SECOND AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT
EXHIBIT 10.71
THIS SECOND AMEDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT, (the “Second Amended and
Restated Agreement”), dated as of August 1, 2008 (the “Effective Date”), among Medical Properties
Trust, Inc. (the “REIT”), MPT Operating Partnership, L.P., a Delaware limited partnership (the
“Operating Partnership”), (the REIT and the Operating Partnership being herein referred to
collectively as the “Company”), and Xxxxxxx X. XxXxxxxx (the “Employee”):
WHEREAS, the Employee and the Company entered into an Amended and Restated Employment
Agreement dated as of September 10, 2003, as amended by the First Amendment to Employment
Agreement dated as of September 29, 2006 (the “Previous Agreement”); and
WHEREAS, the parties desire to supersede the Previous Agreement and substitute in lieu
thereof this Second Amendment to Amended and Restated Employment Agreement.
(a) POSITIONS, The Employee shall be employed by the Operating Partnership as a
part time employee and shall also serve as Vice-Chairman of the Board of Directors of the REIT
(the “Board”), on a part-time basis as provided below.
within the initial one (1) year term (the last day of each such one (1) year period ending on an
anniversary of the Effective Date is referred to herein as a “Term Date”), unless either party
gives notice of non-renewal not later than sixty (60) days prior to a Term Date by providing
written notice to the other party of such party’s intent not to renew (in which case the Second
Amendment to Amended and Restated Agreement shall not be so automatically extended for such
additional one (1) year period and shall terminate at the conclusion of the remaining unextended
Term), or it is sooner terminated pursuant to Sections 7 or 8, but for purposes of all
compensation and benefits payable pursuant to Sections. 3 through 5 hereof the Term shall be
deemed to commence as of August 1, 2008.
2
effect from time to time and on a basis no less favorable than that applicable to any other
employees of the Company, including, without limitation, telephone, travel and entertainment
expenses incurred by the Employee in connection with the business of the Company, promptly upon
the presentation by the Employee of appropriate documentation. The Employee shall also be entitled
to appropriate office space, administrative support, and such other facilities and services as are
suitable to the Employee’s positions and adequate for the performance of the Employee’s duties.
(i) any person, entity or affiliated group, excluding the REIT or any employee benefit plan
of the REIT, acquiring more than 50% of the then outstanding voting shares of the REIT,
(ii) the consummation of any merger or consolidation of the REIT into another company, such
that the holders of the voting shares of the REIT immediately prior to such merger or
consolidation own less than 50% of the voting power of the securities of the surviving company or
the parent of such surviving company, or
(iii) the complete liquidation of the REIT or the sale or disposition of all or substantially
all of the REIT’s assets, such that after the transaction, the holders of the voting shares of the
REIT immediately prior to the transaction own less than 50% of the voting securities of the
acquiror or the parent of the acquiror.
(i) In the event that any payment or benefit received or to be received by the Employee in
connection with a termination of the Employee’s employment (whether pursuant to the terms of this
Second Amendment to Amended and Restated Agreement or any other plan, arrangement or agreement
with the Company, any person whose actions result in a change in control or any person affiliated
with the Company or such person) (all such payments and benefits being hereinafter called “Total
Payments”), such that the Employee will be subject (in whole or in part) to the excise tax imposed
under Code Section 4999 (“Excise Tax”) on such payments and benefits, then the Company shall pay
to the Employee an additional amount (the “Gross-Up Payment”) such that the net amount retained by
the Employee, after deduction of the Excise Tax and any federal, state and local tax on the
Gross-Up Payment, will be equal to the Total Payments. For purposes of determining the amount of
the Gross-Up Payment, the Employee shall be deemed
3
to pay federal income taxes at the highest marginal rate of federal income taxation in the
calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Employee’s residence on such
date, net of the maximum deduction in federal income taxes which could be obtained from deduction
of such state and local taxes.
