Document:

EX-10.1

 

    Exhibit 10.1

 

    CONSULTING
    AGREEMENT

 

    THIS CONSULTING AGREEMENT (the
    “Agreement”), dated September 12, 2006,
    shall become effective upon the consummation of the merger
    contemplated by the Agreement and Plan of Merger referenced
    below (the “Effective Date”), and is entered
    into by and between HEALTH CARE REIT, INC., a Delaware
    corporation (the “Corporation”), and FRED S.
    KLIPSCH (the “Consultant”).

 

    WHEREAS, the Consultant serves as an executive officer of
    Windrose Medical Properties Trust (the
    “Trust”), which is the sole general partner of
    Windrose Medical Properties L.P. (the “LP”);

 

    WHEREAS, the Corporation and certain of its subsidiaries,
    simultaneously with the execution of this Agreement, are
    entering into an Agreement and Plan of Merger with the Trust and
    the LP (“Merger Agreement”) providing for the
    merger of the Company into a wholly owned subsidiary of the
    Corporation and the merger of a wholly owned subsidiary of the
    Corporation into the LP (collectively, the
    “Mergers”);

 

    WHEREAS, effective as of the Effective Date, the
    Corporation wishes to assure itself of the services of the
    Consultant for the period provided in this Agreement, and has
    required that the effectiveness and closing of the Mergers are
    conditioned upon this Agreement being in effect at the Effective
    Date; and

 

    WHEREAS, the Consultant is willing to provide services to
    the Corporation for such period upon the terms and conditions
    set forth in this Agreement.

 

    NOW THEREFORE, in consideration of the mutual covenants
    herein contained, the parties, intending to be legally bound,
    agree as follows:

 

		
	
    1.  
	
    CONSULTING
    SERVICES.  
    

 

    Effective as of the Effective Date, the Corporation retains the
    Consultant as Vice Chairman of the Corporation, and the
    Consultant agrees to perform such services as the parties
    mutually agree that are customarily performed by such officer in
    a publicly traded corporation, upon the terms and conditions
    herein contained. In such capacity, the Consultant shall report
    to the Chairman and Chief Executive Officer of the Corporation.

 

    Throughout the Term of this Agreement, the Consultant shall
    devote his best efforts to the business and affairs of the
    Corporation and shall devote such time to the performance of the
    duties described herein as the parties mutually agree. The
    Corporation acknowledges that the Consultant has an ownership
    interest in, and management responsibilities with, Klipsch Group
    Inc., and may have other positions, duties and responsibilities
    involving the Klipsch Group, Inc. that are permissible in all
    respects hereunder.

 

		
	
    2.  
	
    TERM
    OF
    AGREEMENT.  
    

 

    The term of this Agreement (“Term”) shall be
    for two years beginning on the Effective Date and expiring on
    the day before the second anniversary of the Effective Date.

 

    Notwithstanding the foregoing, the Corporation or the Consultant
    shall be entitled to terminate this Agreement before the Term
    expires, as described in Section 5, subject to a continuing
    obligation to make any payments required under Section 5
    below.

 

		
	
    3.  
	
    COMPENSATION.  
    

 

    (a) Retention Bonus.  The
    Consultant shall receive a retention bonus on the later of
    (x) the Effective Date or (y) January 2, 2007 of
    (i) $975,500 plus (ii) shares of the
    Corporation’s common stock having a value of $930,000
    (“Initial Stock Award”) based on the closing
    price of the Corporation’s common stock as of the Effective
    Date. All such shares shall be fully vested on the Effective
    Date and shall be fully registered under state and federal
    securities laws and approved for listing on the New York Stock
    Exchange so as to be freely tradable by the Consultant at the
    time of receipt; provided, however, that (x) until the
    first anniversary of the payment of the retention bonus, no
    portion of the stock granted as part of the Initial Stock Award
    may be sold and (y) until the second anniversary of the

 

    payment of the retention bonus, no more than one-half of the
    stock granted as part of the Initial Stock Award may be sold.

 

    (b) Base Fee.  The Consultant shall
    receive a base consulting fee (“Base Fee”)
    during the Term as follows, payable in equal semi-monthly
    installments in a manner consistent with the Corporation’s
    customary practice for payroll payments:

 

	 	 	 	 	 
	

    Year

	
 
	
    Annual Base Fee

	 

	

    Year 1
    

	
 
	
    $
	
    350,000
	
 

	

    Year 2
    

	
 
	
    $
	
    250,000
	
 

 

    (c) Performance Bonus.  The
    Consultant shall also be eligible to receive a bonus
    (“Performance Bonus”) from the Corporation each
    fiscal year during the Term. The amount of the Performance Bonus
    shall be determined by the Compensation Committee of the
    Corporation’s Board, using such performance measures as the
    Compensation Committee deems to be appropriate; provided,
    however, that the target amount of such Performance Bonus for
    2007 and 2008 shall be between 60% and 120% of the
    Consultant’s Base Fee.

 

    (d) Cash Payment.  On the later of
    (x) the Effective Date and (y) January 2, 2007,
    the Corporation will pay to the Consultant, in cash, the amount
    of $1,680,000, which amount shall be in lieu of the cash
    payments payable to the Consultant upon a change of control
    under (i) the Change of Control Severance Agreement dated
    August 1, 2002 between the Consultant and the Trust and the
    LP or (ii) the Employment Agreement dated February 21,
    2005 between the Consultant and the Trust and the LP (other than
    payment of (A) any accrued but unpaid salary through the
    Effective Date, (B) any bonus that has been earned but
    which remains unpaid as of the Effective Date and
    (C) reimbursement of any expenses that the Consultant
    incurred on behalf of the Trust or the LP, all of which shall
    continue to be payable to the Consultant by the Trust and the
    LP).

