AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (the "Agreement") is made
as of March 26, 1999, by and between LTC Properties, Inc., a corporation
organized under the laws of the State of Maryland ("LTC" or the "Company"), and
Xxxxx X. Xxxxxxxxxx ("Executive") and amends and restates the Employment
Agreement dated June 30, 1998, by and between LTC and Executive (the "Prior
Employment Agreement") and is effective as of March 26, 1999.
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. Appointment, Title and Duties. LTC hereby employs Executive to
serve as its President and Chief Financial Officer. In such capacity, Executive
shall report to the Chief Executive Officer of the Company, and shall have such
duties, powers and responsibilities as are customarily assigned to the President
and Chief Financial Officer of a publicly held corporation, but shall also be
responsible to the Board of Directors and to any committee thereof. In addition,
Executive shall have such other duties and responsibilities as the Chief
Executive Officer may assign him, with his consent, including serving with the
consent or at the request of the Company on the board of directors of affiliated
corporations.
2. Term of Agreement. The initial term of this Agreement shall be
for a three (3) year period, ending March 26, 2002. Unless the employment
hereunder shall have been terminated in accordance with the provisions hereof,
the term of this Agreement shall be extended beyond March 26, 2002, such that at
each and every moment of time hereafter the remaining term shall not be less
than three (3) years.
3. Acceptance of Position. Executive accepts the position of
President and Chief Financial Officer of LTC, and agrees that during the term of
this Agreement he will faithfully perform his duties and, except as expressly
approved by the Board of Directors of LTC, will devote substantially all of his
business time to the business and affairs of LTC, and will not engage, for his
own account or for the account of any other person or entity, in a business
which competes with LTC. It is acknowledged and agreed that Executive may serve
as an officer and/or director of companies in which LTC owns voting or
non-voting stock. In addition, it is acknowledged and agreed that Executive may,
from time to time, serve as a member of the board of directors of other
companies, in which event the Board of Directors of LTC must expressly approve
such service pursuant to a Board resolution maintained in the Company's minute
books. Any compensation or remuneration which Executive receives in
consideration of his service on the board of directors of other companies shall
be the sole and exclusive property of Executive, and LTC shall have no right or
entitlement at any time to any such compensation or remuneration.
4. Salary and Benefits. During the term of this Agreement:
a. LTC shall pay to Executive a base salary at an annual rate
of not less than Two Hundred Sixty-Five Thousand Dollars ($265,000) per annum,
paid in approximately equal installments at intervals based on any reasonable
Company policy. LTC agrees from time to time to consider increases in such base
salary in the discretion of the Board
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of Directors. Any increase, once granted, shall automatically amend this
Agreement to provide that thereafter Executive's base salary shall not be less
than the annual amount to which such base salary has been increased.
b. Executive shall participate in all health, retirement,
Company-paid insurance, sick leave, disability, expense reimbursement and other
benefit programs which LTC makes available to any of its senior executives, and
shall be eligible for bonuses in the discretion of the Board of Directors.
c. Executive shall be entitled to reasonable vacation time,
not less than four (4) weeks per year, provided that not more than two (2) weeks
of such vacation time may be taken consecutively without prior notice to and
non-objection by the Compensation Committee of the Board of Directors or, if
there is no Compensation Committee, the Board of Directors.
5. Certain Terms Defined. For purposes of this Agreement:
a. Executive shall be deemed to be "disabled" if a physical or
mental condition shall occur and persist which, in the written opinion of a
licensed physician selected by the Board of Directors in good faith, has
rendered Executive unable to perform the duties of President and Chief Financial
Officer of LTC for a period of sixty (60) days or more and, in the written
opinion of such physician, the condition will continue for an indefinite period
of time, rendering Executive unable to return to his duties.
