-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AfpQgQTI2xdWuUepLOyLw3jxKhxyHmPcUvi+hWDkBCe7fcNFnHcYf7Envbv5FXsY sxmVV9E2K2BW2xvkxzqjJA== 0000950152-97-003807.txt : 19970514 0000950152-97-003807.hdr.sgml : 19970514 ACCESSION NUMBER: 0000950152-97-003807 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 17 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970513 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEALTH CARE REIT INC /DE/ CENTRAL INDEX KEY: 0000766704 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 341096634 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08923 FILM NUMBER: 97602322 BUSINESS ADDRESS: STREET 1: ONE SEAGATE STE 1950 STREET 2: P O BOX 1475 CITY: TOLEDO STATE: OH ZIP: 43604 BUSINESS PHONE: 4192472800 10-Q 1 HEALTH CARE REIT, INC. /QUARTERLY REPORT 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended MARCH 31, 1997 ------------------------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to _______________________ HEALTH CARE REIT, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 34-1096634 - -------------------------------- ----------------------- (State or jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One SeaGate, Suite 1500, Toledo, Ohio 43604 - ------------------------------------- ---------------------- (Address of principal executive office) (Zip Code) (Registrant's telephone number, including area code) (419) 247-2800 ------------------------- - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . ----- ----- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes _____. No _____. APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of April 30, 1997. Class: Shares of Common Stock, $1.00 par value Outstanding 21,887,294 shares 2 HEALTH CARE REIT, INC. INDEX Page ---- Part I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets - March 31, 1997 and December 31, 1996 3 Consolidated Statements of Income - Three months ended March 31, 1997 and 1996 4 Consolidated Statements of Shareholders' Equity - Three months ended March 31, 1997 and 1996 5 Consolidated Statements of Cash Flows- Three months ended March 31, 1997 and 1996 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Part II. OTHER INFORMATION Item 5. Other Information 11 Item 6. Exhibits and Reports on Form 8-K 12 SIGNATURES 13 EXHIBIT INDEX 14 -2- 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS -------------------- CONSOLIDATED BALANCE SHEETS (UNAUDITED) HEALTH CARE REIT, INC. AND SUBSIDIARIES
MARCH 31 DECEMBER 31 1997 1996 (UNAUDITED) (NOTE) ----------------- ----------------- (IN THOUSANDS) ASSETS Real estate investments: Loans receivable: Mortgage loans $ 367,327 $ 292,442 Construction loans 27,303 61,013 Working capital loans 7,425 4,727 ----------------- ----------------- 402,055 358,182 Investment in operating leases 196,653 153,623 Investment in direct financing leases 10,804 10,876 ----------------- ----------------- 609,512 522,681 Less allowance for losses 9,937 9,787 ----------------- ----------------- NET REAL ESTATE INVESTMENTS 599,575 512,894 Other Assets: Investment securities available for sale 966 768 Deferred loan expenses 2,002 1,432 Cash and cash equivalents 121 581 Receivables and other assets 5,768 4,156 ----------------- ----------------- 8,857 6,937 ----------------- ----------------- TOTAL ASSETS $ 608,432 $ 519,831 ================= ================= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Borrowings under line of credit arrangements $ 100,500 $ 92,125 Senior notes 82,000 82,000 Other long-term obligations 10,097 10,270 Accrued expenses and other liabilities 11,401 9,900 ----------------- ----------------- TOTAL LIABILITIES $ 203,998 $ 194,295 Shareholders' equity: Preferred Stock, $1.00 par value: Authorized - 10,000,000 shares Issued and outstanding - None Common Stock, $1.00 par value: Authorized - 40,000,000 shares Issued and outstanding - 21,737,294 in 1997 and 18,320,291 in 1996 21,737 18,320 Capital in excess of par value 373,443 298,281 Undistributed net income 8,288 8,167 Unrealized gains on investment securities available for sale 966 768 ----------------- ----------------- TOTAL SHAREHOLDERS' EQUITY 404,434 325,536 ----------------- ----------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 608,432 $ 519,831 ================= =================
NOTE: The balance sheet at December 31, 1996 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See notes to consolidated financial statements -3- 4 CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) HEALTH CARE REIT, INC. AND SUBSIDIARIES
THREE MONTHS ENDED MARCH 31 1997 1996 ---------------------- ----------------------- (IN THOUSANDS EXCEPT PER SHARE DATA) GROSS INCOME: Interest and other income $ 10,616 $ 8,104 Operating leases: Rent 4,963 1,960 Direct financing leases: Lease income 357 368 Loan and commitment fees 584 420 Interest and other income 49 38 ------------ --------------- Gross Income $ 16,569 $ 10,890 EXPENSES: Interest: Line of credit arrangements $ 2,161 $ 2,296 Senior notes and other long- term obligations 1,850 1,215 Loan expense 217 187 Provision for depreciation 1,185 475 Provision for losses 150 150 General and administrative expenses 1,180 890 --------------- ----------------- Total expenses 6,743 5,213 --------------- ----------------- Net Income $ 9,826 $ 5,677 =============== ================= Average number of shares outstanding 19,301 12,052 Net income per share $ 0.51 $ 0.47 Dividends per share $ 0.52 $ 0.52
See notes to consolidated financial statements -4- 5 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) HEALTH CARE REIT, INC. AND SUBSIDIARIES
THREE MONTHS ENDED MARCH 31 1997 1996 ------------------------------------ (IN THOUSANDS) Balances at beginning of period $ 325,536 $ 187,598 Net income 9,826 5,677 Proceeds from issuance of shares under the dividend reinvestment plan - 36,577 in 1997 and 33,323 in 1996 887 691 Proceeds from issuance of shares under the employee stock incentive plans - 50,426 in 1997 and 15,000 in 1996 1,087 261 Net Proceeds from sale of 3,330,000 shares in 1997 76,605 Change in net unrecognized gain on investment securities available for sale 198 725 Cash dividends paid (9,705) (6,259) --------------- -------------- Balances at end of period $ 404,434 $ 188,693 =============== ==============
See notes to consolidated financial statements -5- 6 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) HEALTH CARE REIT, INC. AND SUBSIDIARIES
THREE MONTHS ENDED MARCH 31 1997 1996 ----------------------------- (IN THOUSANDS) OPERATING ACTIVITIES Net income $ 9,826 $ 5,677 Adjustments to reconcile net income to net cash Provision for depreciation 1,199 470 Provision for losses 150 150 Amortization of loan and organization expenses 218 188 Loan and commitment fees earned less than cash received 452 957 Direct financing lease income less than cash received 72 53 Interest income in excess of cash received (9) (133) Increase in accrued expenses and other liabilities 1,049 1,418 Increase in other receivables and prepaid items (1,315) (397) -------- -------- NET CASH PROVIDED FROM OPERATING ACTIVITIES 11,642 8,383 INVESTING ACTIVITIES Investment in operating-lease properties (44,216) (8,380) Investment in loans receivable (44,576) (32,376) Principal collected on loans 713 1,974 Other (7) 5 -------- -------- NET CASH USED IN INVESTING ACTIVITIES (88,086) (38,777) FINANCING ACTIVITIES Net borrowings under line of credit arrangements 8,375 35,900 Principal payments on long-term obligations (173) (49) Net proceeds from the issuance of Common Stock 78,275 952 Increase in deferred loan expense (788) (12) Cash distributions to shareholders (9,705) (6,259) -------- -------- NET CASH PROVIDED FROM FINANCING ACTIVITIES 75,984 30,532 -------- -------- Increase/(decrease) in cash and cash equivalents (460) 138 Cash and cash equivalents at beginning of period 581 860 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 121 $ 998 ======== ======== Supplemental Cash Flow Information -- Interest Paid $ 3,359 $ 1,957 ======== ========
See notes to consolidated financial statements -6- 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HEALTH CARE REIT, INC. AND SUBSIDIARIES NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered for a fair presentation have been included. Operating results for the three months ended March 31, 1997 are not necessarily an indication of the results that may be expected for the year ended December 31, 1997. For further information, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1996. Net income per share has been computed by dividing net income by the average number of common shares and common stock equivalents outstanding. NOTE B - REAL ESTATE INVESTMENTS During the three months ended March 31, 1997, the Company provided permanent mortgage financings of $26,304,000, invested $36,891,000 in operating leases and made construction advances of $26,183,000. During the three months ended March 31, 1997, the Company received principal payments on real estate mortgages of $685,000 and had net advances on working capital loans of $2,698,000. With respect to the above-mentioned construction advances, funding associated with seventeen construction loans represented $18,859,000, and funding for construction in progress in connection with eight properties owned directly by the Company totaled $7,324,000. During the three months ended March 31, 1997, five of the construction loans completed the construction phase of the Company's investment process and were converted to investments in permanent mortgage loans, with an aggregate investment of $52,492,000. Also during the three months ended March 31, 1997, one of the construction properties in progress completed the construction phase of the Company's investment process and was converted to a permanent operating lease, with an investment balance of $1,588,000. At March 31, 1997, the Company had $147,140,000 in unfunded commitments. NOTE C - INDEBTEDNESS AND SHAREHOLDERS' EQUITY In January 1997, in connection with the underwriters' exercise of an over allotment option associated with the Company's December 18, 1996 offering of 2,200,000 shares of common stock, the Company issued 330,000 shares of Common Stock, $1.00 par value per share, at the price of $23.875 per share, which generated net proceeds of $7,485,000 to the Company. -7- 8 In March 1997, the Company issued 3,000,000 shares of Common Stock, $1.00 par value per share, at the price of $24.375 per share, which generated net proceeds to the Company of $69,120,000. In March 1997, the Company closed a $175 million unsecured credit facility which replaced the Company's then existing secured credit facility. Simultaneous with the closing of the new credit facility, all senior noteholders released collateral which had served as security for the Company's $82 million of senior indebtedness. The senior unsecured notes are rated `BBB-' (triple-B-minus) by Duff & Phelps Credit Rating Co. The Company has a total of $185,000,000 in unsecured credit facilities bearing interest at the lenders' prime rate or LIBOR plus 1.125%, of which $84,500,000 was available at March 31, 1997. NOTE D - INVESTMENT SECURITIES AVAILABLE FOR SALE Investment securities available for sale are stated at fair value with unrealized gains and losses reported in a separate component of shareholders' equity. At March 31, 1997, available-for-sale securities are the common stock of a corporation, which were obtained by the Company at no cost. NOTE E - CONTINGENT LIABILITIES As disclosed in the financial statements for the year ended December 31, 1996, the Company was contingently liable for certain obligations amounting to approximately $18,815,000. No significant change in these contingencies had occurred as of March 31, 1997. NOTE F - DISTRIBUTIONS PAID TO SHAREHOLDERS On February 20, 1997, the Company paid a dividend of $0.52 per share to shareholders of record on February 4, 1997. This dividend related to the period from October 1, 1996 through December 31, 1996. NOTE G - EARNINGS PER SHARE In February, 1997, the Financial Accounting Standards Board issued Statement No. 128, Earning per Share, which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share. The impact on primary earnings per share and fully diluted earnings per share is not expected to be material. NOTE H - SUBSEQUENT EVENTS On April 22, 1997, the Company declared a dividend of $0.525 per share payable on May 20, 1997 to shareholders of record on May 5, 1997. The dividend relates to the period from January 1, 1997 through March 31, 1997. -8- 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ------------------------------------------------- CONDITION AND RESULTS OF OPERATIONS ----------------------------------- LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- At March 31, 1997, the Company's net real estate investments totaled approximately $599,575,000, which included 59 skilled nursing facilities, 73 assisted living facilities, 11 retirement centers, six specialty care facilities and two behavioral care facilities. The Company funds its investments through a combination of long-term and short-term financing, utilizing both debt and equity. As of March 31, 1997, the Company had shareholders' equity of $404,434,000 and a total outstanding debt balance of $192,597,000, which represents a debt to equity ratio of 0.48 to 1.0. In January 1997, in connection with the underwriters exercise of an over allotment option associated with the Company's December 18, 1996 offering of 2,200,000 shares of common stock, the Company issued 330,000 shares of Common Stock, $1.00 par value per share, at the price of $23.875 per share, which generated net proceeds of $7,485,000 to the Company. In March 1997, the Company issued 3,000,000 shares of Common Stock, $1.00 par value per share, at the price of $24.375 per share, which generated net proceeds to the Company of $69,120,000. During the three months ended March 31, 1997, the proceeds derived from the Company's capital raising activities were used to reduce bank debt under the Company's revolving lines of credit arrangements. In March 1997, the Company closed a $175 million unsecured credit facility which replaced the Company's then existing secured credit facility. Simultaneous with the closing of the new credit facility, all senior noteholders released collateral which had served as security for the Company's $82 million of senior indebtedness. The senior unsecured notes are rated `BBB-' (triple-B-minus) by Duff & Phelps Credit Rating Co. As of March 31, 1997, the Company had approximately $147,140,000 in unfunded commitments. Under the Company's line of credit arrangements, available funding totaled $84,500,000. The Company believes its liquidity and various sources of available capital are sufficient to fund operations, finance future investments, and meet debt service and dividend requirements. RESULTS OF OPERATIONS - --------------------- Revenues for three months ended March 31, 1997 were $16,569,000 compared to $10,890,000 for the three months ended March 31, 1996. Revenue growth resulted primarily from increased interest income of $2,512,000 and increased operating lease income of $3,003,000 as a result of additional real estate investments made during the past twelve months. Expenses for the three months ended March 31, 1997 totaled $6,743,000, an increase of $1,530,000 from expenses of $5,213,000 for the same period in 1996. The increase in total expenses was primarily related to an increase in interest expense, additional expense associated with the provision for depreciation, and increased other operating expenses. Interest expense for the three months ended March 31, 1997 was $4,011,000 compared to $3,511,000 for the same period in 1996. The increase in the 1997 period was primarily due to the issuance of $30,000,000 Senior Notes in April 1996. -9- 10 The provision for depreciation for the three month period ended March 31, 1997 totaled $1,185,000, an increase of $710,000 over the comparable period in 1996 as a result of additional operating lease investments. General and administrative expenses for the three month period in 1997 totaled $1,180,000, as compared to $890,000 for the same period in 1996. The expenses for the three month period in 1997 were 7.12% of revenues as compared to 8.17% for the same period in 1996. As a result of the various factors mentioned above, net income for the three month period ended March 31, 1997 was $9,826,000 as compared to $5,677,000 for the same period in 1996. Net income per share for the three month period ended March 31, 1997 was $.51 versus $.47 for the comparable 1996 period. The per share increases resulted from an increase in net income offset by an increase in average shares outstanding during the 1997 period. -10- 11 PART II. OTHER INFORMATION ITEM 5. OTHER INFORMATION ----------------- On January 9, 1997, the Company issued a press release in which it announced that during the fourth quarter of 1996 it had funded $78.6 million of new investments. On January 10, 1997, the Company issued a press release in which it announced that the underwriters for the Company's December 18, 1996 offering of 2,200,000 common shares exercised an over allotment option to purchase 330,000 additional shares at a purchase price of $23.875 per share. On January 15, 1997, the Company issued a press release in which it announced that during 1996 it had funded $230 million of new investments. On January 16, 1997, the Company issued a press release in which it announced that it had filed a shelf registration with the Securities and Exchange Commission enabling the Company to offer in the future up to an aggregate of $300 million of securities. On January 20, 1997, the Company issued a press release in which it announced that the Board of Directors voted to pay a quarterly cash dividend of $.52 per share, payable to shareholders of record on February 20, 1997. On January 21, 1997, the Company issued a press release in which it announced that Raymond W. Braun had been appointed Chief Operating Officer of the Company. On February 4, 1997, the Company issued a press release in which it announced that during the month of January 1997 it had funded $62.8 million of new investments. On February 5, 1997, the Company issued a press release in which it announced financial results for the fourth quarter 1996 and the year ended 1996. On March 7, 1997, the Company issued a press release in which it announced that it had filed a prospectus supplement for an offering of 3,000,000 shares of Common Stock. On March 31, 1997, the Company issued a press release in which it announced that it had closed a $175 million unsecured credit facility. -11- 12 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -------------------------------- (a) Reports 10.1 Employment Agreement dated as of January 1, 1997 by and between Health Care REIT, Inc. and George L. Chapman 10.2 Employment Agreement dated as of January 1, 1997 by and between Health Care REIT, Inc. and Raymond W. Braun 10.3 Employment Agreement dated as of January 1, 1997 by and between Health Care REIT, Inc. and Edward F. Lange, Jr. 10.4 Employment Agreement dated as of January 1, 1997 by and between Health Care REIT, Inc. and Erin C. Ibele 10.5 Stock Plan for Non-Employee Directors 27 Financial Data Schedule 99.1 Press release dated January 9, 1997 99.2 Press release dated January 10, 1997 99.3 Press release dated January 15, 1997 99.4 Press release dated January 16, 1997 99.5 Press release dated January 20, 1997 99.6 Press release dated January 21, 1997 99.7 Press release dated February 4, 1997 99.8 Press release dated February 5, 1997 99.9 Press release dated March 7, 1997 99.10 Press release dated March 31, 1997 (b) Reports on Form 8-K Form 8-K filed on March 6, 1997 -12- 13 Pursuant to the requirement of the Securities and Exchange Act of 1934, the Registrant had duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HEALTH CARE REIT, INC. Date: May 12, 1997 By: GEORGE L. CHAPMAN ------------------------ ------------------------- George L. Chapman, Chairman, Chief Executive Office, and President Date: May 12, 1997 By: EDWARD F. LANGE, JR. ----------------------- --------------------------- Edward F. Lange, Jr., Chief Financial Officer Date: May 12, 1997 By: MICHAEL A. CRABTREE ----------------------- ------------------------- Michael A. Crabtree, Chief Accounting Officer -13- 14 EXHIBIT INDEX The following documents are included in this Form 10-Q as Exhibits:
DESIGNATION NUMBER UNDER ITEM 601 OF PAGE REGULATION S-K EXHIBIT DESCRIPTION NUMBER -------------- ------------------- ------ 10.1 Employment Agreement dated as of January 1, 1997 by and between Health Care REIT, Inc. and George L. Chapman 10.2 Employment Agreement dated as of January 1, 1997 by and between Health Care REIT, Inc. and Raymond W. Braun 10.3 Employment Agreement dated as of January 1, 1997 by and between Health Care REIT, Inc. and Edward F. Lange, Jr. 10.4 Employment Agreement dated as of January 1, 1997 by and between Health Care REIT, Inc. and Erin C. Ibele 10.5 Stock Plan for Non-Employee Directors 27 Financial Data Schedule 99.1 Press release dated January 9, 1997 99.2 Press release dated January 10, 1997 99.3 Press release dated January 15, 1997 99.4 Press release dated January 16, 1997 99.5 Press release dated January 20, 1997 99.6 Press release dated January 21, 1997 99.7 Press release dated February 4, 1997 99.8 Press release dated February 5, 1997 99.9 Press release dated March 7, 1997 99.10 Press release dated March 31, 1997
