State of Ohio having subject matter
jurisdiction. This provision with respect to injunctive relief shall not,
however, diminish the Corporation's right to claim and recover damages.
It is expressly understood and agreed that although the
parties consider the restrictions contained in this Agreement to be reasonable,
if a court determines that the time or territory or any other restriction
contained in this Agreement is an unenforceable restriction on the activities of
the Executive, no such provision of this Agreement shall be rendered void but
shall be deemed amended to apply as to such maximum time and territory and to
such extent as such court may judicially determine or indicate to be reasonable.
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 CORPORATION:
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.
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 Corporation, but neither this Agreement nor any rights hereunder shall be
assignable or otherwise subject to hypothecation by the Executive.
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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 Corporation 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 Corporation has caused this Agreement
to be duly executed, and the Executive has hereunto set his hand, as of the day
and year first above written.
ATTEST: HEALTH CARE REIT, INC.
/s/ ERIN C. IBELE By /s/ GEORGE L. CHAPMAN
- ---------------------------------- ------------------------------------
Erin C. Ibele George L. Chapman
Corporate Secretary Chief Executive Officer
WITNESS: EXECUTIVE:
/s/ ERIN C. IBELE /s/ RAYMOND W. BRAUN
- ---------------------------------- -----------------------------------
Erin C. Ibele Raymond W. Braun
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Exhibit 10.3
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated this 27th day of March, 1998,
but effective as of January 1, 1998, (the "Agreement"), by and between HEALTH
CARE REIT, INC., a Delaware corporation, (the "Corporation"), and EDWARD F.
LANGE, JR. (the "Executive").
WHEREAS, the Corporation and the Executive entered into an
Employment Agreement, effective as of January 1, 1997;
WHEREAS, at its November, 1997 meeting, the Compensation
Committee of the Corporation's Board of Directors approved certain modifications
to the terms of such Employment Agreement.
WHEREAS, the Corporation 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 Corporation for such period
upon the terms and conditions set forth in this Amended and Restated Employment
Agreement.
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties, intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT
The Corporation hereby agrees to employ the Executive as the
Corporation's 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 Corporation's Chief Executive Officer
("CEO"), and shall have the powers and responsibilities set forth in Article IV
of the Corporation's By-Laws as well as such additional powers and
responsibilities consistent with his position as the 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 Corporation.
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.
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Notwithstanding the foregoing, the Corporation 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 for 1997, and at a
rate of not less than $200,000 per annum for subsequent years, payable 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 Corporation each year during the term of this Agreement, with the actual
amount of such bonus to be determined by the Compensation Committee of the
Corporation's Board, using such performance measures as the Committee deems to
be appropriate.
4. ADDITIONAL COMPENSATION AND BENEFITS
The Executive shall receive the following additional
compensation and welfare and fringe benefits:
(a) Stock Options and Other Long-Term Incentives. The
Executive has been granted incentive stock options, nonstatutory stock
options and shares of restricted stock pursuant to the terms of the
Corporation's 1995 Stock Incentive Plan. During the remaining term of
the Agreement, any additional stock options, restricted stock or other
awards under the 1995 Stock Incentive Plan shall be at the discretion
of the Compensation Committee of the Corporation's Board.
(b) Health Insurance. The Corporation 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
(3) weeks of vacation during each year during the term of this
Agreement and any extensions thereof, prorated for partial years.
(d) Business Expenses. The Corporation shall reimburse the
Executive for all reasonable expenses he incurs in promoting the
Corporation's business, including expenses for travel and similar
items, upon presentation by the Executive from time to time of an
itemized account of such expenditures.
In addition to the benefits provided pursuant to the preceding
paragraphs of this Section 4, the Executive shall be eligible to participate in
such other executive compensation and
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retirement plans of the Corporation as are applicable generally to other
officers, and in such welfare benefit plans, programs, practices and policies of
the Corporation as are generally applicable to other key employees, unless such
participation would duplicate, directly or indirectly, benefits already accorded
to the Executive.
5. PAYMENTS UPON TERMINATION
(a) Involuntary Termination. If the Executive's employment is
terminated by the Corporation during the term of this Agreement, the Executive
shall be entitled to receive his base salary accrued through the date of
termination, any accrued but unpaid vacation pay, plus any bonuses earned but
unpaid with respect to fiscal years or other periods preceding the termination
date. The Executive shall also receive any nonforfeitable benefits payable to
him under the terms of any deferred compensation, incentive or other benefit
plans maintained by the Corporation, payable in accordance with the terms of the
applicable plan.
If the termination is not a termination for Cause, as
described in paragraph (c), a voluntary termination by the Executive as
described in paragraph (d), or a result of the Executive's death or disability,
then the Corporation shall also be obligated to make a series of monthly
severance payments to the Executive for each month during the remaining term of
this Agreement, but not less than 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 last fiscal year preceding the
termination date 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 not a termination for Cause
as described in paragraph (c), a voluntary termination by the Executive as
described in paragraph (d), or a result of the Executive's death or disability,
then:
(i) Any stock options, restricted stock or other awards
granted to the Executive under the Corporation'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
Corporation's expense under any life, health and disability insurance
programs maintained by the Corporation in which the Executive
participated at the time of his termination for the remaining term of
the Agreement (but not less than six (6) months), or until, if earlier,
the date the Executive obtains comparable coverage under benefit plans
maintained by a new employer; and
(iii) The Executive may elect, by delivering written notice to
the Corporation within thirty (30) days following such termination of
his employment, to receive from the Corporation a lump sum severance
payment in lieu of the monthly severance payments
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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 Corporation. The Corporation
shall deliver the payment to the Executive, in the form of a bank
cashier's check, within ten (10) business days following the date on
which the Corporation receives written notice of the Executive's
election.
(b) Disability. The Corporation shall be entitled to terminate
this Agreement, if the Board determines that the Executive has been unable to
attend to his duties for at least ninety (90) days because of a medically
diagnosable physical or mental condition, and has received a written opinion
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 earned but unpaid with respect to
fiscal years or other periods preceding the termination date. In addition, the
Corporation shall make a series of monthly disability payments to Executive,
each equal to one-twelfth (1/12th) of the sum of (i) his annual base salary, as
in effect at the time Executive became permanently disabled, and (ii) the
greater of (A) the annual bonus paid to the Executive for the last fiscal year
preceding the date of disability or (B) a minimum bonus equal to forty percent
(40%) of the Executive's annual base salary. Payment of such disability benefit
shall commence with the month following the date of the termination by reason of
permanent disability and continue each month for the remaining current term of
this Agreement (but not less than twelve (12) months), but shall terminate at an
earlier date if the Executive returns to active employment, either with the
Corporation or otherwise. Any amounts payable under this Section 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
Corporation.
