Document:

EXHIBIT 10.2

EMPLOYMENT
AGREEMENT 

THIS
EMPLOYMENT AGREEMENT, dated this 13th day of April, 2014
(the “Agreement”), is entered into by and between HEALTH CARE REIT, INC., a
Delaware corporation, (the “Corporation”), and THOMAS J. DEROSA (the
“Executive”) and is effective April 13, 2014 (the “Effective Date”). 

WHEREAS,
the Corporation wishes to assure itself of the services of the Executive for
the period provided in this Agreement, and the Executive is willing to serve in
the employ of 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, hereby agree as follows:

1. EMPLOYMENT   

The
Corporation hereby agrees to employ the Executive as the Corporation’s Chief
Executive Officer, upon the terms and conditions herein contained, and the
Executive hereby agrees to accept such employment and to serve as the
Corporation’s Chief Executive Officer, and to perform the duties and functions
customarily performed by the Chief Executive Officer of a publicly traded
corporation. 

In
such capacities, the Executive shall report to the Corporation’s Board of
Directors (the “Board”), and shall have the powers and responsibilities set
forth in the Corporation’s By-Laws as well as such additional powers and
responsibilities consistent with his position as the Board may assign to him. 

Throughout
the Term (defined below) of this Agreement, the Executive shall devote his best
efforts and all of his business time and services to the business and affairs
of the Corporation. 

2. TERM OF AGREEMENT  

The
term of employment under this Agreement is three years from the Effective Date
and shall expire on April 13, 2017, unless earlier terminated under one of  the
circumstances set forth in Sections 5, 6 or 7. The length of employment under
this Agreement is referred to herein as the “Term.” 

The
Corporation shall be entitled to terminate this Agreement immediately for any
reason, subject to the continuing obligations of the Corporation under this
Agreement. 

3. BASE COMPENSATION AND BONUS  

(a)
The Executive shall receive annual base compensation during the Term of this
Agreement of not less than $825,000 in cash (“Base Compensation”). Such amounts
shall be payable in substantially equal semi-monthly installments. Subject to
the terms of this Agreement, during the Term, the Compensation Committee of the
Board (the “Compensation Committee”) shall consult with the Executive and
review the Executive’s Base Compensation at annual intervals, and may adjust
the Executive’s annual Base Compensation from time to time. 

(b)
The Executive shall also be eligible to receive an annual incentive cash bonus
with target bonus of 150% of Base Compensation and maximum bonus of 300% of
Base Compensation, prorated from the Effective Date, with the actual amount of
such bonus to be determined by the Compensation Committee, using such
performance measures as the Compensation Committee deems to be appropriate.
Such bonus, if any, shall be paid to the Executive no later than sixty
(60) days after the end of the year to which the bonus relates. 

4. ADDITIONAL COMPENSATION AND
BENEFITS  

 

 

  

 

The Executive shall receive the following additional
compensation and welfare and fringe benefits during the term: 

(a)
Stock Options and Other Long-Term Incentives. During the Term of the
Agreement, any stock options, restricted stock or other awards granted under
the 2005 Long-Term Incentive Plan, or any other equity compensation plan adopted
by the Corporation, shall be at the discretion of the Compensation Committee. 
Notwithstanding the foregoing, the Executive will be eligible to receive
long-term incentive equity grants with an annual target value of $3,300,000,
adjusted for the Effective Date, subject to the terms and conditions as
determined by the Compensation Committee.

In
addition, within an administratively reasonable period of time following the
Effective Date, the Corporation shall grant restricted stock units to Executive
with a value of $1 million (rounded to the nearest whole share) (the “Initial
RSUs”).  The Initial RSUs shall be subject to performance criteria as
determined by the Board or Compensation Committee (the “Initial Performance
Criteria”), and shall also be subject to a requirement of continued employment,
which requirements shall be satisfied in substantially equal installments on
each of the first, second, and third anniversaries of the Effective Date hereof
(as modified by Sections 5, 6 or 7 below).  The Initial Performance Criteria
shall be determined by the Board or the Compensation Committee in its sole
discretion after consultation with the Executive in the first ninety (90) days
after the Effective Date.  Each vested portion of the Initial RSUs shall be further
deferred until after the Executive is no longer employed with the Corporation,
subject to terms and conditions to conform with applicable law, including but
not limited to Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”). 

(b)
Health Insurance. During the Term of this Agreement, the Corporation
shall provide the Executive and his dependents with health insurance coverage
no less favorable than that from time to time made available to other key
employees. 

(c)
Paid Time Off. During the Term of this Agreement, the Executive shall be
entitled to paid time off (“PTO”) (based on the number of years of service) in
accordance with the Corporation’s PTO policy, as it may be amended from time to
time.

(d)
Business Expenses. During the Term of this Agreement, the Corporation
shall reimburse the Executive for all reasonable expenses he incurs in
promoting the Corporation’s business, including expenses for travel and similar
items, upon presentation by the Executive from time to time of an itemized
account of such expenditures in accordance with the Corporation’s established
policies and applicable law.  Following Executive’s termination of employment,
any expense reimbursement requests must be submitted no later than sixty (60)
days following such termination. 

(e)
Automobile Allowance.  During the Term, the Corporation will provide the
Executive with a monthly allowance to cover expenses incurred with the
Executive’s lease of an automobile.

(f)
Relocation Expenses.  The Corporation shall provide Executive with a
relocation and transition allowance in the amount of $100,000 to cover expenses
incurred with Executive’s move to the greater Toledo, Ohio area, including but
not limited to (i) moving himself, family members and personal property, (ii)
travel to his current home prior to any relocation of family members, (iii)
housing in the greater Toledo, Ohio area and (iv) other related expenses.   

(g)
Other Benefits.  In addition to the benefits provided pursuant to the
preceding paragraphs of this Section 4, the Executive shall be eligible to
participate in such other executive compensation and retirement plans of the
Corporation as are applicable generally to other executive officers, and in
such welfare plans, programs, practices and policies of the Corporation as are
generally applicable to other executive officers, unless such participation
would duplicate, directly or indirectly, benefits already accorded to the
Executive.  To the extent that the Executive elects not to receive certain
welfare benefits for which he is eligible, he will receive a cash payment in
lieu of such benefits in an amount equal to the cost that the Company would
otherwise have incurred to provide such benefits to the Executive, but in any
event not to exceed $2000 per month.

