Document:

EX-10.5

 

    Exhibit 10.5

 

    SUPPORT
    AGREEMENT

 

    SUPPORT AGREEMENT, dated as of September 12, 2006 (this
    “Agreement”), by the undersigned beneficial
    interest holder (the “Shareholder”) of Windrose
    Medical Properties Trust, a Maryland real estate investment
    trust (the “Company”), for the benefit of
    Health Care REIT, Inc., a Delaware corporation
    (“Parent”).

 

    RECITALS

 

    WHEREAS, Parent, Heat Merger Sub, LLC, a Delaware limited
    liability company and a wholly-owned subsidiary of Parent
    (“Merger Sub”), Heat OP Merger Sub, L.P., a
    Virginia limited partnership and a wholly-owned subsidiary of
    Parent (“OP Merger Sub”), the Company and
    Windrose Medical Properties, L.P., a Virginia limited
    partnership and the operating limited partnership of the Company
    (“Company OP”), are entering into the Agreement
    and Plan of Merger, dated as of September 12, 2006 (the
    “Merger Agreement”), which provides for, among
    other things, the merger of the Company with and into Merger Sub;

 

    WHEREAS, the Shareholder owns that number of common shares of
    beneficial interest, par value $0.01 per share, of the
    Company (“Company Common Shares”), appearing on
    the signature page hereof (such Company Common Shares, together
    with any other Company Common Shares or other shares of
    beneficial interest or voting securities of the Company
    beneficially owned as of the date hereof or acquired by such
    Shareholder after the date hereof and during the term of this
    Agreement, being collectively referred to herein as the
    “Subject Shares”);

 

    WHEREAS, the Shareholder is a limited partner of Company OP and
    owns that number of units of partnership interest of Company OP
    (“Company OP Units”) appearing on the signature
    page hereof (such Company OP Units, together with any other
    Company OP Units or other units of partnership interest of
    Company OP beneficially owned as of the date hereof or acquired
    by such Shareholder after the date hereof and during the term of
    this Agreement, being collectively referred to herein as the
    “Subject Units”); and

 

    WHEREAS, as a condition to their willingness to enter into the
    Merger Agreement, Parent, Merger Sub and OP Merger Sub have
    required that the Shareholder agree, and in order to induce
    Parent, Merger Sub and OP Merger Sub to enter into the Merger
    Agreement the Shareholder has agreed, to enter into this
    Agreement.

 

    NOW, THEREFORE, in consideration of the promises and the mutual
    covenants and agreements set forth herein, the Shareholder
    agrees as follows:

 

    1. Capitalized Terms.  Capitalized
    terms used in this Agreement that are not defined herein shall
    have the meanings set forth in the Merger Agreement.

 

    2. Covenants of Shareholder.  Until
    the termination of this Agreement in accordance with
    Section 5:

 

    (a) The Shareholder shall attend the Company Shareholders
    Meeting, in person or by proxy, and at the Company Shareholders
    Meeting (or at any adjournment thereof) or in any other
    circumstances upon which a vote, consent or other approval with
    respect to the Merger and the Merger Agreement is sought, the
    Shareholder shall vote (or cause to be voted) the Subject Shares
    in favor of the Merger, the adoption of the Merger Agreement and
    the approval of the terms thereof.

 

    (b) At any meeting of Shareholders of the Company or at any
    adjournment thereof or in any other circumstances upon which the
    Shareholder’s vote, consent or other approval is sought,
    the Shareholder shall vote (or cause to be voted) the Subject
    Shares against (i) any merger agreement or merger (other
    than the Merger Agreement and the Merger), consolidation,
    combination, sale of substantial assets, reorganization,
    recapitalization, dissolution, liquidation or winding up of or
    by the Company or any Company Subsidiary or any other
    Acquisition Proposal or (ii) any action or agreement
    (including any amendment of the Company’s Amended and
    Restated Declaration of Trust or Amended and Restated Bylaws or
    other proposal or transaction involving the Company or any
    Company Subsidiary) that would (A) result in a breach of
    any covenant, representation or warranty or any other obligation
    or agreement under the Merger Agreement, (B) in any manner
    impede, interfere with, delay, discourage, postpone,

 

    frustrate, prevent, nullify or adversely affect the Merger, the
    Merger Agreement or any of the other transactions contemplated
    by the Merger Agreement or (C) change in any manner the
    voting rights of any class of beneficial interests of the
    Company. The Shareholder further agrees not to commit or agree
    to take any action inconsistent with the foregoing.

