Document:

exv10w1

 

EXHIBIT 10.1

IN THE UNITED STATES DISTRICT COURT

DISTRICT OF SOUTH CAROLINA

	 	 	 	 	 	 	 
	Spartanburg Regional Health Services

	 	 	)	 	 	 
	District, Inc. d/b/a Spartanburg Regional

	 	 	)	 	 	 
	
Healthcare System, Spartanburg Regional

	 	 	)	 	 	 
	
Medical Center, Spartanburg Hospital for

	 	 	)	 	 	 
	
Restorative Care, and B.J. Workman

	 	 	)	 	 	 
	Memorial
Hospital, on behalf of themselves 
and others similarly situated,

	 	 	)

)	 	 	 
	 
                              Plaintiff,

	 	 	)
)	 	 	 
	 

	 	 	)	 	 	 
	                              vs.

	 	 	)	 	 	C.A. No. 7:03-2141-HFF
	 

	 	 	)	 	 	 
	Hillenbrand Industries, Inc., Hill-Rom, Inc.

	 	 	)	 	 	 
	and Hill-Rom Company, Inc.,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	                              Defendants.

	 	 	)	 	 	 

SETTLEMENT AGREEMENT

     THIS
SETTLEMENT AGREEMENT is made and entered into as of the ___ day of February, 2006, by and
among the Defendants, the Plaintiff, the Class Representative(s) and the Settlement Class (all as
defined herein) in the above-captioned action (the “Action”).

     WHEREAS, Plaintiff has alleged violations of law including, monopoly maintenance, attempted
monopolization, and illegal restraints of trade, in violation of Sections 1 and 2 of the Sherman
Antitrust Act and Section 3 of the Clayton Act;

     WHEREAS, the Defendants have asserted and would assert a number of defenses to Plaintiff’s
claims;

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     WHEREAS, Plaintiff and the Defendants agree that this Settlement Agreement shall not be deemed
or construed to be an admission or evidence of the truth of any of Plaintiff’s claims or
allegations in the Class Action;

     WHEREAS, arm’s length settlement negotiations have taken place among Plaintiff’s Counsel, the
Class Representative(s), Plaintiff and the Defendants, and this Settlement Agreement, including its
exhibits, which embodies all of the terms and conditions of the settlement among Defendants,
Plaintiff, the Class Representative(s) and the Settlement Class, has been reached, subject to the
approval of the Court and Final Approval as provided herein;

     WHEREAS, Plaintiff’s Counsel, Plaintiff and the Class Representative(s) have concluded, after
due investigation and after carefully considering the relevant circumstances, including the claims
asserted in the Action, the legal and factual defenses thereto and the applicable law, that it
would be in the best interests of Plaintiff, the Class Representative(s) and the Settlement Class
to enter into this Settlement Agreement to avoid the uncertainties of litigation and to assure that
the benefits reflected herein are obtained for the Settlement Class and, further, that Plaintiff’s
Counsel, the Class Representative(s) and Plaintiff consider the settlement set forth herein to be
fair, reasonable and adequate and in the best interests of Plaintiff, the Class Representative(s)
and all members of the Settlement Class; and

     WHEREAS, Defendants have concluded, despite their belief that they have good defenses to the
claims asserted, that they will enter into this Settlement Agreement to avoid the further expense,
inconvenience and burden of this litigation and any other present or future litigation arising out
of the facts that gave rise to this litigation and the distraction and diversion of their personnel
and resources, and thereby to put to rest this controversy with valued business customers, and to
avoid the risks inherent in uncertain complex litigation;

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     NOW, THEREFORE, it is agreed by and among the undersigned, on behalf of each of the Defendants
and the Settlement Class, Plaintiff and the Class Representative(s) that the Action be settled,
compromised and dismissed on the merits and with prejudice as to the Defendants and all other
Released Parties and, except as hereafter provided, without costs against Plaintiff, the Class
Representative(s) and the Settlement Class or the Defendants, subject to the approval of the Court,
on the following terms and conditions:

     1. Class Definition. Subject to the Court’s approval and for the purposes of this
Settlement Agreement only, the undersigned agree that there shall be certified the following
Settlement Class (the “Settlement Class”) as set forth below:

All purchasers or renters of any Hill-Rom products (“Products” as defined in section
2 below) in North America during the period from January 1, 1990 through the date of
this Settlement Agreement.

     The Parties’ agreement as to certification of the Settlement Class is only for purposes of
effectuating the Settlement, and for no other purpose. The Parties retain all of their respective
objections, arguments and/or defenses with respect to class certification if the Settlement does
not obtain Final Approval as defined herein. The Parties acknowledge that there has been no
stipulation to a class for any purposes other than effectuating the Settlement, and that if the
Settlement does not obtain Final Approval as defined herein, agreement as to certification of the
Settlement Class becomes null and void ab initio.

     2. Definitions. The following terms shall have the following meanings for purposes of
this Settlement Agreement:

     “Action” means the lawsuit on file as Spartanburg Regional Health Services District, Inc. v.
Hillenbrand Industries, Inc. et al., C.A. No. 7:03-2141-HFF (D.S.C.).

     “Allowed Purchases and Rentals” means a Participating Class Member’s Purchases and Rentals
approved pursuant to the Plan of Distribution.

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     “Canadian Government Purchases and Rentals” means direct purchases and rentals of Products by
the Canadian Government.

     “Class Period” means the period January 1, 1990 through the date of this Settlement Agreement.

     “Class Representative(s)” means Spartanburg Regional Health Services District, Inc. d/b/a/
Spartanburg Regional Healthcare System, Spartanburg Regional Medical Center, Spartanburg Hospital
for Restorative Care, and B.J. Workman Memorial Hospital, and/or such other person(s) the Court may
appoint under Fed. R. Civ. P. 23(c).

     “Court” means the United States District Court for the District of South Carolina, Spartanburg
Division.

     “Defendants” means Hillenbrand Industries, Inc., Hill-Rom, Inc., and Hill-Rom Company, Inc.

     “Defendants’ Counsel” means Boies, Schiller & Flexner LLP.

     “Escrow Account” means the escrow account or accounts established pursuant to the Escrow
Agreement.

     “Escrow Agent” means the escrow agent selected jointly by Plaintiff’s Counsel and Defendants
under the Escrow Agreement.

     “Escrow Agreement” means the Escrow Agreement attached as Exhibit 1 hereto when finalized and
executed.

     “Escrow Funds” means those funds in the Escrow Account.

     “Final Approval” means the first date upon which all of the following three conditions shall
have been satisfied:

	 	a.	 	The Settlement Class has been certified by the Court;
	 
	 	b.	 	Entry has been made, as provided in paragraph 6 hereof, of the final judgment
of dismissal with prejudice substantially in the form of Exhibit 2 hereto; and
	 
	 	c.	 	Either (i) thirty (30) days have passed from the date of the Court’s entry of
final judgment with no notice of appeal having been filed with the Court or (ii) such
final judgment has been appealed, (A) but no stay of execution has been entered by a
Court of competent jurisdiction or any such stay has been lifted, or (B) such final
judgment has been affirmed by the reviewing court to which any appeal has been taken or
petition for review has been presented and the time for further appeal or review of
such affirmance has expired.

     “Hill-Rom” means any subsidiary or affiliate of Hillenbrand Industries, Inc., or any division,
business unit or business thereof, that sells or rents, or has sold or rented, health-care

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related products, including without limitation Hill-Rom, Inc., Hill-Rom Company, Inc. and
Support Systems International.

     “North America” means the United States and Canada.

     “Opt-Out” means any member of the Settlement Class that has timely excluded itself, himself or
herself from the Settlement Class or has been allowed by the Court to exclude itself, himself or
herself from the Settlement Class.

