-----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, MGNQSmd2R1/85U/Lc+JzDLNVjL4SDkdqcurke686mb5mqxx0KgmQz2qBRFoQWesA l1764QjCsN2q+YT/ypqDMQ== 0001017062-01-500266.txt : 20010514 0001017062-01-500266.hdr.sgml : 20010514 ACCESSION NUMBER: 0001017062-01-500266 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONWIDE HEALTH PROPERTIES INC CENTRAL INDEX KEY: 0000780053 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 953997619 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09028 FILM NUMBER: 1630441 BUSINESS ADDRESS: STREET 1: 610 NEWPORT CENTER DR STREET 2: STE 1150 CITY: NEWPORT BEACH STATE: CA ZIP: 92660-6429 BUSINESS PHONE: 9497184400 MAIL ADDRESS: STREET 1: 610 NEWPORT CENTER DR STREET 2: STE 1150 CITY: NEWPORT BEACH STATE: CA ZIP: 92660-6429 FORMER COMPANY: FORMER CONFORMED NAME: BEVERLY INVESTMENT PROPERTIES INC DATE OF NAME CHANGE: 19890515 10-Q 1 d10q.txt QUARTERLY REPORT FOR NATIONWIDE HEALTH - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- FORM 10-Q (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, 2001 OR [_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _____________ Commission file number 1-9028 NATIONWIDE HEALTH PROPERTIES, INC. (Exact name of registrant as specified in its charter) ---------------- Maryland 95-3997619 (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification Number)
610 Newport Center Drive, Suite 1150 Newport Beach, California 92660 (Address of principal executive offices) (949) 718-4400 (Registrant's telephone number, including area code) ---------------- 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 [_] Shares of registrant's common stock, $.10 par value, outstanding at April 30, 2001--46,240,651. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- NATIONWIDE HEALTH PROPERTIES, INC. FORM 10-Q March 31, 2001 TABLE OF CONTENTS Part I--Financial Information
Page ---- Item 1. Financial Statements Condensed Consolidated Balance Sheets.......................... 2 Condensed Consolidated Statements of Operations................ 3 Condensed Consolidated Statements of Cash Flows................ 4 Notes to Condensed Consolidated Financial Statements........... 5 Management's Discussion and Analysis of Financial Condition and Item 2. Results of Operations.......................................... 8 Part II--Other Information Item 6. Exhibits and Reports on Form 8-K............................... 12
1 PART I NATIONWIDE HEALTH PROPERTIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31, 2001 2000 ----------- ------------ (Unaudited) (Dollars in thousands) ASSETS ------ Investments in real estate Real estate properties: Land.............................................. $ 141,437 $ 142,721 Buildings and improvements........................ 1,175,300 1,182,410 Construction in progress.......................... 8,683 8,478 ---------- ---------- 1,325,420 1,333,609 Less accumulated depreciation..................... (192,380) (186,206) ---------- ---------- 1,133,040 1,147,403 Mortgage loans receivable, net.................... 185,938 185,623 ---------- ---------- 1,318,978 1,333,026 Cash and cash equivalents............................. 9,205 6,149 Receivables........................................... 8,137 7,607 Other assets.......................................... 35,688 34,225 ---------- ---------- $1,372,008 $1,381,007 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Bank borrowings....................................... $ 74,000 $ 79,000 Senior notes due 2001-2038............................ 622,900 627,900 Notes and bonds payable............................... 62,651 62,857 Accounts payable and accrued liabilities.............. 57,690 47,778 Stockholders' equity: Preferred stock $1.00 par value; 5,000,000 shares authorized; Issued and outstanding: 2001-- 1,000,000; 2000--1,000,000, stated at liquidation preference of $100 per share....................... 100,000 100,000 Common stock $.10 par value; 100,000,000 shares authorized; Issued and outstanding: 2001-- 46,240,651; 2000--46,226,484....................... 4,624 4,623 Capital in excess of par value...................... 556,772 556,658 Cumulative net income............................... 590,786 575,619 Cumulative dividends................................ (697,415) (673,428) ---------- ---------- Total stockholders' equity........................ 554,767 563,472 ---------- ---------- $1,372,008 $1,381,007 ========== ==========
See accompanying notes. 2 NATIONWIDE HEALTH PROPERTIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands except per share amounts)
Three Months Ended March 31, ---------------- 2001 2000 ------- ------- Revenues: Minimum rent............................................... $32,605 $32,269 Interest and other income.................................. 5,321 6,335 Additional rent and additional interest.................... 3,753 3,817 ------- ------- 41,679 42,421 Expenses: Interest and amortization of deferred financing costs...... 14,302 14,560 Depreciation and non-cash charges.......................... 10,491 9,842 General and administrative................................. 1,719 1,497 ------- ------- 26,512 25,899 ------- ------- Net income before gain on sale of properties................. 15,167 16,522 Gain on sale of properties................................... -- 1,016 ------- ------- Net income................................................... 15,167 17,538 Preferred stock dividends.................................... (1,919) (1,919) ------- ------- Net income available to common stockholders.................. $13,248 $15,619 ======= ======= Per share amounts: Basic/diluted income from continuing operations available to common stockholders.................................... $ .29 $ .32 ======= ======= Basic/diluted net income available to common stockholders.. $ .29 $ .34 ======= ======= Dividends paid per common share............................ $ .46 $ .46 ======= ======= Weighted average shares outstanding.......................... 46,235 46,224 ======= =======
See accompanying notes. 3 NATIONWIDE HEALTH PROPERTIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31, ------------------ 2001 2000 -------- -------- (In thousands) Cash flow from operating activities: Net income................................................. $ 15,167 $ 17,538 Gain on sale of properties............................... -- (1,016) Depreciation and non-cash charges........................ 10,491 9,842 Amortization of deferred financing costs................. 240 258 Net increase in other assets and liabilities............. 7,456 12,334 -------- -------- Net cash provided by operating activities.............. 33,354 38,956 Cash flow from investing activities: Investment in real estate properties..................... (1,222) (7,743) Disposition of real estate properties.................... 5,275 9,819 Investment in mortgage loans receivable.................. (610) (246) Principal payments on mortgage loans receivable.......... 626 4,198 -------- -------- Net cash provided by investing activities.............. 4,069 6,028 Cash flow from financing activities: Bank borrowings.......................................... 44,000 36,500 Repayment of bank borrowings............................. (49,000) (45,800) Issuance of common stock................................. 59 -- Issuance of senior unsecured debt........................ 15,000 -- Repayments of senior unsecured debt...................... (20,000) (10,000) Principal payments on convertible debentures, notes and bonds................................................... (161) (103) Dividends paid........................................... (23,987) (23,830) Other, net............................................... (278) (39) -------- -------- Net cash used in financing activities.................. (34,367) (43,272) -------- -------- Increase in cash and cash equivalents...................... 3,056 1,712 Cash and cash equivalents, beginning of period............. 6,149 16,139 -------- -------- Cash and cash equivalents, end of period................... $ 9,205 $ 17,851 ======== ========
See accompanying notes. 4 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2001 (Unaudited) (i) We have prepared the condensed consolidated financial statements included herein without audit. These financial statements include all adjustments that are, in the opinion of management, necessary for a fair presentation of the results of operations for the three-month periods ended March 31, 2001 and 2000 pursuant to the rules and regulations of the Securities and Exchange Commission. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. Although we believe that the disclosures in the financial statements included herein are adequate to make the information presented not misleading, these condensed consolidated financial statements should be read in conjunction with our financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2000 filed with the Securities and Exchange Commission ("2000 Annual Report"). The results of operations for the three-month periods ended March 31, 2001 and 2000 are not necessarily indicative of the results for a full year. (ii) Nationwide Health Properties, Inc., a Maryland corporation organized in October 1985, is a real estate investment trust that invests primarily in health care related facilities and provides financing to health care providers. Whenever we refer herein to "the Company" or to "us" or use the terms "we" or "our," we are referring to Nationwide Health Properties, Inc. As of March 31, 2001, we had investments in 324 facilities located in 37 states. The facilities include 180 skilled nursing facilities, 128 assisted living facilities, 13 continuing care retirement communities, 2 rehabilitation hospitals and 1 medical clinic. Our facilities are operated by 59 different operators, including the following publicly traded companies: Alterra Healthcare Corporation ("Alterra"), American Retirement Corporation, ARV Assisted Living, Inc., Beverly Enterprises, Inc., Harborside Healthcare Corporation, HEALTHSOUTH Corporation, Integrated Health Services, Inc., Mariner Post-Acute Network, Inc. and Sun Healthcare Group, Inc. Of the operators of the facilities, only Alterra, which accounted for 12% of our revenues for the three months ended March 31, 2001, accounts for more than 10% of our revenues. As of March 31, 2001, we had direct ownership of 144 skilled nursing facilities, 121 assisted living facilities, 9 continuing care retirement communities, 2 rehabilitation hospitals and 1 medical clinic. Substantially all of our owned facilities are leased under "net" leases that are accounted for as operating leases. The leases have initial terms ranging from 5 to 19 years, and generally have two or more multiple-year renewal options. We earn fixed monthly minimum rents and may earn periodic additional rents. The additional rent payments are generally computed as a percentage of facility net patient revenues in excess of base amounts or as a percentage of the increase in the Consumer Price Index. Additional rents are generally calculated and payable monthly or quarterly. While the calculations and payments are generally made on a quarterly basis, SEC Staff Accounting Bulletin No. 101 Revenue Recognition in Financial Statements ("SAB No. 101"), which we adopted during the fourth quarter of 2000 does not allow for the recognition of such revenue until all possible contingencies have been eliminated. For additional information about the effects of SAB No. 101, please see Footnote 2 "Summary of Significant Accounting Policies" and Footnote 16 "Quarterly Financial Data" to our financial statements in our 2000 Annual Report. Most of the leases contain provisions such that the total rent cannot decrease from one year to the next. In addition, most of the leases contain cross-collateralization and cross- default provisions tied to other leases with the same lessee, as well as grouped lease renewals and grouped purchase options. Obligations under the leases have corporate guarantees, and leases covering 191 facilities are backed by irrevocable letters of credit or security deposits that cover from 1 to 12 months of monthly minimum rents. Under the terms of the leases, the lessees are responsible for all maintenance, repairs, taxes and insurance on the leased properties. 5 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) March 31, 2001 (Unaudited) As of March 31, 2001, we held 35 mortgage loans secured by 36 skilled nursing facilities, 7 assisted living facilities, 4 continuing care retirement communities and 4 parcels of land. As of March 31, 2001, the mortgage loans had a net book value of approximately $185,938,000 with individual outstanding balances ranging from approximately $365,000 to $15,724,000 and maturities ranging from 2001 to 2025. (iii) Basic earnings per share is computed by dividing income from continuing operations available to common stockholders by the weighted average common shares outstanding. Income available to common stockholders is calculated by deducting dividends declared on preferred stock from income from continuing operations and net income. Diluted earnings per share includes the effect of the potential shares outstanding.