-14- EX-10.1 2 EXHIBIT 10.1 1 Exhibit 10.1 EMPLOYMENT AGREEMENT -------------------- THIS EMPLOYMENT AGREEMENT, dated as of the 1st day of January, 1997 (the "Agreement"), by and between HEALTH CARE REIT, INC., a Delaware corporation, (the "Company"), and GEORGE L. CHAPMAN (the "Executive"). WHEREAS, the Company wishes to assure itself of the services of the Executive for the period provided in this Agreement and the Executive is willing to serve in the employ of the Company for such period upon the terms and conditions hereinafter set forth. NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties, intending to be legally bound, hereby agree as follows: 1. EMPLOYMENT ---------- The Company hereby agrees to employ the Executive as the Company's Chief Executive Officer and President, upon the terms and conditions herein contained, and the Executive hereby agrees to accept such employment and to serve as the Company's Chief Executive Officer and President, and to perform the duties and functions customarily performed by the Chief Executive Officer of a publicly traded corporation during the term of this Agreement. In such capacity, the Executive shall report only to the Company's Board of Directors, and shall have the powers and responsibilities set forth in Article IV of the Company's By-Laws as well as such additional powers and responsibilities consistent with his position as the Board of Directors may assign to him. Throughout the term of this Agreement, the Executive shall devote his best efforts and all of his business time and services to the business and affairs of the Company. 2. TERM OF AGREEMENT ----------------- The term of employment under this Agreement shall commence as of January 1, 1997 (the "Effective Date"). The initial term of this Agreement shall be for a period of three (3) years ending December 31, 1999. Upon the expiration of such initial employment period, the term of employment hereunder shall automatically be extended without further action by the parties for successive three (3) year renewal terms, unless either party shall give at least six (6) months advance written notice to the other of his or its intention that this Agreement shall terminate upon the expiration of the initial term or the current renewal term, as the case may be. 2 Notwithstanding the foregoing, the Company shall be entitled to terminate this Agreement immediately, subject to a continuing obligation to make any payments required under Section 5 below, if the Executive (i) becomes disabled as described in Section 5(b), (ii) is terminated for Cause, as defined in Section 5(c), or (iii) voluntarily terminates his employment before the current term of this Agreement expires, as described in Section 5(d). 3. SALARY AND BONUS ---------------- The Executive shall receive a base salary during the term of this Agreement at a rate of not less than $350,000 per annum in substantially equal semi-monthly installments. The Compensation Committee of the Board shall consult with the Executive and review the Executive's base salary at annual intervals, and may adjust the Executive's annual base salary from time to time as the Committee deems to be appropriate. The Executive shall also be eligible to receive a bonus from the Company each year during the term of this Agreement, with the actual amount of such bonus to be determined by the Compensation Committee of the Company's Board, using such performance measures as the Committee deems to be appropriate. 4. ADDITIONAL COMPENSATION AND BENEFITS ------------------------------------ The Executive shall receive the following additional compensation and welfare and fringe benefits: (a) STOCK OPTIONS. The Executive shall be granted nonstatutory stock options with respect to 80,000 shares of common stock, and 5,223 shares of restricted stock, pursuant to the terms of the Company's 1995 Stock Incentive Plan. During the remaining term of the Agreement, any additional stock option or restricted stock awards under the 1995 Stock Incentive Plan shall be at the discretion of the Compensation Committee of the Company's Board. (b) DISABILITY INSURANCE. During the term of this Agreement, the Company shall maintain a disability insurance policy on the Executive with the maximum aggregate annual benefit commercially available to the Company, up to a maximum of sixty percent (60%) of his annual base salary. The Company shall provide at its expense all supplemental disability coverage needed to provide this aggregate benefit. The Executive will submit to such medical examination and supply such information as is necessary for the Company to obtain such insurance coverage. -2- 3 (c) MEDICAL INSURANCE. The Company shall provide the Executive and his dependents with health insurance coverage no less favorable than that from time to time made available to other key employees. (d) BUSINESS CLUBS. The Company shall pay all initiation fees and dues charged by up to two dining clubs, country clubs, athletic clubs, or similar organizations of which the Executive is a member or desires to become a member. (e) CONFERENCES. The Company shall pay for the Executive and his wife to attend up to three business-related conferences, conventions or seminars within the continental United States each year during the term of this Agreement, including registration fees, travel expenses and reasonable hotel and meal allowances. (f) VACATION. The Executive shall be entitled to up to five weeks of vacation during each year during the term of this Agreement and any extensions thereof, prorated for partial years. (g) MEDICAL EXAMINATIONS. The Company shall pay or reimburse the Executive for the cost of a physical examination by a physician acceptable to the Executive in alternate years. (h) BUSINESS EXPENSES. The Company shall reimburse the Executive for all reasonable expenses he incurs in promoting the Company's business, including expenses for travel and similar items, upon presentation by the Executive from time to time of an itemized account of such expenditures. In addition to the benefits provided pursuant to the preceding paragraphs of this Section 4, the Executive shall be eligible to participate in such other executive compensation and retirement plans of the Company as are applicable generally to other officers, and in such welfare benefit plans, programs, practices and policies of the Company as are generally applicable to other key employees, unless such participation would duplicate, directly or indirectly, benefits already accorded to the Executive. 5. PAYMENTS UPON TERMINATION ------------------------- (a) INVOLUNTARY TERMINATION. If the Executive's employment is terminated by the Company during the term of this Agreement, the Executive shall be entitled to receive his base salary accrued through the date of termination, any accrued but unpaid vacation pay, plus any bonuses payable with respect to periods preceding the termination date. The Executive shall also receive any nonforfeitable benefits payable to him under the terms of any deferred compensation, incentive or other benefit plan -3- 4 maintained by the Company, payable in accordance with the terms of the applicable plan. If the termination is neither a termination for Cause as described in paragraph (c) nor a voluntary termination by the Executive as described in paragraph (d), then the Company shall also be obligated to make a series of monthly severance payments to the Executive for each month during the remaining term of this Agreement, but not less than twenty-four (24) months. Each monthly payment shall be equal to one-twelfth (1/12th) of the sum of (i) the Executive's annual base salary, as in effect on the date of termination, and (ii) the greater of (A) the average of the annual bonuses paid to the Executive for the two (2) fiscal years preceding the termination or (B) a minimum bonus equal to fifty percent (50%) of his annual base salary. If the Executive obtains a replacement position with any new employer (including a position as an officer, employee, consultant, or agent, or self-employment as a partner or sole proprietor), the payments shall be reduced by all amounts the Executive receives as compensation for services performed during such period. The Executive shall be under no duty to mitigate the amounts owed to him under this paragraph (a) by seeking such a replacement position. In addition, if the termination is neither a termination for Cause as described in paragraph (c) nor a voluntary termination by the Executive as described in paragraph (d), then: (i) Any stock option or restricted stock awards granted to the Executive under the Company's 1995 Stock Incentive Plan shall become fully vested and, in the case of stock options, exercisable in full; (ii) The Executive shall be provided continued coverage at the Company's expense under any life, medical and disability insurance programs maintained by the Company in which the Executive participated at the time of his termination for the remaining term of the Agreement, but not less than twelve (12) months, or until, if earlier, the date he obtains comparable coverage from a new employer; and (iii) The Executive may elect, by delivering written notice to the Company within 30 days following such termination of his employment, to receive from the Company a lump sum severance payment in lieu of the monthly severance payments described in the preceding paragraph in an amount equal to the present value of such payments. Such present value shall be calculated using a discount rate equal to the interest rate on 90-day Treasury bills, as reported in the WALL STREET JOURNAL (or similar publication) for the date the election is received by the Company. The Company shall deliver the payment to the Executive, in the form of a bank cashier's check, within 10 business days following the date on -4- 5 which the Company receives written notice of the Executive's election. (b) DISABILITY. The Company shall be entitled to terminate this Agreement, if the Board determines that the Executive has been unable to attend to his duties for at least ninety (90) days because of a medically diagnosable physical or mental condition, and has received a written opinion from a physician acceptable to the Board that such condition prevents the Executive from resuming full performance of his duties and is likely to continue for an indefinite period. Upon such termination, the Executive shall be entitled to receive his base salary accrued through the date of termination, any accrued but unpaid vacation pay, plus any bonuses payable with respect to periods preceding the termination date. In addition, the Company shall pay to Executive a monthly disability benefit equal to one-twenty-fourth (1/24th) of his current annual base salary at the time he became permanently disabled. Payment of such disability benefit shall commence on the last day of the month following the date of the termination by reason of permanent disability and cease with the earliest of (i) the month in which the Executive returns to active employment, either with the Company or otherwise, (ii) the end of the initial term of this Agreement, or the current renewal term, as the case may be, or (iii) the twenty-fourth month after the date of the termination. Any amounts payable under this Section 5(b) shall be reduced by any amounts paid to the Executive under any long-term disability plan or other disability program or insurance policies maintained or provided by the Company. (c) TERMINATION FOR CAUSE. If the Executive's employment is terminated by the Company for Cause, the amount the Executive shall be entitled to receive from the Company shall be limited to his base salary accrued through the date of termination, any accrued but unpaid vacation pay, any bonuses payable with respect to the fiscal year of the Company most recently ended, and any nonforfeitable benefits payable to the Executive under the terms of deferred compensation or incentive plans maintained by the Company. For purposes of this Agreement, the term "Cause" shall be limited to (i) action by the Executive involving willful disloyalty to the Company, such as embezzlement, fraud, misappropriation of corporate assets or a breach of the covenants set forth in Sections 9 and 10 below; or (ii) the Executive being convicted of a felony; or (iii) the Executive being convicted of any lesser crime or offense committed in connection with the performance of his duties hereunder or involving moral turpitude; or (iv) the intentional and willful failure by the Executive to substantially perform his duties hereunder as directed by the Board (other than any such failure resulting from the Executive's incapacity due to physical or mental disability) after a demand for substantial performance is made on the Executive by the Board of Directors. -5- 6 (d) VOLUNTARY TERMINATION BY THE EXECUTIVE. If the Executive resigns or otherwise voluntarily terminates his employment before the end of the current term of this Agreement (other than in connection with a Change in Corporate Control as described in Section 6), the amount the Executive shall be entitled to receive from the Company shall be limited to his base salary accrued through the date of termination, any accrued but unpaid vacation pay, plus any bonuses payable with respect to the fiscal year of the Company most recently ended, and any nonforfeitable benefits payable to the Executive under the terms of any deferred compensation or incentive plans of the Company. For purposes of this paragraph, a resignation by the Executive shall not be deemed to be voluntary if the Executive is (1) assigned to a position other than the Chief Executive Officer and President of the Company (other than for Cause or by reason of permanent disability), (2) assigned duties materially inconsistent with such position, or (3) directed to report to anyone other than the Company's Board of Directors. 6. EFFECT OF CHANGE IN CORPORATE CONTROL ------------------------------------- (a) In the event of a Change in Corporate Control, the vesting of any stock options, restricted stock awards or other incentive-based awards granted to the Executive under the terms of the Company's 1995 Stock Incentive Plan shall be accelerated (to the extent permitted by the terms of such Plan) and such awards shall become immediately vested in full and, in the case of stock options, exercisable in full. (b) If, at any time during the period of twelve (12) consecutive months following the occurrence of a Change in Corporate Control, and during the term of this Agreement, the Executive is involuntarily terminated (other than for Cause) or elects to voluntarily resign his employment, the Executive shall be entitled to receive, in lieu of the monthly payments described in Section 5(a) above, monthly severance payments for each month during the remaining term of this Agreement, but not less than twenty-four (24) months. Each monthly payment shall be equal to one-twelfth (1/12th) of the sum of (i) the Executive's annual base salary, as in effect at the time of the Change in Corporate Control, and (ii) the greater of (A) the average of the annual bonuses paid to the Executive for the last two fiscal years of the Company ending prior to the Change in Corporate Control or, (B) a minimum bonus equal to fifty percent (50%) of the Executive's annual base salary. (c) If the Executive is involuntarily terminated (other than for Cause) or elects to voluntarily resign his employment within twelve months after a Change in Corporate Control, he may elect, by delivering written notice to the Company within 30 days following such termination of his employment, to receive from the -6- 7 Company a lump sum severance payment in lieu of the monthly payments described in the preceding paragraph. The amount of this payment shall be equal to the present value of the monthly payments described in the preceding paragraph. Such present value shall be calculated using a discount rate equal to the interest rate on 90-day Treasury bills, as reported in the WALL STREET JOURNAL (or similar publication) for the date the election is received by the Company. The Company shall deliver the payment to the Executive, in the form of a bank cashier's check, within 10 business days following the date on which the Company receives written notice of the Executive's election. In addition, if the Executive is involuntarily terminated (other than for Cause) or elects to voluntarily resign his employment within twelve months after a Change in Corporate Control, he shall be entitled to continued coverage at the Company's expense under any life, medical and disability insurance programs maintained by the Company in which the Executive participated at the time of his termination, which coverage shall be continued until the expiration of the current term of the Agreement (but not less than twelve (12) months) or (ii) if earlier, the date the Executive obtains comparable coverage under benefit plans maintained by a new employer. (d) For purposes of this Agreement, a "Change in Corporate Control" shall include any of the following events: (1) The acquisition in one or more transactions of more than twenty percent (20%) of the Company's outstanding Common Stock (or the equivalent in voting power of any classes or classes of securities of the Company entitled to vote in elections of directors) by any corporation, or other person or group (within the meaning of Section 14(d)(3) of the Securities Exchange Act of 1934, as amended); (2) Any transfer or sale of substantially all of the assets of the Company, or any merger or consolidation of the Company into or with another corporation in which the Company is not the surviving entity, or any merger or consolidation of the Company into or with another corporation in which the Company is the surviving entity and, in connection with such merger or consolidation, all or part of the outstanding shares of Common Stock shall be changed into or exchanged for other stock or securities of the Company or any other person, or cash, or any other property. (3) Any election of persons to the Board of Directors which causes a majority of the Board of Directors to consist of persons other than "Continuing Directors". For this purpose, those persons who were members of the Board of Directors on May 1, 1995, shall be "Continuing Directors". Any person who is nominated for election as a member of the Board after May -7- 8 1, 1995, shall also be considered a "Continuing Director" for this purpose if, and only if, his or her nomination for election to the Board of Directors is approved or recommended by a majority of the members of the Board (or of the relevant Nominating Committee) and at least five (5) members of the Board are themselves Continuing Directors at the time of such nomination; or (4) Any person, or group of persons, announces a tender offer for at least twenty percent (20%) of the Company's Common Stock. (e) Notwithstanding anything else in this Agreement, the amount of severance compensation payable to the Executive as a result of a Change in Corporate Control under this Section 6, or otherwise, shall be limited to the maximum amount the Company would be entitled to deduct pursuant to Section 280G of the Internal Revenue Code of 1986, as amended. (f) If any dispute arises between the Company (or any successor) and the Executive regarding Executive's right to severance payments under Section 5 or Section 6, the Executive shall be entitled to recover his attorneys fees and costs incurred in connection with such dispute. 7. DEATH ----- If the Executive dies during the term of this Agreement, the Company shall pay to the Executive's estate a lump sum payment equal to the sum of the Executive's base salary accrued through the date of death plus the total unpaid amount of any accrued vacation pay or bonuses earned with respect to the fiscal year of the Company most recently ended. In addition, the death benefits payable by reason of the Executive's death under any retirement, deferred compensation or other employee benefit plan maintained by the Company shall be paid to the beneficiary designated by the Executive, and the stock options or other stock awards held by the Executive under the Company's stock plans shall become fully vested, in accordance with the terms of the applicable plan or plans. 8. WITHHOLDING ----------- The Company shall, to the extent permitted by law, have the right to withhold and deduct from any payment hereunder any federal, state or local taxes of any kind required by law to be withheld with respect to any such payment. 