(c) Termination for Cause. If the Executive's employment is
terminated by the Corporation for Cause, the amount the Executive shall be
entitled to receive from the Corporation shall be limited to his base salary
accrued through the date of termination, any accrued but unpaid vacation pay,
plus any bonuses earned but unpaid with respect to the fiscal year of the
Corporation most recently ended, and any nonforfeitable benefits payable to the
Executive under the terms of any deferred compensation, incentive or other
benefit plans maintained by the Corporation.
For purposes of this Agreement, the term "Cause" shall be
limited to (i) action by the Executive involving willful disloyalty to the
Corporation, such as embezzlement, fraud, misappropriation of corporate assets
or a breach of the covenants set forth in Sections 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 Corporation'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
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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 Corporation shall be limited to his base salary accrued through the
date of termination, any accrued but unpaid vacation pay, plus any bonuses
earned but unpaid with respect to any fiscal years or other periods preceding
the termination date, and any nonforfeitable benefits payable to the Executive
under the terms of any deferred compensation, incentive or other benefit plans
of the Corporation.
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 Corporation (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 Corporation'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 or other awards granted to the Executive
under the terms of the Corporation'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
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 Corporation 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 (12)
months after a Change in Corporate Control, he may elect, by delivering written
notice to the Corporation within thirty (30) days following such termination of
his employment, to receive from the Corporation a lump sum severance payment in
lieu of the monthly 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 Corporation. The Corporation shall deliver the
payment to the Executive, in the form of a bank cashier's check, within ten (10)
business days following the date on which the Corporation receives written
notice of the Executive's election.
In addition, if the Executive is involuntarily terminated
(other than for Cause) or elects to voluntarily resign his employment within
twelve (12) months after a Change in Corporate Control, he shall be entitled to
continued coverage at the Corporation's expense under any life, health and
disability insurance programs maintained by the Corporation in which the
Executive
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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 until, 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 Corporation's outstanding Common Stock (or the
equivalent in voting power of any classes or classes of securities of
the Corporation entitled to vote in elections of directors) by any
corporation, or other person or group (within the meaning of Section
14(d)(3) of the Securities Exchange Act of 1934, as amended);
(2) Any transfer or sale of substantially all of the assets of the
Corporation, or any merger or consolidation of the Corporation into or
with another corporation in which the Corporation is not the surviving
entity;
(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 Corporation's Common Stock, and the
Board of Directors appoints a special committee of the Board to
consider the Corporation's response to such tender offer.
(e) Notwithstanding anything else in this Agreement, if any
payment, accelerated vesting or other benefit provided by the Corporation to the
Executive in connection with a Change in Corporate Control, whether paid or
payable pursuant to the terms of this Agreement or otherwise (a "Parachute
Payment") is determined to be a parachute payment subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code (such excise tax, together
with any interest and penalties incurred by the Executive with respect to such
excise tax, are referred to as the "Excise Tax"), the Corporation shall make an
additional payment (the "Gross-Up Payment") to the Executive in an amount such
that the net amount of the Gross-Up Payment the Executive retains, after payment
by the Executive of all taxes imposed upon the Gross-Up Payment, including,
without limitation, the Excise Tax and any federal, state or local income taxes
(and any interest and penalties imposed with respect thereto) on the Gross-Up
Payment, will be equal to the Excise Tax liability imposed upon the Executive
with respect to all Parachute Payments (other than the Gross-Up Payment).
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7. DEATH
If the Executive dies during the term of this Agreement, the
Corporation shall pay to the Executive's estate a lump sum payment equal to the
sum of the Executive's base salary accrued through the date of death, any
accrued but unpaid vacation pay, plus any bonuses earned but unpaid with respect
to fiscal years or other periods preceding the date of death. In addition, the
Corporation shall pay to the Executive's surviving spouse (or such other
beneficiary as the Executive may designate in writing) a lump sum payment equal
to the present value of a series of monthly payments for each month during the
remaining term of the Agreement (but not less than twelve (12) months), each in
an amount equal to one-twelfth (1/12th) of the sum of (i) the Executive's annual
base salary, as in effect on the date of death, and (ii) the greater of (A) the
annual bonus paid to the Executive for the last fiscal year preceding the date
of death or (B) a minimum bonus equal to forty percent (40%) of the Executive's
annual base salary. Such present value shall be calculated using a discount rate
equal to the interest rate on 90-day Treasury bills, as reported in the Wall
Street Journal (or similar publication) for the date of death. In addition, the
death benefits payable by reason of the Executive's death under any retirement,
deferred compensation, life insurance or other employee benefit plan maintained
by the Corporation shall be paid to the beneficiary designated by the Executive,
and the stock options, restricted stock or other awards held by the Executive
under the Corporation's stock plans shall become fully vested, and, in the case
of stock options, exercisable in full, in accordance with the terms of the
applicable plan or plans.
8. WITHHOLDING
The Corporation shall, to the extent permitted by law, have
the right to withhold and deduct from any payment hereunder any federal, state
or local taxes of any kind required by law to be withheld with respect to any
such payment.
9. PROTECTION OF CONFIDENTIAL INFORMATION
The Executive agrees that he will keep all confidential and
proprietary information of the Corporation or relating to its business
confidential, and that he will not (except with the Corporation's prior written
consent), while in the employ of the Corporation or thereafter, disclose any
such confidential information to any person, firm, corporation, association or
other entity, other than in furtherance of his duties hereunder, and then only
to those with a "need to know." The Executive shall not make use of any such
confidential information for his own purposes or for the benefit of any person,
firm, corporation, association or other entity (except the Corporation) under
any circumstances during or after the term of his employment. The foregoing
shall not apply to any information which is already in the public domain, or is
generally disclosed by the Corporation or is otherwise in the public domain at
the time of disclosure.
The Executive recognizes that because his work for the
Corporation may bring him into contact with confidential and proprietary
information of the Corporation, the restrictions of this Section 9 are required
for the reasonable protection of the Corporation and its investments and for the
Corporation's reliance on and confidence in the Executive.
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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 Corporation 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 Corporation in the business of the passive
ownership of health care facilities, or passive investing in or lending to
health care-related enterprises. The Executive will be deemed to be engaged in
such competitive business activities if he participates in such a business
enterprise as an employee, officer, director, consultant, agent, partner,
proprietor, or other participant; provided that the ownership of no more than
two percent (2%) of the stock of a publicly traded corporation engaged in a
competitive business shall not be deemed to be engaging in competitive business
activities.
The Executive agrees that he shall not, for a period of one
year from the time his employment under this Agreement ceases (for whatever
reason), or, if later, during 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 Corporation 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.