Three months ended March 31, ----------------------------- 2001 2000 -------------- -------------- Income Shares Income Shares ------- ------ ------- ------ (In thousands) Income before gain on sale of properties......... $15,167 $16,522 Less: preferred stock dividends.................. 1,919 1,919 ------- ------- Amounts used to calculate Basic EPS.............. 13,248 46,235 14,603 46,224 Effect of dilutive securities: Stock options.................................. -- 7 -- -- ------- ------ ------- ------ Amounts used to calculate Diluted EPS............ $13,248 46,242 $14,603 46,224 ======= ====== ======= ======
(iv) The Company qualifies as a real estate investment trust under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. The Company intends to continue to qualify as such and therefore to distribute at least ninety percent (90%) of its taxable income to its stockholders. Accordingly, no provision has been made for federal income taxes. (v) During the three months ended March 31, 2001, we funded approximately $1,017,000 in capital improvements at certain facilities in accordance with certain existing lease provisions. Such capital improvements result in an increase in the minimum rents earned by us on these facilities. During the three-month period ended March 31, 2001, we disposed of three skilled nursing facilities and two residential care facilities for the elderly in five separate transactions for aggregate proceeds of approximately $5,275,000. During the three-month period ended March 31, 2001, we repaid $20,000,000 in aggregate principal amount of medium-term notes that bore interest at a fixed rate of 6.68%. During the three months ended March 31, 2001, we also issued $15,000,000 in aggregate principal amount of medium-term notes that bear interest at a fixed rate of 9.75% and mature on March 20, 2008. (vi) The Company capitalizes interest on facilities under construction. The capitalization rates used are based on rates for our senior unsecured notes and bank line of credit, as applicable. Capitalized interest for the three months ended March 31, 2001 and 2000 was $202,000 and $608,000, respectively. (vii) In December 2000, Balanced Care Corporation ("BCC") notified us that it would only be making a partial payment of its December rent. At the time, we leased ten facilities in six states to BCC under two master leases. The facilities were constructed and opened during 1999 and 2000 with an aggregate investment of approximately $68,712,000. We immediately declared BCC in default under its master leases and initiated steps 6 NATIONWIDE HEALTH PROPERTIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) March 31, 2001 (Unaudited) to terminate the leases. BCC agreed to return the facilities to us and the leases were terminated effective as of January 1, 2001. We have leased the facilities to a new operator effective April 1, 2001 at straight-lined lease rates comparable to those previously paid by BCC of approximately $580,000 per month. BCC managed the facilities on an interim basis on our behalf until we could get a new lessee in place, and will continue to manage them until the facility licenses can be transferred to the name of the new operator. We utilized the forfeited cash security deposits totaling approximately $2,035,000 to cover the majority of the rent from December through March. Three operators of nursing homes we own have filed for protection under the United States bankruptcy laws. Under bankruptcy statutes, the tenant must either assume our leases or reject them and return the properties to us. If the tenant assumes the leases, it is required to assume the leases under the existing terms; the court cannot change the rental amount or other lease provisions that could financially impact the Company. Our rent has been paid each month on a timely basis. While there is a possibility that the tenants may decide to reject the leases on these properties, and while we have identified parties interested in leasing these facilities, any new leases may be at a lower rental rate. The table below summarizes the filing dates of the bankruptcies, the number of our owned facilities operated by each operator, our investment in facilities subject to the bankruptcies, the percentage of our revenues for 2001 relating to the facilities operated by each operator and cash deposits and letters of credit currently held by us as security for each operator:
Number of Investment Percentage Bankruptcy Facilities in of 2001 Security Operator Filing Date Operated Facilities Revenues Deposits -------- ---------------- ---------- ------------ ---------- ---------- Mariner Post-Acute Network, Inc........... January 18, 2000 20 $ 60,354,000 5% $2,655,000 Sun Healthcare Group, Inc.................... October 14, 1999 15 50,349,000 4 1,267,000 Integrated Health Services, Inc.......... February 2, 2000 7 35,109,000 3 643,000 --- ------------ --- ---------- Totals.................. 42 $145,812,000 12% $4,565,000 === ============ === ==========
7 NATIONWIDE HEALTH PROPERTIES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS March 31, 2001 Statement Regarding Forward Looking Disclosure Certain information contained in this report includes forward looking statements. Forward looking statements include statements regarding our expectations, beliefs, intentions, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements which are other than statements of historical facts. These statements may be identified, without limitation, by the use of forward looking terminology such as "may", "will", "anticipates", "expects", "believes", "intends", "should" or comparable terms or the negative thereof. All forward looking statements included in this report are based on information available to us on the date hereof. Such statements speak only as of the date hereof and we assume no obligation to update such forward looking statements. These statements involve risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include (without limitation) the following: the effect of economic and market conditions and changes in interest rates; the general distress of the healthcare industry; government regulations, including changes in the reimbursement levels under the Medicare and Medicaid programs; continued deterioration of the operating results or financial condition, including bankruptcies, of the Company's tenants; the ability of the Company to attract new operators for certain facilities; occupancy levels at certain facilities; the ability of the Company to sell certain facilities for their book value; the amount and yield of any additional investments; changes in tax laws and regulations affecting real estate investment trusts; access to the capital markets and the cost of capital; changes in the ratings of the Company's debt securities; and the additional risk factors set forth under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2000 ("2000 Annual Report"). Operating Results Three Months 2001 Compared to Three Months 2000 Minimum rent increased $336,000, or 1%, over the same period in 2000. The increase was primarily due to minimum rent from investments we made in additional leased facilities during the last twelve months and the conversion of two mortgage loans to leases during the same period, partially offset by the disposal of eleven facilities during the last twelve months. Interest and other income decreased by $1,014,000, or 16%, over the same period in 2000. The decrease was primarily due to the payoff of three mortgage loans during the last twelve months, the conversion of two mortgage loans to leases during the last twelve months and repayments of the principal balance on mortgage loans and notes receivable during the last twelve months, partially offset by a mortgage loan provided on one of the facilities sold during the last twelve months. Additional rent and additional interest decreased by $64,000, or 2%, over the same period in 2000 after the restatement of the March 31, 2000 additional rent and additional interest amount from $4,212,000 to $3,817,000 caused by the adoption of SEC Staff Accounting Bulletin No. 101 Revenue Recognition in Financial Statements ("SAB No. 101") in the fourth quarter of 2000. The decrease was primarily due to the disposal of facilities and the payoff of mortgage loans discussed above, partially offset by increased additional rent as provided for in the Company's existing leases and mortgage loans receivable based on increases in the facility revenues or the Consumer Price Index. Interest and amortization of deferred financing costs decreased $258,000 or 2% over the same period in 2000. The decrease was primarily due to the payoff of $40,000,000 of fixed rate medium-term notes during the last twelve months and decreases in the average interest rates on our $100,000,000 bank line of credit, partially offset by the issuance of $15,000,000 of fixed rate medium- term notes during the first quarter of 2001, an increase in the borrowings on our $100,000,000 bank line of credit, and a reduction in interest capitalized on construction projects. Depreciation and non-cash charges increased $649,000 or 7% over the same period in 2000. The increase was primarily attributable to increased depreciation due to the completion of additional 8 facilities over the last twelve months and the write-off of certain capitalized costs, partially offset by the disposal of facilities during the same period. General and administrative costs increased $222,000 or 15% over the same period in 2000. The increase was primarily due to costs related to the bankruptcy proceedings of three of the operators of our facilities discussed below, costs related to taking back ten facilities from an operator that defaulted in December 2000 also discussed below, and increases in compensation and other general expenses. We expect to receive increased additional rent and additional interest at individual facilities because our leases and mortgages generally contain provisions under which additional rents or interest income increase with increases in facility revenues and increases in the Consumer Price Index. Historically, revenues at our facilities and the Consumer Price Index generally have increased, although there are no assurances that they will continue to increase in the future. Sales of facilities or repayments of mortgages would serve to offset the aforementioned revenue increases, and if sales and repayments exceed additional investments, this would actually reduce revenues. We expect that additional rent and additional interest may decrease due to lease renewals that may result in a shift in the characterization of revenue from additional rent to minimum rent. There is no assurance that leases will renew at the aggregate existing rent level, so the impact of lease renewals may be a decrease in the total rent received by the Company. Additional investments in healthcare facilities would also increase rental and/or interest income. As additional investments in facilities are made, depreciation and/or interest expense would also increase. Any such increases, however, are expected to be at least partially offset by rents or interest income associated with the investments. Information Regarding Certain Operators Over-leveraging and changes in reimbursement levels during 1999 have had an adverse impact on the financial performance of some of the companies that operate nursing homes owned by the Company. Three operators have filed for protection under the United States bankruptcy laws. The table below summarizes the filing dates of the bankruptcies, the number of our owned facilities operated by each operator, our investment in facilities subject to the bankruptcies, the percentage of our revenues for 2001 relating to the facilities operated by each operator and cash deposits and letters of credit currently held by us as security for each operator:
Number of Percentage Bankruptcy Facilities Investment of 2001 Security Operator Filing Date Operated in Facilities Revenues Deposits -------- ---------------- ---------- ------------- ---------- ---------- Mariner Post-Acute Network, Inc. ......... January 18, 2000 20 $ 60,354,000 5% $2,655,000 Sun Healthcare Group, Inc. .................. October 14, 1999 15 50,349,000 4 1,267,000 Integrated Health Services, Inc. ........ February 2, 2000 7 35,109,000 3 643,000 --- ------------ --- ---------- Totals.............. 42 $145,812,000 12% $4,565,000 === ============ === ==========
Under bankruptcy statutes, the tenant must either assume our leases or reject them and return the properties to us. If the tenant assumes the leases, it is required to assume the leases under the existing terms; the court cannot change the rental amount or other lease provisions that could financially impact the Company. The tenant's decision whether to assume leases is usually based primarily on whether the properties that are operated by the tenant are providing positive cash flows. Only a few of the 42 facilities leased to and operated by these three companies are not providing adequate cash flows on their own to cover the rent under the leases. Our rent has been paid each month on a timely basis. While there is a possibility that the tenants may decide to reject the leases on these properties, and while we have identified parties interested in leasing these facilities, any new leases may be at a lower rental rate. In addition to the above, we have one mortgage loan directly with Mariner Post-Acute Network in the amount of $7,497,000 that is secured by one facility. The revenues from this mortgage loan represent approximately .5% of our revenues for the three months ended March 31, 2001 and the mortgage loan has a security deposit in the amount of $400,000. We have not received any payments on this mortgage loan subsequent to March 2000. Under bankruptcy statutes, the court imposes an automatic stay with respect to 9 our actions to collect or pursue remedies with respect to mortgage loans and we are precluded from exercising foreclosure or other remedies against the borrower. Unlike a lease, a mortgage loan is not subject to assumption or rejection. The mortgage loan may be divided into (i) a secured loan for the portion of the mortgage loan that does not exceed the value of the property and (ii) an unsecured loan for the portion of the mortgage loan that exceeds the value of the property, which unsecured portion would be treated like general unsecured claims in the bankruptcy estate. We would only be entitled to the recovery of interest and costs if and to the extent that the value of the collateral exceeds the amount owed, and we believe it currently does. In addition, the courts may modify the terms of a mortgage, including the rate of interest and timing of principal payments. In December 2000, Balanced Care Corporation ("BCC") notified us that it would only be making a partial payment of its December rent. At the time, we leased ten facilities in six states to BCC under two master leases. The facilities were constructed and opened during 1999 and 2000 with an aggregate investment of approximately $68,712,000. We immediately declared BCC in default under its master leases and initiated steps to terminate the leases. BCC agreed to return the facilities to us and the leases were terminated effective as of January 1, 2001. We have leased the facilities to a new operator effective April 1, 2001 at straight-lined lease rates comparable to those previously paid by BCC of approximately $580,000 per month. BCC has managed the facilities on an interim basis on our behalf until we could get a new lessee in place, and will continue to manage them until the facility licenses can be transferred to the name of the new operator. We utilized the forfeited cash security deposits totaling approximately $2,035,000 to cover the majority of the rent from December through March. In general, the replacement of operators that have defaulted on lease or loan obligations could be delayed by the approval process of any regulatory agency necessary for the transfer of the property or the replacement of the operator licensed to operate the facility. Liquidity and Capital Resources During the three months ended March 31, 2001, we funded approximately $1,017,000 in capital improvements at certain facilities in accordance with certain existing lease provisions. Such capital improvements result in an increase in the minimum rents earned by us on these facilities. The construction advances and capital improvement advances were funded by borrowings on our bank line of credit and by cash on hand. During the three-month period ended March 31, 2001, we disposed of three skilled nursing facilities and two residential care facilities for the elderly in five separate transactions for aggregate proceeds of approximately $5,275,000. The proceeds received were used to repay borrowings on our bank line of credit. During the three months ended March 31, 2001, we repaid $20,000,000 in aggregate principal amount of medium-term notes that bore interest at a fixed rate of 6.68%. The repayment was funded by borrowings on our bank line of credit, by cash on hand and by the issuance of $15,000,000 in aggregate principal amount of medium-term notes that bear interest at a fixed rate of 9.75% and mature on March 20, 2008. At March 31, 2001, we had $26,000,000 available under our $100,000,000 bank line of credit that expires on March 31, 2003. We have shelf registrations on file with the Securities and Exchange Commission under which we may issue (a) up to $427,100,000 in aggregate principal amount of medium term notes and (b) up to approximately $178,247,000 of securities including debt, convertible debt, common and preferred stock. We may make additional investments in healthcare related facilities, although the level of our new investments has decreased during the last two years and we do not anticipate making significant additional investments beyond our current commitments until such time as access to long-term capital is available under more favorable terms. Financing for future investments may be provided by borrowings under our bank line of credit, private placements or public offerings of debt or equity, the assumption of secured indebtedness, obtaining mortgage financing on a portion of our owned portfolio or through joint ventures. We believe we have sufficient liquidity and financing capability to finance anticipated future investments, maintain our current dividend level and repay borrowings at or prior to their maturity. 10 Market Risk Exposure This "Market Risk Exposure" discussion is an update of material changes to the "Market Risk Exposure" discussion included in our 2000 Annual Report and should be read in conjunction with such discussion. Readers are cautioned that many of the statements contained in the "Market Risk Exposure" discussion are forward looking and should be read in conjunction with the disclosures under the heading "Statement Regarding Forward Looking Disclosure" set forth above. We are exposed to market risks related to fluctuations in interest rates on our mortgage loans receivable and debt. The Company does not utilize interest rate swaps, forward or option contracts on foreign currencies or commodities, or other types of derivative financial instruments. We provide mortgage loans to operators of healthcare facilities as part of our normal operations. The majority of the loans have fixed rates. Four of the mortgage loans have adjustable rates; however, the rates adjust only once or twice over the loan lives and the minimum adjusted rate is equal to the current rate. Therefore, all mortgage loans receivable are treated as fixed rate notes. The Company utilizes debt financing primarily for the purpose of making additional investments in healthcare facilities. Historically, we have made short-term borrowings on our variable rate bank line of credit to fund our acquisitions until market conditions were appropriate, based on management's judgment, to issue stock or fixed rate debt to provide long-term financing. During the three months ended March 31, 2001, we repaid $20,000,000 of 6.68% fixed rate debt and issued $15,000,000 of 9.75% fixed rate debt. In addition, the bank borrowings under our bank line of credit have decreased to $74,000,000 from $79,000,000. For fixed rate debt, changes in interest rates generally affect the fair market value, but do not impact earnings or cash flows. Conversely, for variable rate debt, changes in interest rates generally do not impact fair market value, but do affect the future earnings and cash flows. Increases in interest rates during 2000 made it more expensive for us to access debt capital through our medium-term note program. Decreases in interest rates during the 2001 have resulted in a decrease in interest expense related to our bank line of credit, but have not significantly reduced our cost to access debt capital through our medium-term note program. Any future interest rate increases may increase the cost of any borrowings to finance future acquisitions or replace current long-term debt as it matures. 11 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 10.1 Second Amendment to Employment Agreement of T. Andrew Stokes dated as of April 20, 2001. 10.2 Second Amendment to Employment Agreement of Mark. L. Desmond dated as of April 20, 2001. 10.3 Executive Employment Security Policy as Amended and Restated April 20, 2001. 10.4 1989 Stock Option Plan as Amended and Restated April 20, 2001.
