Document:

Exhibit

Exhibit 10.11

EMPLOYMENT AGREEMENT
between
CHESAPEAKE ENERGY CORPORATION
and
[Name of Executive]
Effective January 1, 2019

EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective [Date], between CHESAPEAKE ENERGY CORPORATION, an Oklahoma corporation (the "Company") and [Name of Executive], an individual (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to retain the services of the Executive and the Executive desires to make the Executive's services available to the Company.
NOW, THEREFORE, in consideration of the mutual promises herein contained, the Company and the Executive agree as follows: 
		
	1.
	Employment.  The Company hereby employs the Executive and the Executive hereby accepts such employment subject to the terms and conditions contained in this Agreement.  The Executive is engaged as an employee of the Company, and the Executive and the Company do not intend to create a joint venture, partnership or other relationship which might impose a fiduciary obligation on the Executive or the Company in the performance of this Agreement.

		
	2.
	Executive's Duties.  The Executive is employed on a full-time basis.  Throughout the term of this Agreement, the Executive will use the Executive's best efforts and due diligence to assist the Company in achieving the most profitable operation of the Company and the Company's affiliated entities consistent with developing and maintaining a quality business operation.  The Executive shall also devote all of Executive's working time, attention and energies to the performance of Executive's duties and responsibilities under this Agreement.

		
	2.1
	Specific Duties.  The Executive will serve as [Title of Executive] for the Company, and in such other positions as might be mutually agreed upon by the parties.  The Executive shall perform all of the duties required to fully and faithfully execute the office and position to which the Executive is appointed, and such other duties as may be reasonably requested by the Executive's supervisor or by the Company.  During the term of this Agreement, the Executive may be nominated for election or appointed to serve as a director or officer of any of the Company's affiliated entities as determined in such affiliates' Board of Directors' sole discretion.  The services of the Executive will be requested and directed by the Company's [Title of Supervisor], [Name of Supervisor].

		
	2.2
	Policies and Procedures.  The Company has issued various policies and procedures applicable to all employees of the Company and its related and affiliated entities including an Employment Policies Manual which sets forth the general human resources policies of the Company and addresses 

frequently asked questions regarding the Company.  The Executive agrees to comply with such policies and procedures except to the extent inconsistent with this Agreement.  Such policies and procedures may be changed or adopted in the sole discretion of the Company without advance notice.
		
	3.
	Other Activities.  Except as provided in this Agreement or approved by the Compensation Committee, or its designee, as applicable, in writing, the Executive agrees not to:  (a) engage in other operating business activities independent of the Company; (b) serve as a general partner, officer, executive, director or member of any corporation, partnership, company or firm; or (c) directly or indirectly invest, participate or engage in the Oil and Gas Business.  For purposes of this Agreement the term "Oil and Gas Business" means:  (i) producing oil and gas; (ii) drilling, owning or operating an interest in oil and gas leases or wells; (iii) providing material or services to the Oil and Gas Business; (iv) refining, processing, gathering, compressing, transporting or marketing oil or gas; or (v) owning an interest in or assisting any corporation, partnership, company, entity or person in any of the foregoing.  The foregoing will not prohibit: (v) ownership of publicly traded securities; (w) ownership of royalty interests where the Executive owns or previously owned the surface of the land covered in whole or in part by the royalty interest and the ownership of the royalty interest is incidental to the ownership of such surface estate; (x) ownership of royalty interests, overriding royalty interests, working interests or other interests in oil and gas owned prior to the Executive's date of first employment with the Company and disclosed to the Company in writing; (y) ownership of royalty interests, overriding royalty interests, working interests or other interests in oil and gas acquired by the Executive through a bona fide gift or inheritance subject to disclosure by Executive to the Company in writing; or (z) service as an officer or director of a not-for-profit organization so long as such activity does not materially interfere with Executive’s obligations under this Agreement.  If the Executive serves as a director or officer of a not-for-profit organization, the Executive shall disclose the name of the organization and their involvement in an annual disclosure statement, the form of which shall be provided by the Company.

		
	4.
	Executive's Compensation.  The Company agrees to compensate the Executive as follows:

		
	4.1
	Base Salary.  A base salary (the "Base Salary"), at the initial annual rate of not less than [Dollar Amount ($_____)] will be paid to the Executive in regular installments in accordance with the Company's designated payroll schedule.

		
	4.2
	Bonus.  In addition to the Base Salary described in paragraph 4.1 of this Agreement, the Executive shall be eligible for an annual bonus for each fiscal year during the Term on the same basis as other executive officers under the Company’s then current annual incentive plan with a target of [___]% of Base Salary which shall be payable in accordance with the terms of such plan.

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	4.3
	Equity Compensation.  In addition to the compensation set forth in paragraphs 4.1 and 4.2 of this Agreement, the Executive will be eligible for annual grants of Chesapeake Energy Corporation restricted stock units, performance units, stock options or other awards from the Company's equity compensation plans with a target aggregate fair value of $[_______] (generally referred to as “Equity Compensation Plans”), subject to the terms and conditions of the Equity Compensation Plans.

		
	4.4
	Benefits.  The Company will provide the Executive with benefits that are customarily provided to similarly situated executives of the Company and as are set forth in and governed by the Company's Employment Policies Manual and applicable plan documents.  Additionally, the Company will provide paid time off (“PTO”) to the Executive, the amount of which will be determined in accordance with the Company’s PTO policy.  No additional compensation will be paid for failure to take PTO.  The Company will also provide the Executive the opportunity to apply for coverage under the Company's medical, life and disability plans, if any. If the Executive is accepted for coverage under such plans, the Company will make such coverage available to the Executive on the same terms as is customarily provided by the Company to the plan participants as modified from time to time in the Company’s sole discretion. Executive will be entitled to receive reimbursement for all reasonable business expenses incurred by Executive in accordance with the Company’s expense reimbursement policy.  All payments for reimbursement under this Section 4.4 shall be paid promptly but in no event later than the last day of Executive’s taxable year following the taxable year in which Executive incurred such expenses.

		
	5.
	Term.  The term of Executive’s employment under the provisions of this Agreement shall be for a period commencing on the Effective Date and ending on December 31, 2021 (the "Term"); provided, however, if during the Term of this Agreement a Change of Control occurs, the Term of this Agreement shall be extended to the later of the original expiration date of the Term or the expiration of the Change of Control Period.  For purposes of this Agreement, a "Change of Control" means the occurrence of any of the following:

(a)    the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of thirty percent (30%) or more of either (i) the then outstanding shares of Chesapeake Energy Corporation common stock (the "Outstanding CHK Common Stock") or (ii) the combined voting power of the then outstanding voting securities of Chesapeake Energy Corporation entitled to vote generally in the election of directors (the "Outstanding CHK Voting Securities").  For purposes of this paragraph, the following acquisitions by 

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a Person will not constitute a Change of Control: (i) any acquisition by Chesapeake Energy Corporation; (ii) any redemption, share acquisition or other purchase of shares directly or indirectly by Chesapeake Energy Corporation; (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Chesapeake Energy Corporation or any entity controlled by Chesapeake Energy Corporation; or (iv) any acquisition by any entity pursuant to a transaction which complies with clauses (i), (ii) and (iii) of paragraph (c) below;
(b)    during any period of not more than twenty-four (24) months, the individuals who constitute the Board of Directors (the "Incumbent Board") of Chesapeake Energy Corporation as of the beginning of the period cease for any reason to constitute at least a majority of the Board of Directors.  Any individual becoming a director whose election, or nomination for election by Chesapeake Energy Corporation's shareholders, is approved by a vote of at least a majority of the directors then comprising the Incumbent Board will be considered a member of the Incumbent Board, but any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Incumbent Board will not be deemed a member of the Incumbent Board;
(c)    the consummation of a reorganization, merger, consolidation or sale or other disposition of all or substantially all of the assets of Chesapeake Energy Corporation (a "Business Combination"), unless following such Business Combination: (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding CHK Common Stock and Outstanding CHK Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than sixty percent (60%) of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, an entity  which as a result of such transaction owns Chesapeake Energy Corporation or all or substantially all of Chesapeake Energy Corporation's assets either directly or through one or more subsidiaries or affiliated entities) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding CHK Common Stock and Outstanding CHK Voting Securities, as the case may be; (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of Chesapeake Energy Corporation or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, thirty percent (30%) 

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or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the Board of Directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Incumbent Board, providing for such Business Combination; or
(d)    the approval by the shareholders of Chesapeake Energy Corporation of a complete liquidation or dissolution of Chesapeake Energy Corporation.
For purposes of this Agreement, “Change of Control Period” means the twenty‐four (24) month period commencing on the effective date of a Change of Control.
		