11. INJUNCTIVE RELIEF
The Executive acknowledges and agrees that it would be
difficult to fully compensate the Corporation for damages resulting from the
breach or threatened breach of the covenants set forth in Sections 9 and 10 of
this Agreement and accordingly agrees that the Corporation shall be entitled to
temporary and injunctive relief, including temporary restraining orders,
preliminary injunctions and permanent injunctions, to enforce such provisions in
any action or proceeding instituted in the United States District Court for the
Northern District of Ohio or in any court in the State of Ohio having subject
matter jurisdiction. This provision with respect to injunctive relief shall not,
however, diminish the Corporation's right to claim and recover damages.
It is expressly understood and agreed that although the
parties consider the restrictions contained in this Agreement to be reasonable,
if a court determines that the time or territory or any other restriction
contained in this Agreement is an unenforceable restriction on the activities of
the Executive, no such provision of this Agreement shall be rendered void but
shall be deemed amended to apply as to such maximum time and territory and to
such extent as such court may judicially determine or indicate to be reasonable.
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):
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IF TO THE CORPORATION:
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.
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 Corporation, 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 Corporation and the Executive. The Agreement may be
amended at any time by mutual written agreement of the parties hereto.
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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 Corporation has caused this Agreement
to be duly executed, and the Executive has hereunto set his hand, as of the day
and year first above written.
ATTEST: HEALTH CARE REIT, INC.
/s/ ERIN C. IBELE By /s/ GEORGE L. CHAPMAN
- ---------------------------------- -------------------------------------
Erin C. Ibele George L. Chapman
Corporate Secretary Chief Executive Officer
WITNESS: EXECUTIVE:
/s/ ERIN C. IBELE /s/ EDWARD F. LANGE, JR.
- ---------------------------------- -------------------------------------
Erin C. Ibele Edward F. Lange, Jr.
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Exhibit 10.4
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated this 20th day of March, 1998,
but effective as of January 1, 1998, (the "Agreement"), by and between HEALTH
CARE REIT, INC., a Delaware corporation, (the "Corporation"), and ERIN C. IBELE
(the "Executive").
WHEREAS, the Corporation and the Executive entered into an
Employment Agreement, effective as of January 1, 1997;
WHEREAS, at its November, 1997 meeting, the Compensation
Committee of the Corporation's Board of Directors approved certain modifications
to the terms of such Employment Agreement.
WHEREAS, the Corporation 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 Corporation for such period
upon the terms and conditions set forth in this Amended and Restated Employment
Agreement.
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties, intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT
The Corporation hereby agrees to employ the Executive as the
Corporation's 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 Corporation's Chief Executive
Officer ("CEO"), and shall have the powers and responsibilities set forth in
Article IV of the Corporation's By-Laws as well as such additional powers and
responsibilities consistent with 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 Corporation.
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
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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 Corporation 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 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 for 1997, and at a
rate of not less than $92,500 per annum for subsequent years, payable 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 Corporation each year during the term of this Agreement, with the actual
amount of such bonus to be determined by the Compensation Committee of the
Corporation's Board, using such performance measures as the Committee deems to
be appropriate.
4. ADDITIONAL COMPENSATION AND BENEFITS
The Executive shall receive the following additional
compensation and welfare and fringe benefits:
(a) Stock Options and Other Long-Term Incentives. The
Executive has been granted incentive stock options, nonstatutory stock
options, and shares of restricted stock pursuant to the terms of the
Corporation's 1995 Stock Incentive Plan. During the remaining term of
the Agreement, any additional stock options, restricted stock or other
awards under the 1995 Stock Incentive Plan shall be at the discretion
of the Compensation Committee of the Corporation's Board.
(b) Health Insurance. The Corporation 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
(3) weeks of vacation during each year during the term of this
Agreement and any extensions thereof, prorated for partial years.
(d) Business Expenses. The Corporation shall reimburse the
Executive for all reasonable expenses she incurs in promoting the
Corporation's business, including expenses
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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 Corporation as are
applicable generally to other officers, and in such welfare benefit plans,
programs, practices and policies of the Corporation as are generally applicable
to other key employees, unless such participation would duplicate, directly or
indirectly, benefits already accorded to the Executive.
5. PAYMENTS UPON TERMINATION
(a) Involuntary Termination. If the Executive's employment is
terminated by the Corporation during the term of this Agreement, the Executive
shall be entitled to receive her base salary accrued through the date of
termination, any accrued but unpaid vacation pay, plus any bonuses earned but
unpaid with respect to fiscal years or other periods preceding the termination
date. The Executive shall also receive any nonforfeitable benefits payable to
her under the terms of any deferred compensation, incentive or other benefit
plan maintained by the Corporation, payable in accordance with the terms of the
applicable plan.
If the termination is not a termination for Cause, as
described in paragraph (c), a voluntary termination by the Executive as
described in paragraph (d), or a result of the Executive's death or disability,
then the Corporation shall also be obligated to make a series of monthly
severance payments to the Executive for each month during the remaining term of
this Agreement, but not less than 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 last fiscal year preceding the
termination date or (B) a minimum bonus equal to thirty percent (30%) 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 not a termination for Cause
as described in paragraph (c), a voluntary termination by the Executive as
described in paragraph (d), or a result of the Executive's death or disability,
then:
(i) Any stock options, restricted stock or other awards
granted to the Executive under the Corporation'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
Corporation's expense under any life, health and disability insurance
programs maintained by the Corporation in which the Executive
participated at the time of her termination for the
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remaining term of the Agreement (but not less than six (6) months), or
until, if earlier, the date the Executive obtains comparable coverage
under benefit plans maintained by a new employer; and
(iii) The Executive may elect, by delivering written notice to
the Corporation within thirty (30) days following such termination of
her employment, to receive from the Corporation 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 Corporation. The Corporation shall deliver the
payment to the Executive, in the form of a bank cashier's check, within
ten (10) business days following the date on which the Corporation
receives written notice of the Executive's election.
(b) Disability. The Corporation shall be entitled to terminate
this Agreement, if the Board determines that the Executive has been unable to
attend to 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 earned but unpaid with respect to
fiscal years or other periods preceding the termination date. In addition, the
Corporation shall make a series of monthly disability payments to Executive,
each equal to one-twelfth (1/12th) of the sum of (i) her annual base salary, as
in effect at the time Executive became permanently disabled, and (ii) the
greater of (A) the annual bonus paid to the Executive for the last fiscal year
preceding the date of disability or (B) a minimum bonus equal to thirty percent
(30%) of the Executive's annual base salary. Payment of such disability benefit
shall commence with the month following the date of the termination by reason of
permanent disability and continue each month for the remaining current term of
this Agreement (but not less than twelve (12) months), but shall terminate at an
earlier date if the Executive returns to active employment, either with the
Corporation or otherwise. Any amounts payable under this Section 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
Corporation.
