Exhibit 10.1

 

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) by and between PHYSICIANS REALTY TRUST, a Maryland trust, (the “Company”), and JOHN T. THOMAS (the “Executive”) is entered into this 6th day of May, 2014, but effective as of the 24th day of July, 2013 (the “Effective Date”).

 

WHEREAS , the Company and the Executive entered into an Employment Agreement (the “Original Agreement”) dated the Effective Date, providing for the Executive’s employment and setting forth the terms and conditions for such employment; and

 

WHEREAS , the Company and the Executive desire to amend and restate the Original Agreement to provide for certain changes to the terms and conditions of the Executive’s employment by the Company, as reflected in this Agreement.

 

NOW THEREFORE , in consideration of the mutual covenants herein contained, the parties, intending to be legally bound, hereby agree as follows:

 

1.                                       EMPLOYMENT

 

The Company hereby agrees to employ the Executive as its President and Chief Executive Officer (the “CEO”) upon the terms and conditions herein contained, and the Executive hereby agrees to accept such employment and to serve in such position. As CEO, the Executive will have those duties which can reasonably be expected to be performed by a person in such position and shall undertake such other responsibilities as may be assigned to the Executive by the Company’s Board of Trustees from time to time. For purposes of this Agreement, all references to the “Board” shall mean the Board of Trustees, excluding the Executive. In such capacity, the Executive shall report to the Company’s Board and shall have such powers and responsibilities consistent with his position as may be assigned. The Company agrees to nominate the Executive to be a member of the Board and any Executive Committee (or similar Committee) of the Board for the Employment Term (as defined below) at the next regularly scheduled meeting of the Board that occurs after the Effective Date of this Agreement. Throughout the Employment Term, the Executive shall devote his best efforts and all of his business time and services to the business and affairs of the Company.

 

2.                                       TERM OF AGREEMENT

 

Subject to earlier termination as herein provided, the Executive’s employment under this Agreement shall begin on the Effective Date and shall continue in effect until the third anniversary of the Effective Date (the “Initial Term”). The Agreement will automatically renew, subject to earlier termination as herein provided, for successive one (1) year periods (the “Additional Terms”), unless either the Executive or the Company provide notice of non-renewal at least sixty (60) days prior to the expiration of the Initial Term or the then Additional Term, whichever is applicable. The Initial Term and any Additional Term(s) shall be referred to collectively as the “Employment Term.”

 

Notwithstanding the foregoing, the Company shall be entitled to terminate this Agreement immediately, subject to a continuing obligation to make any payments required under Section 5 below, if the Executive (i) incurs a Disability as described in Section 5(b) , (ii) is terminated for Cause, as defined in Section 5(c) , or (iii) voluntarily terminates his employment without Good Reason (as defined below) during the Employment Term, as described in Section 5(d) .

 

 

3.                                       SALARY AND BONUS .

 

The Executive shall receive a base salary during the Employment Term at a rate of $300,000 per annum for 2013 (the “Base Salary”), payable in substantially equal semi-monthly installments. The Compensation Committee of the Board shall consult with the CEO and review the Executive’s Base Salary at annual intervals, and may increase the Executive’s annual Base Salary from time to time as the Committee deems to be appropriate.

 

Subject to Section 12 , the Executive will have an annual cash bonus opportunity for each calendar year during the Employment Term (the “Annual Bonus”) based upon performance goals that are established by the Board or the Compensation Committee of the Board, as the case may be, in its sole discretion.  In the event an Annual Bonus is payable pursuant to this Section 3 , such bonus shall be paid to the Executive no later than March 15th of the year after the year to which the bonus relates.

 

On or as soon as administratively practicable after the date of an Initial Public Offering (as defined below) (but in no event later than sixty (60) days after the date of an Initial Public Offering), the Executive shall receive a grant of restricted shares of the Company’s common shares having a value of $1,000,000 based on the public offering price per share of the Company’s common shares offered for sale at the Initial Public Offering (the “Restricted Shares”). The Restricted Shares shall be subject to the restrictions set forth in the restricted share agreement between the Company and the Executive and the terms of an equity incentive plan adopted by the Company prior to the grant of the Restricted Shares (the “Plan”). The Restricted Shares shall vest over a three-year period, with one-third of the Restricted Shares vesting equally on the first, second, and third anniversary of the Effective Date, subject to any forfeiture or acceleration provisions set forth in the restricted share agreement and the Plan. For purposes of this Agreement, “Initial Public Offering” means any underwritten sale of the Company’s equity securities pursuant to an effective registration statement under the Securities Act of 1933 filed with the Securities and Exchange Commission on Form S-1 or any other eligible form (or a successor form thereto adopted by the Securities and Exchange Commission).

 

4.                                       ADDITIONAL COMPENSATION AND BENEFITS

 

The Executive shall receive the following additional compensation and welfare and fringe benefits during the term of the Agreement:

 

(a)                                  Options and Other Long-Term Incentives . During the Employment Term, any options, restricted shares or other awards granted under the Plan shall be at the discretion of the Compensation Committee of the Company’s Board.

 

(b)                                  Vacation . The Executive shall be entitled to up to four (4) weeks of vacation during each year during the Employment Term and any extensions thereof, prorated for partial years.

 

(c)                                   Business Expenses . The Company shall reimburse the Executive for all reasonable expenses he incurs in promoting the Company’s business, including expenses for travel and similar items, upon presentation by the Executive from time to time of an itemized account of such expenditures. Any reimbursement of expenses made under this Agreement shall only be made for eligible expenses (including transportation and cellular service expenses as set forth above) incurred during the Employment Term, and no reimbursement of any expense shall be made by the Company after December 31st of the year following the calendar year in which the expense was incurred. The amount eligible for reimbursement under this Agreement during a taxable year may not affect expenses eligible for reimbursement in any other taxable year, and the

 

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right to reimbursement under this Agreement is not subject to liquidation or exchange for another benefit. The Executive will comply with the Company’s policies regarding these benefits, including all Internal Revenue Service rules and requirements.

 

(d)                                  Professional Expenses . Each calendar year during the Employment Term, the Company agrees to reimburse the Executive for up to $10,000 of reasonable professional expenses (i.e., accounting, financial planning, estate planning expenses) incurred by the Executive during such year for personal advice rendered to the Executive.

 

(e)                                   Other Benefits and Perquisites . The Executive shall be entitled to participate in the benefit plans provided by the Company for all employees, generally, and for the Company’s executive employees. The Company shall be entitled to change or terminate these plans in its sole discretion at any time.

 

5.                                       PAYMENTS UPON TERMINATION

 

(a)                                  Involuntary Termination . If the Executive’s employment is involuntarily terminated by the Company during the Employment Term, the Executive shall be entitled to receive his Base Salary accrued through the date of termination, any accrued but unpaid vacation pay, plus any bonuses earned but unpaid with respect to fiscal years or other periods ending before the termination date (collectively, the “Accrued Obligations”). Such payments shall be made to the Executive within the time period required by applicable law (and in all events within sixty (60) days following the date of involuntary termination). The Executive shall also receive any nonforfeitable benefits payable to him under the terms of any deferred compensation, incentive or other benefit plans maintained by the Company, payable in accordance with the terms of the applicable plan.

 

If the termination is not (1) a termination for Cause (as defined below), as described in Section 5(c) ; (2) a voluntary termination by the Executive without Good Reason (as defined below) as described in Section 5(d) ; (3) a termination as a result of the Executive’s death or Disability (as defined below); or (4) a termination due to non-renewal of the then current term as described in Section 5(e) , then subject to compliance with the restrictive covenants in Section 9 and Section 10 and the execution and timely return by the Executive of a release of claims in a form and substance reasonably requested by the Company (the “Release”), and except as otherwise provided by Sections 12 and 18 , the Company shall pay severance to the Executive in accordance with its normal payroll practices, equal to the Executive’s Base Salary as in effect at the time his employment terminates for a period equal to the greater of (a) the remainder of the then current term of this Agreement or (b) twenty-four (24) months, with the first payment on the first payroll date after the revocation period for the Release has expired; provided, that if the time period for returning and revoking the release begins in one taxable year and ends in a second taxable year, the payments shall not commence until the first payroll date in the second taxable year.

 

In addition, if the termination is not (1) a termination for Cause, as described in Section 5(c) ; (2) a voluntary termination by the Executive without Good Reason as described in Section 5(d) ; (3) a termination as a result of the Executive’s death or Disability (as defined below); or (4) a termination due to non-renewal of the then current term as described in Section 5(e) , then, subject to compliance with the restrictive covenants in Section 9 and Section 10 , the execution and timely return by the Executive of the Release, and except as otherwise provided by Sections 12 and 18 , the Executive shall be entitled to the following:

 

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(i)                                      Any options, restricted shares or other awards granted to the Executive under the Plan shall become fully vested and, in the case of options, exercisable in full;

 

(ii)                                   Provided that the Executive elects continuation of coverage under the Company’s group health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended (“COBRA”), the Executive shall be provided continued coverage at the Company’s expense under any health insurance programs maintained by the Company in which the Executive participated at the time of his termination for twelve (12) months, or until, if earlier, the date the Executive obtains comparable coverage under a group health plan maintained by a new employer. To the extent the benefits provided under the immediately preceding sentence are otherwise taxable to the Executive, such benefits, for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) (and the regulations and other guidance issued thereunder) shall be provided as separate monthly in-kind payments of those benefits, and to the extent those benefits are subject to and not otherwise excepted from Section 409A of the Code, the provision of the in-kind benefits during one calendar year shall not affect the in-kind benefits to be provided in any other calendar year; and

 

(iii)                                Any Annual Bonus(es) payable under Section 3 above that would have been earned based solely on continued employment for the remainder of the then current term, and if none, then an amount equal to fifty percent (50%) of the Executive’s then current Base Salary, payable at the same time as bonuses are paid to other active employees of the Company with respect to such performance period, and forfeited if the Executive violates any of the restrictive covenants in Section 9 and Section 10 .

 

(b)                                  Disability . The Company shall be entitled to terminate the Executive’s employment if the Board determines that the Executive has been unable to attend to his duties for at least ninety (90) days because of a Disability (as defined below), and has received a written opinion from a physician acceptable to the Board that such condition prevents the Executive from resuming full performance of his duties and is likely to continue for an indefinite period. Upon such involuntary termination, the Executive shall be entitled to receive the Accrued Obligations. Such payments shall be made to the Executive within the time period required by applicable law (and in all events within sixty (60) days following the date of involuntary termination). In addition, subject to compliance with the restrictive covenants in Section 9 and Section 10 and the execution and timely return by the Executive of the Release, the Company shall pay severance to the Executive in accordance with its normal payroll practices, equal to twelve (12) months of the Executive’s Base Salary as in effect at the time his employment terminates, with the first payment on the first payroll date after the revocation period for the Release has expired; provided, that (i) if the time period for returning and revoking the Release begins in one taxable year and ends in a second taxable year, the payments shall not commence until the first payroll date in the second taxable year; and (ii) all such payments shall immediately terminate at an earlier date if the Executive returns to active employment, either with the Company or otherwise. Any amounts payable under this Section 5(b)  shall be reduced on a dollar-for-dollar basis by the amount of bona fide disability pay (within the meaning of Treas. Reg. section 1.409A-1(a)(5)) received or receivable by the Executive during such twelve-month period, provided such disability payments are made pursuant to a plan sponsored by the Company that covers a substantial number of employees of the Company and was established prior to the date the Executive incurred a permanent disability, and further provided that such reduction does not otherwise affect the time of payment of amounts pursuant to this Section 5(b) . For purposes of this Agreement, “Disability” means the Executive is incapacitated due to physical or mental illness and such incapacity, with or without reasonable accommodation, prevents the Executive from satisfactorily

 

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performing the essential functions of his job for the Company on a full-time basis for at least ninety (90) days in a calendar year.

 

(c)                                   Termination for Cause . If the Executive’s employment is terminated by the Company for Cause, the amount the Executive shall be entitled to receive from the Company shall be limited to the Accrued Obligations. Such payments shall be made to the Executive within the time period required by applicable law (and in all events within sixty (60) days following the date of termination).

 

For purposes of this Agreement, the term “ Cause ” shall be limited to the following:

 

(i)                                      the Executive engaging in any act of fraud, dishonesty, theft, misappropriation or embezzlement of funds or misrepresentation with respect to the Company;

 

(ii)                                   the Executive’s conviction or plea of no contest with respect to any felony or other crime involving moral turpitude;

 

(iii)                                the Executive’s material breach of his obligations under this Agreement, including, without limitation, breach of the covenants set forth in Section 9 and Section 10 below or the refusal of the Executive to perform his job duties as directed by the Board, which the Executive failed to cure within thirty (30) days after receiving written notice from the Board specifying the alleged breach;

 

(iv)                               violation of any material duty or obligation to the Company or of any direction or any rule or regulation reasonably established by the Board, which the Executive failed to cure within thirty (30) days after receiving written notice from the Board specifying the alleged violation; or

 

(v)                                  insubordination or misconduct in the performance of, or neglect of, the Executive’s duties which the Executive failed to cure within thirty (30) days after receiving written notice from the Board specifying the alleged insubordination, misconduct, or neglect.

 

(d)                                  Voluntary Termination by the Executive without Good Reason . If the Executive resigns or otherwise voluntarily terminates his employment before the end of the current Employment Term (other than in connection with a Change in Corporate Control, as described in Section 6 ), the amount the Executive shall be entitled to receive from the Company shall be limited to the Accrued Obligations. Such payment shall be made to the Executive within the time period required by applicable law (and in all events within sixty (60) days following the date of resignation or voluntary termination).

 

For purposes of this Agreement, a resignation by the Executive shall not be deemed to be voluntary without Good Reason if, without the Executive’s prior consent, the Executive is (1) assigned to a position other than the CEO (other than for Cause or by reason of his Disability) or assigned duties materially inconsistent with such position if either such change in assignment constitutes a material diminution in the Executive’s authority, duties or responsibilities, or (2) directed to report to anyone other than the Board if such change in reporting duties constitutes a material diminution in the authority, duties or responsibilities of the supervisor to whom the Executive is required to report; provided that the Executive has notified the Company within the first ninety (90) days following the initial date of such change in assignment or reporting duties

 

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that the Executive regards such change in assignment or reporting duties as grounds justifying resignation under this Section 5(d)  and the Company has failed to cure such change in assignment or reporting duties within ninety (90) days following its receipt of such notice from the Executive; and provided further that the Executive resigns under this Section 5(d) within six (6) months following the initial existence of a change in assignment or reporting duties described herein.

 

(e)                                   Non-Renewal . The Executive’s employment shall terminate in the event that the then-current Employment Term expires by reason of a party giving a notice of an election not to renew as provided in Section 2 . If the Executive’s employment terminates due to non-renewal of the Agreement, the amount the Executive shall be entitled to receive from the Company shall be limited to the Accrued Obligations. Such payment shall be made to the Executive within the time period required by applicable law (and in all events within sixty (60) days following the expiration of the then-current term).

 

6.                                       EFFECT OF CHANGE IN CORPORATE CONTROL

 

(a)                                  Accelerated Vesting of Awards . In the event of a Change in Control (as such term is defined in the Plan), the vesting of any options, restricted shares or other awards granted to the Executive under the terms of the Plan shall be accelerated (to the extent permitted by the terms of the Plan) and such awards shall become immediately vested in full and, in the case of options, exercisable in full.

 

(b)                                  Severance Payment . If, during the Employment Term at any time during the period of twelve (12) consecutive months following the occurrence of a Change in Corporate Control, the Executive is involuntarily terminated (other than for Cause) or the Executive terminates his employment for Good Reason, then subject to compliance with the restrictive covenants in Section 9 and Section 10 and the execution and timely return by the Executive of the Release, the Executive shall be entitled to receive a lump sum severance payment equal to the present value of a series of monthly payments for twenty-four (24) months, each in an amount equal to one-twelfth (1/12th) of the sum of (i) the Executive’s Base Salary, as in effect at the time of the Change in Corporate Control, and (ii) the average of the annual bonuses paid to the Executive for the prior two fiscal years of the Company ending prior to the Change in Corporate Control, if any. Such present value shall be calculated using a discount rate equal to the interest rate on 90-day Treasury bills, as reported in the Wall Street Journal (or similar publication) on the date of the Change in Corporate Control. Such lump sum payment shall be made to the Executive within sixty (60) days following the date of such involuntary termination.

 

In addition, if during the Employment Term within twelve (12) months after a Change in Corporate Control the Executive is involuntarily terminated (other than for Cause) or the Executive terminates his employment for Good Reason, he shall be entitled to continued coverage at the Company’s expense under any health insurance programs maintained by the Company in which the Executive participated at the time of his termination, which coverage shall be continued for eighteen (18) months or until, if earlier, the date the Executive obtains comparable coverage under a group health plan maintained by a new employer. To the extent the benefits provided under the immediately preceding sentence are otherwise taxable to the Executive, such benefits, for purposes of Section 409A of the Code (and the regulations and other guidance issued thereunder) shall be provided as separate monthly in-kind payments of those benefits, and to the extent those benefits are subject to and not otherwise excepted from Section 409A of the Code, the provision of the in-kind benefits during one calendar year shall not affect the in-kind benefits to be provided in any other calendar year.

 

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(c)                                   Definition of Change in Corporate Control . For purposes of this Agreement, a “Change in Corporate Control” shall include any of the following events:

 

(i)                                      The acquisition in one or more transactions of more than fifty percent (50%) of the Company’s outstanding Common Shares (or the equivalent in voting power of any class or classes of securities of the Company entitled to vote in elections of trustees) by any Company, or other person or group (within the meaning of Section 14(d)(3) of the Securities Exchange Act of 1934, as amended);

 

(ii)                                   Any transfer or sale of substantially all of the assets of the Company, or any merger or consolidation of the Company into or with another Company in which the Company is not the surviving entity;

 

Provided, however, that no event shall constitute a Change in Corporate Control unless such event is also a “change in ownership”, a “change in effective control” or a “change in the ownership of a substantial portion of the assets” of the Company, as determined in accordance with Section 409A of the Code, and the regulations and guidance issued thereunder.

 

7.                                       DEATH

 

If the Executive dies during the Employment Term, the Company shall pay to the Executive’s surviving spouse or if there is no surviving spouse, the Executive’s estate, a lump sum payment equal to the Accrued Obligations. Such payment shall be paid within the time period required by applicable law (and in all events within sixty (60) days following the date of the Executive’s death). In addition, the death benefits payable by reason of the Executive’s death under any retirement, deferred compensation, life insurance or other employee benefit plan maintained by the Company shall be paid to the beneficiary designated by the Executive, and the options, restricted shares or other awards held by the Executive under the Company’s equity incentive plans shall become fully vested, and, in the case of options, exercisable in full, in accordance with the terms of the applicable plan or plans.

 

8.                                       WITHHOLDING

 

The Company shall, to the extent permitted by law, have the right to withhold and deduct from any payment hereunder any federal, state or local taxes of any kind required by law to be withheld with respect to any such payment.

 

9.                                       PROTECTION OF CONFIDENTIAL INFORMATION

 

During the Executive’s employment with the Company, the Company shall grant the Executive otherwise prohibited access to its trade secrets and confidential information which are not known to the Company’s competitors or within the Company’s industry generally, which were developed by the Company over a long period of time and/or at its substantial expense, and which are of great competitive value to the Company, and access to the Company’s customers and clients. For purposes of this Agreement, “Confidential Information” includes all trade secrets and confidential and proprietary information of the Company, including, but not limited to, the following: financial models, financial information and data, business methods, electronic files, computer drives/disks, passwords, address and telephone lists, internal memoranda, correspondence, business strategies, business plans and/or projections, lease forms, construction contract forms, development and construction management service agreements, tenant lists, lease terms, rates, rent rolls, strategies, improvements, discoveries, plans for research or future business, infrastructure, marketing and sales plans and strategies, budgets, customer and client information, employee, customer and client nonpublic personal information, supplier lists,

 

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business records, audit processes, management methods and information, reports, recommendations and conclusions, information regarding the names, contact information, skills and compensation of employees and contractors of the Company, other information not generally known to the public, and other business information disclosed to the Executive by the Company, either directly or indirectly, in writing, orally, or by drawings or observation.

 

The Executive acknowledges and agrees that Confidential Information is proprietary to and a trade secret of the Company and, as such, is a special and unique asset of the Company, and that any disclosure or unauthorized use of any Confidential Information by the Executive will cause irreparable harm and loss to the Company. The Executive understands and acknowledges that each and every component of the Confidential Information (i) has been developed by the Company at significant effort and expense and is sufficiently secret to derive economic value from not being generally known to other parties, and (ii) constitutes a protectable business interest of the Company. The Executive acknowledges and agrees that the Company owns the Confidential Information. The Executive agrees not to dispute, contest, or deny any such ownership rights either during or after the Executive’s employment with the Company. The Executive agrees to preserve and protect the confidentiality of all Confidential Information. The Executive agrees that the Executive shall not at any time (whether during or after the Executive’s employment), directly or indirectly, disclose to any unauthorized person or use for the Executive’s own account any Confidential Information without the Company’s consent. Throughout the Executive’s employment and at all times thereafter: (i) the Executive shall hold all Confidential Information in the strictest confidence, take all reasonable precautions to prevent its inadvertent disclosure to any unauthorized person, and follow all policies of the Company protecting the Confidential Information; (ii) the Executive shall not, directly or indirectly, utilize, disclose or make available to any other person or entity, any of the Confidential Information, other than in the proper performance of the Executive’s duties; (iii) the Executive shall not use the Confidential Information or trade secrets to attempt to solicit, induce, recruit, or take away clients or customers of the Company; and (iv) if the Executive learns that any person or entity is taking or threatening to take any actions which would compromise any Confidential Information, the Executive shall promptly advise the Company of all facts concerning such action or threatened action. The foregoing shall not apply to any information which is already in the public domain, or is generally disclosed by the Company or is otherwise in the public domain at the time of disclosure (other than through an unauthorized disclosure by the Executive or any other person).

 

Upon the termination of the Executive’s employment for any reason, the Executive shall immediately return and deliver to the Company any and all Confidential Information, software, devices, cell phones, personal data assistants, credit cards, data, reports, proposals, lists, correspondence, materials, equipment, computers, hard drives, papers, books, records, documents, memoranda, manuals, e-mail, electronic or magnetic recordings or data, including all copies thereof, which belong to the Company or relate to the Company’s business and which are in the Executive’s possession, custody or control, whether prepared by the Executive or others. If at any time after termination of the Executive’s employment he determines that he has any Confidential Information in his possession or control, the Executive shall immediately return to the Company all such Confidential Information in the Executive’s possession or control, including all copies and portions thereof.

 

The Executive recognizes that because his work for the Company may bring him into contact with confidential and proprietary information of the Company, the restrictions of this Section 9 are required for the reasonable protection of the Company and its investments and for the Company’s reliance on and confidence in the Executive.

 

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10.                                RESTRICTIVE COVENANTS

 

In consideration for (i) the Company’s promise to provide Confidential Information to the Executive, (ii) the substantial economic investment made by the Company in the Confidential Information and goodwill of the Company, and/or the business opportunities disclosed or entrusted to the Executive, (iii) access to the Company’s customers and clients, and (iv) the Company’s employment of the Executive pursuant to this Agreement and the compensation and other benefits provided by the Company to the Executive, to protect the Company’s Confidential Information and business goodwill of the Company, the Executive agrees to the following restrictive covenants.

 

(a)                                  Non-Competition . The Executive hereby agrees that during the Restricted Period (defined below), other than in connection with the Executive’s duties under this Agreement, the Executive shall not, and shall not use any Confidential Information to, without the prior consent of the Company, directly or indirectly, either individually or as an owner, principal, partner, stockholder, manager, contractor, distributor, lender, investor, consultant, agent, employee, co-venturer or as a director or officer of any corporation or association, or in any other manner or capacity whatsoever, become employed by, control, carry on, join, lend money for, engage in, establish, perform services for, invest in, solicit investors for, consult for, do business with or otherwise engage in any Competing Business (defined below) within the Restricted Territory (defined below); provided however, that nothing in this Section 10(a)  shall prevent the Executive from owning a passive investment in up to two percent (2%) of the stock of a publicly traded corporation engaged in a Competing Business and such ownership shall not be considered to be a violation of Section 10(a) .

 

(i)                                      “Restricted Period” means during the Executive’s employment with the Company and for a period equal to the later of (i) one (1) year immediately following the date of the Executive’s termination from employment for any reason or (ii) the number of months for which the Executive is receiving monthly severance payments under Section 5 or Section 6 of this Agreement.

 

(ii)                                   “Competing Business” means any business, individual, partnership, firm, corporation or other entity that provides the same or substantially similar products or services as those provided by the Company during the Executive’s employment, which includes, without limitation, the business of buying, managing, holding and selling medical office buildings.

 

(iii)                                As CEO of the Company, the Executive has responsibility for the Company’s operations throughout the United States. Because the Company does business throughout the United States, the “Restricted Territory” means the United States and any other region or state in which the Executive performed services, was assigned responsibility for the Company, or about which the Executive received Confidential Information.

 

(b)                                  Non-Solicitation . The Executive agrees that during the Restricted Period, other than in connection with the Executive’s duties under this Agreement, the Executive shall not, and shall not use any Confidential Information to, directly or indirectly, either individually or as an owner, principal, partner, stockholder, manager, contractor, distributor, lender, investor, consultant, agent, employee, co-venturer or as a director or officer of any corporation or association, or in any other manner or capacity whatsoever, and whether personally or through other persons:

 

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(i)                                      Solicit business from, interfere with, attempt to solicit business with, or do business with any customer or client of the Company with whom the Company did business or who the Company solicited within the preceding two (2) years, and who or which: (1) the Executive contacted, called on, serviced, or did business with during his employment with the Company; (2) the Executive learned of as a result of his employment with the Company; or (3) about whom the Executive received Confidential Information. This restriction applies only to business which is in the scope of services or products provided by the Company; or

 

(ii)                                   Solicit, induce, or attempt to solicit or induce, engage or hire, on behalf of himself or any other person or entity, any person who is an employee or full-time consultant of the Company or who was employed or retained by the Company within the preceding two (2) years.

 

(c)                                   Non-Disparagement . The Executive shall refrain, both during and after the Employment Term, from publishing any oral or written statements about the Company or any of the Company’s board of trustees, equity holders, members, shareholders, managers, officers, employees, consultants, agents or representatives that (i) are slanderous, libelous or defamatory; or (ii) place the Company or any of its trustees, managers, officers, employees, consultants, agents or representatives in a false light before the public. A violation or threatened violation of this prohibition may be enjoined by the courts. The rights afforded the Company under this provision are in addition to any and all rights and remedies otherwise afforded by law.

 

(d)                                  Tolling . If the Executive violates any of the restrictions contained in Section 10 , the Restricted Period shall be suspended and shall not run in favor of the Executive from the time of the commencement of any violation until the time when the Executive cures the violation to the satisfaction of the Company.

 

(e)                                   Reasonableness . The Executive hereby represents to the Company that he has read and understands, and agrees to be bound by, the terms of this Section 10 . The Executive acknowledges that the geographic scope and duration of the covenants contained in this Section 10 are fair and reasonable in light of (i) the nature and wide geographic scope of the operations of the Company’s business; (ii) the Executive’s level of control over and contact with the business in the Restricted Territory; and (iii) the amount of compensation, trade secrets and Confidential Information that the Executive is receiving in connection with his employment by the Company. It is the desire and intent of the parties that the provisions of Section 10 be enforced to the fullest extent permitted under applicable law, whether now or hereafter in effect and therefore, to the extent permitted by applicable law, the Executive and the Company hereby waive any provision of applicable law that would render any provision of Section 10 invalid or unenforceable.

 

11.                                INJUNCTIVE RELIEF

 

The Executive acknowledges that (a) compliance with the covenants set forth in Section 9 and Section 10 of this Agreement are necessary to protect the Company’s business and Confidential Information; (b) a breach or threatened breach of any of such covenants will irreparably harm the Company; and (c) an award of money damages will not be adequate to remedy such harm. Consequently, the Executive acknowledges and agrees that, in addition to other remedies, in the event the Executive breaches or threatens to breach any of the covenants contained in this Agreement, the Company shall be entitled to both a temporary and/or permanent injunction to prevent the continuation of such harm and enforce such provisions and money damages insofar as they can be determined, including, without limitation, all costs and reasonable attorneys’ fees incurred by or on behalf of the Company in the

 

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enforcement of the terms of this Agreement. The Company may apply to any court of competent jurisdiction for a temporary restraining order, preliminary injunction or other interim or conservatory relief, as necessary or applicable. This provision with respect to injunctive relief shall not, however, diminish the Company’s right to claim and recover damages.