5. PAYMENTS UPON TERMINATION  

(a)
Termination without Cause or Termination by Executive for Good Reason (as
defined below). If the Executive’s employment is terminated by the
Corporation without Cause (but not including due to death or disability) or terminated
by the Executive for Good Reason during the Term of this Agreement, the
Executive shall be entitled to the following: 

 

 

  

 

(i)
Base Compensation accrued through the date of termination, based on the number
of days in such year that had elapsed as of the termination date; 

(ii) any accrued but
unpaid PTO through the date of termination; 

(iii) any bonuses
earned but unpaid with respect to fiscal years or other completed periods
preceding the termination date; 

(iv) any nonforfeitable
benefits payable to the Executive under the terms of any deferred compensation,
incentive or other benefit plans maintained by the Corporation, payable in
accordance with the terms of the applicable plan; 

(v) any expenses owed
to the Executive under Sections 4(d), 4(e) or 4(f);

(vi) any pro-rated
portion of the annual bonus that the Executive would have earned for the year
in which the termination occurs (if he had remained employed for the entire
year), based on the number of days in such year that had elapsed as of the termination
date, payable at the time that the Corporation pays bonuses to its executive
officers for such year; 

(vii) all stock
options, restricted stock or other equity awards with time-based vesting
granted to the Executive under this Agreement shall become fully vested and
earned and, in the case of stock options, exercisable in full and all stock
options, restricted stock or other equity awards with performance-based vesting
granted to the Executive under this Agreement shall become vested based upon a
determination of actual level of achievement of performance goals by the
Compensation Committee of the Board as of the end of the quarter immediately
preceding the Executive’s termination or as otherwise expressly provided in the
applicable award agreement; 

(viii) continued
coverage under any group health plan maintained by the Corporation in which the
Executive participated at the time of his termination for the period during
which the Executive elects to receive continuation coverage under
Section 4980B of the Code at an after-tax cost to the Executive comparable
to the cost that the Executive would have incurred for the same coverage had he
remained employed during such period; and 

(ix) a series of
semi-monthly severance payments for twenty-four (24) months (the
“Severance Period”), each in an amount equal to one-twenty fourth
(1/24th) of the sum of (A) the Executive’s Base Compensation, as in
effect on the date of termination, and (B) the Executive’s target annual
cash bonus opportunity at the time of termination, to be paid in accordance
with the Corporation’s normal payroll practices.

The
payments set forth in subsections (vi), (vii), (viii), and (ix) are subject to
(a) a waiver and general release of claims in favor of the Corporation, in a
form and manner satisfactory to the Corporation, that is executed by the
Executive and which becomes effective within sixty (60) days following the date
of such termination, and (b) the Executive’s compliance with the restrictive
covenants set forth in Sections 9 and 10 below during the Severance Period (the
“Severance Requirement”).  Upon any violation of the Severance Requirement
during the Severance Period, all post-employment compensation set forth in
subsections (vi), (vii), (viii), and (ix) above shall immediately stop and the
Executive shall be obligated to return to the Corporation any post-employment
compensation previously paid or otherwise provided to the Executive.  All
payments to be made pursuant to subsection (vii) (excluding stock options)
shall be made to the Executive on the first business day following the date
that is sixty (60) days following the date of such termination (except as
otherwise expressly provided in the applicable award agreement). The payments
set forth in subsection (ix) shall commence on the 60th day
following the day of such termination.  

All
payments to be made pursuant to subsections (i), (ii), (iii), and (v) shall be
made to the Executive within sixty (60) days following the date of such
termination and within any shorter time period required by law.   

For
purposes of this Agreement, “Cause” shall mean: (1) any action by the
Executive involving willful disloyalty to the Corporation, such as
embezzlement, fraud, misappropriation of corporate assets or a breach of the
covenants set forth in Section 9 or 10 herein; (2) the Executive
being convicted of a felony; (3) the Executive being convicted of any
crime or offense that is not a felony but was (x) committed in connection
with the performance of his duties hereunder or (y) involved moral
turpitude; or (4) the intentional and willful failure by the Executive to
substantially perform his duties hereunder as directed by the Board (other than
any 

 

 

  

 

such failure resulting from the Executive’s
incapacity due to physical or mental disability) after a demand for substantial
performance is made by the Board. A termination of employment shall not be
deemed for Cause unless and until (x) there shall have been delivered to
the Executive a notice describing in reasonable detail the particulars giving
rise to a termination for Cause, and (y) in the case of termination
pursuant to clause (4) above, if no cure has occurred by the fifteenth
(15th) day after notice was given. 

For
purposes of this Agreement, “Good Reason” shall mean: (1) the assignment
of Executive to a position other than the Chief Executive Officer of the
Corporation during the Term; (2) the assignment of duties materially
inconsistent with such position if such change in assignment constitutes
(x) a material diminution in the Executive’s total compensation
opportunity, authority, duties or responsibilities; (y) a change in the
reporting structure such that the Executive is directed to report to anyone
other than the Corporation’s Board; or (3) a material breach by the Corporation
of this Agreement; provided, however, Executive must not have consented to any
such act or omission that could give rise to a claim for “Good Reason”, the
Executive must have notified the Corporation in writing within the first thirty
(30) days following the occurrence of any of the foregoing events and the
Corporation must have failed to substantially cure such breach within thirty
(30) days following its receipt of such notice from the Executive; and
provided further, the Executive must have resigned under this paragraph within
ninety (90) days following the occurrence of the event. Notwithstanding the
foregoing, any transfer of responsibilities in connection with succession
planning and leadership transition shall in no event constitute Good Reason for
purposes of this Agreement.  

(b)
Disability. The Corporation shall be entitled to terminate the
Executive’s employment if the Board determines that the Executive has been
unable to substantially perform his duties for at least ninety (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 Executive from resuming full performance of his duties
and is likely to continue for an indefinite period. Upon such termination, the
Executive shall be entitled to the following: 

(i) Base Compensation
accrued through the date of termination, based on the number of days in such
year that had elapsed as of the termination date; 

(ii) any accrued but unpaid
PTO through the date of termination; 

(iii) any bonuses
earned but unpaid with respect to fiscal years or other completed periods
preceding the termination date; 

(iv) any nonforfeitable
benefits payable to the Executive under the terms of any deferred compensation,
incentive or other benefit plans maintained by the Corporation, payable in
accordance with the terms of the applicable plan; 

(v) any expenses owed
to the Executive under Sections 4(d), 4(e) or 4(f); and

(vi) any pro-rated
portion of the annual bonus that the Executive would have earned for the year
in which the termination occurs (if he had remained employed for the entire
year), based on the number of days in such year that had elapsed as of the
termination date, payable at the time that the Corporation pays bonuses to its
executive officers for such year; and

(vii) all stock
options, restricted stock or other equity awards with time-based vesting
granted to the Executive under this Agreement shall become fully vested and
earned and payable and, in the case of stock options, exercisable in full and
all stock options, restricted stock or other equity awards with
performance-based vesting granted to the Executive under this Agreement shall
become vested to the extent provided in the applicable award agreement.

