Exhibit 10.1

 

RETIREMENT AND SEVERANCE AGREEMENT

 

This Retirement and Severance Agreement is entered into this 16th day of April,
2004, by and between R. Bruce Andrews (“Mr. Andrews”) and Nationwide Health
Properties, Inc. (the “Company”).

 

040704

 

RECITALS

 

A. Mr. Andrews has served as President and Chief Executive Officer and as a
Director of the Company since 1989.

 

B. Mr. Andrews entered into an Employment Agreement with the Company dated
February 25, 1998, which subject to its terms, would automatically renew until
his 65th birthday in June, 2005.

 

C. The Company and Mr. Andrews have planned a transition in the office of the
President and Chief Executive Officer of Nationwide Health Properties, Inc. It
is anticipated that Mr. Andrews will continue as a full-time employee of the
Company through April 30, 2004, and will retire effective as of the close of
business on that date.

 

D. Mr. Andrews has been paid a bonus for 2003 of $384,000.

 

E. The Company and Mr. Andrews desire to terminate his Employment Agreement
dated February 25, 1998, and to replace it with this Retirement and Severance
Agreement.

 

AGREEMENT

 

NOW THEREFORE, IT IS AGREED AS FOLLOWS:

 

1. Employment Agreement Terminated. Except for the provisions of Article VII
“Confidential Information,” the Employment Agreement dated February 25, 1998
between the Company and Mr. Andrews, is hereby terminated. This Agreement fully
governs the employment of Mr. Andrews through April 30, 2004, and the
relationship between Mr. Andrews and the Company thereafter with respect to his
retirement and severance.

 

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2. Payments with respect to Base Salary. Mr. Andrews shall continue to be a
full-time employee of the Company through April 30, 2004 to be paid at his
annual salary rate of $480,000, or $40,000 per month through that date. After
the retirement date of April 30, 2004, Mr. Andrews shall be paid $960,000 (based
on two times his highest Annual Base Salary during any of the last three full
fiscal years) in equal monthly installments of $40,000 commencing in May of 2004
and continuing for a two-year period through April 30, 2006.

 

3. Payments with respect to Annual Bonus. In addition to the payments set forth
in Paragraph 2 above, Mr. Andrews shall be paid $221,200 on April 30, 2005, and
$221,200 on April 30, 2006, the sum of which is two times the average Annual
Bonus earned by Mr. Andrews over the last three full fiscal years, and is to be
paid as set forth above, in equal annual installments on the anniversary dates
of retirement.

 

4. Stock Options. Any stock options granted to Mr. Andrews prior to the date of
this Agreement and not fully vested at April 30, 2004 shall fully vest as of
April 30, 2004, the date of retirement, and shall continue to be held by him
subject to the provisions of the Company’s 1989 Stock Option Plan, as amended
(the “Stock Option Plan”). However, it is the intent of the parties that no
options shall expire under Section 14 of the Stock Option Plan as long as Mr.
Andrews remains affiliated with the Company as one of its directors.

 

5. Dividend Equivalents. Mr. Andrews shall continue to receive dividend
equivalents on outstanding stock options for an additional four years through
April 30, 2008, subject to future additional discretionary vesting as determined
by the Plan Committee in its sole discretion and subject to future additional
formula vesting as determined by the Plan Committee based on the formula
applicable to each dividend equivalent cycle, and subject to the expiration of
options under the Stock Option Plan. However, it is the intent of the parties
that no options shall expire under Section 14 of the Stock Option Plan as long
as Mr. Andrews remains affiliated with the Company as one of its directors.

 

6. Benefits. Continuing through April 30, 2006 (two years from the date of
retirement), Mr. Andrews shall receive 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 Mr. Andrews during
calendar year 2003. In addition, Mr. Andrews shall be provided a car allowance
of $1100 per month through April 30, 2006. Mr. Andrews will not be provided an
office or secretary or other benefits not set forth herein.