b. A termination of Executive's employment by LTC shall be
deemed for "Cause" if, and only if, it is based upon (i) conviction of a felony;
(ii) material disloyalty to the Company such as embezzlement, misappropriation
of corporate assets or, except as permitted pursuant to Section 3 of this
Agreement, breach of Executive's agreement not to engage in business for another
enterprise of the type engaged in by the Company; or (iii) the engaging in
unethical or illegal behavior which is of a public nature, brings LTC into
disrepute, and results in material damage to the Company. The Company shall have
the right to suspend Executive, with pay, for a reasonable period to investigate
allegations of conduct which, if proven, would establish a right to terminate
this Agreement for Cause, or to permit a felony charge to be tried. Immediately
upon the conclusion of such temporary period, unless Cause to terminate this
Agreement has been established, Executive shall be restored to all duties and
responsibilities as if such suspension had never occurred.
c. A resignation by Executive shall not be deemed to be
voluntary and shall be deemed to be a resignation with "Good Reason" if it is
based upon (i) a diminution in Executive's title, duties, or salary; (ii) a
reduction in benefits which is not part of an across-the-board reduction in
benefits of all senior executive personnel; (iii) a direction by the Board of
Directors that Executive report to any person or group other than the Chief
Executive Officer or the Board of Directors, or (iv) a geographic relocation of
Executive's place of work a distance of more than seventy five (75) miles from
LTC's offices located at 000 Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxxxx. It
shall also constitute Good Reason for Executive to resign his employment if the
shareholders of LTC shall fail to elect or reelect him to the Board of
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Directors of LTC, unless he declines to be elected to such Board of Directors.
d. "Affiliate" means with respect to any Person, a Person who,
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control, with the Person specified.
e. "Base Salary" means, as of any date of termination of
employment, the highest base salary of Executive in the then current fiscal year
or in any of the last four fiscal years immediately preceding such date of
termination of employment.
f. "Beneficial Owner" shall have the meaning given to such
term in Rule 13d-3 under the Exchange Act;
g. A "Change in Control" occurs if:
i) any Person or related group of Persons (other than
Executive and his Related Persons, the Company or a Person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power
of the Company's then outstanding securities; or
ii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation (or other entity), other
than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 66-2/3% of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; provided, however, that a merger
or consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person acquires more than 30% of the combined
voting power of the Company's then outstanding securities shall not constitute a
Change in Control; or
iii) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
iv) a majority of the members of the Board of Directors
of the Company cease to be Continuing Directors.
h. "Code" means the Internal Revenue Code of 1986, as amended.
i. "Continuing Directors" means, as of any date of
determination, any member of the Board of Directors who (i) was a member of such
Board of Directors on the date of the Agreement or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board of Directors at the
time of such nomination or election.
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j. "Exchange Act" means the Exchange Act of 1934, as amended.
k. "Person" means any individual, corporation, partnership,
limited liability company, trust, association or other entity.
l. "Related Person" means any immediate family member (spouse,
partner, parent, sibling or child whether by birth or adoption) of the Executive
and any trust, estate or foundation, the beneficiary of which is the Executive
and/or an immediate family member of the Executive.
6. Certain Benefits Upon Termination. Executive's employment shall
be terminated upon the earlier of (i) the voluntary resignation of Executive
with or without Good Reason; (ii) Executive's death or permanent disability, or
(iii) upon the termination of Executive's employment by LTC for any reason at
any time. In the event of such termination, the below provisions of this Section
6 shall apply.
a. If Executive's employment by LTC terminates for any reason
other than as a result of (i) a termination for Cause, or (ii) a voluntary
resignation by Executive without a Good Reason, or (iii) a Change in Control of
the Company, then LTC shall pay Executive a lump sum severance payment equal to
three times his Base Salary; provided that if employment terminates by reason of
Executive's death or disability, then such salary shall be paid only to the
extent the Company has available "key man" life, disability or similar insurance
relating to the death or disability of Executive.
b. Upon a Change in Control of the Company whether or not
Executive's employment is terminated thereby, in lieu of the severance payment
described in Section 6(a) above, LTC shall pay Executive a lump sum severance
payment in cash equal to$1.6 million;
c. If Executive's employment by LTC terminates for any reason,
except for LTC's termination of Executive's employment for Cause or a voluntary
resignation by Executive without a Good Reason, LTC shall offer to Executive the
opportunity to participate in all Company-provided medical and dental plans to
the extent Executive elects and remains eligible for coverage under COBRA and
for a maximum period of eighteen (18) months at Company expense; provided,
however, in the event Executive's employment by LTC terminates upon a Change in
Control of the Company, then Executive shall not be given the opportunity to
participate in any of such medical and dental plans except to the extent
required by law.