 

    (e) 2006 Bonus.  Notwithstanding
    anything herein to the contrary, and in addition to any other
    payments described herein, if not paid by the Trust or the LP
    prior to the Effective Date, the Corporation shall pay to the
    Consultant, not later than the later of the Effective Date or
    March 31, 2007, the cash amount of $210,000, representing
    the full amount of the Consultant’s bonus for 2006 from the
    Trust and the LP in accordance with the bonus criteria for the
    Consultant in place for the 2006 fiscal year.

 

		
	
    4.  
	
    BUSINESS
    EXPENSES.  
    

 

    The Corporation shall reimburse the Consultant for all
    reasonable expenses he incurs in promoting the
    Corporation’s business, including expenses for travel
    (including first class air travel) and similar items, upon
    presentation by the Consultant from time to time of an itemized
    account of such expenditures.

 

		
	
    5.  
	
    PAYMENTS
    UPON
    TERMINATION.  
    

 

    (a) Termination.  If the
    Consultant’s services are terminated by the Corporation or
    the Consultant terminates providing services to the Corporation
    before the end of the Term, for any reason other than death or
    disability, the Consultant shall be entitled to receive his Base
    Fee accrued through the date of termination, plus any
    Performance Bonuses earned but unpaid with respect to fiscal
    years or other periods (including partial fiscal years)
    preceding the termination date.

 

    The Corporation shall also be obligated to make a series of
    monthly severance payments to the Consultant for each month
    during the remainder of the Term. Each monthly payment shall be
    equal to the Consultant’s monthly Base Fee during the
    balance of the Term and shall be paid at such time as the
    monthly Base Fee would otherwise be payable.

 

    In addition, the Corporation shall make the eight consecutive
    quarterly payments to the Consultant described in
    Section 7, with the first such payment commencing on the
    date of termination.

 

    (b) Disability.  The Corporation
    shall be entitled to terminate this Agreement, if the Board
    determines that the Consultant has been unable to attend to his
    duties for at least 90 days because of a medically
    diagnosable physical or mental condition, and has received a
    written opinion from a physician acceptable to the Board that
    such condition prevents the Consultant from resuming full
    performance of his duties and is likely to continue for an

    

    2

 

    indefinite period. Upon such termination, the Consultant shall
    be entitled to receive his Base Fee accrued through the date of
    termination, plus any Performance Bonuses earned but unpaid with
    respect to fiscal years or other periods (including partial
    fiscal years) preceding the termination date. In addition, the
    Corporation shall make a series of monthly disability payments
    to the Consultant, each equal to his monthly Base Fee, during
    the balance of the Term (provided that in no event will the
    Consultant fail to receive, in each month during the Term, an
    amount equal to the monthly Base Fee). Payment of such
    disability benefit shall commence with the month following the
    date of the termination by reason of permanent disability and
    shall continue each month for the remainder of the Term, but
    shall terminate at an earlier date if the Consultant returns to
    active service as a consultant to the Corporation. Any amounts
    payable under this Section 5(b) shall be reduced by any
    amounts paid to the Consultant under any long-term disability
    plan or other disability program or disability insurance
    policies maintained or provided by the Corporation.

 

    (c) Death.  If the Consultant dies
    during the Term, the Corporation shall pay to the
    Consultant’s estate a lump sum payment equal to the sum of
    the Consultant’s Base Fee accrued through the date of
    death, plus any Performance Bonus earned but unpaid with respect
    to fiscal years or other periods (including partial fiscal
    years) preceding the date of death. In addition, the Corporation
    shall pay to the Consultant’s surviving spouse (or such
    other beneficiary as the Consultant may designate in writing) a
    lump sum payment equal to the present value of (i) the
    monthly Base Fee that would have been paid during the remainder
    of the Term plus (ii) the sum of the payments described in
    the third paragraph of Section 7 if the Consultant’s
    services terminate for a reason other than death. Such present
    value shall be calculated using a discount rate equal to the
    interest rate on
    90-day
    Treasury bills, as reported in The Wall Street Journal
    (or similar publication) for the date of death. In addition,
    stock options, restricted stock or other awards held by the
    Consultant under the Corporation’s stock plans shall become
    fully vested, and, in the case of stock options, exercisable in
    full, in accordance with the terms of the applicable plan or
    plans.

 

    (d) Section 409A.  This
    Section 5(d) applies if any benefit or payment under this
    Agreement that is payable on account of termination of the
    Consultant’s employment is subject to Section 409A of
    the Internal Revenue Code of 1986, as amended (the
    “Code”) and the Consultant is a “specified
    employee” (as defined in Section 409A of the Code). In
    that event, any such benefit or payment that is payable on
    account of the Consultant’s termination of service shall
    begin to be paid on the first day of the seventh month beginning
    after the Consultant’s termination of employment. The first
    payment of such benefit or payment shall include the amount that
    would have been paid following the Consultant’s termination
    of employment and on or before such first payment but for the
    requirement of the preceding sentence.

 

		
	
    6.  
	
    PROTECTION
    OF CONFIDENTIAL
    INFORMATION.  
    

 

    The Consultant shall keep all confidential and proprietary
    information of the Corporation or relating to its business
    confidential, and he will not (except with the
    Corporation’s prior written consent), while providing
    services to the Corporation or thereafter, disclose any such
    confidential information to any person, firm, corporation,
    association or other entity, other than in furtherance of his
    duties hereunder, and then only to those with a “need to
    know.” The Consultant shall not make use of any such
    confidential information for his own purposes or for the benefit
    of any person, firm, corporation, association or other entity
    (except the Corporation) under any circumstances during or after
    the Term. The foregoing shall not apply to any information which
    is already in the public domain, or is generally disclosed by
    the Corporation or is otherwise in the public domain at the time
    of disclosure.

 

    The Consultant recognizes that because his services to the
    Corporation may bring him into contact with confidential and
    proprietary information of the Corporation, the restrictions of
    this Section 6 are required for the reasonable protection
    of the Corporation and its investments and for the
    Corporation’s reliance on and confidence in the Consultant.