     “Opt-Out Determination Date” means either (i) the date falling fifteen (15) days after the
date Defendants serve Plaintiff’s Counsel with their calculations of their respective Opt-Out
Reductions pursuant to paragraph 10 hereof, unless Plaintiff’s Counsel challenge any of Defendants’
calculations as provided therein; or (ii) in the event of such a challenge, either (A) the date
upon which such challenge has been resolved by agreement between Plaintiff’s Counsel and the
Defendants or (B) the date of the Court’s order determining the Opt-Out Reduction of Defendants.

     “Opt-Out List” means the list of Opt-Outs described in paragraph 10 hereof.

     “Opt-Out Purchases and Rentals” means Purchases and Rentals of Products by Opt-Outs, as
reflected in Defendants’ records.

     “Opt-Out Reduction” means the pro rata portion of the Settlement Fund attributable to the
Opt-Out Purchases and Rentals, viz. $337,500,000 multiplied by a fraction, the numerator of which
is the Opt-Out Purchases and Rentals and the denominator of which is Purchases and Rentals, as
defined herein.

     “Participating Class Member” means every entity and person falling within the definition of
the Settlement Class defined in paragraph l hereof that has not validly excluded
himself/herself/itself from the Settlement Class.

     “Parties” means Plaintiff and Defendants as defined herein and all other signatories to this
Agreement.

     “Plaintiff” means the named plaintiff in the Action, Spartanburg Regional Health Services
District, Inc. d/b/a/ Spartanburg Regional Healthcare System, Spartanburg Regional Medical Center,
Spartanburg Hospital for Restorative Care, and B.J. Workman Memorial Hospital.

     “Plaintiff’s Counsel” means until such time as class counsel is appointed by the Court, Akin
Gump Strauss Hauer & Feld, LLP, Ball and Scott, and Felder & McGee, LLP, and thereafter such
counsel as are appointed class counsel.

     “Plan of Distribution” means the plan to be prepared by Plaintiff’s Counsel, subject to
agreement by Defendants, and approved by the Court for distributing the Settlement Fund.

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     “Products” means all Hill-Rom products sold or rented during the period January 1, 1990
through the date of this settlement agreement, including the Hill-Rom products listed on Exhibit 3
hereto.

     “Purchases and Rentals” means all sales and rentals of any Hill-Rom Products to any member of
the Settlement Class defined in paragraph 1 hereof calculated in U.S. dollars, during the Class
Period.

     “Released Claims” shall have the meaning set forth in paragraph 18 hereof.

     “Released Parties” shall have the meaning set forth in paragraph 18 hereof.

     “Releasing Party” shall have the meaning set forth in paragraph 18 hereof.

     “Settlement” means the settlement of the Released Claims as set forth in this Settlement
Agreement, including any subsequent amendments to this Settlement Agreement by the Parties as
provided herein.

     “Settlement Administrator” means the person(s) selected by Plaintiff’s Counsel subject to
agreement by Defendants, which agreement shall not be unreasonably withheld, and appointed by the
Court to administer the Settlement pursuant to the terms of the Settlement Agreement and the Plan
of Distribution.

     “Settlement Fund” means the payments made by Defendants pursuant to paragraph 7 hereof,
including any interest accrued on such payments after their payment by Defendants.

     “Settlement Hearing” shall have the meaning set forth in paragraph 5 hereof.

     “United States” means the United States of America and its commonwealths, territories,
possessions and insular areas.

     “U.S. Government Purchases and Rentals” means direct purchases and rentals of Products by the
United States Government.

     3. Reasonable Best Efforts to Effectuate this Settlement. Plaintiff’s Counsel agree
to recommend approval of this Settlement Agreement by the Court and to the members of the
Settlement Class. The Parties agree to undertake their reasonable best efforts, including all
steps and efforts contemplated by this Settlement Agreement and any other steps and efforts that
may be necessary or appropriate, by order of the Court or otherwise, to carry out the terms of this
Settlement Agreement.

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     4. Motion for Preliminary Approval. As soon as is possible and in no event later than
ten (10) days after execution of this Settlement Agreement, Plaintiff’s Counsel shall submit to the
Court (i) a motion for conditional intervention under Fed.R.Civ.P. 24 (b) of the Class
Representative(s) which are not currently plaintiffs solely for the purpose of effectuating this
Settlement, and (ii) a motion for preliminary approval of the Settlement and certification of the
Settlement Class. The preliminary approval motion shall include (a) the proposed forms of mail
notice and publication notice of the Settlement to members of the Settlement Class attached as
Exhibit 4a and Exhibit 4b hereto and (b) the proposed form of order preliminarily approving this
Settlement Agreement attached as Exhibit 5 hereto. The motion for conditional intervention and
proposed order shall provide that, in the event that Final Approval does not occur, the Class
Representative(s) withdraw their motion to intervene and any orders granting intervention shall be
void, without prejudice to further seeking intervention or substitution of parties. Upon filing,
Plaintiff and Defendants shall request that a decision be made promptly on the papers or that a
hearing on Plaintiff’s motion for preliminary approval of the Settlement and motion for conditional
intervention be held at the earliest date available to the Court and the Parties.

     5. Notice to Settlement Class. In the event that the Court preliminarily approves the
Settlement and certifies the Settlement Class, Plaintiff’s Counsel shall, in accordance with Rule
23 of the Federal Rules of Civil Procedure and the Court’s preliminary approval order, provide
those members of the Settlement Class who can be identified by reasonable means with notice by
first class mail of the pendency of the Class Action, the certification of the Settlement Class,
the terms of the Settlement and their rights thereunder and the date of the hearing scheduled by
the Court to consider the fairness, adequacy and reasonableness of the proposed Settlement (the
“Settlement Hearing”). Such notice shall be substantially in the form of Exhibit 4a hereto or as

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otherwise ordered by the Court. Plaintiff’s Counsel shall take all necessary and appropriate
steps to ensure that such notice is provided in accordance with the order of the Court, and
Defendants shall, within fourteen (14) days of the date of the Court’s preliminary approval
hearing, provide Plaintiff’s Counsel with copies of such machine-readable records as may exist of
the identity of individual members of the Settlement Class and their respective last known mailing
addresses. Such records shall be provided in good faith and on an “as is” basis, with no
representations or warranties whatsoever. Such records shall be designated and treated as “Highly
Confidential” under the August 9, 2004 Confidentiality and Protective Order in the Action and the
information contained therein shall only be used to identify Settlement Class members and for no
other purpose. To the extent that the Settlement Administrator requires assistance in making use
of these records, Defendants shall not be required to provide or pay for such assistance; however,
the Settlement Administrator may seek such assistance from Defendants’ consultants, Cornerstone
Research, Inc. (“Cornerstone”), and shall be responsible for paying the fees and expenses for such
assistance from the Settlement Fund. Such assistance from Cornerstone will in no way be deemed to
affect or limit either (a) the ongoing retention of Cornerstone by Defendants and their counsel, or
(b) all privileges, including the attorney work product privilege, applicable to Cornerstone’s work
on behalf of Defendants and their counsel. Notice shall also be given by publication as necessary
in order to provide adequate notice under Federal Rule 23, as agreed by the Parties and approved by
the Court. Publication notice shall be given as soon after preliminary approval by the Court of the
settlement as is reasonably practical. The notice to be provided in such publications shall be
substantially in the form of Exhibit 4b hereto. In no event shall the Defendants be responsible
for giving notice of this settlement to members of the

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Settlement Class, including but not limited to the expense and cost of such notice (except
insofar as provided in paragraphs 7(a) and 22 hereof).