 

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The Company shall cause the Nationwide Health Properties, Inc. Deferred
Compensation Plan (the “Deferred Compensation Plan”) to be amended to provide
that Mr. Andrews’ benefit thereunder shall be payable in annual installments
over a period of up to twenty years, commencing as soon as feasible following
the termination of his employment.

 

The obligation of the Company to indemnify Mr. Andrews against liability for
acts or omissions which occurred or are alleged to have occurred during his term
of employment with the Company shall survive his termination of employment. The
Company shall make reasonable commercial efforts to keep in place a directors’
and officers’ liability insurance policy (or policies) providing comprehensive
coverage to Mr. Andrews during the term of his service as a director and for the
subsequent six years, and the terms of such coverage shall be no less favorable
to Mr. Andrews than the terms of such coverage as applied to any other officer
or Director of the Company.

 

7. Company Director. Mr. Andrews will continue as a Director of the Company
subject to the normal nominating processes of the Board of Directors and its
Committees. So long as he serves as director, Mr. Andrews agrees to perform all
of the duties of a director. The Company does not have any obligation to insure
that Mr. Andrews is nominated or elected as a director. Commencing as of May 1,
2004, Mr. Andrews shall be paid for his service as a director in the same manner
as other non-management directors, and shall receive grants of restricted stock
or other long-term incentive awards similar to other directors commencing in
January of 2005.

 

8. Death of Mr. Andrews prior to April 30, 2008. If Mr. Andrews should die prior
to April 30, 2008, any remaining payments under Paragraphs 2, 3, or 5 above
which would have been made to him if he had lived shall be paid to the
beneficiary designated in writing by him, 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 his 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 Mr. Andrews may revoke or change
any such designation of beneficiary at any time by a later written notice to the
Company.

 

Notwithstanding the reference to Paragraph 5 in the immediately preceding
paragraph, which immediately preceding paragraph describes to whom payments are
to be made in the event of the death of Mr. Andrews, the expiration of options
and the right to receive dividend equivalents will be governed, at the death of
Mr. Andrews, by the terms of the Stock Option Plan, including the provisions of
Paragraph 16 thereof.

 

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9. Miscellaneous.

 

(a) This Agreement shall be governed by and construed in accordance with the
laws of the State of California. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

 

(b) All notices and other communications hereunder shall be in writing and shall
be given by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

 

If to Mr. Andrews:

 

R. Bruce Andrews

1421 Bayside Drive

Corona Del Mar, DA 92625-1710

 

If to the Company:

 

Nationwide Health Properties

610 Newport Center Drive

Suite 1150

Newport Beach, CA 92660

Attention: Chairman

 

With a copy to:

 

Nationwide Health Properties

610 Newport Center Drive

Suite 1150

Newport Beach, CA 92660

Attention: Senior Vice President and General Counsel

 

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

 

(c) The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement.

 

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(d) The Company may withhold from any amounts payable under this Agreement such
Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

 

(e) Any failure to insist upon strict compliance with any provision of this
Agreement, or the failure to assert any right hereunder, shall not be deemed to
be a waiver of such provision or right or any other provision or right of this
Agreement.

 

10. Arbitration.

 

(a) The parties agree that any disputes, controversies or claims which arise out
of or are related to this Agreement, Mr. Andrew’s employment or termination of
employment, including, but not limited to, any claim relating to the purported
validity, interpretation, enforceability or breach of this Agreement, and/or any
other claim or controversy arising out of the relationship between Mr. Andrews
and the Company (or the nature of the relationship) or the continuation or
termination of that relationship, shall be settled by arbitration in accordance
with the then-current Rules of Practice and Procedure for Employment Arbitration
(the “Rules”) of the Judicial Arbitration and Mediation Services, Inc. (“JAMS”).