 

It is expressly understood and agreed that although the parties consider the restrictions contained in this Agreement to be reasonable, if a court determines that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction on the activities of the Executive, no such provision of this Agreement shall be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such extent as such court may judicially determine or indicate to be reasonable. By agreeing to this contractual modification prospectively at this time, the Company and the Executive intend to make this provision enforceable under the law or laws of all applicable jurisdictions so that the entire agreement not to compete and this Agreement as prospectively modified shall remain in full force and effect and shall not be rendered void or illegal.

 

12.                                CLAWBACK

 

Any compensation paid to the Executive shall be subject to recovery by the Company, and the Executive shall be required to repay such compensation, if (i) such recovery and repayment is required by applicable law or (ii) either in the year such compensation is paid, or within the three (3) year period thereafter the Company is required to prepare an accounting restatement due to material noncompliance of the Company with any financial reporting requirement under applicable securities laws and the Executive is either (A) a named executive officer or (B) an employee who is responsible for preparation of the Company’s financial statements. The parties agree that the repayment obligations set forth in this Section 12 shall only apply to the extent repayment is required by applicable law, or to the extent the Executive’s compensation is determined to be in excess of the amount that would have been deliverable to the Executive taking into account any restatement or correction of any inaccurate financial statements or materially inaccurate performance metric criteria.

 

13.                                MANDATORY MEDIATION AND ARBITRATION

 

In the event there is an unresolved legal dispute between the Executive and the Company that involves legal rights or remedies arising from this Agreement or the employment relationship between the Executive and the Company (“Dispute”), except as otherwise provided herein, before commencing an arbitration action or other legal proceeding, the parties shall promptly submit the Dispute to mediation, using a mediator jointly selected by the parties, or if the parties are unable to agree upon a mediator then the Dispute shall be submitted to non-binding mediation with the American Arbitration Association in Waukesha County, Wisconsin in accordance with its rules. The cost of the mediation shall be borne equally between the parties. If the parties are unable to achieve a mutually agreeable resolution of the Dispute through mediation, the parties agree to submit their Dispute to binding arbitration under the authority of the Federal Arbitration Act and/or the Wisconsin Uniform Arbitration Act; provided, however, that the Company may pursue a temporary restraining order, preliminary injunction and/or other interim or conservatory relief in accordance with Section 11 above, with related expedited discovery for the parties, in a court of law, and, thereafter, require arbitration of all issues of final relief. Insured workers compensation claims (other than wrongful discharge claims), and claims for unemployment insurance are excluded from arbitration under this provision. The Arbitration will be conducted by the American Arbitration Association pursuant to the American Arbitration Association’s National Rules for the Resolution of Employment Disputes. The arbitrator(s) shall be duly licensed to practice law in the State of Wisconsin. Each party will be allowed at least one deposition. The arbitrator(s) shall be required to state in a written opinion all facts and conclusions of law relied upon to support any decision rendered.

 

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No arbitrator will have authority to render a decision that contains an outcome determinative error of state or federal law, or to fashion a cause of action or remedy not otherwise provided for under applicable state or federal law. Any dispute over whether the arbitrator(s) has failed to comply with the foregoing will be resolved by summary judgment in a court of law. In all other respects, the arbitration process will be conducted in accordance with the American Arbitration Association’s National Rules for the Resolution of Employment Disputes. The Company will pay the arbitration costs and arbitrator’s fees beyond $500, subject to a final arbitration award on who should bear costs and fees. All proceedings shall be conducted in Waukesha County, Wisconsin, or another mutually agreeable site. The duty to arbitrate described above shall survive the termination of this Agreement. Except as otherwise provided above, the parties hereby waive trial in a court of law or by jury. All other rights, remedies, statutes of limitation and defenses applicable to claims asserted in a court of law will apply in the arbitration.

 

14.                                NOTICES

 

All notices or communications hereunder shall be in writing and sent certified or registered mail, return receipt requested, postage prepaid, addressed as follows (or to such other address as such party may designate in writing from time to time):

 

If to the Company:

 

Physicians Realty Trust

735 North Water Street

Suite 1000

Milwaukee, Wisconsin 53202

(414) 978.6400

Attention: Corporate Secretary

 

If to the Executive:

 

John T. Thomas

c/o Physicians Realty Trust

735 North Water Street

Suite 1000

Milwaukee, Wisconsin 53202

(414) 978.6400

Attention: Corporate Secretary

 

The actual date of receipt, as shown by the receipt therefor, shall determine the time at which notice was given.

 

15.                                SEPARABILITY

 

If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect.

 

16.                                ASSIGNMENT

 

This Agreement shall be binding upon and inure to the benefit of the heirs and representatives of the Executive and the assigns and successors of the Company, but neither this Agreement nor any rights hereunder shall be assignable or otherwise subject to hypothecation by the Executive.

 

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17.                                ENTIRE AGREEMENT

 

This Agreement represents the entire agreement of the parties and shall supersede any and all previous contracts, arrangements or understandings (whether oral or written) between the Company and the Executive with respect to the subject matter hereof. No oral statements or prior written material not specifically incorporated in this Agreement shall be of any force and effect. The Agreement may be amended at any time by mutual written agreement of the parties hereto. The Executive acknowledges and represents that in executing this Agreement, he did not rely on, has not relied on, and specifically disavows any reliance on any communications, promises, statements, inducements, or representation(s), oral or written, by the Company, except as expressly contained in this Agreement. The parties represent that they relied on their own judgment in entering into this Agreement.

 

18.                                SECTION 409A COMPLIANCE

 

This Agreement and the benefits or payments to be provided under this Agreement are intended to be exempt from with the requirements of Section 409A of the Code, and shall be interpreted and construed consistently with such intent, provided, that if the Agreement is not exempt, the Agreement is drafted in a manner to comply with the requirements of Section 409A of the Code. The payments to the Executive pursuant to this Agreement are also intended to be exempt from Section 409A of the Code to the maximum extent possible, under either the separation pay exemption pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury Regulation Section 1.409A-1(b)(4). Each payment and benefit hereunder shall constitute a “separately identified” amount within the meaning of Treasury Regulation Section 1.409A-2(b)(2). In the event the terms of this Agreement would subject the Executive to taxes or penalties under Section 409A of the Code (“409A Penalties”), the Company and the Executive shall cooperate diligently to amend the terms of the Agreement to avoid such 409A Penalties, to the extent possible. To the extent any amounts under this Agreement are payable by reference to Executive’s “termination,” “termination of employment,” or similar phrases, such term shall be deemed to refer to the Executive’s “separation from service” (as defined in Treasury Regulation Section 1.409A-1(h) (without regard to any permissible alternative definition thereunder) with the Company and all entities treated as a single employer with the Company under Sections 414(b) and (c) of the Code but substituting a 50% ownership level for the 80% ownership level set forth therein). Notwithstanding any other provision in this Agreement, if the Executive is a “Specified Employee” (as defined in Treasury Regulation Section 1.409A-1(i) on December 31st of the prior calendar year), as of the date of the Executive’s separation from service, then to the extent any amount payable under this Agreement (i) constitutes the payment of nonqualified deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable upon the Executive’s separation from service and (iii) under the terms of this Agreement would be payable prior to the six-month anniversary of the Executive’s separation from service, such payment shall be delayed and paid to the Executive, together with interest at an annual rate equal to the interest rate specified by Regions Bank for a six-month certificate of deposit, on the first day of the first calendar month beginning seven months following the date of termination, or, if earlier, within ninety (90) days following the Executive’s death to the Executive’s surviving spouse (or such other beneficiary as the Executive may designate in writing). Any reimbursement or advancement payable to the Executive pursuant to this Agreement shall be conditioned on the submission by the Executive of all expense reports reasonably required by the Company under any applicable expense reimbursement policy, and shall be paid to the Executive within thirty (30) days following receipt of such expense reports, but in no event later than the last day of the calendar year following the calendar year in which the Executive incurred the reimbursable expense. Any amount of expenses eligible for reimbursement, or in-kind benefit provided, during a calendar year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefit to be provided, during any other calendar year. The right to any reimbursement or in-kind benefit pursuant to this Agreement shall not be subject to liquidation or exchange for any other benefit.

 

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19.                                GOVERNING LAW

 

This Agreement shall be construed, interpreted, and governed in accordance with the laws of the State of Wisconsin, other than the conflict of laws provisions of such laws. Subject to Section 13, venue of any litigation arising from this Agreement or any disputes relating to the Executive’s employment shall be in the United States District Court for the Eastern District of Wisconsin, or a state district court of competent jurisdiction in Waukesha County, Wisconsin. The Executive consents to personal jurisdiction of the United States District Court for the Eastern District of Wisconsin, or a state district court of competent jurisdiction in Waukesha County, Wisconsin for any dispute relating to or arising out of this Agreement or the Executive’s employment, and Executive agrees that Executive shall not challenge personal or subject matter jurisdiction in such courts.

 

20.                                SURVIVAL

 

The Executive’s post-termination obligations in Section 9 and Section 10 shall continue as provided in this Agreement.

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF , the Company has caused this Agreement to be duly executed, and the Executive has hereunto set his hand, as of the day and year first above written.

 

 

		PHYSICIANS REALTY TRUST
	By:	/s/ Tommy G. Thompson
	Its:	Chairman, Board of Trustees, Physicians Realty Trust
		EXECUTIVE:
		/s/ John T. Thomas
		John T. Thomas

 

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Exhibit 10.2

 

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), by and between PHYSICIANS REALTY TRUST, a Maryland trust, (the “Company”), and JOHN SWEET (the “Executive”) is entered into this 6th day of May, 2014 but effective as of the 24th day of July, 2013 (the “Effective Date”).

 

WHEREAS , the Company and the Executive entered into an Employment Agreement (the “Original Agreement”) dated the Effective Date, providing for the Executive’s employment and setting forth the terms and conditions for such employment; and

 

WHEREAS , the Company and the Executive desire to amend and restate the Original Agreement to provide for certain changes to the terms and conditions of the Executive’s employment by the Company, as reflected in this Agreement.

 

NOW THEREFORE , in consideration of the mutual covenants herein contained, the parties, intending to be legally bound, hereby agree as follows:

 

1.                                       EMPLOYMENT

 

The Company hereby agrees to employ the Executive as its Executive Vice President and Chief Investment Officer (the “CIO”) upon the terms and conditions herein contained, and the Executive hereby agrees to accept such employment and to serve in such position. As CIO, the Executive will have those duties which can reasonably be expected to be performed by a person in such position and shall undertake such other responsibilities as may be assigned to the Executive by the Company’s Chief Executive Officer (“CEO”) and/or Board of Trustees from time to time. For purposes of this Agreement, all references to the “Board” shall mean the Board of Trustees. In such capacity, the Executive shall report to the CEO and shall have such powers and responsibilities consistent with his position as may be assigned. Throughout the Employment Term, the Executive shall devote his best efforts and all of his business time and services to the business and affairs of the Company.

 

2.                                       TERM OF AGREEMENT

 

Subject to earlier termination as herein provided, the Executive’s employment under this Agreement shall begin on the Effective Date and shall continue in effect until the third anniversary of the Effective Date (the “Initial Term”). The Agreement will automatically renew, subject to earlier termination as herein provided, for successive one (1) year periods (the “Additional Terms”), unless either the Executive or the Company provide notice of non-renewal at least sixty (60) days prior to the expiration of the Initial Term or the then Additional Term, whichever is applicable. The Initial Term and any Additional Term(s) shall be referred to collectively as the “Employment Term.”

 

Notwithstanding the foregoing, the Company shall be entitled to terminate this Agreement immediately, subject to a continuing obligation to make any payments required under Section 5 below, if the Executive (i) incurs a Disability as described in Section 5(b) , (ii) is terminated for Cause, as defined in Section 5(c) , or (iii) voluntarily terminates his employment without Good Reason (as defined below) during the Employment Term, as described in Section 5(d) .

 

3.                                       SALARY AND BONUS

 

The Executive shall receive a base salary during the Employment Term at a rate of $200,000 per

 

 

annum for 2013 (the “Base Salary”), payable in substantially equal semi-monthly installments. The Compensation Committee of the Board shall consult with the CIO and review the Executive’s Base Salary at annual intervals, and may increase the Executive’s annual Base Salary from time to time as the Committee deems to be appropriate.

 

Subject to Section 12 , the Executive will have an annual cash bonus opportunity for each calendar year during the Employment Term (the “Annual Bonus”) based upon performance goals that are established by the Board or the Compensation Committee of the Board, as the case may be, in its sole discretion. In the event an Annual Bonus is payable pursuant to this Section 3 , such bonus shall be paid to the Executive no later than March 15th of the year after the year to which the bonus relates.

 

On or as soon as administratively practicable after the date of an Initial Public Offering (as defined below) (but in no event later than sixty (60) days after the date of an Initial Public Offering), the Executive shall receive a grant of restricted shares of the Company’s common shares having a value of $800,000 based on the public offering price per share of the Company’s common shares offered for sale at the Initial Public Offering (the “Restricted Shares”). The Restricted Shares shall be subject to the restrictions set forth in the restricted share agreement between the Company and the Executive and the terms of an equity incentive plan adopted by the Company prior to the grant of the Restricted Shares (the “Plan”). The Restricted Shares shall vest over a three-year period, with one-third of the Restricted Shares vesting equally on the first, second, and third anniversary of the Effective Date, subject to any forfeiture or acceleration provisions set forth in the restricted share agreement and the Plan. For purposes of this Agreement, “Initial Public Offering” means any underwritten sale of the Company’s equity securities pursuant to an effective registration statement under the Securities Act of 1933 filed with the Securities and Exchange Commission on Form S-1 or any other eligible form (or a successor form thereto adopted by the Securities and Exchange Commission).

 

4.                                       ADDITIONAL COMPENSATION AND BENEFITS

 

The Executive shall receive the following additional compensation and welfare and fringe benefits during the term of the Agreement:

 

(a)                                  Options and Other Long-Term Incentives .  During the Employment Term, any options, restricted shares or other awards granted under the Plan shall be at the discretion of the Compensation Committee of the Company’s Board.

 

(b)                                  Vacation .  The Executive shall be entitled to up to four (4) weeks of vacation during each year during the Employment Term and any extensions thereof, prorated for partial years.

 

(c)                                   Business Expenses .  The Company shall reimburse the Executive for all reasonable expenses he incurs in promoting the Company’s business, including expenses for travel and similar items, upon presentation by the Executive from time to time of an itemized account of such expenditures. Any reimbursement of expenses made under this Agreement shall only be made for eligible expenses (including transportation and cellular service expenses as set forth above) incurred during the Employment Term, and no reimbursement of any expense shall be made by the Company after December 31st of the year following the calendar year in which the expense was incurred. The amount eligible for reimbursement under this Agreement during a taxable year may not affect expenses eligible for reimbursement in any other taxable year, and the right to reimbursement under this Agreement is not subject to liquidation or exchange for another benefit. The Executive will comply with the Company’s policies regarding these benefits, including all Internal Revenue Service rules and requirements.

 

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(d)                                  Professional Expenses .  Each calendar year during the Employment Term, the Company agrees to reimburse the Executive for up to $10,000 of reasonable professional expenses (i.e., accounting, financial planning, estate planning expenses) incurred by the Executive during such year for personal advice rendered to the Executive.

 

(e)                                   Other Benefits and Perquisites .  The Executive shall be entitled to participate in the benefit plans provided by the Company for all employees, generally, and for the Company’s executive employees. The Company shall be entitled to change or terminate these plans in its sole discretion at any time.

 

5.                                       PAYMENTS UPON TERMINATION

 

(a)                                  Involuntary Termination . If the Executive’s employment is involuntarily terminated by the Company during the Employment Term, the Executive shall be entitled to receive his Base Salary accrued through the date of termination, any accrued but unpaid vacation pay, plus any bonuses earned but unpaid with respect to fiscal years or other periods ending before the termination date (collectively, the “Accrued Obligations”). Such payments shall be made to the Executive within the time period required by applicable law (and in all events within sixty (60) days following the date of involuntary termination). The Executive shall also receive any nonforfeitable benefits payable to him under the terms of any deferred compensation, incentive or other benefit plans maintained by the Company, payable in accordance with the terms of the applicable plan.

 

If the termination is not (1) a termination for Cause (as defined below), as described in Section 5(c) ; (2) a voluntary termination by the Executive without Good Reason (as defined below) as described in Section 5(d) ; (3) a termination as a result of the Executive’s death or Disability (as defined below); or (4) a termination due to non-renewal of the then current term as described in Section 5(e) , then subject to compliance with the restrictive covenants in Section 9 and Section 10 and the execution and timely return by the Executive of a release of claims in a form and substance reasonably requested by the Company (the “Release”), and except as otherwise provided by Sections 12 and 18 , the Company shall pay severance to the Executive in accordance with its normal payroll practices, equal to the Executive’s Base Salary as in effect at the time his employment terminates for a period equal to the greater of (a) the remainder of the then current term of this Agreement or (b) twenty-four (24) months, with the first payment on the first payroll date after the revocation period for the Release has expired; provided, that if the time period for returning and revoking the release begins in one taxable year and ends in a second taxable year, the payments shall not commence until the first payroll date in the second taxable year.

 

In addition, if the termination is not (1) a termination for Cause, as described in Section 5(c) ; (2) a voluntary termination by the Executive without Good Reason as described in Section 5(d) ; (3) a termination as a result of the Executive’s death or Disability (as defined below); or (4) a termination due to non-renewal of the then current term as described in Section 5(e) , then, subject to compliance with the restrictive covenants in Section 9 and Section 10 , the execution and timely return by the Executive of the Release, and except as otherwise provided by Sections 12 and 18, the Executive shall be entitled to the following:

 

(i)                                      Any options, restricted shares or other awards granted to the Executive under the Plan shall become fully vested and, in the case of options, exercisable in full;

 

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(ii)                                   Provided that the Executive elects continuation of coverage under the Company’s group health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended (“COBRA”), the Executive shall be provided continued coverage at the Company’s expense under any health insurance programs maintained by the Company in which the Executive participated at the time of his termination for twelve (12) months, or until, if earlier, the date the Executive obtains comparable coverage under a group health plan maintained by a new employer. To the extent the benefits provided under the immediately preceding sentence are otherwise taxable to the Executive, such benefits, for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) (and the regulations and other guidance issued thereunder) shall be provided as separate monthly in-kind payments of those benefits, and to the extent those benefits are subject to and not otherwise excepted from Section 409A of the Code, the provision of the in-kind benefits during one calendar year shall not affect the in-kind benefits to be provided in any other calendar year; and

 

(iii)                                Any Annual Bonus(es) payable under Section 3 above that would have been earned based solely on continued employment for the remainder of the then current term, and if none, then an amount equal to fifty percent (50%) of the Executive’s then current Base Salary, payable at the same time as bonuses are paid to other active employees of the Company with respect to such performance period, and forfeited if the Executive violates any of the restrictive covenants in Section 9 and Section 10 .

 

(b)                                  Disability . The Company shall be entitled to terminate the Executive’s employment if the Board determines that the Executive has been unable to attend to his duties for at least ninety (90) days because of a Disability (as defined below), and has received a written opinion from a physician acceptable to the Board that such condition prevents the Executive from resuming full performance of his duties and is likely to continue for an indefinite period. Upon such involuntary termination, the Executive shall be entitled to receive the Accrued Obligations. Such payments shall be made to the Executive within the time period required by applicable law (and in all events within sixty (60) days following the date of involuntary termination). In addition, subject to compliance with the restrictive covenants in Section 9 and Section 10 and the execution and timely return by the Executive of the Release, the Company shall pay severance to the Executive in accordance with its normal payroll practices, equal to twelve (12) months of the Executive’s Base Salary as in effect at the time his employment terminates, with the first payment on the first payroll date after the revocation period for the Release has expired; provided, that (i) if the time period for returning and revoking the Release begins in one taxable year and ends in a second taxable year, the payments shall not commence until the first payroll date in the second taxable year; and (ii) all such payments shall immediately terminate at an earlier date if the Executive returns to active employment, either with the Company or otherwise. Any amounts payable under this Section 5(b)  shall be reduced on a dollar-for-dollar basis by the amount of bona fide disability pay (within the meaning of Treas. Reg. section 1.409A-1(a)(5)) received or receivable by the Executive during such twelve-month period, provided such disability payments are made pursuant to a plan sponsored by the Company that covers a substantial number of employees of the Company and was established prior to the date the Executive incurred a permanent disability, and further provided that such reduction does not otherwise affect the time of payment of amounts pursuant to this Section 5(b) . For purposes of this Agreement, “Disability” means the Executive is incapacitated due to physical or mental illness and such incapacity, with or without reasonable accommodation, prevents the Executive from satisfactorily performing the essential functions of his job for the Company on a full-time basis for at least ninety (90) days in a calendar year.

 

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(c)                                   Termination for Cause . If the Executive’s employment is terminated by the Company for Cause, the amount the Executive shall be entitled to receive from the Company shall be limited to the Accrued Obligations. Such payments shall be made to the Executive within the time period required by applicable law (and in all events within sixty (60) days following the date of termination).

 

For purposes of this Agreement, the term “Cause” shall be limited to the following:

 

(i)                                      the Executive engaging in any act of fraud, dishonesty, theft, misappropriation or embezzlement of funds or misrepresentation with respect to the Company;

 

(ii)                                   the Executive’s conviction or plea of no contest with respect to any felony or other crime involving moral turpitude;

 

(iii)                                the Executive’s material breach of his obligations under this Agreement, including, without limitation, breach of the covenants set forth in Section 9 and Section 10 below or the refusal of the Executive to perform his job duties as directed by the Board, which the Executive failed to cure within thirty (30) days after receiving written notice from the Board specifying the alleged breach;

 

(iv)                               violation of any material duty or obligation to the Company or of any direction or any rule or regulation reasonably established by the Board, which the Executive failed to cure within thirty (30) days after receiving written notice from the Board specifying the alleged violation; or

 

(v)                                  insubordination or misconduct in the performance of, or neglect of, the Executive’s duties which the Executive failed to cure within thirty (30) days after receiving written notice from the Board specifying the alleged insubordination, misconduct, or neglect.

 

(d)                                  Voluntary Termination by the Executive without Good Reason . If the Executive resigns or otherwise voluntarily terminates his employment before the end of the current Employment Term (other than in connection with a Change in Corporate Control, as described in Section 6), the amount the Executive shall be entitled to receive from the Company shall be limited to the Accrued Obligations. Such payment shall be made to the Executive within the time period required by applicable law (and in all events within sixty (60) days following the date of resignation or voluntary termination).

 

For purposes of this Agreement, a resignation by the Executive shall not be deemed to be voluntary without Good Reason if, without the Executive’s prior consent, the Executive is (1) assigned to a position other than the CIO (other than for Cause or by reason of his Disability) or assigned duties materially inconsistent with such position if either such change in assignment constitutes a material diminution in the Executive’s authority, duties or responsibilities, or (2) directed to report to anyone other than the CEO if such change in reporting duties constitutes a material diminution in the authority, duties or responsibilities of the supervisor to whom the Executive is required to report; provided that the Executive has notified the Company within the first ninety (90) days following the initial date of such change in assignment or reporting duties that the Executive regards such change in assignment or reporting duties as grounds justifying resignation under this Section 5(d)  and the Company has failed to cure such change in assignment or reporting duties within ninety (90) days following its receipt of such notice from the

 

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Executive; and provided further that the Executive resigns under this Section 5(d)  within six (6) months following the initial existence of a change in assignment or reporting duties described herein.

 

(e)                                   Non-Renewal . The Executive’s employment shall terminate in the event that the then-current Employment Term expires by reason of a party giving a notice of an election not to renew as provided in Section 2. If the Executive’s employment terminates due to non-renewal of the Agreement, the amount the Executive shall be entitled to receive from the Company shall be limited to the Accrued Obligations. Such payment shall be made to the Executive within the time period required by applicable law (and in all events within sixty (60) days following the expiration of the then-current term).

 

6.                                       EFFECT OF CHANGE IN CORPORATE CONTROL

 

(a)                                  Accelerated Vesting of Awards . In the event of a “change in control” (as such term is defined in the Plan), the vesting of any options, restricted shares or other awards granted to the Executive under the terms of the Plan shall be accelerated (to the extent permitted by the terms of the Plan) and such awards shall become immediately vested in full and, in the case of options, exercisable in full.

 

(b)                                  Severance Payment . If, during the Employment Term at any time during the period of twelve (12) consecutive months following the occurrence of a Change in Corporate Control, the Executive is involuntarily terminated (other than for Cause) or the Executive terminates his employment for Good Reason, then subject to compliance with the restrictive covenants in Section 9 and Section 10 and the execution and timely return by the Executive of the Release, the Executive shall be entitled to receive a lump sum severance payment equal to the present value of a series of monthly payments for twenty-four (24) months, each in an amount equal to one-twelfth (1/12th) of the sum of (i) the Executive’s Base Salary, as in effect at the time of the Change in Corporate Control, and (ii) the average of the annual bonuses paid to the Executive for the prior two fiscal years of the Company ending prior to the Change in Corporate Control, if any. Such present value shall be calculated using a discount rate equal to the interest rate on 90-day Treasury bills, as reported in the Wall Street Journal (or similar publication) on the date of the Change in Corporate Control. Such lump sum payment shall be made to the Executive within sixty (60) days following the date of such involuntary termination.

 

In addition, if during the Employment Term within twelve (12) months after a Change in Corporate Control the Executive is involuntarily terminated (other than for Cause) or the Executive terminates his employment for Good Reason, he shall be entitled to continued coverage at the Company’s expense under any health insurance programs maintained by the Company in which the Executive participated at the time of his termination, which coverage shall be continued for eighteen (18) months or until, if earlier, the date the Executive obtains comparable coverage under a group health plan maintained by a new employer. To the extent the benefits provided under the immediately preceding sentence are otherwise taxable to the Executive, such benefits, for purposes of Section 409A of the Code (and the regulations and other guidance issued thereunder) shall be provided as separate monthly in-kind payments of those benefits, and to the extent those benefits are subject to and not otherwise excepted from Section 409A of the Code, the provision of the in-kind benefits during one calendar year shall not affect the in-kind benefits to be provided in any other calendar year.

 

(c)                                   Definition of Change in Corporate Control .  For purposes of this Agreement, a “Change in Corporate Control” shall include any of the following events:

 

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(i)                                      The acquisition in one or more transactions of more than fifty percent (50%) of the Company’s outstanding Common Shares (or the equivalent in voting power of any class or classes of securities of the Company entitled to vote in elections of trustees) by any Company, or other person or group (within the meaning of Section 14(d)(3) of the Securities Exchange Act of 1934, as amended);

 

(ii)                                   Any transfer or sale of substantially all of the assets of the Company, or any merger or consolidation of the Company into or with another Company in which the Company is not the surviving entity;

 

Provided, however, that no event shall constitute a Change in Corporate Control unless such event is also a “change in ownership”, a “change in effective control” or a “change in the ownership of a substantial portion of the assets” of the Company, as determined in accordance with Section 409A of the Code, and the regulations and guidance issued thereunder.

 

7.                                       DEATH

 

If the Executive dies during the Employment Term, the Company shall pay to the Executive’s surviving spouse or if there is no surviving spouse, the Executive’s estate, a lump sum payment equal to the Accrued Obligations. Such payment shall be paid within the time period required by applicable law (and in all events within sixty (60) days following the date of the Executive’s death). In addition, the death benefits payable by reason of the Executive’s death under any retirement, deferred compensation, life insurance or other employee benefit plan maintained by the Company shall be paid to the beneficiary designated by the Executive, and the options, restricted shares or other awards held by the Executive under the Company’s equity incentive plans shall become fully vested, and, in the case of options, exercisable in full, in accordance with the terms of the applicable plan or plans.

 

8.                                       WITHHOLDING

 

The Company shall, to the extent permitted by law, have the right to withhold and deduct from any payment hereunder any federal, state or local taxes of any kind required by law to be withheld with respect to any such payment.