(c) Termination for Cause. If the Executive's employment is
terminated by the Corporation for Cause, the amount the Executive shall be
entitled to receive from the Corporation shall be limited to her base salary
accrued through the date of termination, any accrued but unpaid vacation pay,
plus any bonuses earned but unpaid with respect to the fiscal year of the
Corporation most recently ended, and any nonforfeitable benefits payable to the
Executive under the terms of deferred compensation, incentive or other benefit
plans maintained by the Corporation.
For purposes of this Agreement, the term "Cause" shall be
limited to (i) action by the Executive involving willful disloyalty to the
Corporation, such as embezzlement, fraud, misappropriation of corporate assets
or a breach of the covenants set forth in Sections 9 and 10
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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 Corporation'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 Corporation shall be limited to her base salary
accrued through the date of termination, any accrued but unpaid vacation pay,
plus any bonuses earned but unpaid with respect to any fiscal years or other
periods preceding the termination date, and any nonforfeitable benefits payable
to the Executive under the terms of any deferred compensation, incentive or
other benefit plans of the Corporation.
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 Corporation
(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 Corporation'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 or other awards granted to the Executive
under the terms of the Corporation'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-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 Corporation ending prior to the
Change in Corporate Control or (B) a minimum bonus equal to thirty percent (30%)
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 (12)
months after a Change in Corporate Control, she may elect, by delivering written
notice to the Corporation within thirty (30) days following such termination of
her employment, to receive from the Corporation a lump sum severance payment in
lieu of the monthly payments described in the preceding paragraph. The
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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 Corporation. The Corporation shall deliver
the payment to the Executive, in the form of a bank cashier's check, within ten
(10) business days following the date on which the Corporation receives written
notice of the Executive's election.
In addition, if the Executive is involuntarily terminated
(other than for Cause) or elects to voluntarily resign her employment within
twelve (12) months after a Change in Corporate Control, she shall be entitled to
continued coverage at the Corporation's expense under any life, health and
disability insurance programs maintained by the Corporation in which the
Executive participated at the time of 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 until, 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 Corporation's outstanding Common Stock (or the
equivalent in voting power of any classes or classes of securities of
the Corporation entitled to vote in elections of directors) by any
corporation, or other person or group (within the meaning of Section
14(d)(3) of the Securities Exchange Act of 1934, as amended);
(2) Any transfer or sale of substantially all of the assets of the
Corporation, or any merger or consolidation of the Corporation into or
with another corporation in which the Corporation is not the surviving
entity;
(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 Corporation's Common Stock, and the
Board of Directors appoints a special committee of the Board to
consider the Corporation's response to such tender offer.
(e) Notwithstanding anything else in this Agreement, if any
payment, accelerated vesting or other benefit provided by the Corporation to the
Executive in connection with a Change in Corporate Control, whether paid or
payable pursuant to the terms of this
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Agreement or otherwise (a "Parachute Payment") is determined to be a parachute
payment subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code (such excise tax, together with any interest and penalties incurred
by the Executive with respect to such excise tax, are referred to as the "Excise
Tax"), the Corporation shall make an additional payment (the "Gross-Up Payment")
to the Executive in an amount such that the net amount of the Gross-Up Payment
the Executive retains, after payment by the Executive of all taxes imposed upon
the Gross-Up Payment, including, without limitation, the Excise Tax and any
federal, state or local income taxes (and any interest and penalties imposed
with respect thereto) on the Gross-Up Payment, will be equal to the Excise Tax
liability imposed upon the Executive with respect to all Parachute Payments
(other than the Gross-Up Payment).
7. DEATH
If the Executive dies during the term of this Agreement, the
Corporation shall pay to the Executive's estate a lump sum payment equal to the
sum of the Executive's base salary accrued through the date of death, any
accrued but unpaid vacation pay, plus any bonuses earned but unpaid with respect
to fiscal years or other periods preceding the date of death. In addition, the
Corporation shall pay to the Executive's surviving spouse (or such other
beneficiary as the Executive may designate in writing) a lump sum payment equal
to the present value of a series of monthly payments for each month during the
remaining term of the Agreement (but not less than twelve (12) months), each in
an amount equal to one-twelfth (1/12th) of the sum of (i) the Executive's annual
base salary, as in effect on the date of death, and (ii) the greater of (A) the
annual bonus paid to the Executive for the last fiscal year preceding the date
of death or (B) a minimum bonus equal to thirty percent (30%) of the Executive's
annual base salary. Such present value shall be calculated using a discount rate
equal to the interest rate on 90-day Treasury bills, as reported in the Wall
Street Journal (or similar publication) for the date of death. In addition, the
death benefits payable by reason of the Executive's death under any retirement,
deferred compensation, life insurance or other employee benefit plan maintained
by the Corporation shall be paid to the beneficiary designated by the Executive,
and the stock options, restricted stock or other awards held by the Executive
under the Corporation's stock plans shall become fully vested, and, in the case
of stock options, exercisable in full, in accordance with the terms of the
applicable plan or plans.
8. WITHHOLDING
The Corporation shall, to the extent permitted by law, have
the right to withhold and deduct from any payment hereunder any federal, state
or local taxes of any kind required by law to be withheld with respect to any
such payment.
9. PROTECTION OF CONFIDENTIAL INFORMATION
The Executive agrees that she will keep all confidential and
proprietary information of the Corporation or relating to its business
confidential, and that she will not (except with the Corporation's prior written
consent), while in the employ of the Corporation or thereafter, disclose any
such confidential information to any person, firm, corporation, association or
other entity, other
-7-
<PAGE> 8
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 Corporation) 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 Corporation or is otherwise in the public domain at the time of disclosure.
The Executive recognizes that because her work for the
Corporation may bring her into contact with confidential and proprietary
information of the Corporation, the restrictions of this Section 9 are required
for the reasonable protection of the Corporation and its investments and for the
Corporation'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 Corporation 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 Corporation in the business of the passive
ownership of health care facilities, or passive investing in or lending to
health care-related enterprises. The Executive will be deemed to be engaged in
such competitive business activities if 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 Corporation 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 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 Corporation 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 Corporation shall be entitled to
temporary and injunctive relief, including temporary restraining orders,
preliminary injunctions and permanent injunctions, to enforce such provisions in
any action or proceeding instituted in the United States District Court for the
Northern District of Ohio or in
-8-
<PAGE> 9
any court in the State of Ohio having subject matter jurisdiction. This
provision with respect to injunctive relief shall not, however, diminish the
Corporation's right to claim and recover damages.
