March 30, 2006

 

To: Nationwide Health Properties, Inc.

   610 Newport Center Drive, Suite 1150

   Newport Beach, California 92660-6429

 

From: JPMorgan Chase Bank, National Association

   125 London Wall

   London EC2Y 5AJ

   England

 

From: J.P. Morgan Securities Inc.,

   Solely as Agent

   tel: (212) 622-5270

   fax: (212) 622-0105

Dear Sirs,

The purpose of this letter agreement (this “Confirmation”) is to confirm the
terms and conditions of the transaction entered into between us on the Trade
Date specified below (the “Transaction”). This Confirmation constitutes a
“Confirmation” as referred to in the ISDA Master Agreement specified below.

 

1. The definitions and provisions contained in the 2000 ISDA Definitions (the
“2000 Definitions”) and the 2002 ISDA Equity Derivatives Definitions (the “2002
Definitions” and, together with the 2000 Definitions, the “Definitions”), each
as published by the International Swaps and Derivatives Association, Inc., are
incorporated into this Confirmation. In the event of any inconsistency between
the 2002 Definitions and the 2000 Definitions, the 2002 Definitions will govern.
In the event of any inconsistency between the Definitions and this Confirmation,
this Confirmation will govern.

This Confirmation evidences a complete and binding agreement between Party A and
Party B as to the terms of the Transaction to which this Confirmation relates.
This Confirmation shall supplement, form a part of, and be subject to an
agreement in the form of the 2002 ISDA Master Agreement (the “Agreement”) as if
Party A and Party B had executed an agreement in such form on the Trade Date
(but without any Schedule except for (i) the election of the laws of the State
of New York as the governing law and (ii) United States dollars as the
Termination Currency). In the event of any inconsistency between provisions of
that Agreement and this Confirmation, this Confirmation will prevail for the
purpose of the Transaction to which this Confirmation relates. The parties
hereby agree that no Transaction other than the Transaction to which this
Confirmation relates shall be governed by the Agreement. For purposes of the
2002 Definitions, the Transaction is a Share Forward Transaction.

Party A and Party B each represents to the other that it has entered into this
Transaction in reliance upon such tax, accounting, regulatory, legal, and
financial advice as it deems necessary and not upon any view expressed by the
other.

 

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2. The terms of the particular Transaction to which this Confirmation relates
are as follows:

General Terms:

 

Party A:    JPMorgan Chase Bank, National Association, London Branch Party B:   
Nationwide Health Properties, Inc. Trade Date:    March 30, 2006 Effective Date:
   April 5, 2006 Base Amount:    Initially, 2,250,000 Shares. On each Settlement
Date, the Base Amount shall be reduced by the number of Settlement Shares for
such Settlement Date. Maturity Date:    April 5, 2007 (or, if such date is not a
Scheduled Trading Day, the next following Scheduled Trading Day). Forward Price:
   On the Effective Date, the Initial Forward Price, and on any other day, the
Forward Price as of the immediately preceding calendar day multiplied by the sum
of (i) 1 and (ii) the Daily Rate for such day; provided that on each Forward
Price Reduction Date, the Forward Price in effect on such date shall be the
Forward Price otherwise in effect on such date minus the Forward Price Reduction
Amount for such Forward Price Reduction Date. Initial Forward Price:    USD
20.54 per Share. Daily Rate:    For any day, (i)(A) USD-Federal Funds Rate for
such day minus (B) the Spread divided by (ii) 365. USD-Federal Funds Rate    For
any day, the rate set forth for such day opposite the caption “Federal funds”,
as such rate is displayed on the page “FedsOpen <Index> <GO>“ on the BLOOMBERG
Professional Service, or any successor page; provided that if no rate appears
for any day on such page, the rate for the immediately preceding day for which a
rate appears shall be used for such day. Spread:    40 basis points Forward
Price Reduction Date:    May 12, 2006, August 11, 2006, November 10, 2006, and
February 9, 2007. Forward Price Reduction Amount:    USD 0.38 Shares:    Common
Stock, $0.10 par value per share, of Party B (also referred to herein as the
“Issuer”) (Exchange identifier: “NHP”). Exchange:    The New York Stock
Exchange. Related Exchange(s):    All Exchanges. Clearance System:    DTC.
Calculation Agent:    JPMorgan Chase Bank, National Association

 

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Settlement Terms:

 