     6. Motion for Final Approval and Entry of Final Judgment. If the Court preliminarily
approves the Settlement, Plaintiff’s Counsel shall submit a motion for final approval of the
Settlement by the Court, after notice to the members of the Settlement Class, and shall seek entry
of an order and final judgment, substantially in the form attached as Exhibit 2 hereto:

	 	a.	 	finding the Settlement contemplated by this Settlement Agreement and its terms
as being fair, reasonable and adequate for the Settlement Class within the meaning of
Rule 23 of the Federal Rules of Civil Procedure and directing its consummation pursuant
to its terms and conditions;
	 
	 	b.	 	directing that the Action be dismissed with prejudice and without costs and
that the judgment of dismissal shall be final and appealable;
	 
	 	c.	 	discharging and releasing the Released Parties from all Released Claims;
	 
	 	d.	 	reserving continuing and exclusive jurisdiction over the Settlement and this
Settlement Agreement, including its administration; and
	 
	 	e.	 	directing that, for a period of five (5) years, the Clerk of the Court shall
preserve the record of those members of the Settlement Class that have timely excluded
themselves from the Settlement Class and that a certified copy of such records shall be
provided to the Defendants at their expense.

     7. Settlement Consideration. Subject to the provisions hereof, and in full, complete,
and final settlement of the Action and of all Released Claims as provided herein, Defendants agree
to pay into the Escrow Account the sum of $337,500,000, less the amount of any Opt-Out Reduction as
defined herein, (the “Settlement Fund”). Specifically, Defendants shall have the following payment
obligations:

     (a) In the event that the Court preliminarily approves the Settlement pursuant to paragraph 4
hereof, within thirty (30) days after such approval, Defendants shall pay the sum of $50,000,000
(fifty million U.S. dollars) into the Escrow Account that shall be established

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pursuant to the terms of the Escrow Agreement. These funds may be invested at the direction of the
Escrow Agent pursuant to the terms of the Escrow Agreement, and any interest earned thereon shall
become part of the Settlement Fund. These amounts shall be available immediately thereafter for
reimbursement of such costs, fees, and expenses associated with the provision of notice to the
members of the Settlement Class pursuant to paragraph 5 hereof, as may be agreed to by Plaintiff’s
Counsel and counsel for Defendants, and approved by the Court.

     (b) Within thirty (30) days of Final Approval of the Settlement by the Court, Defendants shall
pay the additional sum of $287,500,000 (two hundred eighty-seven million five hundred thousand U.S.
dollars) into the Escrow Account, less the amount of any Opt-Out Reduction as defined herein.
These funds may be invested at the direction of the Escrow Agent pursuant to the terms of the
Escrow Agreement, and any interest earned thereon shall become part of the Settlement Fund. The
funds in the Escrow Account may be distributed to Participating Class Members pursuant to the Plan
of Distribution and may be used for payment of any attorneys’ fees, costs, expenses or other
disbursements, including any incentive award for the Class Representative(s), as the Court may
order and as is permitted under the Escrow Agreement.

     (c) The Settlement Fund is the total and exclusive amount that Defendants will pay under this
Settlement Agreement or for the benefit of the Released Claims (as defined in paragraph 18 herein),
including without limitation funds to satisfy claims by any Participating Class Member, attorneys’
fees and costs, any Court-approved incentive awards to the Class Representative(s), payment of any
and all estimated taxes, taxes, tax preparation fees, and payment of any and all administrative and
notice expenses associated with the Action or this

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Settlement. Defendants shall have no liability, obligation or responsibility with respect to the
investment, disbursement, or other administration or oversight of the Settlement Fund.

     8. Escrow Account and Escrow Agent. The Escrow Account shall be established and
administered under the Court’s continuing supervision and control pursuant to the Escrow Agreement
attached as Exhibit 1 hereto when finalized and executed. The Escrow Agent shall be the trust
department of a money center bank organized under the laws of the United States or any state
thereof having capital and surplus in excess of $50 billion selected by Plaintiff’s Counsel subject
to agreement by Defendants, which agreement shall not be unreasonably withheld, and approval by the
Court.

     9. Qualified Settlement Fund. The Escrow Account is intended by the Parties to be
treated as a “qualified settlement fund” for federal income tax purposes pursuant to Treas. Reg.
§1.468B-1, and, to that end, the Parties agree they (i) shall cooperate with each other to
accomplish that (A) the Escrow Account is treated by the Internal Revenue Service as a “qualified
settlement fund” under Treas. Reg. §1.468B-1 and (B) the Defendants can obtain either a favorable
private letter ruling from the Internal Revenue Service or an acceptable favorable tax opinion from
qualified tax advisor that concludes the Escrow Account is a “qualified settlement fund” for
federal income tax purposes pursuant to Treas. Reg. §1.468B-1, and (ii) shall not take a position
in any filing with or appearance before any tax authority that is inconsistent with such treatment.

     10. Determination of Opt-Out Reduction. The amount due from Defendants to be paid
into the Settlement Fund pursuant to paragraph 7(b) hereof, shall be reduced by the amount of the
Opt-Out Reduction as defined herein. Within seven (7) days after the Court-ordered deadline for
timely requests for exclusion from the Settlement Class, which deadline shall not be

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less than fifty-five (55) days prior to the Settlement Hearing, as provided in the proposed
Order of Preliminary Approval attached as Exhibit 5 hereto, Plaintiff’s Counsel shall serve on
counsel for Defendants a list of those members of the Settlement Class who have communicated an
intent to exclude themselves from the Settlement Class (the “Opt-Out List”). Plaintiff’s Counsel
shall also supplement the Opt-Out List with the names of any additional Class members who
subsequently communicate an intent to opt-out of the Settlement Class, even if untimely, and
promptly serve such supplements on Defendants’ Counsel.

     Within thirty (30) days after receiving the Opt-Out List from Plaintiff’s Counsel, the
Defendants shall serve upon Plaintiff’s Counsel their computations of Opt-Out Purchases and Rentals
and the Opt-Out Reduction, as defined herein, together with reasonably sufficient supporting
records.

     Plaintiff’s Counsel may challenge Defendants’ calculations within ten (10) days after service
of such calculations upon Plaintiff’s Counsel by the Defendants. In the event that Plaintiff’s
Counsel challenge Defendants’ calculations, counsel for Defendants and Plaintiff’s Counsel shall
meet promptly thereafter in order to attempt to reach agreement as to the amount of Defendants’
Opt-Out Reduction. If, after such consultation, Plaintiff’s Counsel and counsel for the Defendants
do not reach agreement as to the Defendants’ Opt-Out Reduction, the matter shall be referred to the
Court for decision. Defendants shall not be required to pay into the Settlement Fund any disputed
portion of the Opt-Out Reduction unless the dispute is resolved by agreement of the Parties or by a
final, non-appealable Court order.

     In the event that there are Opt-Outs who are not included on the Opt-Out List, the amount of
the Opt-Out Reduction shall be increased accordingly. Participating Class Members who have
assigned Released Claims to third parties who are not Participating Class Members shall be

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treated as Opt-Outs for purposes of the Opt-Out Reduction. Defendants shall be entitled to a
refund from the Settlement Fund for the amount of any Opt-Out Reduction not reflected in a
reduction of the Settlement Fund before the balance of the Settlement Fund has been deposited into
the Escrow Account by Defendants pursuant to paragraph 7(b) herein.

     11. Termination by Defendants. Defendants shall have an option to terminate this
Agreement, and thus prevent Final Approval, if the total value of Opt-Out Purchases and Rentals as
a percentage of all Purchases and Rentals exceeds the confidential percentage agreed to in Exhibit
1 to the Parties’ November 10, 2005 Memorandum of Understanding. For the purpose of calculating
this percentage only, U.S. Government Purchases and Rentals and Canadian Government Purchases and
Rentals shall not be included in either the numerator or denominator of this percentage.

