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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made and entered into this 21st day
of
February, 2005, between WINDROSE MEDICAL PROPERTIES L.P., a
Virginia limited
partnership (the "Company"), FREDERICK L. FARRAR (the
"Executive") and, with
respect to the awards described in Sections 4(c) and 4(e),
WINDROSE MEDICAL
PROPERTIES TRUST, a Maryland real estate trust (the "REIT").
RECITALS
WHEREAS, the Company desires to employ the Executive, and the
Executive
desires to be employed by the Company, all on the terms and
subject to the
conditions set forth herein; and
WHEREAS, the REIT is the sole general partner of the Company
(and when
acting in that capacity is referred to in this Agreement as the
"General
Partner"); and
WHEREAS, the REIT is willing to make the award described in
Section
4(c) and may make the additional awards described in Section
4(e) in order to
assist the Company in retaining the Executive and thereby
allowing the REIT to
benefit from services provided by the Executive; and
WHEREAS, the Executive is willing to enter into this
Agreement
in consideration of the benefits which the Executive will
receive under the
terms hereof.
NOW, THEREFORE, in consideration of the mutual covenants
contained
herein, and for other good and valuable consideration, the
receipt and adequacy
of which are hereby acknowledged, the parties agree as
follows:
1. TERM. The employment of the Executive by the Company under
this
Agreement will commence on January 1, 2005 (the "Effective
Date") and end on
December 31, 2007 (the "Employment Period").
2. POSITION AND DUTIES. The Executive shall be employed by the
Company
and during the Employment Period, the Executive shall perform
such duties on
behalf of the Company as may be assigned by the Company or the
General Partner
from time to time. The Executive shall also serve without
additional
compensation in such offices of the REIT or the subsidiaries of
the Company or
the REIT to which the Executive may be elected or appointed by
the Company or
the General Partner.
3. EXTENT OF SERVICES.
(a) During the Employment Period, the Executive shall fulfill
the
duties of his position hereunder in a manner that will
faithfully and diligently
further the business and interests of the Company and the REIT.
The Company
acknowledges that the executive is a shareholder in Klipsch
Audio, Inc, and
provides and performs services for Klipsch Audio, Inc that do
not prevent the
executive from fulfilling his duties to the Company. In
addition, the Executive
may (i) make any investment where he is not obligated or
required to,
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and shall not in fact, devote significant managerial efforts,
(ii) participate
in charitable, academic or community activities, and in trade or
professional
organizations, or (iii) hold directorships in other companies
consistent with
the Company's and the REIT's conflict of interest policies and
corporate
governance guidelines as in effect from time to time.
(b) Corporate Opportunities. The Executive agrees that he will
not
take personal advantage of any business opportunity which arises
during his
employment with the Company and which may be of benefit to the
Company unless
all material facts regarding such opportunity are promptly
reported by the
Executive to the General Partner and the REIT for consideration
by the Company
and the REIT and the disinterested members of the Board of
Trustees of the REIT
decide to reject the opportunity.
4. COMPENSATION AND RELATED MATTERS.
(a) Annual Base Salary. During calendar year 2005 the Company
shall
pay to the Executive an annual base salary of $160,000 (less all
applicable
deductions, the "Base Salary") for all services rendered by the
Executive to the
Company. During calendar year 2006 the Company shall pay to the
Executive a Base
Salary of $250,000 for all services rendered by the Executive to
the Company.
During calendar year 2007 the Company shall pay to the Executive
a Base Salary
of $260,000 for all services rendered by the Executive to the
Company. The Base
Salary shall be payable in equal installments in accordance with
the practice of
the Company in effect from time to time for the payment of
salaries to officers
of the Company. The Executive's Base Salary shall be reviewed
annually by the
General Partner and the General Partner, in its discretion, may
approve a Base
Salary that exceeds the amounts prescribed by the preceding
sentences.
(b) Annual Bonuses. The Executive shall be eligible for an
annual
bonus ("Annual Bonus") for each calendar year in the Employment
Period, payable
no later than March 31 of the following calendar year, based on
his performance
and the performance of the Company during such period as
determined by the Board
of Trustees of the General Partner. Such annual bonus
opportunity shall be the
greater of (i) 50% of the Executive's Base Salary for the
calendar year or (ii)
$125,000 based upon achieving defined targets or other factors
determined to be
in the best interests of the Company, as established annually by
the
Compensation Committee of the Board of Trustees of the General
Partner.