Settlement Date:    Any Scheduled Trading Day following the Effective Date and
up to and including the Maturity Date, as designated (a) by Party B in a written
notice (a “Settlement Notice”) that satisfies the Settlement Notice Requirements
and is delivered to Party A at least (i) three Scheduled Trading Days prior to
such Settlement Date, which may be the Maturity Date, if Physical Settlement
applies, and (ii) 90 Scheduled Trading Days prior to such Settlement Date, which
may be the Maturity Date, if Cash Settlement applies; provided that (i) the
Maturity Date shall be a Settlement Date if on such date the Base Amount is
greater than zero, (ii) if Cash Settlement applies and Party A shall have fully
unwound its hedge during an Unwind Period by a date that is more than three
Scheduled Trading Days prior to a Settlement Date specified above, Party A may,
by written notice to Party B, specify any Scheduled Trading Day prior to such
originally specified Settlement Date as the Settlement Date and (iii) the
Settlement Date may be modified as provided under “Unwind Period” below; or (b)
by Party A pursuant to “Termination Settlement” below. Settlement Shares:   
With respect to any Settlement Date, a number of Shares, not to exceed the Base
Amount, designated as such by Party B in the related Settlement Notice or by
Party A pursuant to “Termination Settlement” below; provided that on the
Maturity Date the number of Settlement Shares shall be equal to the Base Amount
on such date. Settlement:    Physical Settlement or Cash Settlement, at the
election of Party B as set forth in a Settlement Notice that satisfies the
Settlement Notice Requirements; provided that Physical Settlement shall apply
(i) if no Settlement Method is validly selected, (ii) with respect to any
Settlement Shares in respect of which Party A is unable, in its judgment, to
unwind its hedge by the end of the Unwind Period in a manner that, in the
judgment of Party A, is consistent with the requirements for qualifying for the
safe harbor provided by Rule 10b-18 under the Exchange Act or due to the lack of
sufficient liquidity in the Shares on any Scheduled Trading Day during the
Unwind Period, (iii) (A) at any time when, as a result of its ability to elect
Cash Settlement or (B) if, at the time of electing Cash Settlement or as a
result of such election, Party B would be in default under the Amended and
Restated Credit Agreement, dated as of October 20, 2005, by and among Party B,
as borrower, the Lenders party thereto, JPMorgan Chase Bank, N.A., as
administrative agent and other parties thereto, as may be amended from time to
time (the “Credit Agreement”), and (iv) to any Termination Settlement Date (as
defined below under “Termination Settlement”).

 

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Settlement Notice Requirements:    Notwithstanding any other provision hereof, a
Settlement Notice delivered by Party B that specifies Cash Settlement will not
be effective to establish a Settlement Date or require Cash Settlement unless
Party B delivers to Party A with such Settlement Notice a representation signed
by Party B substantially in the following form: “As of the date of this
Settlement Notice, Party B is not aware of any material nonpublic information
concerning itself or the Shares, and is designating the date contained herein as
a Settlement Date in good faith and not as part of a plan or scheme to evade
compliance with the federal securities laws.” Unwind Period:    Each Scheduled
Trading Day that is not a Disrupted Day during the period from and including the
first Scheduled Trading Day following the date Party B validly elects Cash
Settlement in respect of a Settlement Date through the third Scheduled Trading
Day preceding such Settlement Date; subject to “Termination Settlement” below.
Exchange Act:    The Securities Exchange Act of 1934, as amended from time to
time. Physical Settlement:    On any Settlement Date in respect of which
Physical Settlement applies, Party B shall deliver to Party A through the
Clearance System the Settlement Shares for such Settlement Date, and Party A
shall deliver to Party B, by wire transfer of immediately available funds to an
account designated by Party B, an amount in cash equal to the Physical
Settlement Amount for such Settlement Date, on a delivery versus payment basis.
Physical Settlement Amount:    For any Settlement Date in respect of which
Physical Settlement applies, an amount in cash equal to the product of (i) the
Forward Price on such Settlement Date and (ii) the number of Settlement Shares
for such Settlement Date. Cash Settlement:    On any Settlement Date in respect
of which Cash Settlement applies, if the Cash Settlement Amount for such
Settlement Date is a positive number, Party A will pay such Cash Settlement
Amount to Party B. If the Cash Settlement Amount is a negative number, Party B
will pay the absolute value of such Cash Settlement Amount to Party A. Such
amounts shall be paid on the Settlement Date. Cash Settlement Amount:    For any
Settlement Date in respect of which Cash Settlement applies, an amount
determined by the Calculation Agent equal to the difference between (1) the
product of (i) (A) the Forward Price on the first day of the applicable Unwind
Period minus (B) the weighted average of the 10b-18 VWAPs per Share for each
Scheduled Trading Day at which Party A

 

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   actually purchases Shares during such Unwind Period to unwind its hedge,
multiplied by (ii) the number of Settlement Shares for such Settlement Date,
minus (2) the product of (i) the Forward Price Reduction Amount for any Forward
Price Reduction Date that occurs during such Unwind Period multiplied by (ii)
the number of Shares with respect to which Party A has not unwound its hedge as
of such Forward Price Reduction Date. 10b-18 VWAP:    For any Scheduled Trading
Day during the Unwind Period which is not a Disrupted Day, the volume-weighted
average price at which the Shares trade as reported in the composite
transactions for the Exchange on such Scheduled Trading Day, excluding (i)
trades that do not settle regular way, (ii) opening (regular way) reported
trades on the Exchange on such Scheduled Trading Day, (iii) trades that occur in
the last ten minutes before the scheduled close of trading on the Exchange on
such Scheduled Trading Day and ten minutes before the scheduled close of the
primary trading session in the market where the trade is effected, and (iv)
trades on such Scheduled Trading Day that do not satisfy the requirements of
Rule 10b-18(b)(3), as determined in good faith by the Calculation Agent. Party B
acknowledges that Party A may refer to the Bloomberg Page “NHP <Equity> AQR SEC”
(or any successor thereto), in its discretion, for such Scheduled Trading Day to
determine the 10b-18 VWAP. Settlement Currency:    USD. Failure to Deliver:   
Inapplicable.