	6.
	Termination.  This Agreement will continue in effect until the expiration of the term stated in Section 5 of this Agreement unless earlier terminated pursuant to this Section 6.  For purposes of this Agreement, “Termination Date” shall mean (a) if Executive’s employment is terminated by death, the date of death; (b) if Executive’s employment is terminated pursuant to Section 6.4 due to a disability, thirty (30) days after notice of termination is provided to Executive in accordance with Section 6.4; (c) if Executive’s employment is terminated by Company without Cause or by Executive for Good Reason pursuant to Section 6.1.1 or 6.1.2, on the effective date of termination specified in the notice required by Section 6.1.1 or 6.1.2 respectively; (d) if Executive’s employment is terminated by Company for Cause pursuant to Section 6.1.3, the date on which the notice of termination required by Section 6.1.3 is given; or (e) if Executive’s employment is terminated by Executive pursuant to Section 6.2, on the effective date of termination specified by Executive in the notice of termination required by Section 6.2 unless the Company rejects such date as allowed by Section 6.2, in which case it would be the date specified by the Company.

		
	6.1
	Termination by Company.  The Executive’s employment under this Agreement may be terminated prior to the expiration of the Term under the following circumstances:

		
	6.1.1
	Termination without Cause or for Good Reason Outside of a Change of Control Period.

		
	a)
	Termination by the Company without Cause.  The Company may terminate the Executive’s employment without Cause at any time by the service of written notice of termination to the Executive specifying an effective date of such termination not sooner than ten (10) days after the date of such notice.  In lieu of the Executive working during this ten (10) day period, the 

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Company may choose to end Executive’s employment immediately by providing two (2) weeks of Base Salary.
		
	b)
	Termination by the Executive for Good Reason.  Executive may terminate employment with the Company for “Good Reason” and such termination will not be a breach of this Agreement by Executive.  For purposes of this paragraph 6.1.1(b), Good Reason shall mean the occurrence of one of the events set forth below:

		
	(i)
	elimination of the Executive's job position or material reduction in duties and/or reassignment of the Executive to a new position of materially less authority; or

		
	(ii)
	a material reduction in the Executive’s Base Salary.

Notwithstanding the foregoing, the Executive will not be deemed to have terminated for Good Reason unless (A) the Executive provides written notice to the Company of the existence of one of the conditions described above within ninety (90) days after the Executive has knowledge of the initial existence of the condition, (B) the Company fails to remedy the condition so identified within thirty (30) days after receipt of such notice (if capable of correction), (C) the Executive provides a notice of termination to the Company within thirty (30) days of the expiration of the Company’s period to remedy the condition specifying an effective date for the Executive’s termination, and (D) the effective date of the Executive’s termination of employment is within ninety (90) days after the Executive provides written notice to the Company of the existence of the condition referred to in clause (A).
		
	c)
	Obligations of the Company.  In the event the Executive is Terminated without Cause or terminates employment for Good Reason outside of a Change of Control Period, the Executive will receive as termination compensation within thirty (30) days of the Termination Date: (a) a payment of one (1) times the sum of Base Salary and Annual Bonus in a lump sum payment; (b) pro rata vesting through the last day of the month in which the Termination Date occurs of all unvested awards granted to Executive under the Equity Compensation Plans (provided performance share units shall only be payable subject to the attainment of the performance measures for the applicable performance period as provided under the terms of the applicable award agreement); (c) any Supplemental Matching Contributions to the Chesapeake Energy Corporation Amended and Restated Deferred Compensation Plan (the “401(k) Make-Up Plan”) shall be immediately vested; (d) a lump sum payment 

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of any PTO pay accrued but unused through the Termination Date and (e) a lump sum payment equal to the Executive’s monthly COBRA premium for a twelve (12) month period.  For purposes of this Agreement “Annual Bonus” shall be defined as the average of the annual bonus payments the Executive has received during the immediately preceding three (3) calendar years unless the Executive has been employed by the Company or held the position listed in section 2.1 for less than fifteen (15) months prior to the Termination Date, in which case, “Annual Bonus” shall be defined as the greater of (i) the Executive’s target bonus for the year in which the Termination Date occurs or (ii) the average of the annual bonus payments the Executive has received during the immediately preceding three (3) calendar years. The right to the foregoing termination compensation described under clauses (a), (b) and (c) above is subject to the Executive's execution of the Company's severance agreement which will operate as a release of all legally waivable claims against the Company and the Executive's compliance with all of the provisions of this Agreement, including all post-employment obligations.
		
	6.1.2
	Termination without Cause or for Good Reason During a Change of Control Period.

		
	(a)
	Termination by the Company without Cause.  The Company may terminate the Executive’s employment without Cause during a Change of Control Period at any time by the service of written notice of termination to the Executive specifying an effective date of such termination not sooner than ten (10) days after the date of such notice.  In lieu of the Executive working during this ten (10) day period, the Company may choose to end Executive’s employment immediately by providing two (2) weeks of Base Salary.

		
	(b)
	Termination by the Executive for Good Reason.  Executive may terminate employment with the Company for “Good Reason” and such termination will not be a breach of this Agreement by Executive.  For purposes of this paragraph 6.1.2(b), Good Reason during a Change of Control Period  shall mean the occurrence of one of the events set forth below:

		
	(i)
	elimination of the Executive's job position or material reduction in duties and/or reassignment of the Executive to a new position of materially less authority;

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	(ii)
	a material reduction in Executive’s Base Salary or

		
	(iii)
	a requirement that the Executive relocate to a location outside of a fifty (50) mile radius of the location of his office or principal base of operation immediately prior to the effective date of a Change of Control.

Notwithstanding the foregoing, Executive will not be deemed to have terminated for Good Reason unless (A) Executive provides written notice to the Company of the existence of one of the conditions described above within ninety (90) days after Executive has knowledge of the initial existence of the condition, (B) the Company fails to remedy the condition so identified within thirty (30) days after receipt of such notice (if capable of correction), (C) Executive provides a Notice of Termination to the Company within thirty (30) days of the expiration of the Company’s period to remedy the condition specifying an effective date for the Executive’s termination, and (D) the effective date of the Executive’s termination of employment is within ninety (90) days after Executive provides written notice to the Company of the existence of the condition referred to in clause (A).
		
	(c)
	Obligations of the Company.  In the event the Executive is Terminated without Cause or terminates employment for Good Reason during a Change of Control Period, the Executive will receive as termination compensation within thirty (30) days of the Termination Date: (a) a payment of two (2) times the sum of Base Salary and Annual Bonus in a lump sum payment; (b) all unvested awards granted under the Equity Compensation Plans shall be immediately vested (provided performance share units shall only be payable subject to the attainment of the performance measures for the applicable performance period as provided under the terms of the applicable award agreement); (c) any Supplemental Matching Contributions to the Chesapeake Energy Corporation Amended and Restated Deferred Compensation Plan (the “401(k) Make-Up Plan”) shall be immediately vested; (d) a lump sum payment of any PTO pay accrued but unused through the Termination Date and (e) a lump sum payment equal to the Executive’s monthly COBRA premium for a twelve (12) month period.  The right to the foregoing termination compensation described under clauses (a), (b) and (c) above is subject to the Executive's execution of the Company's severance agreement which will operate as a release of all legally waivable claims against the Company and the Executive's compliance with all of the 

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provisions of this Agreement, including all post-employment obligations.
		
	6.1.3
	Termination for Cause.  The Company may terminate the employment of the Executive hereunder at any time for Cause (as hereinafter defined) (such a termination being referred to in this Agreement as a "Termination For Cause") by giving the Executive written notice of such termination.  As used in this Agreement, "Cause" means:

		
	(i)
	the willful and continued failure of the Executive to perform substantially the Executive’s duties with the Company or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board or the Chief Executive Officer of the Company which specifically identifies the manner in which the Board or Chief Executive Officer believes that the Executive has not substantially performed the Executive’s duties, or

		
	(ii)
	the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company.  For purposes of this provision, no act, or failure to act, on the part of the Executive shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company.  Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company.