(b) Reports on Form 8-K A Form 8-K dated January 12, 2001 was filed with respect to the termination of two master leases with Balanced Care Corporation. 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: May 11, 2001 NATIONWIDE HEALTH PROPERTIES, INC. /s/ Mark L. Desmond By __________________________________ Mark L. Desmond Senior Vice President and Chief Financial Officer (Principal Financial Officer) 13 EX-10.1 2 dex101.txt ANDREW STOKES EMPLOYMENT AGREEMENT EXHIBIT 10.1 SECOND AMENDMENT TO EMPLOYMENT AGREEMENT OF T. ANDREW STOKES This Second Amendment dated as of April 20, 2001 to Employment Agreement of T. Andrew Stokes hereby amends that certain Employment Agreement entered into by and between Nationwide Health Properties, Inc., a California corporation (the "Company") and T. Andrew Stokes (the "Executive") as of February 25, 1998, as amended January 19, 2001 (the "Employment Agreement"). RECITAL The parties desire to delete and restate Paragraph I (E), Paragraph IV (A), and Section V of the Employment Agreement in their entirety. AGREEMENT NOW, THEREFORE, the parties hereto hereby agree to delete Paragraphs I (E) and IV (A) and Section V of the Employment Agreement in their entirety and restate them as follows: "I. E. 'Employment Period' shall mean the period commencing on the Effective Date and ending on February 28, 2003; provided however, that commencing effective as of February 28, 2002 and on each February 28 thereafter (each such date is hereinafter referred to as a "Renewal Date"), the Employment Period shall be automatically extended so as to terminate on the second anniversary of such Renewal Date (but not later than the date when Executive attains age 65), unless the Company or Executive shall give notice to the other that the Employment Period shall not be further extended prior to any such Renewal Date." "IV. Obligations of the Company Upon Termination of Executive's Employment --------------------------------------------------------------------- A. Termination by Company Other than for Cause, Death or ----------------------------------------------------- Disability. Except within three years after a Change of Control ---------- of Company in which case any termination of Executive's employment shall be governed by the Company's Executive Employment Security Policy, and except as provided for in Section VI of this Agreement, if during the Employment Period, the Company shall terminate Executive's employment other than for Cause or disability, the Company shall pay to Executive (a) any Annual Base Salary owed to Executive through the Date of Termination to the extent not previously paid, (b) an amount equal to 150% of Executive's highest Annual Base Salary during any of the last three full fiscal years prior to the Date of Termination, and (c) an amount equal to 150% of the average Annual Bonus earned by Executive over the last three full fiscal years prior to the Date of Termination. In addition to the payments described in subparagraphs (a), (b), and (c) above, the Company also shall (i) arrange to provide to Executive for a period of eighteen months from the Date of Termination, medical (including dental, vision and prescription drug coverage) and life insurance with terms no less favorable, in the aggregate, than the most favorable of those provided to Executive during the year immediately preceding the Date of Termination, (ii) immediately vest all previously unvested shares of Restricted Stock and Stock Options held by Executive, (iii) provide Executive with any Performance-Based Dividend Equivalents (to the extent earned by the Executive through the Date of Termination, as determined by the Company's Compensation Committee) for the eighteen months following the Date of Termination, and (iv) pay any compensation previously deferred by Executive in accordance with the provisions of the plan under which such compensation was deferred. Payments pursuant to subparagraph (a) above shall be made within thirty (30) days following the Date of Termination. Payments pursuant to subparagraph (b) above shall be 1 made in equal monthly installments over the eighteen-month period following the Date of Termination. Payments pursuant to subparagraph (c) above shall be made in equal annual installments over the eighteen-month period following the Date of Termination. Payments pursuant to subparagraph (iii) above shall be made at the time such payments would have been made had Executive remained in the employment of the Company. To the extent that any of the payments and benefits provided for in this Agreement or otherwise payable to Executive constitute "parachute payments" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and but for this subparagraph of this Section IV(A), would be subject to the excise tax imposed by Section 4999 of the Code or any similar or successor provision, the aggregate amount of such payments and benefits shall be reduced, but only to the extent necessary so that none of such payments and benefits are subject to excise tax pursuant to Section 4999 of the Code. If Executive should die while receiving payments pursuant to this Section IV(A), the remaining payments which would have been made to Executive if he had lived shall be paid to the beneficiary designated in writing by Executive, or if there is no effective written designation, then to this spouse, or if there is neither an effective written designation nor a surviving spouse, then to Executive's estate. Designation of a beneficiary or beneficiaries to receive the balance of any such payments shall be made by written notice to the Company, and Executive may revoke or change any such designation of beneficiary at any time by a later written notice to the Company." "V. Non-Exclusivity of Rights. ------------------------- Nothing in this Agreement shall prevent or limit Executive's continuing or future participation in any plan, program, policy or practice provided by the Company for which Executive may qualify, nor shall anything herein limit or otherwise affect such rights as Executive may have under any contract or agreement with the Company. Amounts which are vested or which Executive is otherwise entitled to receive under any plan, policy, practice or program of, or any contract or agreement (other than this Agreement) with the Company at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement. Except for the Company's Executive Employment Security Policy, which remains in full force and effect and is fully operative between Executive and Company in accordance with its terms, Executive shall no longer be covered by any prior employment agreement, security policy or understanding thereof after the Effective date of this Agreement and shall not be covered by any severance policy, practice or program of the Company." IN WITNESS WHEREOF, Executive has hereunto set Executive's hand, and pursuant to the authorization from the Compensation Committee of the Board, the Company has caused this Second Amendment to Employment Agreement of T. Andrew Stokes to be executed in its name on its behalf, all as of the day and year first above written. NATIONWIDE HEALTH PROPERTIES, INC. By: ______________________________________ R. Bruce Andrews, President Executive: __________________________________________ T. Andrew Stokes 2 EX-10.2 3 dex102.txt MARK DESMOND EMPLOYMENT AGREEMENT EXHIBIT 10.2 SECOND AMENDMENT TO EMPLOYMENT AGREEMENT OF MARK L. DESMOND This Second Amendment dated as of April 20, 2001 to Employment Agreement of Mark L. Desmond hereby amends that certain Employment Agreement entered into by and between Nationwide Health Properties, Inc., a California corporation (the "Company") and Mark L. Desmond (the "Executive") as of February 25, 1998, as amended January 19, 2001 (the "Employment Agreement"). RECITAL The parties desire to delete and restate Paragraph I (E), Paragraph IV (A), and Section V of the Employment Agreement in their entirety. AGREEMENT NOW, THEREFORE, the parties hereto hereby agree to delete Paragraphs I (E) and IV (A) and Section V of the Employment Agreement in their entirety and restate them as follows: "I. E. 'Employment Period' shall mean the period commencing on the Effective Date and ending on February 28, 2003; provided however, that commencing effective as of February 28, 2002 and on each February 28 thereafter (each such date is hereinafter referred to as a "Renewal Date"), the Employment Period shall be automatically extended so as to terminate on the second anniversary of such Renewal Date (but not later than the date when Executive attains age 65), unless the Company or Executive shall give notice to the other that the Employment Period shall not be further extended prior to any such Renewal Date." "IV. Obligations of the Company Upon Termination of Executive's Employment --------------------------------------------------------------------- A. Termination by Company Other than for Cause, Death or ----------------------------------------------------- Disability. Except within three years after a Change of Control ---------- of Company in which case any termination of Executive's employment shall be governed by the Company's Executive Employment Security Policy, and except as provided for in Section VI of this Agreement, if during the Employment Period, the Company shall terminate Executive's employment other than for Cause or disability, the Company shall pay to Executive (a) any Annual Base Salary owed to Executive through the Date of Termination to the extent not previously paid, (b) an amount equal to 150% of Executive's highest Annual Base Salary during any of the last three full fiscal years prior to the Date of Termination, and (c) an amount equal to 150% of the average Annual Bonus earned by Executive over the last three full fiscal years prior to the Date of Termination. In addition to the payments described in subparagraphs (a), (b), and (c) above, the Company also shall (i) arrange to provide to Executive for a period of eighteen months from the Date of Termination, medical (including dental, vision and prescription drug coverage) and life insurance with terms no less favorable, in the aggregate, than the most favorable of those provided to Executive during the year immediately preceding the Date of Termination, (ii) immediately vest all previously unvested shares of Restricted Stock and Stock Options held by Executive, (iii) provide Executive with any Performance-Based Dividend Equivalents (to the extent earned by the Executive through the Date of Termination, as determined by the Company's Compensation Committee) for the eighteen months following the Date of Termination, and (iv) pay any compensation previously deferred by Executive in accordance with the provisions of the plan under which such compensation was deferred. 1 Payments pursuant to subparagraph (a) above shall be made within thirty (30) days following the Date of Termination. Payments pursuant to subparagraph (b) above shall be made in equal monthly installments over the eighteen-month period following the Date of Termination. Payments pursuant to subparagraph (c) above shall be made in equal annual installments over the eighteen-month period following the Date of Termination. Payments pursuant to subparagraph (iii) above shall be made at the time such payments would have been made had Executive remained in the employment of the Company. To the extent that any of the payments and benefits provided for in this Agreement or otherwise payable to Executive constitute "parachute payments" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and but for this subparagraph of this Section IV(A), would be subject to the excise tax imposed by Section 4999 of the Code or any similar or successor provision, the aggregate amount of such payments and benefits shall be reduced, but only to the extent necessary so that none of such payments and benefits are subject to excise tax pursuant to Section 4999 of the Code. If Executive should die while receiving payments pursuant to this Section IV(A), the remaining payments which would have been made to Executive if he had lived shall be paid to the beneficiary designated in writing by Executive, or if there is no effective written designation, then to this spouse, or if there is neither an effective written designation nor a surviving spouse, then to Executive's estate. Designation of a beneficiary or beneficiaries to receive the balance of any such payments shall be made by written notice to the Company, and Executive may revoke or change any such designation of beneficiary at any time by a later written notice to the Company." "V. Non-Exclusivity of Rights. ------------------------- Nothing in this Agreement shall prevent or limit Executive's continuing or future participation in any plan, program, policy or practice provided by the Company for which Executive may qualify, nor shall anything herein limit or otherwise affect such rights as Executive may have under any contract or agreement with the Company. Amounts which are vested or which Executive is otherwise entitled to receive under any plan, policy, practice or program of, or any contract or agreement (other than this Agreement) with the Company at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement. Except for the Company's Executive Employment Security Policy, which remains in full force and effect and is fully operative between Executive and Company in accordance with its terms, Executive shall no longer be covered by any prior employment agreement, security policy or understanding thereof after the Effective date of this Agreement and shall not be covered by any severance policy, practice or program of the Company." IN WITNESS WHEREOF, Executive has hereunto set Executive's hand, and pursuant to the authorization from the Compensation Committee of the Board, the Company has caused this Second Amendment to Employment Agreement of Mark L. Desmond to be executed in its name on its behalf, all as of the day and year first above written. NATIONWIDE HEALTH PROPERTIES, INC. By: ______________________________________ R. Bruce Andrews, President Executive: __________________________________________ Mark L. Desmond 2 EX-10.3 4 dex103.txt EMPLOYMENT SECURITY POLICY EXHIBIT 10.3 NATIONWIDE HEALTH PROPERTIES, INC. ---------------------------------- EXECUTIVE EMPLOYMENT SECURITY POLICY ------------------------------------ AS AMENDED AND RESTATED APRIL 20, 2001 -------------------------------------- The following policy shall be applicable to such officers of the Company as shall be selected by the Compensation Committee of the Company's Board and notified thereof as hereinafter provided. This Policy shall not apply to any officer of the Company who is a party to a separate employment agreement with the Company or a subsidiary thereof, unless such employment agreement expressly provides that this Policy shall be applicable to said Officer, and said Agreement has been approved by the Compensation Committee, and he is provided with notice hereunder. This Policy shall be operative only for a period of three (3) years after a Change of Control. This Policy shall not be applicable, and no payments shall be made pursuant to it, unless a Change of Control occurs. 