Exhibit 10.2

 

THIRD AMENDMENT TO

EMPLOYMENT AGREEMENT OF MARK L. DESMOND

 

This Third Amendment dated as of January 31, 2005 to Employment Agreement of
Mark L. Desmond hereby amends that certain Employment Agreement entered into by
and between Nationwide Health Properties, Inc., a Maryland corporation (the
“Company”) and Mark L. Desmond (the “Executive”) as of February 25, 1998, as
amended January 19, 2001 and April 20, 2001 (the “Employment Agreement”).

 

RECITAL

 

The parties desire to delete and restate Sections I.E., II(B)(2), IV and V of
the Employment Agreement in their entirety.

 

AGREEMENT

 

NOW, THEREFORE, the parties hereto hereby agree to delete Sections I.E.,
II(B)(2), IV and V of the Employment Agreement in their entirety and substitute
in lieu thereof the following:

 

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, 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.

 

II. Conditions of Employment.

 

B(2). Annual Bonus. In addition to the Annual Base Salary, Executive shall be
eligible to receive, for each fiscal year ending during the Employment Period,
an annual bonus (the “Annual Bonus”). Such Annual Bonus may range from 30% to
90% (with a target of 60%) of the Annual Base Salary earned by Executive during
the fiscal year as set forth in Table 2 on page 2 of the Company’s Executive
Compensation Program Design dated October 12, 2004, with the specific amount
determined by the Committee based on its assessment of the Company’s and
Executive’s performance for the fiscal year. In assessing such performance, the
Committee shall take into account the growth and income of the Company relative
to its annual financial plan, the quality of the Company’s assets, Executive’s
performance in terms of implementing the Company’s business strategy, and other
considerations deemed by the Committee to be relevant to the current and future
success of the Company. Annual Bonus earned by Executive shall be paid to
Executive no later than ninety (90) days following the end of the fiscal year to
which the Annual Bonus applies, unless such Annual Bonus is voluntarily deferred
by Executive in accordance with a Company sponsored deferral program.

 

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IV. Obligations of the Company Upon Termination of Executive’s Employment

 

  A. Termination by Company Other Than For Cause, Death or Disability. Except in
any case where the termination of Executive’s employment shall be governed by
that certain Change in Control Agreement between the Company and Executive dated
October 19, 2004, 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 which were granted to him prior to December 31, 2004, and vest any
Restricted Stock and Stock Options held by Executive which were granted to him
on and after January 1, 2005 in accordance with the terms of the Company’s Stock
Option Plan of 1989 as amended, or any successor plan (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) during 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 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 two equal installments, the first at nine months and the second
at eighteen months, 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(1), would

 

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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 his 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.

 

  B. Death. If Executive’s employment with the Company is terminated by reason
of Executive’s death during the Employment Period, this Agreement shall
terminate without further obligations to Executive’s legal representatives under
this Agreement, other than for (a) payment of any Base Salary previously earned
by Executive but as yet unpaid, (b) payment of any Annual Bonus previously
awarded to Executive for a fiscal year completed prior to the Date of
Termination but as yet unpaid, and (c) the continuation of any existing rights
Executive may have following death under the provisions of any benefit, stock
option, deferral or compensation plan provided to Executive by the Company.

 

  C. Disability. If Executive’s employment with the Company is terminated by
reason of Executive’s Disability during the Employment Period in accordance with
Section III(A) of this Agreement, this Agreement shall terminated without
further obligations to Executive other than for (a) payment of any Base Salary
previously earned by Executive but as yet unpaid, (b) payment of any Annual
Bonus previously awarded to Executive for a fiscal year completed prior to the
Date of Termination but as yet unpaid, and (c) the continuation of any existing
rights Executive may have following Disability under any benefit, stock option,
deferral or compensation plan provided to Executive by the Company.

 

  D. Cause or Voluntary Termination by Executive. If during the Employment
Period Executive’s employment shall be terminated for Cause, or if Executive
voluntarily terminates his employment with the Company, this Agreement shall
terminate without further obligations to Executive other than for (a) payment of
any Base Salary previously earned by Executive but as yet unpaid, (b) payment of
any Annual Bonus previously awarded to Executive for a fiscal year completed
prior to the Date of Termination but as yet unpaid, and (c) the continuation of
any existing rights Executive may have following termination for Cause or
voluntary termination under any benefit, stock option, deferral or compensation
plan provided to Executive by the Company.

 

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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, specifically including that certain Change in
Control Agreement between Executive and Company dated as of October 19, 2004.
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 that certain Change in Control Agreement between Executive
and Company dated as of October 19, 2004, which remains in full force and effect
and is fully operative between Executive and Company in accordance with its
terms, Executive shall not be covered by any prior employment agreement,
security policy or understanding thereof after the effective date of this
Amendment 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 Third 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:  

/s/ DOUGLAS M. PASQUALE

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    Douglas M. Pasquale Executive:

/s/ MARK L. DESMOND

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Mark L. Desmond

 

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