Healthcare Realty Trust Incorporated Employment Agreement
EXHIBIT 10.13
Healthcare Realty Trust
Incorporated
Incorporated
This Employment Agreement (the “Agreement”) is made and entered into as of January 1,
2007 (“Effective Date”) by and between Healthcare Realty Trust Incorporated, a Maryland
corporation (“Corporation”), and B. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (“Officer”).
Recital
Corporation desires to employ Officer as its Senior Vice President — Real Estate Investments
and Officer is willing to accept such employment by Corporation, on the terms and subject to the
conditions set forth in this Agreement.
Agreement
The Parties Agree As Follows:
1. Duties. During the term of this Agreement, Officer agrees to be employed by and to
serve Corporation as its Senior Vice President — Real Estate Investments and Corporation agrees to
employ and retain Officer in such capacity. Officer’s duties shall be to manage and supervise
Corporation’s real estate investment department in furtherance of the overall financial success of
the Corporation. Officer shall devote such of his business time, energy, and skill to the affairs
of Corporation as shall be necessary to perform his duties under this Agreement. Officer shall
report to Corporation’s Board of Directors and/or Chief Executive Officer and at all times during
the term of this Agreement shall have powers and duties at least commensurate with his position as
Senior Vice President — Real Estate Investments. Officer’s principal place of business with
respect to his services to Corporation shall be within 35 miles of Nashville, Tennessee.
2. Term of Employment.
2.1 Definitions. For purposes of this Agreement the following terms shall have the
following meanings:
(a) “Termination For Cause” shall mean termination by Corporation of Officer’s
employment by Corporation by reason of Officer’s dishonesty towards, fraud upon, or deliberate
injury or attempted injury to, Corporation or by reason of Officer’s breach of this Agreement.
Corporation shall have the burden of establishing that any termination of Officer’s employment by
Corporation is a Termination For Cause.
(b) “Termination Other Than For Cause” shall mean any termination by Corporation of
Officer’s employment by Corporation (other than a Termination For Cause) and shall include a
Constructive Termination of Officer’s
employment, effective upon notice from Officer to Corporation of such Constructive
Termination.
(c) “Voluntary Termination” shall mean termination by Officer of Officer’s employment
by Corporation other than (i) a Constructive Termination as described in subsection 2.1(g), (ii)
“Termination Upon a Change in Control” as described in Section 2.1(d), (iii) termination by reason
of Officer’s death or disability as described in Sections 2.5 and 2.6, and (iv) termination by
reason of retirement by Officer upon attainment of Retirement Eligibility.
(d) “Termination Upon a Change in Control” shall mean a termination by Officer of
Officer’s employment with Corporation within 24 months following a “Change in Control.”
(e) “Change in Control” shall mean (i) the time that Corporation first determines that
any person and all other persons who constitute a group (within the meaning of Section 13(d)(3) of
the Securities Exchange Act of 1934 (“Exchange Act”)) have acquired direct or indirect beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) of 20 percent or more of
Corporation’s outstanding securities, unless a majority of the “Continuing Directors” approves the
acquisition not later than ten business days after Corporation makes that determination, or (ii)
the first day on which a majority of the members of Corporation’s Board of Directors are not
“Continuing Directors.”
(f) “Continuing Directors” shall mean, as of any date of determination, any member of
the Board of Directors of Corporation who (i) was a member of that Board of Directors on January l,
2007, (ii) has been a member of that Board of Directors for the two years immediately preceding
such date of determination, or (iii) was nominated for election or elected to the Board of
Directors with the affirmative vote of the greater of (x) a majority of Continuing Directors who
were members of the Board at the time of such nomination or election or (y) at least four
Continuing Directors.
(g) “Constructive Termination” shall mean (i) any material breach of this Agreement by
Corporation, (ii) any substantial reduction in the authority or responsibility of Officer or other
substantial reduction in the terms and conditions of Officer’s employment under circumstances which
would not justify a Termination For Cause and which are not the result of a breach by Officer of
this Agreement, (iii) any act(s) by Corporation which are designed to or have the effect of
rendering Officer’s working conditions so intolerable or demeaning on a recurring basis that a
reasonable person would resign such employment, or (iv) relocation of Officer to a location that is
more than 35 miles from the location of Corporation’s headquarters on the date this Agreement is
executed.