1. DEFINITIONS. ----------- For purposes of this Policy the following terms shall have the meanings set forth in this Paragraph 1: A. "Board" shall mean the Board of Directors of the Company. ----- B. "Cause" shall mean (i) willful refusal by Participant to follow ----- a lawful written order of the Board, (ii) willful misconduct, dishonesty or reckless disregard of his duties by Participant, or (iii) the conviction of Participant of any felony involving moral turpitude. C. "Change of Control" shall mean a change in control of the ----------------- Company of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A, Regulation 240.14a-101, promulgated under the Securities Exchange Act of 1934 as in effect on the date of this Policy or, if Item 6(e) is no longer in effect, any regulation issued by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934 which serves similar purposes; provided that, without limitation, a Change of Control shall be deemed to have occurred if and when (a) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes a beneficial owner, directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company's then outstanding securities or (b) individuals who are members of the Board immediately prior to a meeting of the shareholders of the 1 Company involving a contest for the election of directors shall not constitute a majority of the Board following such election. D. "Company" shall mean Nationwide Health Properties, Inc. ------- E. "Compensation Committee" shall mean the Compensation Committee ---------------------- of the Board. F. "Conflict of Interest" is defined in Paragraph 9 hereof. -------------------- G. "Participant" shall mean an officer of the Company who has been ----------- selected by the Compensation Committee to participate under this Policy, who has been so notified by the Compensation Committee and who acknowledged such notification pursuant to Paragraph 13 hereof. Participants shall mean all officers of the Company so selected and notified, and who have so acknowledged notification. H. "Period of Employment" shall mean the number of months of -------------------- employment of a Participant by the Company. "Period of Employment" is used to ascertain the number of months for which Termination Indemnity payments will be paid pursuant to the terms hereof. Prior service may be included within the Period of Employment at the discretion of the Compensation Committee if a termination allowance was not paid at the time the prior service ended. Period of Employment shall include disability and military leaves of absence but exclude other leaves of absence unless such leaves of absence are for the convenience of the Company and are approved by the Compensation Committee. Earned but accrued vacation credits shall not be included within "Period of Employment." I. "Termination Indemnity Payments" shall mean those Termination ------------------------------ Indemnity Payments provided by the terms of this Agreement. J. "Total Compensation" shall mean the amount per annum equal to ------------------ the highest annual compensation (salary plus bonus plus performance-based dividend equivalents to the extent earned, as determined by the Company's Compensation Committee, by the Participant through the date of termination, except where the basis of such termination is Cause, death, disability, or normal retirement age) paid to Participant by Company during any of Company's three (3) fiscal years immediately preceding termination of employment. "Monthly Total Compensation" shall mean one twelfth (1/12) of Total Compensation. 2. TERMINATION OF EMPLOYMENT BY THE COMPANY. ---------------------------------------- 2 Within three years after a Change of Control of Company, in the event of termination by the Company of the active employment of any Participant (except where the basis of such termination is Cause, death, disability or normal retirement age sixty-five (65)), such Participant shall be entitled to receive and the Company shall be obligated to pay as Termination Indemnity Payments an amount equal to the Participant's Monthly Total Compensation for the number of months following such termination indicated in paragraph 6 below, less one half ( 1/2) of all salary, bonus, other remuneration and the fair market value to Participant of fringe benefits that the Participant may receive from new employment during the period he is entitled to Termination Indemnity Payments. 3. TERMINATION OF EMPLOYMENT BY THE PARTICIPANT. -------------------------------------------- During the three (3) years after a Change of Control of Company, if the Board fails to reelect a Participant to his then existing or reasonably comparable office, or if a change not acceptable to a Participant is made that affects a substantial reduction in his compensation or benefits (except for (i) a general reduction of compensation or benefits affecting all Participants and resulting from a severe economic down-turn in the financial position of the Company, or (ii) for normal retirement at age sixty-five (65) of such Participant) such Participant shall have the right by written notice to the Company to terminate his active employment as of the last day of the month in which such written notice is delivered to the Company, and such Participant shall be entitled to receive and the Company shall be obligated to pay as Termination Indemnity Payments an amount equal to the Participant's Monthly Total Compensation for the number of months following such termination indicated in Paragraph 6 below, less one-half ( 1/2) of all salary, bonus, other remuneration and the fair market value to Participant of fringe benefits that the Participant may receive from new employment during the period he is entitled to Termination Indemnity Payments. Except as provided above in this paragraph, no Termination Indemnity Payments will be paid pursuant to the terms of this Policy to any Participant whose employment at Company is terminated by voluntary resignation (unless otherwise determined by the Compensation Committee). 4. DEATH/DISABILITY/RETIREMENT: CONTINUATION OF ----------------------------------------------- BENEFITS IN CASE OF DEATH. - ------------------------- Participant shall not receive payments under this Policy on account of termination of employment because of death or disability or upon normal retirement at age sixty-five (65) or thereafter. Should a Participant covered by this Policy die after commencement of payments to him of the Termination Indemnity Payments but 3 before such Termination Indemnity Payments are paid in full, the balance the Participant would have received had he lived shall be paid in installments as designated in writing by such Participant; or if there is not effective written designation then to his spouse; or if there is neither an effective written designation nor a surviving spouse, then to his estate. Designation of a beneficiary or beneficiaries to receive the balance of any Termination Indemnity Payments hereunder shall be made by written notice to the Company and the Participant may revoke or change any such designation of beneficiary at any time by a later written notice to the Company. 5. CAUSE. ----- In the event Participant's employment is terminated for Cause, Participant shall not receive any payments under this Policy. 6. TERMINATION INDEMNITY PAYMENTS. ------------------------------ Termination Indemnity Payments shall be computed and paid to all full-time officers of the Company in accordance with the following schedule: Period of Employment Termination Indemnity Payments -------------------- ------------------------------ (Amount equal to 100% Monthly Total Compensation for the number of months set forth below) Less than one year 12 months One year or more 24 months Three years or more 36 months The maximum period of Termination Indemnity Payments shall be thirty- six (36) months or age sixty-five (65), whichever occurs first. Payments of the Monthly Termination Indemnity Payments hereunder shall be made at the regular pay period of the Company or in such other manner as may be agreed upon by the Participant entitled to receive such payments and the Compensation Committee. Payments made to a Participant hereunder as Termination Indemnity Payments shall be deemed to be compensation for services rendered for all purposes and shall be subject to applicable Federal, State and local tax withholding and deduction requirements. If during the period a Participant is receiving Termination Indemnity Payments under this Policy such Participant makes any false statement or conducts himself in a fraudulent or dishonest manner which materially and adversely affects the Company, the Board may terminate all payments hereunder. 4 7. OTHER COMPANY EMPLOYMENT BENEFITS. --------------------------------- Participants entitled to receive Termination Indemnity Payments under this Policy shall be entitled to participate in certain employee insurance plans (as described below) during the period the Termination Indemnity Payments provided for herein are being paid. During the period of a Participant is receiving payments hereunder, he shall be treated as a continuing employee for purposes of participation in and accrual of rights and benefits under all of the Company's life, accident, medical and dental insurance plans of Participant and his spouse; however, he shall not be entitled to medical or dental coverages for himself or his spouse if such medical or dental coverages are provided under any other group plan or by another employer. In the event that such participation in one or more of such Plans is not possible, Company shall arrange to provide Participant with benefits substantially similar to those which Participant would have been entitled to receive under such plans if he had continued as an employee at the Total Compensation level; however, he shall not be entitled to medical or dental coverages for himself or his spouse if such medical or dental coverages are provided under any other group plan or by another employer. Benefits of continued participation in the Company Retirement Plan and any retirement plans hereafter adopted in which Participant was entitled to participate prior to date of termination (hereinafter referred to as the "Plans") shall continue, provided, however, that if Participant's continued participation is not possible under the general terms and provisions of the Plans, Company shall arrange to provide Participant with benefits substantially similar to those which Participant would have been entitled to receive under the Plans if he had continued as an employee for the full term provided in Paragraph 6 above at the Participant's Total Compensation level. This paragraph is not intended to limit Participant's vested rights under any of Company's retirement plans to a period of three (3) years or until age sixty-five (65); rather, such rights shall continue pursuant to the terms of said Plans. Participants receiving Termination Indemnity Payments hereunder shall not be entitled to continued participation in or accrual of benefits under any Company stock option or restricted stock plan. No stock option shall be granted to such Participant under any Company stock option plan after the termination of active employment; however, such Participant shall have the benefits of all rights vested as of the date of termination of active employment pursuant to the terms of said plans. A Participant receiving Termination Indemnity Payments under this Policy shall be entitled to purchase at depreciated book value the automobile (if any) which Company was providing for the use of such 5 Participant. Also, such Participant shall have the option to have assigned to him any assignable insurance policy owned by Company which relates specifically to such Participant. Company shall have no obligation to pay off any loans against such insurance policies and such former Participant shall reimburse the Company for the cash value of such insurance policies (if any). 8. OTHER EMPLOYMENT. ---------------- After ceasing active employment with the Company or a subsidiary of the Company, and during the period the Participant is eligible to receive any Termination Indemnity Payments hereunder, such Participant has an obligation to use his best efforts to seek other employment, and shall have the right to accept other employment or engage in other business activities subject to the restrictions set forth in Paragraph 9 below (relating to Conflict of Interest). One-half ( 1/2) of all salary, bonus, other remuneration and the fair market value to Participant of fringe benefits from any such new employment shall be deducted from or set off against Termination Indemnity Payments and other benefits provided in this Policy. 9. CONFLICT OF INTEREST. -------------------- During the period a Participant is entitled to receive Termination Indemnity Payments hereunder, such Participant shall not, without the prior written consent of the Company, engage directly or indirectly (including, by way of example only, as a principal, partner, venturer, employee or agent), nor have any direct or indirect interest, in any business which competes with the Company, or any of its subsidiaries in any area of the world in which the Company or such subsidiary engages in business at the time of termination of the Participant's active employment with the Company. Included within the meaning of an indirect interest for purposes of this Policy would be, by way of example only, an interest in any such business held through a nominee, agent, option or other device. The foregoing clause does not apply to an investment by any Participant in the stock of a publicly held corporation if the market value of such investment at the time the Participant acknowledges this Policy and the provisions hereof (if then owned) or when acquired by such Participant (if acquired after the date of such acknowledgment) does not exceed One Hundred Thousand Dollars ($100,000) or to any investment by such Participant in a mutual fund. If Participant directly or indirectly discloses to any third person any confidential records or information, trade secrets or customer list relating to Company's business, Participant's right to Termination 6 Indemnity Payments hereunder shall terminate immediately (in addition to any other remedies that Company may have). 