 

		
	
    7.  
	
    COVENANT
    NOT TO
    COMPETE.  
    

 

    The Corporation and the Consultant acknowledge and agree that as
    a former executive officer of the Trust, the Consultant has
    knowledge and experience in the business of the Trust and that
    the limitations on the Consultant’s activities and the
    payments described in this Section 7 are reasonable and
    appropriate. The Consultant shall not,

    

    3

 

    either during the Term or during the period of two years from
    the time the Consultant’s services under this Agreement are
    terminated for any reason, engage in any business activities on
    behalf of any enterprise which competes with the Corporation in
    the business of the passive ownership of senior housing or
    health care facilities, or passive investing in or lending to
    senior housing or health care-related enterprises, including,
    without limitation, medical office buildings, hospitals of any
    kind, independent living facilities, assisted living facilities,
    skilled nursing facilities, inpatient rehabilitation facilities,
    ambulatory surgery centers, active adult projects or any similar
    types of facilities or projects. The Consultant will be deemed
    to be engaged in such competitive business activities if he
    participates in such a business enterprise as an employee,
    officer, director, trustee, consultant, agent, partner,
    proprietor or other participant; provided that the ownership of
    no more than 2% of the stock of a publicly traded entity engaged
    in a competitive business shall not be deemed to be engaging in
    competitive business activities.

 

    The Consultant shall not, for a period of two years from the
    time his services under this Agreement cease (for whatever
    reason), solicit any employee or full-time consultant of the
    Corporation for the purposes of hiring or retaining such
    employee or consultant other than Daniel R. Loftus, in his
    capacity as an attorney. Notwithstanding the foregoing, the
    Consultant may solicit, hire or retain either Daniel R. Loftus
    or Paula Conroy at any time after they cease to be employed by
    the Corporation.

 

    In consideration for compliance with this covenant, the
    Consultant will receive a payment of $75,000 each quarter with
    the first quarterly payment commencing on the date the
    Consultant’s services are terminated under this Agreement
    for any reason, including expiration of the Term or disability
    (but not death) and continuing for seven consecutive quarters
    thereafter, for a total of eight consecutive quarterly payments.

 

    Notwithstanding the provisions of any other agreement between
    the Consultant and the Trust, the LP or any of their affiliates,
    including but not limited to Sections 7 and 8 of the
    Employment Agreement dated February 21, 2005 between the
    Consultant and the Trust and the LP, the parties agree that the
    provisions of any such other agreement that purport to restrict
    the business, employment or investment activities of the
    Consultant or impose confidentiality obligations on the
    Consultant shall be null and void and of no further force and
    effect as of the Effective Time and thereafter the provisions of
    Section 6 and this Section 7 shall be the sole
    provisions relating to restriction on the business, employment
    or business, the Trust, the LP activities or confidentiality
    obligations binding upon the Consultant or enforceable by the
    Corporation or any of their subsidiaries or affiliates.

 

		
	
    8.  
	
    INJUNCTIVE
    RELIEF.  
    

 

    The Consultant acknowledges and agrees that it would be
    difficult to fully compensate the Corporation for damages
    resulting from the breach or threatened breach of the covenants
    set forth in Sections 6 and 7 of this Agreement.
    Accordingly, the Corporation shall be entitled to temporary and
    injunctive relief, including temporary restraining orders,
    preliminary injunctions and permanent injunctions, to enforce
    such provisions in any action or proceeding instituted in the
    United States District Court for the Northern District of Ohio
    or in any court in the State of Ohio having subject matter
    jurisdiction. This provision with respect to injunctive relief
    shall not, however, diminish the Corporation’s right to
    claim and recover damages.

 

    It is expressly understood and agreed that although the parties
    consider the restrictions contained in this Agreement to be
    reasonable, if a court determines that the time or territory or
    any other restriction contained in this Agreement is an
    unenforceable restriction on the activities of the Consultant,
    no such provision of this Agreement shall be rendered void but
    shall be deemed amended to apply as to such maximum time and
    territory and to such extent as such court may judicially
    determine or indicate to be reasonable.

    

    4

 

		
	
    9.  
	
    NOTICES.  
    

 

    All notices or communications hereunder shall be in writing and
    sent by certified or registered mail, return receipt requested,
    postage prepaid, addressed as follows (or to such other address
    as such party may designate in writing from time to time):

 

    If to the Corporation:

 

    Health Care REIT, Inc.

    One SeaGate, Suite 1500

    Toledo, Ohio 43604

    Attention: Chief Executive Officer

 

    If to the Consultant:

 

    Fred S. Klipsch

    Windrose Medical Properties Trust

    3502 Woodview Trace, Suite 210

    Indianapolis, Indiana 46268

 

    The actual date of receipt, as shown by the receipt therefor,
    shall determine the time at which notice was given.

 

		
	
    10.  
	
    SEPARABILITY.  
    

 

    If any provision of this Agreement shall be declared to be
    invalid or unenforceable, in whole or in part, such invalidity
    or unenforceability shall not affect the remaining provisions
    hereof, which shall remain in full force and effect.

 

		
	
    11.  
	
    ASSIGNMENT.  
    

 

    This Agreement shall be binding upon and inure to the benefit of
    the heirs and representatives of the Consultant and the assigns
    and successors of the Corporation, but neither this Agreement
    nor any rights hereunder shall be assignable or otherwise
    subject to hypothecation by the Consultant. The Corporation may
    assign this Agreement with prior written notice to the
    Consultant, but such assignment shall not release the
    Corporation from any liability hereunder.

 

		
	
    12.  
	
    ENTIRE
    AGREEMENT.  
    

 

    This Agreement represents the entire agreement of the parties
    and shall supersede any and all previous contracts, arrangements
    or understandings between the Corporation, the LP or the Trust
    and the Consultant, including the Change of Control Severance
    Agreement dated on or about August 16, 2002 and the
    Confidentiality Agreement dated on or about August 16, 2002
    among the Consultant and the Trust and the LP. This Agreement
    may be amended at any time by mutual written agreement of the
    parties hereto.