d. In the event that Executive's employment terminates by
reason of his death, all benefits provided in this Section 6 shall be paid to
his estate or as his executor shall direct, but payment may be deferred until
Executive's executor or personal representative has been appointed and qualified
pursuant to the laws in effect in Executive's jurisdiction of residence at the
time of his death.
e. LTC shall make all payments pursuant to the foregoing
subsections (a) through (d) within seven (7) days following the date of
termination of Executive's employment or consummation of a Change in Control of
the Company, as applicable.
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f. Notwithstanding the foregoing, LTC shall have no liability
under this Section if Executive's employment pursuant to this Agreement is
terminated by LTC for Cause or by Executive without a Good Reason; provided,
however, that if Executive's employment pursuant to this Agreement is terminated
by LTC for Cause or by Executive without a Good Reason at any time after a
Change of Control which did not result in Executive's employment being
terminated, such post-Change of Control termination by LTC for Cause or by
Executive without a Good Reason shall not affect in any way Executive's
entitlement to the lump sum severance payment described in Section 6(b), above
or any other rights, benefits or entitlements to which Executive may be entitled
as a result of such Change of Control.
x. Xxxxx-Up.
i) If it shall be determined that any payment,
distribution or benefit received or to be received by Executive from the Company
(whether payable pursuant to the terms of this Agreement or any other plan,
arrangements or agreement with the Company or an Affiliate (as defined above)
("Payments") would be subject to the excise tax imposed by Section 4999 of the
Code (the "Excise Tax"), then Executive shall be entitled to receive an
additional payment (the "Excise Tax Gross-Up Payment) in an amount such that the
net amount retained by Executive, after the calculation and deduction of any
Excise Tax on the Payments and any federal, state and local income taxes and
excise tax on the Excise Tax Gross-Up Payment provided for in this Section 6(g),
shall be equal to the Payments. In determining this amount, the amount of the
Excise Tax Gross-Up Payment attributable to federal income taxes shall be
reduced by the maximum reduction in federal income taxes that could be obtained
by the deduction of the portion of the Excise Tax Gross-Up Payment attributable
to state and local income taxes. Finally, the Excise Tax Gross-Up Payment shall
be reduced by income or excise tax withholding payments made by the Company or
any Affiliate of either to any federal, state or local taxing authority with
respect to the Excise Tax Gross-Up Payment that was not deducted from
compensation payable to Executive.
ii) All determinations required to be made under this
Section 6(g), including whether and when an Excise Tax Gross-Up Payment is
required and the amount of such Excise Tax Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, except as specified in Section
6(g)(i) above, shall be made by the Company's independent auditors (the
"Accounting Firm"), which shall provide detailed supporting calculations both to
the Company and Executive within 15 business days after the Company makes any
Payments to Executive. Such determination of tax liability made by the
Accounting Firm shall be subject to review by Executive's tax advisor and, if
Executive's tax advisor does not agree with such determination reached by the
Accounting Firm, then the Accounting Firm and Executive's tax advisor shall
jointly designate a nationally recognized public accounting firm, which shall
make such determination. All reasonable fees and expenses of the accountants and
tax advisors retained by either Executive or the Company shall be borne by the
Company. Any Excise Tax Gross-Up Payment, as determined pursuant to this Section
6(g), shall be paid by the Company to Executive within five days after the
receipt of such determination. Any determination by a jointly designated public
accounting firm shall be binding upon the Company and Executive.
iii) As a result of the uncertainty in the application
of
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Subsection 4999 of the Code at the time of the initial determination hereunder,
it is possible that Excise Tax Gross-Up Payments will not have been made by the
Company that should have been made consistent with the calculations required to
be made hereunder ("Underpayment"). In the event that Executive thereafter is
required to make a payment of any Excise Tax, any such Underpayment calculated
in accordance with and in the same manner as the Excise Tax Gross-Up Payment in
Section 6(g)(i) above shall be promptly paid by the Company to or for the
benefit of Executive. In the event that the Excise Tax Gross-Up Payment exceeds
the amount subsequently determined to be due, such excess shall constitute a
loan from the Company to Executive payable on the fifth day after demand by the
Company (together with interest at the rate provided in Section 1274(b)(2)(B) of
the Code).
