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Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this " Agreement "), effective
as of the first day of September, 2008 (the " Effective Date
), is entered into by and among Thomas Properties Group, Inc., a
Delaware corporation (" TPG "), Thomas Properties Group,
LP., a Maryland limited partnership (the " Operating
Partnership ") (TPG and the Operating Partnership are
collectively referred to herein as the " Company ") and Paul
S. Rutter (the " Executive ").
WHEREAS, the Company desires to employ Executive and Executive
desires to accept employment with the Company, on the terms and
conditions of this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Employment Period . Subject to the provisions for
earlier termination hereinafter provided, the Executive’s
employment hereunder shall be for a term (the " Employment
Period ") commencing on the Effective Date and ending on the
third anniversary of the Effective Date (the " Initial
Termination Date "); provided , however , that
this Agreement shall be automatically extended for one additional
year on the Initial Termination Date and on each subsequent
anniversary of the Initial Termination Date, unless either the
Executive or the Company elects not to so extend the term of the
Agreement by notifying the other party, in writing, of such
election not less than sixty (60) days prior to the last day
of the term as then in effect.
2. Terms of Employment .
(a) Position and Duties .
(i) During the Employment Period, the Executive shall serve as
Executive Vice President and General Counsel of TPG and the
Operating Partnership and shall perform such employment duties as
are usual and customary for such positions. During the Employment
Period, the Executive shall be a member of the Executive Management
Committee of the Company, which shall consist of the Chief
Executive Officer and the Executive Vice Presidents of the Company
and the Chief Financial Officer, and the Executive shall report
directly at all times to the Chief Executive Officer. The Executive
Management Committee shall, as a group, review and consider all
major business policies, strategies and initiatives of the Company
and its affiliates. The Executive shall be officed at the
Company’s main headquarters offices in Los Angeles,
California, provided, however, that the Executive understands that
travel will be a required component of the position, and the
Executive may from time to time work from the Company’s other
offices. At the Company’s request, the Executive shall serve
the Company and/or its subsidiaries and affiliates in other
positions and capacities in addition to the foregoing. In the event
that the Executive, during the Employment Period, serves in any one
or more of such additional capacities, the Executive’s
compensation shall not be increased beyond that specified in
Section 2(b) of this Agreement. In addition, in the
event the Executive’s service in one or more of such
additional capacities is subsequently terminated, the
Executive’s compensation, as specified in
Section 2(b) of this Agreement, shall not be diminished
or reduced in any manner as a result of such termination for so
long as the Executive otherwise remains employed under the terms of
this Agreement.
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(ii) During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote substantially all of his
business time, energy, skill and best efforts to the performance of
his duties hereunder in a manner that will faithfully and
diligently further the business and interests of the Company.
Notwithstanding the foregoing, during the Employment Period it
shall not be a violation of this Agreement for the Executive to
(A) serve on civic, charitable or other boards or committees,
provided, however, that the Executive will consult with the Chief
Executive Officer prior to accepting a position on the board of any
publicly traded company, (B) deliver lectures, fulfill
speaking engagements or teach at educational institutions or
(C) manage his personal investments, so long as such
activities do not materially interfere with the performance of the
Executive’s responsibilities as an executive officer of the
Company. It is expressly understood and agreed that to the extent
that any such activities have been conducted by the Executive prior
to the Effective Date and fully disclosed in writing and agreed to
by the Company in writing the continued conduct of such activities
(or the conduct of activities similar in nature and scope thereto)
subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive’s
responsibilities to the Company; provided that no such activity
shall be permitted that violates any written non-competition
agreement between the parties or prevents the Executive from
devoting substantially all of his business time to the fulfillment
of his duties hereunder.
(iii) The Executive agrees that he will not take personal
advantage of any business opportunity that arises during his
employment by the Company and which may be of benefit to the
Company unless all material facts regarding such opportunity are
promptly reported by the Executive to the Board of Directors of TPG
(the " Board ") for consideration by the Company and the
disinterested members of the Board determine to reject the
opportunity and to approve the Executive’s participation
therein.
(b) Compensation; Benefits, Equity Grants .