All
cash payments (other than pro-rated bonus) listed in subsections (i), (ii),
(iii) and(v) shall be paid to the Executive within sixty (60) days
following the date of such termination and within any shorter time period
required by law.  All payments to be made pursuant to subsection  (vii)
(excluding stock options) shall be made to the Executive on the first business
day following the date that is sixty (60) days following the date of such
termination (except as otherwise expressly provided in the applicable award
agreement).

(c)
Termination for Cause. If the Executive’s employment is terminated by
the Corporation for Cause, the Executive shall be entitled to the following: 

 

 

  

 

(i)
Base Compensation accrued through the date of termination, based on the number
of days in such year that had elapsed as of the termination date; 

(ii) any accrued but
unpaid PTO through the date of termination; 

(iii) any bonuses
earned but unpaid with respect to fiscal years or other completed periods
preceding the termination date;

(iv) any nonforfeitable
benefits payable to the Executive under the terms of any deferred compensation,
incentive or other benefit plans maintained by the Corporation, payable in
accordance with the terms of the applicable plan; and

(v) any expenses owed
to the Executive under Section 4(d).

All
cash payments listed in subsections (i), (ii), (iii) and (v) required to be
paid pursuant to this Section shall be paid to the Executive within sixty
(60) days following the date of such termination and within any shorter
time period required by law. 

(d)
Voluntary Termination or Resignation by the Executive. If the Executive
voluntarily terminates (but not by reason of expiration of the Term) or resigns
his employment other than for Good Reason, the Executive shall be entitled to
the following: 

(i) Base Compensation
accrued through the date of termination, based on the number of days in such
year that had elapsed as of the termination date; 

(ii) any accrued but
unpaid PTO through the date of termination; 

(iii) any bonuses
earned but unpaid with respect to fiscal years or other completed periods
preceding the termination date; 

(iv) any nonforfeitable
benefits payable to the Executive under the terms of any deferred compensation,
incentive or other benefit plans maintained by the Corporation, payable in
accordance with the terms of the applicable plan; and

(v) any expenses owed
to the Executive under Section 4(d). 

All
cash payments required to be paid pursuant to this Section shall be made to the
Executive within sixty (60) days following the date of such termination
and within any shorter time period required by law. 

(e)
Termination upon Expiration of the Term. If the Executive’s employment
terminates as a result of the expiration of the Term of this Agreement, the
Executive shall be entitled to the following: 

(i) Base Compensation
accrued through the date of termination, based on the number of days in such
year that had elapsed as of the termination date; 

(ii) any accrued but
unpaid PTO through the date of termination; 

(iii) any bonuses
earned but unpaid with respect to fiscal years or other completed periods
preceding the termination date;

(iv) any nonforfeitable
benefits payable to the Executive under the terms of any deferred compensation,
incentive or other benefit plans maintained by the Corporation, payable in
accordance with the terms of the applicable plan; and

(v) any expenses owed
to the Executive under Sections 4(d) 4(e), or 4(f).

All
cash payments listed in subsections (i), (ii), (iii) and (v) required to be
paid pursuant to this Section shall be made to the Executive within sixty
(60) days following the date of such termination and within any shorter
time period required by law. 

6.
CHANGE IN CORPORATE CONTROL  

 

 

  

 

(a) If at any time upon, or during the period of
twenty-four (24) consecutive months following, the occurrence of a Change
in Corporate Control (as defined below), and during the Term of this Agreement,
the Executive is involuntarily terminated (other than for Cause), or resigns
his employment for Good Reason, the Executive shall be entitled to the
following: 

(i) Base Compensation
accrued through the date of termination, based on the number of days in such
year that had elapsed as of the termination date; 

(ii) any accrued but unpaid
PTO pay through the date of termination; 

(iii) any bonuses
earned but unpaid with respect to fiscal years or other completed periods
preceding the termination date; 

(iv) any nonforfeitable
benefits payable to the Executive under the terms of any deferred compensation,
incentive or other benefit plans maintained by the Corporation, payable in
accordance with the terms of the applicable plan; 

(v) any expenses owed
to the Executive under Sections 4(d), 4(e) or 4(f);

(vi) the pro-rated
portion of the target annual bonus that the Executive would have earned for the
year in which the termination occurs (if he had remained employed for the
entire year), based on the number of days in such year that had elapsed as of
the termination date; 

(vii) all stock options,
restricted stock or other equity awards with time-based vesting granted to the
Executive under this Agreement shall become fully vested and earned and, in the
case of stock options, exercisable in full and all stock options, restricted
stock or other equity awards with performance-based vesting granted to the
Executive under this Agreement shall become vested based upon a determination
of actual level of achievement of performance goals by the Compensation
Committee of the Board as of immediately prior to the occurrence of the Change
of Corporate Control or as otherwise expressly provided in the applicable award
agreements; 

(viii) continued
coverage under any group health plan maintained by the Corporation in which the
Executive participated at the time of his termination for the period during
which the Executive elects to receive continuation coverage under
Section 4980B of the Code at an after-tax cost to the Executive comparable
to the cost that the Executive would have incurred for the same coverage had he
remained employed during such period; and

(ix) a lump sum
severance payment equal to the present value of a series of monthly severance
payments for thirty-six (36) months, each in an amount equal to
one-twelfth (1/12th) of the sum of (A) the Executive’s Base
Compensation, as in effect at the time of the Change in Corporate Control, and
(B) the average of annual bonuses paid to the Executive for the last three
(3) or, if applicable, fewer fiscal years of the Corporation ending prior to
the Change in Corporate Control. 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) on the date of the
Change in Corporate Control.  For purposes of this subsection (ix), the amount
of any annual bonus paid for a portion of a fiscal year shall be annualized and
if no such bonuses have been paid, then the Executive’s target annual bonus at
the time of termination shall be used.

The
payments set forth in subsections (vi), (vii), (viii), and (ix) are subject to
a waiver and general release of claims in favor of the Corporation, in a form
and manner satisfactory to the Corporation, that is executed by the Executive
and which becomes effective within sixty (60) days following the date of such
termination.  All payments to be made pursuant to subsection  (vii) (excluding
stock options) shall be made to the Executive on the first business day
following the date that is sixty (60) days following the date of such
termination (except as otherwise expressly provided in the applicable award
agreement). All cash payments required to be paid pursuant to subsections (i),
(ii), (iii), (v), (vi) and (ix) of this Section shall be made within sixty (60)
days following the date of such termination and within any shorter time period
required by law.  Notwithstanding
the foregoing,  the severance payment under this Section shall be payable
on a monthly basis instead of a lump sum if the “Change in Corporate Control” does
not constitute a “change in control event” within the meaning of Treasury
Regulation Section 1.409A-3(i)(g) and shall in any event comply with the
provisions of Section 8. 