 

9.                                       PROTECTION OF CONFIDENTIAL INFORMATION

 

During the Executive’s employment with the Company, the Company shall grant the Executive otherwise prohibited access to its trade secrets and confidential information which are not known to the Company’s competitors or within the Company’s industry generally, which were developed by the Company over a long period of time and/or at its substantial expense, and which are of great competitive value to the Company, and access to the Company’s customers and clients. For purposes of this Agreement, “Confidential Information” includes all trade secrets and confidential and proprietary information of the Company, including, but not limited to, the following: financial models, financial information and data, business methods, electronic files, computer drives/disks, passwords, address and telephone lists, internal memoranda, correspondence, business strategies, business plans and/or projections, lease forms, construction contract forms, development and construction management service agreements, tenant lists, lease terms, rates, rent rolls, strategies, improvements, discoveries, plans for research or future business, infrastructure, marketing and sales plans and strategies, budgets, customer and client information, employee, customer and client nonpublic personal information, supplier lists, business records, audit processes, management methods and information, reports, recommendations and conclusions, information regarding the names, contact information, skills and compensation of employees and contractors of the Company, other information not generally known to the public, and other business

 

7

 

information disclosed to the Executive by the Company, either directly or indirectly, in writing, orally, or by drawings or observation.

 

The Executive acknowledges and agrees that Confidential Information is proprietary to and a trade secret of the Company and, as such, is a special and unique asset of the Company, and that any disclosure or unauthorized use of any Confidential Information by the Executive will cause irreparable harm and loss to the Company. The Executive understands and acknowledges that each and every component of the Confidential Information (i) has been developed by the Company at significant effort and expense and is sufficiently secret to derive economic value from not being generally known to other parties, and (ii) constitutes a protectable business interest of the Company. The Executive acknowledges and agrees that the Company owns the Confidential Information. The Executive agrees not to dispute, contest, or deny any such ownership rights either during or after the Executive’s employment with the Company. The Executive agrees to preserve and protect the confidentiality of all Confidential Information. The Executive agrees that the Executive shall not at any time (whether during or after the Executive’s employment), directly or indirectly, disclose to any unauthorized person or use for the Executive’s own account any Confidential Information without the Company’s consent. Throughout the Executive’s employment and at all times thereafter: (i) the Executive shall hold all Confidential Information in the strictest confidence, take all reasonable precautions to prevent its inadvertent disclosure to any unauthorized person, and follow all policies of the Company protecting the Confidential Information; (ii) the Executive shall not, directly or indirectly, utilize, disclose or make available to any other person or entity, any of the Confidential Information, other than in the proper performance of the Executive’s duties; (iii) the Executive shall not use the Confidential Information or trade secrets to attempt to solicit, induce, recruit, or take away clients or customers of the Company; and (iv) if the Executive learns that any person or entity is taking or threatening to take any actions which would compromise any Confidential Information, the Executive shall promptly advise the Company of all facts concerning such action or threatened action. The foregoing shall not apply to any information which is already in the public domain, or is generally disclosed by the Company or is otherwise in the public domain at the time of disclosure (other than through an unauthorized disclosure by the Executive or any other person).

 

Upon the termination of the Executive’s employment for any reason, the Executive shall immediately return and deliver to the Company any and all Confidential Information, software, devices, cell phones, personal data assistants, credit cards, data, reports, proposals, lists, correspondence, materials, equipment, computers, hard drives, papers, books, records, documents, memoranda, manuals, e-mail, electronic or magnetic recordings or data, including all copies thereof, which belong to the Company or relate to the Company’s business and which are in the Executive’s possession, custody or control, whether prepared by the Executive or others. If at any time after termination of the Executive’s employment he determines that he has any Confidential Information in his possession or control, the Executive shall immediately return to the Company all such Confidential Information in the Executive’s possession or control, including all copies and portions thereof.

 

The Executive recognizes that because his work for the Company may bring him into contact with confidential and proprietary information of the Company, the restrictions of this Section 9 are required for the reasonable protection of the Company and its investments and for the Company’s reliance on and confidence in the Executive.

 

10.                                RESTRICTIVE COVENANTS

 

In consideration for (i) the Company’s promise to provide Confidential Information to the Executive, (ii) the substantial economic investment made by the Company in the Confidential Information and goodwill of the Company, and/or the business opportunities disclosed or entrusted to the Executive,

 

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(iii) access to the Company’s customers and clients, and (iv) the Company’s employment of the Executive pursuant to this Agreement and the compensation and other benefits provided by the Company to the Executive, to protect the Company’s Confidential Information and business goodwill of the Company, the Executive agrees to the following restrictive covenants.

 

(a)                                  Non-Competition . The Executive hereby agrees that during the Restricted Period (defined below), other than in connection with the Executive’s duties under this Agreement, the Executive shall not, and shall not use any Confidential Information to, without the prior consent of the Company, directly or indirectly, either individually or as an owner, principal, partner, stockholder, manager, contractor, distributor, lender, investor, consultant, agent, employee, co-venturer or as a director or officer of any corporation or association, or in any other manner or capacity whatsoever, become employed by, control, carry on, join, lend money for, engage in, establish, perform services for, invest in, solicit investors for, consult for, do business with or otherwise engage in any Competing Business (defined below) within the Restricted Territory (defined below); provided however, that nothing in this Section 10(a)  shall prevent the Executive from owning a passive investment in up to two percent (2%) of the stock of a publicly traded corporation engaged in a Competing Business and such ownership shall not be considered to be a violation of Section 10(a) .

 

(i)                                      “Restricted Period” means during the Executive’s employment with the Company and for a period equal to the later of (i) one (1) year immediately following the date of the Executive’s termination from employment for any reason or (ii) the number of months for which the Executive is receiving monthly severance payments under Section 5 or Section 6 of this Agreement.

 

(ii)                                   “Competing Business” means any business, individual, partnership, firm, corporation or other entity that provides the same or substantially similar products or services as those provided by the Company during the Executive’s employment, which includes, without limitation, the business of buying, managing, holding and selling medical office buildings.

 

(iii)                                As CIO of the Company, the Executive has responsibility for the Company’s operations throughout the United States. Because the Company does business throughout the United States, the “Restricted Territory” means the United States and any other region or state in which the Executive performed services, was assigned responsibility for the Company, or about which the Executive received Confidential Information.

 

(b)                                  Non-Solicitation . The Executive agrees that during the Restricted Period, other than in connection with the Executive’s duties under this Agreement, the Executive shall not, and shall not use any Confidential Information to, directly or indirectly, either individually or as an owner, principal, partner, stockholder, manager, contractor, distributor, lender, investor, consultant, agent, employee, co-venturer or as a director or officer of any corporation or association, or in any other manner or capacity whatsoever, and whether personally or through other persons:

 

(i)                                      Solicit business from, interfere with, attempt to solicit business with, or do business with any customer or client of the Company with whom the Company did business or who the Company solicited within the preceding two (2) years, and who or which: (1) the Executive contacted, called on, serviced, or did business with during his employment with the Company; (2) the Executive learned of as a result of his

 

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employment with the Company; or (3) about whom the Executive received Confidential Information. This restriction applies only to business which is in the scope of services or products provided by the Company; or

 

(ii)                                   Solicit, induce, or attempt to solicit or induce, engage or hire, on behalf of himself or any other person or entity, any person who is an employee or full-time consultant of the Company or who was employed or retained by the Company within the preceding two (2) years.

 

(c)                                   Non-Disparagement . The Executive shall refrain, both during and after the Employment Term, from publishing any oral or written statements about the Company or any of the Company’s board of trustees, equity holders, members, shareholders, managers, officers, employees, consultants, agents or representatives that (i) are slanderous, libelous or defamatory; or (ii) place the Company or any of its trustees, managers, officers, employees, consultants, agents or representatives in a false light before the public. A violation or threatened violation of this prohibition may be enjoined by the courts. The rights afforded the Company under this provision are in addition to any and all rights and remedies otherwise afforded by law.

 

(d)                                  Tolling . If the Executive violates any of the restrictions contained in Section 10 , the Restricted Period shall be suspended and shall not run in favor of the Executive from the time of the commencement of any violation until the time when the Executive cures the violation to the satisfaction of the Company.

 

(e)                                   Reasonableness . The Executive hereby represents to the Company that he has read and understands, and agrees to be bound by, the terms of this Section 10 . The Executive acknowledges that the geographic scope and duration of the covenants contained in this Section 10 are fair and reasonable in light of (i) the nature and wide geographic scope of the operations of the Company’s business; (ii) the Executive’s level of control over and contact with the business in the Restricted Territory; and (iii) the amount of compensation, trade secrets and Confidential Information that the Executive is receiving in connection with his employment by the Company. It is the desire and intent of the parties that the provisions of Section 10 be enforced to the fullest extent permitted under applicable law, whether now or hereafter in effect and therefore, to the extent permitted by applicable law, the Executive and the Company hereby waive any provision of applicable law that would render any provision of Section 10 invalid or unenforceable.

 

11.                                INJUNCTIVE RELIEF

 

The Executive acknowledges that (a) compliance with the covenants set forth in Section 9 and Section 10 of this Agreement are necessary to protect the Company’s business and Confidential Information; (b) a breach or threatened breach of any of such covenants will irreparably harm the Company; and (c) an award of money damages will not be adequate to remedy such harm. Consequently, the Executive acknowledges and agrees that, in addition to other remedies, in the event the Executive breaches or threatens to breach any of the covenants contained in this Agreement, the Company shall be entitled to both a temporary and/or permanent injunction to prevent the continuation of such harm and enforce such provisions and money damages insofar as they can be determined, including, without limitation, all costs and reasonable attorneys’ fees incurred by or on behalf of the Company in the enforcement of the terms of this Agreement. The Company may apply to any court of competent jurisdiction for a temporary restraining order, preliminary injunction or other interim or conservatory relief, as necessary or applicable. This provision with respect to injunctive relief shall not, however, diminish the Company’s right to claim and recover damages.

 

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It is expressly understood and agreed that although the parties consider the restrictions contained in this Agreement to be reasonable, if a court determines that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction on the activities of the Executive, no such provision of this Agreement shall be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such extent as such court may judicially determine or indicate to be reasonable. By agreeing to this contractual modification prospectively at this time, the Company and the Executive intend to make this provision enforceable under the law or laws of all applicable jurisdictions so that the entire agreement not to compete and this Agreement as prospectively modified shall remain in full force and effect and shall not be rendered void or illegal.

 

12.                                CLAWBACK

 

Any compensation paid to the Executive shall be subject to recovery by the Company, and the Executive shall be required to repay such compensation, if (i) such recovery and repayment is required by applicable law or (ii) either in the year such compensation is paid, or within the three (3) year period thereafter the Company is required to prepare an accounting restatement due to material noncompliance of the Company with any financial reporting requirement under applicable securities laws and the Executive is either (A) a named executive officer or (B) an employee who is responsible for preparation of the Company’s financial statements. The parties agree that the repayment obligations set forth in this Section 12 shall only apply to the extent repayment is required by applicable law, or to the extent the Executive’s compensation is determined to be in excess of the amount that would have been deliverable to the Executive taking into account any restatement or correction of any inaccurate financial statements or materially inaccurate performance metric criteria.

 

13.                                MANDATORY MEDIATION AND ARBITRATION

 

In the event there is an unresolved legal dispute between the Executive and the Company that involves legal rights or remedies arising from this Agreement or the employment relationship between the Executive and the Company (“Dispute”), except as otherwise provided herein, before commencing an arbitration action or other legal proceeding, the parties shall promptly submit the Dispute to mediation, using a mediator jointly selected by the parties, or if the parties are unable to agree upon a mediator then the Dispute shall be submitted to non-binding mediation with the American Arbitration Association in Waukesha County, Wisconsin in accordance with its rules. The cost of the mediation shall be borne equally between the parties. If the parties are unable to achieve a mutually agreeable resolution of the Dispute through mediation, the parties agree to submit their Dispute to binding arbitration under the authority of the Federal Arbitration Act and/or the Wisconsin Uniform Arbitration Act; provided, however, that the Company may pursue a temporary restraining order, preliminary injunction and/or other interim or conservatory relief in accordance with Section 11 above, with related expedited discovery for the parties, in a court of law, and, thereafter, require arbitration of all issues of final relief. Insured workers compensation claims (other than wrongful discharge claims), and claims for unemployment insurance are excluded from arbitration under this provision. The Arbitration will be conducted by the American Arbitration Association pursuant to the American Arbitration Association’s National Rules for the Resolution of Employment Disputes. The arbitrator(s) shall be duly licensed to practice law in the State of Wisconsin. Each party will be allowed at least one deposition. The arbitrator(s) shall be required to state in a written opinion all facts and conclusions of law relied upon to support any decision rendered. No arbitrator will have authority to render a decision that contains an outcome determinative error of state or federal law, or to fashion a cause of action or remedy not otherwise provided for under applicable state or federal law. Any dispute over whether the arbitrator(s) has failed to comply with the foregoing will be resolved by summary judgment in a court of law. In all other respects, the arbitration process will be conducted in accordance with the American Arbitration Association’s National Rules for the Resolution of Employment Disputes. The Company will pay the arbitration costs and arbitrator’s fees beyond $500,

 

11

 

subject to a final arbitration award on who should bear costs and fees. All proceedings shall be conducted in Waukesha County, Wisconsin, or another mutually agreeable site. The duty to arbitrate described above shall survive the termination of this Agreement. Except as otherwise provided above, the parties hereby waive trial in a court of law or by jury. All other rights, remedies, statutes of limitation and defenses applicable to claims asserted in a court of law will apply in the arbitration.

 

14.                                NOTICES

 

All notices or communications hereunder shall be in writing and sent certified or registered mail, return receipt requested, postage prepaid, addressed as follows (or to such other address as such party may designate in writing from time to time):

 

If to the Company:

 

Physicians Realty Trust

735 North Water Street

Suite 1000

Milwaukee, Wisconsin 53202

(414) 978.6400

Attention: Corporate Secretary

 

If to the Executive:

 

John Sweet

c/o Physicians Realty Trust

735 North Water Street

Suite 1000

Milwaukee, Wisconsin 53202

(414) 978.6400

Attention: Corporate Secretary

 

The actual date of receipt, as shown by the receipt therefor, shall determine the time at which notice was given.

 

15.                                SEPARABILITY

 

If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect.

 

16.                                ASSIGNMENT

 

This Agreement shall be binding upon and inure to the benefit of the heirs and representatives of the Executive and the assigns and successors of the Company, but neither this Agreement nor any rights hereunder shall be assignable or otherwise subject to hypothecation by the Executive.

 

17.                                ENTIRE AGREEMENT

 

This Agreement represents the entire agreement of the parties and shall supersede any and all previous contracts, arrangements or understandings (whether oral or written) between the Company and the Executive with respect to the subject matter hereof. No oral statements or prior written material not

 

12

 

specifically incorporated in this Agreement shall be of any force and effect. The Agreement may be amended at any time by mutual written agreement of the parties hereto. The Executive acknowledges and represents that in executing this Agreement, he did not rely on, has not relied on, and specifically disavows any reliance on any communications, promises, statements, inducements, or representation(s), oral or written, by the Company, except as expressly contained in this Agreement. The parties represent that they relied on their own judgment in entering into this Agreement.

 

18.                                SECTION 409A COMPLIANCE

 

This Agreement and the benefits or payments to be provided under this Agreement are intended to be exempt from with the requirements of Section 409A of the Code, and shall be interpreted and construed consistently with such intent, provided, that if the Agreement is not exempt, the Agreement is drafted in a manner to comply with the requirements of Section 409A of the Code. The payments to the Executive pursuant to this Agreement are also intended to be exempt from Section 409A of the Code to the maximum extent possible, under either the separation pay exemption pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury Regulation Section 1.409A-1(b)(4). Each payment and benefit hereunder shall constitute a “separately identified” amount within the meaning of Treasury Regulation Section 1.409A-2(b)(2). In the event the terms of this Agreement would subject the Executive to taxes or penalties under Section 409A of the Code (“409A Penalties”), the Company and the Executive shall cooperate diligently to amend the terms of the Agreement to avoid such 409A Penalties, to the extent possible. To the extent any amounts under this Agreement are payable by reference to Executive’s “termination,” “termination of employment,” or similar phrases, such term shall be deemed to refer to the Executive’s “separation from service” (as defined in Treasury Regulation Section 1.409A-1(h) (without regard to any permissible alternative definition thereunder) with the Company and all entities treated as a single employer with the Company under Sections 414(b) and (c) of the Code but substituting a 50% ownership level for the 80% ownership level set forth therein). Notwithstanding any other provision in this Agreement, if the Executive is a “Specified Employee” (as defined in Treasury Regulation Section 1.409A-1(i) on December 31st of the prior calendar year), as of the date of the Executive’s separation from service, then to the extent any amount payable under this Agreement (i) constitutes the payment of nonqualified deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable upon the Executive’s separation from service and (iii) under the terms of this Agreement would be payable prior to the six-month anniversary of the Executive’s separation from service, such payment shall be delayed and paid to the Executive, together with interest at an annual rate equal to the interest rate specified by Regions Bank for a six-month certificate of deposit, on the first day of the first calendar month beginning seven (7) months following the date of termination, or, if earlier, within ninety (90) days following the Executive’s death to the Executive’s surviving spouse (or such other beneficiary as the Executive may designate in writing). Any reimbursement or advancement payable to the Executive pursuant to this Agreement shall be conditioned on the submission by the Executive of all expense reports reasonably required by the Company under any applicable expense reimbursement policy, and shall be paid to the Executive within thirty (30) days following receipt of such expense reports, but in no event later than the last day of the calendar year following the calendar year in which the Executive incurred the reimbursable expense. Any amount of expenses eligible for reimbursement, or in-kind benefit provided, during a calendar year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefit to be provided, during any other calendar year. The right to any reimbursement or in-kind benefit pursuant to this Agreement shall not be subject to liquidation or exchange for any other benefit.

 

19.                                GOVERNING LAW

 

This Agreement shall be construed, interpreted, and governed in accordance with the laws of the State of Wisconsin, other than the conflict of laws provisions of such laws. Subject to Section 13, venue

 

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of any litigation arising from this Agreement or any disputes relating to the Executive’s employment shall be in the United States District Court for the Eastern District of Wisconsin, or a state district court of competent jurisdiction in Waukesha County, Wisconsin. The Executive consents to personal jurisdiction of the United States District Court for the Eastern District of Wisconsin, or a state district court of competent jurisdiction in Waukesha County, Wisconsin for any dispute relating to or arising out of this Agreement or the Executive’s employment, and Executive agrees that Executive shall not challenge personal or subject matter jurisdiction in such courts.

 

20.                                SURVIVAL

 

The Executive’s post-termination obligations in Section 9 and Section 10 shall continue as provided in this Agreement.

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF , the Company has caused this Agreement to be duly executed, and the Executive has hereunto set his hand, as of the day and year first above written.

 

 

	PHYSICIANS REALTY TRUST
	By:	/s/ Tommy G. Thompson
	Its:	Chairman, Board of Trustees, Physicians Realty Trust
	EXECUTIVE:
	/s/ John Sweet
	John Sweet

 

15

Exhibit 10.3

 

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) by and between PHYSICIANS REALTY TRUST, a Maryland trust, (the “Company”) and JOHN LUCEY (the “Executive”) is entered into this 6th day of May, 2014, but effective as of the 2nd day of August, 2013 (the “Effective Date”).

 

WHEREAS , the Company and the Executive entered into an Employment Agreement (the “Original Agreement”) dated the 24th day of July, 2013 but effective as of the Effective Date, providing for the Executive’s employment and setting forth the terms and conditions for such employment; and

 

WHEREAS , the Company and the Executive desire to amend and restate the Original Agreement to provide for certain changes to the terms and conditions of the Executive’s employment by the Company, as reflected in this Agreement.

 

NOW THEREFORE , in consideration of the mutual covenants herein contained, the parties, intending to be legally bound, hereby agree as follows:

 

1.                                       EMPLOYMENT

 

The Company hereby agrees to employ the Executive as its Senior Vice President — Principal Financial and Accounting Officer (the “Senior Vice President”) upon the terms and conditions herein contained, and the Executive hereby agrees to accept such employment and to serve in such position.  As Senior Vice President, the Executive will have those duties which can reasonably be expected to be performed by a person in such position and shall undertake such other responsibilities as may be assigned to the Executive by the Company’s Chief Executive Officer from time to time.  For purposes of this Agreement, all references to the “Board” shall mean the Board of Trustees.  In such capacity, the Executive shall report to the Company’s Executive Vice President — Chief Investment Officer and Chief Financial Officer (the “CFO”) and shall have such powers and responsibilities consistent with his position as may be assigned. Throughout the Employment Term, the Executive shall devote his best efforts and all of his business time and services to the business and affairs of the Company.

 

2.                                       TERM OF AGREEMENT

 

Subject to earlier termination as herein provided, the Executive’s employment under this Agreement shall begin on the Effective Date and shall continue in effect until the third anniversary of the Effective Date (the “Initial Term”).  The Agreement will automatically renew, subject to earlier termination as herein provided, for successive one (1) year periods (the “Additional Terms”), unless either the Executive or the Company provide notice of non-renewal at least sixty (60) days prior to the expiration of the Initial Term or the then Additional Term, whichever is applicable.  The Initial Term and any Additional Term(s) shall be referred to collectively as the “Employment Term.”

 

Notwithstanding the foregoing, the Company shall be entitled to terminate this Agreement immediately, subject to a continuing obligation to make any payments required under Section 5 below, if the Executive (i) incurs a Disability as described in Section 5(b) , (ii) is terminated for Cause, as defined in Section 5(c) , or (iii) voluntarily terminates his employment without Good Reason (as defined below) during the Employment Term, as described in Section 5(d) .

 

3.                                       SALARY AND BONUS

 

The Executive shall receive a base salary during the Employment Term at a rate of $150,000 per

 

 

annum for 2013 (the “Base Salary”), payable in substantially equal semi-monthly installments.  The Compensation Committee of the Board shall consult with the Senior Vice President and review the Executive’s Base Salary at annual intervals, and may increase the Executive’s annual Base Salary from time to time as the Committee deems to be appropriate.

 

Subject to Section 12 , the Executive will have an annual cash bonus opportunity for each calendar year during the Employment Term (the “Annual Bonus”) based upon performance goals that are established by the Board or the Compensation Committee of the Board, as the case may be, in its sole discretion.  In the event an Annual Bonus is payable pursuant to this Section 3 , such bonus shall be paid to the Executive no later than March 15th of the year after the year to which the bonus relates.

 

On or as soon as administratively practicable after the date of an Initial Public Offering (as defined below) (but in no event later than sixty (60) days after the date of an Initial Public Offering), the Executive shall receive a grant of restricted shares of the Company’s common shares having a value of $75,000 based on the public offering price per share of the Company’s common shares offered for sale at the Initial Public Offering (the “Restricted Shares”).  The Restricted Shares shall be subject to the restrictions set forth in the restricted share agreement between the Company and the Executive and the terms of an equity incentive plan adopted by the Company prior to the grant of the Restricted Shares (the “Plan”).  The Restricted Shares shall vest over a three-year period, with one-third of the Restricted Shares vesting equally on the first, second, and third anniversary of the Effective Date, subject to any forfeiture or acceleration provisions set forth in the restricted share agreement and the Plan.  For purposes of this Agreement, “Initial Public Offering” means any underwritten sale of the Company’s equity securities pursuant to an effective registration statement under the Securities Act of 1933 filed with the Securities and Exchange Commission on Form S-1 or any other eligible form (or a successor form thereto adopted by the Securities and Exchange Commission).

 

4.                                       ADDITIONAL COMPENSATION AND BENEFITS

 

The Executive shall receive the following additional compensation and welfare and fringe benefits during the term of the Agreement:

 

(a)                                  Options and Other Long-Term Incentives .  During the Employment Term, any options, restricted shares or other awards granted under the Plan shall be at the discretion of the Compensation Committee of the Company’s Board.

 

(b)                                  Vacation .  The Executive shall be entitled to up to three (3) weeks of vacation during each year during the Employment Term and any extensions thereof, prorated for partial years.

 

(c)                                   Business Expenses .  The Company shall reimburse the Executive for all reasonable expenses he incurs in promoting the Company’s business, including expenses for travel and similar items, upon presentation by the Executive from time to time of an itemized account of such expenditures.  Any reimbursement of expenses made under this Agreement shall only be made for eligible expenses (including transportation and cellular service expenses as set forth above) incurred during the Employment Term, and no reimbursement of any expense shall be made by the Company after December 31st of the year following the calendar year in which the expense was incurred.  The amount eligible for reimbursement under this Agreement during a taxable year may not affect expenses eligible for reimbursement in any other taxable year, and the right to reimbursement under this Agreement is not subject to liquidation or exchange for another benefit.  The Executive will comply with the Company’s policies regarding these benefits, including all Internal Revenue Service rules and requirements.

 

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(d)                                  Professional Expenses .  Each calendar year during the Employment Term, the Company agrees to reimburse the Executive for up to $10,000 of reasonable professional expenses (i.e., accounting, financial planning, estate planning expenses) incurred by the Executive during such year for personal advice rendered to the Executive.

 

(e)                                   Other Benefits and Perquisites .

 

(i)                                      The Executive shall be entitled to participate in the benefit plans provided by the Company for all employees, generally, and for the Company’s executive employees.  The Company shall be entitled to change or terminate these plans in its sole discretion at any time.

 

(ii)                                   The Company agrees to reimburse the Executive for the amount of any premiums the Executive pays for his (and his eligible dependents’) medical and dental coverage, including, without limitation COBRA continuation coverage, up to $25,000.00 for the period beginning on the Effective Date and ending on December 31, 2013 (the “Medical Coverage”).  On a monthly basis, the Executive shall provide the Company with documentation of the amount of out-of-pocket insurance premiums to be reimbursed for that month for the Medical Coverage.  The Company shall reimburse the Executive this amount within thirty (30) days of submission.  The amount eligible for reimbursement under this Section 4(e)(ii)  during a taxable year may not affect expenses eligible for reimbursement in any other taxable year, and the right to reimbursement under this Section 4(e)(ii)  is not subject to liquidation or exchange for another benefit.

 

5.                                       PAYMENTS UPON TERMINATION

 

(a)                                  Involuntary Termination .  If the Executive’s employment is involuntarily terminated by the Company during the Employment Term, the Executive shall be entitled to receive his Base Salary accrued through the date of termination, any accrued but unpaid vacation pay, plus any bonuses earned but unpaid with respect to fiscal years or other periods ending before the termination date (collectively, the “Accrued Obligations”).  Such payments shall be made to the Executive within the time period required by applicable law (and in all events within sixty (60) days following the date of involuntary termination).  The Executive shall also receive any nonforfeitable benefits payable to him under the terms of any deferred compensation, incentive or other benefit plans maintained by the Company, payable in accordance with the terms of the applicable plan.

 

If the termination is not (1) a termination for Cause (as defined below), as described in Section 5(c) ; (2) a voluntary termination by the Executive without Good Reason (as defined below) as described in Section 5(d) ; (3) a termination as a result of the Executive’s death or Disability (as defined below); or (4) a termination due to non-renewal of the then current term as described in Section 5(e) , then subject to compliance with the restrictive covenants in Section 9 and Section 10 and the execution and timely return by the Executive of a release of claims in a form and substance reasonably requested by the Company (the “Release”), and except as otherwise provided by Sections 12 and 18 , the Company shall pay severance to the Executive in accordance with its normal payroll practices, equal to the Executive’s Base Salary as in effect at the time his employment terminates for a period equal to the greater of (a) the remainder of the then current term of this Agreement or (b) twenty-four (24) months, with the first payment on the first payroll date after the revocation period for the Release has expired; provided, that if the time period for returning and revoking the release begins in one taxable year and ends in a second taxable year, the payments shall not commence until the first payroll date in the second taxable year.