     To exercise the option to terminate this Agreement, Defendants shall give written notice of
their intent to do so to Plaintiff’s Counsel in accordance with Paragraph 29 of this Agreement,
within seven (7) days after the close of the period for Plaintiff’s Counsel to challenge
Defendants’ calculations of Opt-Out Purchases and Rentals and the Opt-Out Reduction, except that
the occurrence of subsequent Opt-Outs who are not on the Opt-Out List shall reinstate Defendants’
option to terminate this Agreement which may be exercised within 15 days of Defendants’ Counsel
receiving notice of additional Opt-Outs from Plaintiff’s Counsel.

     12. All Claims Satisfied by Settlement Fund. The Settlement Class and each member of
the Settlement Class which has not successfully excluded itself from the Settlement Class are
limited solely to the Settlement Fund for the satisfaction of all Released Claims against all
Defendants and Released Parties as provided herein. Except as provided by order of the Court

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pursuant to this Settlement Agreement, no Participating Class Member shall have any interest in the
Settlement Fund or any portion thereof.

     13. All Fees, Expenses, and Incentive Awards Paid from Settlement Fund. Defendants
shall not be liable for any of the Plaintiff’s fees, costs or expenses of the litigation of the
Action or of this Settlement, including but not limited to those (a) of any of Plaintiff’s Counsel,
experts, consultants, agents or representatives; (b) relating to any incentive awards made to the
Class Representative(s); (c) incurred in giving notice to the Settlement Class; or (d) incurred in
or related to administering the settlement or distributing the Settlement Fund. After Final
Approval, all such fees, costs and expenses, and incentive awards as are approved by the Court may
be paid out of the Settlement Fund, in accordance with paragraph 7 herein, the Escrow Agreement and
the Plan of Distribution.

     14. Attorneys’ Fees and Class Representative(s)’ Incentive Awards. The Defendants and
Plaintiff’s Counsel agree that the award of attorneys’ fees and costs for Plaintiff’s Counsel and
any Class Representative(s)’s incentive award are matters committed to the discretion of the Court,
and Defendants will not object to Plaintiff’s Counsel’s request to the Court for an attorneys’ fee
and award of costs and expenses or to any request for the Class Representative(s)’s incentive
award.

     15. Distribution of Settlement Fund Conditioned Upon Final Approval. Except as
provided in paragraph 7(a) hereof and the Escrow Agreement when finalized and executed, no
distribution to any Participating Class Member or disbursement of any kind may be made from the
Settlement Fund until after Final Approval.

     16. Submission of Claims. Defendants shall supply to Plaintiff’s Counsel or to such
other person(s) as may be appointed by the Court to administer the settlement (the “Settlement

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Administrator”) such records as may exist, in an electronic form, regarding the identity of
individual members of the Settlement Class, their respective last known addresses, and their
respective Purchases and Rentals of Products. Such records shall be supplied in good faith and on
an “as is” basis, with no representations or warranties whatsoever, including without limitation no
representations or warranties regarding completeness or accuracy. Such records shall be designated
and treated as “Highly Confidential” under the August 9, 2004 Confidentiality and Protective Order
in the Action. To the extent that the Settlement Administrator requires assistance in making use
of these records, Defendants shall not be required to provide or pay for such assistance; however,
the Settlement Administrator may seek such assistance from Defendants’ consultants, Cornerstone,
and shall be responsible for paying the fees and expenses for such assistance from the Settlement
Fund. Such assistance from Cornerstone will in no way be deemed to affect or limit either (a) the
ongoing retention of Cornerstone by Defendants and their counsel, or (b) all privileges, including
the attorney work product privilege, applicable to Cornerstone’s work on behalf of Defendants and
their counsel. Each member of the Settlement Class that wishes to participate in the Settlement
Fund shall be required to file a timely proof of claim under oath that sets forth such
Participating Class Member’s claimed Purchases and Rentals of Products from Defendants, verifying
that the Participating Class Member has not assigned any Released Claims, together with such
documentation as the Plan of Distribution may require in support of such proofs of claim. The
proof of claim and Plan of Distribution shall provide that each Participating Class Member who
receives money from the Settlement Fund shall indemnify the Released Parties against any and all
claims by third parties based upon an assignment of any Released Claim by that Participating Class
Member. Any member of the Settlement Class that fails to file a timely proof of claim by

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the deadline established by the Plan of Distribution shall be forever barred from receiving any
distribution from the Settlement Fund (unless a late-filed proof of claim by such Participating
Class Member is specifically approved by Court order) but will in all other respects be bound by
all the terms and provisions of this Settlement Agreement, including but not limited to the
releases set forth in paragraph 18 hereof. The Plan of Distribution shall provide for
investigation, review and resolution of proofs of claim by such means as are reasonable and
necessary to verify the Purchases and Rentals of Products claimed by each Participating Class
Member, including procedures for Court review of the determinations of the Settlement
Administrator.

     17. Plan of Distribution. At least twenty (20) days prior to the Settlement Hearing,
Plaintiff’s Counsel shall submit for Court approval a Plan of Distribution, agreed to by
Defendants, that fairly and adequately provides for the administration of the Settlement and the
distribution of the Settlement Fund as provided in this Settlement Agreement. The Plan of
Distribution shall provide for an allocation of the Settlement Fund that is consistent with the
following terms:

          (a) First, all Court-approved payments of taxes, attorneys’ fees, costs, expenses, and incentive awards
for the Class Representative(s) shall be paid from the Settlement Fund.

          (b) Second, Participating Class Members that file a timely proof of claim as provided in
paragraph 16 shall be entitled to a payment equal to their pro rata share of the remaining
Settlement Fund, which share shall be in proportion to each Participating Class Member’s Allowed
Purchases and Rentals as a percentage of all Participating Class Members’ aggregate Allowed
Purchases and Rentals.

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          (c) After Final Approval, no portion of the Settlement Fund shall be distributed or revert to
Defendants, except as may be required to pay Defendants under the Opt-Out Reduction provided in
paragraph 10 herein. Each Participating Class Member that files a timely proof of claim shall
receive a distribution from the remaining Settlement Fund for its Allowed Purchases and Rentals
according to a schedule to be filed with the Court. Should any Participating Class Members fail to
timely submit a proof of claim, disbursement of the portion of the remaining Settlement Fund
attributable to such Participating Class Members’ Purchases and Rentals shall be decided by the
Court, as provided in the Plan of Distribution.

     18. Release. In addition to the effect of any final judgment entered in accordance
with this Settlement Agreement, in the event that this Settlement Agreement is approved by the
Court after the Settlement Hearing, Defendants and their past, present and future parents,
subsidiaries, divisions, affiliates, stockholders, and each and any of their respective
stockholders, members, officers, directors, insurers, general or limited partners, employees,
agents, legal representatives (and the predecessors, heirs, attorneys and executors,
administrators, successors and assigns of each of the foregoing) (individually and collectively,
the “Released Parties”) are and shall be released and forever discharged to the fullest extent
permitted by law from and against any and all manner of claims, demands, actions, suits, causes of
action, damages whenever incurred, liabilities of any nature and kind whatsoever, including costs,
expenses, penalties and attorneys’ fees, known or unknown, suspected or unsuspected, in law or
equity, that each and every Participating Class Member (including any of their past, present or
future parents, subsidiaries, divisions, affiliates, stockholders, and each and any of their
respective stockholders, officers, directors, insurers, general or limited partners, agents,
attorneys, employees, legal representatives, trustees, associates, heirs, executors,
administrators,

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purchasers, predecessors, successors and assigns, acting in their capacity as such), whether or not
they object to the Settlement and whether or not they make a claim upon or participate in the
Settlement Fund (the “Releasing Parties”), ever had, now has, or hereafter can, shall or may have,
directly, representatively, derivatively or in any other capacity, relating to or arising out of
the subject matter of the Action based on conduct or events from the beginning of time through the
date hereof, including without limitation all claims which were or could have been brought in the
Action related to the discounting, marketing, purchase, rental, servicing or warranty of the
Products except as provided for in paragraph 19 herein and all claims which may result from the
current or future effects of conduct or events occurring prior to or which may exist as of the date
hereof (all of the foregoing being the “Released Claims”). Each Participating Class Member hereby
covenants and agrees that he/she/it shall not sue or otherwise seek to establish or impose
liability against any Released Party based, in whole or in part, on any of the Released Claims.

