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MANAGEMENT AGREEMENT
This Agreement (hereinafter referred to as the "Agreement"), by and between
HEALTH CARE REIT, INC., (hereinafter referred to as the "Company"), a Delaware
corporation and as defined in Sections 856 et seq. Internal Revenue Code of
1986 (hereinafter referred to as the "IRC") and FIRST TOLEDO CORPORATION, an
Ohio corporation having its principal office in Toledo, Ohio (hereinafter
referred to as the "Manager"), is made this 17th day of January, 1994:
W I T N E S S E T H:
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1. The Manager shall execute the business and investment transactions of
the Company in its name and for its account and risk by receiving,
managing, and transferring securities, real property, leaseholds, real
estate mortgages, and other assets or liabilities, subject always to
the authority and supervision of the Directors. The Manager shall
also furnish the following services itself, or by arrangement with
others, to the Company:
A. Investment advisory, financial consulting and electronic data
processing services in connection with the considerations and
decisions made by the Directors;
B. Reportorial and research functions, including provisions of
economic and statistical data relating to securities,
contracts, real property and mortgage investments;
C. The services of a consultant, accountant, mortgage banker,
technical advisor, legal advisor, attorney in fact, broker,
underwriter, corporate fiduciary, escrow agent, depository,
custodian or agent for collection, insurer or insurance agent,
or any other service deemed by the Directors necessary or
desirable;
D. Negotiating and contracting with persons acting in the above
capacities and the employment and retention of same and any
other persons in connection with the mortgages or assets or
liabilities acquired, held or disposed of, or committed,
negotiated or contemplated to be acquired, held or disposed
of;
E. Managing or operating any assets or properties held by the
Company directly or through affiliates, or independent
contractors as defined in Section 856 et seq. of the IRC;
F. Acting as attorney in fact or agent in the purchase or sale or
other disposition of investments, and in handling, prosecuting
or settling of any claims of the Company, including the
foreclosure or other enforcement of any mortgage or other lien
or other security securing or guaranteeing investments, and
exercising its own sound discretion in so doing;
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G. Investing or reinvesting any moneys of the Company;
H. Providing office space and office equipment and necessary
professional, clerical and secretarial personnel for the
performance of any needed services, and allocating the expense
of same;
I. Reviewing each individual property, mortgage or commitment
offered to the Company for purchase as to:
i) The completeness of supporting documents;
ii) The soundness and suitability of property location;
iii) The consistency of the price at which the property or
mortgage is available with the prices of properties
or mortgages of comparable quality and similar terms
available in the area;
iv) The adequacy of the property's facilities; and
v) The ability of the income of the lessee or borrower
to meet the obligations of the lease, mortgage,
or other contract.
J. From time to time, as requested by the Company, reporting on
the performance of the foregoing services to the Company; and
K. Such other services of a managerial or advisory nature as the
Directors may deem within the purview of this Agreement.
2. The Company and its Directors, officers, and employees shall conduct
its general corporate affairs including, but not limited to, investor
communications, regulatory reporting, record keeping, planning, staff
training and community relations, provided that the Manager may be
delegated certain ministerial and non-discretionary portions of such
functions as authorized from time to time by the officers and
Directors.
3. The Manager shall be kept informed of the Company's policies,
decisions, investments, funds available or to become available, and
generally as to the condition of its affairs. In the event the
Manager has not prepared the same, the Company shall furnish the
Manager with a certified copy of al financial statements, a signed
copy of each report prepared by public accountants or sent to public
agencies or shareholders, and such other information with regard to
its affairs or policies as the Manager may from time to time
reasonably request.
4. The Manager shall furnish advice and recommendations regarding
investments considered by the Company and shall, at the request of the
Directors, furnish advice and recommendations with respect to other
aspects of the business and affairs of
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the Company by sending an executive officer of the Manager (who may
also be an officer of the Company) to attend all regular and special
meetings of the Directors, and the Directors shall notify the Manager
of such meetings.
5. The Manager may establish and maintain one or more bank accounts in
its own name, or the name of the Company, and may collect and deposit
into such account or accounts, and disburse from any such account or
accounts any moneys on behalf of the Company, under such terms and
conditions as the Directors may approve; and the Manager shall from
time to time render appropriate accountings of such collections and
payments to the Directors and accountants and auditors of the Company.