 

    (c) The Shareholder agrees not to (i) sell, transfer,
    pledge, assign or otherwise dispose of (including by gift)
    (collectively, “Transfer”), or enter into any
    contract, option or other arrangement (including any
    profit-sharing arrangement) with respect to the Transfer of the
    Subject Shares or Subject Units to any person or (ii) enter
    into any voting arrangement, whether by proxy, voting agreement
    or otherwise, in relation to the Subject Shares or Subject
    Units, and agrees not to commit or agree to take any of the
    foregoing actions.

 

    (d) The Shareholder agrees to promptly notify Parent in
    writing of the nature and amount of any acquisition by such
    Shareholder of any voting securities of the Company or any
    Company OP Units acquired by such Shareholder hereafter.

 

    3. Representations and
    Warranties.  The Shareholder represents and
    warrants to Parent as follows:

 

    (a) The Shareholder has the legal right, power and capacity
    to execute, deliver and perform this Agreement.

 

    (b) The Shareholder is the record and beneficial owner of,
    and has good and marketable title to, the Subject Shares (other
    than Subject Shares shown on the signature page hereto as being
    owned subject to restriction or forfeiture) and the Subject
    Units. The Shareholder does not own, of record or beneficially,
    any shares of beneficial interest of the Company other than the
    Subject Shares or the Subject Units. The Shareholder has the
    sole right to vote, and the sole power of disposition with
    respect to, the Subject Shares (other than Subject Shares shown
    on the signature page hereto as being owned subject to
    restriction or forfeiture) and the Subject Units, and none of
    the Subject Shares or Subject Units is subject to any voting
    trust, proxy or other agreement, arrangement or restriction with
    respect to the voting or disposition of such Subject Shares or
    Subject Units, except as contemplated by this Agreement.

 

    (c) This Agreement has been duly executed and delivered by
    the Shareholder and, assuming the due authorization, execution
    and delivery of this Agreement by Parent, this Agreement
    constitutes the valid and binding agreement of the Shareholder
    enforceable against the Shareholder in accordance with its terms.

 

    4. Grant of Irrevocable Proxy; Appointment of
    Proxy.  Until the termination of this
    Agreement in accordance with Section 5:

 

    (a) The Shareholder hereby severally irrevocably grants to,
    and appoints, George L. Chapman or William C. Ballard, Jr.,
    in their respective capacities as designees of the Company or
    other designees of the Company so designated, and each of them
    individually, or any of them, the Shareholder’s proxy and
    attorney-in-fact
    (with full power of substitution), for and in the name, place
    and stead of the Shareholder, to vote all of the Subject Shares
    owned of record by the Shareholder in accordance with
    Section 1(a) and Section 1(b) of this Agreement.

 

    (b) The Shareholder represents that any proxies heretofore
    given in respect of the Subject Shares are not irrevocable and
    that all such proxies are hereby revoked.

 

    (c) The Shareholder understands and acknowledges that
    Parent, Merger Sub and OP Merger Sub are entering into the
    Merger Agreement in reliance upon the Shareholder’s
    execution and delivery of this Agreement. The Shareholder hereby
    affirms that the irrevocable proxy set forth in this
    Section 3 is given in connection with the execution of the
    Merger Agreement and that such irrevocable proxy is given to
    secure the performance of the duties of the Shareholder under
    this Agreement. The Shareholder hereby further affirms that the
    irrevocable proxy is coupled with an interest and may under no
    circumstance be revoked. The Shareholder hereby ratifies and
    confirms all that such irrevocable proxy may lawfully do or
    cause to be done by virtue hereof.

