EMPLOYMENT
AGREEMENT
This EMPLOYMENT AGREEMENT (this
“ Agreement ”) is dated and effective as
of July 1, 2009, by and between Grubb & Ellis Healthcare
REIT Inc., a Maryland corporation (the “
Company ”), and Scott D. Peters (the “
Executive ”).
WHEREAS, the parties had previously
entered into that initial letter employment agreement dated
November 14, 2008 (the “ Initial Agreement
”) which set forth the initial compensation package and
employment arrangement of the Executive with the Company;
WHEREAS, the parties hereto wish to
supersede and replace the Initial Agreement (except as specified
herein) and enter into the arrangements set forth herein with
respect to the terms and conditions of the Executive’s
continued employment with the Company from and after the
“Effective Date” (as defined herein);
NOW, THEREFORE, in consideration of
the mutual covenants and agreements set forth herein and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
SECTION
1
EMPLOYMENT AGREEMENT
This Agreement shall supersede and
replace the Initial Agreement, which shall be of no further force
and effect as of July 1, 2009 (except as specifically provided
herein). On the terms and conditions set forth in this Agreement,
the Company agrees to employ the Executive, and the Executive
agrees to be employed by the Company, for the Employment Period set
forth in Section 2 and in the positions and with the duties
set forth in Section 3 . Terms used herein with initial
capitalization are defined in Section 10 .
SECTION
2
TERM
Unless earlier terminated pursuant to
Section 7 , the term of the Executive’s
employment hereunder in the positions referenced under
Section 3 will begin as of July 1, 2009 (the
“ Effective Date ”) and will conclude on
December 31, 2013 (the “ Original Term
”). On the final day of the Original Term and on each
anniversary thereafter (each an “ Extension
Date ”), the term of this Agreement shall be extended
automatically for one (1) year, such extension to commence on the
Extension Date and terminate one year after the Extension Date (the
“ Renewal Term ”), unless written notice
that the term of this Agreement shall not be so extended is given
by either party at least one-hundred and eighty (180) days
prior to the Extension Date.
The Original Term and any Renewal
Terms, in their full duration, are herein referred to as the
“ Employment Terms ” and the period of
the Executive’s employment under this Agreement consisting of
the Original Term and all Renewal Terms, except as may be
terminated early pursuant to Section 7 , is herein
referred to as the “ Employment Period
.”
SECTION
3
POSITION AND DUTIES
The Executive will serve as President
and Chief Executive Officer of the Company during the Employment
Period. As President and Chief Executive Officer of the Company,
the Executive will render executive, policy and other management
services to the Company of the type customarily performed by
persons serving in a similar capacity and as reasonably determined
by the Board with regard to the Executive’s status and
position within the Company. The Company shall provide the
Executive with all necessary authority and resources to discharge
the Executive’s responsibilities under laws and regulations
applicable to the Company and the Executive.
Provided that the Executive is in
compliance with the terms of this Agreement, the Board shall
nominate the Executive to serve on the Board every year during the
term of this Agreement and the Executive shall serve on the Board
subject to stockholder election.
The Executive will report directly to
the Board. The Executive shall not be required to take direction
from or report to any other person unless otherwise directed by the
Board. The Executive will devote the Executive’s good faith
efforts and full business time to the performance of the
Executive’s duties hereunder and the advancement of the
business and affairs of the Company during the Employment Period.
It is understood that the Executive may, consistent with the other
provisions of this Agreement, pursue other outside interests,
including but not limited to, devoting time to (A) serving on
corporate, civic or charitable boards or committees,
(B) delivering lectures, fulfilling speaking engagements or
teaching at educational institutions and (C) managing the
Executive’s personal investments, so long as such activities
do not interfere with the performance of Executive’s
responsibilities as President and Chief Executive Officer of the
Company in accordance with this Agreement.
SECTION
4
PLACE OF PERFORMANCE
During the Employment Period, the
Executive’s primary place of employment and work location
will be Scottsdale, Arizona, except for reasonable travel on
Company business and as otherwise consented to by the
Executive.
SECTION
5
COMPENSATION
Base Salary
During the Employment Period, the
Company will pay to the Executive an annual base salary (the
“ Base Salary ”), which initially will be
$500,000.00. The Base Salary will be reviewed by the Compensation
Committee of the Board (the “ Compensation
Committee ”) no less frequently than annually and may
be increased (but not decreased) at the discretion of the
Compensation Committee. If the Executive’s Base Salary is
increased, the increased amount will be the Base Salary for the
remainder of the Employment Period. The Base Salary will be payable
semi-monthly or in such other installments as will be consistent
with the Company’s payroll procedures in effect from time to
time.