9. PROTECTION OF CONFIDENTIAL INFORMATION -------------------------------------- The Executive agrees that he will keep all confidential and proprietary information of the Company or relating to its -8- 9 business confidential, and that he will not (except with the Company's prior written consent), while in the employ of the Company or thereafter, disclose any such confidential information to any person, firm, corporation, association or other entity, other than in furtherance of his duties hereunder, and then only to those with a "need to know." The Executive shall not make use of any such confidential information for his own purposes or for the benefit of any person, firm, corporation, association or other entity (except the Company) under any circumstances during or after the term of his employment. The foregoing shall not apply to any information which is already in the public domain, or is generally disclosed by the Company or is otherwise in the public domain at the time of disclosure. The Executive recognizes that because his work for the Company may bring him into contact with confidential and proprietary information of the Company, the restrictions of this Section 9 are required for the reasonable protection of the Company and its investments and for the Company's reliance on and confidence in the Executive. 10. COVENANT NOT TO COMPETE ----------------------- The Executive hereby agrees that he will not, either during the Employment Term or during the period of one (1) year from the time the Executive's employment under this Agreement is terminated by him voluntarily or by the Company for Cause, engage in any business activities on behalf of any enterprise which competes with the Company in the business of the passive ownership of health care facilities, or passive investing in or lending to health care-related enterprises. The Executive will be deemed to be engaged in such competitive business activities if he participates in such a business enterprise as an employee, officer, director, consultant, agent, partner, proprietor, or other participant; provided that the ownership of no more than two percent (2%) of the stock of a publicly traded corporation engaged in a competitive business shall not be deemed to be engaging in competitive business activities. The Executive agrees that he shall not, for a period of one year from the time his employment under this Agreement ceases (for whatever reason), or, if later, during any period in which he is receiving monthly severance payments under Section 5 or Section 6 of this Agreement, solicit any employee or full-time consultant of the Company for the purposes of hiring or retaining such employee or consultant. For this purpose, the Executive shall be considered to be receiving monthly severance payments under Section 5 or Section 6 of this Agreement during any period for which he would have received such severance payments had he not elected to receive a lump sum severance payment or had such payments not been offset by compensation received from a successor employer. -9- 10 11. INJUNCTIVE RELIEF ----------------- The Executive acknowledges and agrees that it would be difficult to fully compensate the Company for damages resulting from the breach or threatened breach of the covenants set forth in Sections 9 and 10 of this Agreement and accordingly agrees that the Company shall be entitled to temporary and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, to enforce such provisions in any action or proceeding instituted in the United States District Court for the Northern District of Ohio or in any court in the State of Ohio having subject matter jurisdiction. This provision with respect to injunctive relief shall not, however, diminish the Company's right to claim and recover damages. It is expressly understood and agreed that although the parties consider the restrictions contained in this Agreement to be reasonable, if a court determines that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction on the activities of the Executive, no such provision of this Agreement shall be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such extent as such court may judicially determine or indicate to be reasonable. 12. NOTICES ------- All notices or communications hereunder shall be in writing and sent certified or registered mail, return receipt requested, postage prepaid, addressed as follows (or to such other address as such party may designate in writing from time to time): IF TO THE COMPANY: Health Care REIT, Inc. One SeaGate, Suite 1500 Toledo, OH 43604 Attention: Corporate Secretary IF TO THE EXECUTIVE: George L. Chapman One SeaGate, Suite 1500 Toledo, OH 43604 The actual date of receipt, as shown by the receipt therefor, shall determine the time at which notice was given. 13. SEPARABILITY ------------ If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity -10- 11 or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect. 14. ASSIGNMENT ---------- This Agreement shall be binding upon and inure to the benefit of the heirs and representatives of the Executive and the assigns and successors of the Company, but neither this Agreement nor any rights hereunder shall be assignable or otherwise subject to hypothecation by the Executive. 15. ENTIRE AGREEMENT ---------------- This Agreement represents the entire agreement of the parties and shall supersede any and all previous contracts, arrangements or understandings between the Company and the Executive. The Agreement may be amended at any time by mutual written agreement of the parties hereto. 16. GOVERNING LAW ------------- This Agreement shall be construed, interpreted, and governed in accordance with the laws of the State of Ohio, other than the conflict of laws provisions of such laws. IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed, and the Executive has hereunto set his hand, as of the day and year first above written. ATTEST: HEALTH CARE REIT, INC. By - ------------------------------ ------------------------------------ Corporate Secretary Vice President and Chief Operating Officer WITNESS: EXECUTIVE: - ------------------------------ --------------------------------------- George L. Chapman -11- EX-10.2 3 EXHIBIT 10.2 1 Exhibit 10.2 EMPLOYMENT AGREEMENT -------------------- THIS EMPLOYMENT AGREEMENT, dated as of the 1st day of January, 1997 (the "Agreement"), by and between HEALTH CARE REIT, INC., a Delaware corporation, (the "Company"), and RAYMOND W. BRAUN (the "Executive"). WHEREAS, the Company wishes to assure itself of the services of the Executive for the period provided in this Agreement and the Executive is willing to serve in the employ of the Company for such period upon the terms and conditions hereinafter set forth. NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties, intending to be legally bound, hereby agree as follows: 1. EMPLOYMENT ---------- The Company hereby agrees to employ the Executive as the Company's Vice President and Chief Operating Officer, upon the terms and conditions herein contained, and the Executive hereby agrees to accept such employment and to serve in such positions, and to perform the duties and functions customarily performed by the Vice President and Chief Operating Officer of a publicly traded corporation during the term of this Agreement. In such capacity, the Executive shall report only to the Company's Chief Executive Officer ("CEO"), and shall have the powers and responsibilities set forth in Article IV of the Company's By-Laws as well as such additional powers and responsibilities consistent with his position as the CEO may assign to him. Throughout the term of this Agreement, the Executive shall devote his best efforts and all of his business time and services to the business and affairs of the Company. 2. TERM OF AGREEMENT ----------------- The term of employment under this Agreement shall commence as of January 1, 1997 (the "Effective Date"). The initial term of this Agreement shall be for a period of two (2) years, ending December 31, 1998. Upon the expiration of such initial employment period, the term of employment hereunder shall automatically be extended without further action by the parties for successive two (2) year renewal terms, unless either party shall give at least six (6) months advance written notice to the other of his or its intention that this Agreement shall terminate upon the expiration of the initial term or the current renewal term, as the case may be. 2 Notwithstanding the foregoing, the Company shall be entitled to terminate this Agreement immediately, subject to a continuing obligation to make any payments required under Section 5 below, if the Executive (i) becomes disabled as described in Section 5(b), (ii) is terminated for Cause, as defined in Section 5(c), or (iii) voluntarily terminates his employment before the current term of this Agreement expires, as described in Section 5(d). 3. SALARY AND BONUS ---------------- The Executive shall receive a base salary during the term of this Agreement at a rate of not less than $175,000 per annum in substantially equal semi-monthly installments. The Compensation Committee of the Board shall consult with the CEO and review the Executive's base salary at annual intervals, and may adjust the Executive's annual base salary from time to time as the Committee deems to be appropriate. The Executive shall also be eligible to receive a bonus from the Company each year during the term of this Agreement, with the actual amount of such bonus to be determined by the Compensation Committee of the Company's Board, using such performance measures as the Committee deems to be appropriate. 4. ADDITIONAL COMPENSATION AND BENEFITS ------------------------------------ The Executive shall receive the following additional compensation and welfare and fringe benefits: (a) STOCK OPTIONS. The Executive shall be granted nonstatutory stock options with respect to 40,000 shares of common stock, and 2,177 shares of restricted stock, pursuant to the terms of the Company's 1995 Stock Incentive Plan. During the remaining term of the Agreement, any additional stock option or restricted stock awards under the 1995 Stock Incentive Plan shall be at the discretion of the Compensation Committee of the Company's Board. (b) MEDICAL INSURANCE. The Company shall provide the Executive and his dependents with health insurance, life insurance and disability coverage on terms no less favorable than that from time to time made available to other key employees. (c) VACATION. The Executive shall be entitled to up to three weeks of vacation during each year during the term of this Agreement and any extensions thereof, prorated for partial years. -2- 3 (d) BUSINESS EXPENSES. The Company shall reimburse the Executive for all reasonable expenses he incurs in promoting the Company's business, including expenses for travel and similar items, upon presentation by the Executive from time to time of an itemized account of such expenditures. In addition to the benefits provided pursuant to the preceding paragraphs of this Section 4, the Executive shall be eligible to participate in such other executive compensation and retirement plans of the Company as are applicable generally to other officers, and in such welfare benefit plans, programs, practices and policies of the Company as are generally applicable to other key employees, unless such participation would duplicate, directly or indirectly, benefits already accorded to the Executive. 5. PAYMENTS UPON TERMINATION ------------------------- (a) INVOLUNTARY TERMINATION. If the Executive's employment is terminated by the Company during the term of this Agreement, the Executive shall be entitled to receive his base salary accrued through the date of termination, any accrued but unpaid vacation pay, plus any bonuses payable with respect to periods preceding the termination date. The Executive shall also receive any nonforfeitable benefits payable to him under the terms of any deferred compensation, incentive or other benefit plan maintained by the Company, payable in accordance with the terms of the applicable plan. If the termination is neither a termination for Cause as described in paragraph (c) nor a voluntary termination by the Executive as described in paragraph (d), then the Company shall also be obligated to make a series of monthly severance payments to the Executive for each month during the remaining term of this Agreement, but not less than twelve (12) months. Each monthly payment shall be equal to one-twelfth (1/12th) of the sum of (i) the Executive's annual base salary, as in effect on the date of termination, and (ii) the greater of (A) the annual bonus paid to the Executive for the fiscal year preceding the termination or (B) a minimum bonus equal to forty percent (40%) of his annual base salary. If the Executive obtains a replacement position with any new employer (including a position as an officer, employee, consultant, or agent, or self-employment as a partner or sole proprietor), the payments shall be reduced by all amounts the Executive receives as compensation for services performed during such period. The Executive shall be under no duty to mitigate the amounts owed to him under this paragraph (a) by seeking such a replacement position. In addition, if the termination is neither a termination for Cause as described in paragraph (c) nor a voluntary termination by the Executive as described in paragraph (d), then: -3- 4 (i) Any stock option or restricted stock awards granted to the Executive under the Company's 1995 Stock Incentive Plan shall become fully vested and, in the case of stock options, exercisable in full; (ii) The Executive shall be provided continued coverage at the Company's expense under any life, medical and disability insurance programs maintained by the Company in which the Executive participated at the time of his termination for the remaining term of the Agreement, but not less than six (6) months, or until, if earlier, the date he obtains comparable coverage from a new employer; and (iii) The Executive may elect, by delivering written notice to the Company within 30 days following such termination of his employment, to receive from the Company a lump sum severance payment in lieu of the monthly severance payments described in the preceding paragraph in an amount equal to the present value of such payments. Such present value shall be calculated using a discount rate equal to the interest rate on 90-day Treasury bills, as reported in the WALL STREET JOURNAL (or similar publication) for the date the election is received by the Company. The Company shall deliver the payment to the Executive, in the form of a bank cashier's check, within 10 business days following the date on which the Company receives written notice of the Executive's election. (b) DISABILITY. The Company shall be entitled to terminate this Agreement, if the Board determines that the Executive has been unable to attend to his duties for at least ninety (90) days because of a medically diagnosable physical or mental condition, and has received a written opinion from a physician acceptable to the Board that such condition prevents the Executive from resuming full performance of his duties and is likely to continue for an indefinite period. Upon such termination, the Executive shall be entitled to receive his base salary accrued through the date of termination, any accrued but unpaid vacation pay, plus any bonuses payable with respect to periods preceding the termination date. In addition, the Executive shall receive such salary continuation benefits as are provided for in the terms of any long-term disability plan or other disability program or insurance policies maintained for his benefit by the Company. (c) TERMINATION FOR CAUSE. If the Executive's employment is terminated by the Company for Cause, the amount the Executive shall be entitled to receive from the Company shall be limited to his base salary accrued through the date of termination, any accrued but unpaid vacation pay, any bonuses payable with respect to the fiscal year of the Company most recently ended, and any nonforfeitable benefits payable to the Executive under the -4- 5 terms of deferred compensation, incentive or other benefit plans maintained by the Company. For purposes of this Agreement, the term "Cause" shall be limited to (i) action by the Executive involving willful disloyalty to the Company, such as embezzlement, fraud, misappropriation of corporate assets or a breach of the covenants set forth in Sections 9 and 10 below; or (ii) the Executive being convicted of a felony; or (iii) the Executive being convicted of any lesser crime or offense committed in connection with the performance of his duties hereunder or involving moral turpitude; or (iv) the intentional and willful failure by the Executive to substantially perform his duties hereunder as directed by the Company's CEO (other than any such failure resulting from the Executive's incapacity due to physical or mental disability) after a demand for substantial performance is made on the Executive by the Board of Directors. (d) VOLUNTARY TERMINATION BY THE EXECUTIVE. If the Executive resigns or otherwise voluntarily terminates his employment before the end of the current term of this Agreement (other than in connection with a Change in Corporate Control, as described in Section 6), the amount the Executive shall be entitled to receive from the Company shall be limited to his base salary accrued through the date of termination, any accrued but unpaid vacation pay, plus any bonuses payable with respect to the fiscal year of the Company most recently ended, and any nonforfeitable benefits payable to the Executive under the terms of any deferred compensation, incentive or other benefit plans of the Company. For purposes of this paragraph, a resignation by the Executive shall not be deemed to be voluntary if the Executive is (1) assigned to a position other than the Vice President or Chief Operating Officer of the Company (other than for Cause or by reason of permanent disability), (2) assigned duties materially inconsistent with such position, or (3) directed to report to anyone other than the Company's CEO. 6. EFFECT OF CHANGE IN CORPORATE CONTROL ------------------------------------- (a) In the event of a Change in Corporate Control, the vesting of any stock options, restricted stock awards or other incentive-based awards granted to the Executive under the terms of the Company's 1995 Stock Incentive Plan shall be accelerated (to the extent permitted by the terms of such Plan) and such awards shall become immediately vested in full and, in the case of stock options, exercisable in full. (b) If, at any time during the period of twelve (12) consecutive months following the occurrence of a Change in Corporate Control, and during the term of this Agreement, the Executive is involuntarily terminated (other than for Cause) or elects to voluntarily resign his employment, the Executive shall be -5- 6 entitled to receive monthly severance payments for each month during the remaining term of this Agreement, but not less than twelve (12) months. Each monthly payment shall be equal to one-twelfth (1/12th) of the sum of (i) the Executive's annual base salary, as in effect at the time of the Change in Corporate Control, and (ii) the greater of (A) the annual bonus paid to the Executive for the last fiscal year of the Company ending prior to the Change in Corporate Control or (B) a minimum bonus equal to forty percent (40%) of his annual base salary. (c) If the Executive is involuntarily terminated (other than for Cause) or elects to voluntarily resign his employment within twelve months after a Change in Corporate Control, he may elect, by delivering written notice to the Company within 30 days following such termination of his employment, to receive from the Company a lump sum severance payment in lieu of the monthly payments described in the preceding paragraph. The amount of this payment shall be equal to the present value of the monthly payments described in the preceding paragraph. Such present value shall be calculated using a discount rate equal to the interest rate on 90- day Treasury bills, as reported in the WALL STREET JOURNAL (or similar publication) for the date the election is received by the Company. The Company shall deliver the payment to the Executive, in the form of a bank cashier's check, within 10 business days following the date on which the Company receives written notice of the Executive's election. In addition, if the Executive is involuntarily terminated (other than for Cause) or elects to voluntarily resign his employment within twelve months after a Change in Corporate Control, he shall be entitled to continued coverage at the Company's expense under any life, medical and disability insurance programs maintained by the Company in which the Executive participated at the time of his termination, which coverage shall be continued until the expiration of the current term of the Agreement (but not less than six (6) months) or (ii) if earlier, the date the Executive obtains comparable coverage under benefit plans maintained by a new employer. (d) For purposes of this Agreement, a "Change in Corporate Control" shall include any of the following events: (1) The acquisition in one or more transactions of more than twenty percent (20%) of the Company's outstanding Common Stock (or the equivalent in voting power of any classes or classes of securities of the Company entitled to vote in elections of directors) by any corporation, or other person or group (within the meaning of Section 14(d)(3) of the Securities Exchange Act of 1934, as amended); (2) Any transfer or sale of substantially all of the assets of the Company, or any merger or consolidation of the Company -6- 7 into or with another corporation in which the Company is not the surviving entity; (3) Any election of persons to the Board of Directors which causes a majority of the Board of Directors to consist of persons other than "Continuing Directors". For this purpose, those persons who were members of the Board of Directors on May 1, 1995, shall be "Continuing Directors". Any person who is nominated for election as a member of the Board after May 1, 1995, shall also be considered a "Continuing Director" for this purpose if, and only if, his or her nomination for election to the Board of Directors is approved or recommended by a majority of the members of the Board (or of the relevant Nominating Committee) and at least five (5) members of the Board are themselves Continuing Directors at the time of such nomination; or (4) Any person, or group of persons, announces a tender offer for at least twenty percent (20%) of the Company's Common Stock, and the Board of Directors appoints a special committee of the Board to consider the Company's response to such tender offer. (e) Notwithstanding anything else in this Agreement, the amount of severance compensation payable to the Executive as a result of a Change in Corporate Control under this Section 6, or otherwise, shall be limited to the maximum amount the Company would be entitled to deduct pursuant to Section 280G of the Internal Revenue Code of 1986, as amended. 