(i) Base Salary . During the Employment Period, the
Executive shall receive a base salary (the " Base Salary ")
of $375,000 per annum, as the same may be increased thereafter (or
thereafter decreased, but not below the initial Base Salary)
pursuant to the Company’s normal practices for its
executives. The Base Salary shall be paid at such intervals as the
Company pays executive salaries generally. During the Employment
Period, the Base Salary shall be reviewed at least annually for
possible increase (or decrease, not below the initial Base Salary)
in the Company’s sole discretion, as determined by the
Company’s compensation committee. Any increase in Base Salary
shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. The term "Base Salary" as utilized
in this Agreement shall refer to Base Salary as so adjusted.
(ii) Annual Bonus . In addition to the Base Salary, the
Executive shall be eligible to earn, for each fiscal year of the
Company ending during the Employment Period, an annual cash
performance bonus (an " Annual Bonus "). The amount of the
Annual Bonus and the target performance goals applicable to the
Annual Bonus shall be determined in accordance with the terms and
conditions of said bonus plan as in effect from time to time;
provided that Executive’s target for each annual bonus
hereunder shall be 100% of Base Salary for that year, and his
maximum Annual Bonus shall be 150% of Base Salary for that year,
with the additional 50% being for extraordinary performance. The
terms and conditions of any such bonus plan shall be determined by
the Company’s compensation committee of the Board in its sole
discretion.
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(iii) Incentive Awards . Subject to the
terms of the Thomas Properties Group, Inc. 2004 Equity Incentive
Plan, as amended (the " Plan ") and the Policy Regarding
Equity Grants to Executive Officers, adopted by the Compensation
Committee of the Board effective as of June 10, 2008 ("
Policy "), as the same may be amended from time to time, the
Operating Partnership shall, effective as of the Effective Date,
grant to the Executive One Hundred Ten Thousand
(110,000) Incentive Units (as such term is defined in the
Plan) (" Initial Incentive Units "). In addition to the
Initial Incentive Units, the Company will annually, during the
Employment Period, consider at such time as compensation reviews
are performed for executive officers of the Company in the ordinary
course (commencing in the first quarter of 2009), the grant to the
Executive of additional Incentive Units, in an amount determined at
the discretion of the Compensation Committee of the Board based on
the expected contributions of Executive to the Company. The target
annual Incentive Unit award for Executive shall be 100,000
Incentive Units (the " Annual Incentive Unit Target "). The
Initial Incentive Units shall vest as follows:
(A) Subject to the Executive’s continued employment with
the Company, fifty percent (50%) of such Incentive Units ("
Performance Vested Units ") shall vest as follows:
(1) On each of the first three (3) anniversaries of the
date of such grant (" Anniversary Date "), the Executive
shall vest in a percentage of the Performance Vested Units
determined by multiplying thirty-three and one-third percent
(33.33%) by a fraction, (a) the numerator of which is
equal to the annual total stockholder return (stock price plus
dividends) for TPG during the 12-month period immediately preceding
such Anniversary Date (each such annual return, an " Annual
Return "), provided that any negative Annual Return shall be
expressed in the numerator as zero percent (0%) and provided
further that the numerator shall not exceed twelve percent
(12%) (such percent, the " Threshold Percent "), and
(b) the denominator of which is equal to the Threshold
Percent, with the resulting product rounded to the nearest whole
percent; and
(2) If (a) on any Anniversary Date pursuant to
Section 2 (b)(iii)(A)(1) of this Agreement, or on
either of the fourth or fifth anniversary of the date of the grant
of the Performance Vested Units (any such Anniversary Date, a "
Makeup Anniversary Date "), the Annual Return as of such
Makeup Anniversary Date exceeds the Threshold Percent, and
(b) the Executive vested in less than thirty-three and
one-third percent (33.33%) of the Performance Vested Units
pursuant to Section 2(b)(iii)(A)(1) of this Agreement
on any of the first through third Anniversary Dates prior to such
Makeup Anniversary Date, then the Executive shall vest in an
additional percentage of the Performance Vested Units on such
Makeup Anniversary Date (such additional percentage, the "
Makeup Percentage "), with such Makeup Percentage being an
amount equal to the difference between (i) 33.33% times the
number of preceding Anniversary Dates (not to exceed 100%), less
(ii) the percentage of the Performance Vested Units in which
the Executive has vested immediately prior to such Makeup
Anniversary Date.
