EXHIBIT 10.4
HEALTH CARE REIT, INC.
Stock Option Agreement
     THIS AGREEMENT, dated December 20, 2006, between Health Care REIT, Inc., a
Delaware corporation (the “Company”), and Daniel R. Loftus (the “Participant”),
is made pursuant and subject to the provisions of the 2002 Stock Incentive Plan
(the “Plan”) of Windrose Medical Properties Trust, a Maryland real estate
investment trust (the “Trust”), a copy of which has been made available to the
Participant. All capitalized terms used herein but not otherwise defined herein
shall have the meanings ascribed to them in the Plan, except that references in
the Plan to the “Company” shall mean “Health Care REIT, Inc., a Delaware
corporation” and references to the “Common Stock” shall mean “the common stock,
$1.00 par value per share, of Health Care REIT, Inc.”
     WHEREAS, the Trust and Windrose Medical Properties, L.P., a Virginia
limited partnership (the “Operating Partnership”), entered into an Agreement and
Plan of Merger, dated September 12, 2006, with the Company, Heat Merger Sub,
LLC, a Delaware limited liability company (“Merger Sub”), and Heat OP Merger
Sub, L.P., a Virginia limited partnership (“OP Merger Sub”), as amended by
Amendment No. 1 to Agreement and Plan of Merger, dated October 12, 2006 (the
“Merger Agreement”), which provides for: (a) the Trust to merge with and into
Merger Sub, with Merger Sub continuing as the surviving entity, and (b) OP
Merger Sub to merge with and into the Operating Partnership, with the Operating
Partnership continuing as the surviving entity.
     WHEREAS, pursuant to Section 6.2 of the Merger Agreement, each option to
acquire common shares of beneficial interest in the Trust, $0.01 par value per
share, held by Participant prior to the Merger Effective Time (as defined in the
Merger Agreement), became fully vested in accordance with the Plan and is
identified on Exhibit A (a “Pre-Conversion Option”).
     WHEREAS, pursuant to Section 6.2 of the Merger Agreement, at the Merger
Effective Time, each Pre-Conversion Option was converted into an option to
acquire the number of shares of common stock, $1.00 par value per share, of the
Company, as reflected on Exhibit A (“Common Stock”).
1. Converted Options. Pursuant to the Plan, the Trust granted to the Participant
the Pre-Conversion Options, subject to the terms and conditions of the Plan and
the applicable stock option agreement between the Trust and Participant. At the
Merger Effective Time, such Pre-Conversion Options were fully vested and
converted into an option to acquire the number of shares of Common Stock
identified on Exhibit A (the “Converted Options”). Accordingly, effective as of
the date hereof and subject to the terms and conditions of the Plan and the
terms and conditions herein set forth, Participant shall have the right and
option to exercise such Converted Options and purchase from the Company all or
any part of the Common Stock at the option price set forth on Exhibit A. The
Converted Options are intended to be “incentive stock options” under Section 422
of the Code. Such Converted Options will be exercisable as hereinafter provided.
2. Expiration Date. The Converted Options shall expire at 11:59 p.m. on the
applicable Expiration Date set forth on Exhibit A.

 

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3. Exercisability. The Converted Options shall continue to be exercisable until
the earlier of the termination of the right to exercise the Converted Options
pursuant to paragraph 6, 7 or 8 or until the Expiration Date. The Participant
may exercise the Converted Options for all or part of the number of shares of
Common Stock. A partial exercise of the Converted Options shall not affect the
Participant’s right to exercise the Converted Options with respect to the
remaining shares of Common Stock, subject to the conditions of the Plan and this
Agreement.
4. Method of Exercise and Payment for Shares. The Converted Options shall be
exercised by written notice delivered to the attention of the Company’s
Secretary at the Company’s principal executive office. The exercise date shall
be (i) in the case of notice by mail, the date of postmark or (ii) if delivered
in person, the date of delivery. Such notice shall be accompanied by payment of
the option price in full, in cash or cash equivalent acceptable to the
Compensation Committee of the Company, or by the surrender of shares of Common
Stock with an aggregate Fair Market Value (determined as of the preceding
business day) which, together with any cash or cash equivalent paid by the
Participant, is not less than the option price for the number of shares of
Common Stock for which the Converted Option is being exercised.
5. Nontransferable. The Participant’s rights under the Converted Options are
nontransferable except by will or the laws of descent and distribution. During
the Participant’s lifetime, the Converted Options may be exercised only by the
Participant.
6. Exercise in the Event of Death. The Converted Options may be exercised by the
Participant’s estate, or the person or persons to whom his rights under the
Converted Options shall pass by will or the laws of descent and distribution, if
the Participant dies before the Expiration Date and before the termination of
his or her rights under paragraph 7 or 8. The Participant’s estate or such
persons may exercise the Converted Options during the 90 day period following
the Participant’s death or, if shorter, during the remainder of the period
preceding the Expiration Date. The Participant’s estate or such persons may
exercise the Converted Options for all or part of the number of shares of Common
Stock that the Participant was entitled to purchase on the date of his or her
death.
7. Exercise by Participant After Termination. The Converted Options may be
exercised by the Participant if his or her employment with the Company or its
Affiliates terminates or is terminated before the Expiration Date and before the
termination of his or her rights under paragraph 8. In that event, the
Participant may exercise the Converted Options during the 90 day period
following the last day that he or she is employed by the Company or an Affiliate
or, if shorter, the remainder of the period preceding the Expiration Date. The
Participant may exercise the Converted Options for all or part of the number of
shares of Common Stock that the Participant was entitled to purchase on the last
day that he or she was employed by the Company or an Affiliate.
8. Breach of Covenant. The Converted Options may not be exercised on or after
the date that the Participant breaches a covenant against competition,
disclosure of confidential information or solicitation of employees contained in
a written agreement between the Company and the Participant or an Affiliate and
the Participant. In addition, in the event of any such breach, the Participant
or the transferee of the Converted Options must return to the Company any shares
of Common Stock acquired upon the exercise of the Converted Options within the
six