 

 

  

 

(b) For purposes of this Agreement, a “Change in
Corporate Control” shall mean: 

(i) The acquisition in
one or more transactions of more than twenty percent (20%) of the
Corporation’s outstanding common stock (or the equivalent in voting power of
any class or classes of securities of the Corporation entitled to vote in
elections of directors) by any corporation, or other person or group (within
the meaning of Section 14(d)(3) of the Securities Exchange Act of 1934, as
amended), except for acquisitions of the Corporation’s outstanding common stock
by (A) the Corporation or an affiliate or subsidiary of the Corporation,
(B) an employee benefit plan (or any trust forming a part thereof) of the
Corporation, or (C) an underwriter temporarily holding securities of the
Corporation pursuant to an offering of such securities; 

(ii) The sale of all or
substantially all of the assets of the Corporation; 

(iii) The consummation
of any merger or consolidation or similar business combination or
reorganization involving the Corporation (“Corporate Transaction”), unless
(A) the stockholders of the Corporation, immediately before such Corporate
Transaction, own, directly or indirectly, immediately following such Corporate
Transaction, more than fifty percent (50%) of the then outstanding shares
of common stock (or the equivalent in voting power of any class or classes of
securities of the corporation entitled to vote in elections of directors) of
the corporation resulting from such Corporate Transaction (the “Surviving
Company”) in substantially the same proportion as their ownership of the
Corporation’s outstanding common stock (or the equivalent in voting power of
any class or classes of securities of the Corporation entitled to vote in
elections of directors) immediately before such Corporate Transaction, and
(B) the persons who were Continuing Directors (as defined below)
immediately prior to the execution of the agreement providing for such
Corporate Transaction constitute more than fifty percent (50%) of the
members of the Board of Directors of the Surviving Company; or 

(iv) During any
twenty-four (24) month period, individuals who, as of the beginning of
such period, constitute the Board (the “Continuing Directors”) cease for any
reason to constitute at least a majority of the Board. For this purpose, any
person who is nominated for election as a member of the Board after April 14,
2014 shall also be considered a “Continuing Director” if, and only if, his or
her nomination for election to the Board is approved or recommended by a
majority of the members of the Board (or of the Nominating Committee of the
Board) and at least five (5) members of the Board are themselves
Continuing Directors at the time of such nomination; provided, however, that a
director elected to the Board as part of a threatened or actual proxy contest,
including by reason of an agreement intended to avoid or settle any threatened
or actual proxy contest, shall not be considered a “Continuing Director” even
if his or her nomination for election to the Board is approved or recommended
by a majority of the members of the Board (or of the Nominating Committee of
the Board); or

(v) The liquidation or
dissolution of the Corporation. 

(c)
Notwithstanding anything else in this Agreement to the contrary, in the event
that it shall be determined that any payments or distributions by the Corporation
to or for the benefit of the Executive, whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise
(together, the “Payment”) would constitute an “excess parachute payment” within
the meaning of Section 280G of the Code, then the Payments shall be payable
either in (i) full or (ii) as to such lesser amount which would result in no
portion of such Payments being subject to the Excise Tax and the Executive
shall receive the greater, on an after-tax basis, of (i) or (ii) above, as
determined by an independent accountant or tax advisor (“Independent Tax
Advisor”) selected by the Corporation. In the event that the payments and/or
benefits are to be reduced pursuant to this Section 6(c), such payments and benefits
shall be reduced as determined by the Independent Tax Advisor such that the
reduction of compensation to be provided to or for the benefit of the Executive
as a result of this Section 6(c) is minimized and to effectuate that, Payments
shall be reduced (i) by first reducing or eliminating the portion of such
Payments which is not payable in cash (other than that portion of such payments
that is subject to clause (iii) below), (ii) then by reducing or eliminating
cash Payments (other than that portion of such Payments subject to clause (iii)
below) and (iii) then by reducing or eliminating the portion of such Payments
(whether or not payable in cash) to which Treas. Reg. §1.280G-1 Q/A 24(c) (or
any successor provision thereto) applies, in each case in reverse order
beginning with Payments which are to be paid the farthest in time from the date
of the transaction constituting a change in ownership of the Corporation within
the meaning of Section 280G of the Code. Any reductions made pursuant to this
Section 6(c) shall be made in a manner consistent with the requirements of
Section 409A and where two economically equivalent amounts are subject to
reduction but payable at different times, such amounts shall be reduced on a
pro rata basis but not below zero.

 

 

  

 

(d) If any dispute arises between the Corporation
(or any successor) and the Executive regarding Executive’s right to payments
under this Section, the Executive shall be entitled to recover his attorneys
fees and costs incurred in connection with such dispute if the Executive is
determined to be the prevailing party. The following additional terms and
conditions shall apply to the reimbursement of any attorneys fees and costs:
(i) the attorneys fees and costs must be incurred by the Executive within
five years following the date of the Executive’s termination or resignation;
(ii) the attorneys fees and costs shall be paid by the Corporation by the
end of the taxable year following the year in which the attorneys fees and
costs were incurred; (iii) the amount of any attorneys fees and costs paid
by the Corporation in one taxable year shall not affect the amount of any
attorneys fees and costs to be paid by the Corporation in any other taxable
year; and (iv) the Executive’s right to receive attorneys fees and costs
may not be liquidated or exchanged for any other benefit.

7.
DEATH   

If
the Executive dies during the Term of this Agreement, the Corporation shall pay
to the Executive’s estate the following: 

(i) Base Compensation
accrued through the date of death, based on the number of days in such year
that had elapsed as of the date of death; 

(ii) any accrued but
unpaid PTO through the date of death; 

(iii) any bonuses
earned but unpaid with respect to fiscal years or other completed periods
preceding the date of death; 

(iv) any nonforfeitable
benefits payable to the Executive under the terms of any deferred compensation,
incentive or other benefit plans maintained by the Corporation, payable in
accordance with the terms of the applicable plan; 

(v) any expenses owed
to the Executive under Sections 4(d), 4(e) or 4(f);

(vi) any pro-rated
portion of the annual bonus that the Executive would have earned for the year
in which the death occurs (if he had remained employed for the entire year),
based on the number of days in such year that had elapsed as of the date of
death), payable at the time that the Corporation pays bonuses to its executive
officers for such year; and 

(vii) all stock
options, restricted stock or other equity awards with time-based vesting
granted to the Executive under this Agreement shall become fully vested and
earned and, in the case of stock options, exercisable in full and all stock
options, restricted stock or other equity awards with performance-based vesting
granted to the Executive under this Agreement shall become vested to the extent
provided in the applicable award agreement. 

All
cash payments listed in subsections (i), (ii), (iii) and (v) required to be
paid pursuant to this Section shall be made to the estate within sixty
(60) days following the date of death and within any shorter time period
required by law. All payments to be made pursuant to subsection  (vii)
(excluding stock options) shall be made to the Executive on the first business
day following the date that is sixty (60) days following the date of such
termination (except as otherwise expressly provided in the applicable award
agreement).The pro-rated bonus shall be paid in accordance with the provisions
of Section 3(b) after the Compensation Committee has approved bonuses payable
for the year. 