10. CONSULTATION FOR COMPANY. ------------------------ During the period Participant is entitled to receive Termination Indemnity Payments hereunder, he shall be available at reasonable times and upon reasonable notice to consult with and advise officers and executives of the Company regarding the business and affairs of the Company; provided, however, that such consultation and advice shall be scheduled and arranged so that it does not interfere unreasonably with any other employment or business activities of Participant. 11. AMENDMENT OR TERMINATION OF POLICY. ---------------------------------- The Company reserves the right to alter, amend or revoke this Policy prospectively at any time prior to a Change of Control, by notice to the Participants, but no such alteration, amendment or revocation shall be made after a Change of Control except with the express prior written consent and agreement of such Participant. Nothing herein shall entitle any Participant to continue employment with the Company or to continued tenure in any specific office or position. 12. TERMINATION OF TERMINATION INDEMNITY PAYMENTS. --------------------------------------------- The Termination Indemnity Payments and all other benefits to which any Participant is entitled hereunder shall terminate immediately if following termination of active employment such person (1) breaches the Conflict of Interest provisions in Paragraph 9 hereof, or (2) fails or refuses to consult with and advise officers and other executives of the Company in accordance with Paragraph 10 hereof, or (3) makes false statements or conducts himself in a manner that in the reasonable discretion of the Board materially and adversely affects the Company, or (4) reaches his sixty-fifth (65) birthday. 13. ACKNOWLEDGMENT BY COMPANY OFFICERS ---------------------------------- Each officer of the Company to whom this Policy is to be applicable shall be informed thereof by letter substantially in the form attached as Exhibit "A" hereto and, as a condition to entitlement, shall acknowledge in a writing substantially similar to the form letter attached as Exhibit "B" hereto that the Participant understands and agrees to be bound by the provisions of this Policy. A list of the Participants shall be maintained by the Secretary of the Company. 7 14. OTHER PROVISIONS. ---------------- This Policy shall become effective as of February 8, 1990. The Termination Indemnity Payments provided hereby supersede and replace any and all other termination compensation to which any Participant is or might become entitled under any other policies or practices of the Company, except termination compensation covered by an agreement in effect on the effective date hereof which has separately been approved by the Compensation Committee. The rights and obligations of the Company under this Policy shall inure to the benefit of and shall be binding upon the Company's successors and assigns. References in this Policy to the male gender shall include the female gender. In any action at law or in equity to enforce any of the provisions or rights under this Policy, the unsuccessful party to such litigation as determined by the court in a final judgment or decree shall pay the successful party or parties all costs, expenses and reasonable attorneys fees incurred therein by such party or parties (including without limitation such costs, expenses and fees on any appeals) and if such successful party shall recover judgment in any such action or proceedings, such costs, expenses and attorneys fees shall be included as a part of such judgment. Paragraphs or other headings contained in this Policy are for reference purposes only and shall not affect in any way the meaning or interpretation of this Policy. To the full extent controllable by stipulation of the parties, this Policy shall be interpreted and enforced under California law. NOTE: This Policy is intended to remain outside the provisions of Section 67 of the Tax Reform Act of 1984, as originally enacted (adding Sections 280G and 4999 and amending Sections 275(a) and 3121 (v) of the Internal Revenue Code) (the "1984 Act"). Notwithstanding any other term or provision contained in this Policy, no Termination Indemnity Payment shall be made to any Participant in an amount which would subject any portion of such Termination Indemnity Payment, or any such Termination Indemnity Payment theretofore received by the Participant, to the excise tax provided in Section 67 of the 1984 Act. 8379B/788A 8 PERSONAL AND CONFIDENTIAL - ------------------------- (Date) (Address) Re: Nationwide Health Properties, Inc. Executive Employment Security Policy ------------------------------------ Dear __________________: You have been designated as one of the officers of Nationwide Health Properties, Inc. (the "Company") covered by the above-referenced Executive Employment Security Policy ("Policy"), a copy of which is enclosed. This letter constitutes the notice to you required by Paragraph 13 of the Policy. Under Paragraph 13 of the Policy, your entitlement to any benefits which you may eventually qualify to receive under the Policy is subject to the written acknowledgment of your understanding of and agreement to the terms and conditions of the Policy. Enclosed for this purpose are two copies of a form letter for use. Please complete, date and sign both copies of that letter and return one signed copy to the Secretary of the Company while retaining the other copy for your personal records. Very truly yours, Encl. Exhibit "A" 9 PERSONAL AND CONFIDENTIAL - ------------------------- (Date) Nationwide Health Properties, Inc. 610 Newport Center Drive, Suite 1150 Newport Beach, CA 92660 Re: Nationwide Health Properties, Inc. Executive Employment Security Policy ------------------------------------ Gentlemen: This will acknowledge receipt of the Nationwide Health Properties, Inc. Executive Employment Security Policy which was enclosed in your letter of _______________________. I have read this Policy and understand and agree to all of its terms and conditions. I hereby designate ___________________________________________ as my beneficiary(ies) to receive the balance of any Termination Indemnity Payments to which I am entitled under the Policy but which remain unpaid at the date of my death. I understand that I may revoke or change this designation of beneficiary(ies) at any time by a later written notice to the Company. Very truly yours, Exhibit "B" 10 The undersigned, Secretary of Nationwide Health Properties, Inc., certifies that the "Nationwide Health Properties, Inc. Executive Employment Security Policy As Amended and Restated April 20, 2001" as set forth in the foregoing document was adopted by Nationwide Health Properties, Inc. as its policy pursuant to Board action on February 8, 1990, as amended by further Board action on April 20, 2001. Dated: April 20, 2001 __________________________________ Don M. Pearson, Secretary 11 EX-10.4 5 dex104.txt 1989 AMENDED STOCK OPTION PLAN EXHIBIT 10.4 NATIONWIDE HEALTH PROPERTIES, INC. 1989 STOCK OPTION PLAN AS AMENDED AND RESTATED APRIL 20, 2001 1. Purpose ------- The purpose of the Nationwide Health Properties, Inc. 1989 Stock Option Plan (the "Plan") is to strengthen Nationwide Health Properties, Inc. (the "Corporation") and those corporations which are or hereafter become subsidiary corporations (the "Subsidiary" or "Subsidiaries") by providing additional means of attracting and retaining competent managerial personnel and by providing to participating directors, officers and employees added incentives for high levels of performance and for unusual efforts to increase the earnings, value and distributions of the Corporation and any subsidiaries. The Plan seeks to accomplish these purposes and achieve these results by providing a means whereby such directors, officers and employees may receive shares of Restricted Stock, and/or Stock Options and/or Stock Appreciation Rights in accordance with this Plan. Stock Options granted pursuant to this Plan are intended to be Incentive Stock Options or Non-Qualified Stock Options, as shall be determined and designated by the Plan Committee upon the grant of each Stock Option hereunder. 2. Definitions ----------- For purposes of this Plan, the following terms shall have the following meanings: (a) Common Stock. This term shall mean shares of the ------------ Corporation's common stock, $.10 par value, subject to adjustment pursuant to Section 18 (Adjustment Upon Changes in Capitalization) hereunder. (b) Corporation. This term shall mean Nationwide Health ----------- Properties, Inc., a Maryland Corporation. (c) Eligible Participants. This term shall mean all directors --------------------- of the Corporation or any Subsidiary, and all officers or employees (whether or not they are also directors) of the Corporation or any Subsidiary. (d) Fair Market Value. This term shall mean the fair market ----------------- value of the Common Stock as determined in accordance with any reasonable valuation method selected by the Plan Committee, including the valuation methods described in Treasury Regulations Section 20.2031-1. Unless determined otherwise by the Plan Committee, "fair market value" shall be as applied to any date specified in the Plan, the closing price of a share of Common Stock on the New York Stock Exchange's composite tape on such date, or, if no such sales were made on such date, the closing price of such share on the New York Stock Exchange's composite tape on the next preceding date on which there were such sales. (e) Grantee. This term shall mean any Eligible Participant to ------- whom Restricted Stock or Stock Appreciation Rights have been granted pursuant to this Plan. (f) Incentive Stock Option. This term shall mean a Stock Option ---------------------- which is an "incentive stock option" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended. (g) Non-Qualified Stock Option. This term shall mean a Stock -------------------------- Option which is not an Incentive Stock Option. 1 (h) Option Shares. This term shall mean Common Stock covered by ------------- and subject to any outstanding unexercised Stock Option granted pursuant to this Plan. (i) Optionee. This term shall mean any Eligible Participant to -------- whom a Stock Option has been granted pursuant to this Plan, provided that at least part of the Stock Option is outstanding and unexercised. (j) Plan. This term shall mean the Nationwide Health ---- Properties, Inc. 1989 Stock Option Plan, as amended and restated October 14, 1999, and as embodied herein and as may be further amended from time to time in accordance with the terms hereof and applicable law. (k) Plan Committee. The Compensation Committee of the Board of -------------- Directors of the Corporation shall constitute the Plan Committee and have full authority to act in the matter. The Plan Committee shall consist at all times of a committee of two or more non-employee directors. All references in the Plan to the "Plan Committee" shall be deemed to refer to the Compensation Committee of the Board of Directors. The Board of Directors of the Corporation shall have the right, in its sole and absolute discretion, to remove or replace any person from or on the Compensation Committee at any time for any reason whatsoever. (l) Restricted Stock. This term shall mean shares of Common ---------------- Stock of the Company granted without cost to the Participant pursuant to either Section 6 or 7, and subject to the terms of Section 8. (m) Stock Appreciation Right. This term shall mean a stock ------------------------ appreciation right as described in Section 12 of this Plan. (n) Stock Option. This term shall mean the right to purchase ------------ Common Stock under this Plan in a specified number of shares, at a price and upon the terms and conditions as specified in this Plan or as determined by the Plan Committee. (o) Subsidiary. This term shall mean each "subsidiary ---------- corporation" (treating the Corporation as the employer corporation) as defined in Section 425(f) of the Internal Revenue Code of 1986, as amended. 3. Administration. -------------- (a) Administration of the Plan. This Plan shall be administered -------------------------- by the Plan Committee. Any action of the Plan Committee with respect to the administration of the Plan shall be taken pursuant to a majority vote, or pursuant to the unanimous written consent, of its members. Any such action taken by the Plan Committee in the administration of this Plan shall be valid and binding, so long as the same is not inconsistent with the terms and conditions of this Plan. To the extent consistent with the availability to the Plan of Rule 16b-3 under the Securities Exchange Act of 1934 as amended, and subject to compliance with the terms, conditions and restrictions set forth in this Plan, the Plan Committee shall have the exclusive right, in its sole and absolute discretion, to establish the terms and conditions of all Restricted Stock, Stock Options and Stock Appreciation Rights granted under the Plan, including, without limitation, the power to determine the duration and purposes, if any, of leaves of absence which may be permitted to holders of unexercised, unexpired Stock Options without such constituting a termination under the Plan, and to prescribe and amend the terms, provisions ad form of each instrument and agreement setting forth the terms and conditions of Restricted Stock, Stock Options and Stock Appreciation Rights granted hereunder. (b) Decisions and Determinations. To the extent consistent with ---------------------------- the availability to the Plan of Rule 16b-3 under the Securities Exchange Act of 1934 as amended, and subject to the express provisions of this Plan, the Plan Committee shall have the authority to construe and interpret this Plan, to define the terms used herein, to prescribe, amend, and rescind rules and regulations relating to the administration of the rules and regulations relating to the administration of the Plan, and to make all other determinations necessary or 2 advisable for administration of the Plan. Determinations of the Plan Committee on matters referred to in this Section 3 shall be final and conclusive so long as the same are not inconsistent with the terms of this Plan. 4. Shares subject to the Plan -------------------------- Subject to adjustments as provided in Section 18 hereof, the maximum number of shares of Common Stock which may be issued as Restricted Stock or upon exercise of all Stock Options or pursuant to Stock Appreciation Rights granted under this Plan is limited to One Million Six Hundred Thousand (1,600,000) shares in the aggregate. If for any reason, unreleased shares of Restricted Stock do not vest, said shares shall again be available for grants of Restricted Stock, Stock Options or Stock Appreciation Rights under this Plan. If any Stock Option and/or Stock Appreciation Rights shall be canceled, surrendered, or expire for any reason without having been exercised in full, the Shares represented thereby shall again be available for grants of Restricted Stock, Stock Options or Stock Appreciation Rights under this Plan. 5. Eligibility ----------- Only Eligible Participants shall be eligible to receive grants of Restricted Stock, Stock Options or Stock Appreciation Rights under this Plan. 6. Formula Awards of Restricted Stock and Stock Options to Non- ----------------------------------------------------------- Employee Directors - ------------------ Initial grants of Restricted Stock made to non-employee directors who first become eligible after January 1, 1996 shall be in the amount of 2,000 shares. Additional grants of 2,000 shares shall be made to each non-employee director on or after each anniversary of the initial grant made heretofore under the Plan, commencing January 1, 1996. Initial grants of Stock Options covering 30,000 shares each were made to non-employee directors on November 13, 1989. Non-employee directors are not eligible for further grants of Stock Options nor for any grants of Stock Appreciation Rights. 