     In addition, each Releasing Party hereby expressly waives and releases any and all provisions,
rights, and benefits conferred by § 1542 of the California Civil Code, which reads:

Section 1542. General Release; extent. A general release
does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the
release, which if known by him or her must have materially affected
his or her settlement with the debtor;

or by any law of any state or territory of the United States or other jurisdiction, or principle of
common law, which is similar, comparable or equivalent to § 1542 of the California Civil Code.
Each Releasing Party may hereafter discover facts other than or different from those which he, she
or it knows or believes to be true with respect to the claims which are the subject matter of this
paragraph 18, but each Releasing Party hereby expressly waives and fully, finally and forever
settles and releases any known or unknown, suspected or unsuspected,
contingent or non-

18

 

contingent claim that would otherwise fall within the definition of Released Claims, whether or not
concealed or hidden, without regard to the subsequent discovery or existence of such different or
additional facts. Without limiting the scope of the release, each Releasing Party also hereby
expressly waives and fully, finally and forever settles and releases any and all claims it may have
against any Released Party under § 17200, et seq., of the California Business and Professions Code
or any similar, comparable or equivalent provision of the law of any other state or territory of
the United States or other jurisdiction, which claims are hereby expressly incorporated into the
definition of Released Claims.

     Each Participating Class Member must execute a release and covenant not to sue in conformity
with paragraph 18 in order to receive its pro rata share of the Settlement Fund. Plaintiff and
Plaintiff’s Counsel will ensure that each claim form provided to Participating Class Members under
the Plan of Distribution contains a copy of the release and covenant not to sue set forth in
paragraph 18 herein, which shall be signed by each member of the Class or its authorized
representative as a precondition to receiving any portion of the Settlement Fund.

     19. Reservation of Claims. The release set forth in paragraph 18 hereof shall not
release any claim based on personal injury, product liability, intellectual property rights or
breach of contract or warranty concerning conduct or events unrelated to the Released Claims.

     20. Future Pricing Policies. The Defendants agree that for a period of three years
from the date of this Settlement Agreement, for any new contracts, Defendants shall not offer
incremental discounts on capital beds or architectural products that are conditioned on a customer
renting therapy products from Defendants, i.e., while such products may be sold together, the
rental therapy product line shall be separately priced and discounted; but

19

 

Defendants may continue to offer all other discounts (e.g., volume discounts, early payment
discounts, capitation arrangements, etc.) as appropriate.

     21. Obligations Are Joint and Several. All obligations assumed by the Defendants
under this Settlement Agreement are intended to be, and shall remain, joint and several.

     22. Effect of Disapproval. If Final Approval does not occur, then the Parties’
respective obligations under this Settlement Agreement shall become null and void, and the Escrow
Fund (including any and all income earned thereon) shall be returned to the Defendants, less only
the costs incurred in giving notice to the Settlement Class as provided in paragraph 5 hereof. The
Parties expressly reserve all of their rights if the Settlement does not become final in accordance
with the terms of this Settlement Agreement.

     23. Consent to Jurisdiction. Each Defendant and each member of the Settlement Class
hereby irrevocably submits to the exclusive jurisdiction of the Court for any suit, action,
proceeding or dispute arising out of or relating to this Settlement Agreement or the applicability
of this Settlement Agreement and its exhibits. Without limiting the generality of the foregoing,
it is hereby agreed that any dispute concerning the provisions of paragraph 18 hereof, including
but not limited to any suit, action or proceeding in which the provisions of paragraph 18 hereof is
asserted as a defense in whole or in part to any claim or cause of action or otherwise raised as an
objection, constitutes a suit, action or proceeding arising out of or relating to this Settlement
Agreement and its exhibits. In the event that the provisions of paragraph 18 hereof are asserted by
any Released Party as a defense in whole or in part to any claim or cause of action or otherwise
raised as an objection in any suit, action or proceeding, each and every Releasing Party hereby
agrees that such Released Party shall be entitled to a stay of that suit, action or proceeding
until the Court has entered a final judgment no longer subject to any
appeal or a final, non-

20

 

appealable order determining any issues relating to the defense or objection based on the
provisions of paragraph 18. Solely for purposes of such suit, action or proceeding, to the fullest
extent that they may effectively do so under applicable law, each Participating Class Member and
the Defendants irrevocably waive and agree not to assert, by way of motion, as a defense or
otherwise, any claim or objection that they are not subject to the jurisdiction of the Court or
that the Court is in any way an improper venue or an inconvenient forum. Nothing herein shall be
construed as a submission to jurisdiction for any purpose other than enforcement of the Settlement
Agreement.

     24. Resolution of Disputes; Retention of Jurisdiction. Any disputes between or among
the Defendants and any Participating Class Member or Members concerning matters contained in this
Settlement Agreement shall, if they cannot be resolved by negotiation and agreement, be submitted
to the Court. The Court shall retain jurisdiction over the implementation and enforcement of this
Settlement Agreement.

     25. Binding Effect. Subject to paragraph 28 hereof, this Settlement Agreement shall
be binding upon, and inure to the benefit of, the successors of the Parties. Without limiting the
generality of the foregoing, each and every covenant and agreement herein by Plaintiff shall be
binding upon all Participating Class Members.

     26. Authorization to Enter Settlement Agreement. Each undersigned representative of
Defendants covenants and represents that such representative is fully authorized to enter into and
to execute this Settlement Agreement on behalf of Defendants. Plaintiff’s Counsel represent that
they are fully authorized to conduct settlement negotiations with defense counsel on behalf of
Plaintiff, the Class Representative(s) and Plaintiff’s Counsel and to enter into, and to execute,

21

 

this Settlement Agreement on behalf of the Settlement Class, subject to Court approval pursuant to
Fed. R. Civ. P. 23(e).

     27. Notices. All notices under this Settlement Agreement shall be in writing. Each
such notice, except as provided for in paragraph 5, shall be given either by (a) hand delivery; (b)
registered or certified mail, return receipt requested, postage pre-paid; or (c) Federal Express or
similar overnight courier and, in the case of either (a), (b) or (c) shall be addressed, if
directed to any plaintiff or Participating Class Member, to Plaintiff’s Counsel at their addresses
set forth on Exhibit 6 hereto, and if directed to a Defendant, to its representative(s) at the
address(es) set forth on Exhibit 6 hereto, or such other address as Plaintiff’s Counsel or a
Defendant may designate, from time to time, by giving notice to all Parties in the manner described
in this paragraph.

     28. Intended Beneficiaries. No provision of this Settlement Agreement shall provide
any rights to, or be enforceable by, any person or entity that is not a Participating Class Member,
a Released Party or Plaintiff’s Counsel. No Participating Class Member or Plaintiff’s Counsel may
assign or otherwise convey any right to enforce any provision of this Settlement Agreement.