(ii) The Employee or the Company may request, prior to the time any payments under this
Second Amendment to Amended and Restated Agreement are made, a determination of whether any or all
of the Total Payments will be subject to the Excise Tax and, if so, the amount of such Excise Tax
and the federal, state and local tax imposed on the Gross-Up Payment. If such a determination is
requested, it shall be made promptly, at the Company’s expense, by tax counsel selected by the
Employee and approved by the Company (with such approval not being unreasonably withheld), and
such determination shall be conclusive and binding on both parties. The Company agrees to provide
any information reasonably requested by such tax counsel. Tax counsel may engage accountants or
other experts, at the Company’s expense, to the extent deemed necessary or advisable for them to
reach a determination. For these purposes, the term “tax counsel” shall mean a law firm with
expertise in federal income tax matters.
(iii) In the event that the Excise Tax is subsequently determined to be less than the amount
taken into account hereunder, the Employee will repay to the Company, at the time that the amount
of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment
attributable to such reduction plus that portion of the Gross-Up Payment attributable to the
Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment, without any
interest thereon. In the event that the Excise Tax is determined to exceed the amount taken into
account hereunder, the Company will make an additional Gross-Up Payment in respect of such excess
and in respect of any portion of the Excise Tax with respect to which the Company had not
previously made a Gross-Up Payment (plus any interest, penalties or additions payable by the
Employee with respect to such excess and such portion) at the time that the amount of such excess
is finally determined, without any interest thereon.
(iv) Each party agrees to notify the other party, in writing, of any claim that, if
successful, would require the payment by the Company of a Gross-Up Payment or might entitle the
Company to a refund of all or part of any previous Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten (10) business days after the Employee or Company
is informed in writing of such claim or otherwise becomes aware of such claim. If notice of the
claim arose as a result of a claim made against the Employee by a taxing authority, Employee shall
not pay such claim prior to the expiration of the thirty (30) day period following the date on
which he gives notice to the Company. If the Company notifies the Employee in writing prior to the
expiration of such period that it desires to contest such claim, the Employee shall: (A) give the
Company any information reasonably requested by the Company relating to such claim, (B) take such
action in connection with contesting such claim as the Company shall reasonably request in writing
from time to time, including, without limitation, accepting legal representation with respect to
such claim by an attorney selected by the Employee and approved by the Company (with such approval
not being unreasonably withheld), (C) cooperate with the Company in good faith in order to
effectively contest such claim, and (D) permit the Company to reasonably participate in any
proceedings relating to such claim. The Company shall bear and pay directly all costs and expenses
(including legal fees and additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise
Tax
4
(including interest and penalties with respect thereto) imposed as a result of such representation
and payment of costs and expenses.
(v) Notwithstanding the foregoing, the Company shall control all audits and proceedings taken
in connection with any claim, audit or proceeding involving Excise Taxes or Gross-Up Payments and,
at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings
and conferences with the taxing authority in respect of any such claim, audit or proceeding and
may, at its sole option, either direct the Employee to pay the tax claimed and xxx for a refund or
contest the tax in any permissible manner, and the Employee 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 the Company shall determine; provided, however, that if the Company
directs the Employee to pay such tax and xxx for a refund, the Company shall advance the amount of
such payment to the Employee, (including interest or penalties with respect thereto) and shall
indemnify and hold the Employee harmless, on an after-tax basis, for 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. The Company shall be required to
consult with and keep the Employee fully apprised of developments and actions being considered or
taken with respect to such claim, audit or proceeding. The Company’s control of the contest shall
be limited to issues with respect to which such a Gross-Up Payment would be payable or refundable
hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other
issue. Each party agrees to keep the other party fully apprised of developments concerning such
claim, audit or proceeding and to cooperate with the other in good faith in order to effectively
resolve such claim, audit or proceeding.
(vi) For purposes of this Subsection (c), a determination of whether a payment is subject to
Excise Taxes, including but not limited to, a determination of Change in Control, shall be made
pursuant to Code Section 280G.
5
options following the Employee’s death in which to exercise his vested stock options, including
those stock options that vested on death. The Employee shall not be due any accrued bonus or other
benefits following termination of his employment by reason of death or permanent disability.
6
Agreement, as may be amended from time to time, then the Company shall pay compensation and
benefits for the Employee as follows:
(i) any Base Salary, Incentive Bonus, expense reimbursements and all other compensation
related payments that are payable as of the effective date of the termination of his employment
that are related to the period of his employment preceding the effective date of the termination
of his employment, including pay in lieu of accrued, but unused, vacation, and
(ii) the prorated amount of the Incentive Bonus for the year in which the termination of
employment occurs, pro rated for the portion of such year during which the Employee was employed
prior to the effective date of the termination of his employment, and
(iii) any remaining amount of Base Salary payable to the Employee through the end of the then
current term of this Amended and Restated Agreement.