It is expressly understood and agreed that although the
parties consider the restrictions contained in this Agreement to be reasonable,
if a court determines that the time or territory or any other restriction
contained in this Agreement is an unenforceable restriction on the activities of
the Executive, no such provision of this Agreement shall be rendered void but
shall be deemed amended to apply as to such maximum time and territory and to
such extent as such court may judicially determine or indicate to be reasonable.
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 CORPORATION:
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
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
This Agreement shall be binding upon and inure to the benefit
of the heirs and representatives of the Executive and the assigns and successors
of the Corporation, but neither this Agreement nor any rights hereunder shall be
assignable or otherwise subject to hypothecation by the Executive.
-9-
<PAGE> 10
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 Corporation 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 Corporation 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.
/s/ RAYMOND W. BRAUN By /s/ GEORGE L. CHAPMAN
- ---------------------------------- ------------------------------------
Raymond W. Braun George L. Chapman
Vice President and Chief Chief Executive Officer
Operating Officer
WITNESS: EXECUTIVE:
/s/ RAYMOND W. BRAUN /s/ ERIN C. IBELE
- ---------------------------------- -----------------------------------
Raymond W. Braun Erin C. Ibele
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000766704
<NAME> HEALTH CARE REIT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,689
<SECURITIES> 5,009
<RECEIVABLES> 7,927
<ALLOWANCES> 4,537
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 390,781
<DEPRECIATION> 13,638
<TOTAL-ASSETS> 836,006
<CURRENT-LIABILITIES> 0
<BONDS> 319,650
0
0
<COMMON> 25,368
<OTHER-SE> 471,733
<TOTAL-LIABILITY-AND-EQUITY> 836,006
<SALES> 0
<TOTAL-REVENUES> 21,226
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,046
<LOSS-PROVISION> 150
<INTEREST-EXPENSE> 4,240
<INCOME-PRETAX> 13,409
<INCOME-TAX> 0
<INCOME-CONTINUING> 13,409
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,409
<EPS-PRIMARY> 0.55
<EPS-DILUTED> 0.54
</TABLE>
<PAGE> 1
Exhibit 99.1
F O R I M M E D I A T E R E L E A S E
January 15, 1998
For more information contact:
Erin Ibele - (419) 247-2800
Ed Lange - (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES RECORD
NEW INVESTMENTS OF $262.6 MILLION FOR 1997
Toledo, Ohio, January 15, 1998..... HEALTH CARE REIT, INC. (NYSE/HCN) announced
today that investment activity for the fourth quarter of 1997 totaled
$80,082,000. For the year ended December 31, 1997, the company funded record
investments of $262,646,000.
The 1997 investment activity contributed to a 39% increase in Net Real Estate
Investments which totaled $713,557,000 at December 31, 1997, as compared with
$512,894,000 at December 31, 1996.
Fourth quarter investment activity, inclusive of recurring construction funding
of $46,465,000, included $44,984,000 of operating leases, $31,020,000 of
mortgage loans and $4,078,000 for equity related investments. Real estate
investments were comprised of $59,135,000 for 55 assisted living facilities,
$4,549,000 for six nursing homes, $8,084,000 for three retirement centers and
$4,236,000 for two behavioral care facilities. The company funded equity related
investments in five privately held health care companies. Aggregate funding was
provided to 21 operators in 19 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, 1997
the company had investments in 183 health care facilities in 29 states and had
total assets of approximately $734 million.
For more information on Health Care REIT, Inc., via facsimile at no cost,
dial-1-800-PRO-INFO and enter the company code -- HCN.
#####
<PAGE> 1
Exhibit 99.2
F O R I M M E D I A T E R E L E A S E
January 20, 1998
For more information contact:
Erin Ibele - (419) 247-2800
Ed Lange - (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES
INCREASE IN QUARTERLY DIVIDEND
Toledo, Ohio, January 20, 1998....HEALTH CARE REIT, INC. (NYSE/HCN) announced
today that upon a review of the company's operating results and financial
condition, the Board of Directors voted to declare a dividend for the quarter
ended December 31, 1997 of $0.54 per share as compared to $0.52 per share for
the same period in 1996.
The dividend is a one-half cent increase from the dividend paid for the third
quarter of 1997 and represents the 107th consecutive dividend payment. The
dividend will be payable February 20, 1998 to shareholders of record on February
3, 1998.
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, 1997,
the company had investments in 183 health care facilities in 29 states and had
total assets of approximately $734 million.
For more information on Health Care REIT, Inc., via facsimile at no cost,
dial-1-800-PRO-INFO and enter the company code -- HCN.
#####
<PAGE> 1
Exhibit 99.3
F O R I M M E D I A T E R E L E A S E
February 4, 1998
For more information contact:
Erin Ibele - (419) 247-2800
Ed Lange - (419) 247-2800
HEALTH CARE REIT, INC. REPORTS EARNINGS FOR THE
THREE MONTHS AND YEAR ENDED DECEMBER 31, 1997
1997 YEAR END RESULTS 1997 YEAR END HIGHLIGHTS
--------------------- ------------------------
o $734 million total assets o 23% shareholder return
o $73 million gross income o 41% asset growth
o $2.34 per share FFO o 9% per share FFO growth
o $2.11 per share dividends o 90% FFO payout ratio
Toledo, Ohio, February 4, 1998........HEALTH CARE REIT, INC. (NYSE/HCN) today
announced the operating results for the year ended December 31, 1997. Funds from
operations (FFO) achieved a record level of $51,236,000, or $2.34 per share for
the year ended December 31, 1997, a 9.3 percent per share increase from
$30,286,000, or $2.14 per share in the prior year.
"The company achieved significant milestones in 1997," commented George L.
Chapman, chairman and chief executive officer. "We funded approximately $263
million of new investments, a record level. The recapitalization plan commenced
in 1996 was completed, providing the company with an unsecured capital
structure, a new revolving credit facility and unsecured credit ratings from
Moody's Investors Service and Duff & Phelps Credit Rating Co. During 1998 we
intend to continue our investment focus on the long-term care sector and advance
our growth strategy of providing capital to emerging health care operators. The
company is well positioned for continued growth and success."
For the three months ended December 31, 1997, FFO totaled $14,375,000, or $0.60
per share, as compared with FFO of $9,143,000, or $0.55 per share, for the same
period in 1996, an increase of 9.1 percent. Net income for the fourth quarter of
1997 totaled $12,950,000, or $0.54 per share, on revenue of $19,731,000, as
compared with net income of $9,046,000, or $0.55 per share, on revenue of
$14,818,000 for the three months ended December 31, 1996.