 

		
	
    13.  
	
    GOVERNING
    LAW.  
    

 

    This Agreement shall be construed, interpreted and governed in
    accordance with the laws of the State of Ohio, other than the
    conflict of laws provisions of such laws.

 

		
	
    14.  
	
    SURVIVAL.  
    

 

    Sections 5, 6, 7, 8, 10, 12, 13 and 15 shall
    survive any expiration or termination of this Agreement.

 

		
	
    15.  
	
    EXCISE
    TAX
    INDEMNIFICATION.  
    

 

    The Consultant shall be entitled to a payment or payments under
    this Section 15 if any payment or benefit provided under
    this Agreement or any other plan, agreement or arrangement with
    the Corporation, the Trust, the LP or any of their affiliates
    constitutes an “excess parachute payment” (as defined
    in Section 280G(b)(1) of the Code, but without regard to
    Section 280G(b)(2)(A)(ii) of the Code) and the Consultant
    incurs a liability under Section 4999

    

    5

 

    of the Code. The amount payable to the Consultant under this
    Section 15 shall be the amount required to indemnify the
    Consultant and hold him harmless from the application of
    Sections 280G and 4999 of the Code, together with any
    interest or penalties related thereto, with respect to benefits,
    payments, accelerated exercisability and vesting and other
    rights under this Agreement or otherwise, and any income,
    employment, hospitalization, excise and other taxes and
    penalties attributable to the indemnification payment. The
    benefit payable under this Section 15 shall be calculated
    and paid not later than the date (or extended filing date) on
    which the tax return reflecting liability for the excise tax
    under Section 4999 of the Code is required to be filed with
    the Internal Revenue Service. To the extent that any other plan,
    agreement or arrangement requires that the Consultant be
    indemnified and held harmless from the application of
    Sections 280G and 4999 of the Code, any such
    indemnification and the amount required to be paid to the
    Executive under this Section 15 shall be coordinated so
    that such indemnification is paid only once and the obligations
    of the Corporation, the Trust, the LP or any of their affiliates
    shall be satisfied to the extent of any such other payment (and
    vice versa).

 

    The Consultant and the Corporation agree that the application of
    Sections 280G and 4999 of the Code may not be clear in all
    cases. The Consultant agrees that the Company may take the
    position that all or part of a payment or payments are not
    “excess parachute payments” (as defined above) and do
    not result in liability under Section 4999 of the Code. The
    Consultant agrees that his individual tax returns will be
    prepared in a manner that is consistent with the
    Corporation’s position on such matters if the
    Consultant’s professional tax preparer concludes, in his or
    her professional opinion, that the Corporation’s position
    is reasonable based on published rulings, regulations and other
    authority. If the Consultant’s individual income tax return
    is prepared in accordance with the preceding sentence, i.e., in
    a manner consistent with the Corporation’s position, then
    (in addition to any benefit payable under the preceding
    paragraph) the Corporation shall indemnify the Consultant, and
    hold him harmless, from any liability for tax, penalty, interest
    or otherwise arising from the position stated on the
    Consultant’s individual income tax return related to the
    application of Section 280G or 4999 of the Code to payments
    from the Corporation, the Trust, the LP or any of their
    affiliates. If the Consultant’s professional tax preparer
    does not agree that the Corporation’s position is
    reasonable based on published rulings, regulations and other
    authority, then the Consultant’s individual tax return will
    reflect any liability under Section 4999 of the Code that
    such professional tax preparer determines is appropriate and the
    Corporation shall indemnify the Consultant and hold him harmless
    in accordance with the preceding paragraph.

 

		
	
    16.  
	
    INDEMNIFICATION.  
    

 

    From and after the Effective Date, the Corporation hereby agrees
    to indemnify, defend and hold harmless the Consultant from and
    against any claim, loss, damage, liability or expense to which
    the Consultant shall become subject, under any agreement, common
    law or otherwise, arising out of or based upon any guaranty
    executed by the Consultant in favor of Wells Fargo, as Trustee,
    in connection with the Mount Vernon, Georgia facility.

    

    6

 

    IN WITNESS WHEREOF, this Agreement is executed by the
    Corporation and the Consultant as of the date set forth above
    and effective as of the Effective Date.

 

	 	 	 
	

    Attest:

	
 
	
    HEALTH CARE REIT,
    INC.

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
    /s/  Erin
    C. Ibele

    

    
	
 
	
    By: /s/  George
    L. Chapman
    

Chief
    Executive Officer
    

	
 
	
 
	
 

	

    Witness:

	
 
	
    CONSULTANT:

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
    /s/  Erin
    C. Ibele

    

    
	
 
	
    By: /s/  Fred
    S. Klipsch
    

Fred
    S. Klipsch 
    

    

    7EX-10.2

 

    Exhibit 10.2

 

    CONSULTING
    AGREEMENT

 

    THIS CONSULTING AGREEMENT (the
    “Agreement”), dated September 12, 2006,
    shall become effective upon the consummation of the merger
    contemplated by the Agreement and Plan of Merger referenced
    below (the “Effective Date”), and is entered
    into by and between HEALTH CARE REIT, INC., a Delaware
    corporation (the “Corporation”), and
    FREDERICK L. FARRAR (the “Consultant”).