Performance Grant
Bonus
On the Effective Date, the Company
will grant the Executive 50,000 fully-vested shares of the
Company’s Common Stock (the “ Shares
”), pursuant to, and subject to the terms and conditions of,
the NNN Healthcare/Office REIT, Inc. 2006 Incentive Plan (“
Plan ”), in consideration of Executive’s
performance to date (the “ Performance Bonus
Shares ”).
Notwithstanding the foregoing, the
Executive may in his sole discretion elect to receive a cash
payment in lieu of up to one-half of the Performance Bonus Shares
(i.e., up to 25,000 Shares). Any such payment will be equal to the
fair market value of the foregone Performance Bonus Shares as of
the Effective Date. The Executive must make such election in
writing prior to the Effective Date.
Annual Bonus
During the Employment Period, the
Executive will be eligible to earn an annual performance bonus in
an amount determined at the discretion of the Compensation
Committee for each fiscal year, up to a maximum of 200% of the Base
Salary. It is the intention of the parties hereto that the
Compensation Committee shall establish bonus parameters for the
Executive with respect to each fiscal year of the Employment
Period. The Executive acknowledges and agrees that his annual bonus
is not guaranteed at any level, rather it is to be determined
solely by the Compensation Committee, in its sole discretion.
The Compensation Committee will
establish the performance goals and objectives each year, after
meeting with the Executive, on which the Annual Bonus will be
based.
Equity Compensation
– Annual Share Grants
The Executive previously received a
grant of 40,000 restricted Shares (the “ Original
Restricted Shares ”), as set forth in the Initial
Agreement. Such Original Restricted Shares shall vest in the time
and manner set forth on that certain Restricted Stock
Agreement dated November 14, 2008. The Original Restricted
Shares were granted pursuant to, and will remain subject to the
terms and conditions of the Plan.
Subject to the approval of the Board
of Directors and the conditions and restrictions herein, the
Company will grant to the Executive an additional 100,000
restricted Shares of the Company’s Common Stock on the
Effective Date and, for so long as the Executive remains employed
by the Company, the Company will further grant 100,000 restricted
Shares of the Company’s Common Stock on each of the first
three (3) anniversaries of the Effective Date, for a total of
400,000 restricted Shares of the Company’s Common Stock.
Each such grant of 100,000 restricted
Shares of the Company’s Common Stock (the “
Annual Restricted Shares ”) will vest and
become non-forfeitable in equal annual installments during the
balance of the term of this Agreement as follows: first on the date
of each applicable grant and thereafter on each of the remaining
anniversaries of the Effective Date, as applicable, until all
shares are fully vested. The Annual Restricted Shares shall be
granted pursuant to, and will be subject to the terms and
conditions of, the Plan, this Agreement and the Company’s
standard Restricted Stock Agreement. If there is any inconsistency
or ambiguity among the Initial Agreement, this Agreement, the Plan
or the Restricted Stock Agreement, the Plan shall prevail.
Notwithstanding the foregoing, the
Executive may in his sole discretion elect to receive a cash award
in lieu of up to one-half of each grant of Annual Restricted Shares
(i.e., up to 50,000 Shares). Any cash award issued pursuant to such
an election will be subject to the same vesting schedule as the
foregone Annual Restricted Shares and will pay out in an amount
equal to the fair market value of the foregone Annual Restricted
Shares on the vesting date. The Executive must make such election
in writing prior to the first grant of the Annual Restricted
Shares. Thereafter, such election must be made in writing five
(5) days prior to the grant to which it relates.
Other Compensation
– Equity Interest
The Company is currently
contemplating a “Follow-On Offering” (the “
Follow-On Offering ”). In the event the Company
proceeds with the Follow-On Offering, is ultimately successful in
raising funds and for so long as the Executive remains with the
Company and performs to the satisfaction of the Company, the
Executive shall be entitled to receive a direct or indirect equity
interest in the Company (which equity interest may be held by a
limited liability company managed by the Company in which the
Executive is a member) (the “ Equity Interest
”) entitling the Executive to distributions or dividends upon
the achievement of certain returns or benchmarks by the Company
related to the value of the assets acquired by the Company with the
proceeds of the Follow-On Offering.
Subject to Board approval of the
establishment of the Equity Interest program, the terms of the
Equity Interest, the documents that convey the Equity Interest and
the receipt of all regulatory approvals necessary for the Company
to conduct the Follow-On Offering in all fifty (50) states, Puerto
Rico and the District of Columbia, the Company shall issue such
interest to the Executive and it shall vest as follows:
(a) Initial Vesting of
1.25% : The Executive shall be immediately vested in 1.25% of
the appreciation (the “ Appreciation ”)
that the Company realizes from properties and other interests
acquired using proceeds from the Follow-on Offering after the
distribution by the Company to its stockholders of the gross
purchase price for all of the Company’s issued shares (as
reduced by any shares redeemed pursuant to the Company’s
stock redemption plan) and a cumulative 8% per annum return on the
gross purchase price for all such shares, as will be described in
the documents that evidence the Equity Interest; provided that the
Executive acknowledges the terms of the Equity Interest have not
been finally determined by the Board and that changes to the terms
of the Equity Interest may be required by the Board in order for
the Follow-On Offering to be declared effective by each of the
regulatory authorities with jurisdiction over the Follow-On
Offering and that, as a result of such changes, the right to
receive the Equity Interest is subject to modification or
elimination.