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(B) Subject to Executive’s continued
employment with the Company, the remaining fifty percent
(50%) of such Incentive Units (the " Discretionary Vested
Units ") shall vest as follows:
(1) Sixty percent (60%) of the Discretionary Vested Units
(the " Discretionary Performance Vested Units ") shall vest
as follows: up to thirty-three and one-third percent
(33.33%) of the Discretionary Performance Vested Units shall
vest on each Anniversary Date, subject to the achievement of
individual and company goals (" Performance Goals ") for the
12-month period immediately preceding each such Anniversary Date,
as determined by the Compensation Committee in its sole discretion,
provided that if the Executive vests in less than thirty-three and
one-third percent (33.33%) of the Discretionary Performance
Vested Units on any Anniversary Date, the Compensation Committee
may allow the Performance Goals for the 12-month period immediately
preceding such Anniversary Date to be carried forward to a future
period or periods so that the Executive has an opportunity to vest
in all or a portion of such unvested percentage on one or more
future Anniversary Dates.
(2) The remaining forty percent (40%) of the Discretionary
Vested Units (the " Committee Discretionary Vested Units ")
shall vest as follows: up to thirty-three and one-third percent
(33.33%) of the Committee Discretionary Vested Units shall
vest on each Anniversary Date as determined by the Compensation
Committee in its sole discretion, provided that if the Executive
vests in less than thirty-three and one-third percent
(33.33%) of the Committee Discretionary Vested Units on any
Anniversary Date, the Executive may vest in all or a portion of
such unvested percentage on any future Anniversary Date, as
determined by the Compensation Committee in its sole
discretion.
Notwithstanding any other provisions of this Agreement, in the
event the Executive does not receive additional grants of Incentive
Units (in addition to the Initial Incentive Units) during the first
two years of the Employment Period, which as of the second
anniversary of the Effective Date total no less than Two Hundred
Thousand (200,000) Incentive Units, then following the second
(2 nd ) anniversary of the Effective Date, Executive may elect,
by notice to the Company no more than 30 days following the second
anniversary of the Effective Date, to terminate this Agreement with
60 days prior notice, in which case all of the Initial Incentive
Units granted to Executive that have not otherwise vested under
this Agreement will vest on the effective date of such termination;
provided, however, if the Company is prohibited by the Plan or
Policy, as amended, from having such unvested Incentive Units vest
on such termination date, then the Company will pay the Executive
on the date of such termination a cash payment equal to the value
of the Incentive Units that would otherwise have vested on such
date, which value shall be determined by multiplying the number of
Incentive Units that would have vested by the closing price of the
publicly traded shares of TPG on the day immediately preceding such
termination date.
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(iv) Incentive, Savings and Retirement
Plans . During the Employment Period, the Executive shall be
eligible to participate in all other incentive plans, policies and
programs, and all savings and retirement plans, policies and
programs, in each case that are applicable generally to senior
executives of the Company.
(v) Welfare Benefit Plans . During the Employment Period,
the Executive and the Executive’s eligible family members
shall be eligible for participation in the welfare benefit plans,
practices, policies and programs (including, if applicable,
medical, dental, disability, employee life, group life and
accidental death insurance plans and programs) maintained by the
Company for its senior executives.
(vi) Expenses . During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable business expenses incurred by the Executive in
accordance with the policies, practices and procedures of the
Company provided to senior executives of the Company.
(vii) Fringe Benefits . During the Employment Period, the
Executive shall be entitled to such fringe benefits and perquisites
as are provided by the Company to its senior executives from time
to time, in accordance with the policies, practices and procedures
of the Company.
(viii) Vacation . During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the
plans, policies, programs and practices of the Company applicable
to its senior executives.
(ix) Indemnification Agreement . The parties acknowledge
that in connection with the execution of this Agreement, they are
entering into an Indemnification Agreement (" Indemnification
Agreement ") which shall be effective as of the Effective
Date.