6. The Manager shall use its best efforts in the exercise of sound and
common business practices to see that any mortgage securing any
investments of the Company shall be a valid lien upon the mortgaged
property according to its terms, that the title of any real property
interests forming a part of the Company's investments is covered by
title guarantees or policies issued by responsible insurance
companies, that any insurance issued by the Federal Housing
Administration or guaranty issued by the Veterans Administration is
valid and in full force and effect and enforceable according to its
terms, that any commitment, and the financial status of any lender
making such commitment, to provide permanent financing of buildings is
satisfactory, that any property forming part of the Company's
investments is duly insured against loss or damage by fire, with
extended coverage, and against other insurable hazards and risks as is
customary and appropriate in the circumstances and shall carry out the
policies from time to time directed by the Directors in connection
with the protection of such investments.
7. The Manager shall not take any action which in its opinion would
adversely affect the status of the Company as a real estate investment
trust under Section 856 et seq. of the IRC, or regulations promulgated
thereunder, or which would otherwise be prohibited by the Company's
Certificate of Incorporation or Amended By-Laws.
8. Directors, officers, shareholders and employees of the Manager may
serve as Directors, officers, employees and agents of the Company and
may be compensated by the Company for their services rendered as
employees or agents of the Company. The Company shall not knowingly,
directly or indirectly, purchase or otherwise acquire any property
whatsoever from, or sell or otherwise transfer any property whatsoever
to, or lend any of the assets or property of the Company to, any
corporation, partnership or trust with which a Director in his
individual capacity is affiliated by reason of being a director,
officer, partner, trustee, or holder of more than one percent (1%) of
the outstanding equity investments of such corporation, partnership,
or trust, unless such transaction has been approved by the affirmative
vote of a majority of the Directors not so affiliated; and in the
event the Company
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acquires any asset from such persons, the price of such assets shall
be based upon an independent appraisal. Nothing contained in this
Agreement shall prohibit or in any way limit the Manager from
contracting with others for the performing of services similar or
identical to those undertaken by the Manager pursuant to this
Agreement; nor shall the Manager in any way be limited with respect to
the use of the name "First Toledo" by itself or with any affiliated or
successor corporation or other business entity in any jurisdiction in
which the Company may be doing business. The Company hereby agrees it
is using the service mark "Health Care REIT, Inc." and may use "Health
Care Fund" under the license and control of the Manager. The Company
hereby and irrevocably assigns to the Manager any and all right which
it may have to consent to the use of the name "First Toledo" and the
names and service marks "Health Care REIT, Inc." and/or "Health Care
Fund" by others and agrees to execute such instruments as are
reasonably necessary to give effect to this covenant or to effect such
consent with any governmental department or agency. Further, in the
event that the Manager, successor by reorganization or merger of a
wholly owned subsidiary shall cease to act in its capacity as advisor
to the Company by reason of the termination of this Agreement or any
renewal hereof, for any reason whatsoever, the Directors shall, upon
request of the Manager, or its successor by reorganization or merger
of a wholly owned subsidiary of the Manager, immediately eliminate
from the Company name, the words "Health Care REIT, Inc." or "Health
Care Fund" or any approximation thereof, which names are the property
of the Manager and immediately cease use of the service marks "Health
Care REIT, Inc." and/or "Health Care Fund" or any approximation
thereof, which services marks are the property of the Manager. The
covenant contained in the immediately preceding sentence shall survive
and shall not otherwise be affected by the termination of this
Agreement, or any renewal hereof.
9. If required by the Directors, the Manager shall maintain a fidelity
bond in a responsible surety company in an amount of not less than
$100,000 or such higher amount as may later be required by the
Directors covering all officers and employees of the Manager handling
funds and negotiable assets of the Company, which bond shall protect
the Company against all loses of any such property, from acts of such
officers and employees through theft, embezzlement, or fraud, unless
aid offers and employees are furnished under management contract by
another firm which carries adequate fidelity bond coverage naming the
Company as an insured or beneficiary thereunder.
10. When requested by the Directors, the Manager shall service mortgage
loans held by the Company and may charge to the Company such fees as
are approved by the Company.