<PAGE> 2
February 4, 1998
HEALTH CARE REIT, INC. PAGE 2
- --------------------------------------------------------------------------------
Net income for the year ended December 31, 1997, totaled $46,478,000, or $2.12
per share, on revenue of $73,308,000 as compared with net income of $30,676,000,
or $2.17 per share, on revenue of $54,402,000 for the year ended 1996.
Revenue growth was generated primarily by new investment activity in 1996 and
1997, which totaled $230,051,000 and $262,646,000, respectively. Investment
activity contributed to a 41 percent increase in total assets, which at December
31, 1997 totaled $734,327,000 as compared with total assets of $519,831,000 at
December 31, 1996.
The growth in revenue and net income for the three months and year ended
December 31, 1997 was offset by non-recurring prepayment fees and gains on the
exercise of purchase options earned during the fourth quarter and year ended
1996, which totaled $674,000 and $3,635,000, respectively, as compared with
non-recurring prepayment fees of $52,000 and $529,000 earned during the three
months and year ended December 31, 1997, respectively.
Dividend payments for the year ended December 31, 1997 totaled $45,804,000, or
$2.11 per share as compared with dividend payments of $28,427,000, or $2.08 per
share during 1996. Correspondingly, the FFO payout ratio for 1997 was 90% as
compared with a FFO payout ratio of 97% for 1996.
In compliance with the Financial Accounting Standards Board Statement No. 128,
the company's average number of shares outstanding is reported on a diluted
basis. All earnings per share amounts for all periods have been presented and,
where appropriate, restated to conform to the Statement 128 requirements.
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, 1997,
the company had investments in 183 health care facilities in 29 states and had
total assets of approximately $734 million.
This document and supporting schedules may contain "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
For more information on Health Care REIT, Inc., via facsimile at no cost,
dial 1-800-PRO-INFO and enter the company code -- HCN
#####
<PAGE> 3
HEALTH CARE REIT, INC.
FINANCIAL SUPPLEMENT
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
December 31
-----------------------------
1997 1996
-----------------------------
ASSETS
<S> <C> <C>
Real estate investments:
Real property owned:
Land $ 22,445 $ 12,949
Buildings & improvements 239,549 136,256
Construction in progress 47,050 10,900
--------- ---------
309,044 160,105
Less accumulated depreciation (11,769) (6,482)
--------- ---------
Total real property owned 297,275 153,623
Loans receivable 412,734 358,182
Direct financing leases 7,935 10,876
--------- ---------
717,944 522,681
Less allowance for losses (4,387) (9,787)
--------- ---------
Net real estate investments 713,557 512,894
Other Assets:
Deferred loan expenses 2,275 1,432
Cash and cash equivalents 1,381 581
Investment securities 9,635 768
Receivables and other assets 7,479 4,156
--------- ---------
20,770 6,937
--------- ---------
Total assets $ 734,327 $ 519,831
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Borrowings under line of credit obligations $ 78,400 $ 92,125
Senior unsecured notes 162,000 82,000
Bonds and mortgages payable 8,670 10,270
Accrued expenses and other liabilities 15,333 9,900
--------- ---------
Total liabilities $ 264,403 $ 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 - 24,341,030
in 1997 and 18,320,291 in 1996 24,341 18,320
Capital in excess of par value 435,603 298,281
Undistributed net income 8,841 8,167
Unrealized gains on investment securities
available for sale 4,671 768
Unamortized restricted stock (3,532)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY $ 469,924 $ 325,536
--------- ---------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 734,327 $ 519,831
========= =========
</TABLE>
<PAGE> 4
HEALTH CARE REIT, INC.
Financial Supplement
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Amounts in thousands except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31 DECEMBER 31
---------------------------------- ---------------------------------
1997 1996 1997 1996
----------------- ---------------- ---------------- ----------------
Revenues:
<S> <C> <C> <C> <C>
Interest on loans receivable $ 12,370 $ 9,970 $ 45,999 $ 36,735
Prepayment fees 52 674 529 3,059
Operating leases:
Rents 6,060 3,134 22,178 9,848
Gain on exercise of options 155
Direct financing leases:
Lease income 166 366 1,238 1,464
Gain on exercise of options 421
Loan and commitment fees 955 661 3,036 2,607
Other income 128 13 328 113
-------------- ----------- ------------ -----------
$ 19,731 $ 14,818 $ 73,308 $ 54,402
Expenses:
Interest expense $ 3,732 $ 3,372 $ 15,365 $ 14,635
Provision for depreciation 1,477 771 5,287 2,427
General and administrative 1,252 1,264 4,858 4,448
Loan expense 170 215 720 808
Provision for losses 150 150 600 600
Disposition of investments 808
-------------- ----------- ------------ -----------
6,781 5,772 26,830 23,726
-------------- ----------- ------------ -----------
Net Income $ 12,950 $ 9,046 $ 46,478 $ 30,676
============== =========== ============ ===========
Average number of shares outstanding:
Basic 23,434 16,410 21,594 14,093
Diluted 23,805 16,496 21,929 14,150
Net income per share:
Basic $ 0.55 $ 0.55 $ 2.15 $ 2.18
Diluted 0.54 0.55 2.12 2.17
Funds from operations $ 14,375 $ 9,143 $ 51,236 $ 30,286
Funds from operations per share:
Basic $ 0.61 $ 0.56 $ 2.37 $ 2.15
Diluted 0.60 0.55 2.34 2.14
Dividends per share $ 0.535 $ 0.520 $ 2.110 $ 2.080
</TABLE>
<PAGE> 5
HEALTH CARE REIT, INC.
Financial Supplement - December 31, 1997
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION ($000's) Exhibit 1
BALANCE SHEET DATA # Properties # Beds/Units Balance % Balance
-------------------- ------------------- -------------------- -----------------
<S> <C> <C> <C> <C>
Loans Receivable 86 8,948 $ 412,735 58%
Real Property 94 7,112 297,274 41%
Direct Financing Leases 3 243 7,935 1%
-------------------- ------------------ --------------------- -----------------
Gross Real Estate Invest. 183 16,303 $ 717,944 100%
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT DATA # Properties # Beds/Units Investment (1) % Investment
-------------------- ------------------ --------------------- -----------------
<S> <C> <C> <C> <C>
Assisted Living Facilities 116 7,812 $ 350,159 48%
Nursing Homes 49 6,430 233,103 32%
Retirement Centers 10 1,054 47,332 6%
Specialty Care Facilities 6 713 92,591 13%
Behavioral Care 2 294 10,324 1%
-------------------- ------------------ --------------------- -----------------
183 16,303 $ 733,509 100%
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT BY OWNER TYPE # Properties # Beds/Units Investment (1) % Investment
-------------------- ------------------ --------------------- -----------------
<S> <C> <C> <C> <C>
Publicly Traded 89 6,589 $ 321,438 44%
Key Private 53 5,167 254,215 35%
Privately Held 41 4,547 157,856 21%
-------------------- ------------------ --------------------- -----------------
183 16,303 $ 733,509 100%
</TABLE>
Notes: (1) Total investments include real estate investments and credit
enhancements which amounted to $717,944,000 and $15,565,000
respectively.