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month period before such breach or on or after such breach. Upon delivery of the
shares of Common Stock pursuant to the preceding sentence, the Company shall pay
the Participant or transferee the option price paid to acquire such shares of
Common Stock under the Converted Options.
9. Fractional Shares. Fractional shares shall not be issuable hereunder, and
when any provision hereof may entitle the Participant to a fractional share such
fraction shall be disregarded.
10. Change in Capital Structure. The terms of the Converted Options shall be
adjusted as the Board of Directors of the Company determines is equitably
required in the event the Company effects one or more stock dividends, stock
split-ups, subdivisions or consolidations of shares or other similar changes in
capitalization.
11. Governing Law. This Agreement shall be governed by the laws of the State of
Maryland; provided, however, that the issuance of shares of Common Stock shall
be governed by the laws of the State of Delaware.
12. Conflicts. In the event of any conflict between the provisions of the Plan
as in effect on the date hereof and the provisions of this Agreement, the
provisions of the Plan shall govern. All references herein to the Plan shall
mean the Plan as in effect on the date hereof.
13. Participant Bound by Plan. The Participant hereby acknowledges that a copy
of the Plan has been made available to the Participant and agrees to be bound by
all the terms and provisions thereof.
14. No Right to Continued Employment. The Converted Options do not confer upon
the Participant any right with respect to continuance of employment with the
Company or an Affiliate and does not interfere with the right of the Company or
an Affiliate to terminate the Participant’s employment.
15. Binding Effect. Subject to the limitations stated above and in the Plan,
this Agreement shall be binding upon and inure to the benefit of the legatees,
distributees, and personal representatives of the Participant and the successors
of the Company.
16. Superceding Agreement. This Agreement supercedes all other agreements that
evidence Pre-Conversion Options.
[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by a
duly authorized officer, and the Participant has affixed his or her signature
hereto as of the date first written above.

          Health Care REIT, Inc.   Daniel R. Loftus
 
       
 
       
By:
  /s/ Erin C. Ibele   /s/ Daniel R. Loftus
 
       
Name:
  Erin C. Ibele    
Its:
  Senior Vice President—Administration    
 
  and Corporate Secretary    

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DAN LOFTUS
EXHIBIT A
INCENTIVE STOCK OPTIONS

                                                              Vested Before    
Vested After                                       Merger of 12/19/2006    
Merger of 12/19/2006     Total             Exercise Price     Exercise Price    
    Grant Date Of   Number of     Number of     Number of Pre-     Number of    
Per Share for     Per Share for         Pre-Conversion   Pre-Conversion    
Pre-Conversion     Conversion     Converted     Pre-Conversion     Converted    
Expiration   Options   Options     Options     Options     Options     Options  
  Options     Date  
8/16/2002
    6,000       —       6,000       2,705     $ 12.00     $ 26.61      
8/15/2012  
8/5/2003
    6,000       1,500       7,500       3,381     $ 12.00     $ 26.61      
8/4/2013  
7/27/2004
    4,280       2,853       7,133       3,216     $ 12.00     $ 26.61      
7/26/2014  
7/26/2005
    1,000       1,500       2,500       1,127     $ 15.11     $ 33.51      
7/25/2015  

NON-QUALIFYING STOCK OPTIONS

                                                              Vested Before    
Vested After                                       Merger of 12/19/2006    
Merger of 12/19/2006     Total             Exercise Price     Exercise Price    
    Grant Date Of   Number of     Number of     Number of Pre-     Number of    
Per Share for     Per Share for         Pre-Conversion   Pre-Conversion    
Pre-Conversion     Conversion     Converted     Pre-Conversion     Converted    
Expiration   Options   Options     Options     Options     Options     Options  
  Options     Date  
7/27/2004
    220       147       367       165     $ 12.00     $ 26.61       7/25/2014  
12/20/2005
    7,200       28,800       36,000       16,232     $ 14.79     $ 32.80      
12/19/2015  
7/26/2005
    4,000       6,000       10,000       4,509     $ 15.11     $ 33.51      
7/25/2015  
8/1/2006
    3,600       14,400       18,000       8,116     $ 14.70     $ 32.60      
7/31/2016  

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