<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
HEALTHCARE REALTY TRUST INCORPORATED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
(HEALTHCARE REALTY TRUST LOGO)
3310 WEST END AVENUE
NASHVILLE, TENNESSEE 37203
March 31, 2000
TO OUR SHAREHOLDERS:
You are cordially invited to attend the 2000 annual meeting of shareholders
of Healthcare Realty Trust Incorporated, to be held on Tuesday, May 16, 2000, at
10:00 a.m. (local time) at the Company's executive offices at 3310 West End
Avenue, Suite 700, Nashville, Tennessee.
Please read the enclosed 1999 Annual Report to Shareholders and Proxy
Statement for the 2000 annual meeting. Whether or not you plan to attend the
meeting, please sign, date and return the enclosed proxy, which is being
solicited by the Board of Directors, as soon as possible so that your vote will
be recorded. If you attend the meeting, you may withdraw your proxy and vote
your shares personally.
Sincerely,
/s/ DAVID R. EMERY
David R. Emery
Chairman and Chief Executive Officer
IMPORTANT
COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY
AND RETURN IT PROMPTLY.
<PAGE> 3
(HEALTHCARE REALTY TRUST LOGO)
3310 WEST END AVENUE
NASHVILLE, TENNESSEE 37203
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 16, 2000
TO OUR SHAREHOLDERS:
The annual meeting of shareholders of Healthcare Realty Trust Incorporated
(the "Company") will be held on Tuesday, May 16, 2000, at 10:00 a.m. (local
time) at 3310 West End Avenue, Suite 700, Nashville, Tennessee, for the
following purposes:
(1) To elect two nominees as Class 1 directors;
(2) To act on a proposal to amend and restate the Company's charter;
(3) To act on a proposed 2000 Employee Stock Purchase Plan;
(4) To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for fiscal 2000; and
(5) To transact any other business that properly comes before the
meeting or any adjournment thereof.
Holders of the Company's Common Stock and 8 7/8% Series A Voting Cumulative
Preferred Stock of record at the close of business on March 16, 2000 are
entitled to vote at the meeting or at any adjournment of the meeting.
Dated: March 31, 2000
By order of the Board of Directors
/s/ DAVID R. EMERY
David R. Emery
Chairman and Chief Executive Officer
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, TO ASSURE THE
PRESENCE OF A QUORUM, PLEASE COMPLETE, DATE, SIGN AND MAIL THE ENCLOSED PROXY AS
SOON AS POSSIBLE. IF YOU ATTEND THE MEETING AND WISH TO VOTE YOUR SHARES
PERSONALLY, YOU MAY DO SO AT ANY TIME BEFORE THE PROXY IS EXERCISED.
<PAGE> 4
(HEALTHCARE REALTY TRUST LOGO)
3310 WEST END AVENUE
NASHVILLE, TENNESSEE 37203
PROXY STATEMENT
This Proxy Statement contains information related to the annual meeting of
shareholders to be held at 3310 West End Avenue, Suite 700, Nashville,
Tennessee, on Tuesday, May 16, 2000, at 10:00 a.m. (local time) for the purposes
set forth in the accompanying notice, and at any adjournment thereof. This Proxy
Statement and the accompanying proxy are first being mailed or given to
shareholders on or about March 31, 2000.
If the enclosed proxy is properly executed, returned and not revoked, it
will be voted in accordance with the instructions, if any, given by the
shareholder, and if no instructions are given, it will be voted (a) FOR the
election as directors of the nominees described in this Proxy Statement, (b) FOR
amending and restating the Company's charter; (c) FOR approving the 2000
Employee Stock Purchase Plan, (d) FOR ratification of the appointment of Ernst &
Young LLP as the Company's independent auditors, and (e) FOR the recommendation
of the Board of Directors on any other proposal that may properly come before
the meeting. The persons named as proxies in the enclosed proxy were selected by
the Company's Board of Directors.
Shareholders who sign proxies have the right to revoke them at any time
before they are voted by written request to the Company, and the giving of the
proxy will not affect the right of a shareholder to attend the meeting and vote
in person.
The close of business on March 16, 2000 has been fixed as the record date
for the determination of shareholders entitled to vote at the meeting. As of the
close of business on such date, the Company had 150,000,000 authorized shares of
common stock, $.01 par value (the "Common Stock"), of which
shares were outstanding and entitled to vote and 50,000,000 authorized shares of
preferred stock, of which 3,000,000 shares designated as the 8 7/8% Series A
Voting Cumulative Preferred Stock (the "Preferred Stock") were outstanding and
entitled to vote. The Common Stock and the Preferred Stock are the Company's
only outstanding classes of voting stock.
Each share of Common Stock and Preferred Stock (together, the "Voting
Stock") will have one vote, voting as a single class, on each matter to be voted
upon at the meeting.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes having three-year
terms that expire in successive years. The current three-year term of the Class
1 directors expires at the 2000 annual meeting. The Board of Directors proposes
that the nominees described below, all of whom are currently serving as Class 1
directors, be re-elected to Class 1 to serve until the annual meeting of
shareholders in 2003 or until their successors have been elected. Each nominee
has consented to be a candidate and to serve, if elected.
According to Maryland law, directors are elected by a plurality of the
votes cast by the shares entitled to vote in the election at a meeting at which
a quorum is present. The Company's Articles of Incorporation do not provide for
cumulative voting and, accordingly, each shareholder may cast one vote per share
of Voting Stock for each nominee.
Unless a proxy shall specify otherwise, the persons named in the proxy
shall vote the shares covered thereby for the nominees designated by the Board
of Directors listed below. Should any nominee become unavailable for election,
shares covered by a proxy will be voted for a substitute nominee selected by the
current Board of Directors.
<PAGE> 5
CLASS 1 NOMINEES
The nominees for election as Class 1 directors are:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ---- --- -------------------- --------
<S> <C> <C> <C>
CLASS 1 -- 2003
Charles Raymond Fernandez, M.D......... 56 Chief Executive Officer and Chief 1993
Medical Officer, Piedmont Clinic,
Atlanta, Georgia since November,
1999; previously Medical Director,
Nalle Clinic, Charlotte, North
Carolina
Errol L. Biggs, Ph.D................... 59 Director-Center for Health 1993
Administration and Professor and
Director-Programs in Health
Administration, University of
Colorado; President, Biggs &
Associates (consulting company),
Castle Rock, Colorado
</TABLE>
CONTINUING DIRECTORS
The persons named below will continue to serve as directors until the
annual meeting of shareholders in the year indicated and until their successors
are elected and take office. Shareholders are not voting on the election of the
Class 2 and Class 3 directors.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ---- --- -------------------- --------
<S> <C> <C> <C>
CLASS 2 -- 2001
Marliese E. Mooney..................... 70 Independent healthcare consultant, Fort 1993
Myers, Florida
Edwin B. Morris III.................... 60 Managing Director, Morris & Morse 1993
Company, Inc. (real estate financial
consulting firm), Boston,
Massachusetts
John Knox Singleton.................... 51 President and Chief Executive Officer, 1993
Inova Health Systems, Falls Church,
Virginia
CLASS 3 -- 2002
David R. Emery......................... 55 Chairman of the Board of Directors, 1993
President and Chief Executive Officer
of Healthcare Realty Trust
Incorporated
Thompson S. Dent....................... 49 President, Chief Operating Officer and 1993
a Director, PhyCor, Inc. (physician
management company), Nashville,
Tennessee
Batey M. Gresham, Jr................... 65 Founder, Gresham, Smith & Partners 1993
(architects), Nashville, Tennessee
</TABLE>
Except as indicated, each of the nominees and continuing directors has had
the principal occupation indicated for more than five years.
2
<PAGE> 6
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors has an Executive Committee, an Audit Committee, and
a Compensation Committee. All committee members are non-employee, independent
directors except David R. Emery, the Chairman of the Board, President, and Chief
Executive Officer of the Company. The Company's Board of Directors has no
standing nominating committee. The following table sets forth the current
members of the committees:
COMMITTEE MEMBERSHIP
<TABLE>
<CAPTION>
NAME EXECUTIVE AUDIT COMPENSATION
---- --------- ----- ------------
<S> <C> <C> <C>
Errol L. Biggs, Ph.D.................................. X
Thompson S. Dent...................................... X X
David R. Emery........................................ X
Charles Raymond Fernandez, M.D........................ X
Batey M. Gresham, Jr.................................. X
Marliese E. Mooney.................................... X
Edwin B. Morris III................................... X
John Knox Singleton................................... X
</TABLE>
EXECUTIVE COMMITTEE NO MEETINGS IN 1999
- Acts on behalf of the Board of Directors on all matters concerning the
management and conduct of the business and affairs of the Company except
those matters that cannot by law be delegated by the Board.
AUDIT COMMITTEE 2 MEETINGS IN 1999
- Selects and engages, subject to the consent of the shareholders, and
fixes the compensation of, a firm of certified public accountants whose
duty it is to audit the books and accounts of the Company and its
subsidiaries for the fiscal year in which it is appointed.
- Confers with the auditors and determines the scope of the audit.
- Reviews the business practices and conduct of employees and other
representatives of the Company and its subsidiaries to ensure that they
comply with the Company's policies and procedures. None of the members of
the Audit Committee may be an officer or employee of the Company.
COMPENSATION COMMITTEE 2 MEETINGS IN 1999
- Establishes a general compensation policy for the Company and approves
increases in directors' fees and salaries paid to officers and senior
employees earning in excess of an annual base salary of $200,000.
- Administers all of the Company's employee benefit plans, including any
stock option and restricted stock plans, bonus plans, retirement plans,
stock purchase plans and medical, dental and insurance plans.
- Determines, subject to the provisions of the Company's plans, the
directors, officers and employees of the Company eligible to participate
in any of the plans, the extent of such participation and the terms and
conditions under which benefits may be vested, received or exercised.
MEETING ATTENDANCE
The Board of Directors held a total of four meetings in 1999. Each director
attended at least 75% of the meetings of the Board and committees of the Board
on which such director served.
3
<PAGE> 7
COMPENSATION OF DIRECTORS
Directors who are employees of the Company receive no additional
compensation for their services as directors. Each non-employee director
receives:
- An annual retainer of $12,000;
- A meeting fee of $1,000 for each Board or committee meeting attended (but
only one fee in the event that more than one such meeting is held on a
single day);
- An annual grant of 150 restricted shares of Company Common Stock; and
- Reimbursement for necessary travel expenses incurred in attending such
meetings.
The Company's retirement plan for non-employee directors provides that when
an eligible director reaches age 65 and has completed five years of service with
the Company, such director shall receive an annual amount equal to the
director's compensation immediately preceding retirement from the Board of
Directors for a period of not more than 15 years. A director who dies will
receive benefits as if the director retired from the Board of Directors on the
day before his or her death. If a retired director dies before the end of his or
her payment period, his or her beneficiary will receive the remaining benefits
for the balance of the payment period.
Each non-employee director receives an automatic grant, at the conclusion
of each annual meeting, of 150 restricted shares of the Company's Common Stock.
Such shares are restricted for three years from the date of grant and are
granted as of the Annual Meeting date. Such shares are subject to forfeiture
upon the occurrence of certain events. Shares subject to the risk of forfeiture
may not be sold, assigned, pledged or otherwise transferred. Subject to the risk
of forfeiture and transfer restrictions, directors shall have all rights as
shareholders with respect to restricted shares, including the right to vote and
receive dividends or other distributions on such shares. As of February 28,
2000, non-employee directors had received an aggregate of 13,053 restricted
shares.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ELECTION
OF ALL OF THE PROPOSED NOMINEES TO THE BOARD OF DIRECTORS.
AMENDED AND RESTATED CHARTER
On October 1, 1999, certain amendments to the Maryland Business Corporation
Act became effective.