In the event this Agreement is terminated for Cause, the Company will not have any obligation to provide any further payments or benefits to the Executive after the Termination Date other than a lump sum payment within thirty (30) days of the Termination Date of any PTO pay accrued but unused through the Termination Date.
		
	6.2
	Termination by Executive.  The Executive may voluntarily terminate employment under this Agreement for any reason by the service of written notice of such termination to the Company specifying an effective date of termination no sooner than thirty (30) days and no later than sixty (60) days after the date of such notice; provided, however, if less than thirty (30) days remain in the Term, the minimum notice required from Executive under this 

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Section 6.2 shall be reduced from thirty (30) to seven (7) days.  The Company reserves the right to end the employment relationship at any time after the date such notice is given to the Company and to pay Executive through the Termination Date.
		
	6.3
	Retirement by Executive.  In the event the Executive is fifty-five (55) years or older and the Executive’s employment is terminated under Sections 6.1.1 or 6.2 of this Agreement, the Executive will be (a) eligible for continued post-retirement vesting of the unvested awards granted under the Equity Compensation Plans (provided performance share units shall only be payable subject to the attainment of the performance measures for the applicable performance period as provided under the terms of the applicable award agreement); and (b) eligible for accelerated vesting of the unvested Supplemental Matching Contributions to the Chesapeake Energy Corporation Amended and Restated Deferred Compensation Plan (the "401(k) Make-Up Plan").  The vesting under clauses (a) and (b) of this Section 6.3 will be in accordance with the retirement matrix (the "Retirement Matrix") attached to this Agreement as Exhibit “A”.  The right to acceleration and continued vesting is subject to the Executive’s execution of the Company’s severance agreement which will include a release of all legally waivable claims between the parties as of the effective date of the release except for the Company’s obligation to pay the foregoing severance compensation and the Executive’s obligation to comply with all post-employment obligations under this Agreement.

		
	6.4
	Disability.  If the Executive becomes “disabled” (as defined below), the Company may give Executive written notice of its intention to terminate on the 30th day after receipt of the notice by Executive.  In the event the Executive is terminated due to Disability (a) all unvested awards granted to the Executive under the Equity Compensation Plans shall be immediately vested (provided performance share units shall only be payable subject to the attainment of the performance measures for the applicable performance period as provided under the terms of the applicable award agreement); and (b) any Supplemental Matching Contributions to the Chesapeake Energy 401(k) Make-Up Plan shall be immediately vested.  Executive shall also receive a lump sum payment within thirty (30) days of the Termination Date of any PTO pay accrued but unused through the Termination Date.  The right to the foregoing compensation due under clauses (a) and (b) above is subject to the execution by the Executive or the Executive's legal representative of the Company's severance agreement which will operate as a release of all legally waivable claims against the Company.  For purposes of this Section 6.4, Executive is “disabled” if he is unable to perform the essential functions of the position (with or without reasonable accommodation) under this Agreement, which disability lasts for an uninterrupted period of at least 90 days or a total of at least 180 days out of any consecutive 360-day period, 

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as a result of Executive’s incapacity due to physical or mental illness (as determined by the opinion of an independent physician selected by the Company).  In applying this Section 6.4, the Company will comply with any applicable legal requirements, including the Americans with Disabilities Act.
		
	6.5
	Death of Executive.  If the Executive dies during the term of this Agreement, the Company may thereafter terminate this Agreement without compensation. In the event of the Executive’s death the Company will (a) immediately vest all unvested awards granted to the Executive under the Equity Compensation Plans (provided performance share units shall only be payable subject to the attainment of the performance measures for the applicable performance period as provided under the terms of the applicable award agreement); and (b) immediately vest any Supplemental Matching Contributions to the Chesapeake Energy 401(k) Make-Up Plan.  Executive’s beneficiaries/estate shall also receive a lump sum payment within thirty (30) days of death of any PTO pay accrued but unused through the Termination Date.  Amounts payable under this Section 6.5 shall be paid to the beneficiary designated on the Company's universal beneficiary designation form in effect on the date of the Executive's death.  If the Executive fails to designate a beneficiary or if such designation is ineffective, in whole or in part, any payment that would otherwise have been paid under this Section 6.5 shall be paid to the Executive's estate. The right to the foregoing compensation due under clauses (a) and (b) above is subject to the execution by the beneficiary, or as applicable, the administrator of the Executive's estate of the Company's severance agreement which will operate as a release of all legally waivable claims against the Company.

		
	6.6
	Effect of Termination.  The termination of this Agreement, when accompanied by the termination of Executive’s employment with the Company, will terminate all obligations of the Executive to render services on behalf of the Company from and after the Termination Date, provided that upon termination of this Agreement and termination of employment for any reason (other than by reason of Executive’s death), the Executive will maintain the confidentiality of all information acquired by the Executive during the term of Executive's employment in accordance with the terms and provisions of the Company’s Confidentiality Agreement and the Executive shall comply with all other post-employment requirements including Section 6.6 and Sections 7, 8, 9, 10, 11 and 12, as well as the Company’s arbitration program.  Except as otherwise provided in Sections 4.5 and 6 of this Agreement and payment of any PTO pay accrued but unused through the Termination Date, no accrued bonus, severance pay or other form of compensation will be payable by the Company to the Executive by reason of the termination of this Agreement.  All keys, entry cards, credit cards, files, records, financial information, Confidential Information, research, results, test data, instructions, drawings, sketches, specifications, product data sheets, products, books, DVDs, disks, memory 

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devices, business plans, marketing plans, documents, correspondence, furniture, furnishings, equipment, supplies and other items relating to the Company in the Executive's possession will remain the property of the Company.  Upon termination of employment, the Executive will have the right to retain and remove all personal property and effects which are owned by the Executive and located in the offices of the Company at a time determined by the Company.  All such personal items will be removed from such offices no later than two (2) days after the Termination Date, and the Company is hereby authorized to discard any items remaining and to reassign the Executive's office space after such date.  Prior to the Termination Date, the Executive will render such services to the Company as might be reasonably required to provide for the orderly termination of the Executive's employment.  Notwithstanding the foregoing and without discharging any obligations to pay compensation to the Executive under this Agreement, after notice of the termination, the Company may request that the Executive not provide any other services to the Company and not enter the Company's premises before or after the Termination Date.  In the event that the Executive separates employment with the Company, Executive hereby grants consent to notification by the Company to Executive's new employer about Executive's rights and obligations under this Agreement.  Upon such termination of employment, the Executive further agrees to acknowledge compliance with this Agreement in a form reasonably provided by the Company.
If this Agreement is not terminated pursuant to any of the preceding provisions of Section 6 or extended by mutual written agreement of the parties prior to the expiration of the Term, this Agreement and Executive’s employment under this Agreement will end and Company will have no further obligation to provide any further payments or benefits to Executive under this Agreement after the expiration of the Term other than any PTO pay accrued but unused through the expiration of the Term.  Upon expiration of this Agreement, Executive will continue to be employed with Company on an at will basis until such employment is terminated by either party, with or without any reason.
		
	7.
	Non-Solicitation.  The Executive agrees that during his employment hereunder, and for the one (1) year period immediately following termination of employment for any reason, the Executive shall not directly solicit goods, services or a combination of goods and services from any “Established Customers” of the Company.  For purposes of this agreement, “Established Customer” means a customer, regardless of location, of the Company as of the date Executive’s employment terminates who continues to be a customer or who the Company reasonably anticipates will continue to be a customer.

		
	8.
	Non-Solicitation of Employees and Independent Contractors.  The Executive covenants that during the term of employment and for the one (1) year period immediately following the termination of employment for any reason, Executive will 

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neither directly nor indirectly induce nor attempt to induce any executive, employee or independent contractor of the Company to terminate his/her employment relationship with the Company to go to work for any other company or third party.
		
	9.
	Reasonableness.  The Company and the Executive have attempted to specify a reasonable period of time and reasonable restrictions to which this Agreement shall apply.  The Company and Executive agree that if a court or administrative body should subsequently determine that the terms of this Agreement are greater than reasonably necessary to protect the Company's interest, the Company agrees to waive those terms which are found by a court or administrative body to be greater than reasonably necessary to protect the Company's interest and to request that the court or administrative body reform this Agreement specifying a reasonable period of time and such other reasonable restrictions as the court or administrative body deems necessary.