Adjustments:

 

Method of Adjustment:    Calculation Agent Adjustment; notwithstanding anything
to the contrary in the 2002 Definitions, but without affecting Calculation
Agent’s obligations contained in Section 1.40 of the 2002 Definitions, in
effecting any adjustments contemplated by Section 11.2(c) of the 2002
Definitions, the Calculation Agent may make an adjustment pursuant to
Calculation Agent Adjustment to any one or more of the Base Amount, the Forward
Price and any other variable relevant to the settlement or payment terms of the
Transaction. Additional Adjustment:    If, in Party A’s sole judgment, the
actual cost to Party A, over any one month period, of borrowing a number of
Shares equal to the Base Amount to hedge its exposure to the Transaction exceeds
a weighted average rate equal to 40 basis points per annum, the Calculation
Agent shall reduce the Forward Price in order to compensate Party A for the
amount by which such cost exceeded a weighted average rate equal to 40 basis
points per annum during such period. The Calculation Agent shall notify Party B
prior to making any such adjustment to the Forward Price and, upon the request
of Party B, Party A shall provide an itemized list of its stock loan costs for
the applicable one month period.

 

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Account Details:

 

Payments to Party A:    To be advised under separate cover or telephone
confirmed prior to each Settlement Date. Payments to Party B:    To be advised
under separate cover or telephone confirmed prior to each Settlement Date.
Delivery of Shares to Party A:    To be advised. Delivery of Shares to Party B:
   To be advised.

 

3. Other Provisions:

Conditions to Effectiveness:

The effectiveness of this Confirmation on the Effective Date shall be subject to
(i) the condition that the respective representations and warranties of J.P.
Morgan Securities Inc. (“JPMS”) and Party B contained in the Underwriting
Agreement dated the date hereof among Party B, Party A and JPMS as
Representative of the Several Underwriters (the “Underwriting Agreement”) and
any certificate delivered pursuant thereto by JPMS or Party B are true and
correct on the Effective Date as if made as of the Effective Date, (ii) the
condition that JPMS and Party B have performed all of their respective
obligations required to be performed by it under the Underwriting Agreement on
or prior to the Effective Date, (iii) the condition that Party B has delivered
to Party A resolutions of the Board of Directors of Party B authorizing the
Transaction, in form and substance satisfactory to Party A, (iv) the
satisfaction of all of the conditions set forth in Section 7 of the Underwriting
Agreement and (v) the condition that neither of the following has occurred
(A) Party A is unable to borrow and deliver for sale a number of Shares equal to
the Base Amount, or (B) in Party A’s sole judgment either it is impracticable to
do so or Party A would incur a stock loan cost of more than a rate equal to 100
basis points per annum to do so (in which event this Confirmation shall be
effective but the Base Amount for this Transaction shall be the number of Shares
Party A is required to deliver in accordance with Section 1 of the Underwriting
Agreement).

Representations and Agreements of Party B:

Party B (i) has such knowledge and experience in financial and business affairs
as to be capable of evaluating the merits and risks of entering into this
Transaction; (ii) has consulted with its own legal, financial, accounting and
tax advisors in connection with this Transaction; and (iii) is entering into
this Transaction for a bona fide business purpose.

Party B is not and has not been the subject of any civil proceeding of a
judicial or administrative body of competent jurisdiction that could reasonably
be expected to impair materially Party B’s ability to perform its obligations
hereunder.

Party B will by the next succeeding New York Business Day notify Party A upon
obtaining knowledge of the occurrence of any event that would constitute an
Event of Default, a Potential Event of Default or a Potential Adjustment Event.

 

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Additional Representations, Warranties and Agreements of Party B: Party B hereby
represents and warrants to, and agrees with, Party A as of the date hereof that:

 

  (a) Any Shares, when issued and delivered in accordance with the terms of the
Transaction, will be duly authorized and validly issued, fully paid and
nonassessable, and the issuance thereof will not be subject to any preemptive or
similar rights.

 

  (b) Party B has reserved and will keep available at all times, free from
preemptive rights, out of its authorized but unissued Shares, solely for the
purpose of issuance upon settlement of the Transaction as herein provided, the
full number of Shares as shall be issuable at such time upon settlement of the
Transaction. All Shares so issuable shall, upon such issuance, be accepted for
listing or quotation on the Exchange.