In order to take advantage of the changes in Maryland corporate law and for
the reasons stated below, the Board of Directors has approved unanimously the
form of a proposed Articles of Amendment and Restatement ("Restated Charter")
and recommend that it be approved by the shareholders. The text of the proposed
Articles of Amendment and Restatement is set forth in Appendix A of this Proxy
Statement and should be read in its entirety by shareholders. The following
description of such proposed Articles of Amendment and Restatement is qualified
in its entirety by reference to Appendix A. Except as otherwise noted below, to
the best knowledge of the Board of Directors, there are no pending, threatened
or proposed proceedings, transactions or actions to which these proposed changes
to the Company's current Charter would apply.
If the proposed Restated Charter is adopted by the affirmative vote of a
majority of all of the outstanding shares of the Company's Common Stock and
Preferred Stock entitled to vote at the Company's annual meeting, the proposed
Restated Charter will become effective upon its filing with the Maryland
Department of Assessments and Taxation, which is expected to occur shortly after
such shareholder approval.
DESCRIPTION OF MATERIAL CHANGES
The following describes the material changes in the proposed Restated
Charter.
Increasing Authorized Shares. The Maryland Act was amended to permit
charters to include a provision permitting a Maryland corporation's board of
directors to increase the number of authorized shares
4
<PAGE> 8
or the number of authorized shares of any class without shareholder approval.
The Company's Board of Directors has unanimously included such a provision in
the proposed Restated Charter.
Authorized shares are the shares which a corporation may issue. These
shares are not outstanding until they are actually issued by the corporation.
Adoption of this provision will not result in the issuance of any additional
shares of Common Stock or Preferred Stock. The increase in the authorized number
of shares is intended to insure that there will be sufficient authorized but
unissued shares available for stock dividends, for use in connection with
acquisitions and for other corporate purposes.
Approval of this provision will permit the Board to authorize such
additional shares without further approval of shareholders and to issue such
shares upon such terms and at such times as it may determine unless shareholder
approval is required by applicable law or stock exchange requirements. Holders
of the Company's securities have no preemptive rights to subscribe to the
Company's securities.
The Board believes that the ability to increase its authorized shares
without shareholder approval will provide the Company with needed flexibility
for possible future acquisitions, financing transactions, and other general
corporate purposes. The Board has no present plans to issue additional shares of
Common Stock or Preferred Stock, although the Company is continually reviewing
various transactions that could result in the issuance of shares of stock.
However, if the Company were to enter into a transaction requiring the issuance
of more shares than are currently authorized, the delay and expense of
soliciting shareholder approval to add additional shares could cause delay in
completing the transaction or, in extreme circumstances, could cause the Company
to fail to complete the transaction.
Indemnification Rights. The Company's Charter currently provides that
directors, officers, employees, and agents shall be indemnified by the Company
as of right to the full extent permitted by the Maryland Business Corporation
Act. The indemnification provisions of the proposed Restated Charter clarify
that provision and provide that indemnification may be enhanced in ways not
inconsistent with public policy when authorized by the charter or bylaws, a
resolution of shareholders or directors or by an agreement providing for such
enhanced indemnification.
Although certain of these provisions are already included in the Maryland
Act and the Company's present indemnification arrangements, the new
indemnification provisions clarify that:
- Officers, directors, employees and agents of the Company are indemnified,
as are such persons who serve in similar capacities in other companies at
the Company's request.
- Indemnification applies to civil, criminal and administrative actions,
suits or proceedings.
- Indemnification includes expenses, attorney's fees, judgments, penalties,
fines, and settlement amounts.
- The Company will advance expenses during the pendency of a proceeding.
- The Company may purchase insurance to cover indemnified liabilities.
- Any future limitation of the indemnification rights shall only act
prospectively and shall not affect indemnification for past acts.
The Company's primary purpose in clarifying these provisions was to foster
the willingness of responsible and competent individuals to serve as officers
and directors without inordinate fear that their personal net worth would be
exposed to litigation. Moreover, in light of the expense of defending lawsuits,
the frequency in recent years with which unwarranted litigation is brought
against directors, officers or employees of corporations and the inevitable
uncertainties with respect to the application of the above standards to
particular facts and circumstances, as a practical matter directors, officers
and employees of corporations now rely on indemnity from, and insurance provided
by, the corporations they serve as a financial back-stop in the event of such
expenses or unforeseen liability. Also, such litigation is typically extremely
expensive whatever its eventual outcome. In view of the costs and uncertainties
of litigation, it is often prudent, as a general matter, to settle such
litigation. Settlement amounts, even if immaterial to the corporation involved
and minor compared to the enormous amounts frequently claimed, often exceed the
financial resources of most individual director, officer and employee
defendants. In recent years, spurred on by changes in corporate indemnity
statutes like those enacted in the Maryland Business Corporation Act and the
crisis in directors and officers liability insurance, corporations have been
adopting enhancements to statutory indemnification
5
<PAGE> 9
provisions similar to those proposed by the Company herein to assist them in
attracting and retaining qualified directors, officers and employees. To align
the Company's indemnification provisions with modern practice, the Board of
Directors has approved unanimously adding proposed Section 2 of Article IX to
the proposed Restated Charter.
Tax Provisions. The proposed Restated Charter contains certain new
provisions designed to preserve the Company's tax classification as a real
estate investment trust.
Section 4 of Article VI recognizes the obligation of holders of more than
5% of the Company's outstanding shares to provide certain information to the
Company to enable the Company to comply with its reporting requirements to the
Internal Revenue Service.
Sections 5 and 6 of Article VI give the Company's Board of Directors the
authority to take action and to interpret the language of the Charter in ways
necessary to protect the Company's status as a real estate investment trust.
Editorial Clarification. The other changes in the proposed Restated
Charter involve rearrangement of certain provisions and changes intended to
clarify the language. These changes do not involve any substantive change to the
Company's business or the rights of shareholders.
REQUIRED VOTE
The affirmative vote of a majority of the outstanding shares of Common
Stock and Preferred Stock, voting as a single class, is needed to approve the
proposed Articles of Amendment and Restatement.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL
OF THE ARTICLES OF AMENDMENT AND RESTATEMENT.
2000 EMPLOYEE STOCK PURCHASE PLAN
The purpose of the 2000 Employee Stock Purchase Plan (the "Purchase Plan")
is to provide an opportunity for eligible employees to share in the growth and
prosperity of the Company by acquiring a proprietary interest in the Company
through acquisition of shares of the Company's Common Stock. The text of the
Purchase Plan is set forth in Appendix B of this Proxy Statement and should be
read in its entirety by shareholders.
The Compensation Committee of the Company's Board of Directors has reviewed
the Company's policies regarding the compensation of the Company's employees and
has recommended that the Company encourage investment by employees in the
Company's Common Stock by creating a plan by which employees may receive the
opportunity to purchase shares of the Company's Common Stock at a modest
discount. Accordingly, the Board of Directors has unanimously approved the
Purchase Plan.
DESCRIPTION OF THE PURCHASE PLAN
The Purchase Plan is administered by the Compensation Committee of the
Board of Directors. On the effective date of the Plan as determined by the Board
of Directors, and on each January 1 thereafter, all employees of the Company who
have been employed for at least 90 days and whose customary employment is at
least 20 hours per week and more than five months in a calendar year are
eligible to participate in the Purchase Plan. As of February 2, 2000, 204
employees were eligible for participation in the Purchase Plan.
Pursuant to the Purchase Plan, eligible employees of the Company and its
subsidiaries may purchase shares of the Company's Common Stock through a regular
payroll deduction. In addition, eligible employees may make voluntary cash
contributions. The Company has reserved 1,000,000 shares of Common Stock for
issuance pursuant to the Purchase Plan, subject to adjustment resulting from (i)
a stock dividend, split or combination, (ii) a reorganization, merger or
consolidation or (iii) another similar change affecting the Company's Common
Stock. As of March 16, 2000 the market price of each individual share of Common
Stock was $ , based upon the closing prices of these shares on the New
York Stock Exchange, Inc.
6
<PAGE> 10
Each eligible participant in the Purchase Plan will be given the
opportunity to purchase shares of the Company's Common Stock (stated as options
to ensure that no participant exceeds the maximum amount permitted by the
Purchase Plan) on the effective date of the Purchase Plan, and on each January 1
thereafter. The options will expire 27 months after the date of grant. A
participant may, prior to the expiration of the term of the options, exercise
options to purchase that number of shares equal to the funds accumulated by the
participant through payroll deduction and voluntary cash contributions divided
by the exercise price of a share of the Company's Common Stock. Any options
which remain unexercised will be exercised at the end of the option term to the
extent of funds remaining from the participants payroll deductions.
The Exercise Price of a share of the Company's Common Stock under the
Purchase Plan shall be equal to the lesser of (i) 85% of the fair market value
of the Company's Common Stock on the date of the grant of the option to be
exercised or (ii) 85% of the fair market value of the Company's Common Stock on
the exercise date of the option.
In no event may a participant in the Purchase Plan (i) purchase in any year
in excess of $25,000 of fair market value of Common Stock (determined on the
January 1 of the year that the option was granted), (ii) be granted options to
purchase shares of the Company's Common Stock thereunder, if, on January 1, the
participant would be deemed (under applicable tax rules) to own more than 5% of
the total combined voting power or value of the Company's Common Stock or (iii)
during the participant's lifetime transfer or otherwise alienate any rights
granted under the Purchase Plan.
TAX CONSEQUENCES
A participant will not recognize income on the grant of an option under the
Purchase Plan. If the participant does not sell the Common Stock purchased under
the Purchase Plan for a holding period of at least two years after the date of
grant and one year after the date of exercise, he will not recognize income on
the purchase of Common Stock. Any gain or loss on the sale of the Common Stock
will be treated as long-term capital gain or loss. However, a participant will
recognize ordinary compensation income (and not capital gains) at the time he
sells the Common Stock on the lesser of (i) the amount by which the price paid
to exercise the option was exceeded by the fair market value of the Common Stock
on the date of grant, or (ii) the amount by which the price paid to exercise the
option was exceeded by the fair market value of the Common Stock at the time of
sale or death.
A participant who disposes of the Common Stock before the holding period
stated above is satisfied will have engaged in a "disqualifying disposition" and
will recognize taxable compensation on the difference between the purchase price
of Common Stock and its fair market value at the time of purchase. The
participant's basis in the Common Stock after a disqualifying disposition is the
fair market value at the time of purchase. The participant will still be subject
to tax on capital gain, if any, upon the sale of the Common Stock on the amount
realized in excess of the increased basis.
Generally, the Company is not entitled to a tax deduction upon the grant of
an option or the purchase of Common Stock under the Purchase Plan. However, if a
participant engages in a disqualifying disposition, the Company may take a tax
deduction for the amount of ordinary income recognized by the participant.
REQUIRED VOTE
Under Maryland law and the Company's bylaws, the Board of Directors is
authorized to determine the compensation of the Company's employees without
shareholder approval. However, shareholder approval of the Purchase Plan is
required under the Internal Revenue Code. Exercise of options issued under the
Purchase Plan is, therefore, conditioned upon the approval by holders of a
majority of the total shares of Voting Stock cast upon the Purchase Plan. The
Purchase Plan is to remain in effect indefinitely.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
THE COMPANY'S 2000 EMPLOYEE STOCK PURCHASE PLAN.
7
<PAGE> 11
SELECTION OF AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors has
appointed Ernst & Young LLP, Certified Public Accountants, as the Company's
independent auditors for fiscal year 2000, subject to the approval of the
shareholders. This firm has served as the independent auditors of the Company
since the Company's formation in 1992. Representatives of this firm are expected
to be present at the meeting and will have an opportunity to make a statement if
they desire and will be available to respond to appropriate questions.
The affirmative vote of a majority of the votes cast at the meeting is
needed to ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for fiscal year 2000. If the appointment is not approved,
the matter will be referred to the Audit Committee for further review.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR RATIFICATION OF THE
APPOINTMENT.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table reports as of January 31, 2000 beneficial ownership of
Common Stock in accordance with Rule 13d-3 under the Securities Exchange Act of
1934. This means that all Company securities over which the directors, nominees,
and executive officers directly or indirectly have or share voting or investment
power are listed as beneficially owned. None of these persons owns any Preferred
Stock, except that the wife of John Knox Singleton owns 500 shares. The Company
knows of no single person or group that is the beneficial owner of more than 5%
of the Company's Common Stock or Preferred Stock.