		
	10.
	Equitable Relief.  The Executive acknowledges that the services to be rendered by Executive are of a special, unique, unusual, extraordinary, and intellectual character, which gives them a peculiar value, and the loss of which cannot reasonably or adequately be compensated in damages in an action at law; and that a breach by the Executive of any of the provisions contained in this Agreement will cause the Company irreparable injury and damage.  The Executive further acknowledges that the Executive possesses unique skills, knowledge and ability and that any material breach of the provisions of this Agreement would be extremely detrimental to the Company.  By reason thereof, the Executive agrees that the Company shall be entitled, in addition to any other remedies it may have under this Agreement or otherwise, to injunctive and other equitable relief to prevent or curtail any breach of this Agreement by him/her.

		
	11.
	Continued Litigation Assistance.  The Executive will cooperate with and assist the Company and its representatives and attorneys as requested, during and after the Term, with respect to any litigation, arbitration or other dispute resolutions by being available for interviews, depositions and/or testimony in regard to any matters in which the Executive is or has been involved or with respect to which the Executive has relevant information.  The Company will reimburse the Executive for any reasonable business expenses the Executive may have incurred in connection with this obligation.

		
	12.
	Arbitration  Any disputes, claims or controversies between the Company and Executive including, but not limited to those arising out of or related to this Agreement or out of the parties' employment relationship (together, “Employment Matter”), shall be settled by arbitration as provided herein.  This agreement shall survive the termination or rescission of this Agreement.  All arbitration shall be in accordance with Rules of the American Arbitration Association, including discovery, and shall be undertaken pursuant to the Federal Arbitration Act.  Arbitration will be held in Oklahoma City, Oklahoma unless the parties mutually agree to another location.  

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The decision of the arbitrator will be enforceable in any court of competent jurisdiction.  Executive and the Company agree that either party shall be entitled to obtain injunctive or other equitable relief to enforce the provisions of this Agreement in a court of competent jurisdiction.  The parties further agree that this arbitration provision is not only applicable to the Company but its affiliates, officers, directors, employees and related parties.  Executive agrees that he shall have no right or authority for any dispute to be brought, heard or arbitrated as a class or collective action, or in a representative or a private attorney general capacity on behalf of a class of persons or the general public.  No class, collective or representative actions are thus allowed to be arbitrated.  Executive agrees that he must pursue any claims that he may have solely on an individual basis through arbitration.
		
	13.
	Miscellaneous.  The parties further agree as follows:

		
	13.1
	Time.  Time is of the essence of each provision of this Agreement.

		
	13.2
	Notices.  Any notice, payment, demand or communication required or permitted to be given by any provision of this Agreement will be in writing and will be deemed to have been given when delivered personally or by express mail to the party designated to receive such notice, or on the date following the day sent by overnight courier, or on the third business day after the same is sent by certified mail, postage and charges prepaid, directed to the following address or to such other or additional addresses as any party might designate by written notice to the other party:

	
		
	To the Company:
	Chesapeake Energy Corporation
6100 N. Western Ave.
Oklahoma City, OK 73118
Attn:  [Vice President – Human Resources]

	 
	 

	To the Executive:
	The most recent home address reflected in the records of the Company.

		
	13.3
	Assignment.  Neither this Agreement nor any of the parties' rights or obligations hereunder can be transferred or assigned without the prior written consent of the other parties to this Agreement; provided, however, the Company may assign this Agreement to any wholly owned affiliate or subsidiary of Chesapeake Energy Corporation without Executive's consent as well as to any purchaser of the Company.

		
	13.4
	Construction.  If any provision of this Agreement or the application thereof to any person or circumstances is determined, to any extent, to be invalid or unenforceable, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which the same is held invalid or unenforceable, will not be affected thereby, and each term and provision of this Agreement will be valid and enforceable to the fullest 

14

extent permitted by law.  This Agreement is intended to be interpreted, construed and enforced in accordance with the laws of the State of Oklahoma.
		
	13.5
	Entire Agreement.  This Agreement, any documents executed in connection with this Agreement, any documents specifically referred to in this Agreement and the Employment Policies Manual constitute the entire agreement between the parties hereto with respect to the subject matter herein contained, and no modification hereof will be effective unless made by a supplemental written agreement executed by all of the parties hereto.

		
	13.6
	Binding Effect.  This Agreement will be binding on the parties and their respective successors, legal representatives and permitted assigns.  In the event of a merger, consolidation, combination, dissolution or liquidation of the Company, the performance of this Agreement will be assumed by any entity which succeeds to or is transferred the business of the Company as a result thereof, and the Executive waives the consent requirement of Section 13.3 to effect such assumption.

		
	13.7
	Supersession.  On execution of this Agreement by the Company and the Executive, the relationship between the Company and the Executive will be bound by the terms of this Agreement, any documents executed in connection with this Agreement, any documents specifically referred to in this Agreement and the Employment Policies Manual as well as any other agreements executed in connection with Executive’s employment with the Company.  In the event of a conflict between the Employment Policies Manual and this Agreement, this Agreement will control in all respects.

		
	13.8
	Third-Party Beneficiary.  The Company's affiliated entities and partnerships are beneficiaries of all terms and provisions of this Agreement and entitled to all rights hereunder.

		
	13.9
	Section 409A.  This Agreement is intended to be exempt from Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and related U.S. Treasury regulations or official pronouncements (“Section 409A”) and any ambiguous provision will be construed in a manner that is compliant with such exemption; provided, however, if and to the extent that any compensation payable pursuant to this Agreement is determined to be subject to Section 409A, this Agreement will be construed in a manner that will comply with Section 409A.  Notwithstanding any provision to the contrary in this Agreement, if the Executive is deemed on his Termination Date to be a “specified employee” within the meaning of that term under Section 409A, then any payments and benefits under this Agreement that are subject to Section 409A and paid by reason of a termination of employment shall be made or provided on the later of (a) the payment date set forth in this Agreement or (b) the date that is the earliest of (i) the expiration of the six-month period measured from the date of the Executive’s termination of 

15

employment or (ii) the date of the Executive’s death (the “Delay Period”).  Payments and benefits subject to the Delay Period shall be paid or provided to the Executive without interest for such delay.  Termination of employment as used throughout this Agreement shall refer to a separation from service within the meaning of Section 409A.  To the extent required to comply with Section 409A, references to a “resignation,” “termination,” “termination of employment” or like terms throughout this Agreement shall be interpreted consistent with the meaning of “separation from service” as defined in Section 409A.
		
	13.10
	Dodd-Frank Act.  Notwithstanding anything in this Agreement or any other agreement between the Company and/or its related entities and Executive to the contrary, Executive acknowledges that the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Act”) may have the effect of requiring certain executives of the Company and/or its related entities to repay the Company, and for the Company to recoup from such executives, certain amounts of incentive-based compensation.  If, and only to the extent, the Act, any rules and regulations promulgated by thereunder by the Securities and Exchange Commission or any similar federal or state law requires the Company to recoup incentive-based compensation that the Company has paid or granted to Executive, Executive hereby agrees, even if Executive has terminated his employment with the Company, to promptly repay such incentive compensation to the Company upon its written request.  In addition, the Executive agrees to be subject to any other compensation clawback arrangement adopted by the Board (whether before or after the Effective Date) which is applicable to all executive officers of the Company.  This Section shall survive the termination of this Agreement.

		
	13.11
	Maximum Payments by the Company.

		
	(a)
	It is the objective of this Agreement to maximize Executive’s Net After-Tax Benefit (as defined herein) if payments or benefits provided under this Agreement are subject to excise tax under Section 4999 of the Code.  Notwithstanding any other provisions of this Agreement, in the event that any payment or benefit by the Company or otherwise to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including, by example and not by way of limitation, acceleration by the Company or otherwise of the date of vesting or payment or rate of payment under any plan, program, arrangement or agreement of the Company (all such payments and benefits, including the payments and benefits under Section 6 hereof, being hereinafter referred to as the “Total Payments”), would be subject (in whole or in part) to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the cash severance payments shall first be reduced, and the non-cash 

16

severance payments shall thereafter be reduced, to the extent necessary so that no portion of the Total Payments shall be subject to the Excise Tax, but only if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of Excise Tax to which Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).
		