     29. No Conflict Intended. Any inconsistency between this Settlement Agreement and the
exhibits attached hereto shall be resolved in favor of this Settlement Agreement. The headings
used in this Settlement Agreement are intended for the convenience of the reader only and shall not
affect the meaning or interpretation of this Settlement Agreement.

     30. No Party Is the Drafter. None of the Parties shall be considered to be the
drafter of this Settlement Agreement or any provision hereof for the purpose of any statute, case
law or rule of interpretation or construction that would or might cause any provision to be
construed against the drafter hereof.

22

 

     31. Choice of Law. All terms of this Settlement Agreement and the exhibits hereto
(except for the Escrow Agreement, Exhibit 1) shall be governed by and interpreted according to the
substantive laws of the State of South Carolina without regard to its choice of law or conflict of
laws principles.

     32. Amendment; Waiver. This Settlement Agreement shall not be modified in any respect
except by a writing executed by the Parties, and the waiver of any rights conferred hereunder shall
be effective only if made by written instrument of the waiving party. The waiver by any party of
any breach of this Settlement Agreement shall not be deemed or construed as a waiver of any other
breach, whether prior, subsequent or contemporaneous, of this Settlement Agreement.

     33. Execution in Counterparts. This Settlement Agreement may be executed in
counterparts. Facsimile signatures shall be considered as valid signatures as of the date hereof,
although the original signature pages shall thereafter be appended to this Settlement Agreement and
filed with the Court.

     34. Integrated Agreement. This Settlement Agreement contains an entire, complete, and
integrated statement of each and every term and provision agreed to by and among the Parties, and
it is not subject to any condition not provided for herein.

     35. Hillenbrand Industries, Inc. may file this Settlement Agreement with the Securities and
Exchange Commission. The Parties agree that press releases in substantially the forms of Exhibit 7
and Exhibit 8 may be released by Defendants and Plaintiff, respectively. No Party (including its
respective officers, employees, agents and representatives, and its affiliates and their respective
officers, employees, agents and representatives) shall issue or make, or cause to be issued or
made, any other press release or public statements (except for communications to

23

 

employees, customers and/or suppliers) related to the Action or the Settlement that in any way
disparages any other Party without prior written approval of the other Parties, provided that the
Parties may make any such additional disclosures, press releases or other public announcements to
the extent that they receive advice of counsel from a nationally or regionally recognized law firm
that such disclosure (in timing, form, substance and scope) is required under applicable laws,
rules and/or regulations. The Parties agree to the same day issuance of any press releases or
public announcements concerning this Settlement Agreement, with the understanding that Hillenbrand
Industries, Inc. must issue a press release within four business days of the signing of this
Settlement Agreement. No Party shall issue a press release related to the Action or the Settlement
before February 3, 2006.

     36. Defendants have denied, and continue to deny, any wrongdoing or legal liability arising
from any of the facts or conduct alleged in the Action. Neither this Settlement Agreement nor any
other Settlement-related document is an admission that any claim which was brought or could have
been brought against the Defendants has any merit whatsoever and shall not be offered or used in
the Action or otherwise for any purpose whatsoever.

     IN WITNESS WHEREOF, the Parties, through their fully authorized representatives have agreed to
this Settlement Agreement on the date first herein above written.

	 	 	 	 	 	 	 	 	 
	PLAINTIFF’S COUNSEL:

on behalf of the Settlement Class	 	 	 	HILLENBRAND INDUSTRIES, INC.,

HILL-ROM, INC., AND HILL-ROM

COMPANY, INC.
	 
	 	 	 	 	 	 	 	 
	By:  

	 	 	 	 	 	By:  	 	 
	 

	 
	 	 	 	 	 

24

 

	 	 	 	 	 
	 

	 	 	 	 
	SPARTANBURG REGIONAL HEALTH SERVICES DISTRICT, INC.

d/b/a SPARTANBURG REGIONAL HEALTHCARE SYSTEM	 	 
	 
	 	 	 	 
	By:  
	 	 	 	 
	 	 	 	 
	 
	 	 	 	 
	SPARTANBURG REGIONAL MEDICAL CENTER	 	 
	 
	 	 	 	 
	By:  
	 	 	 	 
	 	 	 	 
	 
	 	 	 	 
	SPARTANBURG HOSPITAL FOR RESTORATIVE CARE	 	 
	 
	 	 	 	 
	By:  
	 	 	 	 
	 	 	 	 
	 
	 	 	 	 
	B.J. WORKMAN MEMORIAL HOSPITAL	 	 
	 
	 	 	 	 
	By:  
	 	 	 	 
	 	 	 	 

25<PAGE>
                                                                    EXHIBIT 10.1

                      CHANGE IN CONTROL SEVERANCE AGREEMENT

         THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (the "AGREEMENT") is made
and entered into this 3rd day of February, 2006, (the "Effective Date") between
WINDROSE MEDICAL PROPERTIES TRUST, a Maryland business trust (the "REIT"),
WINDROSE MEDICAL PROPERTIES L.P., a Virginia limited partnership (the "Company")
and DANIEL R. LOFTUS (the "Executive"). Certain capitalized terms used in this
Agreement are defined in Section 6.

                                    RECITALS

         The REIT, which is the sole General Partner of the Company,
acknowledges that Executive has made and is expected to make significant
contributions to the growth and success of the REIT and the Company. The Company
acknowledges that Executive has made and is expected to make significant
contributions to the growth and success of the Company. The REIT and the Company
also acknowledge that there exists the possibility of a Change in Control of the
REIT. The REIT and the Company recognize that the possibility of a Change in
Control may contribute to uncertainty on the part of senior management and may
result in the departure or distraction of senior management from their operating
responsibilities.

         Outstanding management of the Company and the REIT is always essential
to advancing the best interests of the Company and its partners and the REIT and
its shareholders. In the event of a threat or occurrence of a bid to acquire or
change control of the Company or the REIT or to effect a business combination,
it is particularly important that the business of the REIT and the Company be
continued with a minimum of disruption. The REIT and the Company believe that
the objective of securing and retaining outstanding management will be achieved
if the Company's and the REIT's key management employees are given assurances of
employment security so that they will not be distracted by personal
uncertainties and risks created by such circumstances.

        NOW, THEREFORE, in consideration of the mutual covenants and obligations
herein and the compensation the REIT and the Company agree, jointly and
severally, herein to pay to Executive, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
REIT, the Company and Executive agree as follows:

1. TERM OF AGREEMENT. The Term of this Agreement begins on the Effective Date
and ends on August 1, 2008. Notwithstanding the preceding sentence, the Term of
this Agreement shall be extended for an additional twelve month period, as of
each anniversary of August 1, 2005, unless the REIT or the Company gives
Executive written notice, at least ninety days prior to the applicable
anniversary of the August 1, 2005, that the Term of this Agreement will not be
extended.

2. RIGHT TO RECEIVE TERMINATION BENEFITS. Executive shall be entitled to receive
the Termination Benefits described in Section 4 if the requirements of any of
the following subsections (a), (b) or (c) are satisfied:

     a. Executive shall be entitled to receive the Termination Benefits if (i) a
     Control Change Date occurs during the Term of this Agreement and (ii)
     within twenty-four

<PAGE>

     months after the Control Change Date either (x) the REIT terminates
     Executive's employment with the REIT without Cause or the Company
     terminates Executive's employment with the Company without Cause or (y)
     Executive resigns from the employment of the REIT and the Company and
     Executive has Good Reason to resign from the REIT or Good Reason to resign
     from the Company.

     b. Executive shall be entitled to receive the Termination Benefits if (i)
     during the Term of this Agreement the REIT terminates Executive's
     employment with the REIT without Cause or the Company terminates
     Executive's employment with the Company without Cause and (ii) a Control
     Change Date occurs within nine months after Executive's termination by
     either the REIT or the Company.

     c. Executive shall be entitled to receive the Termination Benefits if (i)
     during the Term of this Agreement the REIT terminates Executive's
     employment with the REIT without Cause or the Company terminates
     Executive's employment with the Company without Cause and (ii) on the date
     of Executive's termination the REIT or the Company is negotiating with, or
     is in discussions with, a Person regarding a transaction that, if
     completed, would constitute a Change in Control.