 

  (c) Subject to the last sentence of this paragraph, Party B agrees to provide
Party A at least 30 days’ written notice (an “Issuer Repurchase Notice”) prior
to executing any repurchase of Shares by Party B or any of its subsidiaries (or
entering into any contract that would require, or give the option to, Party B or
any of its subsidiaries, to purchase or repurchase Shares), whether out of
profits or capital or whether the consideration for such repurchase is cash,
securities or otherwise (an “Issuer Repurchase”), that alone or in the aggregate
would result in the Base Amount Percentage (as defined below) being (i) equal to
or greater than 7.5% of the outstanding Shares and (ii) greater by 0.5% or more
than the Base Amount Percentage at the time of the immediately preceding Issuer
Repurchase Notice (or in the case of the first such Issuer Repurchase Notice,
greater than the Base Amount Percentage as of the later of the date hereof or
the immediately preceding Settlement Date, if any). The “Base Amount Percentage”
as of any day is the fraction (1) the numerator of which is the Base Amount and
(2) the denominator of which is the number of Shares outstanding on such day. If
Party B reasonably determines that compliance with any notice obligations of
Party B contained in this paragraph or any delay of the related repurchase of
Shares could jeopardize Party B’s status as a “real estate investment trust”
within the meaning of the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder, then, notwithstanding any such
notice obligations, Party B shall be entitled to immediately effect any
repurchases of Shares contemplated by Party B’s charter (each a “Charter
Repurchase”) reasonably necessary to maintain such status and shall use its
reasonable best efforts to notify Party A of such repurchases as soon as
reasonably possible.

 

  (d) Neither the execution and delivery of this Confirmation nor the incurrence
or performance of obligations of Party B hereunder will conflict with or result
in a breach of the Amended and Restated Articles of Incorporation of Party B, as
amended and restated as of the date hereof (the “Articles of Incorporation”) or
by-laws (or any equivalent documents) of Party B, or any applicable law or
regulation, including any provisions of the Maryland General Corporation Law, or
any order, writ, injunction or decree of any court or governmental authority or
agency, or any agreement or instrument to which the Party B or any of its
subsidiaries is a party or by which the Party B or any of its subsidiaries is
bound or to which the Party B or any of its subsidiaries is subject, including
the Credit Agreement, or constitute a default under, or result in the creation
of any lien under, any such agreement or instrument, or breach or constitute a
default under any agreements and contracts of the Counterparty and the
significant subsidiaries filed as exhibits to the Counterparty’s Annual Report
on Form 10-K.

 

  (e) No filing with, or approval, authorization, consent, license registration,
qualification, order or decree of, any court or governmental authority or
agency, domestic or foreign, is necessary or required for the execution,
delivery and performance by Party B of this Confirmation and the consummation of
the Transaction (including, without limitation, the issuance and delivery of
Shares on any Settlement Date) except (i) such as have been obtained under the
Securities Act, and (ii) as may be required to be obtained under state
securities laws.

 

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  (f) Party B agrees not to make any Issuer Repurchase, other than any Charter
Repurchases, if, immediately following such Issuer Repurchase, the Base Amount
Percentage would be equal to or greater than 8.0%.

 

  (g) Party B is not insolvent, nor will Party B be rendered insolvent as a
result of this Transaction.

 

  (h) Neither Party B nor any of its affiliates shall take or refrain from
taking any action (including, without limitation, any direct purchases by Party
B or any of its affiliates or any purchases by a party to a derivative
transaction with Party B or any of its affiliates), either under this
Confirmation, under an agreement with another party or otherwise, that might
cause any purchases of Shares by Party A or any of its affiliates in connection
with any Cash Settlement of this Transaction not to meet the requirements of the
safe harbor provided by Rule 10b-18 under the Exchange Act if such purchases
were made by Party B.

 

  (i) Party B will not engage in any “distribution” (as defined in Regulation M
under the Exchange Act) that would cause a “restricted period” (as defined in
Regulation M) to occur during any Unwind Period.

 

  (j) Party B is an “eligible contract participant” (as such term is defined in
Section 1(a)(12) of the Commodity Exchange Act, as amended).

 

  (k) In addition to any other requirements set forth herein, Party B agrees not
to elect Physical Settlement or Cash Settlement if, in the reasonable judgment
of either Party A or Party B, such settlement or Party A’s related market
activity would result in a violation of the U.S. federal securities laws or any
other federal or state law or regulation applicable to Party B.

Covenant of Party B:

The parties acknowledge and agree that any Shares delivered by Party B to Party
A on any Settlement Date will be newly issued Shares and when delivered by Party
A (or an affiliate of Party A) to securities lenders from whom Party A (or an
affiliate of Party A) borrowed Shares in connection with hedging its exposure to
the Transaction will be freely saleable without further registration or other
restrictions under the Securities Act of 1933, as amended (the “Securities
Act”), in the hands of those securities lenders, irrespective of whether such
stock loan is effected by Party A or an affiliate of Party A. Accordingly, Party
B agrees that the Settlement Shares that it delivers to Party A on each
Settlement Date will not bear a restrictive legend and that such Settlement
Shares will be deposited in, and the delivery thereof shall be effected through
the facilities of, the Clearance System.

Covenants of Party A:

 

  (a) Unless the provisions set forth below under “Private Placement Procedures”
shall be applicable, Party A shall use any Shares delivered by Party B to Party
A on any Settlement Date to return to securities lenders to close out open stock
loans, if any, with respect to Shares.

 

  (b) In connection with bids and purchases of Shares in connection with any
Cash Settlement of this Transaction, Party A shall use its reasonable best
efforts to conduct its activities, or cause its affiliates to conduct their
activities, in a manner consistent with the requirements of the safe harbor
provided by Rule 10b-18 under the Exchange Act, as if such provisions were
applicable to such purchases.