8.
WITHHOLDING AND SECTION 409A COMPLIANCE  

(a)               
The Corporation shall, to the fullest extent not prohibited by law, have the
right to withhold and deduct from any payment hereunder any federal, state or
local taxes of any kind required by law to be withheld with respect to any such
payment.  

(b)
This Agreement is intended to comply with the requirements of Section 409A
of the Code, and shall be interpreted and construed consistently with such
intent. The payments to the Executive pursuant to this Agreement are also
intended to be exempt from Section 409A of the Code to the maximum extent
possible, under either the separation pay exemption pursuant to Treasury
Regulation Section 1.409A-1(b)(9)(iii), as short-term deferrals pursuant
to Treasury Regulation Section 1.409A-1(b)(4), or otherwise. In the event
the terms of this Agreement would subject the Executive to additional income
taxes, interest or penalties under 

 

 

  

 

Section 409A of
the Code (“409A Penalties”), the Corporation and the Executive shall cooperate
diligently to amend the terms of the Agreement to avoid such 409A Penalties, to
the extent possible. To the extent any amounts under this Agreement are payable
by reference to Executive’s “termination,” “termination of employment,” or similar
phrases, such term shall be deemed to refer to the Executive’s “separation from
service” (as defined in Treasury Regulation Section 1.409A-1(h) (without
regard to any permissible alternative definition thereunder) with the
Corporation and all entities treated as a single employer with the Corporation
under Sections 414(b) and (c) of the Code but substituting a 50% ownership
level for the 80% ownership level set forth therein). Notwithstanding any other
provision in this Agreement, including but not limited to Sections 5 and 6, if
the Executive is a “Specified Employee” (as defined Treasury Regulation
Section 1.409A-1(i) on December 31st of the prior calendar year), as
of the date of the Executive’s separation from service, then to the extent any
amount payable under this Agreement (i) constitutes the payment of
nonqualified deferred compensation, within the meaning of Section 409A of
the Code, (ii) is payable upon the Executive’s separation from service,
and (iii) under the terms of this Agreement would be payable prior to the
six-month anniversary of the Executive’s separation from service, such payment
shall be delayed and paid to the Executive, on the first day of the first
calendar month beginning at least six months following the date of termination,
or, if earlier, within ninety (90) days following the Executive’s death to
the Executive’s surviving spouse (or such other beneficiary as the Executive
may designate in writing). Any reimbursement or advancement payable to the
Executive pursuant to this Agreement shall be conditioned on the submission by
the Executive of all expense reports reasonably required by the Corporation
under any applicable expense reimbursement policy, and shall be paid to the
Executive within thirty (30) days following receipt of such expense
reports, but in no event later than the last day of the calendar year following
the calendar year in which the Executive incurred the reimbursable expense. Any
amount of expenses eligible for reimbursement, or in-kind benefit provided, during
a calendar year shall not affect the amount of expenses eligible for
reimbursement, or in-kind benefit to be provided, during any other calendar
year. The right to any reimbursement or in-kind benefit pursuant to this
Agreement shall not be subject to liquidation or exchange for any other
benefit. 

9. PROTECTION OF CONFIDENTIAL
INFORMATION  

The
Executive hereby agrees that, during his employment with the Corporation and
thereafter, he shall not, directly or indirectly, disclose or make available to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, any Confidential Information (defined below).  The
Executive further agrees that, upon the date of the Executive’s termination,
all Confidential Information in his possession that is in written or other
tangible form shall be returned to the Corporation and shall not be retained by
the Executive or furnished to any third party, in any form except as provided
herein.  Notwithstanding the foregoing, this Section 9 shall not apply to
Confidential Information that (i) was publicly known at the time of disclosure
to the Executive, (ii) becomes publicly known or available thereafter other
than by any means in violation of this Agreement or any other duty owed to the
Corporation by the Executive, (iii) is lawfully disclosed to the Executive by a
third party, or (iv) is required to be disclosed by law or by any court,
arbitrator or administrative or legislative body with actual or apparent
jurisdiction to order the Executive to disclose or make accessible any
information.  As used in this Agreement, Confidential Information means,
without limitation, any non-public confidential or proprietary information
disclosed to Executive or known by the Executive as a consequence of or through
the Executive’s relationship with the Corporation, in any form, including
electronic media.  Confidential Information also includes, but is not limited
to the Corporation’s business plans and financial information, marketing plans,
and business opportunities. Nothing herein shall limit in any way any
obligation the Executive may have relating to Confidential Information under
any other agreement or promise to the Corporation. 

The
Executive recognizes that because his work for the Corporation will bring him
into contact with confidential and proprietary information of the Corporation,
the restrictions of this Section 9 are required for the reasonable
protection of the Corporation and its investments and for the Corporation’s
reliance on and confidence in the Executive. 

10. COVENANT NOT TO COMPETE  

The Executive hereby agrees that he
will not, either during the Term or at all times until one year from the time
his employment ceases,  or, if later, during any period in which he is
receiving any severance or change in control payments under Sections 5(a) or 6
(the “Restricted Period”), engage in any business activities on behalf of any
enterprise which competes with the Corporation in the business of
(i) ownership or operation of Health Care Facilities (defined below); (
ii) investment in or lending to health care related enterprises (including,
without limitation, owners or developers of Health Care Facilities);
(iii) management of Health Care Facilities; 

 

 

  

 

or
(iv) provision of any planning or development services for Health Care
Facilities. “Health Care Facilities” means any senior housing facilities or
facilities used or intended primarily for the delivery of health care services,
including, without limitation, any active adult communities, independent living
facilities, assisted living facilities, skilled nursing facilities, inpatient
rehabilitation facilities, ambulatory surgery centers, medical office
buildings, hospitals of any kind, or any similar types of facilities or
projects. The Executive will be deemed to be engaged in such competitive
business activities if he participates in such a business enterprise as an
employee, officer, director, consultant, agent, partner, proprietor, or other
participant; provided that the ownership of no more than two percent
(2%) of the stock of a publicly traded corporation engaged in a
competitive business shall not be deemed to be engaging in competitive business
activities. 

During the Restricted
Period, Executive will be prohibited, to the fullest extent allowed by
applicable law, from directly or indirectly, individually or on behalf of any
person or entity, encouraging, inducing, attempting to induce, recruiting,
attempting to recruit, soliciting or attempting to solicit or participating in
any way in hiring or retaining for employment, contractor or consulting
opportunities anyone who is employed at that time by the Corporation or any
subsidiary or affiliate. 