	(b)
	The Total Payments shall be reduced by the Company in the following order: (i) reduction of any cash severance payments otherwise payable to Executive that are exempt from Section 409A of the Code, (ii) reduction of any other cash payments or benefits otherwise payable to Executive that are exempt from Section 409A of the Code, but excluding any payments attributable to the acceleration of vesting or payments with respect to any equity award with respect to the Company’s common stock that is exempt from Section 409A of the Code, (iii) reduction of any other payments or benefits otherwise payable to Executive on a pro-rata basis or such other manner that complies with Section 409A of the Code, but excluding any payments attributable to the acceleration of vesting and payments with respect to any equity award with respect to the Company’s common stock that are exempt from Section 409A of the Code, and (iv) reduction of any payments attributable to the acceleration of vesting or payments with respect to any other equity award with respect to the Company’s common stock that are exempt from Section 409A of the Code.

		
	(c)
	For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of Section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the written opinion of independent auditors of nationally recognized standing (“Independent Advisors”) selected by the Company, does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments shall be taken into account which, 

17

in the opinion of Independent Advisors, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the “base amount” (as defined in Section 280G(b)(3) of the Code) allocable to such reasonable compensation, and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Independent Advisors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. The costs of obtaining such determination shall be borne by the Company.

[Signature Page Follows]

18

IN WITNESS WHEREOF, the undersigned have executed this Agreement effective the date first above written.
	
					
	 
	 
	 
	CHESAPEAKE ENERGY CORPORATION, an
Oklahoma corporation

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	By:
	 

	 
	 
	 
	 
	[Name of Superior], [Title of Superior]
(the "Company")

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	By:
	 

	 
	 
	 
	 
	[Name of Executive], Individually
(the "Executive")

19

Exhibit “A”
RETIREMENT MATRIX

	
					
	Service Years with Chesapeake
	<55
	55-59
	60-64
	>=65

	0-5
	0%
	0%
	0%
	0%

	5-10
	0%
	60%
	80%
	100%

	10-15
	0%
	80%
	100%
	100%

	15-20
	0%
	100%
	100%
	100%

	20+
	0%
	100%
	100%
	100%uhs-ex103_37.htm

 

Exhibit 10.3

AMENDED AND RESTATed ADVISORY AGREEMENT

THIS AMENDMENT AND RESTATEMENT TO ADVISORY AGREEMENT is entered into as of December 24, 1986 between Universal Health Realty Income Trust, a Maryland business trust (the “Trust”), and UHS of Delaware, Inc., a Delaware corporation (the “Advisor”) is effective as of January 1, 2019.

WHEREAS, the Trust was organized under the laws of the State of Maryland, initially for the purpose of acquiring, directly or indirectly, the real estate of certain income producing health care-related facilities from and leasing the facilities back to certain subsidiaries of Universal Health Services, Inc., a Delaware corporation (“UHS”); and

WHEREAS, the Trust company currently owns numerous properties which it leases to tenants engaged in the provision of heath care and child care services;

WHEREAS, the Advisor is a corporation engaged in the provision of management and administrative services with respect to the ownership of health care and related properties; and

WHEREAS, in connection with its investments, the Trust desires to continue to  make use of the advice and assistance of the Advisor and certain facilities and sources of information available to the Advisor, and to have the Advisor undertake the duties and responsibilities hereinafter set forth, on behalf and subject to the supervision of the Trust’s Board of Trustees (the “Trustees”), all as provided for herein; and

WHEREAS, the Advisor is willing to render such services, subject to the supervision of the Trustees, on the terms and conditions hereinafter set forth; and

WHEREAS, the Trust intends to qualify as a real estate investment trust as defined in the Internal Revenue Code of 1986, as amended, (said Code, as in effect from time to time, together with any regulations and rulings thereunder, being hereinafter referred to as the “Internal Revenue Code”).

NOW, THEREFORE, in consideration of the mutual agreements herein set forth, the parties hereto agree as follows:

1.General Duties of the Advisor. The Advisor shall use its best efforts to supervise the operation of the Trust and to present to the Trust a continuing and suitable investment program consistent with the investment policies and objectives of the Trust. Subject to the supervision of the Trustees and upon their direction, and consistent with the provisions of the Declaration of Trust, the Advisor shall:

(a)serve as the Trust’s investment advisor, with its obligations to include providing research and economic and statistical data in connection with the Trust’s 

 

 

investments, and recommending changes in the Trust’s investment policies, when appropriate;

(b)investigate and evaluate investment opportunities and recommend them to the Trustees;

(c)manage the Trust’s short-term investments including the acquisition and sale of money market instruments in accordance with the Trust’s policies;

(d)administer the day-to-day operations of the Trust, including payment of debts and obligations in the ordinary course of business;

(e)investigate, select and conduct relations and enter into appropriate contracts on behalf of the Trust with other individuals, corporations and entities in furtherance of the investment activities of the Trust;

(f)upon request by the Trustees, act as attorney-in-fact or agent in acquiring and disposing of investments and funds of the Trust and in handling, prosecuting and settling any claims of or against the Trust;

(g)upon request by the Trustees, invest and reinvest any money of the Trust;

(h)obtain for the Trust, when appropriate, the services of property managers or management firms to perform customary property management services and leasing agents to perform customary leasing services with regard to the real estate properties owned by or in the possession of the Trust, and perform such supervisory or monitoring services on behalf of the Trust with respect to the activities of such property managers or management firms and leasing agents as would be performed by a prudent owner, including but not limited to closely supervising the activities of such property managers or management firms and leasing agents, visiting the properties, participating in property management budgeting, reviewing the accounting of property income and expenses, reporting on the financial status of the properties and reviewing and approving marketing plans, but excluding the actual on-site property management functions performed by said property managers or management firms;

(i)obtain for the Trust such services as may be required for other activities relating to the investment portfolio of the Trust;

(j)administer such day-to-day bookkeeping and accounting functions as are required for the proper management of the assets of the Trust, contract for audits and prepare or cause to be prepared such reports as may be required by any governmental authority in connection with the ordinary conduct of the Trust’s business, including without limitation, periodic reports, returns or statements required under the Securities Exchange Act of 1934, as amended, the Internal Revenue Code, the securities and tax statutes of any jurisdiction in which the Trust is obligated to file such reports, or the rules and regulations promulgated under any of the foregoing services; and

 

 

(k)provide office space and office equipment, the use of accounting or computing equipment when required, and provide personnel necessary for the performance of the foregoing services; and

(l)from time to time, or at any time requested by the Trustees, make reports thereto of its performance of the foregoing services to the Trust.

In performing its services under this Advisory Agreement, the Advisor may utilize facilities, personnel and support services of various of its Affiliates (as defined below). The Advisor shall be responsible for paying such Affiliates for their personnel and support services and facilities out of its own funds. Notwithstanding the above, the Trust may request, and will pay for the direct costs of, services provided by Affiliates of the Advisor provided that such request is approved by a majority vote of those Trustees who (i) are not Affiliates of UHS, the Advisor or of any Person who performs services for the Trust and (ii) do not, directly or indirectly, perform any services for the Trust except as a Trustee (the “Independent Trustees”).

As used in this Agreement, the term “Affiliate” means, as to any Person, (i) any other Person directly or indirectly controlling, controlled by or under common control with such Person, (ii) any other Person that owns beneficially, directly or indirectly, five percent (5%) or more of the outstanding capital stock, shares or equitable interests of such Person, or (iii) any officer, director, employee, general partner or trustee of such Person or of any other Person directly or indirectly controlling, controlled by or under common control with such Person (excluding Trustees who are not otherwise an Affiliate of such Person). The term ‘Person means and includes individuals, corporations, limited partnerships, general partnerships, joint stock companies or associations, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts, and other entities and governments and agencies and political subdivisions thereof.

2.Bank Accounts. The Advisor shall establish and maintain one or more bank accounts in its own name or, at the direction of the Trustees, in the name of the Trust, and shall collect and deposit into such account or accounts and disburse therefrom any monies on behalf of the Trust, provided that no funds in any such account shall be commingled with any funds of the Advisor or any other Person. The Advisor shall from time to time render an appropriate accounting of such collections and payments to the Trustees and to the auditors of the Trust.