 

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In addition, if the termination is not (1) a termination for Cause, as described in Section 5(c) ; (2) a voluntary termination by the Executive without Good Reason as described in Section 5(d) ; (3) a termination as a result of the Executive’s death or Disability (as defined below); or (4) a termination due to non-renewal of the then current term as described in Section 5(e) , then, subject to compliance with the restrictive covenants in Section 9 and Section 10 , the execution and timely return by the Executive of the Release, and except as otherwise provided by Sections 12 and 18 , the Executive shall be entitled to the following:

 

(i)                                      Any options, restricted shares or other awards granted to the Executive under the Plan shall become fully vested and, in the case of options, exercisable in full;

 

(ii)                                   Provided that the Executive elects continuation of coverage under the Company’s group health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended (“COBRA”), the Executive shall be provided continued coverage at the Company’s expense under any health insurance programs maintained by the Company in which the Executive participated at the time of his termination for twelve (12) months, or until, if earlier, the date the Executive obtains comparable coverage under a group health plan maintained by a new employer.  To the extent the benefits provided under the immediately preceding sentence are otherwise taxable to the Executive, such benefits, for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) (and the regulations and other guidance issued thereunder) shall be provided as separate monthly in-kind payments of those benefits, and to the extent those benefits are subject to and not otherwise excepted from Section 409A of the Code, the provision of the in-kind benefits during one calendar year shall not affect the in-kind benefits to be provided in any other calendar year; and

 

(iii)                                Any Annual Bonus(es) payable under Section 3 above that would have been earned based solely on continued employment for the remainder of the then current term, and if none, then an amount equal to fifty percent (50%) of the Executive’s then current Base Salary, payable at the same time as bonuses are paid to other active employees of the Company with respect to such performance period, and forfeited if the Executive violates any of the restrictive covenants in Section 9 and Section 10 .

 

(b)                                  Disability .  The Company shall be entitled to terminate the Executive’s employment if the Board determines that the Executive has been unable to attend to his duties for at least ninety (90) days because of a Disability (as defined below), and has received a written opinion from a physician acceptable to the Board that such condition prevents the Executive from resuming full performance of his duties and is likely to continue for an indefinite period.  Upon such involuntary termination, the Executive shall be entitled to receive the Accrued Obligations.  Such payments shall be made to the Executive within the time period required by applicable law (and in all events within sixty (60) days following the date of involuntary termination).  In addition, subject to compliance with the restrictive covenants in Section 9 and Section 10 and the execution and timely return by the Executive of the Release, the Company shall pay severance to the Executive in accordance with its normal payroll practices, equal to twelve (12) months of the Executive’s Base Salary as in effect at the time his employment terminates, with the first payment on the first payroll date after the revocation period for the Release has expired; provided, that (i) if the time period for returning and revoking the Release begins in one taxable year and ends in a second taxable year, the payments shall not commence until the first payroll date in the second taxable year; and (ii) all such payments shall immediately terminate at an earlier date if the Executive returns to active employment, either with the Company or otherwise.  Any amounts payable under this Section 5(b)  shall be reduced on a dollar-for-dollar basis by the amount of bona fide disability pay (within the meaning of Treas. Reg. section 1.409A-1(a)(5)) received or

 

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receivable by the Executive during such twelve-month period, provided such disability payments are made pursuant to a plan sponsored by the Company that covers a substantial number of employees of the Company and was established prior to the date the Executive incurred a permanent disability, and further provided that such reduction does not otherwise affect the time of payment of amounts pursuant to this Section 5(b) .  For purposes of this Agreement, “ Disability ” means the Executive is incapacitated due to physical or mental illness and such incapacity, with or without reasonable accommodation, prevents the Executive from satisfactorily performing the essential functions of his job for the Company on a full-time basis for at least ninety (90) days in a calendar year.

 

(c)                                   Termination for Cause .  If the Executive’s employment is terminated by the Company for Cause, the amount the Executive shall be entitled to receive from the Company shall be limited to the Accrued Obligations.  Such payments shall be made to the Executive within the time period required by applicable law (and in all events within sixty (60) days following the date of termination).

 

For purposes of this Agreement, the term “Cause” shall be limited to the following:

 

(i)                                      the Executive engaging in any act of fraud, dishonesty, theft, misappropriation or embezzlement of funds or misrepresentation with respect to the Company;

 

(ii)                                   the Executive’s conviction or plea of no contest with respect to any felony or other crime involving moral turpitude;

 

(iii)                                the Executive’s material breach of his obligations under this Agreement, including, without limitation, breach of the covenants set forth in Section 9 and Section 10 below or the refusal of the Executive to perform his job duties as directed by the Board, which the Executive failed to cure within thirty (30) days after receiving written notice from the Board specifying the alleged breach;

 

(iv)                               violation of any material duty or obligation to the Company or of any direction or any rule or regulation reasonably established by the Board, which the Executive failed to cure within thirty (30) days after receiving written notice from the Board specifying the alleged violation; or

 

(v)                                  insubordination or misconduct in the performance of, or neglect of, the Executive’s duties which the Executive failed to cure within thirty (30) days after receiving written notice from the Board specifying the alleged insubordination, misconduct, or neglect.

 

(d)                                  Voluntary Termination by the Executive without Good Reason .  If the Executive resigns or otherwise voluntarily terminates his employment before the end of the current Employment Term (other than in connection with a Change in Corporate Control, as described in Section 6 ), the amount the Executive shall be entitled to receive from the Company shall be limited to the Accrued Obligations.  Such payment shall be made to the Executive within the time period required by applicable law (and in all events within sixty (60) days following the date of resignation or voluntary termination).

 

For purposes of this Agreement, a resignation by the Executive shall not be deemed to be voluntary without Good Reason if, without the Executive’s prior consent, the Executive is (1) assigned to a position other than the Senior Vice President (other than for Cause or by reason of

 

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his Disability) or assigned duties materially inconsistent with such position if either such change in assignment constitutes a material diminution in the Executive’s authority, duties or responsibilities, or (2) directed to report to anyone other than the CFO if such change in reporting duties constitutes a material diminution in the authority, duties or responsibilities of the supervisor to whom the Executive is required to report; provided that the Executive has notified the Company within the first ninety (90) days following the initial date of such change in assignment or reporting duties that the Executive regards such change in assignment or reporting duties as grounds justifying resignation under this Section 5(d)  and the Company has failed to cure such change in assignment or reporting duties within ninety (90) days following its receipt of such notice from the Executive; and provided further that the Executive resigns under this Section 5(d)  within six (6) months following the initial existence of a change in assignment or reporting duties described herein.

 

(e)                                   Non-Renewal .  The Executive’s employment shall terminate in the event that the then-current Employment Term expires by reason of a party giving a notice of an election not to renew as provided in Section 2 .  If the Executive’s employment terminates due to non-renewal of the Agreement, the amount the Executive shall be entitled to receive from the Company shall be limited to the Accrued Obligations.  Such payment shall be made to the Executive within the time period required by applicable law (and in all events within sixty (60) days following the expiration of the then-current term).

 

6.                                       EFFECT OF CHANGE IN CORPORATE CONTROL

 

(a)                                  Accelerated Vesting of Awards .  In the event of a “change in control” (as such term is defined in the Plan), the vesting of any options, restricted shares or other awards granted to the Executive under the terms of the Plan shall be accelerated (to the extent permitted by the terms of the Plan) and such awards shall become immediately vested in full and, in the case of options, exercisable in full.

 

(b)                                  Severance Payment .  If, during the Employment Term at any time during the period of twelve (12) consecutive months following the occurrence of a Change in Corporate Control, the Executive is involuntarily terminated (other than for Cause) or the Executive terminates his employment for Good Reason, then subject to compliance with the restrictive covenants in Section 9 and Section 10 and the execution and timely return by the Executive of the Release, the Executive shall be entitled to receive a lump sum severance payment equal to the present value of a series of monthly payments for twenty-four (24) months, each in an amount equal to one-twelfth (1/12th) of the sum of (i) the Executive’s Base Salary, as in effect at the time of the Change in Corporate Control, and (ii) the average of the annual bonuses paid to the Executive for the prior two fiscal years of the Company ending prior to the Change in Corporate Control, if any.  Such present value shall be calculated using a discount rate equal to the interest rate on 90-day Treasury bills, as reported in the Wall Street Journal (or similar publication) on the date of the Change in Corporate Control.  Such lump sum payment shall be made to the Executive within sixty (60) days following the date of such involuntary termination.

 

In addition, if during the Employment Term within twelve (12) months after a Change in Corporate Control the Executive is involuntarily terminated (other than for Cause) or the Executive terminates his employment for Good Reason, he shall be entitled to continued coverage at the Company’s expense under any health insurance programs maintained by the Company in which the Executive participated at the time of his termination, which coverage shall be continued for eighteen (18) months or until, if earlier, the date the Executive obtains comparable coverage under a group health plan maintained by a new employer.  To the extent the benefits provided under the immediately preceding sentence are otherwise taxable to the Executive, such

 

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benefits, for purposes of Section 409A of the Code (and the regulations and other guidance issued thereunder) shall be provided as separate monthly in-kind payments of those benefits, and to the extent those benefits are subject to and not otherwise excepted from Section 409A of the Code, the provision of the in-kind benefits during one calendar year shall not affect the in-kind benefits to be provided in any other calendar year.

 

(c)                                   Definition of Change in Corporate Control .  For purposes of this Agreement, a “Change in Corporate Control” shall include any of the following events:

 

(i)                                      The acquisition in one or more transactions of more than fifty percent (50%) of the Company’s outstanding Common Shares (or the equivalent in voting power of any class or classes of securities of the Company entitled to vote in elections of trustees) by any Company, or other person or group (within the meaning of Section 14(d)(3) of the Securities Exchange Act of 1934, as amended);

 

(ii)                                   Any transfer or sale of substantially all of the assets of the Company, or any merger or consolidation of the Company into or with another Company in which the Company is not the surviving entity;

 

Provided, however, that no event shall constitute a Change in Corporate Control unless such event is also a “change in ownership”, a “change in effective control” or a “change in the ownership of a substantial portion of the assets” of the Company, as determined in accordance with Section 409A of the Code, and the regulations and guidance issued thereunder.

 

7.                                       DEATH

 

If the Executive dies during the Employment Term, the Company shall pay to the Executive’s surviving spouse or if there is no surviving spouse, the Executive’s estate, a lump sum payment equal to the Accrued Obligations.  Such payment shall be paid within the time period required by applicable law (and in all events within sixty (60) days following the date of the Executive’s death).  In addition, the death benefits payable by reason of the Executive’s death under any retirement, deferred compensation, life insurance or other employee benefit plan maintained by the Company shall be paid to the beneficiary designated by the Executive, and the options, restricted shares or other awards held by the Executive under the Company’s equity incentive plans shall become fully vested, and, in the case of options, exercisable in full, in accordance with the terms of the applicable plan or plans.

 

8.                                       WITHHOLDING

 

The Company shall, to the extent permitted by law, have the right to withhold and deduct from any payment hereunder any federal, state or local taxes of any kind required by law to be withheld with respect to any such payment.

 

9.                                       PROTECTION OF CONFIDENTIAL INFORMATION

 

During the Executive’s employment with the Company, the Company shall grant the Executive otherwise prohibited access to its trade secrets and confidential information which are not known to the Company’s competitors or within the Company’s industry generally, which were developed by the Company over a long period of time and/or at its substantial expense, and which are of great competitive value to the Company, and access to the Company’s customers and clients.  For purposes of this Agreement, “Confidential Information” includes all trade secrets and confidential and proprietary information of the Company, including, but not limited to, the following: financial models, financial

 

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information and data, business methods, electronic files, computer drives/disks, passwords, address and telephone lists, internal memoranda, correspondence, business strategies, business plans and/or projections, lease forms, construction contract forms, development and construction management service agreements, tenant lists, lease terms, rates, rent rolls, strategies, improvements, discoveries, plans for research or future business, infrastructure, marketing and sales plans and strategies, budgets, customer and client information, employee, customer and client nonpublic personal information, supplier lists, business records, audit processes, management methods and information, reports, recommendations and conclusions, information regarding the names, contact information, skills and compensation of employees and contractors of the Company, other information not generally known to the public, and other business information disclosed to the Executive by the Company, either directly or indirectly, in writing, orally, or by drawings or observation.

 

The Executive acknowledges and agrees that Confidential Information is proprietary to and a trade secret of the Company and, as such, is a special and unique asset of the Company, and that any disclosure or unauthorized use of any Confidential Information by the Executive will cause irreparable harm and loss to the Company.  The Executive understands and acknowledges that each and every component of the Confidential Information (i) has been developed by the Company at significant effort and expense and is sufficiently secret to derive economic value from not being generally known to other parties, and (ii) constitutes a protectable business interest of the Company.  The Executive acknowledges and agrees that the Company owns the Confidential Information.  The Executive agrees not to dispute, contest, or deny any such ownership rights either during or after the Executive’s employment with the Company.  The Executive agrees to preserve and protect the confidentiality of all Confidential Information.  The Executive agrees that the Executive shall not at any time (whether during or after the Executive’s employment), directly or indirectly, disclose to any unauthorized person or use for the Executive’s own account any Confidential Information without the Company’s consent.  Throughout the Executive’s employment and at all times thereafter: (i) the Executive shall hold all Confidential Information in the strictest confidence, take all reasonable precautions to prevent its inadvertent disclosure to any unauthorized person, and follow all policies of the Company protecting the Confidential Information; (ii) the Executive shall not, directly or indirectly, utilize, disclose or make available to any other person or entity, any of the Confidential Information, other than in the proper performance of the Executive’s duties; (iii) the Executive shall not use the Confidential Information or trade secrets to attempt to solicit, induce, recruit, or take away clients or customers of the Company; and (iv) if the Executive learns that any person or entity is taking or threatening to take any actions which would compromise any Confidential Information, the Executive shall promptly advise the Company of all facts concerning such action or threatened action.  The foregoing shall not apply to any information which is already in the public domain, or is generally disclosed by the Company or is otherwise in the public domain at the time of disclosure (other than through an unauthorized disclosure by the Executive or any other person).

 

Upon the termination of the Executive’s employment for any reason, the Executive shall immediately return and deliver to the Company any and all Confidential Information, software, devices, cell phones, personal data assistants, credit cards, data, reports, proposals, lists, correspondence, materials, equipment, computers, hard drives, papers, books, records, documents, memoranda, manuals, e-mail, electronic or magnetic recordings or data, including all copies thereof, which belong to the Company or relate to the Company’s business and which are in the Executive’s possession, custody or control, whether prepared by the Executive or others.  If at any time after termination of the Executive’s employment he determines that he has any Confidential Information in his possession or control, the Executive shall immediately return to the Company all such Confidential Information in the Executive’s possession or control, including all copies and portions thereof.

 

The Executive recognizes that because his work for the Company may bring him into contact with confidential and proprietary information of the Company, the restrictions of this Section 9 are

 

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required for the reasonable protection of the Company and its investments and for the Company’s reliance on and confidence in the Executive.

 

10.          RESTRICTIVE COVENANTS

 

In consideration for (i) the Company’s promise to provide Confidential Information to the Executive, (ii) the substantial economic investment made by the Company in the Confidential Information and goodwill of the Company, and/or the business opportunities disclosed or entrusted to the Executive, (iii) access to the Company’s customers and clients, and (iv) the Company’s employment of the Executive pursuant to this Agreement and the compensation and other benefits provided by the Company to the Executive, to protect the Company’s Confidential Information and business goodwill of the Company, the Executive agrees to the following restrictive covenants.

 

(a)           Non-Competition .  The Executive hereby agrees that during the Restricted Period (defined below), other than in connection with the Executive’s duties under this Agreement, the Executive shall not, and shall not use any Confidential Information to, without the prior consent of the Company, directly or indirectly, either individually or as an owner, principal, partner, stockholder, manager, contractor, distributor, lender, investor, consultant, agent, employee, co-venturer or as a director or officer of any corporation or association, or in any other manner or capacity whatsoever, become employed by, control, carry on, join, lend money for, engage in, establish, perform services for, invest in, solicit investors for, consult for, do business with or otherwise engage in any Competing Business (defined below) within the Restricted Territory (defined below); provided however, that nothing in this Section 10(a)  shall prevent the Executive from owning a passive investment in up to two percent (2%) of the stock of a publicly traded corporation engaged in a Competing Business and such ownership shall not be considered to be a violation of Section 10(a) .

 

(i)            “Restricted Period” means during the Executive’s employment with the Company and for a period equal to the later of (i) one (1) year immediately following the date of the Executive’s termination from employment for any reason or (ii) the number of months for which the Executive is receiving monthly severance payments under Section 5 or Section 6 of this Agreement.

 

(ii)           “Competing Business” means any business, individual, partnership, firm, corporation or other entity that provides the same or substantially similar products or services as those provided by the Company during the Executive’s employment, which includes, without limitation, the business of buying, managing, holding and selling medical office buildings.

 

(iii)          As Senior Vice President of the Company, the Executive has responsibility for the Company’s operations throughout the United States.  Because the Company does business throughout the United States, the “Restricted Territory” means the United States and any other region or state in which the Executive performed services, was assigned responsibility for the Company, or about which the Executive received Confidential Information.

 

(b)           Non-Solicitation .  The Executive agrees that during the Restricted Period, other than in connection with the Executive’s duties under this Agreement, the Executive shall not, and shall not use any Confidential Information to, directly or indirectly, either individually or as an owner, principal, partner, stockholder, manager, contractor, distributor, lender, investor, consultant, agent, employee, co-venturer or as a director or officer of any corporation or

 

9

 

association, or in any other manner or capacity whatsoever, and whether personally or through other persons:

 

(i)            Solicit business from, interfere with, attempt to solicit business with, or do business with any customer or client of the Company with whom the Company did business or who the Company solicited within the preceding two (2) years, and who or which: (1) the Executive contacted, called on, serviced, or did business with during his employment with the Company; (2) the Executive learned of as a result of his employment with the Company; or (3) about whom the Executive received Confidential Information.  This restriction applies only to business which is in the scope of services or products provided by the Company; or

 

(ii)           Solicit, induce, or attempt to solicit or induce, engage or hire, on behalf of himself or any other person or entity, any person who is an employee or full-time consultant of the Company or who was employed or retained by the Company within the preceding two (2) years.

 

(c)           Non-Disparagement .  The Executive shall refrain, both during and after the Employment Term, from publishing any oral or written statements about the Company or any of the Company’s board of trustees, equity holders, members, shareholders, managers, officers, employees, consultants, agents or representatives that (i) are slanderous, libelous or defamatory; or (ii) place the Company or any of its trustees, managers, officers, employees, consultants, agents or representatives in a false light before the public.  A violation or threatened violation of this prohibition may be enjoined by the courts.  The rights afforded the Company under this provision are in addition to any and all rights and remedies otherwise afforded by law.

 

(d)           Tolling .  If the Executive violates any of the restrictions contained in Section 10 , the Restricted Period shall be suspended and shall not run in favor of the Executive from the time of the commencement of any violation until the time when the Executive cures the violation to the satisfaction of the Company.

 

(e)           Reasonableness .  The Executive hereby represents to the Company that he has read and understands, and agrees to be bound by, the terms of this Section 10 .  The Executive acknowledges that the geographic scope and duration of the covenants contained in this Section 10 are fair and reasonable in light of (i) the nature and wide geographic scope of the operations of the Company’s business; (ii) the Executive’s level of control over and contact with the business in the Restricted Territory; and (iii) the amount of compensation, trade secrets and Confidential Information that the Executive is receiving in connection with his employment by the Company.  It is the desire and intent of the parties that the provisions of Section 10 be enforced to the fullest extent permitted under applicable law, whether now or hereafter in effect and therefore, to the extent permitted by applicable law, the Executive and the Company hereby waive any provision of applicable law that would render any provision of Section 10 invalid or unenforceable.

 

11.          INJUNCTIVE RELIEF

 

The Executive acknowledges that (a) compliance with the covenants set forth in Section 9 and Section 10 of this Agreement are necessary to protect the Company’s business and Confidential Information; (b) a breach or threatened breach of any of such covenants will irreparably harm the Company; and (c) an award of money damages will not be adequate to remedy such harm.  Consequently, the Executive acknowledges and agrees that, in addition to other remedies, in the event the Executive breaches or threatens to breach any of the covenants contained in this Agreement, the Company shall be entitled to both a temporary and/or permanent injunction to prevent the continuation of such harm and

 

10

 

enforce such provisions and money damages insofar as they can be determined, including, without limitation, all costs and reasonable attorneys’ fees incurred by or on behalf of the Company in the enforcement of the terms of this Agreement.  The Company may apply to any court of competent jurisdiction for a temporary restraining order, preliminary injunction or other interim or conservatory relief, as necessary or applicable.  This provision with respect to injunctive relief shall not, however, diminish the Company’s right to claim and recover damages.

 

It is expressly understood and agreed that although the parties consider the restrictions contained in this Agreement to be reasonable, if a court determines that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction on the activities of the Executive, no such provision of this Agreement shall be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such extent as such court may judicially determine or indicate to be reasonable.  By agreeing to this contractual modification prospectively at this time, the Company and the Executive intend to make this provision enforceable under the law or laws of all applicable jurisdictions so that the entire agreement not to compete and this Agreement as prospectively modified shall remain in full force and effect and shall not be rendered void or illegal.

 

12.          CLAWBACK

 

Any compensation paid to the Executive shall be subject to recovery by the Company, and the Executive shall be required to repay such compensation, if (i) such recovery and repayment is required by applicable law or (ii) either in the year such compensation is paid, or within the three (3) year period thereafter the Company is required to prepare an accounting restatement due to material noncompliance of the Company with any financial reporting requirement under applicable securities laws and the Executive is either (A) a named executive officer or (B) an employee who is responsible for preparation of the Company’s financial statements.  The parties agree that the repayment obligations set forth in this Section 12 shall only apply to the extent repayment is required by applicable law, or to the extent the Executive’s compensation is determined to be in excess of the amount that would have been deliverable to the Executive taking into account any restatement or correction of any inaccurate financial statements or materially inaccurate performance metric criteria.

 

13.          MANDATORY MEDIATION AND ARBITRATION

 

In the event there is an unresolved legal dispute between the Executive and the Company that involves legal rights or remedies arising from this Agreement or the employment relationship between the Executive and the Company (“Dispute”), except as otherwise provided herein, before commencing an arbitration action or other legal proceeding, the parties shall promptly submit the Dispute to mediation, using a mediator jointly selected by the parties, or if the parties are unable to agree upon a mediator then the Dispute shall be submitted to non-binding mediation with the American Arbitration Association in Waukesha County, Wisconsin in accordance with its rules.  The cost of the mediation shall be borne equally between the parties.  If the parties are unable to achieve a mutually agreeable resolution of the Dispute through mediation, the parties agree to submit their Dispute to binding arbitration under the authority of the Federal Arbitration Act and/or the Wisconsin Uniform Arbitration Act; provided, however, that the Company may pursue a temporary restraining order, preliminary injunction and/or other interim or conservatory relief in accordance with Section 11 above, with related expedited discovery for the parties, in a court of law, and, thereafter, require arbitration of all issues of final relief.  Insured workers compensation claims (other than wrongful discharge claims), and claims for unemployment insurance are excluded from arbitration under this provision.  The Arbitration will be conducted by the American Arbitration Association pursuant to the American Arbitration Association’s National Rules for the Resolution of Employment Disputes.  The arbitrator(s) shall be duly licensed to practice law in the State of Wisconsin.  Each party will be allowed at least one deposition.  The arbitrator(s) shall be required to state in a written opinion all facts and conclusions of law relied upon to support any decision rendered.

 

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No arbitrator will have authority to render a decision that contains an outcome determinative error of state or federal law, or to fashion a cause of action or remedy not otherwise provided for under applicable state or federal law.  Any dispute over whether the arbitrator(s) has failed to comply with the foregoing will be resolved by summary judgment in a court of law.  In all other respects, the arbitration process will be conducted in accordance with the American Arbitration Association’s National Rules for the Resolution of Employment Disputes.  The Company will pay the arbitration costs and arbitrator’s fees beyond $500, subject to a final arbitration award on who should bear costs and fees.  All proceedings shall be conducted in Waukesha County, Wisconsin, or another mutually agreeable site.  The duty to arbitrate described above shall survive the termination of this Agreement.  Except as otherwise provided above, the parties hereby waive trial in a court of law or by jury.  All other rights, remedies, statutes of limitation and defenses applicable to claims asserted in a court of law will apply in the arbitration.

 

14.          NOTICES

 

All notices or communications hereunder shall be in writing and sent certified or registered mail, return receipt requested, postage prepaid, addressed as follows (or to such other address as such party may designate in writing from time to time):

 

If to the Company:

 

Physicians Realty Trust

735 North Water Street

Suite 1000

Milwaukee, Wisconsin 53202

(414) 978.6400

Attention: Corporate Secretary

 

If to the Executive:

 

John Lucey

c/o Physicians Realty Trust

735 North Water Street

Suite 1000

Milwaukee, Wisconsin 53202

(414) 978.6400

Attention: Corporate Secretary

 

The actual date of receipt, as shown by the receipt therefor, shall determine the time at which notice was given.

 

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15.          SEPARABILITY

 

If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect.

 

16.          ASSIGNMENT

 

This Agreement shall be binding upon and inure to the benefit of the heirs and representatives of the Executive and the assigns and successors of the Company, but neither this Agreement nor any rights hereunder shall be assignable or otherwise subject to hypothecation by the Executive.

 

17.          ENTIRE AGREEMENT

 

This Agreement represents the entire agreement of the parties and shall supersede any and all previous contracts, arrangements or understandings (whether oral or written) between the Company and the Executive with respect to the subject matter hereof.  No oral statements or prior written material not specifically incorporated in this Agreement shall be of any force and effect.  The Agreement may be amended at any time by mutual written agreement of the parties hereto.  The Executive acknowledges and represents that in executing this Agreement, he did not rely on, has not relied on, and specifically disavows any reliance on any communications, promises, statements, inducements, or representation(s), oral or written, by the Company, except as expressly contained in this Agreement.  The parties represent that they relied on their own judgment in entering into this Agreement.

 

18.          SECTION 409A COMPLIANCE

 

This Agreement and the benefits or payments to be provided under this Agreement are intended to be exempt from with the requirements of Section 409A of the Code, and shall be interpreted and construed consistently with such intent, provided, that if the Agreement is not exempt, the Agreement is drafted in a manner to comply with the requirements of Section 409A of the Code.  The payments to the Executive pursuant to this Agreement are also intended to be exempt from Section 409A of the Code to the maximum extent possible, under either the separation pay exemption pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury Regulation Section 1.409A-1(b)(4).  Each payment and benefit hereunder shall constitute a “separately identified” amount within the meaning of Treasury Regulation Section 1.409A-2(b)(2).  In the event the terms of this Agreement would subject the Executive to taxes or penalties under Section 409A of the Code (“409A Penalties”), the Company and the Executive shall cooperate diligently to amend the terms of the Agreement to avoid such 409A Penalties, to the extent possible.  To the extent any amounts under this Agreement are payable by reference to Executive’s “termination,” “termination of employment,” or similar phrases, such term shall be deemed to refer to the Executive’s “separation from service” (as defined in Treasury Regulation Section 1.409A-1(h) (without regard to any permissible alternative definition thereunder) with the Company and all entities treated as a single employer with the Company under Sections 414(b) and (c) of the Code but substituting a 50% ownership level for the 80% ownership level set forth therein).  Notwithstanding any other provision in this Agreement, if the Executive is a “Specified Employee” (as defined in Treasury Regulation Section 1.409A-1(i) on December 31st of the prior calendar year), as of the date of the Executive’s separation from service, then to the extent any amount payable under this Agreement (i) constitutes the payment of nonqualified deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable upon the Executive’s separation from service and (iii) under the terms of this Agreement would be payable prior to the six-month anniversary of the Executive’s separation from service, such payment shall be delayed and paid to the Executive, together with interest at an annual rate equal to the interest rate specified by Regions Bank for a six-month certificate of deposit, on the first day of the first calendar month beginning seven (7) months following the date of termination,

 

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or, if earlier, within ninety (90) days following the Executive’s death to the Executive’s surviving spouse (or such other beneficiary as the Executive may designate in writing).  Any reimbursement or advancement payable to the Executive pursuant to this Agreement shall be conditioned on the submission by the Executive of all expense reports reasonably required by the Company under any applicable expense reimbursement policy, and shall be paid to the Executive within thirty (30) days following receipt of such expense reports, but in no event later than the last day of the calendar year following the calendar year in which the Executive incurred the reimbursable expense.  Any amount of expenses eligible for reimbursement, or in-kind benefit provided, during a calendar year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefit to be provided, during any other calendar year.  The right to any reimbursement or in-kind benefit pursuant to this Agreement shall not be subject to liquidation or exchange for any other benefit.