7. Discretionary Awards of Restricted Stock, Stock Options and Stock ----------------------------------------------------------------- Appreciation Rights - ------------------- The Plan Committee, in its sole and absolute discretion, subject to the provisions of the Plan, may grant Restricted Stock, Stock Options and/or Stock Appreciation Rights to any Eligible Participant other than a non-employee director (whose Awards of Restricted Stock and Stock Options are specifically provided in Section 6 hereof) at such times and in such amounts and on such terms and conditions as it deems advisable and specifies in the respective grants. 8. Restricted Stock and Forfeiture Restrictions -------------------------------------------- (a) Certain Terms. The shares of Restricted Stock granted to a ------------- Participant shall be released to him in accordance with such schedule as the Plan Committee, in its sole discretion, shall determine at the time of grant; except for non-employee directors whose shares shall be released three years after the date of grant, provided that any such shares shall be fully released upon normal retirement from the Board of Directors. All shares of Restricted Stock shall be fully released not later than ten years from the date of grant. Except for normal retirement, or pursuant to the terms of the written agreement with an officer and/or employee of the Company, the Grantee shall have no vested interest in the unreleased stock of any grant in the event of his termination with the Corporation for any reason (including failure of re-election, unless the Plan Committee in its sole discretion decides to terminate the forfeiture restrictions following the termination of such Grantee) and the unreleased stock 3 certificates shall be canceled. During the Grantee's continued employment or affiliation, however, he shall have the right to vote all shares and to receive all dividends as though all shares granted were his without restrictions. (b) Written Agreement. The details of each grant regarding ----------------- shares of Restricted Stock shall be evidenced by a written agreement covering terms and conditions, not inconsistent with the Plan, as the Plan Committee shall approve. Such agreement shall be promptly delivered by Management of the Corporation to each Grantee. 9. Stock Options ------------- (a) Designation as Incentive or Nonqualified Options. The Plan ------------------------------------------------ Committee shall designate in each grant of a Stock Option whether the Stock Option is an Incentive Stock Option or a Non-Qualified Stock Option. The terms upon which and the times at which, or the periods within which, the Option Shares subject to such Stock Option may become acquired or such Stock Options may be acquired and exercised shall be as set forth in the Plan and the related Stock Option Agreements. (b) Date of Grant and Rights of Optionee. The determination of ------------------------------------ the Plan Committee to grant a Stock Option shall not in any way constitute or be deemed to constitute an obligation of the Corporation, or a right of the Eligible Participant who is the proposed subject of the grant, and shall not constitute the grant of a Stock Option hereunder unless and until both the Corporation and the Eligible Participant have executed and delivered to the other a Stock Option Agreement in the form then required by the Plan Committee as evidencing the grant of the Stock Option, together with such other instrument or instruments as may be required by the Plan Committee pursuant to this Plan; provided, however, that the Plan Committee may fix the date of grant as any date on or after the date of its final determination to grant the Stock Option (or if no such date is fixed, then the date of grant shall be the date on which the determination was finally made by the Plan Committee to grant the Stock Option), and such date shall be set forth in the Stock Option Agreement. The date of grant as so determined shall be deemed the date of grant of the Stock Option for purposes of this plan. (c) 10% Shareholder. A Stock Option granted hereunder to an --------------- Eligible Participant who owns, directly or indirectly, at the date of the grant of the Stock Option, more than ten percent (10%) of the total combined voting power of all classes of capital stock of the Corporation or a Subsidiary shall not qualify as an Incentive Stock Option unless: (i) the purchase price of the Option Shares subject to said Stock Option is at least one hundred and ten percent (110%) of the Fair Market Value of the Option Shares, determined as of the date said Stock Option is granted; and (ii) the Stock Option by its terms is not exercisable after five (5) years from the date that it is granted. The attribution rules of Section 425(d) of the Internal Revenue Code of 1996, as amended, shall apply in the determination of indirect ownership of stock. (d) Maximum Value of Stock Options. No grant of Incentive Stock ------------------------------ Options hereunder may be made when the aggregate fair market value of Option Shares with respect to which Incentive Stock Options (pursuant to this Plan or any other Incentive Stock Option Plan of the Corporation or any Subsidiary) are exercisable for the first time by the Eligible Participant during any calendar year exceeds $100,000. (e) Non-Qualified Stock Options. Stock Options granted by the --------------------------- Plan Committee shall be deemed Non-Qualified Stock Options under this Plan if they: (i) are designated at the time of grant as Incentive Stock Options but do not so qualify under the provisions of Section 422 of the Code or any regulations or rulings issued by the Internal Revenue Service for any reason; (ii) are not granted in accordance with the provisions of Section 9(c); (iii) are in excess of the fair market value limitations set forth in Section 9(d); (iv) are granted to an Eligible Participant who is not an employee of the Corporation or any subsidiary; or (v) are designated at the time of grant as Non-Qualified Stock Options. Non-Qualified Stock Options granted hereunder shall be so designated in the Stock Option Agreement entered into between the Corporation and the Optionee. (f) Dividend Equivalents. In addition to Stock Options granted --------------------- under this Plan, "Dividend Equivalents" may be granted under this Plan. The Dividend Equivalents shall be based on the dividends 4 declared on the Common Stock and shall be credited as of dividend payment dates, during the period between the date of grant and the date the Stock Option is exercised or expires, as determined by the Plan Committee. Such Dividend Equivalents shall be payable in cash or additional shares of Common Stock by such formula and at such time and subject to such conditions as may be determined by the Plan Committee. Sections 13 through 21, Sections 24 through 26 and Section 29 of the Plan, as such sections apply to stock options, also shall apply to Dividend Equivalents. 10. Stock Option Exercise Price --------------------------- The exercise price of Option Shares shall be determined by the Committee at the date of grant, except that the exercise price of any Option Shares designated as Incentive Stock Options shall be one hundred percent (100%) of the Fair Market value of the Common Stock represented by the Option Shares on the date of grant of the related Incentive Stock Option 11. Exercise of Stock Options ------------------------- (a) Exercise. Except as otherwise provided elsewhere herein, if -------- an Optionee shall not in any given period exercise any part of a Stock Option which has become exercisable during that period, the Optionee's right to exercise such part of the Stock Option shall continue until expiration of the Stock Option or any part thereof as may be provided in the related Stock Option Agreement. No Stock Option shall, except as provided in Section 11(g) hereof, become exercisable until one (1) year following the date of grant, and (i) as to non-employee directors, a Stock Option first becomes exercisable as to one-third (1/3) of the Option Shares called for thereby during the second year following the date of the grant, as to an additional one-third (1/3) during the third year and as to the remaining one-third (1/3) during the fourth year, and (ii) as to all other Eligible Participants, Stock Options shall be exercisable as set forth by the Committee. No Stock Option or part thereof shall be exercisable except with respect to whole shares of Common Stock, and fractional share interests shall be disregarded except that they may be accumulated. (b) Prior Outstanding Incentive Stock Options. Incentive Stock ----------------------------------------- Options granted to an Optionee under the Plan shall be exercisable even while such Optionee has outstanding and unexercised any Incentive Stock Option previously granted to him or her pursuant to this Plan or any other Incentive Stock Option Plan of the Corporation or any Subsidiary. An Incentive Stock Option shall be treated as outstanding until it is exercised in full or expires by reason of lapse of time, or is otherwise canceled by mutual action of the Optionee and the Corporation. (c) Notice of Payment. Stock Options granted hereunder shall be ----------------- exercised by written notice delivered to the Corporation specifying the number of Option Shares with respect to which the Stock Option is being exercised, together with concurrent payment in full of the exercise price as hereinafter provided. If the Stock Option is being exercised by any person or persons other than the Optionee, said notice shall be accompanied by proof, satisfactory to the counsel for the Corporation, of the right of such person or persons to exercise the Stock Option. (d) Payment of Exercise Price. The exercise price of any Option ------------------------- Shares purchased upon the proper exercise of a Stock Option shall be paid in full at the time of each exercise of a Stock Option in cash or check and/or in Common Stock of the Corporation which, when added to the cash payment, if any, has an aggregate Fair Market Value equal to the full amount of the exercise price of the Stock Option, or part thereof, then being exercised. Payment by an Optionee as provided herein shall be made in full concurrently with the Optionee's notification to the Corporation of his intention to exercise all or part of a Stock Option. If all or any part of a payment is made in shares of Common Stock as heretofore provided, such payment shall be deemed to have been made only upon receipt by the Corporation of all required share certificates, and all stock powers and all other required transfer documents necessary to transfer the shares of Common Stock to the Corporation. In addition, Options may be exercised and payment made by delivering a properly executed exercise notice together with irrevocable instructions to a broker or bank to promptly deliver to the Corporation the amount of sale proceeds 5 necessary to pay the exercise price and any applicable tax withholding. The date of exercise shall be deemed to be the date the Corporation receives the notice. (e) Minimum Exercise. Not less than ten (10) Option Shares may ---------------- be purchased at any one time upon exercise of a Stock Option unless the number of shares purchased is the total number which remains to be purchased under the Stock Option. 