No amounts will be payable under this Agreement unless Executive's employment
with the REIT, the Company or both is terminated as described in one of the
foregoing subsections.

3. TERMINATION BENEFITS. Upon a termination of Executive's employment in
accordance with Section 2, Executive shall be entitled to receive the following
Termination Benefits:

     a. Payment of any accrued but unpaid salary from the REIT or the Company
     through the date that Executive's employment terminates;

     b. Payment of any bonus that has been earned from the REIT or the Company
     but which remains unpaid as of Executive's termination of employment;

     c. Reimbursement for any expenses that Executive incurred on behalf of the
     REIT or the Company prior to termination of employment to the extent that
     such expenses are reimbursable under the REIT's or the Company's standard
     reimbursement policies; and

     d. A payment equal to two times Executive's Current Cash Compensation. The
     term "Current Cash Compensation" is the sum of Executive's annual base
     salaries from the REIT and the Company as in effect on the date Executive's
     employment terminates and the average of the annual bonuses paid to
     Executive for the REIT's and the Company's prior two fiscal years of the
     REIT and the Company preceding the termination of his employment; provided
     that any extraordinary bonuses shall not be considered in determining the
     Current Cash Compensation.

The Termination Benefits shall be payable in a single cash sum within fifteen
days of Executive's termination of employment in accordance with Section 3. The
payment of the Termination Benefits shall be reduced by amounts required to be
withheld for applicable income and employment taxes.

<PAGE>

In addition to the Termination Benefits described in this Section 4, Executive
also shall be entitled to receive any benefits or payments that Executive is
entitled to receive under any employee benefit plans or other arrangements or
agreements, including by way of example, stock option agreements, that cover
Executive and any such benefits will become vested as a result of a termination
in accordance with Section 2.

4. EXCISE TAX INDEMNIFICATION. Executive shall be entitled to a payment under
this Agreement if any payment or benefit provided under this Agreement or any
other plan or agreement with the Company or the REIT constitutes a "parachute
payment" (as defined in Section 280G(b)(2)(A) of the Internal Revenue Code of
1986 (the "Code"), but without regard to Code Section 280G(b)(2)(A)(ii)) and
Executive incurs a liability under Code Section 4999. The amount payable to
Executive under this Section 5 shall be the amount required to indemnify
Executive and hold him harmless from the application of Code Sections 280G and
4999 with respect to benefits, payments, accelerated exercisability and vesting
and other rights under this Agreement or otherwise, and any income, employment,
hospitalization, excise and other taxes attributable to the indemnification
payment. The benefit payable under this Section 5 shall be calculated and paid
not later than the date (or extended filing date) on which the tax return
reflecting liability for the Code Section 4999 excise tax is required to be
filed with the Internal Revenue Service. To the extent that any other plan or
agreement requires that Executive be indemnified and held harmless from the
application of Code Sections 280G and 4999, any such indemnification and the
amount required to be paid to Executive under this Section 5 shall be
coordinated so that such indemnification is paid only once and the REIT's and
the Company's obligations under this Section 5 shall be satisfied to the extent
of any such other payment (and vice versa). Executive shall be entitled to the
benefit described in Section 5 without regard to whether he becomes entitled to
receive the Termination Benefits described in Section 4.

5. CERTAIN DEFINITIONS. As used in this Agreement, certain terms have the
definitions set forth below.

     a. Acquiring Person means that a Person, considered alone or together with
     all Control Affiliates and Associates of that Person, is or becomes
     directly or indirectly the beneficial owner (as defined in Rule 13d-3 under
     the Exchange Act) of securities representing at least twenty percent (20%)
     of the REIT's then outstanding securities entitled to vote generally in the
     election of the Board.

     b. Associate, with respect to any Person, is defined in Rule 12b-2 under
     the Exchange Act; provided, however, that an Associate shall not include
     the Company, the REIT or a majority-owned affiliate of the Company or the
     REIT.

     c. Board means the Board of Trustees of the REIT.

     d. Cause means (i) willful, deliberate and continued failure by Executive
     (other than for reason of mental or physical illness) to perform his duties
     as established by the Board or the General Partner of the Company, or fraud
     or dishonesty in connection with such duties, in either case, if such
     conduct has a materially detrimental effect on the

<PAGE>

     business operations of the REIT or the Company; (ii) a material breach by
     Executive of his fiduciary duties of loyalty or care to the REIT or the
     Company; (iii) conviction of any crime (or upon entering a plea of guilty
     or nolo contendere to a charge of any crime) constituting a felony; (iv)
     misappropriation of the REIT or the Company's funds or property; or (v)
     willful, flagrant, deliberate and repeated infractions of material
     published policies and regulations of the Company or the REIT of which
     Executive has actual knowledge.

     e. Change in Control means (i) a Person is or becomes an Acquiring Person;
     (ii) holders of the securities of the REIT entitled to vote thereon approve
     any agreement with a Person (or, if such approval is not required by
     applicable law and is not solicited by the REIT, the closing of such an
     agreement) that involves the transfer of more than fifty percent (50%) of
     the REIT's and its affiliates' total assets on a consolidated basis, as
     reported in the REIT's consolidated financial statements filed with the
     Securities and Exchange Commission; (iii) holders of the securities of the
     REIT entitled to vote thereon approve a transaction (or, if such approval
     is not required by applicable law and is not solicited by the REIT, the
     closing of such a transaction) pursuant to which the REIT will undergo a
     merger, consolidation, or statutory share exchange with a company,
     regardless of whether the REIT is intended to be the surviving or resulting
     entity after the merger, consolidation, or statutory share exchange, other
     than a transaction that results in the voting securities of the REIT
     carrying the right to vote in elections of persons to the Board outstanding
     immediately prior to the closing of the transaction continuing to represent
     (either by remaining outstanding or by being converted into voting
     securities of the surviving entity) more than fifty percent (50%) of the
     REIT's voting securities carrying the right to vote in elections of persons
     to the Board, or such securities of such surviving entity, outstanding
     immediately after the closing of such transaction; (iv) the Continuing
     Directors cease for any reason to constitute a majority of the Board; (v)
     holders of the securities of the REIT entitled to vote thereon approve a
     plan of complete liquidation of the REIT agreement for the sale or
     liquidation by the REIT or its affiliates of substantially all of the
     assets of the REIT and its affiliates (or, if such approval is not required
     by applicable law and is not solicited by the REIT, the commencement of
     actions constituting such a plan or the closing of such an agreement); or
     (vi) the Board adopts a resolution to the effect that, in, its judgment, as
     a consequence of any one or more transactions or events or series of
     transactions or events, a Change in Control of the Company has effectively
     occurred.

     f. Continuing Director means any member of the Board, while a member of the
     Board and (i) who was a member of the Board on August 1, 2005 or (ii) whose
     nomination for or election to the Board was recommended or approved by a
     majority of the Continuing Directors.

     g. Control Affiliate, with respect to any Person, means an affiliate as
     defined in Rule 12b-2 under the Exchange Act.