During the Restricted
Period, Executive will not make or authorize anyone else to make on Executive’s
behalf any disparaging or untruthful remarks or statements, whether oral or
written, about the Corporation, its operations or its products, services,
affiliates, officers, directors, employees, or agents, or issue any
communication that reflects adversely on or encourages any adverse action
against the Corporation.  Executive will not make any direct or indirect
written or oral statements to the press, television, radio or other media or
other external persons or entities concerning any matters pertaining to the
business and affairs of the Corporation, its affiliates or any of its officers
or directors. 

11. INJUNCTIVE RELIEF  

The
Executive 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 9 and 10 of this Agreement and
accordingly agrees that the Corporation shall be entitled to temporary and
injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions, without the need to post any bond, 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
Executive, 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. 

12.
NOTICES   

All
notices or communications hereunder shall be in writing and sent by overnight courier,
certified mail, 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. 

4500 Dorr Street

Toledo, OH 43615

	
  Attention: 
  

  	
  General
  Counsel

  

If
to the Executive, at the address on file with the Corporation’s Human Resources
department. 

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

13. 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. 

14. ASSIGNMENT   

This
Agreement shall be binding upon and inure to the benefit of the heirs and
representatives of the Executive and the assigns and successors of the
Corporation, but neither this Agreement nor any rights or obligations hereunder
shall be assignable or otherwise subject to hypothecation by the Executive. 

15. 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 and the Executive. The Agreement may be amended at any time by
mutual written agreement of the parties hereto. 

16. GOVERNING LAW  

This
Agreement shall be construed, interpreted, and governed in accordance with the
laws of the State of Ohio. 

IN
WITNESS WHEREOF, the Corporation has caused this
Agreement to be duly executed, and the Executive has hereunto set his hand, as
of the day and year first above written. 

HEALTH CARE REIT INC.

By:          /s/ Jeffrey H.
Miller

Name:    Jeffrey H. Miller

Title:       Executive Vice
President – Operations and General Counsel

EXECUTIVE:

/s/ Thomas J. DeRosa

Thomas J. DeRosaEXHIBIT 10.3

HEALTH
CARE REIT, INC.

2013-2015 LONG-TERM INCENTIVE PROGRAM

As
Amended and Restated

1.                  
Purpose.  This 2013-2015 Long-Term Incentive Program (the “Program”)
is adopted pursuant to the Amended and Restated Health Care REIT, Inc. 2005
Long-Term Incentive Plan (the “Equity Plan”) and any successor equity
plan and is intended to provide an incentive for superior work and to motivate
executives and employees of Health Care REIT, Inc. (the “Company”)
toward even higher achievement and business results, to tie their goals and
interests to those of the Company and its stockholders and to enable the
Company to attract and retain highly qualified executives and employees.  The
Program is for the benefit of Participants (as defined below). 
The Program is hereby amended and restated in its entirety as of January 1,
2014 to remove the use of individual performance as a factor for determining
the amount of Earned Awards under the Plan.

2.                  
Definitions.  Capitalized terms used herein without definitions
shall have the meanings given to those terms in the Equity Plan.  In addition,
as used herein:

“Award”
means a grant to a Participant hereunder.

“Award
Notice” means a notice or agreement provided to a Participant that sets
forth the terms, conditions and limitations of the Participant’s participation
in this Program, including, without limitation, the Participant’s Target Award.

“Cause”
for termination of the Participant’s employment for purposes of Section 6
means: (a) if the Participant is a party to an employment agreement with the
Company immediately prior to such termination, and “Cause” is defined therein,
then “Cause” shall have the meaning set forth in such employment agreement, or
(b) if the Participant is not party to an employment agreement with the Company
immediately prior to such termination or the Participant’s employment agreement
does not define “Cause,” then “Cause” shall mean: (i) gross negligence or
willful misconduct by the Participant in connection with the performance of his
or her material duties as an employee of the Company or any Subsidiary; (ii) a
breach by the Participant of any of his or her material duties as an employee
of the Company or any Subsidiary and the failure of the Participant to cure
such breach within 30 days after written notice thereof by the Company or any
Subsidiary; (iii) conduct by the Participant against the material best
interests of the Company or any Subsidiary or a material act of statutory or
common law fraud against the Company, any Subsidiary or the employees of either
the Company or any Subsidiary; or (iv) indictment of the Participant of a
felony or a misdemeanor involving moral turpitude and such indictment has a
material adverse effect on the interests or reputation of the Company or any
Subsidiary.

“Change
in Corporate Control” shall have the same meaning as set forth in Section
10.1(a) (but substituting “fifty percent (50%)” for “twenty percent (20%)”) and
Section 10.1(c) of the Equity Plan.

“Class
A Participant” means the Chairman and Chief Executive Officer.

“Class
B Participant” means a Participant who is an Executive Vice President.

“Class
C Participant” means a Participant who is a Senior Vice President.

“Code” means the Internal
Revenue Code of 1986, as amended.

“Disability”
for termination of the Participant’s employment for purposes of Section 6 means
(a) if the Participant is a party to an employment agreement with the Company
immediately prior to such termination, and “Disability” is defined therein,
then “Disability” shall have the meaning set forth in such employment
agreement, or (b) if the Participant is not party to an employment agreement
with the Company that defines “Disability,” then “Disability” shall have the
same meaning as defined in the Equity Plan.

“Dividend
Value” means the aggregate amount of dividends and other distributions paid
on one Share for which the record date occurred on or after the first day of
the Performance Period and prior to the Issuance Date for the Performance
Period (excluding dividends and distributions paid in the form of additional
Shares).

 

 

  

 

“Earned Award”
means, with respect to a Participant, the actual number of shares of Restricted
Stock that were earned by such Participant pursuant to this Program at the end
of the Performance Period.

“EBITDA”
means earnings before interest, taxes, depreciation and amortization of the
Company, as adjusted and calculated in accordance with the Company’s accounting
principles.

“Equity Plan”
means the Amended and Restated Health Care REIT, Inc. 2005 Long-Term Incentive
Plan, as amended from time to time.

“FAD”
means normalized funds available for distribution of the Company, as adjusted
and calculated in accordance with the Company’s accounting principles.

“FFO”
means normalized funds from operations, as adjusted and calculated in accordance
with the Company’s accounting principles.

“Good
Reason” for termination of the Participant’s employment for purposes of
Section 6 means: (a) if the Participant is a party to an employment
agreement with the Company immediately prior to such termination, and “good
reason” is defined therein, then “Good Reason” shall have the meaning set forth
in such employment agreement, or (b) if the Participant is not party to an
employment agreement with the Company immediately prior to such termination
and/or the Participant’s employment agreement does not define “Good Reason”: 
(i) a substantial adverse change, not consented to by the Participant, in the
nature or scope of the Participant’s responsibilities, authorities, powers,
functions, or duties; (ii) a breach by the Company of any of its material
obligations hereunder; or (iii) a material change in the geographic location at
which the Participant must perform his or her services.  Unless otherwise
provided in an employment agreement to which the Participant is a party
immediately prior to such termination, to constitute “good reason termination,”
the Participant must:  (1) provide written notice to the Company within 90 days
of the initial existence of the event constituting “Good Reason;” (2) may not
terminate his or her employment unless the Company fails to remedy the event
constituting “Good Reason” within 30 days after such notice has been given; and
(3) the Participant must terminate employment with the Company no later than 30
days after the end of the 30-day period in which the Company fails to remedy
the event constituting “Good Reason.”