    

    2

 

    5. Termination.  The obligations of
    the Shareholder hereunder shall terminate upon the earlier to
    occur of (i) the termination of the Merger Agreement
    pursuant to Section 9.1 thereof and (ii) the Effective
    Time.

 

    6. Successors, Assigns and Transferees
    Bound.  Any successor, assignee or transferee
    (including a successor, assignee or transferee as a result of
    the death of the Shareholder, such as an executor or heir) shall
    be bound by the terms hereof, and the Shareholder shall take any
    and all actions necessary to obtain the written confirmation
    from such successor, assignee or transferee that it is bound by
    the terms hereof.

 

    7. Remedies.  The Shareholder
    acknowledges that money damages would be both incalculable and
    an insufficient remedy for any breach of this Agreement by it,
    and that any such breach would cause Parent irreparable harm.
    Accordingly, the Shareholder agrees that in the event of any
    breach or threatened breach of this Agreement, Parent, in
    addition to any other remedies at law or in equity it may have,
    shall be entitled, without the requirement of posting a bond or
    other security, to equitable relief, including injunctive relief
    and specific performance.

 

    8. Severability.  The invalidity or
    unenforceability of any provision of this Agreement in any
    jurisdiction shall not affect the validity or enforceability of
    any other provision of this Agreement in such jurisdiction, or
    the validity or enforceability of any provision of this
    Agreement in any other jurisdiction.

 

    9. Amendment.  This Agreement may
    be amended only by means of a written instrument executed and
    delivered by both the Shareholder and Parent.

 

    10. Jurisdiction.  Each party
    hereby irrevocably submits to the exclusive jurisdiction of the
    courts of the State of Delaware in any action, suit or
    proceeding arising in connection with this Agreement, and agrees
    that any such action, suit or proceeding shall be brought only
    in such courts (and waives any objection based on forum non
    conveniens or any other objection to venue therein). Each
    party hereto waives any right to a trial by jury in connection
    with any such action, suit or proceeding.

 

    11. Governing Law.  Except to the
    extent that Entity Law is mandatorily applicable to the Merger,
    this Agreement shall be governed by, and construed in accordance
    with, the laws of the State of Delaware, regardless of the laws
    that might otherwise govern under applicable principles of
    conflicts of laws thereof.

 

    12. Notice.  All notices, requests,
    demands and other communications hereunder shall be deemed to
    have been duly given and made if in writing and if served by
    personal delivery upon the party for whom it is intended or if
    sent by telex or telecopier (and also confirmed in writing) to
    the person at the address set forth below, or such other address
    as may be designated in writing hereafter, in the same manner,
    by such person:

 

			
	 	    (a) 
	
    if to Parent, to:

 

    Health Care REIT, Inc.

    One SeaGate, Suite 1500

    Toledo, Ohio 43604

    Attention: General Counsel

    Facsimile No.:
    (419) 247-2826

 

    with copies (which shall not constitute notice) to:

 

    Shumaker, Loop & Kendrick, LLP

    North Courthouse Square

    1000 Jackson

    Toledo, Ohio
    42624-1573

    Attention: Mary Ellen Pisanelli, Esq.

 

    and

 

    Sidley Austin LLP

    One South Dearborn

    Chicago, Illinois 60603

    Attention: David J. Zampa, Esq.

    

    3

 

 

    (b) if to the Shareholder to:

 

    Windrose Medical Properties Trust

    3502 Woodview Trace

    Suite 210

    Indianapolis, IN 46268

    Attention: Frederick L. Farrar

 

    with a copy (which shall not constitute notice) to:

 

    Hunton & Williams LLP

    Riverfront Plaza, East Tower

    951 East Byrd Street

    Richmond, Virginia 23219

    Attention: David C. Wright, Esq.

 

    13. Counterparts.  For the
    convenience of the parties, this Agreement may be executed in
    counterparts, each of which shall be deemed an original, but all
    of which together shall constitute one and the same instrument.