 

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Insolvency Filing:

Notwithstanding anything to the contrary herein, in the Agreement or in the
Definitions, upon any Insolvency Filing in respect of the Issuer, the
Transaction shall automatically terminate on the date thereof without further
liability of either party to this Confirmation to the other party (except for
any liability in respect of any breach of representation or covenant by a party
under this Confirmation prior to the date of such Insolvency Filing).

Extraordinary Dividends:

If an ex-dividend date for an Extraordinary Dividend occurs on or after the
Trade Date and on or prior to the Maturity Date, Party B shall pay an amount, as
determined by the Calculation Agent, in cash equal to the product of such
Extraordinary Dividend and the Base Amount to Party A on the earlier of (i) the
date on which such Extraordinary Dividend is paid by the Issuer to holders of
record of the Shares or (ii) the Maturity Date. “Extraordinary Dividend” means
the per Share amount of any cash dividend or distribution declared by the Issuer
with respect to the Shares that is specified by the board of directors of the
Issuer as an “extraordinary” dividend.

Acceleration Events:

The following events shall each constitute an “Acceleration Event”:

 

  (a) Stock Borrow Events. In the reasonable judgment of Party A (i) Party A is
unable to hedge Party A’s exposure to the Transaction because (A) of the lack of
sufficient Shares being made available for Share borrowing by lenders, or (B) it
is otherwise commercially impracticable or (ii) Party A would incur a cost to
borrow Shares to hedge its exposure to the Transaction that is greater than a
rate equal to 100 basis points per annum (each of (i) and (ii) a “Stock Borrow
Event”);

 

  (b) Dividends and Other Distributions. On any day occurring after the Trade
Date Party B declares a distribution, issue or dividend to existing holders of
the Shares of (i) any cash dividend (other than an Extraordinary Dividend) to
the extent all cash dividends having an ex-dividend date during the period from
and including any Forward Price Reduction Date (with each of the Trade Date and
the Maturity Date being a Forward Price Reduction Date having a Forward Price
Reduction Amount equal to $0.00 for purposes of this clause (b) only) to but
excluding the next subsequent Forward Price Reduction Date exceeds, on a per
Share basis, the Forward Price Reduction Amount or (ii) share capital or
securities of another issuer acquired or owned (directly or indirectly) by Party
B as a result of a spin-off or other similar transaction or (iii) any other type
of securities (other than Shares), rights or warrants or other assets, for
payment (cash or other consideration) at less than the prevailing market price
as determined by Party A;

 

  (d) ISDA Early Termination Date. Either Party A or Party B has the right to
designate an Early Termination Date pursuant to Section 6 of the Agreement;

 

  (e) Other ISDA Events. The occurrence of an Announcement Date in respect of an
Extraordinary Event; the occurrence of any Change in Law or Delisting; provided
that in case of a Delisting, in addition to the provisions of
Section 12.6(a)(iii) of the 2002 Definitions, it will also constitute a
Delisting if the Exchange is located in the United States and the Shares are not
immediately re-listed, re-traded or re-quoted on any of the New York Stock
Exchange, the American Stock Exchange or the NASDAQ National Market (or their
respective successors);

 

  (f) Issuer Repurchases. Party B publicly announces or discloses any Issuer
Repurchase (whether or not subsequently amended) that alone, or in the
aggregate, results in, or could result in, the Base Amount representing more
than 8% of the total outstanding Shares (assuming the consummation of such
proposed Issuer Repurchase); or

 

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  (g) Credit Agreement. At any time when, following and as a result of the Cash
Settlement election by Party B in accordance with “Settlement” provisions above
and prior to the last day of the Unwind Period with respect to such Cash
Settlement, Party B shall be in breach of the Credit Agreement.

Termination Settlement:

Upon the occurrence of any Acceleration Event, Party A shall have the right to
designate, upon at least one Scheduled Trading Day’s notice, any Scheduled
Trading Day following such occurrence to be a Settlement Date hereunder (a
“Termination Settlement Date”) to which Physical Settlement shall apply, and to
select the number of Settlement Shares relating to such Termination Settlement
Date; provided that (i) in the case of an Acceleration Event arising out of a
Stock Borrow Event, the number of Settlement Shares so designated by Party A
shall not exceed the number of Shares as to which such Stock Borrow Event exists
and (ii) in the case of an Acceleration Event arising out of an Issuer
Repurchase, the number of Settlement Shares so designated by Party A shall not
exceed the number of Shares necessary to cause the Base Amount to be less than
7% of the total outstanding Shares (assuming consummation of such proposed
Issuer Repurchase). If, upon designation of a Termination Settlement Date by
Party A pursuant to the preceding sentence, Party B fails to deliver the
Settlement Shares relating to such Termination Settlement Date when due, such
failure shall constitute an Event of Default with respect to Party B and
Section 6 of the Agreement shall apply. If an Acceleration Event occurs during
an Unwind Period relating to a number of Settlement Shares to which Cash
Settlement applies, then on the Termination Settlement Date relating to such
Acceleration Event, notwithstanding any election to the contrary by Party B,
Cash Settlement shall apply to the portion of the Settlement Shares relating to
such Unwind Period as to which Party A has unwound its hedge and Physical
Settlement shall apply in respect of the remainder (if any) of such Settlement
Shares, in addition to the Settlement Shares designated by Party A in respect of
such Termination Settlement Date.