7. DEATH ----- If the Executive dies during the term of this Agreement, the Company shall pay to the Executive's estate a lump sum payment equal to the sum of the Executive's base salary accrued through the date of death plus the total unpaid amount of any accrued vacation pay or bonuses earned with respect to the fiscal year of the Company most recently ended. In addition, the death benefits payable by reason of the Executive's death under any retirement, deferred compensation or other employee benefit plan maintained by the Company shall be paid to the beneficiary designated by the Executive, and the stock options or other stock awards held by the Executive under the Company's stock plans shall become fully vested, in accordance with the terms of the applicable plan or plans. 8. WITHHOLDING ----------- The Company shall, to the extent permitted by law, have the right to withhold and deduct from any payment hereunder any federal, state or local taxes of any kind required by law to be withheld with respect to any such payment. -7- 8 9. PROTECTION OF CONFIDENTIAL INFORMATION -------------------------------------- The Executive agrees that he will keep all confidential and proprietary information of the Company or relating to its business confidential, and that he will not (except with the Company's prior written consent), while in the employ of the Company or thereafter, disclose any such confidential information to any person, firm, corporation, association or other entity, other than in furtherance of his duties hereunder, and then only to those with a "need to know." The Executive shall not make use of any such confidential information for his own purposes or for the benefit of any person, firm, corporation, association or other entity (except the Company) under any circumstances during or after the term of his employment. The foregoing shall not apply to any information which is already in the public domain, or is generally disclosed by the Company or is otherwise in the public domain at the time of disclosure. The Executive recognizes that because his work for the Company may bring him into contact with confidential and proprietary information of the Company, the restrictions of this Section 9 are required for the reasonable protection of the Company and its investments and for the Company's reliance on and confidence in the Executive. 10. COVENANT NOT TO COMPETE ----------------------- The Executive hereby agrees that he will not, either during the Employment Term or during the period of one (1) year from the time the Executive's employment under this Agreement is terminated by him voluntarily, by the Company for Cause, or because the Executive chooses not to extend the term of this Agreement, engage in any business activities on behalf of any enterprise which competes with the Company in the business of the passive ownership of health care facilities, or passive investing in or lending to health care-related enterprises. The Executive will be deemed to be engaged in such competitive business activities if he participates in such a business enterprise as an employee, officer, director, consultant, agent, partner, proprietor, or other participant; provided that the ownership of no more than two percent (2%) of the stock of a publicly traded corporation engaged in a competitive business shall not be deemed to be engaging in competitive business activities. The Executive agrees that he shall not, for a period of one year from the time his employment under this Agreement ceases (for whatever reason), or, if later, during any period in which he is receiving monthly severance payments under Section 5 or Section 6 of this Agreement, solicit any employee or full-time consultant of the Company for the purposes of hiring or retaining such employee or consultant. For this purpose, the Executive shall be considered to be receiving monthly severance payments under Section -8- 9 6 of this Agreement during any period for which he would have received such severance payments had he not elected to receive a lump sum severance payment or had such payments not been offset by compensation received from a successor employer. 11. INJUNCTIVE RELIEF ----------------- The Executive acknowledges and agrees that it would be difficult to fully compensate the Company for damages resulting from the breach or threatened breach of the covenants set forth in Sections 9 and 10 of this Agreement and accordingly agrees that the Company shall be entitled to temporary and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, to enforce such provisions in any action or proceeding instituted in the United States District Court for the Northern District of Ohio or in any court in the State of Ohio having subject matter jurisdiction. This provision with respect to injunctive relief shall not, however, diminish the Company's right to claim and recover damages. It is expressly understood and agreed that although the parties consider the restrictions contained in this Agreement to be reasonable, if a court determines that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction on the activities of the Executive, no such provision of this Agreement shall be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such extent as such court may judicially determine or indicate to be reasonable. 12. NOTICES ------- All notices or communications hereunder shall be in writing and sent certified or registered mail, return receipt requested, postage prepaid, addressed as follows (or to such other address as such party may designate in writing from time to time): IF TO THE COMPANY: Health Care REIT, Inc. One SeaGate, Suite 1500 Toledo, OH 43604 Attention: Corporate Secretary IF TO THE EXECUTIVE: Raymond W. Braun One SeaGate, Suite 1500 Toledo, OH 43604 The actual date of receipt, as shown by the receipt therefor, shall determine the time at which notice was given. -9- 10 13. SEPARABILITY ------------ If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect. 14. ASSIGNMENT ---------- This Agreement shall be binding upon and inure to the benefit of the heirs and representatives of the Executive and the assigns and successors of the Company, but neither this Agreement nor any rights hereunder shall be assignable or otherwise subject to hypothecation by the Executive. 15. ENTIRE AGREEMENT ---------------- This Agreement represents the entire agreement of the parties and shall supersede any and all previous contracts, arrangements or understandings between the Company and the Executive. The Agreement may be amended at any time by mutual written agreement of the parties hereto. 16. GOVERNING LAW ------------- This Agreement shall be construed, interpreted, and governed in accordance with the laws of the State of Ohio, other than the conflict of laws provisions of such laws. IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed, and the Executive has hereunto set his hand, as of the day and year first above written. ATTEST: HEALTH CARE REIT, INC. By - ------------------------------ ---------------------------- Corporate Secretary Chief Executive Officer WITNESS: EXECUTIVE: - ------------------------------ ---------------------------- Raymond W. Braun -10- EX-10.3 4 EXHIBIT 10.3 1 Exhibit 10.3 EMPLOYMENT AGREEMENT -------------------- THIS EMPLOYMENT AGREEMENT, dated as of the 1st day of January, 1997 (the "Agreement"), by and between HEALTH CARE REIT, INC., a Delaware corporation, (the "Company"), and EDWARD F. LANGE, JR. (the "Executive"). WHEREAS, the Company wishes to assure itself of the services of the Executive for the period provided in this Agreement and the Executive is willing to serve in the employ of the Company for such period upon the terms and conditions hereinafter set forth. NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties, intending to be legally bound, hereby agree as follows: 1. EMPLOYMENT ---------- The Company hereby agrees to employ the Executive as the Company's Vice President, Chief Financial Officer and Treasurer, upon the terms and conditions herein contained, and the Executive hereby agrees to accept such employment and to serve in such positions, and to perform the duties and functions customarily performed by the Chief Financial Officer of a publicly traded corporation during the term of this Agreement. In such capacity, the Executive shall report only to the Company's Chief Executive Officer ("CEO"), and shall have the powers and responsibilities set forth in Article IV of the Company's By-Laws as well as such additional powers and responsibilities consistent with his position as the CEO may assign to him. Throughout the term of this Agreement, the Executive shall devote his best efforts and all of his business time and services to the business and affairs of the Company. 2. TERM OF AGREEMENT ----------------- The term of employment under this Agreement shall commence as of January 1, 1997 (the "Effective Date"). The initial term of this Agreement shall be for a period of two (2) years, ending December 31, 1998. Upon the expiration of such initial employment period, the term of employment hereunder shall automatically be extended without further action by the parties for successive two (2) year renewal terms, unless either party shall give at least six (6) months advance written notice to the other of his or its intention that this Agreement shall terminate upon the expiration of the initial term or the current renewal term, as the case may be. 2 Notwithstanding the foregoing, the Company shall be entitled to terminate this Agreement immediately, subject to a continuing obligation to make any payments required under Section 5 below, if the Executive (i) becomes disabled as described in Section 5(b), (ii) is terminated for Cause, as defined in Section 5(c), or (iii) voluntarily terminates his employment before the current term of this Agreement expires, as described in Section 5(d). 3. SALARY AND BONUS ---------------- The Executive shall receive a base salary during the term of this Agreement at a rate of not less than $170,000 per annum in substantially equal semi-monthly installments. The Compensation Committee of the Board shall consult with the CEO and review the Executive's base salary at annual intervals, and may adjust the Executive's annual base salary from time to time as the Committee deems to be appropriate. The Executive shall also be eligible to receive a bonus from the Company each year during the term of this Agreement, with the actual amount of such bonus to be determined by the Compensation Committee of the Company's Board, using such performance measures as the Committee deems to be appropriate. 4. ADDITIONAL COMPENSATION AND BENEFITS ------------------------------------ The Executive shall receive the following additional compensation and welfare and fringe benefits: (a) STOCK OPTIONS. The Executive shall be granted nonstatutory stock options with respect to 37,500 shares of common stock, and 2,114 shares of restricted stock, pursuant to the terms of the Company's 1995 Stock Incentive Plan. During the remaining term of the Agreement, any additional stock option or restricted stock awards under the 1995 Stock Incentive Plan shall be at the discretion of the Compensation Committee of the Company's Board. (b) MEDICAL INSURANCE. The Company shall provide the Executive and his dependents with health insurance, life insurance and disability coverage on terms no less favorable than that from time to time made available to other key employees. (c) VACATION. The Executive shall be entitled to up to three weeks of vacation during each year during the term of this Agreement and any extensions thereof, prorated for partial years. -2- 3 (d) BUSINESS EXPENSES. The Company shall reimburse the Executive for all reasonable expenses he incurs in promoting the Company's business, including expenses for travel and similar items, upon presentation by the Executive from time to time of an itemized account of such expenditures. In addition to the benefits provided pursuant to the preceding paragraphs of this Section 4, the Executive shall be eligible to participate in such other executive compensation and retirement plans of the Company as are applicable generally to other officers, and in such welfare benefit plans, programs, practices and policies of the Company as are generally applicable to other key employees, unless such participation would duplicate, directly or indirectly, benefits already accorded to the Executive. 5. PAYMENTS UPON TERMINATION ------------------------- (a) INVOLUNTARY TERMINATION. If the Executive's employment is terminated by the Company during the term of this Agreement, the Executive shall be entitled to receive his base salary accrued through the date of termination, any accrued but unpaid vacation pay, plus any bonuses payable with respect to periods preceding the termination date. The Executive shall also receive any nonforfeitable benefits payable to him under the terms of any deferred compensation, incentive or other benefit plan maintained by the Company, payable in accordance with the terms of the applicable plan. If the termination is neither a termination for Cause as described in paragraph (c) nor a voluntary termination by the Executive as described in paragraph (d), then the Company shall also be obligated to make a series of monthly severance payments to the Executive for each month during the remaining term of this Agreement, but not less than twelve (12) months. Each monthly payment shall be equal to one-twelfth (1/12th) of the sum of (i) the Executive's annual base salary, as in effect on the date of termination, and (ii) the greater of (A) the annual bonus paid to the Executive for the fiscal year preceding the termination or (B) a minimum bonus equal to thirty-seven and one-half percent (37.5%) of his annual base salary. If the Executive obtains a replacement position with any new employer (including a position as an officer, employee, consultant, or agent, or self-employment as a partner or sole proprietor), the payments shall be reduced by all amounts the Executive receives as compensation for services performed during such period. The Executive shall be under no duty to mitigate the amounts owed to him under this paragraph (a) by seeking such a replacement position. In addition, if the termination is neither a termination for Cause as described in paragraph (c) nor a voluntary termination by the Executive as described in paragraph (d), then: -3- 4 (i) Any stock option or restricted stock awards granted to the Executive under the Company's 1995 Stock Incentive Plan shall become fully vested and, in the case of stock options, exercisable in full; (ii) The Executive shall be provided continued coverage at the Company's expense under any life, medical and disability insurance programs maintained by the Company in which the Executive participated at the time of his termination for the remaining term of the Agreement, but not less than six (6) months, or until, if earlier, the date he obtains comparable coverage from a new employer; and (iii) The Executive may elect, by delivering written notice to the Company within 30 days following such termination of his employment, to receive from the Company a lump sum severance payment in lieu of the monthly severance payments described in the preceding paragraph in an amount equal to the present value of such payments. Such present value shall be calculated using a discount rate equal to the interest rate on 90-day Treasury bills, as reported in the WALL STREET JOURNAL (or similar publication) for the date the election is received by the Company. The Company shall deliver the payment to the Executive, in the form of a bank cashier's check, within 10 business days following the date on which the Company receives written notice of the Executive's election. (b) DISABILITY. The Company shall be entitled to terminate this Agreement, if the Board determines that the Executive has been unable to attend to his duties for at least ninety (90) days because of a medically diagnosable physical or mental condition, and has received a written opinion from a physician acceptable to the Board that such condition prevents the Executive from resuming full performance of his duties and is likely to continue for an indefinite period. Upon such termination, the Executive shall be entitled to receive his base salary accrued through the date of termination, any accrued but unpaid vacation pay, plus any bonuses payable with respect to periods preceding the termination date. In addition, the Executive shall receive such salary continuation benefits as are provided for in the terms of any long-term disability plan or other disability program or insurance policies maintained for his benefit by the Company. (c) TERMINATION FOR CAUSE. If the Executive's employment is terminated by the Company for Cause, the amount the Executive shall be entitled to receive from the Company shall be limited to his base salary accrued through the date of termination, any accrued but unpaid vacation pay, any bonuses payable with respect to the fiscal year of the Company most recently ended, and any nonforfeitable benefits payable to the Executive under the -4- 5 terms of deferred compensation, incentive or other benefit plans maintained by the Company. For purposes of this Agreement, the term "Cause" shall be limited to (i) action by the Executive involving willful disloyalty to the Company, such as embezzlement, fraud, misappropriation of corporate assets or a breach of the covenants set forth in Sections 9 and 10 below; or (ii) the Executive being convicted of a felony; or (iii) the Executive being convicted of any lesser crime or offense committed in connection with the performance of his duties hereunder or involving moral turpitude; or (iv) the intentional and willful failure by the Executive to substantially perform his duties hereunder as directed by the Company's CEO (other than any such failure resulting from the Executive's incapacity due to physical or mental disability) after a demand for substantial performance is made on the Executive by the Board of Directors. (d) VOLUNTARY TERMINATION BY THE EXECUTIVE. If the Executive resigns or otherwise voluntarily terminates his employment before the end of the current term of this Agreement (other than in connection with a Change in Corporate Control, as described in Section 6), the amount the Executive shall be entitled to receive from the Company shall be limited to his base salary accrued through the date of termination, any accrued but unpaid vacation pay, plus any bonuses payable with respect to the fiscal year of the Company most recently ended, and any nonforfeitable benefits payable to the Executive under the terms of any deferred compensation, incentive or other benefit plans of the Company. For purposes of this paragraph, a resignation by the Executive shall not be deemed to be voluntary if the Executive is (1) assigned to a position other than the Vice President, Chief Financial Officer and Treasurer of the Company (other than for Cause or by reason of permanent disability), (2) assigned