EXHIBIT 10.12
HEALTHCARE REALTY TRUST
INCORPORATED
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of January 1, 2003 ("Effective Date") by and between HEALTHCARE REALTY TRUST
INCORPORATED, a Maryland corporation ("Corporation"), and XXXXX X. XXXXXX
("Officer").
RECITAL
Corporation desires to employ Officer as its Senior Vice President and
Chief Financial Officer 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 and Chief
Financial Officer, and Corporation agrees to employ and retain Officer in such
capacities. Officer's duties shall be to (a) be responsible for the maintenance
of Corporation's accounting books, records, and funds, (b) prepare accurate
financial statements for Corporation, (c) advise the officers and Board of
Directors regarding the financial condition of Corporation, and (d) be
responsible for maintaining proper internal controls over the assets of
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 and Chief Financial Officer. 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, 2003, (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 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
1993 Employees Stock Incentive Plan, the 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, 2003 through December 31, 2003, unless
terminated earlier pursuant to this Section 2. Commencing in 2004, 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
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vested without regard to such illness or incapacity (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, 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, 2003 at the rate of $178,908.00
per annum payable in 24 equal semi-monthly installments. The Base Salary for
each year (or portion thereof) beginning January 1, 2004 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.
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 7, 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.
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4. SEVERANCE COMPENSATION.
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
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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 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,
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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 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;
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(ii) take such action in connection with
contesting such claim as Corporation 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 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 xxx 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 xxx 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. ss. 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, 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 telegraph or first
class mail, certified or registered with return receipt requested, and shall be
deemed to have been duly given three days after mailing or 12 hours after
transmission of a telegram to the respective persons named below:
If to Corporation:
Healthcare Realty Trust Incorporated
0000 Xxxx Xxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
If to Officer:
Xx. Xxxxx X. Xxxxxx
00000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxx 00000
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 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
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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/ Xxxxx X. Xxxxx
---------------------------------
Name: Xxxxx X. Xxxxx
Title: President and Chairman
Date: January 1, 2003
OFFICER:
/s/ Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx
Date: January 1, 2003
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