Private Placement Procedures

If Party B is unable to comply with the provisions of “Covenant of Party B”
above because of a change in law or a change in the policy of the Securities and
Exchange Commission or its staff, or Party A otherwise determines that in its
reasonable opinion any Settlement Shares to be delivered to Party A by Party B
may not be freely returned by Party A or its affiliates to securities lenders as
described under “Covenant of Party B” above, then delivery of any such
Settlement Shares (the “Restricted Shares”) shall be effected pursuant to Annex
A hereto, unless waived by Party A.

Rule 10b5-1:

It is the intent of Party A and Party B that following any election of Cash
Settlement by Party B, the purchase of Shares by Party A during any Unwind
Period comply with the requirements of Rule 10b5-1(c)(1)(i)(B) of the Exchange
Act and that this Confirmation shall be interpreted to comply with the
requirements of Rule 10b5-1(c).

Party B acknowledges that (i) during any Unwind Period Party B does not have,
and shall not attempt to exercise, any influence over how, when or whether to
effect purchases of Shares by Party A (or its agent or affiliate) in connection
with this Confirmation and (ii) Party B is entering into the Agreement and this
Confirmation in good faith and not as part of a plan or scheme to evade
compliance with federal securities laws including, without limitation, Rule
10b-5 promulgated under the Exchange Act.

 

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Party B hereby agrees with Party A that during any Unwind Period Party B shall
not communicate, directly or indirectly, any Material Non-Public Information (as
defined herein) to any EDG Personnel (as defined below). For purposes of this
Transaction, “Material Non-Public Information” means information relating to
Party B or the Shares that (a) has not been widely disseminated by wire service,
in one or more newspapers of general circulation, by communication from Party B
to its shareholders or in a press release, or contained in a public filing made
by Party B with the Securities and Exchange Commission and (b) a reasonable
investor might consider to be of importance in making an investment decision to
buy, sell or hold Shares. For the avoidance of doubt and solely by way of
illustration, information should be presumed “material” if it relates to such
matters as dividend increases or decreases, earnings estimates, changes in
previously released earnings estimates, significant expansion or curtailment of
operations, a significant increase or decline of orders, significant merger or
acquisition proposals or agreements, significant new products or discoveries,
extraordinary borrowing, major litigation, liquidity problems, extraordinary
management developments, purchase or sale of substantial assets, or other
similar information. For purposes of this Transaction, “EDG Personnel” means any
employee on the trading side of the Equity Derivatives Group of J.P. Morgan
Securities, Inc. and does not include Messrs. David Aidelson, Santosh Nabar,
James Rothschild, Beesham Seecharan, Sudheer Tegulapalle and Ms. Bernadette
Barnard (or any other person or persons designated from time to time by the
Compliance Group of Party A).

Maximum Share Delivery:

Notwithstanding any other provision of this Confirmation, in no event will Party
B be required to deliver on any Settlement Date, whether pursuant to Physical
Settlement, Termination Settlement or any Private Placement Settlement, more
than 9 million Shares to Party A, subject to reduction by the amount of any
Shares delivered by Party B on any prior Settlement Date.

Market Disruption Event:

Section 6.3(a) of the 2002 Definitions is amended by deleting the words “at any
time during the one hour period that ends at the relevant Valuation Time, Latest
Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case
may be,”.

Assignment:

Party A may assign or transfer any of its rights or delegate any of its duties
hereunder to any affiliate of Party A or any entity organized or sponsored by
Party A without the prior written consent of Party B. Notwithstanding any other
provision of this Confirmation to the contrary requiring or allowing Party A to
purchase or receive any Shares from Party B, Party A may designate any of its
affiliates to purchase or receive such Shares or otherwise to perform Party A’s
obligations in respect of this Transaction and any such designee may assume such
obligations, and Party A shall be discharged of its obligations to Party B
solely to the extent of any such performance.

Matters Relating to Agent:

Each party agrees and acknowledges that (i) JPMS, as agent, (the “Agent”) acts
solely as agent on a disclosed basis with respect to the transactions
contemplated hereunder, and (ii) the Agent has no obligation, by guaranty,
endorsement or otherwise, with respect to the obligations of either Party B or
Party A hereunder, either with respect to the delivery of cash or Shares, either
at the beginning or the end of the transactions contemplated hereby. In this
regard, each of Party A and Party B acknowledges and agrees to look solely to
the other for performance hereunder, and not to the Agent.

 

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Indemnity

Party B agrees to indemnify Party A and its affiliates and their respective
directors, officers, agents and controlling parties (Party A and each such
affiliate or person being an “Indemnified Party”) from and against any and all
losses, claims, damages and liabilities incurred by or asserted against such
Indemnified Party arising out of, in connection with, or relating to, any breach
of any covenant or representation made by Party B in this Confirmation or the
Agreement, the consummation of the transactions contemplated hereby or any
breach of the Articles of Incorporation, and will reimburse any Indemnified
Party for all reasonable expenses (including reasonable legal fees and expenses)
as they are incurred in connection with the investigation of, preparation for,
or defense of any pending or threatened claim or any action or proceeding
arising therefrom, whether or not such Indemnified Party is a party thereto.
Party B will not be liable under this Indemnity paragraph to the extent that any
loss, claim, damage, liability or expense is found in a judgment by a court to
have resulted from Party A’s gross negligence, willful misconduct or breach of
any representation or covenant of Party A contained in this Confirmation of the
Agreement.