3.Protection of Investments. The Advisor shall use its best efforts, in cooperation with the legal counsel to the Trust, as deemed appropriate in the Advisor’s reasonable discretion, (a) to verify title to or procure title insurance in respect of any property in which the Trust makes or proposes to make any investment; (b) to verify that any mortgage securing any investment of the Trust shall be a valid lien upon the mortgaged property according to its terms; that any insurance or guaranty issued by the Federal Housing Authority, the Veterans Administration or any similar agency of the United States or Canada, or any subdivision thereof, or any private mortgage insurance company, upon which the Trustees rely, is valid and in full force and effect and enforceable according to its terms; and that any commitments to provide permanent financing on property with respect to which the Trust is 

 

 

furnishing interim loans are satisfactory; and (c) to carry on the policies from time to time specified by the Trustees with regard to the protection of the Trust’s investments.

4.Records. The Advisor shall maintain appropriate books of account and records relating to services performed pursuant hereto, which books of account and records shall be available for inspection by representatives of the Trust upon reasonable notice during normal business hours.

5.Information Furnished Advisor. The Trustees shall at all times keep the Advisor fully informed with regard to the investment policies of the Trust, the capitalization policy of the Trust, and generally the Trustees’ then-current intentions as to the future of the Trust. In particular, the Trustees shall notify the Advisor promptly of their intention to sell or otherwise dispose of any of the Trust’s investments or to make any new investments. The Trust shall furnish the Advisor with a certified copy of all financial statements, a signed copy of each report prepared by independent certified public accountants, and such other information with regard to its affairs as the Advisor may from time to time reasonably request. The Trust shall retain legal counsel and accountants to provide such legal and accounting advice and services as the Advisor or the Trustees shall deem necessary or appropriate to adequately perform the functions of the Trust, and shall have such legal counsel and accountants provide the Advisor with such legal or accounting opinions and advice as the Advisor shall reasonably request.

6.REIT Qualification. Anything else in this Agreement to the contrary notwithstanding, the Advisor shall not take any action (including, without limitation, furnishing or rendering services to tenants of property or managing real property), which action, in its judgment made in good faith, or in the judgment of the Trustees as transmitted to the Advisor in writing, would (a) adversely affect the status of the Trust as a real estate investment trust as defined and limited in the Internal Revenue Code or which would make the Trust subject to the Investment Company Act of 1940, as amended, or (b) violate any law, rule, regulation or statement of policy of any government body or agency having jurisdiction over the Company or over its securities, or (c) otherwise not be permitted by the Declaration of Trust or Bylaws of the Trust, except if such action shall be ordered by the Trustees, in which event the Advisor shall promptly notify the Trustees of the Advisor’s judgment that such action or omission to act would adversely affect such status or violate any such law, rule or regulation or the Declaration of Trust or Bylaws of the Trust and shall refrain from taking such action pending further clarification or instructions from the Trustees. In addition, the Advisor shall take such affirmative steps which, in its judgment made in good faith, or in the judgment of the Trustees as transmitted to the Advisor in writing, would prevent or cure any action described in (a), (b) or (c) above.

7.Self-Dealing. Neither the Advisor nor any Affiliate of the Advisor shall sell any property or assets to the Trust or purchase any property or assets from the Trust, directly or indirectly, except as approved by a majority of the Independent Trustees. In addition, except as otherwise provided in Sections 1, 10, or 12 hereof, or except as approved by a majority of the Independent Trustees, neither the Advisor nor any Affiliate of the Advisor shall receive any commission or other remuneration, directly or indirectly, in connection with the activities of the Trust or any joint venture or partnership in which the Trust is a party. Except for compensation received by the Advisor pursuant to Section 10 hereof, all commissions or other remuneration received by the Advisor or an Affiliate of the Advisor and not approved by the Independent 

 

 

Trustees under Section 1 hereof or this Section 7 shall be reported to the Trust annually within ninety (90) days following the end of the Trust’s fiscal year.

8.No Partnership or Joint Venture. The Trust and the Advisor are not partners or joint venturers with each other and neither the terms of this Advisory Agreement nor the fact that the Trust and the Advisor have joint interests in any one or more investments shall be construed so as to make them such partners or joint venturers or impose any liability as such on either of them.

9.Fidelity Bond. The Advisor shall not be required to obtain or maintain a fidelity bond in connection with the performance of its services hereunder.

10.Compensation. The Advisor shall be paid, for the services rendered by it to the Trust pursuant to this Advisory Agreement, an annual advisory fee (the “Fees”) equal to (.70% of the Average Invested Real Estate Assets of the Trust (as defined below) as derived from the Trust’s consolidated balance sheet from time to time. 

For purposes of this Agreement, “Average Invested Real Estate Assets” of the Trust shall be deemed to mean, for any period, the average of the aggregate book value of the consolidated assets of the Trust invested, directly or indirectly, in equity interests in and loans secured by real estate, before reserves for depreciation or bad debts or other similar noncash reserves, computed by taking the average of such values at the end of each month during such period; provided that, if the last day of such period (the “Termination Date”) is on or after the 15th, but prior to the last day, of any month, such consolidated assets at the Termination Date shall be included in computing such average as if the Termination Date occurred at the end of a month.

The Fees shall be computed within thirty (30) days following the end of each fiscal quarter. Such computations shall be based upon the Trust’s quarterly financial statements and shall be in reasonable detail. A copy of such computations shall promptly be delivered to the Advisor accompanied by payment of the Fees shown thereon to be due and payable.

The payment of the aggregate annual Fees paid for any fiscal year shall be subject to adjustment as of the end of each fiscal year. On or before the 30th day after public availability of the Trust’s annual audited financial statements for each fiscal year, the Trust shall deliver to the Advisor an Officer’s Certificate (a ‘Certificate’) reasonably acceptable to the Advisor and certified by an authorized officer of the Trust setting forth (i) the Average Invested Real Estate Assets for the Trust’s fiscal year ended upon the immediately preceding December 31, and (ii) the Trust’s computation of the Fees payable for said fiscal year.

If the aggregate annual Fees payable for said fiscal year as shown in such Certificate exceed the aggregate amounts previously paid with respect thereto by the Trust, the Trust shall include its payment for such deficit and deliver the same to the Advisor with such Certificate; provided, however, that if at the time such Certificate is prepared the Trust enjoys a credit against Fees not yet due pursuant to Section 13 hereof, the Trust shall apply such credit to offset such deficit and shall not make any payment pursuant to this paragraph except to the extent that such deficit exceeds such credit.

 

 

If the aggregate annual Fees payable for said fiscal year as shown in such Certificate are less than the aggregate amounts previously paid with respect thereto by the Trust, the Trust shall specify in such Certificate whether the Advisor should (i) remit to the Trust its payment in the amount equal to such difference (in which case the Advisor shall remit its payment within ten (10) days of receipt of such Certificate) or (ii) grant the Trust a credit against the Fees next coming due in the amount of such difference until such amount has been fully paid or otherwise discharged. All credits granted pursuant to clause (ii) of the previous sentence and pursuant to Section 13 hereof shall be aggregated and carried forward until the aggregate amount thereof shall have been applied to offset Fees and other amounts as provided herein.

Any difference between the Fees for any fiscal year as shown in such Certificate and the total amount of Fees for such fiscal year previously paid by the Trust, whether in favor of the Advisor or the Trust, shall bear interest (calculated on the basis of a 365-day year) at the rate of interest announced publicly by JP Morgan Chase & Co. of New York (“JPM”), in New York, New York, as such bank’s “base rate” as of the last day of such fiscal year, which interest shall accrue from and including the last day of such fiscal year to and excluding the date on which the amount of such difference shall be fully paid or otherwise discharged, and which interest, if payable by the Trust, may be offset as aforesaid by credits for Fees not yet payable.