 

19.          GOVERNING LAW

 

This Agreement shall be construed, interpreted, and governed in accordance with the laws of the State of Wisconsin, other than the conflict of laws provisions of such laws.  Subject to Section 13 , venue of any litigation arising from this Agreement or any disputes relating to the Executive’s employment shall be in the United States District Court for the Eastern District of Wisconsin, or a state district court of competent jurisdiction in Waukesha County, Wisconsin.  The Executive consents to personal jurisdiction of the United States District Court for the Eastern District of Wisconsin, or a state district court of competent jurisdiction in Waukesha County, Wisconsin for any dispute relating to or arising out of this Agreement or the Executive’s employment, and Executive agrees that Executive shall not challenge personal or subject matter jurisdiction in such courts.

 

20.          SURVIVAL

 

The Executive’s post-termination obligations in Section 9 and Section 10 shall continue as provided in this Agreement.

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF , the Company has caused this Agreement to be duly executed, and the Executive has hereunto set his hand, as of the day and year first above written.

 

	PHYSICIANS REALTY TRUST
	By:	/s/ Tommy G. Thompson
	Its:	Chairman, Board of Trustees, Physicians Realty Trust
		EXECUTIVE:
		/s/ John Lucey
		John Lucey

 

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Exhibit 10.4

 

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), by and between PHYSICIANS REALTY TRUST, a Maryland trust, (the “Company”), and MARK D. THEINE (the “Executive”) is entered into this 6th day of May, 2014, but effective as of the 24th day of July, 2013 (the “Effective Date”).

 

WHEREAS , the Company and the Executive entered into an Employment Agreement (the “Original Agreement”) dated the Effective Date, providing for the Executive’s employment and setting forth the terms and conditions for such employment; and

 

WHEREAS , the Company and the Executive desire to amend and restate the Original Agreement to provide for certain changes to the terms and conditions of the Executive’s employment by the Company, as reflected in this Agreement.

 

NOW THEREFORE , in consideration of the mutual covenants herein contained, the parties, intending to be legally bound, hereby agree as follows:

 

1.                                       EMPLOYMENT

 

The Company hereby agrees to employ the Executive as its Senior Vice President of Asset and Investment Management (the “Senior Vice President”) upon the terms and conditions herein contained, and the Executive hereby agrees to accept such employment and to serve in such position. As Senior Vice President, the Executive will have those duties which can reasonably be expected to be performed by a person in such position and shall undertake such other responsibilities as may be assigned to the Executive by the Company’s Chief Executive Officer (“CEO”) from time to time. For purposes of this Agreement, all references to the “Board” shall mean the Board of Trustees. In such capacity, the Executive shall report to the Company’s Board and shall have such powers and responsibilities consistent with his position as may be assigned. Throughout the Employment Term, the Executive shall devote his best efforts and all of his business time and services to the business and affairs of the Company.

 

2.                                       TERM OF AGREEMENT

 

Subject to earlier termination as herein provided, the Executive’s employment under this Agreement shall begin on the Effective Date and shall continue in effect until the third anniversary of the Effective Date (the “Initial Term”). The Agreement will automatically renew, subject to earlier termination as herein provided, for successive one (1) year periods (the “Additional Terms”), unless either the Executive or the Company provide notice of non-renewal at least sixty (60) days prior to the expiration of the Initial Term or the then Additional Term, whichever is applicable. The Initial Term and any Additional Term(s) shall be referred to collectively as the “Employment Term.”

 

Notwithstanding the foregoing, the Company shall be entitled to terminate this Agreement immediately, subject to a continuing obligation to make any payments required under Section 5 below, if the Executive (i) incurs a Disability as described in Section 5(b) , (ii) is terminated for Cause, as defined in Section 5(c) , or (iii) voluntarily terminates his employment without Good Reason (as defined below) during the Employment Term, as described in Section 5(d) .

 

3.                                       SALARY AND BONUS

 

The Executive shall receive a base salary during the Employment Term at a rate of $150,000 per

 

 

annum for 2013 (the “Base Salary”), payable in substantially equal semi-monthly installments. The Compensation Committee of the Board shall consult with the Senior Vice President and review the Executive’s Base Salary at annual intervals, and may increase the Executive’s annual Base Salary from time to time as the Committee deems to be appropriate.

 

Subject to Section 12 , the Executive will have an annual cash bonus opportunity for each calendar year during the Employment Term (the “Annual Bonus”) based upon performance goals that are established by the Board or the Compensation Committee of the Board, as the case may be, in its sole discretion.  In the event an Annual Bonus is payable pursuant to this Section 3 , such bonus shall be paid to the Executive no later than March 15th of the year after the year to which the bonus relates.

 

On or as soon as administratively practicable after the date of an Initial Public Offering (as defined below) (but in no event later than sixty (60) days after the date of an Initial Public Offering), the Executive shall receive a grant of restricted shares of the Company’s common shares having a value of $400,000 based on the public offering price per share of the Company’s common shares offered for sale at the Initial Public Offering (the “Restricted Shares”). The Restricted Shares shall be subject to the restrictions set forth in the restricted share agreement between the Company and the Executive and the terms of an equity incentive plan adopted by the Company prior to the grant of the Restricted Shares (the “Plan”). The Restricted Shares shall vest over a three-year period, with one-third of the Restricted Shares vesting equally on the first, second, and third anniversary of the Effective Date, subject to any forfeiture or acceleration provisions set forth in the restricted share agreement and the Plan. For purposes of this Agreement, “Initial Public Offering” means any underwritten sale of the Company’s equity securities pursuant to an effective registration statement under the Securities Act of 1933 filed with the Securities and Exchange Commission on Form S-1 or any other eligible form (or a successor form thereto adopted by the Securities and Exchange Commission).

 

4.                                       ADDITIONAL COMPENSATION AND BENEFITS

 

The Executive shall receive the following additional compensation and welfare and fringe benefits during the term of the Agreement:

 

(a)                                  Options and Other Long-Term Incentives . During the Employment Term, any options, restricted shares or other awards granted under the Plan shall be at the discretion of the Compensation Committee of the Company’s Board.

 

(b)                                  Vacation . The Executive shall be entitled to up to four (4) weeks of vacation during each year during the Employment Term and any extensions thereof, prorated for partial years.

 

(c)                                   Business Expenses . The Company shall reimburse the Executive for all reasonable expenses he incurs in promoting the Company’s business, including expenses for travel and similar items, upon presentation by the Executive from time to time of an itemized account of such expenditures. Any reimbursement of expenses made under this Agreement shall only be made for eligible expenses (including transportation and cellular service expenses as set forth above) incurred during the Employment Term, and no reimbursement of any expense shall be made by the Company after December 31st of the year following the calendar year in which the expense was incurred. The amount eligible for reimbursement under this Agreement during a taxable year may not affect expenses eligible for reimbursement in any other taxable year, and the right to reimbursement under this Agreement is not subject to liquidation or exchange for another benefit. The Executive will comply with the Company’s policies regarding these benefits, including all Internal Revenue Service rules and requirements.

 

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(d)                                  Professional Expenses . Each calendar year during the Employment Term, the Company agrees to reimburse the Executive for up to $10,000 of reasonable professional expenses (i.e., accounting, financial planning, estate planning expenses) incurred by the Executive during such year for personal advice rendered to the Executive.

 

(e)                                   Other Benefits and Perquisites . The Executive shall be entitled to participate in the benefit plans provided by the Company for all employees, generally, and for the Company’s executive employees. The Company shall be entitled to change or terminate these plans in its sole discretion at any time.

 

5.                                       PAYMENTS UPON TERMINATION

 

(a)                                  Involuntary Termination . If the Executive’s employment is involuntarily terminated by the Company during the Employment Term, the Executive shall be entitled to receive his Base Salary accrued through the date of termination, any accrued but unpaid vacation pay, plus any bonuses earned but unpaid with respect to fiscal years or other periods ending before the termination date (collectively, the “Accrued Obligations”). Such payments shall be made to the Executive within the time period required by applicable law (and in all events within sixty (60) days following the date of involuntary termination). The Executive shall also receive any nonforfeitable benefits payable to him under the terms of any deferred compensation, incentive or other benefit plans maintained by the Company, payable in accordance with the terms of the applicable plan.

 

If the termination is not (1) a termination for Cause (as defined below), as described in Section 5(c) ; (2) a voluntary termination by the Executive without Good Reason (as defined below) as described in Section 5(d) ; (3) a termination as a result of the Executive’s death or Disability (as defined below); or (4) a termination due to non-renewal of the then current term as described in Section 5(e) , then subject to compliance with the restrictive covenants in Section 9 and Section 10 and the execution and timely return by the Executive of a release of claims in a form and substance reasonably requested by the Company (the “Release”), and except as otherwise provided by Sections 12 and 18 , the Company shall pay severance to the Executive in accordance with its normal payroll practices, equal to the Executive’s Base Salary as in effect at the time his employment terminates for a period equal to the greater of (a) the remainder of the then current term of this Agreement or (b) twenty-four (24) months, with the first payment on the first payroll date after the revocation period for the Release has expired; provided, that if the time period for returning and revoking the release begins in one taxable year and ends in a second taxable year, the payments shall not commence until the first payroll date in the second taxable year.

 

In addition, if the termination is not (1) a termination for Cause, as described in Section 5(c) ; (2) a voluntary termination by the Executive without Good Reason as described in Section 5(d) ; (3) a termination as a result of the Executive’s death or Disability (as defined below); or (4) a termination due to non-renewal of the then current term as described in Section 5(e) , then, subject to compliance with the restrictive covenants in Section 9 and Section 10 , the execution and timely return by the Executive of the Release, and except as otherwise provided by Sections 12 and 18 , the Executive shall be entitled to the following:

 

(i)                                      Any options, restricted shares or other awards granted to the Executive under the Plan shall become fully vested and, in the case of options, exercisable in full;

 

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(ii)                                   Provided that the Executive elects continuation of coverage under the Company’s group health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended (“COBRA”), the Executive shall be provided continued coverage at the Company’s expense under any health insurance programs maintained by the Company in which the Executive participated at the time of his termination for twelve (12) months, or until, if earlier, the date the Executive obtains comparable coverage under a group health plan maintained by a new employer. To the extent the benefits provided under the immediately preceding sentence are otherwise taxable to the Executive, such benefits, for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) (and the regulations and other guidance issued thereunder) shall be provided as separate monthly in-kind payments of those benefits, and to the extent those benefits are subject to and not otherwise excepted from Section 409A of the Code, the provision of the in-kind benefits during one calendar year shall not affect the in-kind benefits to be provided in any other calendar year; and

 

(iii)                                Annual Bonus(es) payable under Section 3 above that would have been earned based solely on continued employment for the remainder of the then current term, and if none, then an amount equal to fifty percent (50%) of the Executive’s then current Base Salary, payable at the same time as bonuses are paid to other active employees of the Company with respect to such performance period, and forfeited if the Executive violates any of the restrictive covenants in Section 9 and Section 10 .

 

(b)                                  Disability . The Company shall be entitled to terminate the Executive’s employment if the Board determines that the Executive has been unable to attend to his duties for at least ninety (90) days because of a Disability (as defined below), and has received a written opinion from a physician acceptable to the Board that such condition prevents the Executive from resuming full performance of his duties and is likely to continue for an indefinite period. Upon such involuntary termination, the Executive shall be entitled to receive the Accrued Obligations. Such payments shall be made to the Executive within the time period required by applicable law (and in all events within sixty (60) days following the date of involuntary termination). In addition, subject to compliance with the restrictive covenants in Section 9 and Section 10 and the execution and timely return by the Executive of the Release, the Company shall pay severance to the Executive in accordance with its normal payroll practices, equal to twelve (12) months of the Executive’s Base Salary as in effect at the time his employment terminates, with the first payment on the first payroll date after the revocation period for the Release has expired; provided, that (i) if the time period for returning and revoking the Release begins in one taxable year and ends in a second taxable year, the payments shall not commence until the first payroll date in the second taxable year; and (ii) all such payments shall immediately terminate at an earlier date if the Executive returns to active employment, either with the Company or otherwise. Any amounts payable under this Section 5(b)  shall be reduced on a dollar-for-dollar basis by the amount of bona fide disability pay (within the meaning of Treas. Reg. section 1.409A-1(a)(5)) received or receivable by the Executive during such twelve-month period, provided such disability payments are made pursuant to a plan sponsored by the Company that covers a substantial number of employees of the Company and was established prior to the date the Executive incurred a permanent disability, and further provided that such reduction does not otherwise affect the time of payment of amounts pursuant to this Section 5(b) . For purposes of this Agreement, “Disability” means the Executive is incapacitated due to physical or mental illness and such incapacity, with or without reasonable accommodation, prevents the Executive from satisfactorily performing the essential functions of his job for the Company on a full-time basis for at least ninety (90) days in a calendar year.

 

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(c)                                   Termination for Cause . If the Executive’s employment is terminated by the Company for Cause, the amount the Executive shall be entitled to receive from the Company shall be limited to the Accrued Obligations. Such payments shall be made to the Executive within the time period required by applicable law (and in all events within sixty (60) days following the date of termination).

 

For purposes of this Agreement, the term “Cause” shall be limited to the following:

 

(i)                                      the Executive engaging in any act of fraud, dishonesty, theft, misappropriation or embezzlement of funds or misrepresentation with respect to the Company;

 

(ii)                                   the Executive’s conviction or plea of no contest with respect to any felony or other crime involving moral turpitude;

 

(iii)                                the Executive’s material breach of his obligations under this Agreement, including, without limitation, breach of the covenants set forth in Section 9 and Section 10 below or the refusal of the Executive to perform his job duties as directed by the Board, which the Executive failed to cure within thirty (30) days after receiving written notice from the Board specifying the alleged breach;

 

(iv)                               violation of any material duty or obligation to the Company or of any direction or any rule or regulation reasonably established by the Board, which the Executive failed to cure within thirty (30) days after receiving written notice from the Board specifying the alleged violation; or

 

(v)                                  insubordination or misconduct in the performance of, or neglect of, the Executive’s duties which the Executive failed to cure within thirty (30) days after receiving written notice from the Board specifying the alleged insubordination, misconduct, or neglect.

 

(d)                                  Voluntary Termination by the Executive without Good Reason . If the Executive resigns or otherwise voluntarily terminates his employment before the end of the current Employment Term (other than in connection with a Change in Corporate Control, as described in Section 6 ), the amount the Executive shall be entitled to receive from the Company shall be limited to the Accrued Obligations. Such payment shall be made to the Executive within the time period required by applicable law (and in all events within sixty (60) days following the date of resignation or voluntary termination).

 

For purposes of this Agreement, a resignation by the Executive shall not be deemed to be voluntary without Good Reason if, without the Executive’s prior consent, the Executive is (1) assigned to a position other than the Senior Vice President (other than for Cause or by reason of his Disability) or assigned duties materially inconsistent with such position if either such change in assignment constitutes a material diminution in the Executive’s authority, duties or responsibilities, or (2) directed to report to anyone other than the CEO if such change in reporting duties constitutes a material diminution in the authority, duties or responsibilities of the supervisor to whom the Executive is required to report; provided that the Executive has notified the Company within the first ninety (90) days following the initial date of such change in assignment or reporting duties that the Executive regards such change in assignment or reporting duties as grounds justifying resignation under this Section 5(d)  and the Company has failed to cure such change in assignment or reporting duties within ninety (90) days following its receipt of

 

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such notice from the Executive; and provided further that the Executive resigns under this Section 5(d)  within six (6) months following the initial existence of a change in assignment or reporting duties described herein.

 

(e)                                   Non-Renewal . The Executive’s employment shall terminate in the event that the then-current Employment Term expires by reason of a party giving a notice of an election not to renew as provided in Section 2 . If the Executive’s employment terminates due to non-renewal of the Agreement, the amount the Executive shall be entitled to receive from the Company shall be limited to the Accrued Obligations. Such payment shall be made to the Executive within the time period required by applicable law (and in all events within sixty (60) days following the expiration of the then-current term).

 

6.                                       EFFECT OF CHANGE IN CORPORATE CONTROL

 

(a)                                  Accelerated Vesting of Awards . In the event of a “change in control” (as such term is defined in the Plan), the vesting of any options, restricted shares or other awards granted to the Executive under the terms of the Plan shall be accelerated (to the extent permitted by the terms of the Plan) and such awards shall become immediately vested in full and, in the case of stock options, exercisable in full.

 

(b)                                  Severance Payment . If, during the Employment Term at any time during the period of twelve (12) consecutive months following the occurrence of a Change in Corporate Control, the Executive is involuntarily terminated (other than for Cause) or the Executive terminates his employment for Good Reason, then subject to compliance with the restrictive covenants in Section 9 and Section 10 and the execution and timely return by the Executive of the Release, the Executive shall be entitled to receive a lump sum severance payment equal to the present value of a series of monthly payments for twenty-four (24) months, each in an amount equal to one-twelfth (1/12th) of the sum of (i) the Executive’s Base Salary, as in effect at the time of the Change in Corporate Control, and (ii) the average of the annual bonuses paid to the Executive for the prior two fiscal years of the Company ending prior to the Change in Corporate Control, if any. Such present value shall be calculated using a discount rate equal to the interest rate on 90-day Treasury bills, as reported in the Wall Street Journal (or similar publication) on the date of the Change in Corporate Control. Such lump sum payment shall be made to the Executive within sixty (60) days following the date of such involuntary termination.

 

In addition, if during the Employment Term within twelve (12) months after a Change in Corporate Control the Executive is involuntarily terminated (other than for Cause) or the Executive terminates his employment for Good Reason, he shall be entitled to continued coverage at the Company’s expense under any health insurance programs maintained by the Company in which the Executive participated at the time of his termination, which coverage shall be continued for eighteen (18) months or until, if earlier, the date the Executive obtains comparable coverage under a group health plan maintained by a new employer. To the extent the benefits provided under the immediately preceding sentence are otherwise taxable to the Executive, such benefits, for purposes of Section 409A of the Code (and the regulations and other guidance issued thereunder) shall be provided as separate monthly in-kind payments of those benefits, and to the extent those benefits are subject to and not otherwise excepted from Section 409A of the Code, the provision of the in-kind benefits during one calendar year shall not affect the in-kind benefits to be provided in any other calendar year.

 

(c)                                   Definition of Change in Corporate Control . For purposes of this Agreement, a “Change in Corporate Control” shall include any of the following events:

 

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(i)                                      The acquisition in one or more transactions of more than fifty percent (50%) of the Company’s outstanding Common Shares (or the equivalent in voting power of any class or classes of securities of the Company entitled to vote in elections of trustees) by any Company, or other person or group (within the meaning of Section 14(d)(3) of the Securities Exchange Act of 1934, as amended);

 

(ii)                                   Any transfer or sale of substantially all of the assets of the Company, or any merger or consolidation of the Company into or with another Company in which the Company is not the surviving entity;

 

Provided, however, that no event shall constitute a Change in Corporate Control unless such event is also a “change in ownership”, a “change in effective control” or a “change in the ownership of a substantial portion of the assets” of the Company, as determined in accordance with Section 409A of the Code, and the regulations and guidance issued thereunder.

 

7.                                       DEATH

 

If the Executive dies during the Employment Term, the Company shall pay to the Executive’s surviving spouse or if there is no surviving spouse, the Executive’s estate, a lump sum payment equal to the Accrued Obligations. Such payment shall be paid within the time period required by applicable law (and in all events within sixty (60) days following the date of the Executive’s death). In addition, the death benefits payable by reason of the Executive’s death under any retirement, deferred compensation, life insurance or other employee benefit plan maintained by the Company shall be paid to the beneficiary designated by the Executive, and the options, restricted shares or other awards held by the Executive under the Company’s equity incentive plans shall become fully vested, and, in the case of options, exercisable in full, in accordance with the terms of the applicable plan or plans.

 

8.                                       WITHHOLDING

 

The Company shall, to the extent permitted by law, have the right to withhold and deduct from any payment hereunder any federal, state or local taxes of any kind required by law to be withheld with respect to any such payment.

 

9.                                       PROTECTION OF CONFIDENTIAL INFORMATION

 

During the Executive’s employment with the Company, the Company shall grant the Executive otherwise prohibited access to its trade secrets and confidential information which are not known to the Company’s competitors or within the Company’s industry generally, which were developed by the Company over a long period of time and/or at its substantial expense, and which are of great competitive value to the Company, and access to the Company’s customers and clients. For purposes of this Agreement, “Confidential Information” includes all trade secrets and confidential and proprietary information of the Company, including, but not limited to, the following: financial models, financial information and data, business methods, electronic files, computer drives/disks, passwords, address and telephone lists, internal memoranda, correspondence, business strategies, business plans and/or projections, lease forms, construction contract forms, development and construction management service agreements, tenant lists, lease terms, rates, rent rolls, strategies, improvements, discoveries, plans for research or future business, infrastructure, marketing and sales plans and strategies, budgets, customer and client information, employee, customer and client nonpublic personal information, supplier lists, business records, audit processes, management methods and information, reports, recommendations and conclusions, information regarding the names, contact information, skills and compensation of employees and contractors of the Company, other information not generally known to the public, and other business

 

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information disclosed to the Executive by the Company, either directly or indirectly, in writing, orally, or by drawings or observation.

 

The Executive acknowledges and agrees that Confidential Information is proprietary to and a trade secret of the Company and, as such, is a special and unique asset of the Company, and that any disclosure or unauthorized use of any Confidential Information by the Executive will cause irreparable harm and loss to the Company. The Executive understands and acknowledges that each and every component of the Confidential Information (i) has been developed by the Company at significant effort and expense and is sufficiently secret to derive economic value from not being generally known to other parties, and (ii) constitutes a protectable business interest of the Company. The Executive acknowledges and agrees that the Company owns the Confidential Information. The Executive agrees not to dispute, contest, or deny any such ownership rights either during or after the Executive’s employment with the Company. The Executive agrees to preserve and protect the confidentiality of all Confidential Information. The Executive agrees that the Executive shall not at any time (whether during or after the Executive’s employment), directly or indirectly, disclose to any unauthorized person or use for the Executive’s own account any Confidential Information without the Company’s consent. Throughout the Executive’s employment and at all times thereafter: (i) the Executive shall hold all Confidential Information in the strictest confidence, take all reasonable precautions to prevent its inadvertent disclosure to any unauthorized person, and follow all policies of the Company protecting the Confidential Information; (ii) the Executive shall not, directly or indirectly, utilize, disclose or make available to any other person or entity, any of the Confidential Information, other than in the proper performance of the Executive’s duties; (iii) the Executive shall not use the Confidential Information or trade secrets to attempt to solicit, induce, recruit, or take away clients or customers of the Company; and (iv) if the Executive learns that any person or entity is taking or threatening to take any actions which would compromise any Confidential Information, the Executive shall promptly advise the Company of all facts concerning such action or threatened action. The foregoing shall not apply to any information which is already in the public domain, or is generally disclosed by the Company or is otherwise in the public domain at the time of disclosure (other than through an unauthorized disclosure by the Executive or any other person).

 

Upon the termination of the Executive’s employment for any reason, the Executive shall immediately return and deliver to the Company any and all Confidential Information, software, devices, cell phones, personal data assistants, credit cards, data, reports, proposals, lists, correspondence, materials, equipment, computers, hard drives, papers, books, records, documents, memoranda, manuals, e-mail, electronic or magnetic recordings or data, including all copies thereof, which belong to the Company or relate to the Company’s business and which are in the Executive’s possession, custody or control, whether prepared by the Executive or others. If at any time after termination of the Executive’s employment he determines that he has any Confidential Information in his possession or control, the Executive shall immediately return to the Company all such Confidential Information in the Executive’s possession or control, including all copies and portions thereof.

 

The Executive recognizes that because his work for the Company may bring him into contact with confidential and proprietary information of the Company, the restrictions of this Section 9 are required for the reasonable protection of the Company and its investments and for the Company’s reliance on and confidence in the Executive.

 

10.                                RESTRICTIVE COVENANTS

 

In consideration for (i) the Company’s promise to provide Confidential Information to the Executive, (ii) the substantial economic investment made by the Company in the Confidential Information and goodwill of the Company, and/or the business opportunities disclosed or entrusted to the Executive,

 

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(iii) access to the Company’s customers and clients, and (iv) the Company’s employment of the Executive pursuant to this Agreement and the compensation and other benefits provided by the Company to the Executive, to protect the Company’s Confidential Information and business goodwill of the Company, the Executive agrees to the following restrictive covenants.

 

(a)                                  Non-Competition . The Executive hereby agrees that during the Restricted Period (defined below), other than in connection with the Executive’s duties under this Agreement, the Executive shall not, and shall not use any Confidential Information to, without the prior consent of the Company, directly or indirectly, either individually or as an owner, principal, partner, stockholder, manager, contractor, distributor, lender, investor, consultant, agent, employee, co-venturer or as a director or officer of any corporation or association, or in any other manner or capacity whatsoever, become employed by, control, carry on, join, lend money for, engage in, establish, perform services for, invest in, solicit investors for, consult for, do business with or otherwise engage in any Competing Business (defined below) within the Restricted Territory (defined below); provided however, that nothing in this Section 10(a)  shall prevent the Executive from owning a passive investment in up to two percent (2%) of the stock of a publicly traded corporation engaged in a Competing Business and such ownership shall not be considered to be a violation of Section 10(a) .

 

(i)                                      “Restricted Period” means during the Executive’s employment with the Company and for a period equal to the later of (i) one (1) year immediately following the date of the Executive’s termination from employment for any reason or (ii) the number of months for which the Executive is receiving monthly severance payments under Section 5 or Section 6 of this Agreement.

 

(ii)                                   “Competing Business” means any business, individual, partnership, firm, corporation or other entity that provides the same or substantially similar products or services as those provided by the Company during the Executive’s employment, which includes, without limitation, the business of buying, managing, holding and selling medical office buildings.

 

(iii)                                As Senior Vice President of the Company, the Executive has responsibility for the Company’s operations throughout the United States. Because the Company does business throughout the United States, the “Restricted Territory” means the United States and any other region or state in which the Executive performed services, was assigned responsibility for the Company, or about which the Executive received Confidential Information.

 

(b)                                  Non-Solicitation . The Executive agrees that during the Restricted Period, other than in connection with the Executive’s duties under this Agreement, the Executive shall not, and shall not use any Confidential Information to, directly or indirectly, either individually or as an owner, principal, partner, stockholder, manager, contractor, distributor, lender, investor, consultant, agent, employee, co-venturer or as a director or officer of any corporation or association, or in any other manner or capacity whatsoever, and whether personally or through other persons:

 

(i)                                      Solicit business from, interfere with, attempt to solicit business with, or do business with any customer or client of the Company with whom the Company did business or who the Company solicited within the preceding two (2) years, and who or which: (1) the Executive contacted, called on, serviced, or did business with during his employment with the Company; (2) the Executive learned of as a result of his

 

9

 

employment with the Company; or (3) about whom the Executive received Confidential Information. This restriction applies only to business which is in the scope of services or products provided by the Company; or

 

(ii)                                   Solicit, induce, or attempt to solicit or induce, engage or hire, on behalf of himself or any other person or entity, any person who is an employee or full-time consultant of the Company or who was employed or retained by the Company within the preceding two (2) years.

 

(c)                                   Non-Disparagement . The Executive shall refrain, both during and after the Employment Term, from publishing any oral or written statements about the Company or any of the Company’s board of trustees, equity holders, members, shareholders, managers, officers, employees, consultants, agents or representatives that (i) are slanderous, libelous or defamatory; or (ii) place the Company or any of its trustees, managers, officers, employees, consultants, agents or representatives in a false light before the public. A violation or threatened violation of this prohibition may be enjoined by the courts. The rights afforded the Company under this provision are in addition to any and all rights and remedies otherwise afforded by law.

 

(d)                                  Tolling . If the Executive violates any of the restrictions contained in Section 10, the Restricted Period shall be suspended and shall not run in favor of the Executive from the time of the commencement of any violation until the time when the Executive cures the violation to the satisfaction of the Company.

 

(e)                                   Reasonableness . The Executive hereby represents to the Company that he has read and understands, and agrees to be bound by, the terms of this Section 10 . The Executive acknowledges that the geographic scope and duration of the covenants contained in this Section 10 are fair and reasonable in light of (i) the nature and wide geographic scope of the operations of the Company’s business; (ii) the Executive’s level of control over and contact with the business in the Restricted Territory; and (iii) the amount of compensation, trade secrets and Confidential Information that the Executive is receiving in connection with his employment by the Company. It is the desire and intent of the parties that the provisions of Section 10 be enforced to the fullest extent permitted under applicable law, whether now or hereafter in effect and therefore, to the extent permitted by applicable law, the Executive and the Company hereby waive any provision of applicable law that would render any provision of Section 10 invalid or unenforceable.