(c) This Section 4(c) evidences the grant to the Executive by
the
REIT of a Stock Award under the Windrose Medical Properties
Trust 2002 Stock
Incentive Plan (the "Plan") (and terms used in this Section 4(c)
that are
defined in the Plan have the same meaning assigned to them under
the Plan). The
Stock Award covers 20,000 common shares of the REIT. The
Executive's interest in
the Stock Award shall become vested and transferable with
respect to 1,600
common shares on the execution of this agreement, with
additional shares vesting
at the rate of 575 shares on the last day of each calendar
quarter, beginning
with the quarter ending March 31, 2005, if the Executive remains
in the
continuous employ of the Company from the date of this Agreement
until such
vesting date (even if the vesting date occurs after the end of
the Employment
Period). The preceding sentence to the contrary notwithstanding,
the Executive's
interest in all of the common shares subject to the Stock Award
shall be vested
and transferable if the Executive remains in the continuous
employ of the
Company from the date of this
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Agreement until a "Change in Control" (as defined in the Change
in Control
Severance Agreement between the Executive, the Company and the
REIT dated August
21, 2002) or until the Executive's termination of employment by
the Company
without Cause, the Executive's resignation with Good Reason or
the cessation of
the Executive's service on account of his death or Disability
(as hereinafter
defined) even if such event occurs after the end of the
Employment Period. Any
common shares subject to the Stock Award that are not vested and
transferable as
of the date of the Executive's resignation without Good Reason
shall become
vested and transferable as determined by the Board of Trustees
of the REIT in
its sole discretion (and any common shares that are not or do
not become vested
and transferable shall be forfeited). Any common shares subject
to the Stock
Award that are not vested and transferable as of the date of the
Executive's
termination for Cause shall be forfeited. The Stock Award
evidenced by this
Section 4(c) shall be governed by the terms of the Plan
including, by way of
example and not of limitation, the Executive's right to receive
dividends and to
vote the common shares subject to the Stock Award (even if the
Executive's
interest is not vested and transferable) and the requirement
that the REIT
retain custody of the certificates evidencing shares that have
not become vested
and transferable.
(d) Expenses. The Company shall pay or reimburse the Executive
for
all reasonable expenses actually paid or incurred by the
Executive during the
Employment Period in the performance of the Executive's duties
under this
Agreement in accordance with the Company's employee business
expense
reimbursement policies in effect from time to time.
(e) Other Benefits. During the Employment Period, the
Executive
shall be eligible to receive such employee benefits including,
without
limitation, participation in any retirement and welfare plans
maintained by the
Company, as the Company may provide from time to time to
similarly situated
employees, and such other benefits as the Board of Trustees of
the REIT may from
time to time establish for the Company's or the REIT's executive
officers. In
keeping with the practice of the Company and the REIT with
respect to stock
based incentive compensation, the Executive shall also be
entitled to the
following annual grants during the Employment Period:
(i) Annual option grants (qualified as incentive stock
options
to the extent possible), as determined by the Compensation
Committee of the REIT
and approved by the Board of Trustees of the REIT.
(ii) Annual restricted share grants (vesting solely on the
passage of time with continuous employment (not to exceed three
years)), as
determined by the Compensation Committee of the REIT and
approved by the Board
of Trustees of the REIT.
(iii) Such other share grants or incentive compensation as
the
Compensation Committee of the REIT and Board of Trustees of the
REIT shall
determine from time to time.
(f) Vacations. The Executive shall be entitled to at least four
(4)
weeks' vacation in each calendar year, together with leave of
absence and leave
for illness or temporary disability in accordance with the
policies of the
Company in effect from time to time,
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however, in no event shall the Executive be paid for unused
vacation time on
termination of employment.
5. TERMINATION. Each party shall have the right to terminate
the
Executive's employment hereunder before the Employment Period
expires to the
extent, and subject to the provisions, set forth in this Section
5:
(a) Death. The Executive's employment hereunder shall terminate
upon
his death.
(b) Disability. The Company shall have the right to terminate
the
Executive's employment if the General Partner determines that
the Executive is
unable to perform his duties by reason of Disability. As used
herein,
"Disability" shall mean a disability as such term or a similar
term is defined
under a disability insurance policy maintained by the Company
covering the
Executive or, if there is no such policy, "Disability" shall
mean the inability
of the Executive, due to physical or mental illness or injury,
to perform his
duties hereunder for any period of 180 consecutive days and the
return of the
Executive to his duties for periods of 15 days or less shall not
interrupt such
180 day period.