12. Stock Appreciation Rights ------------------------- (a) Grant of Stock Appreciation Rights. A Stock Appreciation ---------------------------------- Right may be granted to any Class II or Class III Participant selected by the Plan Committee to whom Option Shares may be granted under this Plan. A Stock Appreciation Right may be granted (a) in connection and simultaneously with the grant of an Option, (b) independent of an Option. A Stock Appreciation Right shall be subject to such terms and conditions not inconsistent with this Plan as the Plan Committee shall impose and shall be evidenced by a written Stock Appreciation Right Agreement, which shall be executed by the Grantee and an authorized officer of the Corporation. (b) Coupled Stock Appreciation Rights. --------------------------------- (i) A Coupled Stock Appreciation Right ("CSAR") shall be related to a particular Option and shall be exercisable only when and to the extend the related Option is exercisable. (ii) A CSAR may be granted to the Grantee for not more than the number of shares subject to the simultaneously granted Option to which it is coupled. (iii) A CSAR shall entitle the Grantee to surrender to the Company unexercised a portion of the Option to which the CSAR relates and to receive from the Company in exchange therefor an amount determined by multiplying the difference obtained by subtracting the Option exercise price of the Option from the Fair Market Value of a share of Common Stock on the date of exercise of the CSAR by the number of shares of Common Stock with respect to which the CSAR shall have been exercised, subject to any limitations the Committee may impose. (c) Independent Stock Appreciation Rights. ------------------------------------- (i) An Independent Stock Appreciation Right ("ISAR") shall be unrelated to any Option and shall have a term set by the Committee. Except as otherwise set forth in this Plan, an ISAR shall be exercisable at such times and in such installments as the Committee may determine, and shall cover such number of shares of Common Stock as the Committee may determine. The exercise price per share of Common Stock subject to each ISAR shall be set by the Committee. (ii) An ISAR shall entitle the Grantee to exercise all or a specified portion of the ISAR (to the extent then exercisable pursuant to its terms) and to receive from the Company an amount determined by multiplying the difference obtained by subtracting the exercise price per share of the ISAR from the Fair Market Value of a share of Common Stock on the date of exercise of the ISAR by the number of shares of Common Stock with respect to which the ISAR shall have been exercised, subject to any limitations the Committee may impose. (d) Payment and Limitations on Exercise. ----------------------------------- (i) Payment of the amount determined under this Section 12 shall be in cash, in Common Stock or a combination of both, as determined by the Committee. (ii) So long as Rule 16b-3 under the Exchange Act, or any successor thereto, so provides, no CSAR shall be exercisable during the first six months after it is granted with respect to an outstanding 6 Option, except to the extent that the Committee in its discretion permits such exercise in the event of the Grantee's death or disability within the meaning of Section 105(d)(4) of the Code. (iii) So long as Rule 16b-3 under the Exchange Act, or any successor thereto, so provides, cash payment upon exercise of a Stock Appreciation Right may only be made if such Stock Appreciation Right is exercised during the period beginning on the third business day following the date of the Company's release of its quarterly or annual summary statements of sales and earnings and ending on the twelfth business day following such date. 13. Nontransferability ------------------ Except as otherwise provided herein each Stock Option and Stock Appreciation Right and all unreleased shares of Restricted Stock shall, by their terms, be nontransferable by the Options or Grantee other than by will or the laws of descent and distribution, or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code of 1986, as amended, or Title I of the Employee Retirement Income Security Act, or the rules thereunder. Stock Options and Stock Appreciation Rights shall be exercisable during the lifetime of the Optionee or Grantee only by the Optionee or Grantee. 14. Affiliation ----------- Nothing contained in this Plan (or in any Stock Option, Stock Appreciation Rights or Restricted Stock Agreement) shall obligate the Corporation or any Subsidiary to employ or continue to employ or remain affiliated with any Participant for any period of time or interfere in any way with the right of the Corporation or a Subsidiary to reduce or increase the Participant's compensation. Except as provided in Section 15 hereof, if, for any reason other than disability or death, an Optionee ceases to be affiliated with the Corporation or a Subsidiary, the Stock Options and/or Stock Appreciation Rights granted to such Optionee shall expire on the expiration dates specified for said Stock Options and or Stock Appreciation Rights at the time of their grant, or three (3) months after the Optionee ceases to be so affiliated, whichever is earlier. During such period after cessation of affiliation, such Stock Options and/or Stock Appreciation Rights shall be exercisable only as to those increments, if any, which had become exercisable as of the date on which such Optionee ceased to be affiliated with the Corporation or the Subsidiary, and any Stock Options and/or Stock Appreciation Rights or increments which had not become exercisable as of such date shall expire automatically on such date. 15. Termination for Cause --------------------- If the Stock option and/or Stock Appreciation Rights Agreement so provides and if an Optionee's or Grantee's employment by or affiliation with the Corporation or a Subsidiary is terminated for cause, the Stock Option and/or Stock Appreciation Rights granted to such Optionee or Grantee shall automatically expire and terminate in their entirety immediately upon such termination; provided, however, that the Plan Committee may, in its sole discretion, within thirty (30) days of such termination, reinstate such Stock Options and/or Stock Appreciation Rights by giving written notice of such reinstatement to the Optionee or Grantee. In the event of such reinstatement, the Optionee or Grantee may exercise the Stock Options and/or Stock Appreciation Rights only to such extent, for such time, and upon such terms and conditions as if the Optionee or Grantee had ceased to be employed by or affiliated with the Corporation or a Subsidiary upon the date of such termination for a reason other than cause, disability or death. Termination for cause shall include, but shall not be limited to, termination for malfeasance or gross misfeasance in the performance of duties or conviction of illegal activity in connection therewith and, in any event, the termination of the Plan Committee with respect thereto shall be final and conclusive. 16. Death of Optionee or Grantee ---------------------------- 7 If an Optionee or Grantee dies while employed by or affiliated with the Corporation or a Subsidiary, or during the three-month period referred to in Section 14 hereof, the Stock Options and/or Stock Appreciation Rights granted to such Optionee or Grantee shall expire on the expiration dates specified for said Stock Options and/or Stock Appreciation Rights at the time of their grant, or one (1) year after the date of such death, whichever is earlier. After such death, but before such expiration, subject to the terms and provisions of the Plan and the related Stock Option and/or Stock Appreciation Rights Agreements, the person or persons to whom such Optionee's or Grantee's rights under the Stock Options and/or Stock Appreciation Rights shall have passed by will or by the applicable laws of descent and distribution, or the executor or administrator of the Optionee's or Grantee's estate, shall have the right to exercise such Stock Options and/or Stock Appreciation Rights to the extent that increments, if any, had become exercisable as of the date on which the Optionee or Grantee died. 17. Disability Optionee or Grantee ------------------------------ If any Optionee or Grantee is disabled while employed by or affiliated with the Corporation or a Subsidiary or during the three-month period referred to in Section 14 hereof, the Stock Options and/or Stock Appreciation Rights granted to such Optionee or Grantee shall expire on the expiration dates specified for said Stock Options and/or Stock Appreciation Rights at the time of their grant, or one (1) year after the date such disability occurred, whichever is earlier. After such disability occurs, but before such expiration, the Optionee or Grantee or the guardian or conservator or the Optionee's or Grantee's estate, as duly appointed by a court of competent jurisdiction, shall have the right to exercise such Stock Options and/or Stock Appreciation Rights to the extent that increments, if any, had become exercisable as of the date on which the Optionee or Grantee became disabled or cased to be employed by or affiliated with the Corporation or a Subsidiary as a result of the disability. An Optionee or Grantee shall be deemed to be "disabled" if it shall appear to the Plan Committee, upon written certification delivered to the Corporation of a qualified licensed physician, that the Optionee or Grantee has become permanently and totally unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment which can be expected to result in the Optionee's or Grantee's death, or which has lasted or can be expected to last for a continuous period of not less than 12 months. 18. Adjustment Upon Changes in Capitalization ----------------------------------------- If the outstanding shares of Common Stock of the Corporation and increased, decreased, or changed into or exchanged for a different number or kind of shares or securities of the Corporation, through a reorganization, merger, recapitalization, reclassification, stock split, stock dividend, stock consolidation, or otherwise, without consideration to the Corporation, or if there is a spin-off or other distribution of stock or property with respect to the holders of the Common Stock other than normal cash dividends, an appropriate and proportionate adjustment shall be made in the number and kind of shares as to which Stock Options and Stock Appreciation Rights may be granted. A corresponding adjustment changing the number or kind of Option Shares and the exercise prices per share allocated to unexercised Stock Options, or portions thereof, and/or with respect to Stock Appreciation Rights which shall have been granted prior to any such change, shall likewise be made. Such adjustments shall be made without change in the total price applicable to the unexercised portion of the Stock Option and/or Stock Appreciation Rights, but with a corresponding adjustment in the price for each share subject to the Stock Option and/or Stock Appreciation Rights. Adjustments under this Section shall be made by the Plan Committee, whose determination as to what adjustments shall be made, and the extent thereof, shall be final and conclusive. No fractional shares of stock shall be issued or made available under the Plan on account of such adjustments, and fractional share interests shall be disregarded, except that they may be accumulated. 19. Terminating Events ------------------ Upon consummation of a plan of dissolution or liquidation of the Corporation, or upon consummation of a plan of reorganization, merger or consolidation of the Corporation with one or more corporations, as a result of which the Corporation is not the surviving entity, or upon the sale of all or substantially all the assets of the Corporation to another corporation, the Plan shall automatically terminate and all unreleased shares of Restricted Stock shall be released under such circumstances, and all Stock Options and/or Stock Appreciation Rights theretofore granted shall be terminated, subject to provisions of the immediately following 8 paragraph in this Section 19, unless provision is made in connection with such transaction for assumption of Stock Options and/or Stock Appreciation Rights theretofore granted, or substitution for such Stock Option and/or Stock Appreciation Rights with new options covering stock of a successor employer corporation, or a parent or subsidiary corporation thereof, solely at the discretion of such successor corporation, or parent or subsidiary corporation, with appropriate adjustments as to number and kind of shares and prices. Notwithstanding the immediately preceding paragraph and/or any provision in any Stock Option or Stock Appreciation Right Agreement pertaining to the time of exercise of a Stock Option or Stock Appreciation Right, or part thereof, upon adoption by the requisite holders of the outstanding shares of Common Stock of any plan of dissolution, liquidation, reorganization, merger, consolidation or sale of all or substantially all of the assets of the Corporation to another corporation which would, upon consummation, result in termination of a Stock Option or Stock Appreciation Right, all Stock Options or Stock Appreciation Rights previously granted shall become immediately exercisable as to all unexercised Shares for such period of time as may be determined by the Plan Committee, but in any event not less than 30 days, on the condition that the terminating event is consummated. If such terminating event is not consummated, Stock Options or Stock Appreciation Rights granted pursuant to the Plan shall be exercisable in accordance with the terms of their respective Stock Option or Stock Appreciation Right Agreements. Notwithstanding any other provision of this Plan, in the event of a Change of Control as hereinafter defined, all shares of Restricted Stock shall immediately vest and all outstanding Stock Options shall be immediately exercisable in full. Change of Control shall mean a change in control of the Company of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A, Regulation 240.14a-101, promulgated under the Securities Exchange Act of 1934, or, if Item 6(e) is no longer in effect, any regulation issued by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934 which serves similar purposes; provided that, without limitation, a Change of Control shall be deemed to have occurred if and when (a) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes a beneficial owner, directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company's then outstanding securities, or (b) individuals who are members of the Board immediately prior to a meeting of the shareholders of the Company involving a contest for the election of directors shall not constitute a majority of the Board following such election. 20. Amendment and Termination ------------------------- The Board of Directors of the Corporation may at any time and from time to time suspend, amend, or terminate the Plan; provided that, except as permitted under the provisions of Section 18 hereof, no amendment or modification may be adopted without the Corporation having first obtained the approval of the holders of a majority of the Corporation's outstanding shares of Common Stock present, or represented, and entitled to vote at a duly held meeting of shareholders of the Corporation, or by written consent, if the amendment or modification would: (a) increase the number of securities which may be issued under the Plan; (b) materially modify the requirements as to eligibility for participation in the Plan; (c) increase or decrease the exercise price of any Incentive Stock Option granted under the Plan; (d) increase the maximum term of Stock Options or Stock Appreciation Rights provided for herein or increase the maximum period during which shares of Restricted Stock may be released; (e) permit Stock Options or Stock Appreciation Rights or Restricted Stock to be granted to any person who is not an Eligible Participant; or (f) change any provision of the Plan which would affect the qualification as an Incentive Stock Option under the internal revenue laws then applicable of any Stock Option granted as an Incentive Stock Option under the Plan. 9 The provisions of this Plan shall not be amended more than once every six months, other than to comport with changes in the Internal Revenue Code, the Employee Retirement Income Security Act, or the rules thereunder. No Stock Option or Stock Appreciation Right and no shares of Restricted Stock may be granted during any suspension of the Plan or after termination of the Plan. Amendment, suspension, or termination of the Plan shall not (except as otherwise provided in Section 19 hereof), without the consent of the Participant, alter or impair any rights or obligations theretofore granted. 