<TABLE>
<CAPTION>
PERCENT OF
SHARES SHARES
NAME BENEFICIALLY BENEFICIALLY
OF BENEFICIAL OWNER OWNED(1) OWNED
------------------- ------------ ------------
<S> <C> <C>
David R. Emery(2)......................................... 432,512(3) 1.0%
Timothy G. Wallace........................................ 182,738(4) *
Roger O. West............................................. 154,814(5) *
Charles Raymond Fernandez, M.D............................ 6,672(6) *
Errol L. Biggs, Ph.D...................................... 2,121(7) *
Marliese E. Mooney........................................ 2,739(8) *
Edwin B. Morris III....................................... 2,398(9) *
John Knox Singleton....................................... 23,064(9)(10) *
Thompson S. Dent.......................................... 13,507(9) *
Batey M. Gresham, Jr...................................... 3,312(9) *
All executive officers and directors as a group (10
persons)................................................ 823,877 2.06%
</TABLE>
- ---------------
* Less than 1%
(1) Pursuant to the rules of the Securities and Exchange Commission, restricted
shares of Common Stock that the recipient does not have the ability to vote
or to receive dividends on are not included.
(2) Includes 143,352 shares owned by the Emery Family Limited Partnership and
1,448 shares owned by the Emery Family 1993 Irrevocable Trust. Mr. Emery is
a limited partner of the partnership and a beneficiary of the trust, but
has no voting or investment power with respect to the shares owned by such
partnership or trust.
(3) Includes 287,712 shares of restricted stock granted pursuant to the 1993
Employees Stock Incentive Plan.
(4) Reflects 149,800 shares of restricted stock granted pursuant to the 1993
Employees Stock Incentive Plan.
(5) Reflects 151,576 shares of restricted stock granted pursuant to the
Company's 1993 Employees Stock Incentive Plan.
8
<PAGE> 12
(6) Includes 1,866 shares of stock granted pursuant to the Company's Restricted
Stock Plan of which 450 are shares of restricted stock.
(7) Includes 1,856 shares of stock granted pursuant to the Company's Restricted
Stock Plan of which 450 are shares of restricted stock.
(8) Includes 1,739 shares of stock granted pursuant to the Company's Restricted
Stock Plan of which 450 are shares of restricted stock.
(9) Includes 1,898 shares of stock granted pursuant to the Company's Restricted
Stock Plan of which 450 are shares of restricted stock.
(10) Of these shares, 2,267 are held in trust by Mr. Singleton for the benefit
of his minor children, 361 are held jointly with Peggy T. Singleton, Mr.
Singleton's wife, 16,904 shares are owned by Mr. Singleton's wife, and
1,634 are owned in an IRA.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of the
Company's Common Stock or Preferred Stock, to file with the SEC initial reports
of ownership and reports of changes in ownership of the Common Stock. These
officers, directors and greater than 10% shareholders of the Company are
required by SEC rules to furnish the Company with copies of all Section 16(a)
reports they file. There are specific due dates for these reports and the
Company is required to report in this Proxy Statement any failure to file
reports as required during 1999.
Based upon a review of these filings and written representations from the
Company's directors and executive officers that no other reports were required,
except as set forth below, the Company believes that the reporting and filing
requirements relating to ownership of Common Stock and Preferred Stock were
complied with during 1999 and prior years.
The following reports were not timely filed: (1) The filing to reflect the
issuance of restricted shares to the directors in May 1999 was accepted for
filing on the due date but deemed filed the following morning. (2) Charles
Raymond Fernandez, M.D., a director, purchased 3,800 shares of Common Stock on
December 17, 1999, but Dr. Fernandez neglected to notify the Company of his
purchase until February 22, 2000. The required report was filed with the SEC on
February 24, 2000.
9
<PAGE> 13
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table reflects the compensation of the Named Executive
Officers:
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -----------------------
-------------------------------------- RESTRICTED SECURITIES ALL
OTHER ANNUAL AWARDS UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) ($) ($) COMPENSATION
- --------------------------- ---- --------- -------- --------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
David R. Emery..................... 1999 425,000 450,000 17,658(1) 641,750(3) 17,733(2)
Chairman of the Board and........ 1998 332,800 630,500 16,691(1) 0 0 1,100(2)
Chief Executive Officer.......... 1997 328,500 189,000 15,829(1) 0 0 0
Timothy G. Wallace................. 1999 275,000 300,000 7,237(1) 415,250(3) 0
Executive Vice President......... 1998 210,800 395,300 7,025(1) 0 0 0
and Chief Financial Officer...... 1997 208,100 99,800 6,826(1) 0 0 0
Roger O. West...................... 1999 275,000 300,000 10,094(1) 415,250(3) 0
Executive Vice President......... 1998 210,800 395,300 9,790(1) 0 0 0
and General Counsel.............. 1997 208,100 99,800 9,499(1) 0 0 0
</TABLE>
- ---------------
(1) Reflects cost of life and supplemental disability insurance premiums paid by
the Company.
(2) Represents certain financial and tax planning services paid on behalf of Mr.
Emery.
(3) Reflects shares of Common Stock issued in lieu of cash bonus based upon a
closing price of the Common Stock on December 31, 1999 of $15.625. The
stated amounts do not reflect any diminution of value attributable to the
restrictions on such shares. The shares vest after a five year holding
period. During the restricted period, holders may vote the shares and
receive all dividends thereon.
STOCK OPTION GRANTS
The Company did not have any stock options or stock appreciation rights
outstanding, granted, or exercised during 1999.
PENSION OR RETIREMENT PLANS
The Company adopted an Executive Retirement Plan for its senior executives
in 1993. Because it is a defined benefit plan, the amount of a retiree's pension
is calculated using pay and years of service as an employee, rather than by the
market value of the plan's assets as in defined contribution plans.
Upon retirement, a participant receives an annual pension from the plan
equal to 60% of the participant's Final Average Annual Compensation, as defined
below, plus 6% for each year of service after age 60 (90% for retirement at age
65 with at least five years of service). Plan benefits are reduced by the
participant's primary Social Security benefits and Company contributions to the
participant's 401(k) plan. One-half of the annual pension benefit is payable to
the participant's spouse upon the participant's death.
"Final Average Annual Compensation," which is calculated as the average of
the three highest, not necessarily consecutive, years' earnings, is based upon a
participant's annual salary and bonus (whether paid in cash or stock).
10
<PAGE> 14
The plan is unfunded and will be paid from earnings of the Company. The
Compensation Committee selects eligible participants in the plan. As of March
16, 2000, the Compensation Committee has selected the following persons as the
participants for this plan:
<TABLE>
<CAPTION>
YEARS OF SERVICE
NAME AS OF DECEMBER 31, 1999
- ---- -----------------------
<S> <C>
David R. Emery.............................................. 7
Timothy G. Wallace.......................................... 7
Roger O. West............................................... 5
Fredrick M. Langreck........................................ 7
Rita Hicks Todd............................................. 7
</TABLE>
The following table illustrates the annual pension benefits upon the normal
retirement age of 65 calculated before any offset of the employee's primary
Social Security benefits or Company contributions to the participant's 401(k)
plan:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
FINAL
AVERAGE YEARS OF SERVICE
ANNUAL -------------------------------------
COMPENSATION 5 10 15 20
- ------------------------------------------------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
50,000.............................................. 45,000 45,000 45,000 45,000
100,000............................................... 90,000 90,000 90,000 90,000
150,000............................................... 135,000 135,000 135,000 135,000
200,000............................................... 180,000 180,000 180,000 180,000
250,000............................................... 225,000 225,000 225,000 225,000
300,000............................................... 270,000 270,000 270,000 270,000
350,000............................................... 315,000 315,000 315,000 315,000
400,000............................................... 360,000 360,000 360,000 360,000
450,000............................................... 405,000 405,000 405,000 405,000
500,000............................................... 450,000 450,000 450,000 450,000
600,000............................................... 540,000 540,000 540,000 540,000
700,000............................................... 630,000 630,000 630,000 630,000
800,000............................................... 720,000 720,000 720,000 720,000
900,000............................................... 810,000 810,000 810,000 810,000
1,000,000.............................................. 900,000 900,000 900,000 900,000
</TABLE>
The Company has also adopted a Non-Qualified Deferred Compensation Plan,
which allows eligible participants to defer and invest a portion of their
compensation. The deferrals are credited to a participant's account and invested
in various securities designated by the Company selected by the participants.
These investment options may be amended from time to time by the Company.
Participants are 100% vested in their accounts. No matching funds are provided.
As a result, the Company incurs no costs associated with the plan other than
routine administrative expenses. Participants may elect benefit payments to
commence either in the year 2010 or upon retirement. The participant can specify
that his or her benefits be paid as a single lump sum or in annual installments
over a period of between five and ten years. In the event of an employee's
termination, benefits are paid in a lump sum within 90 days following
termination. The plan allows disabled employees to receive hardship withdrawals.
The plan is administered by a committee consisting of three or more officers
selected by the Compensation Committee. The plan committee has broad powers to
interpret and administer the plan, including designating participants and
investment options.
The Board of Directors adopted the 2000 Employee Stock Purchase Plan which
is being acted upon by the shareholders at this meeting. See "2000 Employee
Stock Purchase Plan."
11
<PAGE> 15
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
David R. Emery
Mr. Emery's employment agreement, pursuant to which he serves as Chairman,
President and Chief Executive Officer of the Company, has a five-year term that
is automatically extended on January 1 of each year for an additional year.
Under this agreement, Mr. Emery receives a 2000 base salary of $434,775 (which
includes a cost of living adjustment) and annual increases at the discretion of
the Compensation Committee of the Board of Directors, and is entitled to
participate in the Company's restricted stock plan and all other benefit
programs generally available to executive officers of the Company. Mr. Emery is
also entitled to receive an annual bonus at the discretion of the Compensation
Committee.
If Mr. Emery's employment agreement is terminated for any reason other than
for cause or upon Mr. Emery's voluntary termination, he is entitled to receive
his unpaid salary, earned bonus, vested, released, granted, or reserved stock
awards, vested deferred compensation (other than plan benefits which will be
paid in accordance with the applicable plan), and other benefits through the
date of termination. In addition, Mr. Emery will receive as severance
compensation his base salary for a period of three years following the date of
termination and an amount equal to twice his average annual bonus during the two
years immediately preceding his termination. Mr. Emery may elect to receive a
lump sum severance amount equal to the present value of such severance payments
(using a discount rate equal to the 90-day treasury bill interest rate in effect
on the date of delivery of such election notice).
If a "change-in-control" (as defined in the employment agreement) occurs,
Mr. Emery may terminate his agreement and receive his accrued base salary and
other benefits described above through the remaining term of the agreement and
an amount equal to three times his average annual bonus during the two years
immediately preceding the termination. In addition, Mr. Emery may elect to
receive from the Company a lump sum severance payment (calculated as provided
above) which may not be greater than three times his base salary. In such event,
Mr. Emery is entitled to receive a tax gross-up payment as compensation for any
excise tax imposed by Section 280(g) of the Internal Revenue Code which would be
required to be paid.
The Company may terminate Mr. Emery's agreement for "cause," which is
defined to include material, substantial and willful dishonesty towards, fraud
upon, or deliberate injury or attempted injury to, the Company or Mr. Emery's
material, substantial and willful breach of the employment agreement which has
resulted in material injury to the Company. In the event of Mr. Emery's
termination for cause, he shall receive all accrued salary, earned bonus
compensation, vested deferred compensation (other than plan benefits which will
be payable in accordance with the applicable plan), and other benefits through
the date of termination, but shall receive no other severance benefits. Mr.