(c) Cause. The Company shall have the right to terminate the
Executive's employment at any time upon delivery of a Notice of
Termination (as
defined in subsection (f) below) for Cause (as defined below) to
Executive, such
employment to terminate upon a date specified in the Notice of
Termination which
shall not be earlier than thirty (30) days after delivery of
such notice to the
Executive if the stated reason for termination is described in
clause (i), (ii)
or (v) of the following sentence. For purposes of this
Agreement, the term
"Cause" means (i) willful, deliberate and continued failure by
the Executive
(other than for reason of mental or physical illness) to perform
his duties as
established by the General Partner or fraud or dishonesty in
connection with
such duties, in either case, if such conduct has a materially
detrimental effect
on the business operations of the Company; (ii) a material
breach by the
Executive of his fiduciary duties of loyalty or care to the
Company or the REIT;
(iii) conviction of any crime (or upon entering a plea of guilty
or nolo
contendre to a charge of any crime) constituting a felony; (iv)
misappropriation
of the Company's funds or property; or (v) willful, flagrant,
deliberate and
repeated infractions of material published policies and
regulations of the
Company or the REIT of which the Executive has actual knowledge.
If the Company
desires to terminate the Executive for a reason described in
clause (i), (ii) or
(v) of the preceding sentence, the Executive shall have thirty
(30) days after
receipt of the Notice of Termination in which to cure the
failure, breach or
infraction described in the Notice of Termination and shall be
afforded an
opportunity to present his position or defense to the Board of
Trustees of the
Company. If the failure, breach or infraction is timely cured by
the Executive
or the Company's Board of Trustees determines that Cause for the
Executive's
termination does not exist, the Notice of Termination shall
become null and
void.
(d) Without Cause. The Company may at any time terminate the
Executive's employment hereunder.
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(e) Termination by the Executive.
(i) The Executive may terminate his employment hereunder (A)
for
Good Reason, or (B) without Good Reason at any time after the
date hereof upon
delivery of a Notice of Termination (as defined in subsection
(f) below).
(ii) For purposes of this Agreement, "Good Reason" shall
mean
(A) the failure by the General Partner to reelect or
reappoint
the Executive to the Executive's current position with the
Company;
(B) a material diminution by the General Partner of the
Executive's duties, functions and responsibilities with respect
to the Company
without the Executive's consent;
(C) the failure of the Company to permit the Executive to
exercise such responsibilities as are consistent with the
Executive's positions
and are of such a nature as are usually associated with such
offices of a
corporation engaged in substantially the same business as the
Company;
(D) the Company's causing Executive to relocate his
employment
more than fifty (50) miles from Indianapolis, Indiana, without
the consent of
the Executive;
(E) the Company's failure to make a payment when due to the
Executive;
(F) the Company's reduction of the Executive's (A) annual
base
salary, as such may be increased from time to time after the
date of this
Agreement; (B) bonus, such that the aggregate threshold, target,
or maximum
bonus projected for the Executive for a fiscal year is lower
than the aggregate
threshold, target, or maximum bonus, respectively, projected for
the Executive
for the immediately preceding fiscal year; or (C) employee
welfare, fringe or
pension benefits, other than reductions determined to be
necessary to comply
with the Employee Retirement Income Security Act of 1974, as
amended, or to
retain the tax-qualified or tax-favored status of the benefit
under the Code,
which determination shall be made by the General Partner in good
faith;
(G) a breach of Section 11(c) of this Agreement; or
(H) the Company, the General Partner or the Board of
Trustees
of the REIT directs the Executive to engage in unlawful or
unethical conduct or
conduct contrary to the Company's or the REIT's good business
practices.
If the Executive desires to terminate his employment for Good
Reason, the
Company shall have thirty (30) days after its receipt of the
Executive's Notice
of Termination in which to cure or remedy the grounds identified
as Good Reason
in the Notice of Termination. If the grounds for
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Good Reason are timely cured or remedied by the Company, the
Executive's Notice
of Termination shall become null and void.
(f) Notice of Termination. Any termination of the
Executive's
employment by the Company or by the Executive (other than
termination pursuant
to subsection (a) hereof) shall be communicated by written
Notice of Termination
to the other party hereto in accordance with Section 14(a). For
purposes of this
Agreement, a "Notice of Termination" shall mean a notice which
shall indicate
the specific termination provision in this Agreement relied upon
and shall set
forth in reasonable detail the facts and circ
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