 

    14. No Limitation on Actions of the Shareholder as
    Director or Officer.  Notwithstanding anything
    to the contrary in this Agreement, nothing in this Agreement is
    intended or shall be construed to require the Shareholder to
    take or in any way limit any action that the Shareholder may
    take to discharge the Shareholder’s fiduciary duties as a
    director or officer of the Company, including but not limited to
    the right to vote for or support a Superior Acquisition
    Proposal, the termination of the Merger Agreement or any other
    action, in each case in accordance with the terms of the Merger
    Agreement.

    

    4

 

    IN WITNESS WHEREOF, the parties have executed this Agreement as
    of the date first written above.

 

    /s/  Frederick
    L. Farrar

    Name: Frederick L. Farrar

 

    Number of Company Common Shares

    owned on the date hereof: 20,620

 

    Number of Company Common Shares held

    subject to restriction or forfeiture: 23,700

 

    Number of Company OP Units

    owned on the date hereof: 7,079

 

    Accepted and Agreed to

    as of the date set forth above:

 

    HEALTH CARE REIT, INC.

 

    /s/  George
    L. Chapman

    Name: George L. Chapman

			
	    Title: 
	
    Chairman and Chief Executive Officer
	 

    

    5EX-10.6

 

EXHIBIT 10.6

September 12, 2006

Mr. Fred S. Klipsch

3502 Woodview Trace

Suite 210

Indianapolis, Indiana 46268

Dear Mr. Klipsch:

     Reference is made to the merger (“Merger”) of [OP Merger Sub] with and into Windrose
Medical Properties, L.P. (“Company OP”) pursuant to the Agreement and Plan of Merger dated
September 12, 2006 (the “Merger Agreement”). In connection with the Merger, units of
partnership interest in Company OP (“Company OP Units”) will automatically be converted
into shares of common stock of Health Care REIT, Inc. (“Parent Shares”) as set forth in the
Merger Agreement and cash in lieu of fractional shares, in a taxable transaction (the “OP Unit
Exchange”). You and certain others are holders of Company OP Units and, in connection with the
Merger, will exchange your Company OP Units in the Merger.

     Health Care REIT, Inc. (“Parent”) hereby agrees to pay to you, at the Effective Time
of the OP Merger (as defined in the Merger Agreement), an amount of cash equal to the Adjustment
Amount (as defined below), determined as of the Effective Time, attributable to your OP Unit
Exchange. For informational purposes only, the Current Tax Cost based on December 31, 2005 basis
numbers, and assuming a value of $18.06 per Company OP Unit in the OP Unit Exchange, is estimated
to be approximately $488,369. The Gross-Up Amount will be calculated as set forth below.

     Katz Sapper Miller (the “Expert”) shall determine the Adjustment Amount. Parent shall
be responsible for the fees and expenses of the Expert. In determining the Current Tax Cost (as
defined below) and the Gross-Up Amount (as defined below), the Expert shall take into account, as
relevant, your actual tax basis capital account in the Company OP, as determined for federal income
tax purposes, and your actual tax basis in your interest in the Company OP.

     The payment of the Adjustment Amount pursuant to this letter agreement shall be in addition
to, and shall not in any manner reduce, the amounts distributable or payable to you pursuant to the
other provisions of the Merger Agreement and Amended and Restated Agreement of Limited Partnership
of Company OP (calculated as if there had been no Adjustment Amount).

     “Adjustment Amount” means the amount equal to the sum of (i) the Current Tax Cost and
(ii) the Gross-Up Amount as of the Effective Time of the Merger.