Notice

 

Non-Reliance:    Applicable Additional Acknowledgments:    Applicable

Agreements and Acknowledgments

Regarding Hedging Activities:

   Applicable

 

4. The Agreement is further supplemented by the following provisions:

No Collateral or Setoff.:

Notwithstanding Section 6(f) or any other provision of the Agreement or any
other agreement between the parties to the contrary, the obligations of Party B
hereunder are not secured by any collateral. Obligations under this Transaction
shall not be set off against any other obligations of the parties, whether
arising under the Agreement, this Confirmation, under any other agreement
between the parties hereto, by operation of law or otherwise, and no other
obligations of the parties shall be set off against obligations under this
Transaction, whether arising under the Agreement, this Confirmation, under any
other agreement between the parties hereto, by operation of law or otherwise,
and each party hereby waives any such right of setoff. In calculating any
amounts under Section 6(e) of the Agreement, notwithstanding anything to the
contrary in the Agreement, (a) separate amounts shall be calculated as set forth
in such Section 6(e) with respect to (i) this Transaction and (ii) all other
Transactions, and (b) such separate amounts shall be payable pursuant to
Section 6(d)(ii) of the Agreement.

Status of Claims in Bankruptcy:

Party A acknowledges and agrees that this confirmation is not intended to convey
to Party A rights with respect to the transactions contemplated hereby that are
senior to the claims of common stockholders in any U.S. bankruptcy proceedings
of Party B; provided, however, that nothing herein shall limit or shall be
deemed to limit Party A’s right to pursue remedies in the event of a breach by
Party B of its obligations and agreements with respect to this Confirmation and
the Agreement; and provided further, that nothing herein shall limit or shall be
deemed to limit Party A’s rights in respect of any transaction other than the
Transaction.

 

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Limit on Beneficial Ownership:

Notwithstanding any other provisions hereof, Party A shall not be entitled to
receive Shares or any other class of voting securities of the Issuer hereunder
(whether in connection with the purchase of Shares on any Settlement Date or any
Termination Settlement Date, any Private Placement Settlement or otherwise) to
the extent (but only to the extent) that such receipt would result in JPMorgan
Chase & Co. or any of its affiliates or associates directly or indirectly,
individually or in the aggregate, beneficially owning (as such term is defined
for purposes of Section 13(d) of the Exchange Act) at any time in excess of 9%
of the outstanding Shares or any other class of voting securities of the Issuer.
Any purported delivery hereunder shall be void and have no effect to the extent
(but only to the extent) that such delivery would result in JPMorgan Chase & Co.
or any of its affiliates or associates directly or indirectly, individually or
in the aggregate, so beneficially owning in excess of 9% of the outstanding
Shares or any other class of voting securities of the Issuer. If any delivery
owed to Party A hereunder is not made, in whole or in part, as a result of this
provision, Party B’s obligation to make such delivery shall not be extinguished
and Party B shall make such delivery as promptly as practicable after, but in no
event later than one Clearance System Business Day after, Party A gives notice
to Party B that such delivery would not result in JPMorgan Chase & Co. or any of
its affiliates or associates directly or indirectly, individually or in the
aggregate, so beneficially owning in excess of 9% of the outstanding Shares or
any other class of voting securities of the Issuer.

Miscellaneous:

 

  (a) Addresses for Notices. For the purpose of Section 12(a) of the Agreement:

 

     Address for notices or communications to Party A:

 

Address:    JPMorgan Chase Bank, National Association    277 Park Avenue    9th
Floor    New York, NY 10172 Attention:    Equity Derivatives Group Telephone
No.:    (212) 622-5270 Facsimile No.:    (212) 622-0105 With a copy to:   
Address:    JPMorgan Chase Bank, National Association    277 Park Avenue    11th
Floor    New York, NY 10172 Attention:    Equity Derivatives Group – Marketing
Support Telephone No.:    (212) 622-6707 Facsimile No.:    (212) 622-8534

 

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     Address for notices or communications to Party B:

 

Address:    Nationwide Health Properties, Inc.    610 Newport Center Drive,
Suite 1150    Newport Beach, California 92660-6429 Attention:    Mr. Douglas M.
Pasquale Telephone No.:    (949) 718-4400 Facsimile No.:    (203) 759-6876

 

  (b) Waiver of Right to Trial by Jury. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by jury in respect
of any suit, action or proceeding relating to this Confirmation. Each party
(i) certifies that no representative, agent or attorney of the other party has
represented, expressly or otherwise, that such other party would not, in the
event of such a suit action or proceeding, seek to enforce the foregoing waiver
and (ii) acknowledges that it and the other party have been induced to enter
into this Confirmation by, among other things, the mutual waivers and
certifications herein.

 

  (c) London Branch. Party A is entering into this Confirmation and the
Agreement through its London branch. Notwithstanding the foregoing, Party A
represents to Party B that the obligations of Party A are the same as if it had
entered into this Confirmation and the Agreement through its head or home office
in New York.