7. Tax Liability Loan. Upon a Change in Control of the
Company, whether or not Executive's employment is terminated as a result
thereof, the Company shall offer Executive an unsecured loan in the amount
necessary to fund Executive's tax liability arising from the accelerated vesting
of restricted shares held by Executive, if any. Such loan shall be due, in full,
in ten (10) years from the date made and shall bear interest at the then-current
Applicable Federal Rate (the minimum rate necessary to avoid "unstated interest"
under Section 7872 of the Code) with interest payments to be paid to the Company
annually. Such loan shall be evidenced by a promissory note signed by, and with
full recourse to, Executive.
8. Indemnification. LTC shall indemnify Executive and hold him
harmless from and against all claims, actions, losses, damages, expense or
liabilities (including expenses of defense and settlement) ("Claim") based upon
or in any way arising from or connected with his employment by LTC, to the
maximum extent permitted by law. To the extent permitted by law, LTC shall
advance to Executive any expenses necessary in connection with the defense of
any Claim which is brought if indemnification cannot be determined to be
available prior to the conclusion of, or the investigation of, such Claim. The
parties hereto agree that each understands and has understood, at all times
under all prior employment agreements between LTC and Executive, that
notwithstanding the above-stated provisions, nothing herein shall require LTC to
hold harmless or indemnify Executive with respect to any Claim which is brought
or asserted against Executive by LTC. LTC shall investigate in good faith the
availability and cost of directors' and officers' insurance and shall include
Executive as an insured in any policy of such insurance it maintains.
9. Attorney Fees. In the event that any action or proceeding
is brought to enforce the terms and provisions of this Agreement, the prevailing
party shall be entitled to recover reasonable attorneys fees.
10. Notices. All notices and other communications provided to
either party hereto under this Agreement shall be in writing and delivered by
certified or registered mail to such party at its address set forth below its
signature hereto, or at such other address as may be designated by such party in
a notice to the other party. Any notice, if mailed and properly addressed with
postage prepaid, shall be deemed given when received.
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11. Construction. In construing this Agreement, if any portion
of this Agreement shall be found to be invalid or unenforceable, the remaining
terms and provisions of this Agreement shall be given effect to the maximum
extent permitted without considering the void, invalid or unenforceable
provision. In construing this Agreement, the singular shall include the plural,
the masculine shall include the feminine and neuter genders as appropriate, and
no meaning or effect shall be given to the captions of the sections in this
Agreement, which are inserted for convenience of reference only.
12. Headings. The section headings hereof have been inserted
for convenience of reference only and shall not be construed to affect the
meaning, construction or effect of this Agreement.
13. Governing Law. The provisions of this Agreement shall be
construed and interpreted in accordance with the internal laws of the State of
California as at the time in effect.
14. Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all other prior agreements and undertakings, both
written and oral, among Executive and the Company, with respect to the subject
matter hereof.
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IN WITNESS WHEREOF, this Agreement has been executed on the date set forth
below, to be effective as of the date specified in the first paragraph of this
Agreement.
LTC PROPERTIES, INC.,
a Maryland Corporation
Address: By: /s/ Xxxxx X. Xxxxxxxxxxx
----------------------- ------------------------------------
Chairman and Chief Executive Officer
-------------------------------
------------------------------- Date Signed: March 26 1999
---------------------------
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Chairman of Compensation Committee
Date Signed: March 26 1999
-------------------------
Address: /s/ Xxxxx X. Xxxxxxxxxx
-----------------------
Executive
-------------------------------
Date Signed: March 26 1999
------------------------------- -------------------------
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