Emery's agreement may also be terminated if Mr. Emery dies or becomes disabled
and his disability continues for a period of 12 consecutive months. In the event
of termination of the employment agreement because of Mr. Emery's death or
disability, Mr. Emery (or his estate) shall receive these same payments but no
additional severance except that, if Mr. Emery becomes disabled, the Company
will maintain his insurance benefits for the remaining term of his employment
agreement.
The Company has agreed to indemnify Mr. Emery for certain liabilities
arising from actions taken within the scope of his employment. Mr. Emery's
employment agreement contains restrictive covenants pursuant to which Mr. Emery
has agreed not to compete with the Company during the period of Mr. Emery's
employment and any period following termination of his employment during which
he is receiving severance payments except in the event of a change-in-control of
the Company.
Timothy G. Wallace
The employment agreement with Mr. Wallace is similar in scope to Mr.
Emery's agreement. Mr. Wallace's agreement has a five-year term that is
automatically extended on January 1 of each year for an additional year. Under
the agreement, Mr. Wallace receives a 2000 base salary of $281,325 (which
includes a cost of living adjustment), and annual bonuses and salary increases
at the discretion of the Compensation Committee. Mr. Wallace is entitled to
participate in the Company's executive incentive compensation plan as
12
<PAGE> 16
well as the restricted stock plan and other benefit programs available to Mr.
Emery. The agreement provides that if Mr. Wallace's employment is terminated, he
will receive compensation similar to Mr. Emery's. In the employment agreement,
the Company has agreed to indemnify Mr. Wallace for certain liabilities arising
from actions taken within the scope of his employment. Mr. Wallace has also
agreed not to compete with the Company during the period of his employment and
any period during which he is receiving severance payments except in the event
of a change-in-control of the Company.
Roger O. West
The Company's employment agreement with Mr. West contains terms similar to
those contained in the employment agreements for Mr. Emery and Mr. Wallace. Mr.
West's agreement has a five-year term that is automatically extended on January
1 of each year for an additional year. Mr. West's 2000 base salary is $281,325
(which includes a cost of living adjustment). Mr. West is also entitled to
receive annual bonuses and salary increases at the discretion of the
Compensation Committee. In addition, Mr. West is eligible to participate in the
applicable restricted stock and other benefit and compensation plans instituted
by the Company available to Mr. Emery and Mr. Wallace.
Mr. West's employment agreement also contains indemnification, covenants
not to compete, termination, change of control and severance provisions similar
to those contained in the employment agreements for Mr. Emery and Mr. Wallace.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors are
Thompson S. Dent, Batey M. Gresham, Jr. and Edwin B. Morris III. There are no
interlocks among the members of the Compensation Committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following Report of the Compensation Committee and the performance
graph included elsewhere in this Proxy Statement do not constitute soliciting
material and should not be deemed filed or incorporated by reference into any
other Company filing under the Securities Act of 1933 or the Securities Exchange
Act of 1934, except to the extent the Company specifically incorporates this
Report or the performance graph by reference therein.
The Compensation Committee establishes a general compensation policy for
the Company and is responsible for approving increases in compensation paid to
the executive officers of the Company within the framework of the Company's
compensation philosophy. The Compensation Committee administers the Company's
employee benefit plans, including restricted stock plans and annual and
long-term incentive plans. In addition, the Compensation Committee evaluates the
performance of the executive officers of the Company and related matters. The
Compensation Committee reviews its decisions with the full Board of Directors.
COMPREHENSIVE EXECUTIVE COMPENSATION POLICY
The Company's compensation program for executives consists of three key
elements:
- Base salaries competitive with those paid to the executive officers of
comparable real estate investment companies;
- Variable annual incentives which would reflect executive contribution to
the Company's short-term objectives; and
- A variable long-term incentive program utilizing share ownership in the
Company reflecting executive contribution to the achievement of the
Company's long-term goals.
The Compensation Committee, in consultation with Ernst & Young LLP,
regularly reviews the executive compensation policies and practices of selected
comparable publicly traded real estate investment companies, establishes base
salaries, incentive target guidelines and equity grant practices for senior
executive positions,
13
<PAGE> 17
and monitors share ownership guidelines for the senior executive officers of the
Company. The following is a summary of the compensation policy of the Company
established by the Compensation Committee:
Base Salary. The base salary of each of the Company's executive officers
should be approximately 50% of the combined base salary and targeted annual and
long-term incentive compensation. Salary increases consist of two components.
The employment agreements with the executive officers require increases based on
adjustments in the consumer price index. In addition, the Compensation
Committee, in its discretion, can recommend additional salary increases. The
Compensation Committee bases all recommendations for increases to base salaries
upon an assessment, reflecting competitive market practices, of experience,
tenure in position and individual and corporate performance. The President will
review all salary recommendations for executive officers, except the
recommendation for himself, with the Compensation Committee, which will be
responsible for approving or disapproving these recommendations. The
Compensation Committee will be solely responsible for determining the salary of
Mr. Emery. In reviewing the President's recommendations and determining base
salaries, the Compensation Committee generally will continue to seek outside
data and recommendations of independent compensation consultants.
In January 1999, after reviewing salary ranges and supporting data for
comparable publicly traded real estate companies, the Compensation Committee
increased base salaries to a level generally at the median of the comparable
company range, as recommended by Ernst & Young. In light of the increase in base
salary in 1999 and of other components of compensation described herein, the
Compensation Committee determined only to increase the base salary of the
executive officers for 2000 by the increase in the cost of living.
Annual Incentive Compensation. An executive's annual incentive
compensation takes the form of cash bonuses. Such compensation will reflect the
degree to which the executive contributes to the realization of established
short-term objectives of the Company and is intended to be a substantial
incentive for the executive officers to achieve those objectives. This at-risk
pay policy provides annual incentive compensation that is substantially measured
as a percentage of base salary, thus enhancing the performance based component
of the total cash compensation. Annual incentive compensation and the total
annual cash compensation are intended to be competitive with prevailing market
practices.
The Compensation Committee has established the Executive Variable Incentive
Plan (the "Bonus Incentive Plan"). The Compensation Committee allocated the
determination of target annual incentive awards between two factors: corporate
performance and individual performance.
At the inception of the Bonus Incentive Plan, the Compensation Committee
established a performance index to evaluate the Company's corporate performance
during each plan year. Corporate performance is measured in terms of the
percentage of funds from operations available for the targeted dividend
distributions during the plan year. The corporate performance index assumes that
the Company has not successfully undertaken a public offering of its Common
Stock or accomplished other significant additions to its capital which benefit
the Company in the long-term, but could lower funds from operations in the
short-term. In the event of such additions to capital, the Compensation
Committee retains the authority to undertake adjustments to the awards to be
delivered for such year. The individual performance index measures the degree
the individual achieved performance objectives established by Mr. Emery, for
executives other than himself, and, in the case of Mr. Emery, as established by
the Compensation Committee.
During 1999, the Compensation Committee reviewed the Bonus Incentive Plan
and received the recommendations of Ernst & Young with respect to adjusting the
Bonus Incentive Plan. The Compensation Committee determined that adjustments to
the Bonus Incentive Plan were required to bring total potential annual cash
compensation to the median of the comparable company range; and, in July, 1999,
after reviewing total cash compensation ranges and supporting data for
comparable publicly traded real estate companies, the Compensation Committee
increased the potential annual incentive to be awarded to the executives. In
1998, the Compensation Committee established cash bonus awards to be made to the
executive officers in 1998 and 1999 in recognition of the significant changes in
the asset, liability and equity position of the Company resulting from of the
acquisition of Capstone Capital Corporation. Because the executive officers
received payment of such a cash bonus award in 1999 and because the Compensation
Committee felt that it would be in the best interest of the Company for the
executive officers to increase their equity position in the Company,
14
<PAGE> 18
the Compensation Committee gave the executive officers the opportunity to elect
to receive their annual incentive awards in the form of long-term incentive
restricted stock, having a five-year restriction period, rather than by payment
of a cash bonus. All three executive officers elected to take their awards in
restricted stock. The Company's performance in 1999, based upon the percentage
of funds from operations available for the target dividend, improved to 83.4% as
compared to 87.2% in 1998.
Long-Term Incentive Compensation. Under the Company's 1993 Employees Stock
Incentive Plan, the Compensation Committee makes grants of restricted stock as a
means of delivering long-term incentive to the Company's executives to induce
them to direct their efforts toward maximizing total returns to shareholders as
measured over an extended period of time. In consultation with Ernst & Young,
the Compensation Committee has prepared long-term target objectives for the
Company and has determined the long-term incentive awards to be made to
designated executive officers, relating to the attainment of these objectives.
Target objectives are measured by the cumulative total shareholder return, which
is the current price for a share of the Company's Common Stock, plus the
cumulative dividends paid to date with respect to a share of Common Stock,
adjusted to include the cumulative effect of per share dividend reinvestment,
less the Company's initial public offering share price of $19.50. The
Compensation Committee has the sole authority to designate the recipients of the
grants.
Pursuant to grants under the Stock Incentive Plan, an aggregate of 445,000
restricted shares were reserved for the executive officers in 1994. All of such
shares were granted to the executives upon attainment of the target objectives,
which shares will fully vest without restriction if the executives remain
employees of the Company for specified periods. In 1998, an additional 445,000
shares were reserved for future grants of restricted stock to the executive
officers (225,000 for Mr. Emery and 110,000 for each of Mr. Wallace and Mr.
West.) None of these additional shares has been granted and no dividend or
voting rights will be received with respect to these shares until granted.
Stock Ownership Guidelines. In connection with the development of the
executive long-term incentive compensation, Ernst & Young recommended the
incorporation of target stock ownership guidelines for designated senior
executives. The Company implemented target share ownership guidelines for
executive officers to promote share ownership and further align executive and
shareholder interests. The guidelines state that within five years from the date
of employment of the executive, it is expected that the executive would possess
qualifying shares of the Company's stock having an aggregate acquisition value
equal to a multiple of base salary, generally determined as of the date of
employment. Qualifying shares include (i) shares of the Company owned by the
executive or the executive's immediate family, or family entities and trusts and
shares held for the executive's benefit pursuant to a qualified plan and (ii)
restricted stock of the Company regardless of the method of grant or
acquisition. The Compensation Committee retains the authority to make exceptions
to the target guidelines based upon changes in circumstances or otherwise to
amend or alter the guidelines as the Compensation Committee may determine. A
written report of the share ownership of the executive shall be delivered
annually to the Compensation Committee.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Under David R. Emery's employment agreement, Mr. Emery's annual base salary
is subject to cost of living adjustments and annual increases at the discretion
of the Compensation Committee. Mr. Emery is entitled to participate in the Stock
Incentive Plan, executive retirement plan and all other benefit programs
generally available to executive officers of the Company. The Company does not
provide Mr. Emery with incidental perquisites such as club memberships, company
vehicles, or other similar items, although it does provide financial and tax
planning assistance to Mr. Emery. The Compensation Committee considers a number
of factors for establishing the base salary of the Chief Executive Officer of
the Company, including growth, asset quality, competitive position, and
profitability of the Company as compared with publicly traded real estate
companies selected by Ernst & Young. The Compensation Committee established Mr.
Emery's 1999 base salary, as the Chief Executive Officer, at $425,000. In
addition, in 1999, the Compensation Committee made an additional cash bonus
payment of $450,000 in light of the significant changes in the asset, liability
and equity position of the Company resulting from the acquisition of Capstone
Capital Corporation. As Chief Executive Officer, Mr. Emery is entitled to earn
an annual bonus incentive on the same basis as all
15
<PAGE> 19
other executive officers of the Company. Based upon the Company's bonus criteria
described above, Mr. Emery received a bonus of 41,072 shares of restricted
stock, having a five-year restriction period, for 1999. Under the long-term
incentive component of Mr. Emery's compensation, future awards to be granted as
a result of attaining Company target objectives are to be made from a
reservation of 225,000 shares of restricted stock. None of these reserved shares
has been granted and no dividend or voting rights will be received with respect
to these shares until granted.