(b) Annual Vesting : The
Executive shall vest in an additional .3125% of the Appreciation on
January 1 st of each year that he is employed by the
Company until his total Equity Interest in the Appreciation is
equal to 2.5%.
Notwithstanding any other provisions
herein to the contrary, the Company’s obligation to issue and
the Executive’s right to receive the Equity Interest is
subject to the following:
(i) Notwithstanding any other
provisions herein to the contrary, the Executive acknowledges and
agrees that: (i) the Executive has not received and the
Company has not provided any assurance or representation of any
kind relating to the Equity Interest; (ii) the Executive does
not have any expectation of any minimum level of a direct or
indirect equity interest in the Company or a subordinated
participation interest in the Company; (iii) neither the
Company nor any director, officer, shareholder, partner, member,
employee, trustee, representative or agent of the Company shall
have any liability or responsibility to the Executive for any act
or omission performed or failed to be performed by it, or for any
losses, claims, costs, damages, or liabilities arising from any
such act or omission relating to the acquisition, management,
operation, or disposition of the Company’s assets;
(iv) the Company shall have full power, authority, discretion
and control with respect to its assets; and (v) any rights of
the Executive to the Equity Interest, if any, are personal to the
Executive and, notwithstanding any other provisions herein to the
contrary, may not be assigned by the Executive except to the extent
permitted by the documents that evidence such interest. The
foregoing provisions are of material importance to the Company. The
Executive acknowledges and agrees that the Company has agreed to
the grant of the Equity Interest (subject to the provisions
herein), if any, in reliance of the Executive’s agreement to
the foregoing provisions.
(ii) Notwithstanding any other
provisions herein to the contrary, if this Agreement is terminated
by the Company for Cause, then the Equity Interest shall be
forfeited.
(iii) Notwithstanding any other
provision herein to the contrary, if the Executive terminates this
Agreement for any reason, other than for Good Reason, then the
Equity Interest shall be forfeited.
(iv) Notwithstanding any other
provisions herein to the contrary, payment of the Equity Interest
shall be subject to and conditioned upon the Executive’s
compliance with all applicable laws, rules and regulations and the
Executive’s compliance with the terms of this Agreement.
(v) Notwithstanding any other
provisions herein to the contrary, retention of the Equity Interest
shall be subject to and conditioned upon the Executive’s
continued employment with the Company during the Original Term.
(vi) Notwithstanding any other
provisions herein to the contrary, retention of the Equity Interest
shall be subject to and conditioned upon the Executive’s
compliance with the terms and conditions of the Non-Compete
Agreement (as defined herein).
Benefits
During the Employment Period, the
Executive will be entitled to all employee benefits and perquisites
made available to senior executives of the Company, including,
without limitation, group medical, dental, vision, life insurance,
long-term disability insurance, retirement, pension, 401(k) savings
plans and/or prescription drug plan coverage, subject to the
condition that the Executive is eligible for participation in any
such plans. The Company shall pay 100% of the premium cost of the
Company’s health insurance coverage provided to the Executive
(and the Executive’s dependants, if applicable) by the
Company from time to time. Nothing contained in this Agreement will
prevent the Company from terminating plans, changing carriers or
effecting modifications in employee benefits coverage for the
Executive as long as such modifications affect all similarly
situated senior executives of the Company.
Vacation;
Holidays
During the Employment Period, the
Executive will be entitled to all public holidays observed by the
Company and vacation days in accordance with the applicable
vacation policies for senior executives of the Company, which
vacation days will be taken at a reasonable time or times. The
Executive will initially be entitled to four (4) weeks
vacation per year, and accrual of vacation time is capped at a
maximum of five (5) weeks. A maximum of one (1) week of
any unused vacation may carry over from calendar year to calendar
year in accordance with the general policies of the Company and
subject to applicable law.
Directors and
Officers Insurance and Indemnification
The Company shall maintain insurance
to insure the Executive against claims arising out of an alleged
wrongful act by the Executive while acting as a director or officer
of the Company or one of its subsidiaries. The Company shall
further indemnify and exculpate the Executive from money damages
incurred as a result of claims arising out of an alleged wrongful
act by the Executive while acting as an office