 

11.                                INJUNCTIVE RELIEF

 

The Executive acknowledges that (a) compliance with the covenants set forth in Section 9 and Section 10 of this Agreement are necessary to protect the Company’s business and Confidential Information; (b) a breach or threatened breach of any of such covenants will irreparably harm the Company; and (c) an award of money damages will not be adequate to remedy such harm. Consequently, the Executive acknowledges and agrees that, in addition to other remedies, in the event the Executive breaches or threatens to breach any of the covenants contained in this Agreement, the Company shall be entitled to both a temporary and/or permanent injunction to prevent the continuation of such harm and enforce such provisions and money damages insofar as they can be determined, including, without limitation, all costs and reasonable attorneys’ fees incurred by or on behalf of the Company in the enforcement of the terms of this Agreement. The Company may apply to any court of competent jurisdiction for a temporary restraining order, preliminary injunction or other interim or conservatory relief, as necessary or applicable. This provision with respect to injunctive relief shall not, however, diminish the Company’s right to claim and recover damages.

 

10

 

It is expressly understood and agreed that although the parties consider the restrictions contained in this Agreement to be reasonable, if a court determines that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction on the activities of the Executive, no such provision of this Agreement shall be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such extent as such court may judicially determine or indicate to be reasonable. By agreeing to this contractual modification prospectively at this time, the Company and the Executive intend to make this provision enforceable under the law or laws of all applicable jurisdictions so that the entire agreement not to compete and this Agreement as prospectively modified shall remain in full force and effect and shall not be rendered void or illegal.

 

12.                                CLAWBACK

 

Any compensation paid to the Executive shall be subject to recovery by the Company, and the Executive shall be required to repay such compensation, if (i) such recovery and repayment is required by applicable law or (ii) either in the year such compensation is paid, or within the three (3) year period thereafter the Company is required to prepare an accounting restatement due to material noncompliance of the Company with any financial reporting requirement under applicable securities laws and the Executive is either (A) a named executive officer or (B) an employee who is responsible for preparation of the Company’s financial statements. The parties agree that the repayment obligations set forth in this Section 12 shall only apply to the extent repayment is required by applicable law, or to the extent the Executive’s compensation is determined to be in excess of the amount that would have been deliverable to the Executive taking into account any restatement or correction of any inaccurate financial statements or materially inaccurate performance metric criteria.

 

13.                                MANDATORY MEDIATION AND ARBITRATION

 

In the event there is an unresolved legal dispute between the Executive and the Company that involves legal rights or remedies arising from this Agreement or the employment relationship between the Executive and the Company (“Dispute”), except as otherwise provided herein, before commencing an arbitration action or other legal proceeding, the parties shall promptly submit the Dispute to mediation, using a mediator jointly selected by the parties, or if the parties are unable to agree upon a mediator then the Dispute shall be submitted to non-binding mediation with the American Arbitration Association in Waukesha County, Wisconsin in accordance with its rules. The cost of the mediation shall be borne equally between the parties. If the parties are unable to achieve a mutually agreeable resolution of the Dispute through mediation, the parties agree to submit their Dispute to binding arbitration under the authority of the Federal Arbitration Act and/or the Wisconsin Uniform Arbitration Act; provided, however, that the Company may pursue a temporary restraining order, preliminary injunction and/or other interim or conservatory relief in accordance with Section 11 above, with related expedited discovery for the parties, in a court of law, and, thereafter, require arbitration of all issues of final relief. Insured workers compensation claims (other than wrongful discharge claims), and claims for unemployment insurance are excluded from arbitration under this provision. The Arbitration will be conducted by the American Arbitration Association pursuant to the American Arbitration Association’s National Rules for the Resolution of Employment Disputes. The arbitrator(s) shall be duly licensed to practice law in the State of Wisconsin. Each party will be allowed at least one deposition. The arbitrator(s) shall be required to state in a written opinion all facts and conclusions of law relied upon to support any decision rendered. No arbitrator will have authority to render a decision that contains an outcome determinative error of state or federal law, or to fashion a cause of action or remedy not otherwise provided for under applicable state or federal law. Any dispute over whether the arbitrator(s) has failed to comply with the foregoing will be resolved by summary judgment in a court of law. In all other respects, the arbitration process will be conducted in accordance with the American Arbitration Association’s National Rules for the Resolution of Employment Disputes. The Company will pay the arbitration costs and arbitrator’s fees beyond $500,

 

11

 

subject to a final arbitration award on who should bear costs and fees. All proceedings shall be conducted in Waukesha County, Wisconsin, or another mutually agreeable site. The duty to arbitrate described above shall survive the termination of this Agreement. Except as otherwise provided above, the parties hereby waive trial in a court of law or by jury. All other rights, remedies, statutes of limitation and defenses applicable to claims asserted in a court of law will apply in the arbitration.

 

14.                                NOTICES

 

All notices or communications hereunder shall be in writing and sent certified or registered mail, return receipt requested, postage prepaid, addressed as follows (or to such other address as such party may designate in writing from time to time):

 

If to the Company:

 

Physicians Realty Trust

735 North Water Street

Suite 1000

Milwaukee, Wisconsin 53202

(414) 978.6400

Attention: Corporate Secretary

 

If to the Executive:

 

Mark D. Theine

c/o Physicians Realty Trust

735 North Water Street

Suite 1000

Milwaukee, Wisconsin 53202

(414) 978.6400

Attention: Corporate Secretary

 

The actual date of receipt, as shown by the receipt therefor, shall determine the time at which notice was given.

 

15.                                SEPARABILITY

 

If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect.

 

16.                                ASSIGNMENT

 

This Agreement shall be binding upon and inure to the benefit of the heirs and representatives of the Executive and the assigns and successors of the Company, but neither this Agreement nor any rights hereunder shall be assignable or otherwise subject to hypothecation by the Executive.

 

17.                                ENTIRE AGREEMENT

 

This Agreement represents the entire agreement of the parties and shall supersede any and all previous contracts, arrangements or understandings (whether oral or written) between the Company and the Executive with respect to the subject matter hereof. No oral statements or prior written material not

 

12

 

specifically incorporated in this Agreement shall be of any force and effect. The Agreement may be amended at any time by mutual written agreement of the parties hereto. The Executive acknowledges and represents that in executing this Agreement, he did not rely on, has not relied on, and specifically disavows any reliance on any communications, promises, statements, inducements, or representation(s), oral or written, by the Company, except as expressly contained in this Agreement. The parties represent that they relied on their own judgment in entering into this Agreement.

 

18.                                SECTION 409A COMPLIANCE

 

This Agreement and the benefits or payments to be provided under this Agreement are intended to be exempt from with the requirements of Section 409A of the Code, and shall be interpreted and construed consistently with such intent, provided, that if the Agreement is not exempt, the Agreement is drafted in a manner to comply with the requirements of Section 409A of the Code. The payments to the Executive pursuant to this Agreement are also intended to be exempt from Section 409A of the Code to the maximum extent possible, under either the separation pay exemption pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury Regulation Section 1.409A-1(b)(4). Each payment and benefit hereunder shall constitute a “separately identified” amount within the meaning of Treasury Regulation Section 1.409A-2(b)(2). In the event the terms of this Agreement would subject the Executive to taxes or penalties under Section 409A of the Code (“409A Penalties”), the Company and the Executive shall cooperate diligently to amend the terms of the Agreement to avoid such 409A Penalties, to the extent possible. To the extent any amounts under this Agreement are payable by reference to Executive’s “termination,” “termination of employment,” or similar phrases, such term shall be deemed to refer to the Executive’s “separation from service” (as defined in Treasury Regulation Section 1.409A-1(h) (without regard to any permissible alternative definition thereunder) with the Company and all entities treated as a single employer with the Company under Sections 414(b) and (c) of the Code but substituting a 50% ownership level for the 80% ownership level set forth therein). Notwithstanding any other provision in this Agreement, if the Executive is a “Specified Employee” (as defined in Treasury Regulation Section 1.409A-1(i) on December 31st of the prior calendar year), as of the date of the Executive’s separation from service, then to the extent any amount payable under this Agreement (i) constitutes the payment of nonqualified deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable upon the Executive’s separation from service and (iii) under the terms of this Agreement would be payable prior to the six-month anniversary of the Executive’s separation from service, such payment shall be delayed and paid to the Executive, together with interest at an annual rate equal to the interest rate specified by Regions Bank for a six-month certificate of deposit, on the first day of the first calendar month beginning seven (7) months following the date of termination, or, if earlier, within ninety (90) days following the Executive’s death to the Executive’s surviving spouse (or such other beneficiary as the Executive may designate in writing). Any reimbursement or advancement payable to the Executive pursuant to this Agreement shall be conditioned on the submission by the Executive of all expense reports reasonably required by the Company under any applicable expense reimbursement policy, and shall be paid to the Executive within thirty (30) days following receipt of such expense reports, but in no event later than the last day of the calendar year following the calendar year in which the Executive incurred the reimbursable expense. Any amount of expenses eligible for reimbursement, or in-kind benefit provided, during a calendar year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefit to be provided, during any other calendar year. The right to any reimbursement or in-kind benefit pursuant to this Agreement shall not be subject to liquidation or exchange for any other benefit.

 

19.                                GOVERNING LAW

 

This Agreement shall be construed, interpreted, and governed in accordance with the laws of the State of Wisconsin, other than the conflict of laws provisions of such laws. Subject to Section 13 , venue

 

13

 

of any litigation arising from this Agreement or any disputes relating to the Executive’s employment shall be in the United States District Court for the Eastern District of Wisconsin, or a state district court of competent jurisdiction in Waukesha County, Wisconsin. The Executive consents to personal jurisdiction of the United States District Court for the Eastern District of Wisconsin, or a state district court of competent jurisdiction in Waukesha County, Wisconsin for any dispute relating to or arising out of this Agreement or the Executive’s employment, and Executive agrees that Executive shall not challenge personal or subject matter jurisdiction in such courts.

 

20.                                SURVIVAL

 

The Executive’s post-termination obligations in Section 9 and Section 10 shall continue as provided in this Agreement.

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

14

 

IN WITNESS WHEREOF , the Company has caused this Agreement to be duly executed, and the Executive has hereunto set his hand, as of the day and year first above written.

 

	PHYSICIANS REALTY TRUST
	By:	/s/ Tommy G. Thompson
	Its: Chairman, Board of Trustees, Physicians Realty Trust
	EXECUTIVE:
	/s/ Mark D. Theine
	Mark D. Theine

 

15

Exhibit 10.5

 

PHYSICIANS REALTY TRUST

 

INCENTIVE BONUS PLAN

 

SECTION 1
ESTABLISHMENT AND PURPOSE

 

The Physicians Realty Trust Incentive Bonus Plan (the “Plan”) has been established by the Company, effective as of January 1, 2014, to promote the success of the Company and its Subsidiaries by providing to selected Executives of the Company and its Subsidiaries the opportunity to earn or receive bonus incentives .

 

SECTION 2
DEFINITIONS AND TERMS

 

Except as otherwise expressly provided or the context otherwise requires, financial and accounting terms are used as defined for purposes of, and shall be determined in accordance with, generally accepted accounting principles used and applied in the United States.  The following words and phrases as used herein shall have the following meanings:

 

(a)           “ Base Salary ” with respect to any Performance Period shall mean the gross base salary an Executive is entitled to receive from the Company or any of its Subsidiaries for that Performance Period, prior to any reductions for salary deferred pursuant to any deferred compensation plan or for contributions to a plan qualifying under Code Section 401(k) or to a cafeteria plan under Code Section 125.

 

(b)           “ Board ” shall mean the board of trustees of the Company, as duly elected from time to time.

 

(c)           “ Code ” shall mean the Internal Revenue Code of 1986, as amended, and as interpreted by the regulations thereunder.

 

(d)           “ Committee ” shall mean the Compensation Committee of the Board, or such other committee as may be appointed by the Board from time to time, or if no such committee is appointed, the entire Board.

 

(e)           “ Company ” shall mean Physicians Realty Trust, a Maryland real estate investment trust.

 

(f)            “ Executive ” shall mean a key employee (including any officer) performing Services for the Company or its Subsidiaries.

 

(g)           “ Effective Date ” shall mean January 1, 2014.

 

(h)           “ Fiscal Year ” shall mean the fiscal year of the Company.

 

(i)            “ Incentive Bonus ” shall mean a cash payment or payment opportunity under the Plan, as the context requires.

 

 

(j)            “ Participant ” shall mean an Executive selected by the Committee to participate in the Plan for any given Performance Period.

 

(k)           “ Performance Goals ” shall mean the specific performance measure or measures that are approved for each Participant for the Performance Period.  Such performance measures may include any one or any combination of financial, operational, sales or other goals, which may be Company-wide, on a business unit or individual basis or otherwise, and may be expressed, for example, in terms of return on invested capital, revenue, net income or loss, real estate investments, funds from operations, or the attainment of various growth objectives.

 

(l)            “ Performance Period ” means the Fiscal Year or other period with respect to which Performance Goals are approved.

 

(m)          “ Plan ” shall mean the Physicians Realty Trust Incentive Bonus Plan, as amended from time to time.

 

(n)           “ Services ” shall mean services rendered to the Company or any of its Subsidiaries as an Executive.

 

(o)           “ Subsidiary ” shall mean any corporation, partnership, limited liability company or other entity as to which 50% of the outstanding voting stock, shares or equity interests shall now or hereafter be owned or controlled directly by a person, any Subsidiary of such person, or any Subsidiary of such Subsidiary.

 

(p)           “ Total and Permanent Disability ” means a Participant is qualified for long-term disability benefits under the Company’s or a Subsidiary’s disability plan or insurance policy; or, if no such plan or policy is then in existence or if the Participant is not eligible to participate in such plan or policy, that the Participant, because of a physical or mental condition resulting from bodily injury, disease, or mental disorder, is unable to perform his or her duties of employment for a period of six (6) continuous months, as determined in good faith by the Committee, based upon medical reports or other evidence satisfactory to the Committee.

 

SECTION 3
ADMINISTRATION OF THE PLAN

 

(a)           Powers of the Committee .  The Plan shall be administered by the Committee.  The Committee shall have the authority, in its sole discretion, to interpret the Plan and to make all determinations specified in or permitted by the Plan or deemed necessary or desirable for its administration or for the conduct of the Committee’s business, including, without limitation, the authority to take the following actions:

 

(i)            to establish Performance Goals for a Performance Period;

 

(ii)           to approve achievement of such Performance Goals;

 

(iii)          to construe, interpret and administer the Plan;

 

(iv)          to amend or terminate the Plan;

 

(v)           to select Executives to become Participants and to determine their Incentive Bonus potential;

 

 

(vi)          to adopt such rules and procedures for the Plan’s administration as the Committee may from time to time deem necessary; and

 

(vii)         to take any other actions deemed necessary or advisable for the interpretation and administration of the Plan.

 

Notwithstanding the foregoing, the Chief Executive Officer may establish individual/business unit Performance Goals for a Performance Period for an Executive (other than the Chief Executive Officer).  Notwithstanding any other provision of the Plan, the Board may elect, in its sole discretion, to determine the amount of any Incentive Bonus for a Performance Period and to approve or disapprove any proposed Performance Goal or Performance Period established by the Committee with respect to any Participant.  Absent any modification or disapproval by the Board, the Committee’s determination of any Incentive Bonus or establishment of any Performance Goal or Performance Period shall be final, conclusive and binding.

 

(b)           Requisite Action .  A majority (but not fewer than two) of the members of the Committee shall constitute a quorum.  The vote of a majority of those present at a meeting at which a quorum is present or the unanimous written consent of the Committee shall constitute action by the Committee.

 

SECTION 4
SELECTION OF PARTICIPANTS

 

(a)           Selection of Participants .  For each Performance Period, the Committee shall determine, at the time the Performance Goals are set, those Executives who will be Participants in the Plan.  No Executive shall have any right to participate in the Plan.  Any Executive selected by the Committee for participation during any one Performance Period will not by virtue of such participation have the right to be selected as a Participant for any other Performance Period.

 

(b)           Effect of Mid-Year Commencement of Services .  If Services as an Executive commence after the Performance Goals are established for a Performance Period, the Committee may select such Executive for participation during the remainder of the Performance Period and may grant an Incentive Bonus to such Executive that is proportionately adjusted based on the period of actual Services during such Performance Period.

 

SECTION 5
PERFORMANCE GOALS

 

(a)           Performance Goals .  The Committee shall establish the Performance Goals for each Performance Period; provided the Chief Executive Officer may establish individual/business unit Performance Goals for the Performance Period for an Executive (other than the Chief Executive Officer).  At the time the Performance Goals are selected, the Committee (or the Chief Executive Officer with respect to individual/business unit Performance Goals) shall provide, in terms of a formula or standard for each Participant, and for any Executive who may become a Participant after the Performance Goals are set, the method of computing the specific amount of Incentive Bonus payable to such Participant if the Performance Goal is attained, subject to Section 6(a) below.  Notwithstanding the preceding sentence, the Committee or the Board may at any time modify or waive any Performance Goal or the terms and conditions of payment of any Incentive Bonus as it may deem desirable in carrying out the purposes of the Plan or take into account such other factors as it deems appropriate in administering any aspect of the Plan.

 

 

(b)           Approval of Performance Goal Attainment .  As soon as practicable following the end of the Performance Period, but no later than March 15 of the calendar year next following the end of the Performance Period, the Committee shall approve the extent to which the Performance Goals were achieved in respect of such Performance Period.

 

SECTION 6
DETERMINATION AND PAYMENT OF INCENTIVE BONUS

 

(a)           Provision for Incentive Bonus .  A Participant may receive an Incentive Bonus for a Performance Period if and only if an applicable Performance Goal established by the Committee (or the Chief Executive Officer with respect to individual/business unit Performance Goals) is attained.

 

(b)           Determination of Incentive Bonus .  As soon as practicable following approval by the Committee of the extent of the achievement of each Performance Goal for the applicable Performance Period, the Committee shall compute the Participant’s Incentive Bonus for the Performance Period.

 

(c)           Termination of Employment During Performance Period . Unless otherwise determined by the Committee or if required by applicable law or pursuant to any written agreement between the Company or any of its Subsidiaries and the Participant:

 

(i)            no Incentive Bonus shall be payable to a Participant (and a Participant shall not be entitled to receive any Incentive Bonus) if the Participant is not employed by the Company or any Subsidiary of the Company on the last day of the Performance Period for which the Incentive Bonus is otherwise payable, unless the Executive’s employment with the Company and its Subsidiaries terminates during the Performance Period by reason of the Executive’s death or Total and Permanent Disability, and

 

(ii)           in the event of the Executive’s death or Total and Permanent Disability during the Performance Period, the Executive (or the Executive’s legal representative or beneficiary) shall receive an Incentive Bonus equal to the product of (A) the Incentive Bonus he or she would have received for the entire Performance Period, multiplied by (B) a fraction, the numerator of which is the number of days during the Performance Period that the Executive was an employee of the Company or any of its Subsidiaries, and the denominator of which is the number of days in the Performance Period.

 

Payment of such Incentive Bonus shall be made in accordance with Section 6(d) below.  In the event of any conflict between the terms of any written agreement between the Company or any of its Subsidiaries and the Participant and the Plan regarding the payment of the Incentive Bonus upon termination of employment with the Company or any of its Subsidiaries, the terms of the written agreement shall control.

 

(d)           Form and Time of Payment .  An Incentive Bonus shall be paid to the Participant in a lump sum cash payment by March 15 of the calendar year following the end of the Performance Period to which such Incentive Bonus relates.  The Committee may, in its discretion, make partial payment of the anticipated amount of any Incentive Bonus before determination of the final amount.

 

SECTION 7
MISCELLANEOUS

 

(a)           No Right to Incentive Bonus or Continued Employment .  Neither the establishment of the Plan nor selection as a Participant nor any action of the Company, any of its Subsidiaries, the Board or the Committee in respect of the Plan shall be held or construed to confer upon

 

 

any person any legal right to receive, or any interest in, an Incentive Bonus, or any legal right to be continued in the employ of the Company or any of its Subsidiaries or to remain an Executive, unless the Executive has a written agreement with the Company or any of its Subsidiaries that expressly provides otherwise.  The Company and its Subsidiaries expressly reserve any and all rights to discharge a Participant in its or their sole discretion, with or without notice, with or without cause and without liability of any person or entity under the Plan or otherwise, except to the extent otherwise expressly provided in any written agreement between the Company or any of its Subsidiaries and the Participant.

 

(b)           Discretion of the Company, Board and Committee .  Any decisions made or action taken by the Company, the Board, the Committee or the Chief Executive Officer in the exercise of its or their authority under the Plan shall be within the absolute discretion of such entity and shall be conclusive and binding for all purposes and upon all persons.

 

(c)           Absence of Liability . No member of the Board or the Committee, nor any officer or employee of the Company or any of its Subsidiaries acting on behalf of the Board or the Committee, shall be personally liable for any act of commission or omission except for his or her willful and intentional wrongdoing, and all members of the Board and the Committee and each and every officer or employee of the Company or any of its Subsidiaries acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such act.

 

(d)           No Funding of Plan .  Incentive Bonuses shall be paid from the general assets of the Company and its Subsidiaries, and no fund or trust shall be deemed to have been established under the Plan.  Any rights of a Participant or former Participant under the Plan shall be limited to those of a general unsecured creditor.

 

(e)           Non-Transferability of Benefits and Interests .  Except as expressly provided in writing by the Committee, no benefit payable under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any such attempted action shall be void and no such benefit shall be in any manner liable for or subject to debts, contracts, liabilities, engagements or torts of any Participant or former Participant.  The preceding sentence shall not apply to an assignment of a contingency or a payment due after the death of the Executive to the deceased Executive’s legal representative or beneficiary.  No Executive or other person shall have any claim or right to receive benefits under the Plan except as provided in the Plan.

 

(f)            Governing Law .  The Plan shall be governed by and construed in accordance with the laws of the State of Wisconsin, without regard to its conflicts of laws provisions.

 

(g)           Amendment, Suspension or Termination of Plan .  The Board or the Committee may from time to time amend, suspend or terminate the Plan, in whole or in part, and if suspended or terminated, the Board or the Committee may reinstate any or all of the provisions of the Plan.  No additional Incentive Bonuses may be payable after termination of the Plan.  Termination of the Plan shall not affect any Incentive Bonuses due and payable on the date of termination, and such Incentive Bonuses shall continue to be subject to the terms of the Plan notwithstanding its termination.

 

(h)           No Fiduciary Relationship . The officers and trustees of the Company and its Subsidiaries shall have no duty to manage or operate the Company and its Subsidiaries in order to maximize the benefits granted to Participants hereunder but rather shall have full discretionary power to make all management and operational decisions based on their determination of the respective best interests of the Company, its Subsidiaries and its and their shareholders.  The Plan shall not be construed to create any fiduciary relationship.

 

 

(i)            Headings .  The headings in the Plan are inserted for convenience of reference only and in no way define, describe or limit the scope or intent of the Plan or any of the provisions hereof.

 

(j)            Severability .  If any provision of the Plan or the application thereof to any person or circumstance is held to be illegal, invalid or unenforceable to any extent or for any reason, such provision shall be severed from the Plan and shall not invalidate the remaining provisions of the Plan, and the remaining provisions of the Plan and the application thereof shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from the Plan.  A provision which is legal, valid and enforceable shall be substituted for the severed provision.

 

(k)           Taxes .  The Company and its Subsidiaries shall be entitled to deduct from amounts payable hereunder any sums required by federal, state or local tax law to be withheld with respect to such payments.

 

(l)            Construction .  Except where the context requires otherwise, words in the singular shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa.  The failure to capitalize or the erroneous capitalization of any word or term shall not affect the definition of such word or term.

 

(m)          Successors .  The Plan is binding on and will inure to the benefit of any successor to the Company, whether by way of merger, consolidation, purchase or otherwise.

 

(n)           Clawback.   Any Incentive Bonus paid to the Executive shall be subject to recovery by the Company, and the Executive shall be required to repay such Incentive Bonus, if (i) such recovery and repayment is required by applicable law or (ii) either in the year such compensation is paid, or within the three (3) year period thereafter the Company is required to prepare an accounting restatement due to material noncompliance of the Company with any financial reporting requirement under applicable securities laws and the Executive is either (A) a named executive officer or (B) an employee who is responsible for preparation of the Company’s financial statements.  The repayment obligations set forth in this Section 7(n) shall only apply to the extent repayment is required by applicable law, or to the extent the Executive’s compensation is determined to be in excess of the amount that would have been deliverable to the Executive taking into account any restatement or correction of any inaccurate financial statements or materially inaccurate performance metric criteria.

 

(o)           Code Section 409A .  This Plan and the Incentive Bonuses to be provided under this Plan are intended to be exempt from with the requirements of Section 409A of the Code, and shall be interpreted and construed consistently with such intent, provided, that if the Plan or an Incentive Bonus is not exempt, the Plan is drafted in a manner to comply with the requirements of Section 409A of the Code.  The payments to the Executive pursuant to this Plan are also intended to be exempt from Section 409A of the Code to the maximum extent possible as short-term deferrals pursuant to Treasury Regulation Section 1.409A-1(b)(4).  Notwithstanding any other provision in this Agreement, if the Executive is a “Specified Employee” (as defined in Treasury Regulation Section 1.409A-1(i) on December 31st of the prior calendar year), as of the date of the Executive’s “separation from service” (as defined in Treasury Regulation Section 1.409A-1(h)), then to the extent any amount payable under this Agreement (i) constitutes the payment of nonqualified deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable upon the Executive’s separation from service and (iii) under the terms of this Agreement would be payable prior to the six-month anniversary of the Executive’s separation from service, such payment shall be delayed and paid to the Executive, together with interest at an annual rate equal to the interest rate specified by Regions Bank for a six-month certificate of deposit, on the first day of the first calendar month beginning seven months following the date of separation from service, or, if

 

 

earlier, within ninety (90) days following the Executive’s death to the Executive’s surviving spouse (or such other beneficiary as the Executive may designate in writing).

 

Exhibit 10.6

 

FIRST AMENDMENT OF

PHYSICIANS REALTY TRUST 2013 EQUITY INCENTIVE PLAN

 

Physicians Realty Trust, a Maryland real estate investment trust (the “Company”), has previously established the Physicians Realty Trust 2013 Equity Incentive Plan (the “2013 Equity Plan”).  The 2013 Equity Plan provides that the Board of Trustees (the “Board”) of the Company may at any time amend the 2013 Equity Plan, provided that no amendment for which shareholder approval is required shall be effective unless such amendment shall be approved by the requisite vote of the shareholders of the Company.  The Board has previously delegated its power to amend the 2013 Equity Plan to the Compensation Committee (the “Committee”) of the Board.  The Committee has determined that it is advisable to amend the 2013 Equity Plan and that such amendment does not require shareholder approval.

 

Therefore, effective July 22, 2013, the 2013 Equity Plan is amended as follows:

 

1.               By substituting the following sentence for the third sentence of Section 6.6(a) of the 2013 Equity Plan:

 

“If the Performance Award is to be in Common Shares, the Performance Award may provide for the issuance of the Common Shares at the time of the grant of the Performance Award or at the time of the certification by the Committee that the Performance Goals for the performance period have been met.”

 

2.               By substituting for the reference to the “Board” in the first sentence of Article 9 of the 2013 Equity Plan a reference to the “Committee.”

 

3.               By deleting and not replacing Article 16 thereof.

 

In all other respects, the 2013 Equity Plan remains unchanged.

 

The foregoing amendment was approved and adopted by the Compensation Committee of the Board of Trustees of the Company on May 6, 2014.

 

	PHYSICIANS REALTY TRUST
	By:	/s/ John T. Thomas
	Name:	John T. Thomas
	Title:	Chief Executive Officer

 

Exhibit 10.7

 

RESTRICTED SHARE AWARD AGREEMENT

 

PHYSICIANS REALTY TRUST

2013 EQUITY INCENTIVE PLAN

 

1.             Grant of Award .  Pursuant to the Physicians Realty Trust 2013 Equity Incentive Plan (the “Plan”) for Employees, Consultants, and Outside Trustees of Physicians Realty Trust, a Maryland real estate investment trust (the “Company”), the Company grants to

 

(the “Participant”)

 

an Award of Restricted Shares in accordance with Section 6.3 of the Plan.  The number of Common Shares awarded under this Restricted Share Award Agreement (the “Agreement”) is                                            (                    ) shares (the “Awarded Shares”).  The “Date of Grant” of this Award is March 3, 2014.