(h) “Deferred Compensation” or “deferred compensation” shall mean any individual or
group plan, program, agreement or other arrangement, whether or not a “plan” for purposes of the
Employee Retirement Income Security Act of 1974 (“ERISA”) and whether or not a retirement plan or
supplemental executive retirement plan or additional retirement plan, but which in any event
involves an agreement by Corporation to make payment(s) to Officer at a future date as compensation
for current services to Corporation. The term Deferred Compensation or deferred compensation shall
include, but not be limited to, benefits described in any Incentive Plan, and any
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implementation thereof or incentive award thereunder, each as it now exists or may hereafter
be amended.
(i) “Incentive Plans” shall mean Corporation’s 2003 Employees Restricted Stock
Incentive Plan, and any successor plans.
(j) “Retirement Eligibility” shall mean Employee’s attainment of 60 years of age and
ten years of continuous employment with Corporation.
2.2 Basic Term. The term of employment of Officer by Corporation shall be from January
1, 2007 through December 31, 2007, unless terminated earlier pursuant to this Section 2.
Commencing in 2008, on the first day of January of each year, the first sentence of this Section
2.2 shall be amended by deleting each year then appearing therein and inserting in each place the
next subsequent year.
2.3 Termination For Cause. Termination For Cause may be effected by Corporation at any
time during the term of this Agreement and shall be effected by written notification to Officer.
Upon Termination For Cause, Officer immediately shall be paid all accrued salary, bonus
compensation, if any, to the extent earned, vested deferred compensation (other than pension plan
or profit sharing plan benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of Corporation in which Officer is a participant to the full extent of
Officer’s rights under such plans, accrued vacation pay and any appropriate business expenses
incurred by Officer in connection with his duties hereunder, all to the date of termination, but
Officer shall not be paid any other compensation or reimbursement of any kind, including without
limitation, severance compensation.
2.4 Termination Other Than For Cause. Notwithstanding anything else in this Agreement,
Corporation may effect a Termination Other Than For Cause at any time upon giving written notice to
Officer of such termination. Upon any Termination Other Than For Cause, Officer shall immediately
be paid all accrued salary, bonus compensation, if any, to the extent earned, whether or not vested
without regard to such Termination (other than pension plan or profit sharing plan benefits which
will be paid in accordance with the applicable plan), any benefits under any plans of Corporation
in which Officer is a participant to the full extent of Officer’s rights under such plans
(including accelerated release and full vesting of shares reserved for Officer under the Incentive
Plans, and any implementation thereof or incentive award thereunder), accrued vacation pay and any
appropriate business expenses incurred by Officer in connection with his duties hereunder, all to
the date of termination, and all severance compensation provided in Section 4.2, but no other
compensation or reimbursement of any kind.
2.5 Termination by Reason of Disability. If, during the term of this Agreement,
Officer, in the reasonable judgment of the Board of Directors of Corporation, has failed to perform
his duties under this Agreement on account of illness or physical or mental incapacity, and such
illness or incapacity continues for a period of more than 12 consecutive months, Corporation shall
have the right to terminate Officer’s employment hereunder by written notification to Officer and
payment to Officer of all accrued salary, bonus compensation, if any, to the extent earned,
deferred compensation, whether or not vested without regard to such illness or incapacity (other
than pension plan or profit
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sharing plan benefits which will be paid in accordance with the applicable plan), any benefits
under any plans of Corporation in which Officer is a participant to the full extent of Officer’s
rights under such plans (including accelerated release and full vesting of shares reserved for
Officer under the Incentive Plans, and any implementation thereof or incentive award thereunder),
accrued vacation pay and any appropriate business expenses incurred by Officer in connection with
his duties hereunder, all to the date of termination, with the exception of medical and dental
benefits which shall continue through the expiration of this Agreement, but Officer shall not be
paid any other compensation or reimbursement of any kind, including without limitation, severance
compensation.