 

    WHEREAS, the Consultant serves as an executive officer of
    Windrose Medical Properties Trust (the
    “Trust”), which is the sole general partner of
    Windrose Medical Properties L.P. (the “LP”);

 

    WHEREAS, the Corporation and certain of its subsidiaries,
    simultaneously with the execution of this Agreement, are
    entering into an Agreement and Plan of Merger with the Trust and
    the LP (“Merger Agreement”) providing for the
    merger of the Company into a wholly owned subsidiary of the
    Corporation and the merger of a wholly owned subsidiary of the
    Corporation into the LP (collectively, the
    “Mergers”);

 

    WHEREAS, effective as of the Effective Date, the
    Corporation wishes to assure itself of the services of the
    Consultant for the period provided in this Agreement, and has
    required that the effectiveness and closing of the Mergers are
    conditioned upon this Agreement being in effect at the Effective
    Date; and

 

    WHEREAS, the Consultant is willing to provide services to
    the Corporation for such period upon the terms and conditions
    set forth in this Agreement.

 

    NOW THEREFORE, in consideration of the mutual covenants
    herein contained, the parties, intending to be legally bound,
    agree as follows:

 

		
	
    1.  
	
    CONSULTING
    SERVICES.  
    

 

    Effective as of the Effective Date, the Corporation retains the
    Consultant as an Executive Vice President of the Corporation and
    President of the Medical Properties Division (the
    “Division”) of the Corporation, and the
    Consultant agrees to perform such services as the parties
    mutually agree that are customarily performed by such officer in
    a publicly traded corporation, upon the terms and conditions
    herein contained. In such capacity, the Consultant shall report
    to the Chairman and Chief Executive Officer of the Corporation
    and to the President of the Corporation.

 

    Throughout the Term of this Agreement, the Consultant shall
    devote his best efforts to the business and affairs of the
    Corporation and shall devote such time to the performance of the
    duties described herein as the parties mutually agree. The
    Corporation acknowledges that the Consultant has an ownership
    interest in, and management responsibilities with, Klipsch Group
    Inc., and may have other positions, duties and responsibilities
    involving the Klipsch Group, Inc. that are permissible in all
    respects hereunder.

 

		
	
    2.  
	
    TERM
    OF
    AGREEMENT.  
    

 

    The term of this Agreement (“Term”) shall be
    for two years beginning on the Effective Date and expiring on
    the day before the second anniversary of the Effective Date.

 

    Notwithstanding the foregoing, the Corporation or the Consultant
    shall be entitled to terminate this Agreement before the Term
    expires, as described in Section 5, subject to a continuing
    obligation to make any payments required under Section 5
    below.

 

		
	
    3.  
	
    COMPENSATION.  
    

 

    (a) Retention Bonus.  The
    Consultant shall receive a retention bonus on the later of
    (x) the Effective Date or (y) January 2, 2007 of
    (i) $529,500 plus (ii) shares of the
    Corporation’s common stock having a value of $500,000
    (“Initial Stock Award”) based on the closing
    price of the Corporation’s common stock as of the Effective
    Date. All such shares shall be fully vested on the Effective
    Date and shall be fully registered under state and federal
    securities laws and approved for listing on the New York Stock
    Exchange so as to be freely tradable by the Consultant at the

 

    time of receipt; provided, however, that (x) until the
    first anniversary of the payment of the retention bonus, no
    portion of the stock granted as part of the Initial Stock Award
    may be sold and (y) until the second anniversary of the
    payment of the retention bonus, no more than one-half of the
    stock granted as part of the Initial Stock Award may be sold.

 

    (b) Base Fee.  The Consultant shall
    receive a base consulting fee (“Base Fee”)
    during the Term as follows, payable in equal semi-monthly
    installments in a manner consistent with the Corporation’s
    customary practice for payroll payments:

 

	 	 	 	 	 
	

    Year

	
 
	
    Annual Base Fee

	 

	

    Year 1
    

	
 
	
    $
	
    300,000
	
 

	

    Year 2
    

	
 
	
    $
	
    300,000
	
 

 

    (c) Performance Bonus.  The
    Consultant shall also be eligible to receive a bonus
    (“Performance Bonus”) from the Corporation each
    fiscal year during the Term. The amount of the Performance Bonus
    shall be determined by the Compensation Committee of the
    Corporation’s Board, using such performance measures as the
    Compensation Committee deems to be appropriate; provided,
    however, that the target amount of such Performance Bonus for
    2007 and 2008 shall be between 30% and 75% of the
    Consultant’s Base Fee.

 

    (d) Cash Payment.  On the later of
    (x) the Effective Date and (y) January 2, 2007,
    the Corporation will pay to the Consultant, in cash, the amount
    of $1,200,000, which amount shall be in lieu of the cash
    payments payable to the Consultant upon a change of control
    under (i) the Change of Control Severance Agreement dated
    August 1, 2002 between the Consultant and the Trust and the
    LP or (ii) the Employment Agreement dated February 21,
    2005 between the Consultant and the Trust and the LP (other than
    payment of (A) any accrued but unpaid salary through the
    Effective Date, (B) any bonus that has been earned but
    which remains unpaid as of the Effective Date and
    (C) reimbursement of any expenses that the Consultant
    incurred on behalf of the Trust or the LP, all of which shall
    continue to be payable to the Consultant by the Trust and the
    LP).

 

    (e) 2006 Bonus.  Notwithstanding
    anything herein to the contrary, and in addition to any other
    payments described herein, if not paid by the Trust or the LP
    prior to the Effective Date, the Corporation shall pay to the
    Consultant, no later than the later of the Effective date or
    March 15, 2007, the cash amount of $150,000, representing
    the full amount of the Consultant’s bonus for 2006 from the
    Trust and the LP in accordance with the bonus criteria for the
    Consultant in place for the 2006 fiscal year.

 

    (f) Stock Options and Other Long-Term
    Incentives.  During the Term, any stock
    options, restricted stock or other awards under the
    Corporation’s 2005 Long-Term Incentive Plan shall be at the
    discretion of the Compensation Committee of the
    Corporation’s Board; provided, however, that the target
    Long-Term Incentive Range shall be between 35% and 75% of the
    Consultant’s Base Fee and Performance Bonus. Any awards
    given during the Term will vest over two years.

 

		
	
    4.  
	
    BUSINESS
    EXPENSES.  
    