 

2.             Subject to Plan .  This Agreement is subject to the terms and conditions of the Plan, and the terms of the Plan shall control.  The capitalized terms used herein that are defined in the Plan shall have the same meanings assigned to them in the Plan.  This Agreement is subject to any rules promulgated pursuant to the Plan by the Board or the Committee and communicated to the Participant in writing.

 

3.             Vesting .  Except as specifically provided in this Agreement and subject to certain restrictions and conditions set forth in the Plan, the Awarded Shares shall vest on the first anniversary of the Date of Grant, provided that the Participant is employed by (or if the Participant is a Consultant or an Outside Trustee, is providing services to) the Company or a Subsidiary on that date.

 

All Awarded Shares not previously vested shall immediately become fully vested upon (i) the Participant’s death; (ii) the Participant’s Termination of Service as a result of his Total and Permanent Disability; or (iii) the occurrence of a Change in Control.

 

4.             Forfeiture of Awarded Shares .  Awarded Shares that are not vested in accordance with Section 3 shall be forfeited on the date of the Participant’s Termination of Service.  Upon forfeiture, all of the Participant’s rights with respect to the forfeited Awarded Shares shall cease and terminate, without any further obligations on the part of the Company.

 

5.             Restrictions on Awarded Shares .  Subject to the provisions of the Plan and the terms of this Agreement, from the Date of Grant until the date the Awarded Shares are vested in accordance with Section 3 and are no longer subject to forfeiture in accordance with Section 4 (the “Restriction Period”), the Participant shall not be permitted to sell, transfer, pledge, hypothecate, margin, assign or otherwise encumber any of the Awarded Shares.  Except for these limitations, the Committee may, in its sole discretion, remove any or all of the restrictions on such Awarded Shares whenever it may determine that, by reason of changes in applicable laws or changes in circumstances after the date of this Agreement, such action is appropriate.

 

6.             Legend .  Awarded Shares electronically registered in a Participant’s name shall note that such shares are Restricted Shares.  If certificates for Awarded Shares are issued, the following legend shall be placed on all such certificates:

 

 

On the face of the certificate:

 

“Transfer of these Common Shares is restricted in accordance with conditions printed on the reverse of this certificate.”

 

On the reverse:

 

“The Common Shares are subject to and transferable only in accordance with that certain Physicians Realty Trust 2013 Equity Incentive Plan, a copy of which is on file at the principal office of the Company in Milwaukee, Wisconsin.  No transfer or pledge of the shares evidenced hereby may be made except in accordance with and subject to the provisions of said Plan and Award Agreement.  By acceptance of these Common Shares, any holder, transferee or pledgee hereof agrees to be bound by all of the provisions of said Plan and Award Agreement.”

 

The following legend shall be inserted on a certificate, if issued, evidencing Common Shares issued under the Plan if the shares were not issued in a transaction registered under the applicable federal and state securities laws:

 

“Common Shares represented by this certificate have been acquired by the holder for investment and not for resale, transfer or distribution, have been issued pursuant to exemptions from the registration requirements of applicable state and federal securities laws, and may not be offered for sale, sold or transferred other than pursuant to effective registration under such laws, or in transactions otherwise in compliance with such laws, and upon evidence satisfactory to the Company of compliance with such laws, as to which the Company may rely upon an opinion of counsel satisfactory to the Company.”

 

All Awarded Shares owned by the Participant shall be subject to the terms of this Agreement and shall be represented by a certificate or certificates bearing the foregoing legend, as applicable.

 

7.             Delivery of Certificates; Registration of Shares .  The Company shall deliver certificates for the Awarded Shares to the Participant (if requested by the Participant in accordance with Section 6.3(a) of the Plan and the Company has elected, in its sole discretion, to issue certificates (as opposed to electronic book entry form with respect to its Common Shares)) or shall register the Awarded Shares in the Participant’s name, free of restriction under this Agreement, promptly after, and only after, the Restriction Period has expired without forfeiture pursuant to Section 4.

 

8.             Rights of a Shareholder .  Except as provided in Section 4 and Section 5 above, the Participant shall have, with respect to his Awarded Shares, all of the rights of a shareholder of the Company, including the right to vote the shares, and the right to receive any dividends thereon.  Any share dividends paid with respect to Awarded Shares shall at all times be treated as Awarded Shares and shall be subject to all restrictions placed on Awarded Shares; any such share dividends paid with respect to Awarded Shares shall vest as the Awarded Shares become vested.

 

9.             Voting .  The Participant, as record holder of the Awarded Shares, has the exclusive right

 

2

 

to vote, or consent with respect to, such Awarded Shares until such time as the Awarded Shares are transferred in accordance with this Agreement or are forfeited pursuant to Section 4; provided, however, that this Section 9 shall not create any voting right where the holders of such Awarded Shares otherwise have no such right.

 

10.          Adjustment to Number of Awarded Shares .  The number of Awarded Shares shall be subject to adjustment in accordance with Articles 11-13 of the Plan.

 

11.          Specific Performance .  The parties acknowledge that remedies at law will be inadequate remedies for breach of this Agreement and consequently agree that this Agreement shall be enforceable by specific performance.  The remedy of specific performance shall be cumulative of all of the rights and remedies at law or in equity of the parties under this Agreement.

 

12.          Participant’s Representations .  Notwithstanding any of the provisions hereof, the Participant hereby agrees that he or she will not acquire any Awarded Shares, and that the Company will not be obligated to issue any Awarded Shares to the Participant hereunder, if the issuance or holding of such shares shall constitute a violation by the Participant or the Company of any provision of any law or regulation of any governmental authority.  In such case, any determination by the Company shall be final, binding, and conclusive.  The rights and obligations of the Company and the rights and obligations of the Participant are subject to all Applicable Laws, rules, and regulations.

 

13.          Investment Representation .  Unless the Awarded Shares are issued in a transaction registered under applicable federal and state securities laws, by his or her execution hereof, the Participant represents and warrants to the Company that all Common Shares which may be purchased and or received hereunder will be acquired by the Participant for investment purposes for his or her own account and not with any intent for resale or distribution in violation of federal or state securities laws.  Unless the Common Shares are issued to him or her in a transaction registered under the applicable federal and state securities laws, all certificates issued with respect to the Common Shares shall bear an appropriate restrictive investment legend and shall be held indefinitely, unless they are subsequently registered under the applicable federal and state securities laws or the Participant obtains an opinion of counsel, in form and substance satisfactory to the Company and its counsel, that such registration is not required.

 

14.          Participant’s Acknowledgments .  The Participant acknowledges that a copy of the Plan has been made available for his review by the Company, and represents that he is familiar with the terms and provisions thereof, and hereby accepts this Award subject to all the terms and provisions thereof.  The Participant hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Committee or the Board, as appropriate, upon any questions arising under the Plan or this Agreement.  The Participant acknowledges and agrees that (i) sales of Common Shares will be subject to the Company’s policies regulating trading by Employees, Consultants and Outside Trustees, including any applicable “blackout” or other designated periods in which sales of Common Shares are not permitted, and (ii) Common Shares received hereunder will be subject to any recoupment or “clawback” policy applied with prospective or retroactive effect.

 

15.          Law Governing .  This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Maryland (excluding any conflict of laws rule or principle of Maryland law that might refer the governance, construction, or interpretation of this agreement to the laws of another state).

 

16.          No Right to Continue Service or Employment .  Nothing herein shall be construed to confer upon the Participant the right to continue in the employ or to provide services to the Company or any Subsidiary, whether as an Employee or as a Consultant or as an Outside Trustee, or interfere with or

 

3

 

restrict in any way the right of the Company or any Subsidiary to discharge the Participant as an Employee, Consultant, or Outside Trustee at any time.

 

17.          Legal Construction .  In the event that any one or more of the terms, provisions, or agreements that are contained in this Agreement shall be held by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect for any reason, the invalid, illegal, or unenforceable term, provision, or agreement shall not affect any other term, provision, or agreement that is contained in this Agreement and this Agreement shall be construed in all respects as if the invalid, illegal, or unenforceable term, provision, or agreement had never been contained herein.

 

18.          Covenants and Agreements as Independent Agreements .  Each covenant and agreement that is set forth in this Agreement shall be construed as a covenant and agreement independent of any other provision of this Agreement.  The existence of any claim or cause of action of the Participant against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements that are set forth in this Agreement.

 

19.          Entire Agreement .  This Agreement together with the Plan supersede any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter hereof and constitute the sole and only agreements between the parties with respect to the said subject matter.  All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement.  Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement or the Plan and that any agreement, statement or promise that is not contained in this Agreement or the Plan shall not be valid or binding or of any force or effect.

 

20.          Parties Bound .  The terms, provisions, and agreements that are contained in this Agreement shall apply to, be binding upon, and inure to the benefit of the parties and their respective heirs, executors, administrators, legal representatives, and permitted successors and assigns, subject to the limitation on assignment expressly set forth herein.  No person shall be permitted to acquire any Awarded Shares without first executing and delivering an agreement in the form satisfactory to the Company making such person or entity subject to the restrictions on transfer contained herein.

 

21.          Modification .  No change or modification of this Agreement shall be valid or binding upon the parties unless the change or modification is in writing and signed by the parties.  Notwithstanding the preceding sentence, the Company may amend the Plan or this Agreement to the extent permitted by the Plan.

 

22.          Headings .  The headings that are used in this Agreement are used for reference and convenience purposes only and do not constitute substantive matters to be considered in construing the terms and provisions of this Agreement.

 

23.          Gender and Number .  Words of any gender used in this Agreement shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise.

 

24.          Notice .  Any notice required or permitted to be delivered hereunder shall be deemed to be delivered only when actually received by the Company or by the Participant, as the case may be, at the addresses set forth below, or at such other addresses as they have theretofore specified by written notice delivered in accordance herewith:

 

4

 

a.                                       Notice to the Company shall be addressed and delivered as follows:

 

Physicians Realty Trust

735 North Water Street, Suite 1000

Milwaukee, Wisconsin  53202

Attn: Corporate Secretary

Fax: (414) 978-6550

 

Notice to the Participant shall be addressed and delivered as set forth on the signature page.

 

25.          Tax Requirements .  The Participant is hereby advised to consult immediately with his or her own tax advisor regarding the tax consequences of this Agreement, the method and timing for filing an election to include this Agreement in income under Section 83(b) of the Code, and the tax consequences of such election.  By execution of this Agreement, the Participant agrees that if the Participant makes such an election, the Participant shall provide the Company with written notice of such election in accordance with the regulations promulgated under Section 83(b) of the Code.  The Company or, if applicable, any Subsidiary (for purposes of this Section 25, the term “ Company” shall be deemed to include any applicable Subsidiary), shall have the right to deduct from all amounts paid in cash or other form in connection with the Plan, any Federal, state, local, or other taxes required by law to be withheld in connection with this Award.  The Company may, in its sole discretion, also require the Participant receiving Common Shares issued under the Plan to pay the Company the amount of any taxes that the Company is required to withhold in connection with the Participant’s income arising with respect to this Award.  Such payments shall be required to be made when requested by the Company and may be required to be made prior to the delivery of any certificate representing Common Shares, if such certificate is requested by the Participant in accordance with Section 6.3(a) of the Plan.  Such payment may be made (i) by the delivery of cash to the Company in an amount that equals or exceeds (to avoid the issuance of fractional shares under (iii) below) the required tax withholding obligations of the Company; (ii) if the Company, in its sole discretion, so consents in writing, the actual delivery by the Participant to the Company of Common Shares, other than (A) Restricted Shares, or (B) Common Shares that the Participant has acquired from the Company within six (6) months  prior thereto, which shares so delivered have an aggregate Fair Market Value that equals or exceeds (to avoid the issuance of fractional shares under (iii) below) the required tax withholding payment; (iii) if the Company, in its sole discretion, so consents in writing, the Company’s withholding of a number of shares to be delivered upon the vesting of this Award, which shares so withheld have an aggregate Fair Market Value that equals (but does not exceed) the required tax withholding payment; or (iv) any combination of (i), (ii), or (iii).  The Company may, in its sole discretion, withhold any such taxes from any other cash remuneration otherwise paid by the Company to the Participant.

 

26.          REIT Status .  This Agreement shall be interpreted and construed in a manner consistent with the Company’s status as a real estate investment trust.

 

5

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Participant, to evidence his or her consent and approval of all the terms hereof, has duly executed this Agreement, as of the date specified in Section 1 hereof.

 

 

		COMPANY:
		PHYSICIANS REALTY TRUST
	By:
	Name:
	Title:
		PARTICIPANT:
			Signature
	Name:
	Address:

 

6

Exhibit 10.8

 

RESTRICTED SHARE AWARD AGREEMENT

 

PHYSICIANS REALTY TRUST

2013 EQUITY INCENTIVE PLAN

 

1.             Grant of Award .  Pursuant to the Physicians Realty Trust 2013 Equity Incentive Plan (the “Plan”) for Employees, Consultants, and Outside Trustees of Physicians Realty Trust, a Maryland real estate investment trust (the “Company”), the Company grants to

 

(the “Participant”)

 

an Award of Restricted Shares in accordance with Section 6.3 of the Plan.  The number of Common Shares awarded under this Restricted Share Award Agreement (the “Agreement”) is                                            (                    ) shares (the “Awarded Shares”).  The “Date of Grant” of this Award is March 3, 2014.

 

2.             Subject to Plan .  This Agreement is subject to the terms and conditions of the Plan, and the terms of the Plan shall control.  The capitalized terms used herein that are defined in the Plan shall have the same meanings assigned to them in the Plan.  This Agreement is subject to any rules promulgated pursuant to the Plan by the Board or the Committee and communicated to the Participant in writing.

 

3.             Vesting .  Except as specifically provided in this Agreement and subject to certain restrictions and conditions set forth in the Plan, the Awarded Shares shall vest on the first anniversary of the Date of Grant, provided that the Participant is providing services to the Company or a Subsidiary on that date.

 

All Awarded Shares not previously vested shall immediately become fully vested upon (i) the Participant’s death; (ii) the Participant’s Termination of Service due to Disability (as defined below); or (iii) the occurrence of a Change in Control.  “Disability” means that a Participant, because of a physical or mental condition resulting from bodily injury, disease, or mental disorder, is unable to perform his or her duties as an Outside Trustee for a period of six (6) continuous months, as determined in good faith by the Board or the Committee, based upon medical reports or other evidence satisfactory to the Board or the Committee.

 

4.             Forfeiture of Awarded Shares .  Awarded Shares that are not vested in accordance with Section 3 shall be forfeited on the date of the Participant’s Termination of Service.  Upon forfeiture, all of the Participant’s rights with respect to the forfeited Awarded Shares shall cease and terminate, without any further obligations on the part of the Company.

 

5.             Restrictions on Awarded Shares .  Subject to the provisions of the Plan and the terms of this Agreement, from the Date of Grant until the date the Awarded Shares are vested in accordance with Section 3 and are no longer subject to forfeiture in accordance with Section 4 (the “Restriction Period”), the Participant shall not be permitted to sell, transfer, pledge, hypothecate, margin, assign or otherwise encumber any of the Awarded Shares.  Except for these limitations, the Committee or the Board may, in its sole discretion, remove any or all of the restrictions on such Awarded Shares whenever it may determine that, by reason of changes in applicable laws or changes in circumstances after the date of this Agreement, such action is appropriate.

 

 

6.             Legend .  Awarded Shares electronically registered in a Participant’s name shall note that such shares are Restricted Shares.  If certificates for Awarded Shares are issued, the following legend shall be placed on all such certificates:

 

On the face of the certificate:

 

“Transfer of these Common Shares is restricted in accordance with conditions printed on the reverse of this certificate.”

 

On the reverse:

 

“The Common Shares are subject to and transferable only in accordance with that certain Physicians Realty Trust 2013 Equity Incentive Plan, a copy of which is on file at the principal office of the Company in Milwaukee, Wisconsin.  No transfer or pledge of the shares evidenced hereby may be made except in accordance with and subject to the provisions of said Plan and Award Agreement.  By acceptance of these Common Shares, any holder, transferee or pledgee hereof agrees to be bound by all of the provisions of said Plan and Award Agreement.”

 

The following legend shall be inserted on a certificate, if issued, evidencing Common Shares issued under the Plan if the shares were not issued in a transaction registered under the applicable federal and state securities laws:

 

“Common Shares represented by this certificate have been acquired by the holder for investment and not for resale, transfer or distribution, have been issued pursuant to exemptions from the registration requirements of applicable state and federal securities laws, and may not be offered for sale, sold or transferred other than pursuant to effective registration under such laws, or in transactions otherwise in compliance with such laws, and upon evidence satisfactory to the Company of compliance with such laws, as to which the Company may rely upon an opinion of counsel satisfactory to the Company.”

 

All Awarded Shares owned by the Participant shall be subject to the terms of this Agreement and shall be represented by a certificate or certificates bearing the foregoing legend, as applicable.

 

7.             Delivery of Certificates; Registration of Shares .  The Company shall deliver certificates for the Awarded Shares to the Participant (if requested by the Participant in accordance with Section 6.3(a) of the Plan and the Company has elected, in its sole discretion, to issue certificates (as opposed to electronic book entry form with respect to its Common Shares)) or shall register the Awarded Shares in the Participant’s name, free of restriction under this Agreement, promptly after, and only after, the Restriction Period has expired without forfeiture pursuant to Section 4.

 

8.             Rights of a Shareholder .  Except as provided in Section 4 and Section 5 above, the Participant shall have, with respect to his Awarded Shares, all of the rights of a shareholder of the Company, including the right to vote the shares, and the right to receive any dividends thereon.  Any share dividends paid with respect to Awarded Shares shall at all times be treated as Awarded Shares and

 

2

 

shall be subject to all restrictions placed on Awarded Shares; any such share dividends paid with respect to Awarded Shares shall vest as the Awarded Shares become vested.

 

9.             Voting .  The Participant, as record holder of the Awarded Shares, has the exclusive right to vote, or consent with respect to, such Awarded Shares until such time as the Awarded Shares are transferred in accordance with this Agreement or are forfeited pursuant to Section 4; provided, however, that this Section 9 shall not create any voting right where the holders of such Awarded Shares otherwise have no such right.

 

10.          Adjustment to Number of Awarded Shares .  The number of Awarded Shares shall be subject to adjustment in accordance with Articles 11-13 of the Plan.

 

11.          Specific Performance .  The parties acknowledge that remedies at law will be inadequate remedies for breach of this Agreement and consequently agree that this Agreement shall be enforceable by specific performance.  The remedy of specific performance shall be cumulative of all of the rights and remedies at law or in equity of the parties under this Agreement.

 

12.          Participant’s Representations .  Notwithstanding any of the provisions hereof, the Participant hereby agrees that he or she will not acquire any Awarded Shares, and that the Company will not be obligated to issue any Awarded Shares to the Participant hereunder, if the issuance or holding of such shares shall constitute a violation by the Participant or the Company of any provision of any law or regulation of any governmental authority.  In such case, any determination by the Company shall be final, binding, and conclusive.  The rights and obligations of the Company and the rights and obligations of the Participant are subject to all Applicable Laws, rules, and regulations.

 

13.          Investment Representation .  Unless the Awarded Shares are issued in a transaction registered under applicable federal and state securities laws, by his or her execution hereof, the Participant represents and warrants to the Company that all Common Shares which may be purchased and or received hereunder will be acquired by the Participant for investment purposes for his or her own account and not with any intent for resale or distribution in violation of federal or state securities laws.  Unless the Common Shares are issued to him or her in a transaction registered under the applicable federal and state securities laws, all certificates issued with respect to the Common Shares shall bear an appropriate restrictive investment legend and shall be held indefinitely, unless they are subsequently registered under the applicable federal and state securities laws or the Participant obtains an opinion of counsel, in form and substance satisfactory to the Company and its counsel, that such registration is not required.

 

14.          Participant’s Acknowledgments .  The Participant acknowledges that a copy of the Plan has been made available for his review by the Company, and represents that he is familiar with the terms and provisions thereof, and hereby accepts this Award subject to all the terms and provisions thereof.  The Participant hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Committee or the Board, as appropriate, upon any questions arising under the Plan or this Agreement.  The Participant acknowledges and agrees that (i) sales of Common Shares will be subject to the Company’s policies regulating trading by Outside Trustees, including any applicable “blackout” or other designated periods in which sales of Common Shares are not permitted, and (ii) Common Shares received hereunder will be subject to any recoupment or “clawback” policy applied with prospective or retroactive effect.

 

15.          Law Governing .  This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Maryland (excluding any conflict of laws rule or principle of Maryland law that might refer the governance, construction, or interpretation of this agreement to the laws of another state).

 

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16.          No Right to Continue Service .  Nothing herein shall be construed to confer upon the Participant the right to continue to provide services to the Company or any Subsidiary as an Outside Trustee, or interfere with or restrict in any way the right of the Company to remove the Participant as an Outside Trustee at any time.

 

17.          Legal Construction .  In the event that any one or more of the terms, provisions, or agreements that are contained in this Agreement shall be held by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect for any reason, the invalid, illegal, or unenforceable term, provision, or agreement shall not affect any other term, provision, or agreement that is contained in this Agreement and this Agreement shall be construed in all respects as if the invalid, illegal, or unenforceable term, provision, or agreement had never been contained herein.

 

18.          Covenants and Agreements as Independent Agreements .  Each covenant and agreement that is set forth in this Agreement shall be construed as a covenant and agreement independent of any other provision of this Agreement.  The existence of any claim or cause of action of the Participant against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements that are set forth in this Agreement.

 

19.          Entire Agreement .  This Agreement together with the Plan supersede any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter hereof and constitute the sole and only agreements between the parties with respect to the said subject matter.  All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement.  Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement or the Plan and that any agreement, statement or promise that is not contained in this Agreement or the Plan shall not be valid or binding or of any force or effect.

 

20.          Parties Bound .  The terms, provisions, and agreements that are contained in this Agreement shall apply to, be binding upon, and inure to the benefit of the parties and their respective heirs, executors, administrators, legal representatives, and permitted successors and assigns, subject to the limitation on assignment expressly set forth herein.  No person shall be permitted to acquire any Awarded Shares without first executing and delivering an agreement in the form satisfactory to the Company making such person or entity subject to the restrictions on transfer contained herein.

 

21.          Modification .  No change or modification of this Agreement shall be valid or binding upon the parties unless the change or modification is in writing and signed by the parties.  Notwithstanding the preceding sentence, the Company may amend the Plan or this Agreement to the extent permitted by the Plan.

 

22.          Headings .  The headings that are used in this Agreement are used for reference and convenience purposes only and do not constitute substantive matters to be considered in construing the terms and provisions of this Agreement.

 

23.          Gender and Number .  Words of any gender used in this Agreement shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise.

 

24.          Notice .  Any notice required or permitted to be delivered hereunder shall be deemed to be delivered only when actually received by the Company or by the Participant, as the case may be, at the addresses set forth below, or at such other addresses as they have theretofore specified by written notice

 

4

 

delivered in accordance herewith:

 

a.                                       Notice to the Company shall be addressed and delivered as follows:

 

Physicians Realty Trust

735 North Water Street, Suite 1000

Milwaukee, Wisconsin  53202

Attn: Corporate Secretary

Fax: (414) 978-6550

 

b.                                       Notice to the Participant shall be addressed and delivered as set forth on the signature page.

 

25.          Tax Requirements .  The Participant is hereby advised to consult immediately with his or her own tax advisor regarding the tax consequences of this Agreement, the method and timing for filing an election to include this Agreement in income under Section 83(b) of the Code, and the tax consequences of such election.  By execution of this Agreement, the Participant agrees that if the Participant makes such an election, the Participant shall provide the Company with written notice of such election in accordance with the regulations promulgated under Section 83(b) of the Code.  The Company or, if applicable, any Subsidiary (for purposes of this Section 25, the term “Company” shall be deemed to include any applicable Subsidiary), shall have the right to deduct from all amounts paid in cash or other form in connection with the Plan, any Federal, state, local, or other taxes required by law to be withheld in connection with this Award.  The Company may, in its sole discretion, also require the Participant receiving Common Shares issued under the Plan to pay the Company the amount of any taxes that the Company is required to withhold in connection with the Participant’s income arising with respect to this Award.  Such payments shall be required to be made when requested by the Company and may be required to be made prior to the delivery of any certificate representing Common Shares, if such certificate is requested by the Participant in accordance with Section 6.3(a) of the Plan.  Such payment may be made (i) by the delivery of cash to the Company in an amount that equals or exceeds (to avoid the issuance of fractional shares under (iii) below) the required tax withholding obligations of the Company; (ii) if the Company, in its sole discretion, so consents in writing, the actual delivery by the Participant to the Company of Common Shares, other than (A) Restricted Shares, or (B) Common Shares that the Participant has acquired from the Company within six (6) months  prior thereto, which shares so delivered have an aggregate Fair Market Value that equals or exceeds (to avoid the issuance of fractional shares under (iii) below) the required tax withholding payment; (iii) if the Company, in its sole discretion, so consents in writing, the Company’s withholding of a number of shares to be delivered upon the vesting of this Award, which shares so withheld have an aggregate Fair Market Value that equals (but does not exceed) the required tax withholding payment; or (iv) any combination of (i), (ii), or (iii).  The Company may, in its sole discretion, withhold any such taxes from any other cash remuneration otherwise paid by the Company to the Participant.

 

26.          REIT Status .  This Agreement shall be interpreted and construed in a manner consistent with the Company’s status as a real estate investment trust.

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Participant, to evidence his or her consent and approval of all the terms hereof, has duly executed this Agreement, as of the date specified in Section 1 hereof.

 

 

		COMPANY:
		PHYSICIANS REALTY TRUST
	By:
	Name:
	Title:
		PARTICIPANT:
			Signature
	Name:
	Address:

 

6

Exhibit 10.9

 

RESTRICTED SHARE UNIT AWARD AGREEMENT

 

PHYSICIANS REALTY TRUST

2013 EQUITY INCENTIVE PLAN

 

1.             Grant of Award .  Pursuant to the Physicians Realty Trust 2013 Equity Incentive Plan (the “Plan”) for Employees, Consultants, and Outside Trustees of Physicians Realty Trust, a Maryland real estate investment trust (the “Company”), the Company grants to

 

(the “Participant”)

 

an Award of Restricted Share Units in accordance with Section 6.5 of the Plan.  The number of Restricted Share Units awarded under this Restricted Share Unit Award Agreement (the “Agreement”) is                                            (                    ) units (the “Awarded Units”).  Each Restricted Share Unit represents the right to receive one Common Share if the Restricted Share Unit becomes vested and nonforfeitable in accordance with Sections 3 and 4 of this Agreement.  The “Date of Grant” of this Award is March 3, 2014.  The Participant shall have no rights as a shareholder of the Company, no dividend rights and no voting rights with respect to the Restricted Share Units or the Common Shares underlying the Restricted Share Units unless and until the Restricted Share Units become vested and nonforfeitable and such Common Shares are delivered to the Participant in accordance with Section 6 of this Agreement.  The Participant is not required to pay any cash consideration for the grant of the Restricted Share Units.

 

2.             Subject to Plan .  This Agreement is subject to the terms and conditions of the Plan, and the terms of the Plan shall control.  The capitalized terms used herein that are defined in the Plan shall have the same meanings assigned to them in the Plan.  This Agreement is subject to any rules promulgated pursuant to the Plan by the Board or the Committee and communicated to the Participant in writing.