 

 

     “Current Tax Cost” means, with respect to the OP Unit Exchange, an amount equal to the
aggregate of the federal, state and local income taxes, net of the benefit of the deduction from
federal income taxes for state and local income taxes assumed paid, that would be incurred by you
as a result of the OP Unit Exchange. For purposes of this paragraph, (x) all income arising from
the OP Unit Exchange that is treated as ordinary income or short-term capital gain under the
applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and
all payments under this letter agreement shall be treated as subject to federal, state and local
income taxes at an effective tax rate imposed on ordinary income of individuals residing in the
local and state in which you reside are for tax purposes determined using the maximum federal,
state and local rates of tax on ordinary income then in effect, (y) all other income arising from
the OP Unit Exchange shall be subject to federal, state and local income tax at the effective tax
rate imposed on long-term capital gains of individuals residing in the local and state in which the
you reside, determined using the maximum federal, local and state rates on long-term capital gains
then in effect (including for this purpose with respect to any Code Section 1245 or Section 1250
recapture (or, as relevant, analogous state and local recapture), the maximum tax rate imposed on
such income), and (z) any amounts giving rise to a payment pursuant to this provision will be
determined assuming the OP Unit Exchange was the only transaction or event reported on your tax
return (i.e., without giving effect to any loss carryforwards or other deductions attributable to
you).

     “Gross-Up Amount” means an amount equal to the federal, state and local income taxes
payable by you as the result of the receipt of an amount equal to the Current Tax Cost and the
Gross-Up Amount, as applicable, pursuant to this letter agreement, calculated in a manner
consistent with and using the same tax rates used for the calculation of Current Tax Cost.
Exhibit A to this letter agreement sets forth an example of a calculation of the Gross-Up
Amount.

Very Truly Yours,

HEALTH CARE REIT, INC.

By: /s/ George L. Chapman                              

Name: George L. Chapman

Title: Chairman and Chief Executive Officer

 

 

Exhibit A

Example of Gross-Up Amount Calculation

	 	 	 	 	 
	Total Gain Recognized
	 	 	5,000,000	 
	Unrecaptured Section 1250 Gain
	 	 	500,000	 
	Federal Tax Rate — Ordinary Income
	 	 	35.00	%
	Federal Tax Rate — Unrecaptured Section 1250 Gain
	 	 	25	%
	Federal Tax Rate — Regular Capital Gain
	 	 	15	%
	Hypothetical Applicable State and Local Tax Rate
	 	 	4.4	%
	 
	 	 	 	 
	State and Local Tax Due from OP Unit Exchange($5,000,000 * 4.4%)
	 	 	220,000	 
	Federal Tax Benefit from State and Local Tax Deduction ($220,000 * 35.0%)
	 	 	(77,000	)
	 
	 	 	 	 
	Federal Tax Due from OP Unit Exchange ($500,000 * 25% plus $4,500,000 * 15%)
	 	 	800,000	 
	Less: Federal Tax Benefit from State and Local Tax Deduction
	 	 	(77,000	)
	 
	 	 	 
	 
	 	 	 	 
	Federal Tax Due
	 	 	723,000	 
	State and Local Tax Due
	 	 	220,000	 
	 
	 	 	 
	Total Tax Due
	 	 	943,000	 
	 
	 	 	 	 
	Gross-Up Calculation
	 	 	 	 
	 
	 	 	 	 
	Total Tax by Applicable Holders (net of any applicable deductions)
	 	 	943,000	 
	 
	 	 	 
	Divide by (1 — Federal, State and Local effective tax rate1)
	 	 	62.14	%2,3
	 
	 	 	 	 
	Result
	 	 	1,517,541	 
	 
	 	 	 	 
	Payment for Federal, State and Local Tax Due
	 	 	943,000	 
	Gross-Up Payment
	 	 	574,541	 
	 
	 	 	 	 
	Total Payment
	 	 	1,517,541	 

This Exhibit A is intended to provide an example of the gross up calculation used to
determine the Gross-Up Amount only and does not reflect the actual tax due from the OP Unit
Exchange.

 

			
	1	 	The foregoing assumes solely for purposes of
the illustration that any tax payments pursuant to the [letter agreement] would
be taxed as ordinary income. The Expert shall be responsible for determining
the tax rate applicable to such payments.
	 
	2	 	Does not take into account phase-out of
itemized deductions.
	 
	3	 	Does not take into account any
self-employment taxes relating to any payments.

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