 

    The Corporation shall reimburse the Consultant for all
    reasonable expenses he incurs in promoting the
    Corporation’s business, including expenses for travel
    (including first class air travel) and similar items, upon
    presentation by the Consultant from time to time of an itemized
    account of such expenditures.

 

		
	
    5.  
	
    PAYMENTS
    UPON
    TERMINATION.  
    

 

    (a) Termination.  If the
    Consultant’s services are terminated by the Corporation or
    the Consultant terminates providing services to the Corporation
    before the end of the Term, for any reason other than death or
    disability, the Consultant shall be entitled to receive his Base
    Fee accrued through the date of termination, plus any
    Performance Bonuses earned but unpaid with respect to fiscal
    years or other periods (including partial fiscal years)
    preceding the termination date.

 

    The Corporation shall also be obligated to make a series of
    monthly severance payments to the Consultant for each month
    during the remainder of the Term. Each monthly payment shall be
    equal to the Consultant’s monthly

    

    2

 

    Base Fee during the balance of the Term and shall be paid at
    such time as the monthly Base Fee would otherwise be payable.

 

    In addition:

 

    (i) if the termination is not a voluntary termination by
    Consultant or a termination for Cause (hereinafter defined), at
    the time of termination, any stock awards, any stock options,
    restricted stock or other awards granted to the Consultant
    pursuant to Section 3(f) shall become fully vested and, in
    the case of stock options, exercisable in full; and

 

    (ii) the Corporation shall make the eight consecutive
    quarterly payments to the Consultant described in
    Section 7, with the first such payment commencing on the
    date of termination.

 

    As used herein, “Cause” means (i) action by the
    Consultant involving willful disloyalty to the Corporation, such
    as embezzlement, fraud, misappropriation of corporate assets or
    a breach of the covenants set forth in Sections 6 and 7
    below; or (ii) the Consultant being convicted of a felony;
    or (iii) the Consultant being convicted of any lesser crime
    or offense committed in connection with the performance of his
    duties hereunder or involving moral turpitude; or (iv) the
    intentional and willful failure by the Consultant to
    substantially perform his duties hereunder as directed by the
    Corporation’s Chairman, Vice Chairman, Chief Executive
    Officer or President (other than any such failure resulting from
    the Consultant’s incapacity due to physical or mental
    disability); or (v) the Consultant’s failure to obtain
    minimum performance goals to be determined by the Compensation
    Committee of the Corporation’s Board, in its discretion.
    Notwithstanding the foregoing, willful disloyalty shall not be
    deemed to include the refusal of the Consultant to engage in any
    unlawful or unethical conduct or conduct in violation of the
    Corporation’s policies.

 

    (b) Disability.  The Corporation
    shall be entitled to terminate this Agreement, if the Board
    determines that the Consultant has been unable to attend to his
    duties for at least 90 days because of a medically
    diagnosable physical or mental condition, and has received a
    written opinion from a physician acceptable to the Board that
    such condition prevents the Consultant from resuming full
    performance of his duties and is likely to continue for an
    indefinite period. Upon such termination, the Consultant shall
    be entitled to receive his Base Fee accrued through the date of
    termination, plus any Performance Bonuses earned but unpaid with
    respect to fiscal years or other periods (including partial
    fiscal years) preceding the termination date. In addition, the
    Corporation shall make a series of monthly disability payments
    to the Consultant, each equal to his monthly Base Fee, during
    the balance of the Term (provided that in no event will the
    Consultant fail to receive, in each month during the Term, an
    amount equal to the monthly Base Fee). Payment of such
    disability benefit shall commence with the month following the
    date of the termination by reason of permanent disability and
    shall continue each month for the remainder of the Term, but
    shall terminate at an earlier date if the Consultant returns to
    active service as a consultant to the Corporation. Any amounts
    payable under this Section 5(b) shall be reduced by any
    amounts paid to the Consultant under any long-term disability
    plan or other disability program or disability insurance
    policies maintained or provided by the Corporation.

 

    (c) Death.  If the Consultant dies
    during the Term, the Corporation shall pay to the
    Consultant’s estate a lump sum payment equal to the sum of
    the Consultant’s Base Fee accrued through the date of
    death, plus any Performance Bonus earned but unpaid with respect
    to fiscal years or other periods (including partial fiscal
    years) preceding the date of death. In addition, the Corporation
    shall pay to the Consultant’s surviving spouse (or such
    other beneficiary as the Consultant may designate in writing) a
    lump sum payment equal to the present value of (i) the
    monthly Base Fee that would have been paid during the remainder
    of the Term plus (ii) the sum of the payments described in
    the third paragraph of Section 7 if the Consultant’s
    services terminate for a reason other than death. Such present
    value shall be calculated using a discount rate equal to the
    interest rate on
    90-day
    Treasury bills, as reported in The Wall Street Journal
    (or similar publication) for the date of death. In addition,
    stock options, restricted stock or other awards held by the
    Consultant under the Corporation’s stock plans shall become
    fully vested, and, in the case of stock options, exercisable in
    full, in accordance with the terms of the applicable plan or
    plans.

 

    (d) Section 409A.  This
    Section 5(d) applies if any benefit or payment under this
    Agreement that is payable on account of termination of the
    Consultant’s employment is subject to Section 409A of
    the Internal Revenue Code of 1986, as amended (the
    “Code”) and the Consultant is a “specified
    employee” (as defined in Section 409A of the Code). In
    that event, any such benefit or payment that is payable on
    account of the Consultant’s termination of

    

    3

 

    service shall begin to be paid on the first day of the seventh
    month beginning after the Consultant’s termination of
    employment. The first payment of such benefit or payment shall
    include the amount that would have been paid following the
    Consultant’s termination of employment and on or before
    such first payment but for the requirement of the preceding
    sentence.

 

		
	
    6.  
	
    PROTECTION
    OF CONFIDENTIAL
    INFORMATION.  
    