3. Termination of Employment . Subject to the provisions
of this Section 3 , the Executive’s employment
shall be deemed terminated for purposes of this Agreement when the
Executive incurs a "separation from service" (as such phrase is
defined in Section 409A) with the Company or any of its
affiliates because of death, disability or termination of
employment for any other reason, including any reason specified in
Section 3(a), (b), (c) or (d) below (such
date, the " Date of Termination "); provided, however, that
except with respect to the Company’s obligation to pay any
Accrued Obligations and/or Other Benefits (each, as defined below)
in accordance with California law, no termination shall be deemed
to occur for purposes of the Agreement while the Executive
continues to perform services for the Company or any of its
affiliates in a capacity as an employee or as an independent
contractor at a level that is at least equal to 20% of the average
level of bona fide services performed (whether as an employee or
otherwise) by the Executive during the immediately preceding
36-month period (or, if employed less than 36 months, such lesser
period).
(a) Death . The Executive’s employment will
terminate automatically upon the Executive’s death.
(b) Disability . To the extent consistent with federal
and state law, Executive’s employment may be terminated if
Executive suffers a Disability. For purposes of this Agreement,
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" Disability " means a physical or mental
illness which renders Executive unable to perform his essential
duties for 90 consecutive days or a total of 180 days in any 12
month period even with reasonable accommodations, or unable to
perform those duties in a manner that would not endanger his health
or safety or the health or safety of others even with reasonable
accommodations. The existence of a Disability shall be determined
through the reasonable opinion of an independent physician selected
by the Company or its insurers and reasonably acceptable to the
Executive or the Executive’s legal representative. The
Company is not, however, required to make unreasonable
accommodations for Executive or accommodations that would create an
undue hardship on the Company.
(c) Cause . The Company may terminate the
Executive’s employment during the Employment Period for Cause
or without Cause. For purposes of this Agreement, "Cause" shall
mean the occurrence of any one or more of the following events:
(i) The Executive’s willful failure to perform or gross
negligence in performing his duties owed to the Company (other than
such failure resulting from Executive’s incapacity due to
physical or mental illness or any such actual or anticipated
failure after his issuance of a Notice of Termination for Good
Reason), which continues after ten (10) days following a
written notice is delivered to the Executive by the Board, which
notice specifies such failure or gross negligence;
(ii) The Executive’s commission of an act of fraud or
dishonesty in the performance of his duties;
(iii) The Executive’s conviction of, or entry by the
Executive of a guilty or no contest plea to, any felony or any
felony or misdemeanor involving moral turpitude;
(iv) Any breach by the Executive of his fiduciary duty or duty
of loyalty to the Company; or
(v) The Executive’s material breach of any of the
provisions of this Agreement or of the Non-Competition Agreement,
which is not cured within ten (10) days following written
notice thereof from the Company.
In determining whether Cause exists to terminate the Executive,
the Board shall consider whether any act or failure to act by the
Executive was taken based either upon the authority given pursuant
to a duly adopted resolution of the Board or upon the written
advice of counsel to the Company, in each case provided after full
and correct disclosure to the Board or such counsel, as applicable,
of all material facts pertaining to the subject matter upon which
such authority or advice was given.
(d) Good Reason . The Executive’s employment may be
terminated by the Executive for Good Reason or by the Executive
without Good Reason. For purposes of this Agreement, " Good
Reason " shall mean the occurrence of any one or more of the
following events without the Executive’s prior written
consent, provided that the Executive terminates his employment
within one-hundred and eighty (180) days following the lapse
of the Company’s cure period described below as to one or
more of such events and unless the Company fully corrects the
circumstances constituting Good Reason (provided such circumstances
are capable of correction) prior to the Date of Termination:
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(i) The Company’s reduction of the
Executive’s annual base salary below the initial Base Salary
or reduction in the Executive’s target annual
bonus.
(ii) The assignment to Executive of duties materially
inconsistent with the Executive’s position, authority, duties
or responsibilities as contemplated by Section 2(a) or
other action by the Company which materially diminishes such
position, authority, duties or responsibilities, excluding for this
purpose isolated, insubstantial or inadvertent action not taken in
bad faith and which is remedied by the Company promptly after
receipt of notice thereof from Executive.
(iii) Relocation of the Company’s offices at which
Executive is principally employed to a location outside Los Angeles
County, or requiring Executive to be based at a location more than
50 miles from the Company’s principal office in Los
Angeles.
(iv) The failure of a successor to the Company to either assume
and agree to perform the obligations of Company hereunder or
replace this Agreement with an employment contract of substantially
similar terms and no less favorable than those terms provided to an
acquiring company’s executive officers.