Compliance with Internal Revenue Code Section 162(m). Section 162(m) of
the Internal Revenue Code generally disallows a tax deduction to public
companies for compensation over $1 million paid to the corporation's Chief
Executive Officer and the four other most highly compensated executive officers.
Qualifying performance-based compensation will not be subject to the deduction
limit if certain requirements are met. The Company currently intends to
structure the performance-based portion of the compensation of its executive
officers in a manner that complies with this statute.
Members of the Compensation Committee
Thompson S. Dent (Chairman)
Batey M. Gresham, Jr.
Edwin B. Morris III
16
<PAGE> 20
COMPARATIVE PERFORMANCE GRAPH
The SEC requires the Company to include in this Proxy Statement a line
graph which compares the yearly percentage change in cumulative total
shareholder return on the Company's Common Stock with (a) the performance of a
broad equity market indicator and (b) the performance of a published industry
index or peer group. The following graph compares the monthly percentage change
in the return on the Company's Common Stock since January 1, 1995 with the
cumulative total return on the Total Return Index for Equity REITs, published by
the National Association of Real Estate Investment Trusts, Inc. and the Standard
and Poor's 500 Index. The graph assumes the investment on January 1, 1995 of
$100 and that all dividends were reinvested at the time they were paid.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG HEALTHCARE REALTY TRUST,
S&P 500 INDEX AND NAREIT EQUITY REIT INDEX
(TOTAL RETURN PERFORMANCE GRAPH)
<TABLE>
<CAPTION>
PERIOD ENDING
----------------------------------------------------------
INDEX 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Healthcare Realty Trust 100.00 120.14 150.61 176.55 145.77 114.17
S&P 500 100.00 137.58 169.03 225.44 289.79 350.78
NAREIT All Equity REIT Index 100.00 115.27 155.92 187.51 154.69 147.54
</TABLE>
17
<PAGE> 21
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Thompson S. Dent, a director of the Company, is a founder and President of
PhyCor, Inc. The Company owns 12 properties which relate to doctor's practices
or clinics managed by PhyCor. The Company received revenues of $9.2 million in
1999 from its leases of these facilities. Mr. Dent, however, receives no
personal benefit as a result of these transactions.
GENERAL INFORMATION
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Shareholder proposals intended to be presented at the 2001 annual meeting
of shareholders must be received by the Company at its executive offices at 3310
West End Avenue, Suite 700, Nashville, Tennessee 37203 not later than December
1, 2000, in order to be included in the Proxy Statement and proxy for that
meeting.
COUNTING OF VOTES
All matters specified in this Proxy Statement will be voted on at the
annual meeting by written ballot. Inspectors of election will be appointed,
among other things, to determine the number of shares of Voting Stock
outstanding, the shares of Voting Stock represented at the annual meeting, the
existence of a quorum and the authenticity, validity and effect of proxies, to
receive votes of ballots, to hear and determine all challenges and questions in
any way arising in connection with the right to vote, to count and tabulate all
votes and to determine the result.
The inspectors of election will treat shares represented by proxies that
reflect abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum. Abstentions, however, do not constitute
a vote "for" or "against" any matter and thus will be disregarded in the
calculation of a plurality or of "votes cast."
Inspectors of election will treat shares referred to as "broker non-votes"
(i.e. shares held by brokers or nominees as to which instructions have not been
received from the beneficial owners or persons entitled to vote that the broker
or nominee does not have discretionary power to vote on a particular matter) as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum. However, for purposes of determining the outcome of any
matter as to which the broker has physically indicated on the proxy that it does
not have discretionary authority to vote, those shares will be treated as not
present and not entitled to vote with respect to that matter (even though those
shares are considered entitled to vote for quorum purposes and may be entitled
to vote on other matters).
MISCELLANEOUS
The Company will bear the cost of printing, mailing and other expenses in
connection with this solicitation of proxies and will also reimburse brokers and
other persons holding shares in their names or in the names of nominees for
their expenses in forwarding this proxy material to the beneficial owners of
such shares. Certain of the directors, officers and employees of the Company
may, without any additional compensation, solicit proxies in person or by
telephone.
Management of the Company is not aware of any matters other than those
described in this Proxy Statement which may be presented for action at the
meeting. If any other matters properly come before the meeting, it is intended
that the proxies will be voted with respect thereto in accordance with the
judgment of the person or persons voting such proxies subject to the direction
of the Board of Directors.
18
<PAGE> 22
A copy of the Company's Annual Report has been mailed to all shareholders
entitled to notice of and to vote at this meeting.
HEALTHCARE REALTY TRUST
INCORPORATED
/s/David R. Emery
David R. Emery
Chairman and Chief Executive Officer
March 31, 2000
19
<PAGE> 23
APPENDIX A
HEALTHCARE REALTY TRUST INCORPORATED
ARTICLES OF AMENDMENT AND RESTATEMENT
Healthcare Realty Trust Incorporated, a Maryland corporation (the
"Corporation"), hereby certifies to the State Department of Assessment and
Taxation of Maryland, that:
FIRST: The Corporation desires to amend and restate in their entirety its
Articles of Incorporation originally filed on April 8, 1993 and all subsequent
amendments and supplements filed with the Maryland State Department of
Assessments and Taxation;
SECOND: The provisions set forth in these Articles of Amendment and
Restatement are all the provisions of the charter currently in effect;
THIRD: The provisions of these Articles of Amendment and Restatement have
been unanimously advised and approved by the entire Board of Directors of the
Corporation;
FOURTH: The provisions of these Articles of Amendment and Restatement have
been duly approved by the stockholders of the Corporation; and
FIFTH: The text of the Articles of Amendment and Restatement is hereby
amended and restated to read as hereinbelow set forth in full:
ARTICLE I
NAME
The name of the Corporation shall be Healthcare Realty Trust Incorporated.
ARTICLE II
PURPOSES
The purposes for which the Corporation is formed are to engage in the
ownership of real property and any other lawful act or activity for which
corporations may be organized under the General Corporation Law of Maryland as
now or hereinafter in force.
ARTICLE III
PRINCIPAL OFFICE AND RESIDENT AGENT
The post office address of the principal office of the Corporation in the
State of Maryland is CSC-Lawyers Incorporating Service Company, 11 East Chase
Street, Baltimore, Maryland 21202. The name of the resident agent of the
Corporation in the State of Maryland is The CSC-Lawyers Incorporating Service
Company, and the post office address is 11 East Chase Street, Baltimore,
Maryland 21202, but this Corporation may maintain an office or offices in such
other place or places as may be from time to time, fixed by its Board of
Directors or as may be fixed by the Bylaws of the Corporation.
ARTICLE IV
DIRECTORS
The current number of directors is eight and their names are: David R.
Emery, Errol L. Biggs, Ph.D., Thompson S. Dent, Charles Raymond Fernandez, M.D.,
Batey M. Gresham, Jr., Marliese E. Mooney, Edwin B. Morris, III, and John Knox
Singleton.
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ARTICLE V
CAPITAL STOCK
SECTION 1. The total number of shares of capital stock which the
Corporation shall have authority to issue is 200,000,000, of which 150,000,000
shall be shares of Common Stock having a par value of $.01 per share and
50,000,000 shall be shares of Preferred Stock having a par value of $.01 per
share. The aggregate par value of all said shares shall be $2,000,000.
SECTION 2. The Board of Directors shall have authority to issue the
Preferred Stock from time to time in one or more series and by resolution shall
designate with respect to any series of Preferred Stock:
(1) The number of shares constituting such series and the distinctive
designation thereof;
(2) The voting rights, if any, of such series;
(3) The rate of dividends payable on such series, the time or times
when such dividends will be payable, the preference to, or any relation to,
the payment of dividends to any other class or series of stock and whether
the dividends will be cumulative or non-cumulative;
(4) Whether there shall be a sinking or similar fund for the purchase
of shares of such series and, if so, the terms and provisions that shall
govern such fund;
(5) The rights of the holders of shares of such series upon the
liquidation, dissolution or winding up of the Corporation;
(6) The rights, if any, of holders of shares of such series to convert
such shares into or to exchange such shares for, shares of any other class
or classes or any other series of the same or of any other class or classes
of stock of the Corporation, the price or prices or rate or rates of
exchange, with such adjustments as shall be provided, at which such shares
shall be convertible or exchangeable, whether such rights of conversion or
exchange shall be exercisable at the option of the holder of the shares of
the Corporation or upon the happening of a specified event, and any other
terms or conditions of such conversion or exchange; and
(7) Any other preferences, powers and relative participating, optional
or other special rights and qualifications, limitations or restrictions of
shares of such series.
SECTION 3. The Board of Directors of the Corporation, with the approval of
a majority of the entire Board, and without action by the stockholders, may
amend the Charter to increase or decrease the aggregate number of shares of
stock of the Corporation or the number of shares of stock of any class that the
Corporation has authority to issue.
SECTION 4. The holders of stock of the Corporation shall have no
preemptive or preferential right to subscribe for or purchase any stock or
securities of the Corporation.
ARTICLE VI
PROVISIONS FOR DEFINING, LIMITING AND
REGULATING CERTAIN POWERS OF THE CORPORATION AND
THE BOARD OF DIRECTORS AND STOCKHOLDERS
SECTION 1. The Board of Directors shall have the authority without
stockholder approval to designate capital gain allocation to holders of any
series or all series of Common Stock; provided, however, that any allocation
among holders of any series or class of stock shall be pro rata among such
holders in accordance with their ownership interests.
SECTION 2. (a) If the Board of Directors shall, at any time and in good
faith, be of the opinion that, direct or indirect ownership of at least 9.9% or
more in value of the outstanding stock of the Corporation, has or may become
concentrated in the hands of one owner (after applying the attribution
provisions of Section 544 of the Internal Revenue Code of 1986 as amended (the
"Code") as modified by Section 856(h)
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of the Code, hereinafter the "Attribution Provisions"), the Board of Directors
shall have the power to refuse to transfer or issue shares of stock of the
Corporation to any person or entity whose acquisition of such shares would, in
the opinion of the Board of Directors, result in the direct or indirect
ownership of more than 9.9% in value of the outstanding stock of the Corporation
(after applying the Attribution Provisions). Any transfer of shares, options,
warrants or other securities convertible into shares that would create an
individual direct or indirect owner of more than 9.9% in value of the
outstanding stock of the Corporation (after applying the Attribution Provisions)
shall be deemed void and the intended transferee shall acquire no interest
therein.
(b) If, notwithstanding the provisions hereof, at any time there is a
transfer in violation of the provisions hereof to a transferee that, absent the
prohibitions in this Section 2, would cause such owner to own directly or
indirectly in excess of 9.9% in value of the outstanding stock of the
Corporation (after applying the Attribution Provisions) those shares of the
Corporation that are a part of the most recent transfer and that are in excess
of 9.9% in value of the outstanding stock of this Corporation shall constitute
"Excess Shares." Excess Shares shall have the following characteristics:
(i) Excess Shares shall be deemed to have been transferred to the
Corporation as trustee of a trust (the "Trust") for the exclusive benefit
of such person or persons to whom the Excess Shares shall later be
transferred pursuant to subparagraphs (ii) or (v) below;
(ii) Subject to the Corporation's rights described in subparagraph (v)
below, an interest in the Trust (representing the number of Excess Shares
held by the Trust attributable to the intended transferee as a result of
the transfer that is void under this Section 2) shall be freely
transferable by the intended transferee (a) at a price that does not exceed
the price paid by the intended transferee for the Excess Shares in
connection with the transfer (in the event Excess Shares are sold, whether
or not the transaction is entered into through the facilities of the New
York Stock Exchange, at a price that exceeds the price paid by the intended
transferee, such excess will be payable to the Corporation upon the demand
of the Corporation) or (b) if the shares became Excess Shares in a
transaction otherwise than for value (e g., by gift, devise or descent), at
a price that does not exceed the market price of the Corporation's shares
as defined below on the date of the transfer (in either case, the "Transfer
Price"); provided, however, that the Excess Shares held in the Trust
attributable to the intended transferee would not constitute Excess Shares
in the hands of the transferee of the interest in the Trust. Upon such
transfer, the Excess Shares attributable to the intended transferee shall
be removed from the Trust and transferred to the transferee of the interest
in the Trust and shall no longer be Excess Shares, and the intended
transferee's interest in the Trust shall be extinguished;
(iii) Excess Shares shall not have any voting rights, and shall not be
considered for the purpose of any stockholder vote or determining a quorum
at the annual meeting or any special meeting of stockholders, but shall
continue to be reflected as issued and outstanding stock of the
Corporation;
(iv) No dividends or other distributions shall be paid with respect to
Excess Shares; any dividends paid in error to an intended transferee prior
to the discovery by the Corporation that the intended transfer is void
under this Section 2 will be repaid to the Corporation upon demand; and
(v) Excess Shares shall be deemed to have been offered for sale to the
Corporation or its designee at the lesser of the Transfer Price and the
market price of the Corporation's shares on the date of acceptance of the
offer. The Corporation shall have the right to accept such offer for a
period of 90 days after the date the Board of Directors determines in good
faith that a transfer that, absent the provisions of this Section 2, would
have made the intended transferee the holder of Excess Shares has taken
place. Prior to any transfer of an interest in the Trust pursuant to
subparagraph (ii) above, notice of the transfer must be given to the
Corporation by the intended transferee, and the Corporation must (a) waive
in writing its right to accept the offer described in this subparagraph (v)
and (b) make a good faith determination that the Excess Shares held in the
Trust attributable to the intended transferee would not constitute Excess
Shares in the hands of the transferee of the interest in the Trust.