duties materially inconsistent with such position, or (3) directed to report to anyone other than the Company's CEO. 6. EFFECT OF CHANGE IN CORPORATE CONTROL ------------------------------------- (a) In the event of a Change in Corporate Control, the vesting of any stock options, restricted stock awards or other incentive-based awards granted to the Executive under the terms of the Company's 1995 Stock Incentive Plan shall be accelerated (to the extent permitted by the terms of such Plan) and such awards shall become immediately vested in full and, in the case of stock options, exercisable in full. (b) If, at any time during the period of twelve (12) consecutive months following the occurrence of a Change in Corporate Control, and during the term of this Agreement, the Executive is involuntarily terminated (other than for Cause) or elects to voluntarily resign his employment, the Executive shall be entitled to receive monthly severance payments for each month -5- 6 during the remaining term of this Agreement, but not less than twelve (12) months. Each monthly payment shall be equal to one-twelfth (1/12th) of the sum of (i) the Executive's annual base salary, as in effect at the time of the Change in Corporate Control, and (ii) the greater of (A) the annual bonus paid to the Executive for the last fiscal year of the Company ending prior to the Change in Corporate Control or (B) a minimum bonus equal to thirty-seven and one-half percent (37.5%) of his annual base salary. (c) If the Executive is involuntarily terminated (other than for Cause) or elects to voluntarily resign his employment within twelve months after a Change in Corporate Control, he may elect, by delivering written notice to the Company within 30 days following such termination of his employment, to receive from the Company a lump sum severance payment in lieu of the monthly payments described in the preceding paragraph. The amount of this payment shall be equal to the present value of the monthly payments described in the preceding paragraph. Such present value shall be calculated using a discount rate equal to the interest rate on 90-day Treasury bills, as reported in the WALL STREET JOURNAL (or similar publication) for the date the election is received by the Company. The Company shall deliver the payment to the Executive, in the form of a bank cashier's check, within 10 business days following the date on which the Company receives written notice of the Executive's election. In addition, if the Executive is involuntarily terminated (other than for Cause) or elects to voluntarily resign his employment within twelve months after a Change in Corporate Control, he shall be entitled to continued coverage at the Company's expense under any life, medical and disability insurance programs maintained by the Company in which the Executive participated at the time of his termination, which coverage shall be continued until the expiration of the current term of the Agreement (but not less than six (6) months) or (ii) if earlier, the date the Executive obtains comparable coverage under benefit plans maintained by a new employer. (d) For purposes of this Agreement, a "Change in Corporate Control" shall include any of the following events: (1) The acquisition in one or more transactions of more than twenty percent (20%) of the Company's outstanding Common Stock (or the equivalent in voting power of any classes or classes of securities of the Company entitled to vote in elections of directors) by any corporation, or other person or group (within the meaning of Section 14(d)(3) of the Securities Exchange Act of 1934, as amended); (2) Any transfer or sale of substantially all of the assets of the Company, or any merger or consolidation of the Company -6- 7 into or with another corporation in which the Company is not the surviving entity; (3) Any election of persons to the Board of Directors which causes a majority of the Board of Directors to consist of persons other than "Continuing Directors". For this purpose, those persons who were members of the Board of Directors on May 1, 1995, shall be "Continuing Directors". Any person who is nominated for election as a member of the Board after May 1, 1995, shall also be considered a "Continuing Director" for this purpose if, and only if, his or her nomination for election to the Board of Directors is approved or recommended by a majority of the members of the Board (or of the relevant Nominating Committee) and at least five (5) members of the Board are themselves Continuing Directors at the time of such nomination; or (4) Any person, or group of persons, announces a tender offer for at least twenty percent (20%) of the Company's Common Stock, and the Board of Directors appoints a special committee of the Board to consider the Company's response to such tender offer. (e) Notwithstanding anything else in this Agreement, the amount of severance compensation payable to the Executive as a result of a Change in Corporate Control under this Section 6, or otherwise, shall be limited to the maximum amount the Company would be entitled to deduct pursuant to Section 280G of the Internal Revenue Code of 1986, as amended. 7. DEATH ----- If the Executive dies during the term of this Agreement, the Company shall pay to the Executive's estate a lump sum payment equal to the sum of the Executive's base salary accrued through the date of death plus the total unpaid amount of any accrued vacation pay or bonuses earned with respect to the fiscal year of the Company most recently ended. In addition, the death benefits payable by reason of the Executive's death under any retirement, deferred compensation or other employee benefit plan maintained by the Company shall be paid to the beneficiary designated by the Executive, and the stock options or other stock awards held by the Executive under the Company's stock plans shall become fully vested, in accordance with the terms of the applicable plan or plans. 8. WITHHOLDING ----------- The Company shall, to the extent permitted by law, have the right to withhold and deduct from any payment hereunder any federal, state or local taxes of any kind required by law to be withheld with respect to any such payment. -7- 8 9. PROTECTION OF CONFIDENTIAL INFORMATION -------------------------------------- The Executive agrees that he will keep all confidential and proprietary information of the Company or relating to its business confidential, and that he will not (except with the Company's prior written consent), while in the employ of the Company or thereafter, disclose any such confidential information to any person, firm, corporation, association or other entity, other than in furtherance of his duties hereunder, and then only to those with a "need to know." The Executive shall not make use of any such confidential information for his own purposes or for the benefit of any person, firm, corporation, association or other entity (except the Company) under any circumstances during or after the term of his employment. The foregoing shall not apply to any information which is already in the public domain, or is generally disclosed by the Company or is otherwise in the public domain at the time of disclosure. The Executive recognizes that because his work for the Company may bring him into contact with confidential and proprietary information of the Company, the restrictions of this Section 9 are required for the reasonable protection of the Company and its investments and for the Company's reliance on and confidence in the Executive. 10. COVENANT NOT TO COMPETE ----------------------- The Executive hereby agrees that he will not, either during the Employment Term or during the period of one (1) year from the time the Executive's employment under this Agreement is terminated by him voluntarily, by the Company for Cause, or because the Executive chooses not to extend the term of this Agreement, engage in any business activities on behalf of any enterprise which competes with the Company in the business of the passive ownership of health care facilities, or passive investing in or lending to health care-related enterprises. The Executive will be deemed to be engaged in such competitive business activities if he participates in such a business enterprise as an employee, officer, director, consultant, agent, partner, proprietor, or other participant; provided that the ownership of no more than two percent (2%) of the stock of a publicly traded corporation engaged in a competitive business shall not be deemed to be engaging in competitive business activities. The Executive agrees that he shall not, for a period of one year from the time his employment under this Agreement ceases (for whatever reason), or, if later, during any period in which he is receiving monthly severance payments under Section 5 or Section 6 of this Agreement, solicit any employee or full-time consultant of the Company for the purposes of hiring or retaining such employee or consultant. For this purpose, the Executive shall be considered to be receiving monthly severance payments under Section 6 of this Agreement during any period for which he would have -8- 9 received such severance payments had he not elected to receive a lump sum severance payment or had such payments not been offset by compensation received from a successor employer. 11. INJUNCTIVE RELIEF ----------------- The Executive acknowledges and agrees that it would be difficult to fully compensate the Company for damages resulting from the breach or threatened breach of the covenants set forth in Sections 9 and 10 of this Agreement and accordingly agrees that the Company shall be entitled to temporary and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, to enforce such provisions in any action or proceeding instituted in the United States District Court for the Northern District of Ohio or in any court in the State of Ohio having subject matter jurisdiction. This provision with respect to injunctive relief shall not, however, diminish the Company's right to claim and recover damages. It is expressly understood and agreed that although the parties consider the restrictions contained in this Agreement to be reasonable, if a court determines that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction on the activities of the Executive, no such provision of this Agreement shall be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such extent as such court may judicially determine or indicate to be reasonable. 12. NOTICES ------- All notices or communications hereunder shall be in writing and sent certified or registered mail, return receipt requested, postage prepaid, addressed as follows (or to such other address as such party may designate in writing from time to time): IF TO THE COMPANY: Health Care REIT, Inc. One SeaGate, Suite 1500 Toledo, OH 43604 Attention: Corporate Secretary IF TO THE EXECUTIVE: Edward F. Lange, Jr. One SeaGate, Suite 1500 Toledo, OH 43604 The actual date of receipt, as shown by the receipt therefor, shall determine the time at which notice was given. -9- 10 13. SEPARABILITY ------------ If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect. 14. ASSIGNMENT ---------- This Agreement shall be binding upon and inure to the benefit of the heirs and representatives of the Executive and the assigns and successors of the Company, but neither this Agreement nor any rights hereunder shall be assignable or otherwise subject to hypothecation by the Executive. 15. ENTIRE AGREEMENT ---------------- This Agreement represents the entire agreement of the parties and shall supersede any and all previous contracts, arrangements or understandings between the Company and the Executive. The Agreement may be amended at any time by mutual written agreement of the parties hereto. 16. GOVERNING LAW ------------- This Agreement shall be construed, interpreted, and governed in accordance with the laws of the State of Ohio, other than the conflict of laws provisions of such laws. IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed, and the Executive has hereunto set his hand, as of the day and year first above written. ATTEST: HEALTH CARE REIT, INC. By - ------------------------------ ------------------------------ Corporate Secretary Chief Executive Officer WITNESS: EXECUTIVE: - ------------------------------ -------------------------------- Edward F. Lange, Jr. -10- EX-10.4 5 EXHIBIT 10.4 1 Exhibit 10.4 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT, dated as of the 1st day of January, 1997 (the "Agreement"), by and between HEALTH CARE REIT, INC., a Delaware corporation, (the "Company"), and ERIN C. IBELE (the "Executive"). WHEREAS, the Company wishes to assure itself of the services of the Executive for the period provided in this Agreement and the Executive is willing to serve in the employ of the Company for such period upon the terms and conditions hereinafter set forth. NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties, intending to be legally bound, hereby agree as follows: 1. EMPLOYMENT ---------- The Company hereby agrees to employ the Executive as the Company's Vice President and Corporate Secretary, upon the terms and conditions herein contained, and the Executive hereby agrees to accept such employment and to serve in such positions, and to perform the duties and functions customarily performed by the Vice President and Corporate Secretary of a publicly traded corporation during the term of this Agreement. In such capacity, the Executive shall report only to the Company's Chief Executive Officer ("CEO"), and shall have the powers and responsibilities set forth in Article IV of the Company's By-Laws as well as such additional powers and responsibilities consistent with her position as the CEO may assign to her. Throughout the term of this Agreement, the Executive shall devote her best efforts and all of her business time and services to the business and affairs of the Company. 2. TERM OF AGREEMENT ----------------- The term of employment under this Agreement shall commence as of January 1, 1997 (the "Effective Date"). The initial term of this Agreement shall be for a period of two (2) years, ending December 31, 1998. Upon the expiration of such initial employment period, the term of employment hereunder shall automatically be extended without further action by the parties for successive two (2) year renewal terms, unless either party shall give at least six (6) months advance written notice to the other of her or its intention that this Agreement shall terminate upon the expiration of the initial term or the current renewal term, as the case may be. Notwithstanding the foregoing, the Company shall be entitled to terminate this Agreement immediately, subject to a 2 continuing obligation to make any payments required under Section 5 below, if the Executive (i) becomes disabled as described in Section 5(b), (ii) is terminated for Cause, as defined in Section 5(c), or (iii) voluntarily terminates her employment before the current term of this Agreement expires, as described in Section 5(d). 3. SALARY AND BONUS ---------------- The Executive shall receive a base salary during the term of this Agreement at a rate of not less than $80,000 per annum in substantially equal semi-monthly installments. The Compensation Committee of the Board shall consult with the CEO and review the Executive's base salary at annual intervals, and may adjust the Executive's annual base salary from time to time as the Committee deems to be appropriate. The Executive shall also be eligible to receive a bonus from the Company each year during the term of this Agreement, with the actual amount of such bonus to be determined by the Compensation Committee of the Company's Board, using such performance measures as the Committee deems to be appropriate. 4. ADDITIONAL COMPENSATION AND BENEFITS ------------------------------------ The Executive shall receive the following additional compensation and welfare and fringe benefits: (a) STOCK OPTIONS. The Executive shall be granted nonstatutory stock options with respect to 20,000 shares of common stock, and 995 shares of restricted stock, pursuant to the terms of the Company's 1995 Stock Incentive Plan. During the remaining term of the Agreement, any additional stock option or restricted stock awards under the 1995 Stock Incentive Plan shall be at the discretion of the Compensation Committee of the Company's Board. (b) MEDICAL INSURANCE. The Company shall provide the Executive and her dependents with health insurance, life insurance and disability coverage on terms no less favorable than that from time to time made available to other key employees. (c) VACATION. The Executive shall be entitled to up to three weeks of vacation during each year during the term of this Agreement and any extensions thereof, prorated for partial years. (d) BUSINESS EXPENSES. The Company shall reimburse the Executive for all reasonable expenses she incurs in promoting the Company's business, including expenses for travel and -2- 3 similar items, upon presentation by the Executive from time to time of an itemized account of such expenditures. In addition to the benefits provided pursuant to the preceding paragraphs of this Section 4, the Executive shall be eligible to participate in such other executive compensation and retirement plans of the Company as are applicable generally to other officers, and in such welfare benefit plans, programs, practices and policies of the Company as are generally applicable to other key employees, unless such participation would duplicate, directly or indirectly, benefits already accorded to the Executive. 5. PAYMENTS UPON TERMINATION ------------------------- (a) INVOLUNTARY TERMINATION. If the Executive's employment is terminated by the Company during the term of this Agreement, the Executive shall be entitled to receive her base salary accrued through the date of termination, any accrued but unpaid vacation pay, plus any bonuses payable with respect to periods preceding the termination date. The Executive shall also receive any nonforfeitable benefits payable to her under the terms of any deferred compensation, incentive or other benefit plan maintained by the Company, payable in accordance with the terms of the applicable plan. If the termination is neither a termination for Cause as described in paragraph (c) nor a voluntary termination by the Executive as described in paragraph (d), then the Company shall also be obligated to make a series of monthly severance payments to the Executive for each month during the remaining term of this Agreement, but not less than twelve (12) months. Each monthly payment shall be equal to one-twelfth (1/12th) of the sum of (i) the Executive's annual base salary, as in effect on the date of termination, and (ii) the greater of (A) the annual bonus paid to the Executive for the fiscal year preceding the termination or (B) a minimum bonus equal to twenty-five percent (25%) of her annual base salary. If the Executive obtains a replacement position with any new employer (including a position as an officer, employee, consultant, or agent, or self-employment as a partner or sole proprietor), the payments shall be reduced by all amounts the Executive receives as compensation for services performed during such period. The Executive shall be under no duty to mitigate the amounts owed to her under this paragraph (a) by seeking such a replacement position. In addition, if the termination is neither a termination for Cause as described in paragraph (c) nor a voluntary termination by the Executive as described in paragraph (d), then: (i) Any stock option or restricted stock awards granted to the Executive under the Company's 1995 Stock Incentive Plan -3- 4 shall become fully vested and, in the case of stock options, exercisable in full; (ii) The Executive shall be provided continued coverage at the Company's expense under any life, medical and disability insurance programs maintained by the Company in which the Executive participated at the time of her termination for the remaining term of the Agreement, but not less than six (6) months, or until, if earlier, the date she obtains comparable coverage from a new employer; and (iii) The Executive may elect, by delivering written notice to the Company within 30 days following such termination of her employment, to receive from the Company a lump sum severance payment in lieu of the monthly severance payments described in the preceding paragraph in an amount equal to the present value of such payments. Such present value shall be calculated using a discount rate equal to the interest rate on 90-day Treasury bills, as reported in the WALL STREET JOURNAL (or similar publication) for the date the election is received by the Company. The Company shall deliver the payment to the Executive, in the form of a bank cashier's check, within 10 business days following the date on which the Company receives written notice of the Executive's election. (b) DISABILITY. The Company shall be entitled to terminate this Agreement, if the Board determines that the Executive has been unable to attend to her