2.6 Death. In the event of Officer’s death during the term of this Agreement,
Officer’s employment shall be deemed to have terminated as of the last day of the month during
which his death occurs and Corporation shall pay to his estate or such beneficiaries as Officer may
from time to time designate all accrued salary, bonus compensation, if any, to the extent earned,
whether or not vested without regard to such Termination (other than pension plan or profit sharing
plan benefits which will be paid in accordance with the applicable plan), any benefits under any
plans of Corporation in which Officer is a participant to the full extent of Officer’s rights under
such plans (including accelerated release and full vesting of shares reserved for Officer under the
Incentive Plans, and any implementation thereof or incentive award thereunder), accrued vacation
pay and any appropriate business expenses incurred by Officer in connection with his duties
hereunder, all to the date of termination, but Officer’s estate shall not be paid any other
compensation or reimbursement of any kind, including without limitation, severance compensation.
2.7 Voluntary Termination. In the event of a Voluntary Termination, Corporation shall
immediately pay all accrued salary, bonus compensation, if any, to the extent earned, vested
deferred compensation (other than pension plan or profit sharing plan benefits which will be paid
in accordance with the applicable plan), any benefits under any plans of Corporation in which
Officer is a participant to the full extent of Officer’s rights under such plans, accrued vacation
pay and any appropriate business expenses incurred by Officer in connection with his duties
hereunder, all to the date of termination, but no other compensation or reimbursement of any kind,
including without limitation, severance compensation.
2.8 Termination Upon a Change in Control or Retirement. In the event of (i) a
Termination Upon a Change in Control or (ii) retirement by Officer upon attainment of Retirement
Eligibility, Officer shall immediately be paid all accrued salary, bonus compensation, if any, to
the extent earned through the date of termination, including compensation that was earned and
deferred, whether or not vested without regard to the Change in Control (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of Corporation in which Officer is a participant to the full extent of
Officer’s rights under such plans (including accelerated release and full vesting of shares
reserved for Officer under the Incentive Plans, and any implementation thereof or incentive award
thereunder), accrued vacation pay and any appropriate business expenses incurred by Officer in
connection with his duties hereunder, all to the date of termination, and all severance
compensation provided in Section 4.1, but no other compensation or reimbursement of any kind.
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2.9 Notice of Termination. Corporation may effect a termination of this Agreement
pursuant to the provisions of this Section 2 upon giving 30 days written notice to Officer of such
termination. Officer may effect a termination of this Agreement pursuant to the provisions of this
Section 2 upon giving 60 days written notice to Corporation of such termination.
3. Salary, Benefits and Bonus Compensation.
3.1 Base Salary. As payment for the services to be rendered by Officer as provided in
Section 1 and subject to the terms and conditions of Section 2, Corporation agrees to pay to
Officer a “Base Salary” for the 12 calendar months beginning January 1, 2007 at the rate of
$282,015 per annum payable in 24 equal semi-monthly installments. The Base Salary for each year
(or portion thereof) beginning January 1, 2008 shall be determined by the Compensation Committee of
the Board of Directors (the “Compensation Committee”) which shall authorize an increase in
Officer’s Base Salary in an amount which, at a minimum, shall be equal to the cumulative
cost-of-living increment on the Base Salary as reported in the “Consumer Price Index, Nashville,
Tennessee, All Items,” published by the U.S. Department of Labor. Officer’s Base Salary shall be
reviewed annually by the Compensation Committee. For purposes of computing the amount of severance
compensation due under this Agreement, the term “Base Salary” shall also include the market value,
as of the date of grant, of any restricted shares of the Corporation to be awarded to Officer in
lieu of annual cash salary in 2007, 2008, and 2009, but shall not include the value of any
“matching” or inducement restricted shares awarded to Officer under any deferred compensation plan
or program maintained by the Corporation.
3.2 Additional Benefits. During the term of this Agreement, Officer shall be entitled
to the following fringe benefits:
(a) Officer Benefits. Officer shall be eligible to participate in such of
Corporation’s benefits and deferred compensation plans as are now generally available or later made
generally available to executive officers of Corporation, including, without limitation, the
Incentive Plans, and any implementation thereof or incentive award thereunder, profit sharing
plans, annual physical examinations, dental and medical plans, personal catastrophe and disability
insurance, financial planning, retirement plans and supplementary executive retirement plans, if
any. For purposes of establishing the length of service under any benefit plans or programs of
Corporation, Officer’s employment with Corporation will be deemed to have commenced on October 20,
1998.
(b) Vacation. Officer shall be entitled to four weeks of vacation during each year
during the term of this Agreement and any extensions thereof, prorated for partial years.