(c) For purposes of this Section 2, market price for any shares of stock
shall be equal to the fair market value of the shares reflected in the closing
sales price for the shares, if then listed on a national securities
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exchange, or the average of the closing sales prices for the shares if then
listed on more than one national securities exchange, or if the shares are not
then listed on a national securities exchange, the latest bid quotation for the
shares if then traded over-the-counter on the last business day immediately
preceding the day on which notices of such acquisition are sent, or, if no such
closing sales prices or quotations are available, then the purchase price shall
be equal to the net asset value of such stock as determined by the Board of
Directors in accordance with the provisions of applicable law.
SECTION 3. Nothing in this Article VI shall preclude the settlement of any
transaction entered into through the facilities of the New York Stock Exchange.
SECTION 4. (a) Every stockholder of record of more than 5% (or such lower
percentage as required by the Code or regulations promulgated thereunder) of the
outstanding shares of the Corporation shall, within 30 days after December 31 of
each year, give written notice to the Corporation stating the name and address
of such record stockholder, the number of shares owned directly and/or
indirectly by it, and a description of how such shares are held; provided,
however, that a stockholder of record who holds outstanding shares as nominee
for another person, which other person is required to include in gross income,
for U.S. federal income tax purposes, the dividends received on such shares (an
"Actual Owner"), shall give written notice to the Corporation stating the name
and address of such Actual Owner and the number of shares of such Actual Owner
with respect to which the stockholder of record is nominee;
(b) Every Actual Owner of more than 5% (or such lower percentage as
required by the Code or regulations promulgated thereunder) of the outstanding
shares of the Corporation who is not a stockholder of record of the Corporation
shall, within 30 days after December 31, of each year, give written notice to
the Corporation stating the name and address of such Actual Owner, the number of
shares owned directly and/or indirectly, and a description of how such shares
are held; and
(c) Each person who directly and/or indirectly owns outstanding shares of
the Corporation and each person (including the stockholder of record) who is
holding shares for a beneficial owner shall provide to the Corporation such
information as the Trust may request, in good faith, in order to determine the
Corporation's compliance with Section 856 through 860 of the Code and any
successor or other provisions of the Code relating to real estate investment
trusts and the regulations promulgated thereunder.
SECTION 5. Nothing contained in this Article VI, other than the provisions
set forth in Section 3, shall limit the authority of the Board of Directors to
take such other action as it deems necessary or advisable to protect the
Corporation and the interests of its stockholders in preserving the
Corporation's status as a real estate investment trust under Section 856 of the
Code.
SECTION 6. In the case of an ambiguity in the application of any of the
provisions of this Article VI, the Board of Directors is authorized to interpret
the provisions of this Article VI with respect to any situation based on the
facts known to it.
ARTICLE VII
AMENDMENTS OF CHARTER AND BYLAWS
SECTION 1. Notwithstanding any of the provisions of this Charter or the
Bylaws of the Corporation (and notwithstanding the fact that a lesser percentage
may be specified by law, this Charter or the Bylaws of the Corporation) the
affirmative vote of the holders of at least 90% of the voting stock of the
Corporation, voting together as a single class, shall be required to adopt any
provision inconsistent with or repeal or amend Section 2 of Article VI, Article
VII or Article IX of this Charter.
SECTION 2. Notwithstanding any of the provisions of this Charter or the
Bylaws of the Corporation (and notwithstanding the fact that a lesser percentage
may be specified by law, this Charter or the Bylaws of the Corporation), the
affirmative vote of the holders of at least 90% of the voting stock of the
Corporation, voting together as a single class, shall be required to repeal or
amend any provision of the Bylaws of the Corporation; provided, however, that
the Board of Directors may repeal or amend any provision of the Bylaws of the
Corporation without the consent of the stockholders unless (i) the General
Corporation Law of the
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State of Maryland reserves this power exclusively to the stockholders; or (ii)
the stockholders, in amending or repealing a particular Bylaw, provide expressly
that the Board of Directors may not amend or repeal that particular Bylaw.
ARTICLE VIII
PERPETUAL EXISTENCE
The period of the existence of the Corporation is to be perpetual.
ARTICLE IX
LIMITATION ON PERSONAL LIABILITY
OF DIRECTORS AND OFFICERS; INDEMNIFICATION
SECTION 1. (a) A director or officer of the Corporation shall not be
personally liable to the Corporation or its stockholders for money damages
unless (i) it is proved that the person actually received an improper benefit or
profit in money, property, or services, for the amount of the benefit or profit
in money, property, or services actually received or (ii) a judgment or other
final adjudication adverse to the person is entered in a proceeding, based on a
finding in the proceeding that the person's action, or failure to act, was the
result of active and deliberate dishonesty and was material to the cause of
action adjudicated in the proceeding.
(b) If the law of the State of Maryland is hereafter amended to authorize
corporate action further limiting or eliminating the personal liability of
directors or officers or expanding such liability, then the liability of
directors or officers to the Corporation or its stockholders shall be limited or
eliminated to the fullest extent permitted by Maryland law as so amended from
time to time.
SECTION 2. (a) The Corporation shall indemnify, and upon request shall
advance expenses to, in the manner and to the fullest extent permitted by law,
any officer, director, employee or agent (or the estate of any such person) who
was or is a party to, or is threatened to be made a party to, any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, investigative or otherwise, by reason of the fact that such
person is or was a director, officer, employee, or agent of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
member, partner, trustee, employee or agent of another corporation, limited
liability company, partnership, joint venture, trust, other enterprise or
employee benefit plan (an "indemnitee"). The Corporation may, to the fullest
extent permitted by law, purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director, officer, member,
partner, trustee, employee or agent of another corporation, limited liability
company, partnership, joint venture, trust, other enterprise or employee benefit
plan against any liability which may be asserted against such person. To the
fullest extent permitted by law, the indemnification and advances provided for
herein shall include expenses (including attorneys' fees), judgments, penalties,
fines and amounts paid in settlement. The indemnification provided herein shall
not be deemed to limit the right of the Corporation to indemnify any other
person for any such expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement to the fullest extent permitted by law, both as to
action in his official capacity and as to action in another capacity while
holding such office.
(b) The rights to indemnification and advancement of expenses set forth in
this Section 2 of Article IX are intended to be greater than those which are
otherwise provided for in the General Corporation Law of the State of Maryland,
are contractual between the Corporation and the person being indemnified, his
heirs, executors and administrators, and, with respect to this Section 2 of
Article IX, are mandatory, notwithstanding a person's failure to meet the
standard of conduct required for permissive indemnification under the General
Corporation Law of the State of Maryland, as amended from time to time. The
rights to indemnification and advancement of expenses set forth in this Section
2 of Article IX above are nonexclusive of other similar rights which may be
granted by law, these Articles, the Bylaws, a resolution of the Board of
Directors or stockholders
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or an agreement with the Corporation, which means of indemnification and
advancement of expenses are hereby specifically authorized.
SECTION 3. Any repeal or modification of the provisions of this Article
IX, either directly or by the adoption of an inconsistent provision of these
Articles, shall be prospective only and shall not adversely affect any right or
protection set forth herein existing in favor of a particular individual at the
time of such repeal or modification. In addition, if an amendment to the General
Corporation Law of the State of Maryland limits or restricts in any way the
indemnification rights permitted by law as of the date hereof, such amendment
shall apply only to the extent mandated by law and only to activities of persons
subject to indemnification under this Article IX which occur subsequent to the
effective date of such amendment.
ARTICLE X
REMOVAL OF DIRECTORS
Any director of the Corporation may be removed only for cause (i) by the
vote of holders of 80% of the outstanding shares of the Corporation, voting as a
single class, or (ii) by the unanimous vote of all of the other members of the
Board of Directors. Cause shall mean the director's willful dishonesty towards,
fraud upon, or deliberate injury or attempted injury to the Corporation.
* * *
SIXTH: The current address of the principal office of the Corporation in
the State of Maryland is set forth in Article III of these Articles of Amendment
and Restatement of the Charter.
SEVENTH: The name and address of the Corporation's current resident agent
in the State of Maryland is set forth in Article III of these Articles of
Amendment and Restatement of the Charter.
EIGHTH: The Bylaws of the Corporation provide that the number of directors
of the Corporation shall not be less than three nor more than nine, as
determined from time to time by the Board of Directors; provided, however, that
if at any time the Corporation has less than three stockholders, the number of
directors of the Corporation may be less than three but not less than the number
of stockholders. The names of those currently in office are set forth in Article
IV of these Articles of Amendment and Restatement of the Charter.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 29
IN WITNESS WHEREOF, Healthcare Realty Trust Incorporated has caused these
presents to be signed in its name and on its behalf by its Executive Vice
President and General Counsel, attested by it Secretary, on May 16, 2000.
HEALTHCARE REALTY TRUST
INCORPORATED
/s/ ROGER O. WEST
--------------------------------------
Roger O. West, Executive Vice
President and General Counsel
ATTEST:
/s/ RITA H. TODD
- ---------------------------------------------------------
Rita H. Todd, Secretary
THE UNDERSIGNED, Executive Vice President and General Counsel of Healthcare
Trust Incorporated, who executed on behalf of said corporation, the foregoing
Articles of Amendment and Restatement, of which this certificate is made a part,
hereby acknowledges, in the name and on behalf of said corporation, the forgoing
Articles of Amendment and Restatement to be the corporate act of said
corporation and further certifies that, to the best of his knowledge,
information, and belief, the matters and facts set forth therein with respect to
the approval thereof are true in all material respects, under the penalties of
perjury.
/s/ ROGER O. WEST
--------------------------------------
Roger O. West, Executive Vice
President and General Counsel
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<PAGE> 30
APPENDIX B
HEALTHCARE REALTY TRUST INCORPORATED
2000 EMPLOYEE STOCK PURCHASE PLAN
PREAMBLE
WHEREAS, Healthcare Realty Trust Incorporated (the "Company") established
the Healthcare Realty Trust Incorporated 1995 Employee Stock Purchase Plan
through which employees of the Company and its affiliates could purchase from
the Company shares of its common stock;
WHEREAS, the Company wishes to continue to provide a plan through which
employees of the Company and its affiliates may purchase Company common stock;
and
WHEREAS, the Company intends that the new plan be an "employee stock
purchase plan" within the meaning of section 423 of the Internal Revenue Code of
1986, and has designed the plan to conform to the provisions of Rule 16b-3 of
the Exchange Act;
NOW, THEREFORE, the Company hereby establishes the Healthcare Realty Trust
Incorporated 2000 Employee Stock Purchase Plan (the "Plan"):
ARTICLE I
PURPOSE OF PLAN
The purpose of the Plan is to secure for the Company and its shareholders
the benefits of the incentive inherent in the ownership of the Company's common
stock by present and future employees of the Company and its Affiliates.