 

    The Consultant shall keep all confidential and proprietary
    information of the Corporation or relating to its business
    confidential, and he will not (except with the
    Corporation’s prior written consent), while providing
    services to the Corporation or thereafter, disclose any such
    confidential information to any person, firm, corporation,
    association or other entity, other than in furtherance of his
    duties hereunder, and then only to those with a “need to
    know.” The Consultant shall not make use of any such
    confidential information for his own purposes or for the benefit
    of any person, firm, corporation, association or other entity
    (except the Corporation) under any circumstances during or after
    the Term. The foregoing shall not apply to any information which
    is already in the public domain, or is generally disclosed by
    the Corporation or is otherwise in the public domain at the time
    of disclosure.

 

    The Consultant recognizes that because his services to the
    Corporation may bring him into contact with confidential and
    proprietary information of the Corporation, the restrictions of
    this Section 6 are required for the reasonable protection
    of the Corporation and its investments and for the
    Corporation’s reliance on and confidence in the Consultant.

 

		
	
    7.  
	
    COVENANT
    NOT TO
    COMPETE.  
    

 

    The Corporation and the Consultant acknowledge and agree that as
    a former executive officer of the Trust, the Consultant has
    knowledge and experience in the business of the Trust and that
    the limitations on the Consultant’s activities and the
    payments described in this Section 7 are reasonable and
    appropriate. The Consultant shall not, either during the Term or
    during the period of two years from the time the
    Consultant’s services under this Agreement are terminated
    for any reason, engage in any business activities on behalf of
    any enterprise which competes with the Corporation in the
    business of the passive ownership of senior housing or health
    care facilities, or passive investing in or lending to senior
    housing or health care-related enterprises, including, without
    limitation, medical office buildings, hospitals of any kind,
    independent living facilities, assisted living facilities,
    skilled nursing facilities, inpatient rehabilitation facilities,
    ambulatory surgery centers, active adult projects or any similar
    types of facilities or projects. The Consultant will be deemed
    to be engaged in such competitive business activities if he
    participates in such a business enterprise as an employee,
    officer, director, trustee, consultant, agent, partner,
    proprietor or other participant; provided that the ownership of
    no more than 2% of the stock of a publicly traded entity engaged
    in a competitive business shall not be deemed to be engaging in
    competitive business activities.

 

    The Consultant shall not, for a period of two years from the
    time his services under this Agreement cease (for whatever
    reason), solicit any employee or full-time consultant of the
    Corporation for the purposes of hiring or retaining such
    employee or consultant other than Daniel R. Loftus, in his
    capacity as an attorney. Notwithstanding the foregoing, the
    Consultant may solicit, hire or retain either Daniel R. Loftus
    or Paula Conroy at any time after they cease to be employed by
    the Corporation.

 

    In consideration for compliance with this covenant, the
    Consultant will receive a payment of $37,500 each quarter with
    the first quarterly payment commencing on the date the
    Consultant’s services are terminated under this Agreement
    for any reason, including expiration of the Term or disability
    (but not death) and continuing for seven consecutive quarters
    thereafter, for a total of eight consecutive quarterly payments.

 

    Notwithstanding the provisions of any other agreement between
    the Consultant and the Trust, the LP or any of their affiliates,
    including but not limited to Sections 7 and 8 of the
    Employment Agreement dated February 21, 2005 between the
    Consultant and the Trust and the LP, the parties agree that the
    provisions of any such other agreement that purport to restrict
    the business, employment or investment activities of the
    Consultant or impose confidentiality obligations on the
    Consultant shall be null and void and of no further force and
    effect as of the Effective Time and thereafter the provisions of
    Section 6 and this Section 7 shall be the sole
    provisions relating to restriction on the

    

    4

 

    business, employment or business, the Trust, the LP activities
    or confidentiality obligations binding upon the Consultant or
    enforceable by the Corporation or any of their subsidiaries or
    affiliates.

 

		
	
    8.  
	
    INJUNCTIVE
    RELIEF.  
    

 

    The Consultant acknowledges and agrees that it would be
    difficult to fully compensate the Corporation for damages
    resulting from the breach or threatened breach of the covenants
    set forth in Sections 6 and 7 of this Agreement.
    Accordingly, the Corporation shall be entitled to temporary and
    injunctive relief, including temporary restraining orders,
    preliminary injunctions and permanent injunctions, to enforce
    such provisions in any action or proceeding instituted in the
    United States District Court for the Northern District of Ohio
    or in any court in the State of Ohio having subject matter
    jurisdiction. This provision with respect to injunctive relief
    shall not, however, diminish the Corporation’s right to
    claim and recover damages.

 

    It is expressly understood and agreed that although the parties
    consider the restrictions contained in this Agreement to be
    reasonable, if a court determines that the time or territory or
    any other restriction contained in this Agreement is an
    unenforceable restriction on the activities of the Consultant,
    no such provision of this Agreement shall be rendered void but
    shall be deemed amended to apply as to such maximum time and
    territory and to such extent as such court may judicially
    determine or indicate to be reasonable.

 

		
	
    9.  
	
    NOTICES.  
    

 

    All notices or communications hereunder shall be in writing and
    sent by certified or registered mail, return receipt requested,
    postage prepaid, addressed as follows (or to such other address
    as such party may designate in writing from time to time):

 

    If to the Corporation:

 

    Health Care REIT, Inc.

    One SeaGate, Suite 1500

    Toledo, Ohio 43604

    Attention: Chief Executive Officer

 

    If to the Consultant:

 

    Frederick L. Farrar

    Windrose Medical Properties Trust

    3502 Woodview Trace, Suite 210

    Indianapolis, Indiana 46268

 

    The actual date of receipt, as shown by the receipt therefor,
    shall determine the time at which notice was given.

 

		
	
    10.  
	
    SEPARABILITY.  
    