11.Expenses of the Advisor. Without regard to the compensation received by the Advisor from the Trust pursuant to this Advisory Agreement, the Advisor shall bear the following expenses incurred in connection with the performance of its duties under this Advisory Agreement:

(a)employment expenses of the personnel employed by the Advisor (other than fees paid and reimbursement of expenses made to independent managers, independent contractors, mortgage servicers, consultants, managers, local property managers or agents employed by or on behalf of the Trust including such persons or entities which may be Affiliates of the Advisor when acting in any such capacity, all of which shall be the responsibility of the Trust), including but not limited to, salaries, wages, payroll taxes and the cost of employee benefit plans;

(b)travel and other expenses of directors, officers and employees of the Advisor, except out-of-pocket expenses of such persons who are Trustees or officers of the Trust incurred in their capacities as Trustees or officers of the Trust;

(c)rent, telephone, utilities, office furniture, equipment and machinery (including computers, to the extent utilized) and other office expenses of the Advisor, except to the extent such expenses relate solely to an office maintained by the Trust separate from the office of the Advisor; and

(d)miscellaneous administrative expenses incurred in supervising, monitoring and inspecting real property and other investments of the Trust or relating to performance by the Advisor of its obligations hereunder.

12.Expenses of the Trust. Except as expressly otherwise provided in this Advisory Agreement, the Trust shall pay all its expenses not payable by the Advisor, and, 

 

 

without limiting the generality of the foregoing, it is specifically agreed that the following expenses of the Trust shall be paid by the Trust and shall not be paid by the Advisor:

(a)the cost of borrowed money;

(b)taxes on income and taxes and assessments on real property, if any, and all other taxes applicable to the Trust;

(c)legal, auditing, accounting, underwriting, brokerage, listing, reporting, registration and other fees, and printing, engraving and other expenses and taxes incurred in connection with the issuance, distribution, transfer, trading, registration and stock exchange listing of the Trust’s securities;

(d)expenses of organizing, revising, amending, converting, modifying or terminating the Trust;

(e)fees and expenses paid to Trustees and officers who are not employees or Affiliates of the Advisor, independent advisors, independent contractors, mortgage servicers, consultants, managers, local property managers or management firms, leasing agents, accountants, attorneys and other agents employed by or on behalf of the Trust and out-of-pocket expenses of Trustees of the Trust who are employees or Affiliates of the Advisor to the extent set forth in Section 11(b) above;

(f)Expenses directly connected with the acquisition, disposition and ownership of real estate interests or other property (including the costs of foreclosure, insurance premiums, legal services, brokerage and sales commissions, maintenance, repair, improvement and local management of property), other than expenses with respect thereto of employees of the Advisor to the extent that such expenses are to be borne by the Advisor pursuant to Section 11 above;

(g)all insurance costs incurred in connection with the Trust (including officer and trustee liability insurance);

(h)expenses connected with payments of dividends or Interest or contributions in cash or any other form made or caused to be made by the Trustees to holders of securities of the Trust;

(i)all expenses connected with communications to holders of securities of the Trust and other bookkeeping and clerical work necessary to maintaining relations with holders of securities, including the cost of printing and mailing certificates for securities and proxy solicitation materials and reports to holders of the Trust’s securities;

(j)transfer agent’s, registrar’s and indenture trustee’s fees and charges;

(k)legal, accounting and auditing fees and expenses; and

(l)expenses relating to any office or office facilities maintained by the Trust separate from the office of the Advisor.

 

 

13.Annual Operating Expenses Limitation Requiring Refunds by the Advisor. There shall be a limitation (the ‘‘Limitation-’) on Operating Expenses (as defined below) of the Trust for each fiscal year which shall be the lower of the following:

(a)the greater of (i) 2% of the Average Invested Real Estate Assets of the Trust for such fiscal year or (ii) 25% of the Net Income (as defined below) of the Company for such fiscal year; or

(b)the lowest of any applicable operating expense limitations that may be imposed by law or regulation in a state in which any securities of the Trust are or will be qualified for sale or by a national securities exchange on which any securities of the Trust are or may be listed, as such limitations may be altered from time to time.

For purposes of this Advisory Agreement, ‘Operating Expenses’ for any fiscal year shall be calculated on the basis of the Trust’s annual audited financial statements and shall be deemed to mean the aggregate annual expenses regarded as ordinary operating expenses in accordance with generally accepted accounting principles (including the Fees), exclusive of the following:

(i)the expenses set forth in Section 12 hereof;

(ii)noncash provisions for depreciation, depletion and amortization;

(iii)losses on the disposition of assets and provisions for such losses, and

(iv)other extraordinary charges including, without limitation, litigation costs.

For purposes of this Advisory Agreement, “Net Income” for any fiscal year shall be calculated on the basis of the Trust’s audited financial statements and shall be deemed to mean total revenues applicable to such fiscal year, less the expenses applicable to such fiscal year, other than additions to reserves for depreciation or bad debts or other similar noncash reserves, determined in accordance with generally accepted accounting principles.

On or before the 30th day after public availability of the Trust’s annual audited financial statements for each fiscal year, the Advisor will refund (to the extent of the aggregate Fees it has received for such fiscal year) to the Trust the amount, if any, by which the Operating Expenses exceeded the Limitation unless the majority of the Independent Trustees shall have made a finding that based upon such unusual and non-recurring factors as they deem the case, a higher level of expenses is justified for such year, any such findings and the reasons therefore shall be referenced in the Minutes of the meeting of the Trustees.

14.Limits of Advisor Responsibility. The Advisor assumes no responsibility other than to render the services described herein in good faith and shall not be responsible for any action of the Trustees in following or declining to follow any advice or recommendation of the Advisor. The Advisor, its shareholders, directors, officers, employees and Affiliates will not be liable to the Trust, its shareholders, or others, except by reason of acts constituting bad faith, misconduct or negligence. The Trust shall reimburse, Indemnify and hold harmless the Advisor, its shareholders, directors, officers and employees and its Affiliates for and from any and all 

 

 

expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever in respect to or arising from any acts or omissions of the Advisor undertaken in good faith and in accordance with the standard set forth above pursuant to the authority granted to it by this Advisory Agreement.

15.Other Activities of Advisor. Nothing . herein shall prevent the Advisor or its Affiliates from engaging in other activities or businesses or from acting as advisor to any other Person (including other real estate investment trusts) or from managing other investments including those of investors or investments advised, sponsored or organized by the Advisor even though such Person has investment policies and objectives similar to those of the Trust; provided, however, that the Advisor shall notify the Trust in writing in the event that it does so act (or intends to so act) as an advisor to another real estate investment trust. The Advisor may also render such services to joint ventures and partnerships in which the Trust is a co-venturer or partner and to the other entities in such joint ventures and partnerships. The Advisor shall be free from any obligation to present to the Trust any particular investment opportunity which comes to the Advisor. In addition, nothing herein shall prevent any stockholder or Affiliate of the Advisor from engaging in any other business or from rendering services of any kind to any other corporation, partnership or other entity (including competitive business activities).

Directors, officers, employees and agents of the Advisor or of its Affiliates may serve as Directors, officers, employees, agents, nominees or signatories of the Trust. When executing documents or otherwise acting in such capacities for the Trust, such persons shall use their respective titles in the Trust. Such persons shall receive from the Trust no compensation for their services to the Trust in any such capacities.

16.Term; Termination. This Advisory Agreement shall continue in force and effect until December 31, 2019 and is renewable annually thereafter by the Trust, if a majority of the Independent Trustees determines that the Advisor’s performance has been satisfactory.

Notwithstanding any other provision of this Advisory Agreement to the contrary, this Advisory Agreement, or any extension thereof, may be terminated by either party thereto upon at least sixty (60) days’ written notice to the other party specifying the effective date of such termination, pursuant to a majority vote of the Independent Trustees, or, in the case of a termination by the Advisor, by a majority vote of the directors of the Advisor; provided, however, that, except for a termination by the Trust pursuant to Section 17 or paragraph (b), (c) or (d) of Section 18, neither party shall be entitled to terminate this agreement unless the effective date of such termination is at the end of a month.

Section 19 hereof shall govern the rights, liabilities and obligations of the parties upon termination of this Advisory Agreement, and except as provided in Section 19, such termination shall be without further liability of either party to the other, other than for breach or violation of this Agreement prior to termination.

