EMPLOYMENT
AGREEMENT
This EMPLOYMENT AGREEMENT (this
“ Agreement ”) is entered into and
effective as of the 1st day of July, 2009, by and between Grubb
& Ellis Healthcare REIT Inc., a Maryland corporation (the
“ Company ”), and Mark Engstrom (the
“ Executive ”).
WHEREAS, the parties hereto wish to
enter into the arrangements set forth herein with respect to the
terms and conditions of the Executive’s 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
Subject to 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 defined herein. Terms used herein with
initial capitalization are defined in Section 10 .
SECTION
2
TERM
The term of the Executive’s
employment hereunder in the position referenced under
Section 3 will begin as of July 1, 2009 (the
“ Effective Date ”) and will conclude on
June 30, 2011 (the “ Original Term
”) subject to earlier termination as provided in
Section 7 herein. At the sole discretion of the
Company, the Agreement may be extended for an additional one
(1) year term (the “ Renewal Term
”), by Company providing the Executive with written notice of
such extension at least one-hundred eighty (180) days prior to
the Extension Date.
The Original Term and any Renewal
Term, in their full duration, are herein referred to as the “
Employment Terms .” The period of the
Executive’s employment under this Agreement consisting of the
Original Term and any Renewal Term, 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 Executive
Vice-President — Acquisitions of the Company during the
Employment Period. The title of Executive can be reasonably
adjusted by the Company. The Executive will render management
services to the Company as reasonably determined by the Board and
Chief Executive Officer of the Company (the “
CEO ”). The Company shall provide the Executive
with necessary authority and resources to discharge the
Executive’s responsibilities under laws and regulations
applicable to the Company and Executive.
The Executive will report directly to
the CEO. The Executive shall not be required to take direction from
or report to any other person unless otherwise directed by the
Board or the CEO. The Executive will devote the Executive’s
best 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.
The Executive may, consistent with the other provisions of this
Agreement and subject to pre-approval of the CEO, pursue other
limited 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 full time
performance of Executive’s responsibilities as Executive
Vice-President — Acquisitions 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 reasonably requested by the
CEO.
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
Two Hundred Seventy-Five Thousand Dollars ($275,000.00). 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 or decreased at the
sole 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.
Bonus
During the Employment Period, the
Executive will be eligible to earn an annual performance bonus in
an amount determined at the sole discretion of the Compensation
Committee for each year. It is the intention of the parties hereto
that the Company shall establish bonus parameters for the Executive
with respect to each fiscal year of the Employment Period.
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 on which the annual bonus will be based. The
Executive’s initial full year annual target bonus will be up
to 100% of the Base Salary (pro-rata for the time worked in the
fiscal year). In the event that a target bonus is not established
with respect to any subsequent fiscal year, the Executive’s
target bonus shall be deemed to be the target bonus established
under this Agreement for the immediately preceding year.
Equity Compensation
– Restricted Stock Units
Subject to the approval of the Board
of Directors and the conditions and restrictions herein, within
sixty (60) days after the Executive relocates to the Phoenix,
Arizona metropolitan area, the Company will grant to the Executive
40,000 restricted stock units (the “ Restricted Stock
Units ”). The date of such grant shall be referred to
herein as the “ Grant Date .” Subject to
the Executive’s continued employment by the Company through
each vesting date, the Restricted Stock Units will vest and convert
to shares of the Company’s Common Stock in equal annual
installments of 33-1/3% each, on the first, second and third
anniversaries of the Grant Date. The Restricted Stock Units shall
be granted pursuant to, and will be subject to the terms and
conditions of, the NNN Healthcare/Office REIT, Inc. 2006 Incentive
Plan (the “ Plan ”) and the
Company’s standard Restricted Stock Unit Agreement. If there
is any inconsistency or ambiguity among this Agreement, the Plan or
the Restricted Stock Unit Agreement, the Plan shall prevail.
Participation
– 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 up to a
possible .25% interest to the Executive in 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.
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 in accordance with this
Agreement.
(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 four (4) weeks.
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 in good faith as an
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 in good faith as an
officer or employee of the Company, or of its subsidiaries, to the
fullest extent permitted under applicable law.
Withholding Taxes
and Other Deductions
To the extent required by law, the
Company will withhold from any payments due to the Executive under
this Agreement any applicable federal, state or local taxes and
such other deductions as are prescribed by law or authorized by the
Executive. With respect to any taxable event related to the
Restricted Stock Units, the Executive may, subject to prior
approval by the Compensation Committee, elect that any withholding
requirement be satisfied, in whole or in part, by withholding from
the Restricted Stock Units shares of Common Stock having a Fair
Market Value (as defined in the Plan) on the date of withholding
equal to the minimum amount (and not any greater amount) required
to be withheld for tax purposes, all in accordance with such
procedures as the Compensation Committee establishes.
SECTION
6
EXPENSES
During the Employment Period, the
Executive is expected and is authorized, subject to the business
expense policies as determined by the Company, to incur reasonable
expenses in the performance of the Executive’s duties
hereunder, including the costs of entertainment, travel, and
similar business expenses. During the Employment Period, the
Company will promptly reimburse the Executive for all such expenses
upon periodic presentation by the Executive of an accounting of
such expenses on terms applicable to senior executives of the
Company. During the Employment Period, the Executive shall be
entitled to upgrade to “First Class” air