Furthermore:
(v) Any restricted stock awarded to the Employee under the Equity Incentive Plan (or any
other or successor plan) shall continue to vest on the same schedule and according to the same
terms as such grants would have vested had his employment not been terminated by the Company, and
the Employee shall have whatever period remains under any outstanding stock options to exercise
those options despite the termination of his employment.
7
and that the provisions of this Section 9 are not intended to restrict the Employee’s use of such
previously acquired knowledge.
In the event that the Employee receives a request or is required (by deposition,
interrogatory, request for documents, subpoena, civil investigative demand or similar process) to
disclose all or any part of the Confidential Information, the Employee agrees to (a) promptly
notify the Company in writing of the existence, terms and circumstances surrounding such request
or requirement, (b) consult with the Company on the advisability of taking legally available steps
to resist or narrow such request or requirement, and (c) assist the Company in seeking a
protective order or other appropriate remedy. In the event that such protective order or other
remedy is not obtained or that the Company waives compliance with the provisions hereof the
Employee shall not be liable for such disclosure unless disclosure to any such tribunal was caused
by or resulted from a previous disclosure by the Employee not permitted by this Second Amendment
to Amended and Restated Agreement.
Nothing in this Section 10 shall impede, restrict or otherwise interfere with Employee’s
management and operation of those companies and businesses he owned, operated or controlled at the
date of this Second Amendment to Amended and Restated Agreement that were not transferred to or
purchased by the Company or the REIT, provided such activities do not materially detract from the
Employee’s performance of his duties hereunder. Further, nothing in this Section 10 shall prohibit
Employee from making any passive investment in a public company, where he is the owner of five
percent (5%) or less of the issued and outstanding voting securities of any entity, provided such
ownership does not result in his being obligated or required to devote any managerial efforts.
The Employee agrees that the restraints imposed upon him pursuant to this Section 10 are
necessary for the reasonable and proper protection of the Company and its subsidiaries and
affiliates, and that each and every one of the restraints is reasonable in respect to subject
matter, length of time and geographic area. The parties further agree that, in the event that any
provision of this Section 10 shall be determined by any court of competent jurisdiction to be
unenforceable by reason of its being extended over too great a time, too large a geographic area or
too great a range of
8
activities, such provision shall be deemed to be modified to permit its enforcement to the maximum
extent permitted by law.
If to the Company, to:
0000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxx 000
9
Xxxxxxxxxx, Xxxxxxx 00000
If to the Employee, at his last residence shown on the records of the
Company.
Any such notice shall be effective (i) if delivered personally, when received, (ii) if sent by
overnight courier, when receipted for, (iii) if mailed, five (5) days after being mailed, and (iv)
on confirmed receipt if sent by written telecommunication or telecopy, provided a copy of such
communication is sent by regular mail, as described above.
10
(g) GOVERNING LAW. This Second Amendment to Amended and Restated Agreement and the
performance hereof shall be construed and governed in accordance with the laws of the State of
Delaware, without giving effect to principles of conflicts of law.
{Signatures to appear on the following page.}
11
OPERATING PARTNERSHIP:
|
EMPLOYEE: | |||
MPT OPERATING PARTNERSHIP,L.P. |
||||
BY: MEDICAL PROPERTIES TRUST, LLC ITS: GENERAL PARTNER |
/s/ Xxxxxxx X. XxXxxxxx
|
|||
BY: MEDICAL PROPERTIES TRUST, INC. |
||||
ITS SOLE MEMBER
|
Dated: 2/26/09 |
By: Name: Title: |
/s/ Xxxxxx X. Xxxxx, Xx.
Chairman, President & CEO |
|||
Dated:
|
2/27/09 | |||
REIT: |
||||
| MEDICAL PROPERTIES TRUST, INC. | ||||
By:
|
/s/ Xxxxxx X. Xxxxx, Xx. | |||
Name: Title: |
Xxxxxx X. Xxxxx, Xx. Chairman, President & CEO |
|||
Dated:
|
2/27/09 | |||
12