<TABLE>
<CAPTION>
REVENUE COMPOSITION ($000's) Exhibit 2
Three Months Ended Year Ended
December 31, 1997 December 31, 1997
---------------------------------- ------------------------------
REVENUE BY INVESTMENT TYPE
<S> <C> <C> <C> <C>
Mortg. Loans & Other Loans $ 12,885 65% $ 48,605 66%
Real Property 6,678 34% 23,460 32%
Direct Financing Leases 168 1% 1,243 2%
----------------- ---------------- ---------------- --------------
$ 19,731 100% $ 73,308 100%
REVENUE BY FACILITY TYPE
Nursing Homes $ 7,249 37% $ 29,829 41%
Assisted Living Facilities 8,508 43% 28,348 38%
Specialty Care Facilities 2,834 14% 10,979 15%
Retirement Centers 1,140 6% 4,152 6%
Behavioral Care 0 0% 0 0%
----------------- ---------------- ---------------- --------------
$ 19,731 100% $ 73,308 100%
REVENUE BY OWNER TYPE
Publicly Traded $ 8,240 42% $ 29,624 40%
Key Private 7,462 38% 27,002 37%
Privately Held 4,029 20% 16,682 23%
----------------- ---------------- ---------------- --------------
$ 19,731 100% $ 73,308 100%
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
REVENUE COMPOSITION (CONTINUED) ($000's) Exhibit 3
OPERATING LEASE EXPIRATIONS & LOAN MATURITIES
Current Lease Current Interest Interest and
Year Revenue (1) Revenue (1) Lease Revenue % of Total
- ------------------ ------------------------ ----------------------- ------------------------ ------------------
<S> <C> <C> <C> <C>
1998 $ 850 $ 0 $ 850 1%
1999 400 843 1,243 2%
2000 380 1,683 2,063 3%
2001 0 3,732 3,732 5%
2002 224 1,725 1,949 2%
Thereafter 31,652 38,060 69,712 87%
------------------------ ----------------------- ------------------------ ------------------
$ 33,506 $ 46,043 $ 79,549 100%
</TABLE>
Notes: (1) Revenue impact by year, annualized
<TABLE>
<CAPTION>
COMMITTED INVESTMENT BALANCES ($000's)
Exhibit 4
Committed Balance Investment per
# Properties # Beds/Units (1) Bed/Unit
-------------------- ------------------- -------------------- ------------------
<S> <C> <C> <C> <C>
Assisted Living Facilities 116 7,812 $ 521,313 $ 66,732
Nursing Homes 49 6,430 245,776 38,223
Retirement Centers 10 1,054 52,496 49,807
Specialty Care Facilities 6 713 92,591 129,861
Behavioral Care 2 294 10,324 35,115
-------------------- ------------------ --------------------- ------------------
183 16,303 $ 922,500 n/a
</TABLE>
Notes: (1) Committed Balance includes real estate investments, credit
enhancements and unfunded commitments for which initial funding had
commenced.
OPERATOR CONCENTRATION ($000's)
<TABLE>
<CAPTION>
Exhibit 5
CONCENTRATION BY INVESTMENT # Properties Investment % Investment
----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
Life Care Centers of America, Inc.. 12 $ 75,212 10%
Olympus Healthcare Group, Inc. 11 63,064 9%
Kapson Senior Quarters 6 59,156 8%
Greenbriar Corporation 15 57,866 8%
Doctors Corporation of America 3 49,311 7%
Remaining Operators 136 428,900 58%
----------------------- ----------------------- -----------------------
183 $ 733,509 100%
</TABLE>
<TABLE>
<CAPTION>
CONCENTRATION BY REVENUE # Properties Revenue (1) % Revenue
----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
Olympus Healthcare Group, Inc. 11 $ 9,253 13%
Life Care Centers of America, Inc. 12 7,536 10%
Doctors Corporation of America 3 5,908 8%
Kapson Senior Quarters 6 4,975 7%
Alternative Living Services 27 4,909 7%
Remaining Operators 124 40,727 55%
----------------------- ----------------------- -----------------------
183 $ 73,308 100%
</TABLE>
Notes: (1) Year ended December 31, 1997
<PAGE> 7
<TABLE>
<CAPTION>
SELECTED FACILITY DATA
Exhibit 6
% Private Pay Coverage Before Coverage After
Occupancy and Medicare Mgt. Fees Mgt. Fees
----------------- --------------------- ---------------------- --------------------
<S> <C> <C> <C> <C>
Nursing Homes 85% 39% 2.17x 1.60x
Assisted Living Facilities 89% 100% 1.44x 1.26x
Retirement Centers 96% 100% 1.88x 1.63x
Specialty Care Facilities 44% 64% 3.50x 3.01x
Behavioral Care n/a n/a n/a n/a
---------------------- --------------------
2.20x 1.79x
</TABLE>
Notes: (1) Facility Data reported as of September 30, 1997
<TABLE>
<CAPTION>
SECURITY DEPOSITS & OTHER CREDIT SUPPORT ($000's) Exhibit 7
Balance % Investment
--------------- -----------------
<S> <C> <C>
Cross Defaulted $ 587,428 82% of gross real estate investments
Cross Collateralized 329,101 81% of mortgage loans
Bank Letters of Credit & Cash 39,159 4% of committed balance
</TABLE>
<TABLE>
<CAPTION>
CURRENT CAPITALIZATION ($000's) Balance % Balance Leverage & Performance Ratios
--------------- ----------------- ----------------------------------------
<S> <C> <C> <C> <C>
Borrowings Under Bank Lines $ 78,400 9% Debt/Total Mkt. Cap 27%
Long-Term Debt Obligations 170,670 18% Debt/Mkt. Cap 36%
Market Capitalization 684,591 73% Interest Coverage 4.07x 4th Qtr.