Acknowledgments.

The parties hereto intend for:

 

  (a) this Transaction to be a “securities contract” as defined in
Section 741(7) of Title 11 of the United States Code (the “Bankruptcy Code”),
qualifying for the protections under Section 555 of the Bankruptcy Code;

 

  (b) a party’s right to liquidate this Transaction and to exercise any other
remedies upon the occurrence of any Event of Default under the Agreement with
respect to the other party to constitute a “contractual right” as defined in the
Bankruptcy Code;

 

  (c) Party A to be a “financial institution” within the meaning of
Section 101(22) of the Bankruptcy Code; and

 

  (d) all payments for, under or in connection with this Transaction, all
payments for the Shares and the transfer of such Shares to constitute
“settlement payments” as defined in the Bankruptcy Code.

Severability.

If any term, provision, covenant or condition of this Confirmation, or the
application thereof to any party or circumstance, shall be held to be invalid or
unenforceable in whole or in part for any reason, the remaining terms,
provisions, covenants, and conditions hereof shall continue in full force and
effect as if this Confirmation had been executed with the invalid or
unenforceable provision eliminated, so long as this Confirmation as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter of this Confirmation and the deletion of such
portion of this Confirmation will not substantially impair the respective
benefits or expectations of parties to this Agreement; provided, however, that
this severability provision shall not be applicable if any provision of
Section 2, 5, 6 or 13 of the Agreement (or any definition or provision in
Section 14 to the extent that it relates to, or is used in or in connection with
any such Section) shall be so held to be invalid or unenforceable.

[Remainder of page intentionally left blank]

 

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Please confirm that the foregoing correctly sets forth the terms of our
agreement by signing and returning this Confirmation.

 

Yours faithfully, J.P. MORGAN SECURITIES INC., as agent for JPMorgan Chase Bank,
National Association By:   /s/ Sri Kosaraju Name:   Sri Kosaraju Title:   Vice
President

Confirmed as of the date first written above:

 

NATIONWIDE HEALTH PROPERTIES, INC.

By:

  /s/ Abdo H. Khoury

Name:

  Abdo H. Khoury

Title:

  Senior Vice President, Chief Financial Officer

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ANNEX A

PRIVATE PLACEMENT PROCEDURES

 

(i) If Party B delivers the Restricted Shares pursuant to this clause (i) (a
“Private Placement Settlement”), then delivery of Restricted Shares by Party B
shall be effected in customary private placement procedures with respect to such
Restricted Shares reasonably acceptable to Party A; provided that if, on or
before the date that a Private Placement Settlement would occur, Party B has
taken, or caused to be taken, any action that would make unavailable either the
exemption pursuant to Section 4(2) of the Securities Act for the sale by Party B
to Party A (or any affiliate designated by Party A) of the Restricted Shares or
the exemption pursuant to Section 4(1) or Section 4(3) of the Securities Act for
resales of the Restricted Shares by Party A (or any such affiliate of Party A)
or Party B fails to deliver the Restricted Shares when due or otherwise fails to
perform obligations within its control in respect of a Private Placement
Settlement, it shall be an Event of Default with respect to Party B and
Section 6 of the Agreement shall apply. The Private Placement Settlement of such
Restricted Shares shall include customary representations, covenants, blue sky
and other governmental filings and/or registrations, indemnities to Party A, due
diligence rights (for Party A or any designated buyer of the Restricted Shares
by Party A), opinions and certificates, and such other documentation as is
customary for private placement agreements, all reasonably acceptable to Party
A. In the case of a Private Placement Settlement, Party A shall, in its good
faith discretion, adjust the amount of Restricted Shares to be delivered to
Party A hereunder in a commercially reasonable manner to reflect the fact that
such Restricted Shares may not be freely returned to securities lenders by Party
A and may only be saleable by Party A at a discount to reflect the lack of
liquidity in Restricted Shares. Notwithstanding the Agreement or this
Confirmation, the date of delivery of such Restricted Shares shall be the
Clearance System Business Day following notice by Party A to Party B of the
number of Restricted Shares to be delivered pursuant to this clause (i). For the
avoidance of doubt, delivery of Restricted Shares shall be due as set forth in
the previous sentence and not be due on the Settlement Date or Termination
Settlement Date that would otherwise be applicable.

 

(ii) If Party B delivers any Restricted Shares in respect of the Transaction,
Party B agrees that (i) such Shares may be transferred by and among JPMorgan
Chase Bank, National Association and its affiliates and (ii) after the minimum
“holding period” within the meaning of Rule 144(d) under the Securities Act has
elapsed after the applicable Settlement Date, Party B shall promptly remove, or
cause the transfer agent for the Shares to remove, any legends referring to any
transfer restrictions from such Shares upon delivery by Party A (or such
affiliate of Party A) to Party B or such transfer agent of seller’s and broker’s
representation letters customarily delivered by Party A or its affiliates in
connection with resales of restricted securities pursuant to Rule 144 under the
Securities Act, each without any further requirement for the delivery of any
certificate, consent, agreement, opinion of counsel, notice or any other
document, any transfer tax stamps or payment of any other amount or any other
action by Party A (or such affiliate of Party A).

 

A-1