 

(b) The arbitration shall be before a single arbitrator selected in accordance
with the JAMS Rules or otherwise by mutual agreement of the parties. The
Arbitration shall take place in Orange County, California, unless the parties
mutually agree to hold the arbitration at another location. Depositions and
other discovery shall be allowed in accordance with the JAMS Rules. The
arbitrator shall apply the substantive law (and the law of remedies, if
applicable) of the State of California or Federal law, or both, as applicable to
the claim(s) asserted.

 

(c) In consideration of the parties’ agreement to submit to arbitration all
disputes with regard to this Agreement and/or with regard to any alleged
contract, or any other claim arising out of their conduct, the relationship
existing hereunder or the continuation or termination of that relationship, and
in further consideration of the anticipated expedition and the minimizing of
expense of this arbitration remedy, the arbitration provisions of this Agreement
shall provide the exclusive remedy, and each party expressly waives any right he
or it may have to seek redress in another forum. The arbitrator, and not any
Federal, state, or local court or agency shall have exclusive authority to
resolve any dispute relating to the interpretation, applicability,
enforceability or formation of this Agreement, including but not limited to, any
claim that all or any part of this Agreement is void or voidable. The
arbitration shall be final and binding upon the parties.

 

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(d) Either party may bring an action in any court of competent jurisdiction to
compel arbitration under this Agreement and to enforce an arbitration award.
Except as otherwise provided for in this Agreement, both the Company and Mr.
Andrews agree that neither of them shall initiate or prosecute any lawsuit or
administrative action in any way related to any claim covered by this Agreement.

 

(e) Any claim which either party has against the other party that could be
submitted for resolution pursuant to this Agreement must be presented in writing
by the claiming party to the other party within one year of the date the
claiming party knew or should have known of the facts giving rise to the claim,
except that claims arising out of or related to the termination of Mr. Andrew’s
employment must be presented by Mr. Andrews within one year of the date of
termination. Unless the party against whom any claim is asserted waives the time
limits set forth above, any claim not brought within the time periods specified
herein shall be waived and forever barred, even if there is a Federal or state
statute of limitations which would have given more time to pursue the claim.

 

(f) The Company shall advance the costs and expenses of the arbitrator. In any
arbitration to enforce any of the provisions or rights under this Agreement, the
unsuccessful party in such arbitration, as determined by the arbitrator, shall
pay to the successful party all costs, expenses and reasonable attorneys’ fees
incurred therein by such party (including without limitation such costs,
expenses and fees on any appeals), and if such successful party shall recover an
award in any such arbitration proceeding, such costs, expenses and attorneys’
fees shall be included as part of such award. Notwithstanding the foregoing
provision, in no event shall the successful party be entitled to recover an
amount from the unsuccessful party for costs, expenses and attorneys’ fees that
exceeds the unsuccessful party’s costs, expenses and attorneys’ fees incurred in
connection with the action or proceeding.

 

(g) Any decision and award or order of the arbitrator shall be final and binding
upon the parties hereto and judgment thereon may be entered in the Superior
Court of the State of California or any other court having jurisdiction.

 

(h) Each of the above terms and conditions shall have separate validity, and the
invalidity of any part thereof shall not affect the remaining parts.

 

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(i) Any decision and award or order of the arbitrator shall be final and binding
between the parties as to all claims which were or could have been raised in
connection with the dispute to the full extent permitted by law. In all other
cases the parties agree that the decision of the arbitrator shall be a condition
precedent to the institution or maintenance of any legal, equitable,
administrative, or other formal proceeding by Mr. Andrews or the Company in
connection with the dispute, and that the decision and opinion of the arbitrator
may be presented in any other forum on the merits of the dispute.

 

IN WITNESS WHEREOF, each party hereto has caused this Agreement to be executed
in its name on its behalf, all as of the day and year first above written.

 

    /s/ R. Bruce Andrews

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R. Bruce Andrews

Nationwide Health Properties, Inc.

By:

 

/s/ Charles D. Miller

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