11. The Company will indemnify and hold harmless the Manager, its
officers, directors and employees, from and against any liabilities,
claims, damages, costs or expenses arising out of the performance by
the Manager of its duties and services hereunder (other than any costs
or expenses which are to be
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borne by the Manager pursuant to other provisions of this Agreement),
to the extent that such liabilities, claims, damages, costs or
expenses are not covered by insurance; provided, however, that no such
right of indemnity shall exist with respect to, but rather the Manager
will indemnify and hold harmless the Company and each Director
individually from and against any liabilities, claims, damages, costs
or expenses incurred by reason of acts constituting bad faith, willful
misfeasance, gross negligence or reckless disregard of its duties
hereunder, or on the part of its officers and employees. The Manager
assumes no responsibility under this Agreement other than to render
the services called for hereunder in good faith and shall not be
responsible for any action of the Directors in following or declining
to follow any advice or recommendations of the Manager.
12. Anything in this Agreement to the contrary notwithstanding, the
Manager shall not have or make any claim under, by reason of, or in
connection with this Agreement against the Directors personally, or
against the shareholders of the Company, but shall look solely to the
property of the Company for the payment of any such claims.
13. A. The Manager shall receive a monthly fee payable at the end of
each month in the amount of 1/10th of one percent of the
Average Invested Assets of the Company (as defined in Article
XIII, Section 1(a) of the Amended By-Laws of the Company) less
long and short-term debt obligations (excluding accrued
expenses and other liabilities).
B. In addition, the Company shall pay the Manager an annual
incentive fee (which may be disbursed monthly in advance)
equal to 10% of the amount of "net profits" (as defined below)
of the Company for such fiscal year in excess of 10% of the
average net worth (as defined below) of the Company; provided,
however, that such incentive fee shall be subject to the
limitations hereinafter set forth in Subsection 13(c). For
the purpose of this Subsection, "net profits" shall mean the
net profits of the Company for the fiscal year determined in
accordance with generally accepted accounting principles,
after all proper charges (including compensation to the
Manager) but adjusted for the following:
i) Exclude as a deduction from "net profits" the
Manager's incentive fee to be paid for such fiscal
year.
ii) Exclude as a deduction from "net profits" all
depreciation expense from operating leases (as that
term is defined by the Financial Accounting Board) to
the extent that such depreciation expense is not
guaranteed by the lessor or lessor's affiliates
(i.e., guaranty part or all of the Company's original
investment).
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iii) Exclude as income from "net profits" any gain on the
sale or exchange of operating lease property to the
extent of the aggregate depreciation expense excluded
as a deduction from "net profits" in ii) above
related to the property sold or exchanged.
For the purpose of this Subsection, "net worth" shall
mean an average of the monthly shareholders' equity
determined in accordance with generally accepted
accounting principles, but adjusted by increasing
shareholders' equity for the accumulated depreciation
on all property in which the depreciation is excluded
as a deduction from "net profits" in ii) above.
In the event this Agreement is terminated other than
at the end of a fiscal year, the incentive fee shall
be computed on the basis of the "net profits" of the
Company to the date of termination.
C. Pursuant to Article VIII, Subsection 3(d) of the Amended
By-Laws, the Manager shall reimburse the Company at least
annually for the amount, if any, by which the aggregate annual
expenses paid or incurred by the Company exceed the amount
permitted by such Section 3(d) to be paid or incurred. The
salaries and wages along with related payroll taxes and
similar expenses of Company employees performing duties
described in Section 2 above shall be deducted from fees paid
to the Manager if such employees are also employees of the
Manager.
14. The Manager shall be responsible for payment of the following
administrative expenses:
A. Employment expenses, including salaries, wages, payroll taxes,
cost of employee benefit plans and incidental help
attributable to operations of the Manager;
B. Accounting fees and related expenses of the Manager;
C. Legal fees of the Manager;
D. Insurance on assets of the Manager;
E. Rent, telephone, utilities and other office expenses related
to the operations of the Manager for its own account; and
F. Travel expenses of officers and employees of the Manager on
the Manager's business.
15. The Company shall be responsible to pay or reimburse for the following
administrative or other expenses:
A. Manager's compensation.
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B. Employee expenses applicable to employees of the Company.