--------------- -----------------
Total Market Capitalization $ 933,661 100% 3.97x LTM
FFO Payout Ratio 90%
</TABLE>
<TABLE>
<CAPTION>
DEBT MATURITIES AND PRINCIPAL PAYMENTS ($000's)
Exhibit 8
Year Bank Lines of Credit Senior Notes Other Debt Total
- ------------------ ------------------------ ----------------------- ------------------------ ------------------
<S> <C> <C> <C> <C>
1998 $ 0 $ 22,000 $ 1,242 $ 23,242
1999 5,400 0 90 5,490
2000 73,000 35,000 99 108,099
2001 0 10,000 109 10,109
2002 0 20,000 121 20,121
2003 0 35,000 133 35,133
2004 0 40,000 186 40,186
2005 0 0 549 549
Thereafter 0 0 6,141 6,141
------------------------ ----------------------- ------------------------ ------------------
$ 78,400 $ 162,000 $ 8,670 $ 249,070
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
INVESTMENT ACTIVITY ($000's)
Exhibit 9
Three Months Ended Year Ended
December 31, 1997 December 31, 1997
<S> <C> <C> <C> <C>
--------------------------------- ---------------------------------
FUNDING BY INVESTMENT TYPE
Mortgage Loans & Other Loans $ 11,551 14% $ 46,231 18%
Real Property 17,988 23% 66,779 25%
Construction Advances 46,465 58% 144,672 55%
Equity Related Investments 4,078 5% 4,964 2%
----------------- --------------- ---------------- ----------------
Total $ 80,082 100% $ 262,646 100%
FUNDING BY FACILITY TYPE
Nursing Homes $ 4,549 6% $ 28,432 11%
Assisted Living Facilities 61,152 76% 183,271 70%
Retirement Centers 10,145 13% 21,752 8%
Specialty Care Facilities 0 0% 24,940 9%
Behavioral Care 4,236 5% 4,251 2%
----------------- --------------- ---------------- ----------------
Total $ 80,082 100% $ 262,646 100%
</TABLE>
<PAGE> 1
Exhibit 99.4
F O R I M M E D I A T E R E L E A S E
February 10, 1998
For more information contact:
Erin Ibele - (419) 247-2800
Ed Lange - (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES
INVESTMENT GRADE RATING BY STANDARD & POOR'S
Toledo, Ohio, February 10, 1998..... HEALTH CARE REIT, INC. (NYSE/HCN) announced
today that Standard & Poor's has assigned a "BBB-" rating to the company's
senior unsecured notes. This is the first time Standard & Poor's has rated the
company's securities. Standard & Poor's also assigned preliminary ratings to the
company's $641 million shelf registrations.
"We are delighted with Standard & Poor's announcement," stated George L.
Chapman, chairman and chief executive officer. "The receipt of a "BBB-" rating
is a significant achievement and confirms the progress the company has made in
executing its investment strategy and improving its capital structure and
portfolio management. The investment grade rating will enhance the company's
access to capital and our continued efforts to reduce the company's cost of
capital."
The Standard & Poor's rating of the company's senior unsecured debt is in
addition to ratings previously issued by Moody's Investors Service of "Ba1" and
Duff & Phelps Credit Corporation of "BBB-".
Standard & Poor's assigned the following ratings to the company's securities:
"BBB-" for senior unsecured debt; "BB+" for subordinated debt; and "BB+" for
preferred stock securities, issuable under the shelf registration.
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, 1997,
the company had investments in 183 health care facilities in 29 states and had
total assets of approximately $734 million.
This document may contain "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.
For more information on Health Care REIT, Inc., via facsimile at no cost,
dial-1-800-PRO-INFO and enter the company code -- HCN.
#####
<PAGE> 1
Exhibit 99.5
F O R I M M E D I A T E R E L E A S E
February 17, 1998
For more information contact:
Erin Ibele - (419) 247-2800
Ed Lange - (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES
PARTICIPATION IN A JOINT VENTURE
TO INVEST IN EUROPEAN HEALTH CARE FACILITIES
Toledo, Ohio, February 17, 1998..... HEALTH CARE REIT, INC. (NYSE/HCN) announced
today that it has agreed to participate in the formation of a joint venture to
invest in health care facilities in the United Kingdom (UK) and continental
Europe. The joint venture participants include Westminster Health Care, a UK
based publicly owned nursing home operator, BT Alex. Brown, and an entity
affiliated with Holiday Retirement Corp. It is anticipated that during the joint
venture's initial phase, the company's funding commitment will total
approximately $20 million.
"We are pleased to have this opportunity to invest in European health care real
estate," stated George L. Chapman, chairman and chief executive officer. "The
joint venture arrangement affords the company a considered investment vehicle
into the European markets with excellent partners. The success of the initial
funding tranche may create significant international growth opportunities."
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, 1997,
the company had investments in 183 health care facilities in 29 states and had
total assets of approximately $734 million.
This document may contain "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.
For more information on Health Care REIT, Inc., via facsimile at no cost,
dial 1-800-PRO-INFO and enter the company code -- HCN.
#####
<PAGE> 1
Exhibit 99.6
F O R I M M E D I A T E R E L E A S E
March 11, 1998
For more information contact:
Erin Ibele - (419) 247-2800
Ed Lange - (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES
SALE OF $100 MILLION OF SENIOR UNSECURED NOTES
Toledo, Ohio, March 11, 1998..... HEALTH CARE REIT, INC. (NYSE/HCN) announced
today the sale of $100 million of 7.625% senior unsecured notes due March 15,
2008. The notes are rated "Ba1" by Moody's Investors Service, "BBB-" by Standard
& Poor's Corporation and "BBB-" by Duff & Phelps Credit Rating Co.
The net proceeds from the sale of the notes will be used to invest in additional
health care property investments and repay borrowings under the company's
revolving lines of credit arrangements.
BT Alex. Brown Incorporated is the lead manager of the underwriting group, and
NationsBanc Montgomery Securities LLC and Salomon Smith Barney are the
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. At December 31, 1997,
the company had investments in 183 health care facilities in 29 states and had
total assets of approximately $734 million.
For more information on Health Care REIT, Inc., via facsimile at no cost,
dial-1-800-PRO-INFO and enter the company code -- HCN.
#####
<PAGE> 1
Exhibit 99.7
F O R I M M E D I A T E R E L E A S E
March 26, 1998
For more information contact:
Erin Ibele - (419) 247-2800
Ed Lange - (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES
SALE OF 913,242 SHARES OF COMMON STOCK
Toledo, Ohio, March 11, 1998..... HEALTH CARE REIT, INC. (NYSE/HCN) announced
that it has priced a public offering of 913,242 shares of common stock. The net
proceeds of the sale will be approximately $23.7 million, and will be used to
repay borrowings under the company's $175 million unsecured revolving credit
facility and to invest in additional health care properties. It is anticipated
that closing and delivery will occur on or about March 30, 1998.
EVEREN Securities, Inc. acted as the sole underwriter for the offering. It is
anticipated that the shares will be deposited by EVEREN with a registered unit
investment trust.
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, 1997,
the company had investments in 183 health care facilities in 29 states and had
total assets of approximately $734 million.
For more information on Health Care REIT, Inc., via facsimile at no cost,
dial 1-800-PRO-INFO and enter the company code -- HCN.
#####