(c) Reimbursement for Expenses. During the term of this Agreement, Corporation shall
reimburse Officer for reasonable and properly documented out-of-pocket business and/or
entertainment expenses incurred by Officer in connection with his duties under this Agreement.
4. Severance Compensation.
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4.1 Severance Compensation in the Event of a Termination Upon a Change in Control. In
the event Officer’s employment is terminated in a Termination Upon a Change in Control, Officer
shall be paid as severance compensation 1.5 times his Base Salary (at the rate payable at the time
of such termination), through the remaining term of this Agreement and any extensions thereof, on
the dates specified in Section 3.1; provided, however, that if Officer is employed by a new
employer during such period, the severance compensation payable to Officer during such period will
be reduced by the amount of compensation that Officer is receiving from the new employer. However,
Officer is under no obligation to mitigate the amount owed Officer pursuant to this Section 4.1 by
seeking other employment or otherwise. Notwithstanding anything in this Section 4.1 to the
contrary, Officer may in Officer’s sole discretion, by delivery of a notice to Corporation within
30 days following a Termination Upon a Change in Control, elect to receive from Corporation a lump
sum severance payment by bank cashier’s check equal to the present value of the flow of cash
payments that would otherwise be paid to Officer pursuant to this Section 4.1. However, in no
event shall payment pursuant to this Section 4.1 be less than 1.5 times his Base Salary as defined
herein for the applicable period. Such present value shall be determined as of the date of
delivery of the notice of election by Officer and shall be based on a discount rate equal to the
interest rate on 90-day U.S. Treasury bills, as reported in the Wall Street Journal (or similar
publication), on the date of delivery of the election notice. If Officer elects to receive a lump
sum severance payment, Corporation shall make such payment to Officer within ten days following the
date on which Officer notifies Corporation of Officer’s election. In addition to the severance
payment payable under this Section 4.1, Officer shall be paid an amount equal to two times the
average annual bonus, if any, earned by Officer in the two years immediately preceding the date of
termination. Officer shall also receive (i) full vesting of any awards granted to Officer under
the Incentive Plans, and any implementation thereof or incentive award thereunder; and (ii) an
immediate release of awards that have been reserved by Corporation for Officer under the Incentive
Plans, and any implementation thereof or incentive award thereunder, or otherwise, and full vesting
of such awards. Officer shall continue to accrue retirement benefits and shall continue to enjoy
any benefits under any plans of Corporation in which Officer is a participant to the full extent of
Officer’s rights under such plans, including any perquisites provided under this Agreement, through
the remaining term of this Agreement; provided, however, that the benefits under any such plans of
Corporation in which Officer is a participant, including any such perquisites, shall cease upon
re-employment by a new employer.
4.2 Severance Compensation in the Event of a Termination Other Than For Cause. In the
event Officer’s employment is terminated in a Termination Other Than For Cause, Officer shall be
paid as severance compensation his Base Salary (at the rate payable at the time of such
termination), for a period of 18 months from the date of such termination, on the dates specified
in Section 3.1; provided, however, that if Officer is employed by a new employer during such
period, the severance compensation payable to Officer during such period will be reduced by the
amount of compensation that Officer is receiving from the new employer. However, Officer is under
no obligation to mitigate the amount owed Officer pursuant to this Section 4.2 by seeking other
employment or otherwise. In addition to the severance payment payable under this Section 4.2,
Officer shall be paid an amount equal to two times the average annual bonus, if any, earned by
Officer in the two years immediately preceding the date of termination and Officer shall also
receive (i) full vesting of any awards granted to Officer under the Incentive Plans, and
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any implementation thereof or incentive award thereunder; and (ii) an immediate release of
awards that have been reserved for Officer under the Incentive Plans, and any implementation
thereof or incentive award thereunder, or otherwise, and full vesting of such awards. Officer
shall be entitled to accelerated vesting of any accrued benefit under each deferred compensation
plan. Notwithstanding the foregoing, continued benefit accrual shall not apply in the case of any
tax-qualified retirement plan if such accrual would adversely affect the tax-qualified status of
such plan; provided, however, that the benefit which would otherwise have been contributed by
Corporation to the account of Officer in any tax-qualified defined contribution and the single sum
value of the benefit plan shall be paid by Corporation to Officer as each such contribution or
benefit would have been made or accrued, as applicable, assuming that Officer had remained employed
on a full-time basis with a rate of pay equal to his Base Salary. In the case of a Termination
Other Than For Cause by reason of the disability of Officer, and if Officer is retired for
disability, then Officer will continue to accrue benefits as provided to Corporation’s executive
officers at the time he incurs his disability, notwithstanding any subsequent nonsubstantial
employment.