“Participant”
means an executive or employee of the Company or any Subsidiary selected by the
Compensation Committee to participate in the Program.

“Performance
Peers” means HCP, Inc. and Ventas, Inc.

“Performance Period” means
the period commencing on January 1, 2013 and concluding on the earlier of
(i) December 31, 2015, or (ii) a Change in Corporate Control.

“Program” means this
Health Care REIT, Inc. 2013-2015 Long-Term Incentive Program, as amended from
time to time.

“Qualified Termination”
means termination of a Participant’s employment for Good Reason, by reason of
the Participant’s death, Disability, by the Company without Cause, Retirement
and in the case of a Participant who is party to an employment agreement with
the Company, a non‐renewal by the Company of the term of such agreement.

“Retirement”
means the voluntary termination of employment by a Participant after attaining
age 55 and if the sum of the Participant’s age and years of service to the
Company is equal to 65 or more; provided that the Participant delivers to the
Company, at least six months (90 days in the case of the Class A
Participant) prior to the date of his or her retirement, written notice specifying
such retirement date and the Participant remains in the continuous service of
the Company from the date the notice is provided until his or her retirement
date.

“Share Price”
means the average of the closing prices per Share for the last 20 trading days
for each calendar year in the Performance Period; provided that (i) if the
determination date is the date upon which a Change in Corporate Control occurs,
the average of the closing prices per Share for the last 20 trading days of
each completed calendar year in the Performance Period and the last 20 trading
days ending immediately prior to the date of the Change in Corporate Control,
and (ii) if the determination date is the date of a Participant’s Qualified
Termination, the average of the closing prices per Share for the last 20
trading days of each completed calendar year in the Performance Period and the
last 20 trading days ending immediately prior to the date of the Participant’s
Qualified Termination. 

“Shares” means shares of
common stock, par value $1.00 per share, of the Company.

 

 

  

 

“Target Award” means a
Participant’s target award, expressed in dollars, for the Performance Period,
as set forth in the Participant’s Award Notice.

3.                  
Administration 

(a)                
The Program shall be administered
by the Compensation Committee in accordance with the Equity Plan.  The
Compensation Committee shall have the discretionary authority to make all
determinations (including, without limitation, the interpretation and
construction of the Program and the determination of relevant facts) regarding
the entitlement to any Award hereunder and the amount of any Award to be paid
under the Program (including the number of shares of Restricted Stock issuable
to any Participant), provided such determinations are made in good faith and are
consistent with the terms, purpose and intent of the Program.  In particular,
but without limitation and subject to the foregoing, the Compensation Committee
shall have the authority:

(i)                
to select Participants under the
Program;

(ii)              
to determine the Target Award and
any formula or criteria for the determination of the Target Award for each
Participant and to determine the Earned Award;

(iii)            
to determine the terms and
conditions, consistent with the terms of this Program, which shall govern Award
Notices and all other written instruments evidencing an Award hereunder,
including the waiver or modification of any such conditions;

(iv)            
to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Program as it
shall from time to time deem advisable; and

(v)              
to interpret the terms and
provisions of the Program and any Award granted under the Program (and any
Award Notices or other agreements relating thereto) and to otherwise supervise
the administration of the Program.

(b)                
Subject to the terms hereof, all decisions
made by the Compensation Committee in good faith pursuant to the Program shall
be final, conclusive and binding on all persons, including the Company and the
Participants.  No member of the Compensation Committee, nor any officer or
employee of the Company acting on behalf of the Compensation Committee, shall
be personally liable for any action, determination, or interpretation taken or
made in good faith with respect to this Program, and all members of the
Compensation Committee and each and any officer or employee of the Company
acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company in respect of any such action,
determination or interpretation.

4.                  
Determination of Awards

(a)                
Each Participant’s Award Notice
shall specify such Participant’s Target Award.

(b)                
The percentage of a Participant’s
Target Award that may be earned for the Performance Period shall be determined
based on the weighted average score of the Company for the Performance Period
with respect to the corporate metrics established by the Compensation
Committee.

(i)                
Depending on the weighted average
score for the corporate metrics, the percentage of a Class A Participant’s
Target Award that may be earned for the Performance Period shall be determined
as follows:

	
  Threshold

  	
  Target

  	
  High

  	
  Extraordinary

  
	
  28.3%

  	
  100%

  	
  205.66%

  	
  266%

  

For
performance between two different tiers, the percentage payable shall be
calculated using interpolation between tiers.

(ii)              
Depending on the weighted average
score for the corporate metrics, the percentage of a Class B Participant’s
Target Award that may be earned for the Performance Period shall be determined
as follows:

 

 

 

	
  Threshold

  	
  Target

  	
  High

  	
  Extraordinary

  
	
  40%

  	
  100%

  	
  150%

  	
  200%

  

For
performance between two different tiers, the percentage payable shall be
calculated using interpolation between tiers.

(iii)            
Depending on the weighted average
score for the corporate metrics, the percentage of a Class C Participant’s
Target Award that may be earned for the Performance Period shall be determined
as follows:

	
  Threshold

  	
  Target

  	
  High

  	
  Extraordinary

  
	
  33.34%

  	
  100%

  	
  166.67%

  	
  216.67%

  

For
performance between two different tiers, the percentage payable shall be
calculated using interpolation between tiers.

5.                  
Change in Corporate Control.  In the event that prior to the end of the Performance Period, a
Change in Corporate Control occurs, then each outstanding Award will be deemed
earned as of the date of such Change in Corporate Control in accordance with
the computation described in Section 4(b) as if the Performance Period ended on
the day prior to the consummation of the Change in Corporate Control (for those
corporate metrics calculated on an annual basis, the most recent quarter
annualized will be considered).  Any Shares issued to satisfy outstanding
Awards shall be fully vested and nonforfeitable.

6.                  
Termination of Participant’s
Employment. 

(a)                
Except as otherwise set forth in a
Participant’s Award Notice, if a Participant’s employment with the Company
terminates, the provision of this Section 6 shall govern the treatment of the
Participant’s Award exclusively, regardless of the provision of any employment,
change in control or other agreement or arrangement to which the Participant is
a party, or any termination or severance policies of the Company then in
effect, which shall be superseded by this Program.