 

    If any provision of this Agreement shall be declared to be
    invalid or unenforceable, in whole or in part, such invalidity
    or unenforceability shall not affect the remaining provisions
    hereof, which shall remain in full force and effect.

 

		
	
    11.  
	
    ASSIGNMENT.  
    

 

    This Agreement shall be binding upon and inure to the benefit of
    the heirs and representatives of the Consultant and the assigns
    and successors of the Corporation, but neither this Agreement
    nor any rights hereunder shall be assignable or otherwise
    subject to hypothecation by the Consultant. The Corporation may
    assign this Agreement with prior written notice to the
    Consultant, but such assignment shall not release the
    Corporation from any liability hereunder.

    

    5

 

		
	
    12.  
	
    ENTIRE
    AGREEMENT.  
    

 

    This Agreement represents the entire agreement of the parties
    and shall supersede any and all previous contracts, arrangements
    or understandings between the Corporation, the LP or the Trust
    and the Consultant, including the Change of Control Severance
    Agreement dated on or about August 16, 2002 and the
    Confidentiality Agreement dated on or about August 16, 2002
    among the Consultant, the Trust and the LP. This Agreement may
    be amended at any time by mutual written agreement of the
    parties hereto.

 

		
	
    13.  
	
    GOVERNING
    LAW.  
    

 

    This Agreement shall be construed, interpreted and governed in
    accordance with the laws of the State of Ohio, other than the
    conflict of laws provisions of such laws.

 

		
	
    14.  
	
    SURVIVAL.  
    

 

    Sections 5, 6, 7, 8, 10, 12, 13 and 15 shall
    survive any expiration or termination of this Agreement.

 

		
	
    15.  
	
    EXCISE
    TAX
    INDEMNIFICATION.  
    

 

    The Consultant shall be entitled to a payment or payments under
    this Section 15 if any payment or benefit provided under
    this Agreement or any other plan, agreement or arrangement with
    the Corporation, the Trust, the LP or any of their affiliates
    constitutes an “excess parachute payment” (as defined
    in Section 280G(b)(1) of the Code, but without regard to
    Section 280G(b)(2)(A)(ii) of the Code) and the Consultant
    incurs a liability under Section 4999 of the Code. The
    amount payable to the Consultant under this Section 15
    shall be the amount required to indemnify the Consultant and
    hold him harmless from the application of Sections 280G and
    4999 of the Code, together with any interest or penalties
    related thereto, with respect to benefits, payments, accelerated
    exercisability and vesting and other rights under this Agreement
    or otherwise, and any income, employment, hospitalization,
    excise and other taxes and penalties attributable to the
    indemnification payment. The benefit payable under this
    Section 15 shall be calculated and paid not later than the
    date (or extended filing date) on which the tax return
    reflecting liability for the excise tax under Section 4999
    of the Code is required to be filed with the Internal Revenue
    Service. To the extent that any other plan, agreement or
    arrangement requires that the Consultant be indemnified and held
    harmless from the application of Sections 280G and 4999 of
    the Code, any such indemnification and the amount required to be
    paid to the Executive under this Section 15 shall be
    coordinated so that such indemnification is paid only once and
    the obligations of the Corporation, the Trust, the LP or any of
    their affiliates shall be satisfied to the extent of any such
    other payment (and vice versa).

 

    The Consultant and the Corporation agree that the application of
    Sections 280G and 4999 of the Code may not be clear in all
    cases. The Consultant agrees that the Company may take the
    position that all or part of a payment or payments are not
    “excess parachute payments” (as defined above) and do
    not result in liability under Section 4999 of the Code. The
    Consultant agrees that his individual tax returns will be
    prepared in a manner that is consistent with the
    Corporation’s position on such matters if the
    Consultant’s professional tax preparer concludes, in his or
    her professional opinion, that the Corporation’s position
    is reasonable based on published rulings, regulations and other
    authority. If the Consultant’s individual income tax return
    is prepared in accordance with the preceding sentence, i.e., in
    a manner consistent with the Corporation’s position, then
    (in addition to any benefit payable under the preceding
    paragraph) the Corporation shall indemnify the Consultant, and
    hold him harmless, from any liability for tax, penalty, interest
    or otherwise arising from the position stated on the
    Consultant’s individual income tax return related to the
    application of Section 280G or 4999 of the Code to payments
    from the Corporation, the Trust, the LP or any of their
    affiliates. If the Consultant’s professional tax preparer
    does not agree that the Corporation’s position is
    reasonable based on published rulings, regulations and other
    authority, then the Consultant’s individual tax return will
    reflect any liability under Section 4999 of the Code that
    such professional tax preparer determines is appropriate and the
    Corporation shall indemnify the Consultant and hold him harmless
    in accordance with the preceding paragraph.

    

    6

 

		
	
    16.  
	
    INDEMNIFICATION.  
    

 

    From and after the Effective Date, the Corporation hereby agrees
    to indemnify, defend and hold harmless the Consultant from and
    against any claim, loss, damage, liability or expense to which
    the Consultant shall become subject, under any agreement, common
    law or otherwise, arising out of or based upon any guaranty
    executed by the Consultant in favor of Wells Fargo, as Trustee,
    in connection with the Mount Vernon, Georgia facility.

 

    IN WITNESS WHEREOF, this Agreement is executed by the
    Corporation and the Consultant as of the date set forth above
    and effective as of the Effective Date.

 

	 	 	 
	

    Attest:

	
 
	
    HEALTH CARE REIT,
    INC.

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
    /s/  Erin
    C. Ibele

    

    
	
 
	
    By: /s/  George
    L.
    Chapman

Chief
    Executive Officer
    

	
 
	
 
	
 

	

    Witness:

	
 
	
    CONSULTANT:

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
    /s/  Erin
    C. Ibele

    

    
	
 
	
    By: /s/  Frederick
    L.
    Farrar

Frederick
    L. Farrar 
    

    

    7

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