4.3 No Severance Compensation Upon Other Termination. In the event of a Voluntary
Termination, Termination For Cause, termination by reason of Officer’s disability pursuant to
Section 2.5, or termination by reason of Officer’s death pursuant to Section 2.6, Officer or his
estate shall not be paid any severance compensation and shall receive only the benefits as provided
in the appropriate section of Article II applicable to the respective termination.
4.4 Additional Payments Due to Change in Control.
(a) Gross Up Payment. Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution by or on behalf of Corporation to
or for the benefit of Officer as a result of a “change in control,” as defined in Section 280G of
the Internal Revenue Code of 1986, as amended (the “Code”), involving Corporation or its affiliates
(whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required under this Section 4.4
(a “Payment”)) would be subject to the excise tax imposed by Section 4999 of the Code, or any
interest or penalties are incurred by Officer with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively referred to as the
“Excise Tax”), then Officer shall be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by Officer of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation, any income taxes (and
any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, Officer retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Tax Opinion. Subject to the provisions of Section 4.4(c), all determinations
required to be made under this Section 4.4, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at
such determination, shall be made by a nationally recognized accounting firm or law firm selected
by Corporation (the “Tax Firm”); provided, however, that the Tax Firm shall not determine that no
Excise Tax is payable by Officer unless it delivers to Officer a written opinion (the “Tax
Opinion”) that failure to pay the
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Excise Tax and to report the Excise Tax and the payments potentially subject thereto on or
with Officer’s applicable federal income tax return will not result in the imposition of an
accuracy-related or other penalty on Officer. All fees and expenses of the Tax Firm shall be borne
solely by Corporation. Within 15 business days of the receipt of notice from Officer that there
has been a Payment, or such earlier time as is requested by Corporation, the Tax Firm shall make
all determinations required under this Section 4.4, shall provide to Corporation and Officer a
written report setting forth such determinations, together with detailed supporting calculations,
and, if the Tax Firm determines that no Excise Tax is payable, shall deliver the Tax Opinion to
Officer. Any Gross-Up Payment, as determined pursuant to this Section 4.4, shall be paid by
Corporation to Officer within 15 days of the receipt of the Tax Firm’s determination. Subject to
the remainder of this Section 4.4, any determination by the Tax Firm shall be binding upon
Corporation and Officer; provided, however, that Officer shall only be bound to the extent that the
determinations of the Tax Firm hereunder, including the determinations made in the Tax Opinion, are
reasonable and reasonably supported by applicable law. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination by the Tax Firm
hereunder, it is possible that Gross-Up Payments which will not have been made by Corporation
should have been made (“Underpayment”), consistent with the calculations required to be made
hereunder. In the event that it is ultimately determined in accordance with the procedures set
forth in Section 4.4(c) that Officer is required to make a payment of any Excise Tax, the Tax Firm
shall reasonably determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by Corporation to or for the benefit of Officer. In
determining the reasonableness of the Tax Firm’s determinations hereunder, and the effect thereof,
Officer shall be provided a reasonable opportunity to review such determinations with the Tax Firm
and Officer’s tax counsel. The Tax Firm’s determinations hereunder, and the Tax Opinion, shall not
be deemed reasonable until Officer’s reasonable objections and comments thereto have been
satisfactorily accommodated by the Tax Firm.