C. Directors' compensation and expenses.
D. Accounting fees and audit expenses of the Company.
E. Legal fees of the Company.
F. Insurance applicable to Directors, officers and employees of
the Company and properties of the Company.
G. Rent, telephone, utilities and office expense attributable to
the Company which may be allocated in the discretion of the
Directors between the Company and the Manager.
H. Taxes on income or property of the Company.
I. Expenses including interest and data processing connected with
the acquisition, operation, maintenance, protection and
disposition of real estate or mortgage loans or other Company
assets.
J. Fees for the management of real estate owned by the Company.
K. Servicing fees applicable to mortgage loans or other
securities.
L. Fees payable to the Manager and other consultants, managers or
agents employed by the Directors for services beyond the
purview of this Agreement.
M. Expenses of organizing, revising, amending, converting,
modifying or terminating the Company.
N. Expenses incurred in connection with the listing of securities
of the Company on any stock exchange.
O. Expenses of any transfer agent or registrar of securities or
dividend agent of the Company.
P. Expenses of registration of securities of the Company under
Federal securities law, underwriting costs, legal fees,
accounting fees, costs relating to the qualification of
securities under the securities laws of the several states and
other expenses relating to the offer and sale of securities,
whether by public offering or private placement.
Q. All other expenses properly incurred on behalf of the Company
although the same may not have been specified.
16. This Agreement shall remain in force until the second quarter meeting
of the full Board of Directors unless earlier renewed or terminated as
set forth below.
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17. This Agreement shall terminate automatically in the event of its
assignment by the Manager without the written consent of the Company
and shall not be assignable by the Company without the written consent
of the Manager, except in the case of assignment by the Company to a
corporation or other organization which is a successor to the Company,
and any such successor organization shall assume the duties and
obligations of the Company hereunder.
18. This Management Agreement and any extension hereof may be terminated
without penalty at any time upon sixty days prior written notice given
by the Manager, or given by the Company following a majority vote of
the Directors. This Agreement shall be terminated immediately upon
the written notice of termination by the Company to the Manager in the
event that (a) the Manager shall violate any material provision of
this Agreement and, upon written notice of such violation, shall not
cure such default within thirty days, or (b) the Manager shall be
adjudged bankrupt or insolvent by a court of competent jurisdiction or
an order shall be made by a court of competent jurisdiction for the
appointment of a receiver of the Manager and such adjudication or
order shall remain in force or unstayed for a period of thirty days.
19. From and after the effective date of termination of this Agreement,
pursuant to Sections 16, 17, or 18 hereof, the Manager shall not be
entitled to compensation for further services hereunder. The Manager
shall forthwith upon such termination:
A. Pay over to the Company all money collected and held for
account of the Company pursuant to this Agreement, after
deducting any accrued compensation and reimbursement for its
expenses to which it is then entitled.
B. Deliver to the Directors a full accounting, including a
statement showing all payments collected by it and a statement
of all money held by it, covering the period following the
date of the last accounting furnished to the Directors.
C. Deliver to the Directors all property and documents of the
Company then in the custody of the Manager.
20. Any notice, report or other communication required or permitted to be
given hereunder shall be in writing and shall, unless some other
method of giving such notice, report or other communication is
accepted by the party to whom it is given, be given by being delivered
to or by being mailed by certified mail to the following addresses of
the parties hereto:
The Manager: First Toledo Corporation
One SeaGate, Suite 1950
Toledo, Ohio 43604
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The Company: Health Care REIT, Inc.
One SeaGate, Suite 1950
Toledo, Ohio 43604
Either party may at any time give notice in writing to the other party
that it wishes to change its address for the purpose of this Section.
21. This Agreement shall not be changed, modified, terminated or disposed
in whole or in part except by an instrument in writing signed by both
parties hereto, or their respective successors or assigns.
22. This Agreement shall bind any successors or assigns of the parties
hereto.
23. The provisions of this Agreement shall be constructed and interpreted
in accordance with the laws of the State of Ohio as at the time in
effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized as of the day and year
first above written.
Attest:
HEALTH CARE REIT, INC.
___________________________ By____________________________
F. D. Wolfe, President
___________________________
Attest: FIRST TOLEDO CORPORATION
___________________________ By____________________________
Bruce G. Thompson, President
___________________________
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