<PAGE>

     h. Control Change Date means the date on which a Change in Control occurs.
     If a Change in Control occurs on account of a series of transactions or
     events, the "Control Change Date" is the date of the last of such
     transactions or events in the series.

     i. Exchange Act means the Securities Exchange Act of 1934, as amended.

     j. Good Reason means the Executive's resignation from the employment of the
     REIT or the Company and its affiliates on account of one or more of the
     following events:

          i.   the failure by the Board to reelect Executive to Executive's
               current position with the REIT;

          ii.  a material diminution by the Board of the duties, functions and
               responsibilities of Executive as the Executive Vice President of
               the REIT without his consent or a material diminution of
               Executive's duties, functions and responsibilities with respect
               to the Company without Executive's consent.

          iii. the failure of the REIT or the Company to permit Executive to
               exercise such responsibilities as are consistent with Executive's
               positions and are of such a nature as are usually associated with
               such offices of a corporation engaged in substantially the same
               business as the REIT or the Company;

          iv.  the REIT's or the Company's causing the Executive to relocate his
               employment more than fifty (50) miles from Indianapolis, Indiana,
               without the consent of Executive;

          v.   the Company's or the REIT's failure to make a payment when due to
               Executive;

          vi.  the Company's or the REIT's reduction of Executive's (A) annual
               base salary, as such may be increased from time to time after the
               date of this Agreement; (B) bonus, such that the aggregate
               threshold, target, or maximum bonus projected for Executive for a
               fiscal year is lower than the aggregate threshold, target, or
               maximum bonus, respectively, projected for Executive for the
               immediately preceding fiscal year; or (C) employee welfare,
               fringe or pension benefits, other than reductions determined to
               be necessary to comply with the Employee Retirement Income
               Security Act of 1974, as amended, or to retain the tax-qualified
               or taxfavored status of the benefit under the Code, which
               determination shall be made by the Board in good faith;

          vii. a breach of Section 10 of this Agreement;

<PAGE>

          viii. the Company or the Board directs Executive to engage in unlawful
                or unethical conduct or conduct contrary to the Company's or the
                REIT's good business practices.

     k. Person means any human being, firm, corporation, partnership, or other
     entity. "Person" also includes any human being, firm, corporation,
     partnership, or other entity as defined in sections 13(d)(3) and 14(d)(2)
     of the Exchange Act. The term "Person" does not include the Company, or any
     Related Entity, and the term Person does not include any employee-benefit
     plan maintained by the Company or any Related Entity, and any person or
     entity organized, appointed, or established by the Company or any Related
     Entity for or pursuant to the terms of any such employee-benefit plan,
     unless the Board determines that such an employee-benefit plan or such
     person or entity is a "Person".

     l. Related Entity means any entity that is part of a controlled group of
     corporations or is under common control with the REIT within the meaning of
     section 1563(a), 414(b) or 414(c) of the Internal Revenue Code of 1986, as
     amended (the "Code").

6. ATTORNEYS' FEES. Executive shall be entitled to reimbursement for any
attorneys' fees and any other reasonable expenses that Executive incurs in
enforcing or protecting his rights under this Agreement. Such reimbursement
shall be made within thirty days following final resolution of the dispute or
occurrence giving rise to such fees and expenses, regardless of whether
Executive is deemed the prevailing party in the resolution of the dispute or
occurrence.

7. NO ASSIGNMENT. Except as required by applicable law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to
execution, attachment, levy or similar process or assignment by operation of law
and any attempt to effect any such action shall be null, void and no effect.

8. GOVERNING Law. This Agreement shall be governed by the laws of the State of
Maryland other than. its choice of law provisions to the extent that they would
require the application of the laws of a State other than the State of Maryland.

9. SUCCESSORS. The REIT and the Company shall require any successor to all or
substantially all of the REIT's or the Company's respective business or assets
(whether direct or indirect, by purchase, merger, consolidation or otherwise),
to expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the REIT and the Company would be required to perform it
if no such succession had taken place. Failure of the REIT or the Company to
obtain such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle Executive to
resign from the employ of the Company and the REIT and to receive the
Termination Benefits and other benefits under this Agreement in the same amount
and on the same terms as Executive would be entitled to hereunder if he
terminated his employment for Good Reason following a Change in Control.
References in this Agreement to the "Company" include the Company as herein
before defined and any successor to the Company's business, assets or both which
assumes and agrees

<PAGE>

to perform this Agreement by operation of law or otherwise. References in this
Agreement to the "REIT" include the REIT as herein before defined and any
successor to the REIT's business, assets or both which assumes and agrees to
perform this Agreement by operation of law or otherwise.

10. BINDING AGREEMENT. This Agreement shall inure to the benefit of and be
enforceable by Executive and his personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive dies while any amount remains payable to him hereunder, all such
amounts shall be paid in accordance with the terms of this Agreement to
Executive's devisee, legatee or other designee or, if there is none, to
Executive's estate.

11. NO EMPLOYMENT RIGHTS. Nothing in this Agreement confers on Executive any
right to continuance of employment by the Company, the REIT or any affiliate.
Nothing in this Agreement interferes with the right of the Company, the REIT or
an affiliate to terminate Executive's employment at any time for any reason
whatsoever, with or without Cause, subject to the requirements of this
Agreement. Nothing in this Agreement restricts the right of Executive to
terminate his employment with the Company, the REIT and affiliates at any time-
for any reason whatsoever, with or without Good Reason.

12. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which together constitute
one and the same instrument.

13. ENTIRE AGREEMENT. This Agreement expresses the whole and entire agreement
between the parties with reference to the payment of the Termination Benefits
and supersedes and replaces any prior agreement, understanding or arrangement
(whether oral or written) by or between the REIT, the Company and Executive with
respect to the payment of the Termination Benefits.

14. NOTICES. All notices, requests and other communications to any party under
this Agreement shall be in writing and shall be given to such party at its
address set forth below or such other address as such party may hereafter
specify for the purpose by notice to the other party:

          If to Executive:                      112880 University Crescent
                                                Apt 3B
                                                Carmel, Indiana 46032

          If to the REIT:                       3502 Woodview Trace Suite 210
                                                Indianapolis, Indiana 46268

          If to the Company:                    3502 Woodview Trace Suite 210
                                                Indianapolis, Indiana 46268

Each notice, request or other communication shall be effective if (i) given by
mail, seventy-two hours after such communication is deposited in the mails with
first class postage prepaid,

<PAGE>

address as aforesaid or (ii) if given by any other means, when delivered at the
address specified in this Section 15.

15. MODIFICATION OF AGREEMENT. No waiver or modification of this Agreement shall
be valid unless in writing and duly executed by the party to be charged
therewith. No evidence of any waiver or modification shall be offered or
received in evidence at any proceeding, arbitration or litigation between the
parties unless such waiver or modification is in writing, duly and executed. The
parties agree that this Section 16 may not be waived except as herein set forth.

16. JOINT AND SEVERAL LIABILITY. The REIT and the Company are jointly and
severally liable to make the payments and provide the benefits provided under
this Agreement including, by way of illustration, the payment of the Termination
Benefits described in Section 4 and the payment of the excise tax
indemnification described in Section 5.

17. RECITALS. The Recitals to this Agreement are incorporated herein and shall
constitute an integral part of this Agreement.

                            [SIGNATURE PAGE FOLLOWS]

<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.

                                       DANIEL R. LOFTUS

                                        /s/ Daniel R. Loftus
                                       ----------------------------------------

                                       WINDROSE MEDICAL PROPERTIES TRUST

                                       By:  /s/ Fred Klipsch
                                           ------------------------------------
                                           Fred Klipsch
                                           Chief Executive Officer

                                       WINDROSE MEDICAL PROPERTIES, L.P.

                                           BY: WINDROSE MEDICAL PROPERTIES
                                           TRUST, ITS GENERAL PARTNER

                                       By:  /s/ Frederick L. Farrar
                                           ------------------------------------
                                           President

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