(c) Notice of IRS Claim. Officer shall notify Corporation in writing of any claims by
the Internal Revenue Service that, if successful, would require the payment by Corporation of the
Gross-Up Payment. Such notification shall be given as soon as practicable but no later than 30
calendar days after Officer actually receives notice in writing of such claim and shall apprise
Corporation of the nature of such claim and the date on which such claim is requested to be paid;
provided, however, that the failure of Officer to notify Corporation of such claim (or to provide
any required information with respect thereto) shall not affect any rights granted to Officer under
this Section 4.4 except to the extent that Corporation is materially prejudiced in the defense of
such claim as a direct result of such failure. Officer shall not pay such claim prior to the
expiration of the 30-day period following the date on which he gives such notice to Corporation (or
such shorter period ending on the date that any payment of taxes with respect to such claim is
due). If Corporation notifies Officer in writing prior to the expiration of such period that it
desires to contest such claim, Officer shall do all of the following:
(i) give Corporation any information reasonably requested by Corporation relating to such
claim;
(ii) take such action in connection with contesting such claim as Corporation shall reasonably
request in writing from time to time, including, without
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limitation, accepting legal representation with respect to such claim by an attorney selected
by Corporation and reasonably acceptable to Officer;
(iii) cooperate with Corporation in good faith in order effectively to contest such claim; and
(iv) if Corporation elects not to assume and control the defense of such claim, permit
Corporation to participate in any proceedings relating to such claim;
provided, however, that Corporation shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and shall indemnify and
hold Officer harmless, on an after-tax basis, for any Excise Tax or income tax (including interest
and penalties with respect thereto) imposed as a result of such representation and payment of costs
and expenses. Without limiting the foregoing provisions of this Section 4.4, Corporation shall
have the right, at its sole option, to assume the defense of and control all proceedings in
connection with such contest, in which case it may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim
and may either direct Officer to pay the tax claimed and ▇▇▇ for a refund or contest the claim in
any permissible manner, and Officer agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as
Corporation shall determine; provided, however, that if Corporation directs Officer to pay such
claim and ▇▇▇ for a refund, Corporation shall advance the amount of such payment to Officer, on an
interest-free basis and shall indemnify and hold Officer harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to such advance; and
further provided that any extension of the statute of limitations relating to payment of taxes for
the taxable year of Officer with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, Corporation’s right to assume the defense of
and control the contest shall be limited to issues with respect to which a Gross-Up Payment would
be payable hereunder and Officer shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing authority.
(d) Right to Tax Refund. If, after the receipt by Officer of an amount advanced by
Corporation pursuant to Section 4.4, Officer becomes entitled to receive any refund with respect to
such claim, Officer shall (subject to Corporation’s complying with the requirements of Section
4.4(c)) promptly pay to Corporation the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by Officer of an amount
advanced by Corporation pursuant to Section 4.4(c), a determination is made that Officer is not
entitled to a refund with respect to such claim and Corporation does not notify Officer in writing
of its intent to contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall, to the extent of such denial, be forgiven and shall not be
required to be repaid and the amount of forgiven advance shall offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid.
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5. Non-Competition; Disclosure of Investments. During the term of this Agreement,
including the period, if any, during which Officer shall be entitled to severance compensation
pursuant to Section 4.2:
(a) Officer shall not, without the prior written consent of Corporation, directly or
indirectly, own, manage, operate, control, be connected with as an officer, employee, partner,
consultant or otherwise, or otherwise engage or participate in any corporation or other business
entity engaged in the business of buying, selling, developing, building and/or managing real estate
facilities for the medical, healthcare and retirement sectors of the real estate industry. Officer
understands and acknowledges that Corporation carries on business nationwide and that the nature of
Corporation’s activities cannot be confined to a limited area. Accordingly, Officer agrees that
the geographic scope of this Section 5 shall include the United States of America. Notwithstanding
the foregoing, the ownership by Officer of less than 2% of any class of the outstanding capital
stock of any corporation conducting such a competitive business which is regularly traded on a
national securities exchange or in the over-the-counter market shall not be a violation of the
foregoing covenant.
(b) Simultaneously with Officer’s execution of this Agreement and upon each anniversary of the
Effective Date, Officer shall notify the Chairman of the Compensation Committee of the nature and
extent of Officer’s investments, stock holdings, employment as an employee, director, or any
similar interest in any business or enterprise other than Corporation; provided, however, that
Officer shall have no obligation to disclose any investment under $100,000 in value or any holdings
of publicly traded securities which are not in excess of one percent of the outstanding class of
such securities. Notwithstanding any provision herein to the contrary, the restrictions and
covenants of this Section 5 shall not apply in the event of a Termination Upon a Change in Control.