duties for at least ninety (90) days because of a medically diagnosable physical or mental condition, and has received a written opinion from a physician acceptable to the Board that such condition prevents the Executive from resuming full performance of her duties and is likely to continue for an indefinite period. Upon such termination, the Executive shall be entitled to receive her base salary accrued through the date of termination, any accrued but unpaid vacation pay, plus any bonuses payable with respect to periods preceding the termination date. In addition, the Executive shall receive such salary continuation benefits as are provided for in the terms of any long-term disability plan or other disability program or insurance policies maintained for her benefit by the Company. (c) TERMINATION FOR CAUSE. If the Executive's employment is terminated by the Company for Cause, the amount the Executive shall be entitled to receive from the Company shall be limited to her base salary accrued through the date of termination, any accrued but unpaid vacation pay, any bonuses payable with respect to the fiscal year of the Company most recently ended, and any nonforfeitable benefits payable to the Executive under the terms of deferred compensation, incentive or other benefit plans maintained by the Company. -4- 5 For purposes of this Agreement, the term "Cause" shall be limited to (i) action by the Executive involving willful disloyalty to the Company, such as embezzlement, fraud, misappropriation of corporate assets or a breach of the covenants set forth in Sections 9 and 10 below; or (ii) the Executive being convicted of a felony; or (iii) the Executive being convicted of any lesser crime or offense committed in connection with the performance of her duties hereunder or involving moral turpitude; or (iv) the intentional and willful failure by the Executive to substantially perform her duties hereunder as directed by the Company's CEO (other than any such failure resulting from the Executive's incapacity due to physical or mental disability) after a demand for substantial performance is made on the Executive by the Board of Directors. (d) VOLUNTARY TERMINATION BY THE EXECUTIVE. If the Executive resigns or otherwise voluntarily terminates her employment before the end of the current term of this Agreement (other than in connection with a Change in Corporate Control, as described in Section 6), the amount the Executive shall be entitled to receive from the Company shall be limited to her base salary accrued through the date of termination, any accrued but unpaid vacation pay, plus any bonuses payable with respect to the fiscal year of the Company most recently ended, and any nonforfeitable benefits payable to the Executive under the terms of any deferred compensation, incentive or other benefit plans of the Company. For purposes of this paragraph, a resignation by the Executive shall not be deemed to be voluntary if the Executive is (1) assigned to a position other than the Vice President or Corporate Secretary of the Company (other than for Cause or by reason of permanent disability), (2) assigned duties materially inconsistent with such position, or (3) directed to report to anyone other than the Company's CEO. 6. EFFECT OF CHANGE IN CORPORATE CONTROL ------------------------------------- (a) In the event of a Change in Corporate Control, the vesting of any stock options, restricted stock awards or other incentive-based awards granted to the Executive under the terms of the Company's 1995 Stock Incentive Plan shall be accelerated (to the extent permitted by the terms of such Plan) and such awards shall become immediately vested in full and, in the case of stock options, exercisable in full. (b) If, at any time during the period of twelve (12) consecutive months following the occurrence of a Change in Corporate Control, and during the term of this Agreement, the Executive is involuntarily terminated (other than for Cause) or elects to voluntarily resign her employment, the Executive shall be entitled to receive monthly severance payments for each month during the remaining term of this Agreement, but not less than twelve (12) months. Each monthly payment shall be equal to one- -5- 6 twelfth (1/12th) of the sum of (i) the Executive's annual base salary, as in effect at the time of the Change in Corporate Control, and (ii) the greater of (A) the annual bonus paid to the Executive for the last fiscal year of the Company ending prior to the Change in Corporate Control or (B) a minimum bonus equal to twenty-five percent (25%) of her annual base salary. (c) If the Executive is involuntarily terminated (other than for Cause) or elects to voluntarily resign her employment within twelve months after a Change in Corporate Control, she may elect, by delivering written notice to the Company within 30 days following such termination of her employment, to receive from the Company a lump sum severance payment in lieu of the monthly payments described in the preceding paragraph. The amount of this payment shall be equal to the present value of the monthly payments described in the preceding paragraph. Such present value shall be calculated using a discount rate equal to the interest rate on 90- day Treasury bills, as reported in the WALL STREET JOURNAL (or similar publication) for the date the election is received by the Company. The Company shall deliver the payment to the Executive, in the form of a bank cashier's check, within 10 business days following the date on which the Company receives written notice of the Executive's election. In addition, if the Executive is involuntarily terminated (other than for Cause) or elects to voluntarily resign her employment within twelve months after a Change in Corporate Control, she shall be entitled to continued coverage at the Company's expense under any life, medical and disability insurance programs maintained by the Company in which the Executive participated at the time of her termination, which coverage shall be continued until the expiration of the current term of the Agreement (but not less than six (6) months) or (ii) if earlier, the date the Executive obtains comparable coverage under benefit plans maintained by a new employer. (d) For purposes of this Agreement, a "Change in Corporate Control" shall include any of the following events: (1) The acquisition in one or more transactions of more than twenty percent (20%) of the Company's outstanding Common Stock (or the equivalent in voting power of any classes or classes of securities of the Company entitled to vote in elections of directors) by any corporation, or other person or group (within the meaning of Section 14(d)(3) of the Securities Exchange Act of 1934, as amended); (2) Any transfer or sale of substantially all of the assets of the Company, or any merger or consolidation of the Company into or with another corporation in which the Company is not the surviving entity; -6- 7 (3) Any election of persons to the Board of Directors which causes a majority of the Board of Directors to consist of persons other than "Continuing Directors". For this purpose, those persons who were members of the Board of Directors on May 1, 1995, shall be "Continuing Directors". Any person who is nominated for election as a member of the Board after May 1, 1995, shall also be considered a "Continuing Director" for this purpose if, and only if, his or her nomination for election to the Board of Directors is approved or recommended by a majority of the members of the Board (or of the relevant Nominating Committee) and at least five (5) members of the Board are themselves Continuing Directors at the time of such nomination; or (4) Any person, or group of persons, announces a tender offer for at least twenty percent (20%) of the Company's Common Stock, and the Board of Directors appoints a special committee of the Board to consider the Company's response to such tender offer. (e) Notwithstanding anything else in this Agreement, the amount of severance compensation payable to the Executive as a result of a Change in Corporate Control under this Section 6, or otherwise, shall be limited to the maximum amount the Company would be entitled to deduct pursuant to Section 280G of the Internal Revenue Code of 1986, as amended. 7. DEATH ----- If the Executive dies during the term of this Agreement, the Company shall pay to the Executive's estate a lump sum payment equal to the sum of the Executive's base salary accrued through the date of death plus the total unpaid amount of any accrued vacation pay or bonuses earned with respect to the fiscal year of the Company most recently ended. In addition, the death benefits payable by reason of the Executive's death under any retirement, deferred compensation or other employee benefit plan maintained by the Company shall be paid to the beneficiary designated by the Executive, and the stock options or other stock awards held by the Executive under the Company's stock plans shall become fully vested, in accordance with the terms of the applicable plan or plans. 8. WITHHOLDING ----------- The Company shall, to the extent permitted by law, have the right to withhold and deduct from any payment hereunder any federal, state or local taxes of any kind required by law to be withheld with respect to any such payment. -7- 8 9. PROTECTION OF CONFIDENTIAL INFORMATION -------------------------------------- The Executive agrees that she will keep all confidential and proprietary information of the Company or relating to its business confidential, and that she will not (except with the Company's prior written consent), while in the employ of the Company or thereafter, disclose any such confidential information to any person, firm, corporation, association or other entity, other than in furtherance of her duties hereunder, and then only to those with a "need to know." The Executive shall not make use of any such confidential information for her own purposes or for the benefit of any person, firm, corporation, association or other entity (except the Company) under any circumstances during or after the term of her employment. The foregoing shall not apply to any information which is already in the public domain, or is generally disclosed by the Company or is otherwise in the public domain at the time of disclosure. The Executive recognizes that because her work for the Company may bring her into contact with confidential and proprietary information of the Company, the restrictions of this Section 9 are required for the reasonable protection of the Company and its investments and for the Company's reliance on and confidence in the Executive. 10. COVENANT NOT TO COMPETE ----------------------- The Executive hereby agrees that she will not, either during the Employment Term or during the period of one (1) year from the time the Executive's employment under this Agreement is terminated by her voluntarily, by the Company for Cause, or because the Executive chooses not to extend the term of this Agreement, engage in any business activities on behalf of any enterprise which competes with the Company in the business of the passive ownership of health care facilities, or passive investing in or lending to health care-related enterprises. The Executive will be deemed to be engaged in such competitive business activities if she participates in such a business enterprise as an employee, officer, director, consultant, agent, partner, proprietor, or other participant; provided that the ownership of no more than two percent (2%) of the stock of a publicly traded corporation engaged in a competitive business shall not be deemed to be engaging in competitive business activities. The Executive agrees that she shall not, for a period of one year from the time her employment under this Agreement ceases (for whatever reason), or, if later, during any period in which she is receiving monthly severance payments under Section 5 or Section 6 of this Agreement, solicit any employee or full-time consultant of the Company for the purposes of hiring or retaining such employee or consultant. For this purpose, the Executive shall be considered to be receiving monthly severance payments under Section -8- 9 6 of this Agreement during any period for which she would have received such severance payments had she not elected to receive a lump sum severance payment or had such payments not been offset by compensation received from a successor employer. 11. INJUNCTIVE RELIEF ----------------- The Executive acknowledges and agrees that it would be difficult to fully compensate the Company for damages resulting from the breach or threatened breach of the covenants set forth in Sections 9 and 10 of this Agreement and accordingly agrees that the Company shall be entitled to temporary and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, to enforce such provisions in any action or proceeding instituted in the United States District Court for the Northern District of Ohio or in any court in the State of Ohio having subject matter jurisdiction. This provision with respect to injunctive relief shall not, however, diminish the Company's right to claim and recover damages. It is expressly understood and agreed that although the parties consider the restrictions contained in this Agreement to be reasonable, if a court determines that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction on the activities of the Executive, no such provision of this Agreement shall be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such extent as such court may judicially determine or indicate to be reasonable. 12. NOTICES ------- All notices or communications hereunder shall be in writing and sent certified or registered mail, return receipt requested, postage prepaid, addressed as follows (or to such other address as such party may designate in writing from time to time): IF TO THE COMPANY: Health Care REIT, Inc. One SeaGate, Suite 1500 Toledo, OH 43604 Attention: Chief Executive Officer and President IF TO THE EXECUTIVE: Erin C. Ibele One SeaGate, Suite 1500 Toledo, OH 43604 -9- 10 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 Company, but neither this Agreement nor any rights hereunder shall be assignable or otherwise subject to hypothecation by the Executive. 15. ENTIRE AGREEMENT ---------------- This Agreement represents the entire agreement of the parties and shall supersede any and all previous contracts, arrangements or understandings between the Company and the Executive. The Agreement may be amended at any time by mutual written agreement of the parties hereto. 16. GOVERNING LAW ------------- This Agreement shall be construed, interpreted, and governed in accordance with the laws of the State of Ohio, other than the conflict of laws provisions of such laws. IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed, and the Executive has hereunto set her hand, as of the day and year first above written. ATTEST: HEALTH CARE REIT, INC. By - ------------------------------ ---------------------------- Vice President and Chief Chief Executive Officer Operating Officer WITNESS: EXECUTIVE: - ------------------------------ ------------------------------- Erin C. Ibele -10- EX-10.5 6 EXHIBIT 10.5 1 Exhibit 10.5 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS ------------------------------------- 1. PURPOSE OF THE PLAN. Health Care REIT, Inc., a Delaware corporation, hereby adopts this Stock Plan for Non-Employee Directors providing for the granting of stock options to directors of the Company who are not employees of the Company. The general purpose of the Plan is to secure for the Company and its stockholders the benefits of the incentive inherent in increased ownership of Common Stock of the Company by members of the Board of Directors of the Company who are not employees of the Company. It is also expected that the Plan will encourage qualified persons to become directors of the Company. The Stock Plan for Non-Employee Directors has been approved by the Board of Directors effective as of January 20, 1997, subject to approval by the Company's stockholders at the annual meeting of the stockholders. 2. CERTAIN DEFINITIONS. In addition to the words and terms elsewhere defined in this Plan, certain capitalized words and terms used in this Plan shall have the meanings given to them by the definitions and descriptions in this Section 2. Unless the context or use indicates another or different meaning or intent, then such definition shall be equally applicable to both the singular and plural forms of any of the capitalized words and terms herein defined. The following words and terms are defined terms under this Plan: 2.1 Award means the grant of an Option or Restricted Stock under this Plan. 2.2 Board of Directors means the Board of Directors of the Company. 2.3 Code means the Internal Revenue Code of 1986, as the same shall be amended from time to time. 2.4 Common Stock means the Common Stock, par value $1.00 per share, of the Company. 2.6 Company means Health Care REIT, Inc., a Delaware corporation. 2.7 Effective Date means January 20, 1997, the date the adoption of the Plan was approved by the Board of Directors. 2.8 Fair Market Value means the fair market value of a share of Common Stock as determined by the Board of Directors by reference to the closing price for shares of Common Stock for the most recent available date, as reported on the New York Stock Exchange. 2.9 Holder means a Non-Employee Director who has received an Award of Options or Restricted Stock under this Plan. 2.10 Non-Employee Director means a member of the Board of Directors who is not an employee of the Company. 2.11 Nonstatutory Stock Option means a stock option that does not qualify as an incentive stock option within the meaning of Section 422 of the Code. 2.12 Option means a right granted to a Non-Employee Director pursuant to the Plan to purchase a specified number of shares of Common Stock at a specified Option Price during a 2 specified period and on such other terms and conditions as may be specified pursuant to the Plan. All Options granted under this Plan shall be Nonstatutory Stock Options. 2.13 Option Price means, with respect to any Option, the price per share the Holder will be required to pay to the Company to exercise the Option and acquire the shares of Common Stock subject to the Option. 2.14 Plan means this Stock Plan for Non-Employee Directors. 2.15 Restricted Stock means shares of Common Stock issued to an eligible Non-Employee Director, subject to such transfer restrictions and other conditions as may be specified in accordance with Section 7 of the Plan. 2.16 Stock Option Agreement means the agreement specified in Section 10 hereof. 3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 12 hereof, the number of shares of Common Stock which may be issued upon exercise of Options or as Awards of Restricted Stock under the Plan shall be 100,000 shares of the Common Stock. On January 1 of each year subsequent to the Effective Date, the aggregate number of shares of Common Stock available for issuance under this Plan shall be increased by an additional 42,000 shares. Such shares may be, in whole or in part, authorized and unissued shares of Common Stock or treasury shares which have been reacquired by the Company. If any Option shall expire or terminate for any reason without having been exercised in full, the unexercised shares subject thereto shall again be available for purposes of the Plan. If any Shares of Restricted Stock are forfeited, the forfeited shares again be available for purposes of the Plan. 4. ADMINISTRATION. 4.1 Powers. The Plan shall be administered by the Board of Directors, which shall have all of the powers vested in it by the terms of the Plan, such powers to include authority (within the limitations described herein) to prescribe the form of the agreement embodying Awards made under the Plan. Subject to the express provisions of the Plan, the Board of Directors shall have plenary authority to interpret the Plan, to adopt, amend and rescind the rules and regulations relating to the Plan and to make all other determinations and to take all other actions deemed necessary or advisable for the administration of the Plan. Any decision of the Board of Directors in the administration of the Plan, as described herein, shall be final and conclusive. 4.2 Delegation to Committee Permitted. Notwithstanding anything to the contrary contained herein, the Board of Directors may at any time, or from time to time, appoint a Committee of at least two members, who shall be members of the Compensation Committee of the Board of Directors (or such other persons as the Board of Directors may designate), and delegate to the Committee the authority of the Board of Directors to administer the Plan. Upon such appointment and delegation, the Committee shall have all the powers, privileges and duties of the Board of Directors, and shall be substituted for the Board of Directors in the administration of the Plan, except the power to appoint members of the Committee and to terminate, modify or amend the Plan. The Board of Directors may from time to time appoint members of the Committee in substitution for or in addition to members previously appointed, may fill vacancies in the Committee and may discharge the Committee. The Committee shall select one of its members as its chairman and shall hold its meetings at such times and places as its shall deem advisable. A majority of its members shall constitute a quorum and all determinations shall be made by a majority of such quorum. Any determination reduced to writing and signed by a majority of the members shall be fully as effective as if it had been made by a majority vote at a meeting duly called and held. 5. ELIGIBILITY. Options and Restricted Stock Awards under this Plan shall be granted only to Non-Employee Directors. 