SECOND AMENDMENT
TO
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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 William G. McKenzie (the
“Employee”):
WHEREAS, the REIT
is a limited partner and, through its wholly owned limited
liability company, Medical Properties Trust, LLC (the
“LLC”), the sole general partner of the Operating
Partnership:
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.
NOW, THEREFORE,
the Company and the Employee, in consideration of the respective
covenants set out below, hereby agree to the provisions of this
Second Amendment to Amended and Restated Agreement as
follows:
(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.
(b) DUTIES.
During the term of this Second Amendment to Amended and Restated
Agreement, the Employee shall perform such duties and tasks as the
Company shall reasonably request from time to time, including,
without limitation, (i) serving as the Vice-Chairman of the
Board, (ii) assisting the Company with strategic planning,
marketing, acquisition of healthcare properties and other
managerial functions from time to time, (iii) speaking at
seminars, lectures and other public and private engagements, and
(iv) such other duties and tasks concerning the ownership and
leasing of healthcare properties (collectively, the
“Services”) as the Chief Executive Officer and the
Board shall from time to time reasonably assign to the Employee.
The Employee shall be available as needed, and as directed by the
Chief Executive Officer, to provide services during each month
during the Term (as herein defined).
2. TERM. This
Second Amendment to Amended and Restated Agreement shall be
effective as of the Effective Date and shall continue in full force
and effect thereafter for a term of one (1) years following the
Effective Date and shall be automatically extended for an
additional one (1) year period on each one (1) year
anniversary of the Effective Date, including an anniversary that
occurs
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.
(a) BASE
SALARY. The Company shall pay the Employee a Base Salary that shall
be payable in periodic installments according to the
Company’s normal payroll practices, but no less frequently
than monthly. The initial Base Salary shall be $60,000 per year.
The Chief Executive Officer may review the Base Salary from time to
time to determine whether and to what extent the Base Salary should
be increased, but shall be under no obligation to do so. The Base
Salary shall not be decreased during the Term. For purposes of this
Agreement, the term “Base Salary” shall mean the amount
established and adjusted from time to time pursuant to this
Section 3.
(b) INCENTIVE
AWARDS: ANNUAL INCENTIVE BONUS. The Employee shall be entitled to
receive an annual cash incentive bonus for each fiscal year during
the term of this Second Amendment to Amended and Restated Agreement
consistent with such bonus policy as may be adopted by the Company
(“Bonus Policy”). The amount of the bonus, if any,
shall determined by the Chief Executive Officer based on the
Employee’s contribution to the Company’s
performance.
4. STOCK BASED
AWARDS. The REIT has established the 2004 Equity Incentive Plan, as
amended from time to time, (the “Equity Incentive
Plan”) which provides for the grants of options to acquire
shares of the Company’s $.001 par value common stock (the
“Common Shares”), awards of restricted Common Shares
and awards of stock appreciation rights, and performance units. The
Employee shall be eligible to receive stock based awards as
approved by the Compensation Committee and in accordance with the
Equity Incentive Plan. The vesting of any restricted Common Shares
shall be governed by the Equity Incentive Plan; provided, however,
that the Employee will be 100% vested and all restrictions will
lapse upon (i) a Change of Control (as defined herein),
(ii) the Employee’s death, or (v) his becoming
Permanently Disabled (as defined herein). The Common Shares issued
as Restricted Share Grants will have voting and dividend rights,
and, following the restriction period, shall be registered and
fully transferable by the Employee.
5. EXPENSES AND
INSURANCE.
(a) DIRECTORS
AND OFFICERS INSURANCE. During the Term, the Employee shall be
entitled to director and officer insurance coverage for his acts
and omissions while an employee and director of the Company on a
basis no less favorable to him than the coverage
provided to any other then current employees and
directors.
(b) EXPENSES,
OFFICE AND SECRETARIAL SUPPORT. The Employee shall be entitled to
reimbursement of all reasonable expenses, in accordance with the
Company’s policy as in
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.
(a) CHANGE OF
CONTROL. For purposes of this Second Amendment to Amended and
Restated Agreement, a “Change of Control” will be
deemed to have taken place upon the occurrence of any of the
following events:
(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.
(b) CERTAIN
BENEFITS UPON A CHANGE OF CONTROL. In the event of a Change of
Control, the Employee shall become 100% vested in the stock options
and restricted Common Shares awarded under the Equity Incentive
Plan (or any other or successor plan) and, if the Employee
voluntarily terminates his employment Without Good Reason after the
Change of Control, then the Employee shall have whatever remaining
period under the options following the Change of Control in which
to exercise his vested stock options, including those stock options
that vested upon the Change of Control.
(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 sue 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 sue 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 con
|