(c) Officer shall not contact or solicit, directly or indirectly, any customer, client, tenant
or account whose identity Officer obtained through association with Corporation, regardless of the
geographical location of such customer, client, tenant or account, nor shall Officer, directly or
indirectly, entice or induce, or attempt to entice or induce, any employee of Corporation to leave
such employ, nor shall Officer employ any such person in any business similar to or in competition
with that of Corporation. Officer hereby acknowledges and agrees that the provisions set forth in
this Section 5 constitute a reasonable restriction on his ability to compete with Corporation and
will not adversely affect his ability to earn income sufficient to support himself and/or his
family.
(d) The parties hereto agree that, in the event a court of competent jurisdiction shall
determine that the geographical or durational elements of this covenant are unenforceable, such
determination shall not render the entire covenant unenforceable. Rather, the excessive aspects of
the covenant shall be reduced to the threshold which is enforceable, and the remaining aspects
shall not be affected thereby.
6. Trade Secrets and Customer Lists. Officer agrees to hold in strict confidence all
information concerning any matters affecting or relating to the business of Corporation and its
subsidiaries and affiliates, including, without limiting the generality of the foregoing, its
manner of operation, business plans, business prospects, agreements, protocols, processes, computer
programs, customer lists, market strategies, internal
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performance statistics, financial data, marketing information and analyses, or other data,
without regard to the capacity in which such information was acquired. Officer agrees that he will
not, directly or indirectly, use any such information for the benefit of any person or entity other
than Corporation or disclose or communicate any of such information in any manner whatsoever other
than to the directors, officers, employees, agents, and representatives of Corporation who need to
know such information, who shall be informed by Officer of the confidential nature of such
information and directed by Officer to treat such information confidentially. Such information does
not include information which (i) was or becomes generally available to the public other than as a
result of a disclosure by Officer or his representatives, or (ii) was or becomes available to
Officer on a non-confidential basis from a source other than Corporation or its advisors provided
that such source is not known to Officer to be bound by a confidentiality agreement with
Corporation, or otherwise prohibited from transmitting the information to Officer by a contractual,
legal or fiduciary obligation; notwithstanding the foregoing, if any such information does become
generally available to the public, Officer agrees not to further discuss or disseminate such
information except in the performance of his duties as Officer. Upon Corporation’s request, Officer
will return all information furnished to him related to the business of Corporation. The parties
hereto stipulate that all such information is material and confidential and gravely affects the
effective and successful conduct of the business of Corporation and Corporation’s goodwill, and
that any breach of the terms of this Section 6 shall be a material breach of this Agreement. The
terms of this Section 6 shall remain in effect following the termination of this Agreement.
7. Use of Proprietary Information. Officer recognizes that Corporation possesses a
proprietary interest in all of the information described in Section 6 and has the exclusive right
and privilege to use, protect by copyright, patent or trademark, manufacture or otherwise exploit
the processes, ideas and concepts described therein to the exclusion of Officer, except as
otherwise agreed between Corporation and Officer in writing. Officer expressly agrees that any
products, inventions, discoveries or improvements made by Officer, his agents or affiliates based
on or arising out of the information described in Section 6 shall be (i) deemed a work made for
hire under the terms of United States Copyright Act, 17 U.S.C. § 101 et seq., and
Corporation shall be the owner of all such rights with respect thereto and (ii) the property of and
inure to the exclusive benefit of Corporation.
8. Miscellaneous.
8.1 Payment Obligations. Corporation’s obligation to pay Officer the compensation and
to make the arrangements provided herein shall be unconditional, and Officer shall have no
obligation whatsoever to mitigate damages hereunder. If litigation after a Change in Control shall
be brought to enforce or interpret any provision contained herein, Corporation, to the extent
permitted by applicable law and Corporation’s Articles of Incorporation and Bylaws, hereby
indemnifies Officer for Officer’s reasonable attorneys’ fees and disbursements incurred in such
litigation.
8.2 Waiver. The waiver of the breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach of the same or other provision hereof.
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8.3 Entire Agreement; Modifications. Except as otherwise provided herein, this
Agreement represents the entire understanding among the parties with respect to the subject matter
hereof, and this Agreement supersedes any and all prior understandings, agreements, plans and
negotiations, whether written or oral, with respect to the subject matter hereof, including without
limitation, that certain Employment Agreement between Corporation and Officer dated as of January
1, 2005, and any understandings, agreements or obligations respecting any past or future
compensation, bonuses, reimbursements or other payments to Officer from Corporation. All
modifications to the Agreement must be in writing and signed by the party against whom enforcement
of such modification is sought.