3 6. OPTIONS. 6.1 Grant of Options. (a) As of the Effective Date, each Non-Employee Director serving on the Board of Directors automatically shall be granted an Option to purchase 10,000 shares of Common Stock, effective as of January 20, 1997, subject to approval of the Plan by the stockholders of the Company as required under Section 14 hereof. (b) Each new Non-Employee Director who is first appointed or elected to the Board of Directors after the Effective Date automatically shall be granted an Option to purchase 10,000 shares of Common Stock on the day he or she is first appointed or elected to the Board of Directors. (c) Each Non-Employee Director who has been granted Options under paragraph (a) or (b) automatically shall be granted an additional Option to purchase 5,000 shares of Common Stock on January 15 of each subsequent year (or, if January 15 is not a business day, on the first business day following January 15) during the term of this Plan. 6.2 Option Prices. The purchase price of the Common Stock under each Option shall be equal to the Fair Market Value of the Common Stock on the grant date (subject to adjustment as provided in Section 12 hereof). 6.3 Term of Options; Limitations on Exercise. The term of each Option shall be for ten years from the date of grant, and, except as set forth in Section 8 hereof, shall expire six months after the cessation of the Holder's status as a Non-Employee Director or upon the earlier expiration at the end of its ten year term. Each Option granted pursuant to Section 6.1(a) shall become exercisable on the first anniversary of the date of grant of such Option. One-third of the shares of Common Stock subject to each Option granted pursuant to Section 6.1(b) or Section 6.1(c) shall become exercisable on a cumulative basis on each of the first three anniversaries of the date of the grant of such Option. 6.4 Exercise of Options. Any part of an Option granted and presently exercisable under the Plan shall be exercisable in whole, or in part, at any time during the term of the Option. Payment shall be made in cash, in whole shares of Common Stock already owned by the Holder of the Option, partly in cash and partly in such Common Stock, or in any other manner acceptable to the Company. Such notice shall state that the Holder of the Option elects to exercise the Option, the number of shares in respect of which it is being exercised and the manner of payment for such shares, and shall either (i) be accompanied by payment of the full Option Price of such shares, or (ii) provide for such arrangements for the payment of the full Option Price of such shares as may be satisfactory to the Company. The Non-Employee Director shall be deemed to have paid the full optimum price due upon exercise of his Options, if his irrevocable notice of exercise to the Corporation is accompanied by an irrevocable instruction to the Corporation to deliver the shares of Common Stock issuable upon exercise of the Options promptly to a broker-dealer designated by Non-Employee Director (which may include the Corporation's transfer agent) for the Non-Employee Director's account, together with an irrevocable instruction to such broker-dealer to sell at least that portion of the shares necessary to pay the option price (and any related expenses specified by the parties), and such portion of the sale proceeds is delivered directly to the Corporation no later than the settlement date This cashless exercise alternative shall not be available if, at the time of such exercise, the Corporation determines that this procedure would subject the Non-Employee Director to liability under Section 16(b) of the Securities Exchange Act of 1934. -3- 4 6.5 Nontransferability of Options. No Options shall be transferable otherwise than by will or the laws of descent and distribution, and an Option may be exercised during the lifetime of the Holder thereof only by such Holder. Notwithstanding the foregoing, the Board of Directors may, in its discretion, permit a Holder to transfer all or a portion of his or her Options to members of his or her immediate family, to trusts for the benefit of members of his immediate family, or to family limited partnerships in which immediate family members are the only partners, provided that the Holder may receive no consideration for such transfers, and that such Options shall still be subject to termination in accordance with Section 6.3 and Section 9 in the hands of the transferee. 6.6 Modifications. The Board of Directors shall have the authority to modify, in any manner it deems desirable or appropriate, the terms of the Option Awards to be made to one or more classifications of Non-Employee Directors in equivalent circumstances (for example, by age or length of service) under this Section 7, including the size or vesting schedules of such Option Awards; PROVIDED that, any modification shall be applied uniformly to all Non-Employee Directors in equivalent circumstances, and FURTHER PROVIDED, that the modification shall not increase the number of shares available under the Plan in any one calendar year beyond the aggregate limit set forth in Section 3. 7. RESTRICTED STOCK. 7.1 Annual Grants of Restricted Stock. On January 20, 1997, and on January 15 of each subsequent year (or, if January 15 is not a business day, on the first business day following January 15), each Non-Employee Director shall be granted an Award consisting of 250 shares of Restricted Stock; provided that, such an Award shall not be effective unless the Non-Employee has agreed and acknowledged in writing in such form as may be requested by the Company that he or she holds such Restricted Stock subject to the transfer restrictions and other conditions set forth in this Section 7 of the Plan. 7.2 Issuance of Restricted Stock. When a Non-Employee Director is granted shares of Restricted Stock, the Company shall issue the shares immediately, and shall register the stock certificates or certificates representing such shares in the name of the Non-Employee Director. Each such stock certificate shall bear an appropriate legend referring to the transfer restrictions and other conditions applicable to such shares of Restricted Stock under the terms of the Plan. The Company shall deliver the stock certificates for each Restricted Stock Award to a custodian or an escrow agent designated by the Board, to be held in escrow until the latest of the following dates: (a) the date the Plan has been approved by the stockholders of the Company, as specified in Section 14 below; (b) six months after the date the Restricted Stock was granted to the Non-Employee Director; or (c) if later, the date on which the transfer restrictions imposed on the Restricted Stock Award by Section 7.3 have expired or been waived. The Board may designate an executive officer of the Company to act as the custodian or escrow agent for such stock certificates. Non-Employee Directors will not be required to make any payment or provide consideration to the Company for the issuance of Restricted Stock Awards, other than providing services to the Company as members of the Board of Directors. -4- 5 7.3 Rights As A Stockholder. A Non-Employee Director granted a Restricted Stock Award shall have all of the rights of a stockholder of the Company with respect to the shares of Restricted Stock included in the Award, including the right to vote the shares and receive all dividends and other distributions declared with respect to such shares, but the shares of Restricted Stock held by the Non-Employee Director shall be subject to the following terms and conditions: (a) During a period set by the Board of Directors of not less than six (6) months, commencing with the date on which the Restricted Stock Award was granted (the "Restriction Period"), the Non-Employee Director will not be permitted to sell, transfer, pledge or assign the shares of Restricted Stock awarded to him or her. (b) If, at any time during the Restriction Period set by the Board for the Restricted Stock Award, the Non-Employee Director's service on the Board of Directors terminates for any reason other than death, disability or retirement at or after age 65, the shares of Restricted Stock included in that Award shall be forfeited, unless the Board of Directors determines that a waiver of such forfeiture would be appropriate, desirable and in the best interests of the Company. A Non-Employee Director shall not forfeit any shares of Restricted Stock if his or her service as a director terminates as a result of death, disability or retirement. (c) Notwithstanding the other provisions of this Section 7.3, the Board of Directors may adopt rules which would permit a gift by a Non-Employee Director of shares of Restricted Stock to a spouse, child, stepchild, grandchild or a family limited partnership or a transfer to a trust the beneficiary or beneficiaries of which shall be either such a relative or persons or the Non-Employee Director, provided that the Restricted Stock so transferred shall remain subject to the restrictions in paragraphs (a) and (b). 7.4 Modifications. The Board of Directors shall have the authority to modify, in any manner it deems desirable or appropriate, the terms of the Restricted Stock Awards to be made to one or more classifications of Non-Employee Directors in equivalent circumstances (for example, by age or length of service) under this Section 7, including the size or Restriction Periods of such Restricted Stock Awards; PROVIDED that, any modification shall be applied uniformly to all Non-Employee Directors in equivalent circumstances, and FURTHER PROVIDED that the modification shall not cause the number of shares available under the Plan in any one calendar year beyond the aggregate limit set forth in Section 3. 8. ACCELERATION ON CHANGE IN CORPORATE CONTROL. Notwithstanding any contrary waiting period set forth herein, each outstanding Option granted under the Plan shall become exercisable in full for the aggregate number of shares covered thereby, and all transfer restrictions and forfeiture conditions imposed on Awards of Restricted Stock shall be waived, in the event of a Change in Corporate Control. The acceleration of the exercise of Options or the waiver of restrictions on Restricted Stock as provided in this Section 8 may be limited as the Board of Directors deems appropriate to ensure that the penalty provisions of Section 4999 of the Code will not apply to any stock received by the Holder from the Company. For purposes of this Plan, a "Change in Corporate Control" shall include any of the following events: (1) The acquisition in one or more transactions of more than twenty percent (20%) of the Company's outstanding Common Stock (or the equivalent in voting power of any classes or classes of securities of the -5- 6 Company entitled to vote in elections of directors) by any corporation, or other person or group (within the meaning of Section 14(d)(3) of the Securities Exchange Act of 1934, as amended); (2) Any transfer or sale of substantially all of the assets of the Company, or any merger or consolidation of the Company into or with another corporation in which the Company is not the surviving entity; (3) Any election of persons to the Board of Directors which causes a majority of the Board of Directors to consist of persons other than "Continuing Directors". For this purpose, those persons who were members of the Board of Directors on January 20, 1997, shall be "Continuing Directors". Any person who is nominated for election as a member of the Board after January 20, 1997, shall also be considered a "Continuing Director" for this purpose if, and only if, his or her nomination for election to the Board of Directors is approved or recommended by a majority of the members of the Board (or of the relevant Nominating Committee) and at least five (5) members of the Board are themselves Continuing Directors at the time of such nomination; or (4) Any person, or group of persons, announces a tender offer for at least twenty percent (20%) of the Company's Common Stock. 9. CESSATION OF SERVICE AS A NON-EMPLOYEE DIRECTOR. 9.1 Death of Holder. If any Non-Employee Director shall die prior to the end of his or her service as a member of the Board of Directors, then: (a) Each outstanding but unexercised Option granted to him or her under the Plan shall become exercisable in full for the aggregate number of shares covered thereby and each Option may be exercised by the legatee(s) or personal representative(s) of such Holder at any time within twelve months after such Holder's death; PROVIDED, HOWEVER, that no Option may be exercised after the expiration date of such Option. (b) Any transfer restrictions and conditions of forfeiture applicable to his or her shares of Restricted Stock shall be waived by the Company. 9.2 Total Disability. If a Non-Employee Director ceases to serve as a member of the Board of Directors prior to the end of his or her term as a result of Total Disability, then: (a) Each outstanding but unexercised Option granted under the Plan shall become exercisable in full for the aggregate number of shares covered thereby from and after the date of such cessation of service and such Option may be exercised by such Holder (or his or her guardian(s) or personal representative(s)) at any time within twelve months after such cessation of service; PROVIDED, HOWEVER, that no Option may be exercised after the expiration date of such Option; and (b) Any transfer restrictions and conditions of forfeiture applicable to his or her shares of Restricted Stock shall be waived by the Company. 9.3 Retirement; Failure to be Nominated for Reelection; Failure to be Reelected. If a Non-Employee Director shall cease to serve as a member of the Board of Directors as a result of such Holder's -6- 7 resignation from the Board (other than as a result of Total Disability) or such Holder's decision not to stand for reelection at the expiration of his or her term of office, or such Holder is not nominated by the Board to stand for election at the Annual Stockholders' Meeting at which his or her term of office expires, or, if nominated, such person is not reelected, then all Options held by such Holder may be exercised at any time within six months after the date of such cessation of service; PROVIDED, HOWEVER, (i) only Options exercisable by the Holder at the time of the cessation of service as a Non-Employee Director may be exercised after such cessation, and (ii) no Option may be exercised after the expiration date of such Option. Further, any shares of Restricted Stock held by that Non-Employee Director subject to forfeiture under Section 7.3 shall be forfeited. 9.4 Removal by the Stockholders for Cause. If a Holder is removed from the Board by the stockholders of the Company for cause (for these purposes, cause shall include, but not be limited to, dishonesty, incompetence, moral turpitude, other misconduct of any kind and the refusal to perform his or her duties and responsibilities for any reason other than illness or incapacity), then (a) all unexercised Options held by such Holder shall immediately be cancelled and terminate, and (b) any shares of Restricted Stock subject to forfeiture under Section 7.3 shall be forfeited. 10. NONALIENATION OF BENEFITS. No right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, hypothecation, pledge, exchange, transfer, encumbrance or charge, and any attempt to anticipate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the person entitled to such benefit. 11. WRITTEN AGREEMENTS. Each grant of an Option hereunder shall be evidenced by a Stock Option Agreement, and each Restricted Stock Award shall be evidenced by a Restricted Stock Agreement, each in such form and containing such terms and provisions not inconsistent with the provisions of the Plan as the Board of Directors from time to time shall approve. 12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any change or changes in the outstanding Common Stock of the Company by reason of any stock dividend, recapitalization, reorganization, merger, consolidation, split-up, combination or any similar transaction, the Board of Directors shall adjust the number of shares of Common Stock which may be issued under this Plan, the number of shares of Common Stock subject to Options theretofore granted under this Plan, the Option Price of such Options, the number of shares of Restricted Stock and make any and all other adjustments deemed appropriate by the Board of Directors in such manner as the Board of Directors deems appropriate to prevent substantial dilution or enlargement of the rights granted to a participating Non-Employee Director. 13. TERMINATION AND AMENDMENT. Unless the Plan shall theretofore have been terminated as hereinafter provided, the Plan shall expire on January 20, 2007. The Board of Directors may terminate the Plan at any time, and the Board of Directors at any time also may modify or amend the Plan in such respects as it shall deem advisable. No termination, modification or amendment of the Plan or any outstanding Stock Option Agreement may, without the consent of the Holder to whom any Award shall theretofore have been granted, adversely affect the rights of such Holder with respect to such Award. The Plan automatically shall terminate in the event that it is not approved by the stockholders of the Company as required under Section 14 hereof. 14. EFFECTIVENESS OF THE PLAN. The Plan shall become effective as of January 20, 1997, provided, that the Plan is approved at the 1997 Annual Stockholders' Meeting of the Company by the holders of a majority of the shares of Common Stock represented at the meeting (in person or by proxy) and entitled to vote thereon. If the Plan is not so approved it shall terminate automatically, and all Options shall automatically be cancelled and be of no further force or effect. -7- 8 15. RIGHTS OF A HOLDER AS A STOCKHOLDER. The Holder of an Option shall have none of the rights of a stockholder with respect to the shares subject to the Option until such shares shall be transferred to the Holder upon the exercise of the Option. 16. GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company with respect to Awards shall be subject to (i) all applicable laws, rules and regulations and such approvals by any governmental agencies as may be required, including, without limitation, the effectiveness of a registration statement under the Securities Act of 1933, as amended, and (ii) the rules and regulations of any securities exchange or securities market on which the Common Stock may be listed or traded. Any Option or Restricted Stock award granted under this Plan shall be subject to the requirement that, if at any time the Board of Directors shall determine that any registration of the shares of Common Stock, or any consent or approval of any governmental body, or any other agreement or consent, is necessary as a condition of the granting of an Option or other Award, or the issuance of Common Stock in satisfaction thereof, such Common Stock will not be issued or delivered until such requirement is satisfied in a manner acceptable to the Board of Directors. 17. WITHHOLDING. The Company's obligation to deliver shares of Common Stock upon the exercise of any Option granted under the Plan shall be subject to applicable Federal, state and local tax withholding requirements. Federal, state and local withholding tax due upon the exercise of any Option may be paid in shares of Common Stock upon such terms and conditions as the Board shall determine; PROVIDED, HOWEVER, that the Board in its sole discretion may disapprove such payment and require that such taxes be paid in cash. 18. SEVERABILITY. If any of the terms or provisions of this Plan conflict with these requirements of Rule 16b-3 under the Exchange Act (as the same shall be amended from time to time), then such terms or provisions shall be deemed inoperative to the extent they so conflict with the requirements of said Rule 16b-3. 19. NON-EXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by the Board nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options and the awarding of stock and cash otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases. 20. GOVERNING LAW. The Plan shall be governed by, and construed in accordance with, the laws of the State of Delaware. -8- EX-27 7 EXHIBIT 27