21. Rights of Eligible Participants ------------------------------- No Eligible Participant or other person shall have any claim or right to be granted Restricted Stock or Stock Options or Stock Appreciation Rights under this Plan, and neither this Plan nor any action taken hereunder shall be deemed to give or be construed as giving any Eligible Participant or other person any right to be retained in the employ of the Corporation or any Subsidiary. Without limiting the generality of the foregoing, no person shall have any rights as a result of his or her classification as an Eligible Participant, such classification being made solely to describe, define and limit those persons who are eligible for consideration for privileges under the Plan. 22. Privileges of Stock Ownership; Regulatory Law Compliance; Notice ---------------------------------------------------------------- of Sale - ------- No Optionee or Grantee shall be entitled to the privileges of stock ownership as to any shares not actually issued and delivered. No shares may be purchased upon the exercise of a Stock Option or Stock Appreciation Right unless and until all then applicable requirements of all regulatory agencies having jurisdiction and all applicable requirements of the securities exchanges upon which securities of the Corporation are listed (if any) shall have been fully complied with. 23. Effective Date of the Plan -------------------------- The Plan, prior to any amendments, was adopted by the Board of Directors on November 13, 1989, and was approved by the shareholders on April 27, 1990. Amendments to the Plan have been adopted on January 24, 1992, January 19, 1996, and October 14, 1999. 24. Termination ----------- Unless previously terminated as aforesaid, the Plan shall terminate on January 18, 2006. No Stock Options or Stock Appreciation Rights or shares of Restricted Stock shall be granted under the Plan thereafter, but such termination shall not affect any Stock Option or Appreciation Right or grant of Restricted Stock theretofore granted. 25. Stock Option and Stock Appreciation Right Period ------------------------------------------------ Each Stock Option and Stock Appreciation Right and all rights and obligations thereunder shall expire on such date as the Plan Committee may determine, but not later than ten (10) years from the date such Stock Option is granted in the case of Incentive Stock Options and eleven (11) years from the date of grant in the case of Non-Qualified Stock Options and Stock Appreciation Rights, and each Stock Option and Stock Appreciation Right shall be subject to earlier termination as provided elsewhere in this Plan. 26. Exculpation and Indemnification of Plan Committee ------------------------------------------------- The present, former and future members of the Plan Committee, and each of them, who is or was a director, officer or employee of the Corporation shall be indemnified by the Corporation to the extent authorized in and permitted by the Corporation's Certificate of Incorporation, and/or Bylaws in connection with all 10 actions, suits and proceedings to which they or any of them may be a party by reason of any act or omission of any member of the Plan Committee under or in connection with the Plan or any Stock Option or Stock Appreciation Right granted thereunder. 27. Compliance with Law and Representations of Participant ------------------------------------------------------ No shares of Common Stock shall be issued upon exercise of any Stock Option or Stock Appreciation Rights, and an Optionee or Grantee shall have no right or claim to such shares, unless and until: (i) payment in full has been received by the Corporation with respect to the exercise of any Stock Option; (ii) in the opinion of the counsel for the Corporation, all applicable requirements of law and of regulatory bodies having jurisdiction over such issuance and delivery have been fully complied with; and (iii) if required by federal or state law or regulation, the Optionee or Grantee shall have paid to the Corporation the amount, if any, required to be withheld on the amount deemed to be compensation to the Optionee or Grantee as a result of the exercise of his or her Stock Option or Stock Appreciation Rights, or made other arrangements satisfactory to the Corporation, in its sole discretion, to satisfy applicable income tax withholding requirements. Unless the shares of Common Stock covered by this Plan have been registered with the Securities and Exchange Commission pursuant to the registration requirements under the Securities Act of 1933, each participant shall: (i) by and upon accepting shares of Restricted Stock or a Stock Option or a Stock Appreciation Right, represent and agree in writing, that the Stock Option or Stock Appreciation Right will be acquired for investment purposes and not for resale or distribution; and (ii) by and upon the exercise of a Stock Option or Stock Appreciation Right, or a part thereof, furnish evidence satisfactory to counsel for the Corporation, including written and signed representations to the effect that the Shares are being acquired for investment purposes and not for resale or distribution, and that the Shares being acquired shall not be sold or otherwise transferred by the Participant except in compliance with the registration provisions under the Securities Act of 1933, as amended, or an applicable exemption therefrom. Further- more, the Corporation, at its sole discretion, to assure itself that any sale or distribution by the Participant complies with this Plan and any applicable federal or state securities laws, may take all reasonable steps, including placing stop transfer instructions with the Corporation's transfer agent prohibiting transfers in violation of the Plan and affixing the following legend (and/or such other legend or legends as the Plan Committee shall require) on certificates evidencing the shares: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANS- FERRED OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THEM UNDER THE ACT OR A WRITTEN OPINION OF COUNSEL FOR THE HOLDER THEREOF, WHICH OPINION SHALL BE ACCEPTABLE TO NATION- WIDE HEALTH PROPERTIES, INC., THAT REGISTRATION IS NOT REQUIRED." 28. Notices ------- All notices and demands of any kind which the Plan Committee, or any Participant, or other person may be required or desires to give under the terms of this Plan shall be in writing and shall be delivered in hand to the person or persons to whom addressed (in the case of the Plan Committee, with the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Treasurer, any Vice President, or Secretary or any Assistant Secretary of the Corporation), by leaving a copy of such notice or demand at the address of such person or persons as may be reflected in the records of the Corporation, or by mailing a copy thereof, properly addressed as above, by certified or registered mail, postage prepaid, with return receipt requested. Delivery by mail shall be deemed made upon receipt by the notifying party of the return receipt request acknowledging receipt of the notice or demand. 11 29. Limitation on Obligations of the Corporation -------------------------------------------- All obligations of the Corporation arising under or as a result of this Plan or Stock Options, Restricted Stock or Stock Appreciation Rights granted hereunder shall constitute the general unsecured obligations of the Corporation, and not of the Board of Directors of the Corporation, any member thereof, the Plan Committee, any member thereof, any officer of the Corporation, or any other person or any Subsidiary, and none of the foregoing, except the Corporation, shall be liable for any debt, obligation, cost or expense hereunder. 30. Limitation of Rights -------------------- Except as otherwise provided by the terms of the Plan, the Plan Committee, in its sole and absolute discretion, is entitled to determine who, if anyone, is an Eligible Participant under this Plan and which, if any, Eligible Participant shall receive any grant. No oral or written agreement by any other person not acting on the behalf of the Plan Committee relating to this Plan is authorized, and such may not bind the Corporation or the Plan Committee to make any grant to any person. 31. Severability ------------ If any provision of this Plan as applied to any person or to any circum- stance shall be adjudged by a court of competent jurisdiction to be void, invalid, or unenforceable, the same shall in no way affect any other provision hereof, the application of any such provision in any other circumstances, or the validity or enforceability hereof. 32. Construction ------------ Where the context or construction requires, all words applied in the plural herein shall be deemed to have been used in the singular and vice versa, and the masculine gender shall include the feminine and the neuter and vice versa. 33. Headings -------- The headings of the several paragraphs herein are inserted solely for convenience of reference and are not intended to form a part of and are not intended to govern, limit or aid in the construction of any term or provision hereof. 34. Successors ---------- This Plan shall be binding upon the respective successors, assigns, heirs, executors, administrators, guardians and personal representatives of the Corporation and Participants. 12 10-Q 6 d7000110q1.pdf QUARTERLY REPORT FOR NATIONWIDE HEALTH begin 644 d7000110q1.pdf M)5!$1BTQ+C(-)>+CS],-"C0U(#`@;V)J#3P\(`TO3&EN96%R:7IE9"`Q(`TO M3R`T-R`-+T@@6R`W.#(@,C@R(%T@#2],(#0R,3@S(`TO12`V,#4Y(`TO3B`Q M-"`-+U0@-#$Q-C4@#3X^(`UE;F1O8FH-("`@("`@("`@("`@("`@("`@("`@ M("`@("`@("`@("`@("`@("`@("`@("`@("`@("`@("`@("`@("!XF4@-C0- M+TEN9F\@-#0@,"!2(`TO4F]O="`T-B`P(%(@#2]0')E9@TP#24E14]& M#2`@("`@#30V(#`@;V)J#3P\(`TO5'EP92`O0V%T86QO9R`-+U!A9V5S(#0R M(#`@4B`-/CX@#65N9&]B:@TV,B`P(&]B:@T\/"`O4R`R,#`@+T9I;'1EJ.Q<6L79],&9@_.[=Q1#$>OV"*0,#0(`!`)A547`-96YDST M8^RP@P3RJU=^)-'UFYY,!+%GIP:,,!K2C,'-K!"..!F"J@9M5+Q52U96>A#) M/%Q"1-O3Z*!I"O&>Q!#Y`JL#F6_D($_/6SR'LXE?G;-V;Y[*-8@=:V1#$ZP^ MJL-G>AAF[T]HD2*4T+:@<2Q$]R;]5EH$\?^PI;.Z03F-P4N%+&E":,JZO28D M_5>[.X[CM?QM;>J7UZHMDN.N97/>]D&C9N8$NIQD8]\_C)'\2/` M`-->=W(*96YD7!E("]4>7!E,2`-+T9I<7%>07)9:DIN@I*#CFY"@$@=07*P2E%J<6E0%%X8Y5`#E6 MH5Q/`>38U*+D3*!00*:"I3E60P,'8PMC,P,S*RA%1_7\/WJ^9W MT,&?:PXR[@61S+^\?@>)_I+X!X3L!W\^$OVYYB\0LKW^+B6Z,?7[+!#\/6OC MQM^S(.Q4(`L$@:Q4D`PKD>;Q=7?_[.QF^UW>S0X08`#T.:U:"F5N9'-T7!E("]&;VYT(`TO4W5B='EP92`O M5'EP93$@#2]%;F-O9&EN9R`O36%C4F]M86Y%;F-O9&EN9R`-+T)A8Q<\F2Y[K.D>WI`45KO(8>4JL3A_'S=_7W=/+1 MCQ&//D4\-M%3)'AT'7W\E4>;T>4/:Q$]=B,15='(9I'-TCB)]B,C31CO:-J> M35L_O1Y]GX\NWVDPD3^,`!/_X$.:)+:1-19LY?O1)3I2=K"K*VMP)"_QW]/H M([M=+O+YU7@B,\'6^3A1;#I.),OGZ_&O^8\C80G11D*J6$=6UJ MD2]@)YS.8LFF2P!27,8)F_]C]GZZ_&&.WQ4LS6ZNKQ?K]>)F2;`OCFH=0V@R M'6!_'EO.BFY;U8]]4U]X0'85SV*T8IGD1F<>8YX#84_12&HX+Q00H[3QHT#+ MB^_2@`^1235$X(V\NUE=([*(%1-\\M,;IX!L8_FP^8Y=%^UG-*_83>WNQG[W MY3L12)=T3/ICVM(Q]I=Q_NE,F=A:F\"V_`H0?[J=KL;*`$_Y?/7W<9K!Z!=/ M%5O-/]S`F@+'#KW-)B9QS'0U\G\Z\5VCL!4UD2K]A M,`4J>!JK0'?3XBG#^JTCQW\[%FWOVMVS!V8'UU;-AK1V]<9MO,O(^UBDK-Q2 M.$I"CTQ"+B@;*GP) M/4\S5.WGQ=6<&LW[^10K$Z0AY3ZL;C[,(0]`;I#B@K`72^A+B)QZX!2@$PA/ MF5/KF/]1E#TBIJPN]MX]'1O6/)#'[1@Z-'./58?DAXU%YS]AH3NXLOKBO`8I MJT@7F*_ZCKPJM[Z.0D\Z;XE*I=")J"G2^"LV!31$8$$H(-R["_7VO"MJ,"=4 MIB7+S$1E66)%]BI(H4!-?CIUQ]9]T3MBA)(*?6P@KU`"`:G"/AW;JMM4Y9!< MQ`!Q4=5ETQZ:MJ!%P;G$\W=L$:_B=4R!SO>'7?,,@.B(B3,+ER"4"?SW17)F MMGTLZNJ?'@P+3>C4*+;8N+JOOI3%X(!D2Y\C@;FS%!-X(4F;Q2F%9P4G%Y;N M";SLJ;!G@.=:JINKMOK=A9MJ?:QZ1W>%&!LL>$X&8BZ]P^3O*ZSO75%N+P)N ML:L>FK:N"N(SD];RURFFL(*D3LA!;!E>S!?;HC-.S]4KKN:U:L@1J5@)QXHX.]3&?A?F&)2"=: M\S?.*W8^6O0=K/L7'BU<3N@Y.$A#WK_IG.K1T5&A(Q.4\[?QU!5F*Y*&// MKB.34IJ8A$+!`,AEX&[:9^]*MPZV!?4U:>DU' M:4:K+0IS;%'-ZH);QP32TM/G`DTC$Q2_?X"&'`)=6\> MM-!=::\O\^$E&Z`D+;%E\_JI%2?#RG>O]D\$-"KY\D:#!PW<6:ZCE*=[$(0Z MB?0O[)HAVA+N=VK7,-4WY>?0)/\:#SWY4`0^?B]V1W<10(]]UX,PE&>P6(2+ M=0K];T<0BI^])?^M[874_,(:$;]YX,##,4E\"\&?77[H?XPEYF72A+;RWP$` M7)EC'`IE;F1S=')E86T-96YD;V)J#34X(#`@;V)J#3P\(`TO5'EP92`O16YC M;V1I;F<@#2]"87-E16YC;V1I;F<@+U=I;D%NF-A7!E("]&;VYT(`TO4W5B='EP M92`O5'EP93$@#2]%;F-O9&EN9R`U."`P(%(@#2]"87-E1F]N="`O5&EM97,M M4F]M86X@#3X^(`UE;F1O8FH--C`@,"!O8FH-/#P@#2]4>7!E("]%>'1'4W1A M=&4@#2]302!F86QS92`-+U--(#`N,#(@#2]44B`O261E;G1I='D@#3X^(`UE M;F1O8FH--C$@,"!O8FH-/#P@+T9U;F-T:6]N5'EP92`P("]$;VUA:6X@6R`P M(#$@72`O4F%N9V4@6R`P(#$@,"`Q(#`@,2!=("]":71S4&5R4V%M<&QE(#@@ M#2]3:7IE(%L@,C4U(%T@+TQE;F=T:"`V-38@+T9I;'1EK]?I=(_`\O+RTM+20Z#5:A^`Q<7%A86%^V!^?GYN;FYV=O8>F)F9 MF9Z>O@NFIJ8F)R?O@(F)B?'Q\;&QL5$P,C(R/#P\-#1T&PP.#FHTFH&!@?[^ M_KZ^OM[>WIZ>GEN@N[N[JZM+K59W=G:J5*J;H*.C0ZE4MK>WM[6UW0"MK:TM M+2T*A:*YN5DNES'Q86%AH:&A(2$AP<#`.APL* M"@H,#`P("/#W]_?S\_/U]?7Q\?'V]O;R\L)BL9Z>GA@,QL/#`XU&HU`H=W=W M-SWM[.S^"S``'(731`IE;F1S M=')E86T-96YD;V)J#3$@,"!O8FH-/#P@#2]4>7!E("]086=E(`TO4&%R96YT M(#0Q(#`@4B`-+U)E"!;(#`@,"`U.30@ M-S'0@72`-+T9O;G0@/#P@+T8T(#4T(#`@4B`O1C4@ M-3D@,"!2(#X^(`TO17AT1U-T871E(#P\("]'4S$@-C`@,"!2(#X^(`TO0V]L M;W)3<&%C92`\/"`O0W,U(#4V(#`@4B`O0W,Y(#4U(#`@4B`^/B`-/CX@#65N M9&]B:@TS(#`@;V)J#3P\("],96YG=&@@-C?4O/ M$]OA(L`7R?C*%O#VPG9`[LD/U,O&4ZSF-@WQ:45$A\YC$2H M.`>\Z7PQ4R@^9M3YJ@T<2@)^9#(K=S:+\&JC@"AVV9G9<$J9<>"$`B8GW#@4 M=ACB\>1*TPOQ?&H8Q/.L2+(B-SXL)*Y03L,MU^6N5_8UVV[*ONU;[1EJ["/DT@EA\X2OI`."NLHM[*RF,C'$.,N9Q!LI=@OD]G)Z4 MX#.TO*%H;3%4(VL/P>"YM7SN$3&<&BNW)BIC_FG&`C`)=;J6..VKK8F2$5@I ML#TBST6$\[X$FZKMI>;ND2A2V@Y2Q5V[KEI9K4TFX2B[IEZ#RUK%SO&D;`"M M4I\%SC=5->"P@(0A\`$42EQ5($M,_NQG.RP((7U#'C30GA$U2._2.HI*Y[:[ M'7+]4.UTH@Q+S@C[(,N!G3M4E@;X7^SB4@Y%/&VZIW^EZ+U!,>OZ2II+^\Z0 M>I?UVX7#H5/X!W@.)/V!9$C"0X<.'%]JE^]K=U:VT$7JTE^V[V$=`O>U35\<%Y4\K'II1D^RM>EK^K' M81''Q$"_+$Q`4)$.ZC!,BT^OYT?Z/.\WUL,0B0V7K`:D27,.1X M]"AU\-G,N=\"#`!`<8N<"F5N9'-T"!;(#`@,"`U.30@-S'1'4W1A=&4@/#P@ M+T=3,2`V,"`P(%(@/CX@#2]#;VQO+ M+HN*#N9T13U[_?ZZV1PCK&%9,7 MR?>;;V9SC82.Y@3I:'-AIA7*\NEJOU\L)L1DUS?7UU M>7&62!EO7"^/S\^NSE:+I=MJ_7:YW*SM9MJ:KB-.=22Y,';?Q._R-J$"B;BX M-PMPS$AJ9Q-$"15PMCDYIAB39//#;+EQOEJLP5?KQ0I,_08V_0%:GXU7WT4W MW^-H.R-1%`W!(!P! 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