8.4 Notices. All notices and other communications under this Agreement shall be in
writing and shall be given by personal delivery, nationally recognized overnight courier,
telefacsimile or first class mail, certified or registered with return receipt requested, and shall
be deemed to have been duly given upon receipt in the event of personal delivery or overnight
courier, three days after mailing, or 12 hours after transmission of a telefacsimile to the
respective persons named below:
If to Corporation:
Healthcare Realty Trust Incorporated
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Officer:
B. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change such party’s address for notices by notice duly give pursuant to this Section
8.4.
8.5 Headings. The Section headings herein are intended for reference and shall not by
themselves determine the construction or interpretation of this Agreement.
8.6 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Tennessee.
8.7 Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or breach thereof, shall be settled by arbitration in Nashville, Tennessee in accordance
with the Rules of the American Arbitration Association, and judgment upon any proper award rendered
by the Arbitrators may be entered in any court having jurisdiction thereof. There shall be three
arbitrators, one to be chosen directly by each party at will, and the third arbitrator to be
selected by the two arbitrators so chosen. To the extent permitted
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by the Rules of the American Arbitration Association, the selected arbitrators may grant
equitable relief. Each party shall pay the fees of the arbitrator selected by him and of his own
attorneys, and the expenses of his witnesses and all other expenses connected with the presentation
of his case. The cost of the arbitration including the cost of the record or transcripts thereof,
if any, administrative fees, and all other fees and costs shall be borne equally by the parties. To
the extent that Officer prevails with respect to any portion of an arbitration award, Officer shall
be reimbursed by Corporation for the costs and expenses incurred by Officer in connection with the
arbitration in an amount proportionate to the award to Officer as compared to the amount in
dispute.
8.8 Severability. Should a court or other body of competent jurisdiction determine
that any provision of this Agreement is excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, and all other provisions of this
Agreement shall be deemed valid and enforceable to the extent possible.
8.9 Survival of Corporation’s Obligations. Corporation’s obligations hereunder shall
not be terminated by reason of any liquidation, dissolution, bankruptcy, cessation of business, or
similar event relating to Corporation. This Agreement shall not be terminated by any merger or
consolidation or other reorganization of Corporation. In the event any such merger, consolidation
or reorganization shall be accomplished by transfer of stock or by transfer of assets or otherwise,
the provisions of this Agreement shall be binding upon and inure to the benefit of the surviving or
resulting corporation or person. This Agreement shall be binding upon and inure to the benefit of
the executors, administrators, heirs, successors and assigns of the parties; provided, however,
that except as herein expressly provided, this Agreement shall not be assignable either by
Corporation (except to an affiliate of Corporation in which event Corporation shall remain liable
if the affiliate fails to meet any obligations to make payments or provide benefits or otherwise)
or by Officer.
8.10 Counterparts. This Agreement may be executed in one or more counterparts, all of
which taken together shall constitute one and the same Agreement.
8.11 Withholdings. All compensation and benefits to Officer hereunder shall be reduced
only by all federal, state, local and other withholdings and similar taxes and payments that are
required by applicable law. Except as otherwise specifically agreed by Officer, no other offsets
or withholdings shall apply to reduce the payment of compensation and benefits hereunder.
8.12 Indemnification. In addition to any rights to indemnification to which Officer is
entitled to under Corporation’s Articles of Incorporation and Bylaws, Corporation shall indemnify
Officer at all times during and after the term of this Agreement to the maximum extent permitted
under Section 2-418 of the General Corporation Law of the State of Maryland or any successor
provision thereof and any other applicable state law, and shall pay Officer’s expenses in defending
any civil or criminal action, suit, or proceeding in advance of the final disposition of such
action, suit, or proceeding, to the maximum extent permitted under such applicable state laws.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the day
and year first above written.
| Corporation: Healthcare Realty Trust Incorporated |
||||
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇ ▇. ▇▇▇▇▇ | |||
| Title: | Chairman and Chief Executive Officer Date: February 26, 2007 | |||
| Officer: |
||||
| /s/ B. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | ||||
| B. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | ||||
| Date: February 26, 2007 | ||||
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