 

3.             Vesting .  Except as specifically provided in this Agreement and subject to certain restrictions and conditions set forth in the Plan, the Participant’s rights and interest in the Awarded Units shall vest as follows:

 

a.             The extent to which the Participant’s rights and interest in one-half (1/2) of the Awarded Units becomes vested and non-forfeitable and ceases to be restricted shall be based upon the satisfaction of the performance goal specified in this Section 3(a) (the “TSR Performance Goal”).  The TSR Performance Goal shall be based upon a comparison of the total shareholder return (“TSR”) of the Company to the TSRs of the companies (other than the Company) that comprise the NAREIT Healthcare Index during the 3-year period commencing on January 1, 2014 and ending on December 31, 2016 (the “Performance Period”), provided that only those companies that comprise the NAREIT Healthcare Index for the entire Performance Period shall be considered.  “TSR” means the percentage rate of return, which can be positive or negative, from the first day of the Performance Period to the last day of the Performance Period, of an investment of $100 in the Common Shares of the Company, or the common shares of beneficial interest issued by the relevant company in the NAREIT Healthcare Index, on the first day of the Performance Period, assuming reinvestment of all dividends paid during the Performance Period.  The portion of the Participant’s rights and interest in the one-half of the Awarded Units subject to this Section 3(a), if any, that becomes vested and nonforfeitable and

 

 

ceases to be restricted in the Performance Period shall be determined in accordance with the following schedule, using linear interpolation, as certified by the Committee:

 

Company TSR Relative to the TSR of the Companies in the NAREIT Healthcare Index		Percentage of One-Half of Awarded Units Vested
Below 33rd percentile		0
33rd percentile		50	%
50th percentile		100	%
75th percentile or above		300	%

 

Notwithstanding the preceding schedule, if the Company TSR is a negative number, then the percentage of one-half of the Awarded Units determined in accordance with the preceding schedule shall be reduced to 80% of such percentage.

 

For the Performance Period, the applicable portion of the Participant’s interest in the Awarded Units subject to this Section 3(a) shall become vested and nonforfeitable and shall cease being restricted upon written certification by the Committee that the corresponding TSR Performance Goal for the Performance Period has been satisfied; provided, the Participant is employed by (or if the Participant is a Consultant or an Outside Trustee, is providing services to) the Company or a Subsidiary on the date of the Committee’s certification.  The Committee shall make this determination within ninety (90) days after the last day of the Performance Period.  Any determination as to whether or not and to what extent the TSR Performance Goal has been satisfied shall be made by the Committee in its sole and absolute discretion and shall be final, binding and conclusive on all persons, including, but not limited to, the Company and the Participant.  The Participant shall not be entitled to any claim or recourse if any action or inaction by the Company, or any other circumstance or event, including any circumstance or event outside the control of the Participant, adversely affects the ability of the Participant to satisfy the TSR Performance Goal or in any way prevents the satisfaction of the TSR Performance Goal.  Any portion of the one-half of the Awarded Units (and related dividend equivalents) subject to this Section 3(a) that exceeds the portion of the Awarded Units that becomes vested and nonforfeitable upon the written certification by the Committee shall be forfeited.

 

b.             The extent to which the Participant’s rights and interest in one-fifth of the Awarded Units becomes vested and non-forfeitable and ceases to be restricted shall be based upon the satisfaction of the performance goal specified in this Section 3(b) (the “Dividend Growth Performance Goal”).  The Dividend Growth Performance Goal shall be based upon the average annual growth in dividends paid per Common Share over the Performance Period, expressed as a percentage (rounded to the nearest tenth of a percent (0.1%)), determined by (i) adding the change in dividends paid per Common Share in each calendar year during the Performance Period over the dividends paid per Common Share in the preceding calendar year, with any negative change considered a zero, and (ii) dividing such sum by the dividends paid per Common Share in 2013 (that is, $.90), and further (iii) dividing the resulting amount by three.  The portion of the Participant’s rights and interest in the one-fifth of the Awarded Units subject to this Section 3(b), if any, that becomes vested and nonforfeitable and ceases to be restricted in the Performance Period shall be determined in accordance with the following schedule, using linear interpolation, as certified by the Committee:

 

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Company Dividend Growth		Percentage of One-Fifth of Awarded Units Vested
Less than 2%		0	%
2%		50	%
3%		100	%
4% or more		300	%

 

For the Performance Period, the applicable portion of the Participant’s interest in the Awarded Units subject to this Section 3(b) shall become vested and nonforfeitable and shall cease being restricted upon written certification by the Committee that the corresponding Dividend Growth Performance Goal for the Performance Period has been satisfied; provided, the Participant is employed by (or if the Participant is a Consultant or an Outside Trustee, is providing services to) the Company or a Subsidiary on the date of the Committee’s certification.  The Committee shall make this determination within ninety (90) days of the last day of the Performance Period.  Any determination as to whether or not and to what extent the Dividend Growth Performance Goal has been satisfied shall be made by the Committee in its sole and absolute discretion and shall be final, binding and conclusive on all persons, including, but not limited to, the Company and the Participant.  The Participant shall not be entitled to any claim or recourse if any action or inaction by the Company, or any other circumstance or event, including any circumstance or event outside the control of the Participant, adversely affects the ability of the Participant to satisfy the Dividend Growth Performance Goal or in any way prevents the satisfaction of the Dividend Growth Performance Goal.  Any portion of the one-fifth of the Awarded Units (and related dividend equivalents) subject to this Section 3(b) that exceeds the portion of the Awarded Units that becomes vested and nonforfeitable upon the written certification by the Committee shall be forfeited.

 

c.             The extent to which the Participant’s rights and interest in one-tenth of the Awarded Units becomes vested and non-forfeitable and ceases to be restricted shall be based upon the satisfaction of the performance goal specified in this Section 3(c) (the “Absolute TSR Performance Goal”).  The Absolute TSR Performance Goal shall be based upon the “Absolute TSR Percentage,” as defined below, achieved during the Performance Period.  “Absolute TSR Percentage” means the compounded annual growth rate, expressed as a percentage (rounded to the nearest tenth of a percent (0.1%)), in the value per share of Common Shares during the Performance Period due to the appreciation in the price per share of Common Shares and dividends paid during the Performance Period, assuming reinvestment of all dividends paid during the Performance Period.  The Absolute TSR Percentage is calculated as follows:

 

 

where:

 

·                   “D” means the amount of dividends paid to a shareholder of record with respect to one share of Common Shares during the Performance Period;

·                   “N” means the number of full calendar years completed during the Performance Period;

·                   “Ending Share Price” means the 20-day simple moving average for the Common Shares on December 31, 2016;

 

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·                   “Beginning Share Price” means the 20-day simple moving average for the Common Shares on December 31, 2013.

 

The portion of the Participant’s rights and interest in the one-tenth of the Awarded Units subject to this Section 3(c), if any, that becomes vested and nonforfeitable and ceases to be restricted in the Performance Period shall be determined in accordance with the following schedule, using linear interpolation, as certified by the Committee:

 

Company Absolute TSR		Percentage of One-Tenth of Awarded Units Vested
Less than 7%		0	%
7%		50	%
10%		100	%
14% or more		300	%

 

For the Performance Period, the applicable portion of the Participant’s interest in the Awarded Units subject to this Section 3(c) shall become vested and nonforfeitable and shall cease being restricted upon written certification by the Committee that the corresponding Absolute TSR Performance Goal for the Performance Period has been satisfied; provided, the Participant is employed by (or if the Participant is a Consultant or an Outside Trustee, is providing services to) the Company or a Subsidiary on the date of the Committee’s certification.  The Committee shall make this determination within ninety (90) days of the last day of the Performance Period.  Any determination as to whether or not and to what extent the Absolute TSR Performance Goal has been satisfied shall be made by the Committee in its sole and absolute discretion and shall be final, binding and conclusive on all persons, including, but not limited to, the Company and the Participant.  The Participant shall not be entitled to any claim or recourse if any action or inaction by the Company, or any other circumstance or event, including any circumstance or event outside the control of the Participant, adversely affects the ability of the Participant to satisfy the Absolute TSR Performance Goal or in any way prevents the satisfaction of the Absolute TSR Performance Goal.  Any portion of the one-tenth of the Awarded Units (and related dividend equivalents) subject to this Section 3(c) that exceeds the portion of the Awarded Units that becomes vested and nonforfeitable upon the written certification by the Committee shall be forfeited.

 

d.             The extent to which the Participant’s rights and interest in one-fifth of the Awarded Units becomes vested and non-forfeitable and ceases to be restricted shall be based upon the satisfaction of the performance goal specified in this Section 3(d) (the “Investment Grade Performance Goal”).  The Investment Grade Performance Goal shall be based upon the investment grade achieved by the last day of the Performance Period.  The portion of the Participant’s rights and interest in the one-fifth of the Awarded Units subject to this Section 3(d), if any, that becomes vested and nonforfeitable and ceases to be restricted in the Performance Period shall be determined in accordance with the following schedule, using linear interpolation, as certified by the Committee:

 

4

 

Company’s Investment Grade		Percentage of One-Fifth of Awarded Units  Vested
Below investment grade rated		0	%
Investment grade rated		100	%
Investment grade plus one or more notches		300	%

 

For the Performance Period, the applicable portion of the Participant’s interest in the Awarded Units subject to this Section 3(d) shall become vested and nonforfeitable and shall cease being restricted upon written certification by the Committee that the corresponding Investment Grade Performance Goal for the Performance Period has been satisfied; provided, the Participant is employed by (or if the Participant is a Consultant or an Outside Trustee, is providing services to) the Company or a Subsidiary on the date of the Committee’s certification.  The Committee shall make this determination within ninety (90) days of the last day of the Performance Period.  Any determination as to whether or not and to what extent the Investment Grade Performance Goal has been satisfied shall be made by the Committee in its sole and absolute discretion and shall be final, binding and conclusive on all persons, including, but not limited to, the Company and the Participant.  The Participant shall not be entitled to any claim or recourse if any action or inaction by the Company, or any other circumstance or event, including any circumstance or event outside the control of the Participant, adversely affects the ability of the Participant to satisfy the Investment Grade Performance Goal or in any way prevents the satisfaction of the Investment Grade Performance Goal.  Any portion of the one-fifth of the Awarded Units (and related dividend equivalents) subject to this Section 3(d) that exceeds the portion of the Awarded Units that becomes vested and nonforfeitable upon the written certification by the Committee shall be forfeited.

 

e.             Notwithstanding the foregoing schedules, no fractional Common Shares shall be issued, and subject to the preceding limitations on the number of related Common Shares available under this Agreement (that is, 300% of the related Common Shares), any fractional Common Share that would have resulted from the foregoing calculations shall be rounded up to the next whole Common Share.

 

f.             Notwithstanding anything to the contrary in this Agreement, the Committee may, in its discretion, adjust (upwards or downwards) the number of related Common Shares that would otherwise be delivered in settlement of the Awarded Units that vest and become nonforfeitable based on achievement of the corresponding performance goal, notwithstanding the level of achievement of such performance goal.  Notwithstanding anything to the contrary in this Agreement, the Committee may, in its sole discretion, accelerate the Performance Period and determine the actual level achieved of the TSR Performance Goal under Section 3(a), the Dividend Growth Performance Goal under Section 3(b), and the Absolute TSR Performance Goal under Section 3(c) (which determination may be by means of a good faith estimate) at any time after the first year of the Performance Period and determine the number of Common Shares that may be delivered in settlement of the Awarded Units; provided, the settlement of 409A Awarded Units (as defined in Section 25) may not be accelerated by the Company except to the extent permitted under Code Section 409A (as defined in Section 25).

 

g.             In the event of a Change in Control at a time that the Participant’s Awarded Units have not yet vested, a portion of the Participant’s Awarded Units shall vest and become

 

5

 

nonforfeitable based on the actual level of the performance goal achieved.  For purposes of Sections 3(a), (b), (c), and (d), the Company shall determine the actual level of the performance goal achieved (such determination may be by means of a good faith estimate) immediately prior to the Change in Control and shall calculate the resulting number of Awarded Units that would have become vested and nonforfeitable (based on such calculation) assuming the determination date was the end of the Performance Period and the Committee had certified such level of achievement.  No fractional Common Shares shall be issued, and subject to the preceding limitations on the number of related Common Shares available under this Agreement (that is, 300% of the related Common Shares), any fractional Common Share that would have resulted from the foregoing calculations shall be rounded up to the next whole Common Share.  Any Awarded Units (and related dividend equivalents) that were unvested immediately prior to the Change in Control and that exceed the portion of the Awarded Units that become vested and nonforfeitable under this Section 3(g) shall be forfeited.

 

4.             Forfeiture of Awarded Units .

 

a.             In General.   Except as otherwise provided in this Section 4, Awarded Units (and related dividend equivalents) that are not vested in accordance with Section 3 shall be forfeited on the date of the Participant’s Termination of Service.  Upon forfeiture, all of the Participant’s rights and interest with respect to the forfeited Awarded Units (and related dividend equivalents) shall cease and terminate, without any further obligations on the part of the Company.

 

b.             Death or Total and Permanent Disability .  In the event that the Participant’s Termination of Service is due to death or Total and Permanent Disability at a time that the Participant’s Awarded Units have not yet vested, a pro rata portion of the Participant’s Awarded Units shall vest and become nonforfeitable as follows:  First, the Company shall determine the actual level of the performance goal achieved (such determination may be by means of a good faith estimate) as of the Company’s fiscal quarter-end coincident with or next preceding the Participant’s Termination of Service (or, if the Participant’s Termination of Service occurs in the first fiscal quarter of the Performance Period, then the Company’s fiscal quarter-end coincident with or next following the Participant’s Termination of Service) and calculating, on a preliminary basis, the resulting number of Awarded Units that would have become vested and nonforfeitable (based on such calculation) assuming the determination date was the end of the Performance Period and the Committee had certified such level of achievement.  Second, a pro rata portion of that number of Awarded Units will be calculated by multiplying that number by a fraction, the numerator of which is the number of months from the Date of Grant through the date of Termination of Service (rounding any partial month to the next whole month) and the denominator of which is 36.  No fractional Common Shares shall be issued, and subject to the preceding limitations on the number of related Common Shares available under this Agreement (that is, 300% of the related Common Shares), any fractional Common Share that would have resulted from the foregoing calculations shall be rounded up to the next whole Common Share.  Any Awarded Units (and related dividend equivalents) that were unvested at the date of Termination of Service and that exceed the pro rata portion of the Awarded Units that become vested and nonforfeitable under this Section 4(b) shall be forfeited.

 

c.             Retirement .  In the event that the Participant’s Termination of Service is due to Retirement at a time that the Participant’s Awarded Units have not yet vested,  the greater of: (i) 100% of the Participant’s Awarded Units or (ii) the portion of the Participant’s Awarded Units that would otherwise vest and become nonforfeitable based on the actual level of the performance goal achieved, shall vest and become nonforfeitable.  The Company shall determine the actual level of the performance goal achieved (such determination may be by means of a good faith

 

6

 

estimate) immediately prior to the Participant’s Termination of Service and shall calculate the resulting number of Awarded Units that would have become vested and nonforfeitable (based on such calculation) assuming the determination date was the date of the Participant’s Termination of Service and the Committee had certified such level of achievement.  No fractional Common Shares shall be issued, and subject to the preceding limitations on the number of related Common Shares available under this Agreement (that is, 300% of the related Common Shares), any fractional Common Share that would have resulted from the foregoing calculations shall be rounded up to the next whole Common Share.

 

5.             Restrictions on Transfer of Awarded Units .  Subject to the provisions of the Plan and the terms of this Agreement, the Participant shall not be permitted to sell, transfer, pledge, hypothecate, margin, assign or otherwise encumber any of the Awarded Units, related rights to dividend equivalents or any other rights relating thereto, and the Awarded Units, related rights to dividend equivalents and other rights relating thereto, shall not be subject to execution, attachment, lien, or similar process; provided, however, the Participant will be entitled to designate a beneficiary or beneficiaries to receive any settlement in respect of the Awarded Units upon the death of the Participant, in the manner and to the extent permitted by the Committee.  Any purported transfer or other transaction not permitted under this Section 5 shall be deemed null and void.

 

6.             Timing and Manner of Settlement of Awarded Units .

 

a.             Settlement Timing.   Unless and until the Awarded Units become vested and nonforfeitable in accordance with Sections 3 and 4 of this Agreement, the Participant will have no right to settlement of any such Awarded Units.  Awarded Units will be settled under this Section 6 by the Company delivering to the Participant (or his beneficiary in the event of death) a number of Common Shares equal to the number of Awarded Units that have become vested and nonforfeitable in accordance with Section 3 or 4 of this Agreement and are to be settled at the applicable settlement date.  In the case of Awarded Units that become vested and nonforfeitable upon the Committee’s certification in accordance with Sections 3(a), (b), (c) and (d) of this Agreement, such Awarded Units will be settled at a date that is as prompt as practicable after the date of the Committee’s certification but in no event later than two and one-half (2 1/2) months after the date of the Company’s certification.  The settlement of Awarded Units that become vested and nonforfeitable in accordance with Section 3(g) will be made on or before the Change in Control.  The settlement of Awarded Units that become vested and nonforfeitable in accordance with Section 4(b) will be made at a date that is as prompt as practicable after the Participant’s Termination of Service but in no event later than two and one-half (2 1/2) months after the end of the calendar year in which Termination of Service occurred.  The settlement of Awarded Units that become vested and nonforfeitable in accordance with Section 4(c) will be made within ninety (90) days of the  Participant’s Termination of Service, provided, however, that if such ninety-day period spans two calendar years, then such settlement shall be made in the portion of such period that falls within the later calendar year.

 

b.             Manner of Settlement .  The Company may make delivery of Common Shares in settlement of Awarded Units by either delivering certificates representing such Common Shares to the Participant (if requested by the Participant in accordance with Section 6.3(a) of the Plan and the Company has elected, in its sole discretion, to issue certificates (as opposed to electronic book entry form with respect to its Common Shares)) or by registering the Common Shares in the Participant’s name.  In no event will the Company issue fractional Common Shares.

 

c.             Effect of Settlement .  Neither the Participant nor any of the Participant’s successors, heirs, assigns or personal representatives shall have any further rights or interests in

 

7

 

any Awarded Units that have been paid and settled.  Although a settlement date or range of dates for settlement are specified above, the Company retains discretion to determine the settlement date, and no Participant or beneficiary of a Participant shall have any claim for damages or loss by virtue of the fact that the market price of Common Shares was higher on a given date upon which settlement could have been made as compared to the market price on or after the actual settlement date (any claim relating to settlement will be limited to a claim for delivery of Common Shares and related dividend equivalents).

 

7.             Legend .  The following legend shall be inserted on a certificate, if issued, evidencing Common Shares issued under the Plan if the Common Shares were not issued in a transaction registered under the applicable federal and state securities laws:

 

“Common Shares represented by this certificate have been acquired by the holder for investment and not for resale, transfer or distribution, have been issued pursuant to exemptions from the registration requirements of applicable state and federal securities laws, and may not be offered for sale, sold or transferred other than pursuant to effective registration under such laws, or in transactions otherwise in compliance with such laws, and upon evidence satisfactory to the Company of compliance with such laws, as to which the Company may rely upon an opinion of counsel satisfactory to the Company.”

 

8.             Dividend Equivalents .  During the period beginning on the Date of Grant and ending on the date that Common Shares are issued in settlement of Awarded Units, the Participant will accrue dividend equivalents equal to the cash dividend or distribution that would have been paid had the Awarded Unit been an issued and outstanding Common Share on the record date for the dividend or distribution.  Such accrued dividend equivalents (i) will vest and become payable upon the same terms and at the same time of settlement as the Awarded Units to which they relate; (ii) will be payable with respect to the total number of Awarded Units that become vested and nonforfeitable; and (ii) will be denominated and payable solely in cash.  Dividend equivalent payments, at settlement, will be net of applicable federal, state, local and social insurance withholding taxes (subject to Section 22 of this Agreement).

 

9.             Adjustment to Number of Awarded Units .  The number of Awarded Units shall be subject to adjustment in accordance with Articles 11 through 13 of the Plan.  Any such adjustment shall be made taking into account any crediting of cash dividend equivalents to the Participant under Section 8 in connection with such transaction or event.  Restricted Share Units credited to the Participant as a result of an adjustment shall be subject to the same forfeiture and settlement terms as applied to the related Awarded Units prior to the adjustment.

 

10.          Specific Performance .  The parties acknowledge that remedies at law will be inadequate remedies for breach of this Agreement and consequently agree that this Agreement shall be enforceable by specific performance.  The remedy of specific performance shall be cumulative of all of the rights and remedies at law or in equity of the parties under this Agreement.

 

11.          Participant’s Acknowledgments .  The Participant acknowledges that a copy of the Plan has been made available for his review by the Company, and represents that he is familiar with the terms and provisions thereof, and hereby accepts this Award subject to all the terms and provisions thereof.  The Participant hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Committee or the Board, as appropriate, upon any questions arising under the Plan or this Agreement.  The Participant acknowledges and agrees that (i) sales of Common Shares delivered in settlement of the

 

8

 

Awarded Units will be subject to the Company’s policies regulating trading by Employees, Consultants and Outside Trustees, including any applicable “blackout” or other designated periods in which sales of Common Shares are not permitted, and (ii) Common Shares delivered in settlement will be subject to any recoupment or “clawback” policy applied with prospective or retroactive effect.

 

12.          Law Governing .  This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Maryland (excluding any conflict of laws rule or principle of Maryland law that might refer the governance, construction, or interpretation of this agreement to the laws of another state).

 

13.          No Right to Continue Service or Employment .  Nothing herein shall be construed to confer upon the Participant the right to continue in the employ or to provide services to the Company or any Subsidiary, whether as an Employee or as a Consultant or as an Outside Trustee, or interfere with or restrict in any way the right of the Company or any Subsidiary to discharge the Participant as an Employee, Consultant, or Outside Trustee at any time.

 

14.          Legal Construction .  In the event that any one or more of the terms, provisions, or agreements that are contained in this Agreement shall be held by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect for any reason, the invalid, illegal, or unenforceable term, provision, or agreement shall not affect any other term, provision, or agreement that is contained in this Agreement and this Agreement shall be construed in all respects as if the invalid, illegal, or unenforceable term, provision, or agreement had never been contained herein.

 

15.          Covenants and Agreements as Independent Agreements .  Each covenant and agreement that is set forth in this Agreement shall be construed as a covenant and agreement independent of any other provision of this Agreement.  The existence of any claim or cause of action of the Participant against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements that are set forth in this Agreement.

 

16.          Entire Agreement .  This Agreement together with the Plan supersede any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter hereof and constitute the sole and only agreements between the parties with respect to the said subject matter.  All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement.  Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement or the Plan and that any agreement, statement or promise that is not contained in this Agreement or the Plan shall not be valid or binding or of any force or effect.

 

17.          Parties Bound .  The terms, provisions, and agreements that are contained in this Agreement shall apply to, be binding upon, and inure to the benefit of the parties and their respective heirs, executors, administrators, legal representatives, and permitted successors and assigns, subject to the limitation on assignment expressly set forth herein.

 

18.          Modification .  No change or modification of this Agreement shall be valid or binding upon the parties unless the change or modification is in writing and signed by the parties.  Notwithstanding the preceding sentence, the Company may amend the Plan or this Agreement to the extent permitted by the Plan.

 

9

 

19.          Headings .  The headings that are used in this Agreement are used for reference and convenience purposes only and do not constitute substantive matters to be considered in construing the terms and provisions of this Agreement.

 

20.          Gender and Number .  Words of any gender used in this Agreement shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise.

 

21.          Notice .  Any notice required or permitted to be delivered hereunder shall be deemed to be delivered only when actually received by the Company or by the Participant, as the case may be, at the addresses set forth below, or at such other addresses as they have theretofore specified by written notice delivered in accordance herewith:

 

a.             Notice to the Company shall be addressed and delivered as follows:

 

Physicians Realty Trust

735 North Water Street, Suite 1000

Milwaukee, Wisconsin  53202

Attn: Corporate Secretary

Fax: (414) 978-6550

 

Notice to the Participant shall be addressed and delivered as set forth on the signature page.

 

22.          Tax Requirements .  The Participant is hereby advised to consult immediately with his or her own tax advisor regarding the tax consequences of this Agreement.  The Company or, if applicable, any Subsidiary (for purposes of this Section 22, the term “Company” shall be deemed to include any applicable Subsidiary) shall have the right to deduct from all amounts paid in cash or other form in connection with the Plan, any federal, state, local, or other taxes required by law to be withheld in connection with this Award.  The Company may, in its sole discretion, also require the Participant receiving Common Shares in settlement of Awarded Units pay the Company the amount of any taxes that the Company is required to withhold in connection with the Participant’s income arising with respect to this Award.  Such payments shall be required to be made when requested by the Company and may be required to be made prior to the delivery of any certificate representing Common Shares, if such certificate is requested by the Participant in accordance with Section 6.3(a) of the Plan.  Such payment may be made (i) by the delivery of cash to the Company in an amount that equals or exceeds (to avoid the issuance of fractional shares under (iii) below) the required tax withholding obligations of the Company; (ii) if the Company, in its sole discretion, so consents in writing, the actual delivery by the Participant to the Company of Common Shares, other than (A) Restricted Shares, or (B) Common Shares that the Participant has acquired from the Company within six (6) months prior thereto, which shares so delivered have an aggregate Fair Market Value that equals or exceeds (to avoid the issuance of fractional shares under (iii) below) the required tax withholding payment; (iii) if the Company, in its sole discretion, so consents in writing, the Company’s withholding of a number of shares to be delivered upon the vesting of this Award, which shares so withheld have an aggregate Fair Market Value that equals (but does not exceed) the required tax withholding payment; or (iv) any combination of (i), (ii), or (iii).  The Company may, in its sole discretion, withhold any such taxes from any other cash remuneration otherwise paid by the Company to the Participant.

 

23.          REIT Status .  This Agreement shall be interpreted and construed in a manner consistent with the Company’s status as a real estate investment trust.

 

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24.          Unfunded Plan .  The Participant acknowledges and agrees that any rights of the Participant to the Participant’s Awarded Units and related dividend equivalents and any other related rights shall constitute bookkeeping entries on the books of the Company and shall not create in the Participant any right to or claim against any specific assets of the Company or any Subsidiary, nor result in the creation of any trust or escrow account for the Participant.  With respect to the Participant’s entitlement to any payment hereunder, the Participant shall be a general creditor of the Company.

 

25.          Code Section 409A.   Payments made pursuant to this Agreement are intended to be exempt from, or to otherwise comply with, Section 409A of the Code and the Treasury regulations and guidance issued thereunder (collectively, “Code Section 409A”).  Accordingly, other provisions of the Plan or this Agreement notwithstanding, the provisions of this Section 25 will apply in order that the Awarded Units, and related dividend equivalents and any other related rights, will be exempt from or otherwise comply with Code Section 409A.  In addition, the Company and the Committee reserve the right, to the extent the Company or the Committee deems necessary or advisable in its sole discretion, to unilaterally amend or modify the Plan and/or this Agreement to ensure that all Awarded Units, and related dividend equivalents and any other related rights, are exempt from or otherwise comply, and in operation comply, with Code Section 409A (including, without limitation, the avoidance of penalties thereunder).  Other provisions of the Plan and this Agreement notwithstanding, the Company makes no representations that the Awarded Units, and related dividend equivalents and any other related rights, will be exempt from or avoid any penalties that may apply under Code Section 409A, makes no undertaking to preclude Code Section 409A from applying to the Awarded Units and related dividend equivalents and any other related rights, and will not indemnify or provide a gross up payment to a Participant (or his beneficiary) for any taxes, interest or penalties imposed under Code Section 409A.  The settlement of Awarded Units that constitute nonqualified deferred compensation within the meaning of Code Section 409A (“409A Awarded Units”) may not be accelerated by the Company except to the extent permitted under Code Section 409A.  The Company may, however, accelerate the vesting of 409A Awarded Units, without changing the settlement terms of such 409A Awarded Units.  In the case of any settlement of 409A Awarded Units during a specified period following any date triggering a right to settlement, the Participant shall have no influence on any determination as to the tax year in which the settlement will be made.  Notwithstanding any other provision in this Agreement, if the Participant is a “specified employee” for purposes of Code Section 409A as of the date of the Participant’s Termination of Service, then to the extent any amount payable under this Agreement (i) constitutes the payment of nonqualified deferred compensation, within the meaning of Code Section 409A, (ii) is payable upon the Participant’s Termination of Service for a reason other than death, and (iii) under the terms of this Agreement would be payable prior to the six-month anniversary of the Participant’s Termination of Service, such payment shall be delayed and paid to the Participant on the day that is six months and one day following the Participant’s Termination of Service or, if earlier, within ninety (90) days following the Participant’s death.

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Participant, to evidence his or her consent and approval of all the terms hereof, has duly executed this Agreement, as of the date specified in Section 1 hereof.

 

	COMPANY:
	PHYSICIANS REALTY TRUST
	By:
	Name:
	Title:
	PARTICIPANT:
	Signature
	Name:
	Address:

 

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