(v) The Company’s material breach of its obligations under
the Agreement.
Notwithstanding any other provision of this
Section 3(d) , the occurrence of any event described in
Section 3(d)(i) or (v) shall constitute Good
Reason only if (x) the Executive provides written notice to
the Company of the occurrence of such event within ninety
(90) days of the initial occurrence of such event and
(y) the Company fails to remedy the event described in the
Executive’s written notice within thirty (30) days of
the Company’s receipt of such notice.
(e) Notice of Termination . Any termination by the
Company for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other parties hereto
given in accordance with Section 1 0 (c) of this
Agreement. For purposes of this Agreement, a " Notice of
Termination " means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision
so indicated and (iii) if the Date of Termination is other
than the date of receipt of such notice, specifies the termination
date (which date shall be not more than thirty days after the
giving of such notice). The failure by the Executive or the Company
to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively,
hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the
Executive’s or the Company’s rights hereunder.
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4. Obligations of the Company Upon
Termination .
(a) Without Cause or For Good Reason . If, during the
Employment Period, the Company shall terminate the
Executive’s employment without Cause or the Executive shall
terminate his employment for Good Reason, then the Executive will
receive those payments and benefits set forth below. The timing of
the payments hereunder is subject to Section 10(e)
hereof:
(i) The Executive shall be paid, in two lump sum payments
(A) the Executive’s earned but unpaid Base Salary and
accrued but unpaid vacation pay through the Date of Termination,
and any Annual Bonus required to be paid to the Executive pursuant
to Section 2(b)(ii) above for any fiscal year of the
Company that ends on or before the Date of Termination to the
extent not previously paid (the " Accrued Obligations "),
and (B) an amount (the " Severance Amount ") equal to
two (2) (the " Severance Multiple ") times the sum of
(x) the Base Salary in effect on the Date of Termination plus
(y) the average Annual Bonus received by the Executive for the
three complete fiscal years (or such lesser number of years as the
Executive has been employed by the Company) of the Company
immediately prior to the Date of Termination; provided ,
however , if less than one (1) year remains in the
Employment Period after the Date of Termination, the Severance
Multiple shall equal one (1); provided, further, that the Accrued
Obligations shall be paid when due under California law and the
Severance Amount shall be paid no later than 60 days after the Date
of Termination;
(ii) At the time when annual bonuses are paid to the
Company’s other senior executives for the fiscal year of the
Company in which the Date of Termination occurs, the Executive
shall be paid an Annual Bonus in an amount equal to the product of
(x) the amount of the Annual Bonus to which the Executive
would have been entitled if the Executive’s employment had
not been terminated, and (y) a fraction, the numerator of
which is the number of days in such fiscal year through the Date of
Termination and the denominator of which is the total number of
days in such fiscal year (a " Pro-Rated Annual Bonus ");
(iii) If Executive (or any of Executive’s qualified
beneficiaries) makes a timely election to continue to participate
in the Company’s group health plans (medical, dental, and
vision) pursuant to 29 U.S.C. §§ 1161-1169 ("COBRA"), the
Company shall pay the premium for such coverage (which premium
payment shall be taxable to Executive if the Company’s group
health plans are self-insured) starting on the Date of Termination
and ending on the earliest of (A) the date that is one
(1) year after the Date of Termination, or (B) the date
on which Executive no longer is eligible to continue to participate
under COBRA. For purposes of the foregoing, the usual limitations
of COBRA shall apply and the Company’s payment of the COBRA
premium(s) shall not extend the continuation period, which begins
on the Date of Termination;
(iv) Any unvested Incentive Units shall become immediately
vested in full; and
(v) To the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any vested benefits
and other amounts or benefits required to be paid or provided or
which the Executive is eligible to receive as of the Date of
Termination under any plan, contract or agreement of the Company
and its affiliates (such other amounts and benefits shall be
hereinafter referred to as the " Other Benefits ") to which
the Executive is a party.
Notwithstanding anything to the contrary in this
Section 4 , it shall be a condition to the
Executive’s right to receive the amounts provided for in
Sections 4(a)(i)(B) and 4(a)(ii) and (iii)
above that the Executive execute, deliver to the Company and
not revoke a release of claims in substantially the form attached
hereto as Exhibit A .
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(b
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