(b)                
In the event of termination of a
Participant’s employment by reason of a Qualified Termination prior to the end
of the Performance Period, then the Compensation Committee shall determine the
Participant’s outstanding Award in accordance with the computation described in
Section 4(b) as if the Performance Period ended on the calendar quarter end
immediately preceding the date of the Participant’s Qualified Termination (for
those corporate metrics calculated on an annual basis, the most recent quarter
annualized will be considered); provided, however, that the Earned Award of
such terminated Participant for the Performance Period shall be multiplied by a
fraction, the numerator of which shall be the number of full and partial months
in which the Participant was employed by the Company in the Performance Period
and the denominator of which shall be 36.  The pro-rated Earned Award shall be
paid out in Shares that are not subject to any risk of forfeiture.  Such
terminated Participant shall also receive a cash payment in an amount
determined pursuant to the provisions of Section 7(b) but taken into account
only dividends through the date of the Qualified Termination. 

(c)                
In the event of termination of a
Participant’s employment by reason of a Qualified Termination after the end of
the Performance Period, any Restricted Stock granted to the Participant under
this Program shall become fully vested and nonforfeitable.

(d)                
In the event of a termination of a
Participant’s employment for any reason other than a Qualified Termination
prior to the end of the Performance Period, except as otherwise set forth in
the Participant’s Award Notice, the Award held by the Participant for the
Performance Period shall, without payment of any consideration by the Company,
automatically and without notice terminate, be forfeited and be and become null
and void, and neither the Participant nor any of his or her successors, heirs,
assigns, or personal representatives will thereafter have any further rights or
interests in such Award.  In the event of a termination of a Participant’s
employment for any reason other than a Qualified Termination after the end of
the Performance Period, except as otherwise set forth in the Participant’s
restricted stock award agreement, any shares of Restricted Stock granted under
Section 7 that remain subject to risk of forfeiture shall be forfeited.

7.                  
Payment of Awards. 

(a)                
As soon as practicable following
the end of the Performance Period, the Compensation Committee shall determine
the size of each Participant’s Earned Award, if any, with respect to the
Performance Period (with the date of such determination being referred to as
the “Issuance Date”).  In no event shall the Issuance Date with respect
to the Performance Period be 

 

 

  

 

later than 74 days after
the end of the Performance Period; provided that (i) in the case of the
Performance Period that ends upon a Change in Corporate Control, the Issuance
Date shall be no later than immediately prior to the consummation of the Change
in Corporate Control, and (ii) in the case of a determination required by
Section 6(b), the Issuance Date shall be no later than 74 days after the date
of the Participant’s Qualified Termination. 

(b)                
On the Issuance Date, the Company
shall issue to each Participant (or such Participant’s estate or beneficiary,
if applicable) a number of shares of Restricted Stock equal to the dollar value
of the Earned Award divided by the Share Price.  Except as otherwise provided
in Sections 5 and 6, one-third of such shares shall be immediately vested and
nonforfeitable, one-third of such shares shall become fully vested and
nonforfeitable on December 31, 2016, and one-third of such shares shall become
fully vested and nonforfeitable on December 31, 2017, subject to continued employment
of the Participant through each such date.  On the Issuance Date for the
Performance Period, the Company shall also pay in cash to each Participant (or
such Participant’s estate or beneficiary, if applicable) an amount equal to the
Dividend Value for the Performance Period multiplied by the number of shares
issued pursuant to the preceding sentence.

8.                  
Adjustments.  Without duplication with the provisions of Section
3 of the Equity Plan, if (i) the Company shall at any time be involved in a
merger, consolidation, dissolution, liquidation, reorganization, exchange of
Shares, sale of all or substantially all of the assets or Shares of the Company
or a transaction similar thereto, (ii) any stock dividend, stock split, reverse
stock split, stock combination, reclassification, recapitalization, or other
similar change in the capital structure of the Company, or any distribution to
holders of Shares other than ordinary cash dividends, shall occur or (iii) any
other event shall occur which in the judgment of the Compensation Committee
necessitates action by way of adjusting the terms of the Program, then and in
that event, the Compensation Committee shall take such action as shall be
necessary to maintain the Participants’ rights hereunder so that they are substantially
the same rights existing under this Program prior to such event.

9.                  
Restrictions and Conditions.  Subject to the provisions of the Equity Plan and
this Program, except as may otherwise be permitted by the Compensation
Committee, a Participant shall not be permitted voluntarily or involuntarily to
sell, assign, transfer, or otherwise encumber or dispose of the Restricted
Stock or an Award; provided that the foregoing restriction shall not apply to
Shares actually issued to a Participant pursuant to Section 7 above that are no
longer subject to a risk of forfeiture.

10.               
Withholding of Tax.  Each Participant shall, not later than the date as
of which vesting or payment in respect of an Award becomes a taxable event for
Federal income tax purposes, pay to the Company or make arrangements
satisfactory to the Company for payment of any Federal, state and local taxes
required by law to be withheld on account of such taxable event.  The Company
shall have the authority to cause the required minimum tax withholding obligation
to be satisfied by withholding a number of Shares to be issued to a Participant
with an aggregate Fair Market Value that would satisfy the withholding amount
due.  The Company’s obligation to deliver stock certificates (or evidence of
book entry) to any Participant is subject to and conditioned on tax withholding
obligations being satisfied by such Participant.

11.               
Miscellaneous. 

(a)                
Amendment and Termination.  The Company reserves the right to amend or
terminate the Program at any time in its discretion without the consent of any
Participant, but no such amendment shall adversely affect the rights of the
Participants with regard to outstanding Awards.

(b)                
No Contract for Continuing
Services.  This Program shall not be
construed as creating any contract for continued services between the Company
or any of its Subsidiaries and any Participant and nothing herein contained
shall give any Participant the right to be retained as an employee or
consultant of the Company or any of its Subsidiaries.

(c)                
Governing Law.  The Program and each Award Notice awarded under the
Program shall be construed in accordance with and governed the laws of the
State of Ohio, without regard to principles of conflict of laws of such state.

(d)                
Construction.  Wherever appropriate, the use of the masculine
gender shall be extended to include the feminine and/or neuter or vice versa;
and the singular form of words shall be extended to include the plural; and the
plural shall be restricted to mean the singular.

(e)                
Headings.  The Section headings and Section numbers are
included solely for ease of reference.  If there is any conflict between such
headings or numbers and the text of this Program, the text shall control.

(f)                 
Effect on Other Plans.  Nothing in this Program shall be construed to limit
the rights of Participants under the Company’s or its Subsidiaries’ benefit
plans, programs or policies.

 

 

 

  

 

(g)                
Clawback Policy.  All Awards granted under this Program shall be
subject to forfeiture (as determined by the Compensation Committee) in
accordance with the terms of the Company’s clawback or recoupment policy (as in
effect from time to time).

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