ARTICLE II
DEFINITIONS
2.1 Affiliate. Each corporation that is designated as an Affiliate by the
Company pursuant to Section 5.3.
2.2 Agreement. An agreement between a Participant and the Company or an
Affiliate through which the Participant elects to exercise the Options granted
to him hereunder and authorizes payment of the Option exercise price.
2.3 Board. The board of directors of the Company.
2.4 Code. The Internal Revenue Code of 1986, as amended.
2.5 Committee. The committee designated by the Board as the "compensation
committee" or is otherwise designated by the Board to administer the Plan.
2.6 Company. Healthcare Realty Trust Incorporated and its successors and
assigns.
2.7 Eligible Employee. An employee of the Company or an Affiliate, except
for the following:
(a) An employee who has been employed by the Company or an Affiliate
for less than 90 days.
(b) An employee whose customary employment is less than 20 hours per
week.
(c) An employee whose customary employment is for five months or less
in a calendar year.
HEALTHCARE REALTY TRUST INCORPORATED
2000 EMPLOYEE STOCK PURCHASE PLAN
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(d) An employee who would own more than 5% of the total combined
voting power of all classes of stock of the Company or an Affiliate at the
time such employee would be granted an Option. For the purpose of
determining if an employee owns more than 5% of such stock, he shall be
deemed to own (i) any stock owned (directly or indirectly) by or for his
brothers and sisters (whether by whole or half blood), spouse, ancestors or
lineal descendants, (ii) any stock owned (directly or indirectly) by or for
a corporation, partnership, estate or trust of which such individual is a
shareholder, partner or beneficiary in proportion to his interest in such
corporation, partnership, estate or trust, and (iii) any stock the
individual may purchase under an outstanding stock option.
2.8 Exchange Act. The Securities Exchange Act of 1934, as amended.
2.9 Exercise Date. The last day of each calendar quarter, which shall be
March 31st, June 30th, September 30th and December 31st of each year.
2.10 Fair Market Value. On any given date, Fair Market Value shall be the
applicable description below (unless, where appropriate, the Committee
determines in good faith the fair market value of the Stock to be otherwise):
(a) If the Stock is traded on the New York Stock Exchange, Fair Market
Value shall be the closing price of the Stock on such exchange on the
trading day on which Fair Market Value is being determined, or on the next
preceding day on which such Stock is traded if no Stock was traded on such
trading day.
(b) If the Stock is not traded on the New York Stock Exchange, but is
reported on the Nasdaq National Market System or another Nasdaq automated
quotation system, and market information is published on a regular basis,
then Fair Market Value shall be the closing price of the Stock, as so
published, on the trading day on which Fair Market Value is being
determined, or the closing price on the next preceding trading day on which
such prices were published if no Stock was traded on such trading day.
(c) If market information is not so published on a regular basis, then
Fair Market Value shall be the average of the high bid and low asked prices
of the Stock in the over-the-counter market during the trading period
during which Fair Market Value is being determined or during the next
preceding trading period in which such high bid and low asked prices were
recorded, as reported by a generally accepted reporting service.
(d) If the Stock is not publicly traded, Fair Market Value shall be
the value determined in good faith by the Committee or the Board,
determined without regard to any restriction on the Stock, other than a
restriction which by its terms will never lapse.
2.11 Grant Date. The first Grant Date shall be the date determined by the
board of directors of the Company at the time the Plan is adopted. Thereafter,
the Grant Date shall be the first day of each calendar year.
2.12 Option. The right that is granted hereunder to a Participant to
purchase from the Company a stated number of shares of Stock at a stated
exercise price.
2.13 Participant. An Eligible Employee who has elected to exercise an
Option and participate in the Plan in accordance with Article 3.
2.14 Payroll Account. A bookkeeping account to which are added the
amounts withheld on behalf of each Participant under regular payroll deductions
authorized by Participants hereunder, and which is reduced by amounts due to the
Company to pay the exercise price of Options exercised hereunder.
2.15 Plan. The Healthcare Realty Trust Incorporated 2000 Employee Stock
Purchase Plan.
2.16 Stock. The common stock of the Company, $0.01 par value.
HEALTHCARE REALTY TRUST INCORPORATED
2000 EMPLOYEE STOCK PURCHASE PLAN
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ARTICLE III
GRANT AND EXERCISE OF OPTIONS
3.1 General Conditions. On each Grant Date, each employee who is an
Eligible Employee on such date shall, without further action of the Committee,
be granted an Option to purchase whole shares of Stock, provided that no
Eligible Employee may be granted an Option which permits his rights to purchase
Stock under the Plan and all other employee stock purchase plans (described in
section 423(b) of the Code) of the Company and its Affiliates to accrue at a
rate that exceeds $25,000 of Fair Market Value of such Stock (determined on the
date that the Option is granted) for each calendar year in which such Option is
outstanding at any time. Each Option grant is subject to the following terms and
conditions:
(a) The exercise price of each Option shall be 85% of Fair Market
Value of each share of Stock that is subject to the Option, based on the
Stock's Fair Market Value that is determined on the Grant Date or, if less,
on the date the Option is exercised.
(b) Each Option, or portion thereof, that has not been exercised shall
expire 27 months after the Grant Date on which the Option was granted,
unless it expires sooner pursuant to Section 3.1(c).
(c) Each Option that has not yet expired pursuant to Section 3.1(b)
shall expire on the date that the Eligible Employee terminates employment
with the Company and all of its Affiliates or revokes his election pursuant
to Section 3.4; provided, however, if termination is due to the death or
disability (as determined in the discretion of the Committee by reference
to any disability benefit plan of the Company) of the Eligible Employee,
the Participant (or his personal representative) may elect to revoke his
election pursuant to Section 3.4.
(d) A right to purchase Stock which has accrued under one Option
granted hereunder may not be carried over to any other Option.
3.2 Right to Exercise. An Option shall be exercisable at any time prior
to its expiration in a manner described in Section 3.3. An Eligible Employee
must exercise an Option while he is an employee of the Company or an Affiliate
or within the periods that are specified herein after termination of employment.
3.3 Method of Exercise. An Eligible Employee may exercise an Option only
on an Exercise Date by providing written notice of intent to exercise prior to
or coincident with the applicable Exercise Date and by payment of the exercise
price in cash or such other form that is acceptable to the Committee. An
Eligible Employee may also elect to exercise an Option through a Payroll Account
election described in Section 3.4.
3.4 Payment of Exercise Price from Payroll Account. An Eligible Employee
who desires to pay the exercise price of an Option from his Payroll Account as
described in Section 3.3 must timely execute an Agreement in the form and manner
prescribed by the Committee prior to the applicable Exercise Date. The Agreement
shall provide for authorization of deductions from the Eligible Employee's
regular payroll that is credited to a Payroll Account. Amounts credited to a
Participant's Payroll Account shall be accumulated and reserved for payment of
the exercise price of Options granted hereunder.
(a) The funds held in the Payroll Account shall first be applied to
exercise options with the lowest exercise price. In the event that all
Options have the same exercise price on an Exercise Date, the funds held in
the Payroll Account shall be first applied to exercise Options in the order
they were granted.
(b) A Participant may initiate, modify or revoke his election to
contribute to his Payroll Account at any time by timely providing the
Committee written notice in the form prescribed by the Committee. An
election to begin or modify contributions shall be effective on the
February 8th or August 8th that coincides with or next follows such written
notice with the exception of a Participant's initial election in the year
the Plan is adopted, which may be submitted and effective as late as March
8, 2000. An election to revoke contributions shall be effective on the
first payroll date following written notice thereof.
HEALTHCARE REALTY TRUST INCORPORATED
2000 EMPLOYEE STOCK PURCHASE PLAN
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<PAGE> 33
(c) Each Participant's election specified under an Agreement shall
remain in effect until modified or revoked by the Participant in accordance
with Section 3.4(b).
(d) The Options granted hereunder for the calendar years 2000 and 2001
are conditioned on the Eligible Employee revoking the Option granted to him
on January 1, 2000, under the Healthcare Realty Trust Incorporated 1995
Employee Stock Purchase Plan. Such revocation may be evidenced by written
notice to the Company or by the exercise of an Option hereunder in a manner
specified in Section 3.3.
3.5 Issuance of Stock. The Company shall issue whole shares of Stock to a
Participant after each Exercise Date. For Options that are not exercised through
a Payroll Account election, the number of shares to be issued shall be
determined by the instructions contained in the written notice of exercise
described in Section 3.2. For shares acquired through a Payroll Account
election, shares shall be issued as follows:
(a) The Company shall determine the number of whole shares of Stock to
be issued to each Participant with respect to an Exercise Date by dividing
the balance of such Participant's Payroll Account by the applicable
exercise price of the Option.
(b) The Company shall deduct from a Participant's Payroll Account the
amount necessary to purchase the greatest number of whole shares of Stock
that can be acquired under the applicable Option.
(c) Any amounts remaining in the Payroll Account after deducting the
exercise price for whole shares of Stock shall generally be held for use on
a subsequent Exercise Date. However, a Participant who has made
contributions to a Payroll Account and has revoked his election to exercise
an Option under the terms of Section 3.3 may obtain payment of the amounts
held in his Payroll Account from the Company by requesting such payment in
writing to the Committee in the time and manner specified by the Committee.
A Participant who has terminated employment shall be paid any amounts
remaining in his Payroll Account after the expiration of all Options
hereunder.
3.6 Nontransferability. Any Option granted under this Plan shall not be
transferable except by will or by the laws of descent and distribution. Only the
Participant to whom an Option is granted may exercise such Option, unless he is
deceased. No right or interest of a Participant in any Option shall be liable
for, or subject to, any lien, obligation or liability of such Participant.
3.7 Shareholder Rights. No Participant shall have any rights as a
shareholder with respect to shares subject to his Option prior to the time that
such Option is exercised.
3.8 Issuance and Delivery of Shares. Shares of Stock issued pursuant to
the exercise of Options hereunder shall be delivered to Participants by the
Company (or its transfer agent) as soon as administratively feasible after a
Participant exercises an Option hereunder, executes any applicable shareholder
agreement that the Company requires at the time of exercise and requests
delivery of the shares.
ARTICLE IV
STOCK SUBJECT TO PLAN
4.1 Source of Shares. Upon the exercise of an Option, the Company may
deliver to the Participant authorized but unissued shares of Stock.
4.2 Maximum Number of Shares. The maximum aggregate number of shares of
Stock that may be issued pursuant to the exercise of Options is 1,000,000
subject to increases and adjustments as provided in Article 6.
4.3 Forfeitures. If an Option is terminated, in whole or in part, the
number of shares of Stock allocated to such Option or portion thereof may be
reallocated to other Options to be granted under this Plan.
HEALTHCARE REALTY TRUST INCORPORATED
2000 EMPLOYEE STOCK PURCHASE PLAN
B-4
<PAGE> 34
ARTICLE V
ADMINISTRATION OF THE PLAN
5.1 General Authority. The Plan shall be administered by the Committee.
The express grant in the Plan of any specific power to the Committee shall not
be construed as limiting any power or authority of the Committee. No member of
the Committee shall be liable for any act done in good faith with respect to
this Plan or any Agreement or Option. The Company shall bear all expenses of
Plan administration. The interpretation and construction by the Committee of any
terms or provisions of this Plan or of any rule or regulation promulgated in
connection herewith, shall be conclusive and binding on all persons. In addition
to all other authority vested with the Committee under the Plan, the Committee
shall have complete authority to:
(a) Interpret all provisions of this Plan;
(b) Prescribe the form of any Agreement and notice and manner for
executing or giving the same;
(c) Adopt, amend, and rescind rules for Plan administration; and
(d) Make all determinations it deems advisable for the administration
of this Plan.