17.Assignment. The Trust may terminate this Advisory Agreement at any time in the event of its assignment by the Advisor except an assignment to a corporation, association, trust, or other successor organization which may take over the property and carry on the affairs of the Advisor, provided that following such assignment the Persons who controlled 

 

 

the operations of the Advisor on the date that such Advisor became advisor to the Trust shall control the operation of the successor organization, including the performance of its duties under this Advisory Agreement, and they shall be bound by the same restrictions by which they were bound prior to such assignment; however, if at any time subsequent to such an assignment such Persons shall cease to control the operations of the successor organization, the Trust may thereupon terminate this Agreement. Such an assignment or any other assignment of this Agreement by the Advisor shall bind the assignee hereunder in the same manner as the Advisor is bound hereunder. This Advisory Agreement shall not be assignable by the Trust without the prior written consent of the Advisor, except in the case of any assignment by the Trust to a Person which is the successor to the Trust, in which case such successor shall be bound hereby and by the terms of said assignment in the same manner and to the same extent as the Trust is bound hereby. Any successor organization that is a permitted assignee under this paragraph, whether a successor to the Advisor or to the Trust, shall be obligated to execute such agreements, certificates or other documents as the non-assigning party shall reasonably request to evidence that such successor organization is bound hereby.

18.Default, Bankruptcy, Etc. of the Advisor. At the sole option of the Trust, this Advisory Agreement may be terminated immediately upon written notice of such termination from the Trustees to the Advisor if any of the following events shall have occurred:

(a)the Advisor shall have violated or failed to comply with any provision of this Advisory Agreement and, after notice from the Trustees of such violation, shall have failed to cure such default within thirty (30) days;

(b)a petition shall have been filed against the Advisor for an involuntary proceeding under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, and such petition shall not have been dismissed within sixty (60) days of filing; or a court having jurisdiction shall have appointed a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Advisor for any substantial portion of its property, or ordered the winding up or liquidation of its affairs, and such appointment or order shall not have been rescinded or vacated within sixty (60) days of such appointment or order;

(c)the Advisor shall have commenced a voluntary proceeding under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or shall have made any general assignment for the benefit of creditors, or shall have failed generally to pay its debts as they become due; or

(d)if the terms of this Agreement impair the status of the Trust as a real estate investment trust, unless the parties prepare amendments thereto as necessary to restore such status, or if, for any reason other than the terms of this Agreement, the continuation of the contractual relationship would jeopardize such status.

The Advisor agrees that, if any of the events specified in Paragraphs (a), (b) or (c) of this Section 18 shall occur, it will give written notice thereof to the Trustees as promptly as practicable, and in any event within seven (7) days, following the occurrence of such event.

 

 

19.Action Upon Termination. From and after the effective date of any termination of this Agreement pursuant to Sections 16, 17 or 18 hereof, the Advisor shall be entitled to no compensation for services rendered hereunder, but shall be paid, on a pro rata basis, all compensation due for services performed prior to such termination, subject to reduction as set forth in the Certificate referred to below. To the extent that any calculations under this Agreement are to be performed on the basis of annual audited, or quarterly or monthly unaudited, financial statements, and if such termination shall become effective on a date other than the end of a year, quarter or month, then such calculations shall nonetheless be performed on the basis of available financial information. Upon such termination, the Advisor shall cooperate with the Trust and take all reasonable steps requested by the Trust to assist the Trustees in making an orderly transition of the advisory function, including execution of such agreement, certificates or other documents as the Trust shall reasonably request. In addition, the Advisor immediately shall:

(a)pay over to the Trust all monies collected and held for the account of the Trust by it pursuant to this Advisory Agreement;

(b)deliver to the Trustees a full and complete accounting, including a statement showing all sums collected by it and a statement of all sums held by it for the period commencing with the date following the date on its last accounting to the Trustees; and

(c)deliver to the Trustees all property and documents of the Trust then in its custody or possession.

The amount of Fees, if any, paid to the Advisor upon termination shall be determined as follows. On or before the 30th day after termination the Trust shall deliver to the Advisor a Certificate reasonably acceptable to the Advisor and certified by an authorized officer of the Trust setting forth information of the same type that would be included in Certificates delivered pursuant to Sections 10 and 13 for purposes of calculating Fees, Total Operating Expenses and the Limitation, but calculated for the portion of the Trust’s fiscal year ended as of the effective date of termination. To the extent that (i) Fees payable for such period as shown on such Certificate shall exceed (ii) the sum of (A) Fees actually paid for such period plus (B) any amounts required to be refunded by the Advisor with respect to such period pursuant to Section 13 plus (C) all credits accumulated by the Trust pursuant to Sections 10 and 13 and not theretofore applied to offset Fees or other amounts hereunder, the Trust shall make a payment to the Advisor in the amount of such excess. To the extent that the amount specified in (i) is less than the amount specified in (ii), the Advisor shall make a payment to the Trust in the amount of such deficit.

Any payment to be made upon termination as aforesaid, whether in favor of the Advisor or the Trust, shall bear interest (calculated on the base of a 365-day year) at the rate of interest announced publicly by JPM, in New York, New York, as JPM’s ‘base rate” as of the effective date of termination, which interest shall accrue from and including the effective date of termination to and excluding the date on which the amount of such difference shall be fully paid or otherwise discharged.

 

 

20.Trustees Action. Wherever action on the part of the Trustees is contemplated by this Agreement, action by a majority of the Trustees, including a majority of the Independent Trustees, shall constitute the action provided for herein.

21.Limitation of Liability. THE DECLARATION OF TRUST ESTABLISHING UNIVERSAL HEALTH REALTY INCOME TRUST, FILED AUGUST 6, 1986, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE “DECLARATION”), IS DULY FILED IN THE OFFICE OF THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME “UNIVERSAL HEALTH REALTY INCOME TRUST,” REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY; AND TEAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE TRUST. ALL PERSONS DEALING WITH THE TRUST, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

22.Notices. Any notice, report or other communication required or permitted to be given hereunder shall be in writing unless some other method of giving such notice, report or other communication is accepted by the party to whom it is given, and shall be given by being delivered at the following addresses to the parties hereto:

The Trustees and/or the Trust:

Universal Health Realty Income Trust
Universal Corporate Center
367 South Gulph Road
P.O. Box 61558
King of Prussia, PA 19406

Attention: President

Copy to:

Norton Rose Fulbright US LLP
1301 Avenue of the Americas
New York, New York 10019

Attention: Warren J. Nimetz

 

 

The Advisor:

UHS of Delaware, Inc.
Universal Corporate Center
367 South Gulph Road
King of Prussia, PA 19406

Attention: Chief Financial Officer

Copy to:

Norton Rose Fulbright US LLP
1301 Avenue of the Americas
New York, New York 10019

Attention: Warren J. Nimetz

Such notice shall be effective upon its receipt by the party to whom it is directed. Either party hereto may at any time give notice to the other party in writing of a change of its address for purposes of this Section 22.

23.Amendments; Waiver. This Agreement shall not be amended, changed, modified, terminated, or discharged in whole or in part except by an instrument in writing signed by each of the parties hereto, or by their respective successors or assigns, or otherwise as provided herein. No provision hereof may be waived except by written instrument signed by the party to be charged with such waiver. No waiver of any term, provision or condition of this Agreement in any one or more instances shall be deemed to be or be construed as a further or continuing waiver of any such term, provision or condition or as a waiver of any other term, provision or condition of this Agreement.

24.Successors and Assigns. This Agreement shall be binding upon any successors or permitted assigns of the parties hereto as provided herein.

25.Governing Law. The provisions of this Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania.

26.Captions. The captions included herein have been inserted for ease of reference only and shall not be construed to affect the meaning, construction or effect of this Agreement.

27.Entire Agreement. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes and cancels any pre-existing agreements with respect to such subject matter.

28.Attorneys’ Fees. If any legal action is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing party or parties shall 

 

 

be entitled to recover reasonable attorneys’ fees and other costs incurred in that action in addition to any other relief to which it or they may be entitled.

29.Accounting Matters. All accounting terms used herein shall be interpreted, and all accounting determinations to be made hereunder shall be made, in accordance with generally accepted accounting principles consistently applied.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers as of the day and year first above written.

UNIVERSAL HEALTH REALTY INCOME TRUST

By/s/ Alan B. Miller
Title: President and Chief Executive Officer

UHS OF DELAWARE, INC.

By/s/ Steve Filton
Title: Executive Vice President and Chief Financial Officer

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