5 0000766704 HEALTH CARE REIT, INC. 1,000 3-MOS DEC-31-1997 MAR-31-1997 121 966 5,768 9,937 0 0 204,320 7,667 608,432 0 192,597 21,737 0 0 382,697 608,432 0 16,569 0 0 2,582 150 4,011 9,826 0 9,826 0 0 0 9,826 .51 .51
EX-99.1 8 EXHIBIT 99.1 1 Exhibit 99.1 [HEALTH CARE REIT LOGO] F O R I M M E D I A T E R E L E A S E January 9, 1997 For more information contact: Erin Ibele - (419) 247-2800 Ed Lange - (419) 247-2800 HEALTH CARE REIT, INC. ANNOUNCES RECORD NEW INVESTMENTS OF $78.6 MILLION FOR FOURTH QUARTER Toledo, Ohio, January 9, 1997..... HEALTH CARE REIT, INC. (NYSE/HCN) announced record quarterly investment activity for the fourth quarter of 1996 totaling $78,554,000. Fourth quarter investment activity, inclusive of recurring construction activity of $36,637,000, included $32,644,000 of operating leases and $45,910,000 of mortgage loans. These investments were comprised of $49,377,000 for 31 assisted living facilities, $14,766,000 for nine nursing homes, $13,418,000 for three specialty care facilities and $993,000 for one retirement center. Funding was provided to 17 operators in 13 states. Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust which invests in health care facilities, primarily nursing homes, assisted living facilities and retirement centers. At December 31, 1996, the company had investments in 137 health care facilities in 28 states. EX-99.2 9 EXHIBIT 99.2 1 Exhibit 99.2 [HEATH CARE REIT LOGO] F O R I M M E D I A T E R E L E A S E January 10, 1997 For more information contact: Erin Ibele - (419) 247-2800 Ed Lange - (419) 247-2800 HEALTH CARE REIT, INC. ANNOUNCES EXERCISE OF OVER ALLOTMENT OPTION Toledo, Ohio, January 10, 1997..... HEALTH CARE REIT, INC. (NYSE/HCN) announced today that the underwriters' for the company's December 18, 1996 offering of 2,200,000 common shares have exercised an over allotment option to purchase 330,000 additional common shares at a purchase price of $23.875 per share. As a result of this exercise, the offering has been increased to 2,530,000 shares at a total purchase price of $60,403,750. Alex. Brown & Sons Incorporated acted as the Manager of the underwriting group, and Smith Barney Inc. and EVEREN Securities, Inc. acted as Co-Managers. The net proceeds will be used to invest in additional health care properties. Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust which invests in health care facilities, primarily nursing homes, assisted living facilities and retirement centers. At December 31, 1996, the company had investments in 137 health care facilities in 28 states. EX-99.3 10 EXHIBIT 99.3 1 Exhibit 99.3 [HEALTH CARE REIT LOGO] F O R I M M E D I A T E R E L E A S E January 15, 1997 For more information contact: Erin Ibele - (419) 247-2800 Ed Lange - (419) 247-2800 HEALTH CARE REIT, INC. ANNOUNCES RECORD NEW INVESTMENTS OF $230 MILLION FOR 1996 Toledo, Ohio, January 15, 1997..... HEALTH CARE REIT, INC. (NYSE/HCN) announced record investment activity for 1996 totaling $230,051,000. Investments for 1996, inclusive of recurring construction activity of $109,683,000, included $66,088,000 of operating leases and $163,963,000 of mortgage loans. These investments were comprised of $128,978,000 for 49 assisted living facilities, $67,984,000 for 21 nursing homes, $30,610,000 for four specialty care facilities and $2,479,000 for one retirement center. Funding was provided to 20 operators in 19 states. The 1996 investment activity contributed to a 46% increase in net real estate investments which totaled approximately $512,894,000 at December 31, 1996, as compared to $351,924,000 at December 31, 1995. "We are extremely pleased with our 1996 investment results," stated George L. Chapman, chairman and chief executive officer of the company. Chapman added, "The investment growth we have achieved reflects the success of our strategy of providing growth capital to emerging health care operators and our emphasis on customer service." Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust which invests in health care facilities, primarily nursing homes, assisted living facilities and retirement centers. At December 31, 1996, the company had investments in 137 health care facilities in 28 states and had total assets of approximately $520 million. EX-99.4 11 EXHIBIT 99.4 1 Exhibit 99.4 [HEATH CARE REIT LOGO] F O R I M M E D I A T E R E L E A S E PRESS RELEASE January 16, 1997 For more information contact: Erin Ibele (419) 247-2800 Ed Lange (419) 247-2800 HEALTH CARE REIT, INC. REPORTS FILING A SHELF REGISTRATION Toledo, Ohio, January 16, 1997....Health Care REIT, Inc. (NYSE/ HCN) announced today that it has filed a shelf registration with the Securities and Exchange Commission that will enable the Company to offer in the future up to an aggregate of $300 million of securities, including common stock, preferred stock and debt. The specific terms of the securities will be set forth in an applicable prospectus supplement, and offers may be made only by a prospectus. Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust which invests in health care facilities, primarily nursing homes, assisted living facilities and retirement centers. At December 31, 1996, the company had investments in 137 health care facilities in 28 states and had total assets of approximately $520 million. EX-99.5 12 EXHIBIT 99.5 1 Exhibit 99.5 [HEALTH CARE REIT LOGO] F O R I M M E D I A T E R E L E A S E PRESS RELEASE January 20, 1997 For more information contact: Erin Ibele (419) 247-2800 Ed Lange (419) 247-2800 HEALTH CARE REIT, INC. ANNOUNCES DIVIDEND Toledo, Ohio, January 20, 1997. . . . The Directors of HEALTH CARE REIT, INC. (NYSE/HCN) voted to pay a quarterly cash dividend of $.52 per share. The dividend will be payable February 20, 1997 to shareholders of record on February 3, 1997. This will be the REIT's 103rd consecutive dividend distribution. Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust which invests in health care facilities, primarily nursing homes, assisted living facilities and retirement centers. At December 31, 1996, the company had investments in 137 health care facilities in 28 states and had total assets of approximately $520 million. EX-99.6 13 EXHIBIT 99.6 1 Exhibit 99.6 [HEALTH CARE REIT LOGO] F O R I M M E D I A T E R E L E A S E PRESS RELEASE January 21, 1997 For more information contact: Erin Ibele (419) 247-2800 Ed Lange (419) 247-2800 HEALTH CARE REIT, INC. NAMES RAYMOND W. BRAUN CHIEF OPERATING OFFICER Toledo, Ohio, January 21, 1997....HEALTH CARE REIT, INC. (NYSE/HCN) announced today that Raymond W. Braun, vice president of the company, has been appointed chief operating officer of the company. Braun, 39, joined the company in 1993 as vice president and assistant general counsel. Prior to his positions with the company, Braun was a partner with the law firm of Shumaker, Loop & Kendrick, Toledo, Ohio. Braun earned a Bachelor of Science degree from Bowling Green State University in 1980, and a law degree from the University of Pennsylvania Law School in 1983. George L. Chapman, chairman and chief executive officer of the company, stated, "the company is pleased to announce the appointment of Ray Braun to the position of chief operating officer in recognition of his outstanding performance as a member of the management team. I am confident of Ray's continuing superior leadership of the company's marketing, underwriting, and monitoring activities." Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust which invests in health care facilities, primarily nursing homes, assisted living facilities and retirement centers. At December 31, 1996, the company had investments in 137 health care facilities in 28 states and had total assets of approximately $520 million. EX-99.7 14 EXHIBIT 99.7 1 Exhibit 99.7 [HEALTH CARE REIT LOGO] F O R I M M E D I A T E R E L E A S E February 4, 1997 For more information contact: Erin Ibele - (419) 247-2800 Ed Lange - (419) 247-2800 HEALTH CARE REIT, INC. ANNOUNCES RECORD MONTHLY INVESTMENT ACTIVITY OF $62.8 MILLION Toledo, Ohio, February 4, 1997..... HEALTH CARE REIT, INC. (NYSE/HCN) announced record monthly investment activity for January, 1997 totaling $62,819,000. January, 1997 investment activity, inclusive of recurring construction activity of $8,013,000, included $35,197,000 of operating leases and $27,622,000 of mortgage loans. These investments were comprised of $18,026,000 for 22 assisted living facilities, $12,779,000 for five nursing homes, $22,940,000 for two specialty care facilities and $9,074,000 for two retirement centers. Funding was provided to 15 operators in 12 states. Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust which invests in health care facilities, primarily nursing homes, assisted living facilities and retirement centers. At December 31, 1996, the company had investments in 137 health care facilities in 28 states and had assets of approximately $520 million. EX-99.8 15 EXHIBIT 99.8 1 Exhibit 99.8 [HEALTH CARE REIT LOGO] FOR IMMEDIATE RELEASE FEBRUARY 5, 1997 FOR MORE INFORMATION CONTACT: ERIN IBELE - (419) 247-2800 ED LANGE - (419) 247-2800 HEALTH CARE REIT, INC. ANNOUNCES FOURTH QUARTER AND YEAR END 1996 RESULTS 1996 YEAR END RESULTS 1996 YEAR END HIGHLIGHTS --------------------- ------------------------ - $54,402,000 Gross Income - 47% shareholder return - $2.15 per share FFO - 45% asset growth - $2.63 per share CAD - 162% growth in operating leases - $2.08 per share Dividends - $230 million gross investments - $440 million market capitalization Toledo, Ohio, February 5, 1997 ........HEALTH CARE REIT, INC. (NYSE/HCN) today announced record funds from operations of $2.15 per share for 1996. Total revenues increased 24 percent for the fourth quarter and 22 percent for the year ended 1996. Management noted that increased level of revenues and strong operating results were attributable to the company's execution of its strategy of providing growth capital to emerging health care operators and continued emphasis on customer service. For the three months ended December 31, 1996 net income totaled $9,046,000, or $0.55 per share, on revenue of $14,818,000 as compared with net income of $786,000, or $0.06 per share, on revenue of $11,978,000 for the three months ended December 31, 1995. Funds from operations (FFO) for the fourth quarter of 1996, totaled $9,143,000, or $0.56 per share as compared with FFO of $(175,000), or ($0.01) per share, for the fourth quarter of 1995. For the year ended December 31, 1996, net income totaled $30,676,000, or $2.18 per share, on revenue of $54,402,000 as compared with net income of $13,635,000, or $1.16 per share, on revenue of $44,596,000 for the year ended 1995. FFO for the year ended 1996 was $30,296,000, or $2.15 per share, compared with FFO of $11,132,000, or $0.95 per share, for the year ended 1995. For the year ended December 31, 1996, cash flows from operating activities available for distribution (CAD) totaled $37,075,000, or $2.63 per share, as compared with CAD of $27,938,000, or $2.39 per share, for the comparable period of 1995. 2 FFO is the generally accepted measure of performance for real estate investment trusts. Effective January 1996, the company adopted the definition of FFO prescribed by the National Association of Real Estate Investment Trusts. The corresponding amount of FFO for the fourth quarter and year ended 1996 has been restated to reflect the new definition. The company's results for 1995 were negatively influenced by nonrecurring charges, primarily related to a $4,800,000 provision for losses and a $5,794,000 charge for the settlement of the management contract, an expense associated with the merger of the company's advisor into the company. Investment activity for the three and twelve month periods ended December 31, 1996, totaled $78,554,000 and $230,051,000, respectively. During 1996 the company generated net proceeds from its capital activities of approximately $162,112,000. - In April 1996, the company issued Senior Secured Notes in the aggregate principal amount of $30,000,000 which mature in 2001 and 2003 and have a weighted average interest rate of 7.18% - In May 1996, the company completed the sale of 2,322,200 shares of common stock at a price of $22.00 per share, which generated net proceeds of $48,103,000. - In September 1996, the company completed the sale of 1,587,800 shares of common stock at a price of $22.00 per share, which generated net proceeds of $34,111,000. - In December 1996, the company completed the sale of 2,200,000 shares of common stock at a price of $23.875 per share, which generated net proceeds of $49,898,000. "We are pleased with our results for the quarter and the year," stated George L. Chapman, Chairman and Chief Executive Officer of Health Care REIT, Inc. "The success of our stated growth strategy is supported by consistent quarterly performance throughout 1996. Our relationship approach to investing generated $230 million of new investments in 1996 and has produced commitments of $236 million, which we expect to fund during the next 12 to 18 months." Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust, which invests in health care facilities, primarily nursing homes, assisted living facilities and retirement centers. The company has investments in 137 health care facilities in 28 states and has total assets of approximately $520 million. This document contains "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the company's actual results in the future to differ materially from expected results. These risks and uncertainties include, among others, competition in the financing of health care facilities, the availability of capital, and regulatory and other changes in the health care sector, as described in the company's filings with the Securities and Exchange Commission. FINANCIAL SCHEDULES FOLLOW 3 HEALTH CARE REIT, INC. CONSOLIDATED BALANCE SHEETS
DECEMBER 31 1996 1995 ------------ ------------ ASSETS Real estate related investments: Loans receivable $358,182,032 $291,998,722 Operating-lease properties 153,622,844 58,628,509 Direct financing leases 10,876,071 11,246,492 ------------ ------------ 522,680,947 361,873,723 Less allowance for losses 9,786,940 9,950,000 ------------ ------------ Net real estate related investments 512,894,007 351,923,723 Other Assets: Deferred loan expenses 1,431,537 1,747,537 Cash and cash equivalents 581,390 860,350 Investment securities available for sale 768,451 845,297 Receivables and other assets 4,155,812 2,715,146 ------------ ------------ 6,937,190 6,168,330 ------------ ------------ Total assets $519,831,197 $358,092,053 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Borrowings under line of credit arrangements $ 92,125,000 $106,700,000 Senior notes 82,000,000 52,000,000 Other long-term obligations 10,270,011 4,059,639 Accrued expenses and other liabilities 9,900,045 7,734,618 ------------ ------------ Total liabilities 194,295,056 170,494,257 Shareholders' equity: Preferred Stock, $1.00 par value: Authorized - 10,000,000 shares Issued and outstanding - None Common Stock, $1.00 par value: Authorized - 40,000,000 shares Issued and outstanding - 18,320,291 shares in 1996 and 12,034,196 shares in 1995 18,320,291 12,034,196 Capital in excess of par value 298,280,949 168,800,194 Undistributed net income 8,166,450 5,918,109 Unrealized gains on investment securities available for sale 768,451 845,297 ------------ ------------ Total shareholders' equity 325,536,141 187,597,796 ------------ ------------ Total liabilities and shareholders' equity $519,831,197 $358,092,053 ============ ============
4 HEALTH CARE REIT, INC. CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED YEAR ENDED DECEMBER 31 DECEMBER 31 1996 1995 1996 1995 ----------- ----------- ----------- ----------- Gross Income: Interest on loans receivable $ 9,970,475 $ 7,857,916 $36,734,438 $30,836,649 Prepayment fees 673,998 1,365,000 3,058,556 4,081,923 Direct financing leases: Lease income 365,503 382,163 1,464,091 1,528,655 Gain on exercise of options 421,167 Operating leases: Rents 3,134,335 1,646,198 9,847,853 6,351,822 Gain on exercise of options 155,270 Loan and commitment fees 660,862 643,962 2,607,292 1,666,286 Interest and other income 12,375 82,654 113,148 130,592 ----------- ----------- ----------- ----------- 14,817,548 11,977,893 54,401,815 44,595,927 Expenses: Interest: Line of credit arrangements 1,536,659 1,833,683 8,243,975 7,472,418 Senior notes and other long- term obligations 1,834,708 1,255,797 6,390,810 5,279,232 Loan expense 214,669 192,324 808,182 752,115 Management fees 577,279 2,385,535 Provision for depreciation 771,179 404,361 2,427,252 1,579,544 Provision for losses 150,000 800,000 600,000 4,800,000 Disposition of investment 807,791 Settlement of management contract 5,030,034 5,793,534 Other operating expenses 1,264,029 1,098,432 4,448,243 2,898,576 ----------- ----------- ----------- ----------- 5,771,244 11,191,910 23,726,253 30,960,954 ----------- ----------- ----------- ----------- Net income $ 9,046,304 $ 785,983 $30,675,562 $13,634,973 =========== =========== =========== =========== Net income per share $ 0.55 $ 0.06 $ 2.18 $ 1.16 Average number of shares outstanding 16,410,182 11,834,658 14,093,028 11,709,642
EX-99.9 16 EXHIBIT 99.9 1 Exhibit 99.9 [HEALTH CARE REIT LOGO] F O R I M M E D I A T E R E L E A S E March 7, 1997 For more information contact: Erin Ibele - (419) 247-2800 Ed Lange - (419) 247-2800 HEALTH CARE REIT, INC. ANNOUNCES SALE OF 3,000,000 SHARES OF COMMON STOCK Toledo, Ohio, March 7, 1997..........Health Care REIT, Inc. (NYSE/HCN) announced that it has filed a prospectus supplement with the Securities and Exchange Commission for an offering of 3,000,000 shares of Common Stock at a market price of $24.375 per share. It is anticipated that closing and delivery will occur on or about March 11, 1997. The net proceeds of the offering are estimated to be $69,015,000, which will be used to invest in additional health care properties. The Company has granted to the underwriters of the offering an over-allotment option to purchase up to an additional 450,000 shares. In the event the underwriters exercise their full over-allotment option, the net proceeds to the Company could increase to approximately $79,412,000. "This is the largest offering of common stock ever completed by the Company," stated George L. Chapman, chairman and chief executive officer of the Company. Chapman added, "The support provided by the capital markets is a significant step in advancing the Company's overall capital plan." Alex. Brown & Sons Incorporated is the Manager of the underwriting group, and NatWest Securities Limited, Smith Barney Inc. and Everen Securities, Inc. are Co-Managers. Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust, which invests in health care facilities, primarily nursing homes, assisted living facilities and retirement centers. The company has investments in 137 health care facilities in 28 states and has total assets of approximately $520 million. EX-99.10 17 EXHIBIT 99.10 1 Exhibit 99.10 [HEALTH CARE REIT LOGO] F O R I M M E D I A T E R E L E A S E March 31, 1997 For more information contact: Erin Ibele - (419) 247-2800 Ed Lange - (419) 247-2800 HEALTH CARE REIT, INC. ANNOUNCES $175 MILLION UNSECURED CREDIT FACILITY AND BALANCE SHEET Toledo, Ohio, March 31, 1997..........HEALTH CARE REIT, INC. (NYSE/HCN) announced today that it has closed a $175 million unsecured credit facility which will replace the company's existing secured line. The credit facility was arranged by KeyBank and Fleet Bank. Other lenders included National City Bank, NationsBank, Sumitomo Bank Ltd., Bank One, Harris Trust, BHF-Bank, Comerica Bank, Kredietbank, M & T Trust Company and National Bank of Detroit. Simultaneous with the closing of the new credit facility, all senior noteholders released collateral which had served as security for the company's $82 million of senior indebtedness. The senior unsecured notes are currently rated `BBB-' (triple -B- minus) by Duff & Phelps Credit Rating Co. Effective with both closings, the company's balance sheet is unsecured. Highlights associated with the unsecured credit facility and balance sheet are as follows: - Provides company flexibility in continuing its growth strategy - Reduces cost of debt by approximately 0.25 percent to 0.375 percent - Enhances company access to lower cost debt capital - Eliminates costs and delays associated with property specific mortgages "These achievements are significant for Health Care REIT. We are appreciative of the support and commitment provided by the bank group and our senior noteholders," stated George L. Chapman, chairman and chief executive officer. "The new unsecured credit structure positions the company to continue its growth strategy and advance the capital plan that is focused on reducing our cost of capital." Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust, which invests in health care facilities, primarily nursing homes, assisted living facilities and retirement centers. The company has investments in 137 health care facilities in 28 states and has total assets of approximately $520 million. -----END PRIVACY-ENHANCED MESSAGE-----