5.2 Persons Subject to Section 16(b). Notwithstanding anything in the
Plan to the contrary, the Board, in its absolute discretion, may bifurcate the
Plan so as to restrict, limit or condition the use of any provision of the Plan
to Participants who are members of the Committee subject to Section 16(b) of the
Exchange Act without so restricting, limiting or conditioning the Plan with
respect to other Participants.
5.2 Designation of Affiliates. The Company may from time to time
designate a "parent corporation," as defined in section 424(e) of the Code, or
"subsidiary corporation," as defined in section 424(f) of the Code, to be a
participating corporation in a manner that is consistent with Treasury
Regulation sec. 1.423-2(c)(4). Corporations that are so designated shall be
Affiliates for purposes of this Plan. Such designation shall be evidenced by the
express inclusion of the corporation as an Affiliate within Section 2.1, the
intentional act of the Company or the Committee to communicate in writing the
grant of Options hereunder to employees of a corporation, or such other written
document that is intended to evidence such designation. The Company or Committee
may rescind the designation of a corporation as an Affiliate by adopting a
writing that is intended to evidence such rescission.
ARTICLE VI
ADJUSTMENT UPON CORPORATE CHANGES
6.1 Adjustments to Shares. The maximum number and kind of shares of stock
with respect to which Options hereunder may be granted and which are the subject
of outstanding Options shall be adjusted by way of increase or decrease as the
Committee determines (in its sole discretion) to be appropriate, in the event
that:
(a) the Company or an Affiliate effects one or more stock dividends,
stock splits, reverse stock splits, subdivisions, consolidations or other
similar events;
(b) the Company or an Affiliate engages in a transaction to which
section 424 of the Code applies; or
(c) there occurs any other event which in the judgment of the
Committee necessitates such action.
Provided, however, that if an event described in paragraph (a) or (b) occurs,
the Committee shall make adjustments to the limits on Options and on the award
of Options specified hereunder that are proportionate to the modifications of
the Stock that are on account of such corporate changes.
HEALTHCARE REALTY TRUST INCORPORATED
2000 EMPLOYEE STOCK PURCHASE PLAN
B-5
<PAGE> 35
6.2 Substitution of Options on Merger or Acquisition. The Committee may
grant Options in substitution for stock awards, stock options, stock
appreciation rights or similar awards held by an individual who becomes an
employee of the Company or an Affiliate in connection with a transaction to
which section 424(a) of the Code applies. The terms of such substituted Options
shall be determined by the Committee in its sole discretion, subject only to the
limitations of Article 4.
6.3 No Preemptive Rights. The issuance by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class, for
cash or property, or for labor or services rendered, either upon direct sale or
upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, outstanding Options.
6.4 Fractional Shares. Only whole shares of Stock may be acquired through
the exercise of an Option. The Company will return to each Participant's Payroll
Account any amount tendered in the exercise of an Option remaining after the
maximum number of whole shares has been purchased.
ARTICLE VII
LEGAL COMPLIANCE CONDITIONS
7.1 General. No Option shall be exercisable, no Stock shall be issued, no
certificates for shares of Stock shall be delivered, and no payment shall be
made under this Plan except in compliance with all federal and state laws and
regulations (including, without limitation, withholding tax requirements),
federal and state securities laws and regulations and the rules of all national
securities exchanges or self-regulatory organizations on which the Company's
shares may be listed. The Company shall have the right to rely on an opinion of
its counsel as to such compliance. No Option shall be exercisable, no Stock
shall be issued, no certificate for shares shall be delivered and no payment
shall be made under this Plan until the Company has obtained such consent or
approval as the Committee may deem advisable from any regulatory bodies having
jurisdiction over such matters.
7.2 Stock Holding Periods. In order for tax treatment under section
421(a) of the Code to apply to Stock acquired hereunder, the Participant is
generally required to hold such shares of Stock for two years after the Grant
Date of an Option through which shares of Stock were acquired and for one year
after the transfer of Stock to the Participant. A person holding Stock acquired
hereunder who disposes of shares prior to the expiration of such holding periods
shall notify the Company of such disposition in writing.
7.3 Stock Legends. Any certificate issued to evidence shares of Stock for
which an Option is exercised may bear such legends and statements as the Company
or Committee may deem advisable to assure compliance with federal and state laws
and regulations.
7.4 Representations by Participants. As a condition to the exercise of an
Option, the Company may require a Participant to represent and warrant at the
time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares.
At the option of the Company, a stop transfer order against any shares of stock
may be placed on the official stock books and records of the Company, and a
legend indicating that the stock may not be pledged, sold or otherwise
transferred unless an opinion of counsel was provided (concurred in by counsel
for the Company) and stating that such transfer is not in violation of any
applicable law or regulation may be stamped on the stock certificate in order to
assure exemption from registration. The Committee may also require such other
action or agreement by the Participants as may from time to time be necessary to
comply with the federal and state securities laws. This provision shall not
obligate the Company or any Affiliate to undertake registration of options or
stock hereunder.
HEALTHCARE REALTY TRUST INCORPORATED
2000 EMPLOYEE STOCK PURCHASE PLAN
B-6
<PAGE> 36
ARTICLE VIII
GENERAL PROVISIONS
8.1 Effect on Employment. Neither the adoption of this Plan, its
operation, nor any documents describing or referring to this Plan (or any part
thereof) shall confer upon any employee any right to continue in the employ of
the Company or an Affiliate or in any way affect any right and power of the
Company or an Affiliate to terminate the employment of any employee at any time
with or without assigning a reason therefor.
8.2 Unfunded Plan. The Plan, insofar as it provides for grants, shall be
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon contractual obligations that may be created hereunder. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company.
8.3 Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
masculine gender when used herein refers to both masculine and feminine. The
reference to any statute, regulation or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
8.4 Governing Law. The internal laws of the state of incorporation of the
Company shall apply to all matters arising under this Plan, to the extent that
federal law does not apply.
8.5 Compliance With Section 16 of the Exchange Act. With respect to
persons subject to Section 16 of the Exchange Act, transactions under this Plan
are intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the Exchange Act. To the extent any provision of this Plan or
action by Committee fails to so comply, it shall be deemed null and void to the
extent permitted by law and deemed advisable by the Committee.
8.6 Amendment. The Board may amend or terminate this Plan at any time;
provided, however, an amendment that would have a material adverse effect on the
rights of a Participant under an outstanding Option is not valid with respect to
such Option without the Participant's consent, except as necessary for Options
to maintain qualification under the Code; and provided further that, to the
extent that such approval is required for compliance with Rule 16b-3 of the
Exchange Act, the provisions of the Plan relating to the number of shares
granted to persons subject to section 16(b) of the Exchange Act, the timing of
such grants and the determination of the exercise price shall not be amended
more than once every six months, other than to comport with changes in the Code,
the Employee Retirement Income Security Act of 1974, or the rules thereunder.
Provided further that the shareholders of the Company must, within 12 months
before of after the adoption thereof, approve any amendment that increases the
number of shares of Stock in the aggregate which may be issued pursuant to
Options granted under the Plan.
8.7 Effective Date of Plan. This Plan shall be effective and Options may
be granted under this Plan on and after the date of its adoption by the Board,
provided that no Option will be effective or exercisable unless and until this
Plan is approved by shareholders of the Company in a manner that satisfies
Treasury Regulation sec. 1.423-2 within 12 months of the date that the Board
took action to adopt the Plan. All Options granted under the Plan will become
void immediately following the 12-month anniversary of the date the Board
adopted the Plan if such approval by shareholders has not yet been obtained.
HEALTHCARE REALTY TRUST INCORPORATED
2000 EMPLOYEE STOCK PURCHASE PLAN
B-7
<PAGE> 37
IN WITNESS WHEREOF, the undersigned officer has executed this Plan on this
the 7th day of February, 2000.
HEALTHCARE REALTY TRUST
INCORPORATED
/s/ ROGER O. WEST
--------------------------------------
Roger O. West
Executive Vice President & General
Counsel
HEALTHCARE REALTY TRUST INCORPORATED
2000 EMPLOYEE STOCK PURCHASE PLAN
B-8
<PAGE> 38
[FORM OF COMMON STOCK PROXY]
HEALTHCARE REALTY TRUST INCORPORATED
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints David R. Emery and Timothy G. Wallace, and
either of them, as proxies, with full power of substitution and resubstitution,
to vote all of the shares of Common Stock which the undersigned is entitled to
vote at the annual meeting of shareholders of Healthcare Realty Trust
Incorporated, to be held at 3310 West End Avenue, Suite 700, Nashville,
Tennessee, on Tuesday, May 16, 2000, at 10:00 a.m., and at any adjournment
thereof.
In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournment thereof.
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE VOTED AS
SPECIFIED. IF NOT OTHERWISE SPECIFIED, THE ABOVE NAMED PROXIES WILL VOTE (A) FOR
THE ELECTION AS DIRECTORS OF THE NOMINEES NAMED BELOW, (B) FOR THE APPROVAL OF
THE COMPANY'S AMENDED AND RESTATED CHARTER, (C) FOR THE APPROVAL OF THE
COMPANY'S 2000 EMPLOYEE STOCK PURCHASE PLAN, (D) FOR THE RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS, AND (E)
IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS ON ANY OTHER
MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING.
1. Election of Class 1 Directors.
[ ] FOR all nominees listed (except as marked to the contrary)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed
Nominees: Charles Raymond Fernandez, M.D. and Errol L. Biggs, Ph.D.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
HIS NAME ON THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
2. Proposal to amend and restate the Company's charter.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to adopt the 2000 Employee Stock Purchase Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Proposal to ratify the appointment of Ernst & Young LLP as the Company's
independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Dated: , 2000
----------------------
----------------------------------
Signature
----------------------------------
Signature if held jointly
IMPORTANT
Please sign exactly as your name
or names appear on this proxy and
mail promptly in the enclosed
envelope. If you sign as agent or
in any other capacity, please
state the capacity in which you
sign.
<PAGE> 39
[FORM OF PREFERRED STOCK PROXY]
HEALTHCARE REALTY TRUST INCORPORATED
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints David R. Emery and Timothy G. Wallace, and
either of them, as proxies, with full power of substitution and resubstitution,
to vote all of the shares of 8 7/8% Series A Voting Cumulative Preferred Stock
which the undersigned is entitled to vote at the annual meeting of shareholders
of Healthcare Realty Trust Incorporated, to be held at 3310 West End Avenue,
Suite 700, Nashville, Tennessee, on Tuesday, May 16, 2000, at 10:00 a.m., and at
any adjournment thereof.
In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournment thereof.
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE VOTED AS
SPECIFIED. IF NOT OTHERWISE SPECIFIED, THE ABOVE NAMED PROXIES WILL VOTE (A) FOR
THE ELECTION AS DIRECTORS OF THE NOMINEES NAMED BELOW, (B) FOR THE APPROVAL OF
THE COMPANY'S AMENDED AND RESTATED CHARTER, (C) FOR THE APPROVAL OF THE
COMPANY'S 2000 EMPLOYEE STOCK PURCHASE PLAN, (D) FOR THE RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS, AND (E)
IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS ON ANY OTHER
MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING.
1. Election of Class 1 Directors.
[ ] FOR all nominees listed (except as marked to the contrary)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed
Nominees: Charles Raymond Fernandez, M.D. and Errol L. Biggs, Ph.D.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
HIS NAME ON THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
2. Proposal to amend and restate the Company's charter.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to adopt the 2000 Employee Stock Purchase Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Proposal to ratify the appointment of Ernst & Young LLP as the Company's
independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Dated: , 2000
----------------------
----------------------------------
Signature
----------------------------------
Signature if held jointly
IMPORTANT
Please sign exactly as your name
or names appear on this proxy and
mail promptly in the enclosed
envelope. If you sign as agent or
in any other capacity, please
state the capacity in which you
sign.
