Exhibit 10.64
EMPLOYMENT
AGREEMENT
(As Amended and Restated as of
the Date Below Executed)
This amended and restated EMPLOYMENT
AGREEMENT (this “Agreement”), effective as of the date
it is executed below (the Effective Date”), is between
Pennsylvania Real Estate Investment Trust, a Pennsylvania business
trust (“Company”), and Douglas S. Grayson
(“Executive”).
BACKGROUND
Executive is currently the Executive
Vice President-Development of Company. Company desires to continue
to employ Executive, and Executive desires to continue to be so
employed, on the terms and conditions contained in this amended and
restated Agreement. Executive has been and will continue to be
substantially involved with Company’s operations and
management and has and will continue to have trade secrets and
other confidential information relating to Company and its
customers; accordingly, the noncompetition agreement and other
restrictive covenants contained in Section 5 hereof constitute
essential elements hereof.
Company and Executive desire to
amend and restate Executive’s current Agreement so that,
among other things, its terms and conditions comply with (or are
exempt from) the deferred compensation rules set forth in section
409A of the Internal Revenue Code of 1986, as amended (the
“IRC”), and the final regulations issued
thereunder.
NOW, THEREFORE,
in consideration of the premises and
the mutual agreements contained herein and intending to be legally
bound hereby, the parties hereto agree as follows:
1. CAPACITY AND
DUTIES
1.1 Employment; Acceptance of
Employment . Company
hereby employs Executive and Executive hereby agrees to continue
employment by Company for the period and upon the terms and
conditions hereinafter set forth.
1.2 Capacity and
Duties
(a) Executive shall continue to
serve as Executive Vice President-Development of Company and,
subject to the supervision and control of the Chief Executive
Officer of the Company, shall have the duties and authority
generally consistent with such office. Executive shall perform such
other duties and shall have such authority as may from time to time
be specified by the Chief Executive Officer of the Company and as
shall be consistent with the status and authority of his current
office. Executive shall also serve as Executive Vice
President-Development of PREIT Associates, L.P.
(“PALP”), of which Company is the general
partner.
(b) Executive understands that
substantially all of the assets of Company consists of its general
partner interest in PALP, and that the business operations of PALP
and its direct and indirect subsidiaries constitute all of the
business operations conducted by Company and its
“Affiliates” (as defined in subsection (c) below).
Accordingly, Company and Executive understand that most of
Executive’s time and energy will be expended on behalf of
PALP and its direct and indirect subsidiaries in Executive’s
capacity as an officer of PALP rather than as an officer of
Company.
(c) Except as permitted by
subsection (d) below, Executive (i) shall devote his full
working time, energy, skill and best efforts to the performance of
his duties hereunder, in a manner that will comply with
Company’s published rules and policies in effect from time to
time, and (ii) shall not be employed by or participate or
engage in or in any manner be a part of the management or operation
of any business enterprise other than Company and its Affiliates
without the prior written consent of Company, which consent may be
granted or withheld in the sole discretion of Company.
“Affiliate” as used in this Agreement means any person
or entity controlling, controlled by, or under common control with,
Company. “Control,” as used in the definition of
Affiliate, means the power to direct the management and policies of
a person or entity, directly or indirectly, whether through the
ownership of voting securities, by contract, or otherwise; the
terms “controlling” and “controlled” shall
have correlative meanings. Further, any person or entity that owns
beneficially, either directly or through one or more
intermediaries, more than 20 percent of the ownership interests in
a specified entity shall be presumed to control such entity for
purposes of the definition of Affiliate.
(d) Notwithstanding the provisions
of subsection (c) above, Executive may (i) continue his
investments in the properties listed on Schedule 1.2(c) hereto and,
subject to the provisions of Section 5.2 hereof, subsequent
properties, provided that Executive’s activities with respect
to such subsequent properties comply with any procedures adopted by
the Board of Trustees of Company (the “Board”)
governing Executive’s non-Company related real estate
activities, and (ii) subject to Section 5.2 hereof, serve
on the board of directors or similar body of other organizations,
including philanthropic organizations and organizations in which
Executive has made an investment, provided that Executive’s
activities with respect to all of the foregoing do not,
individually or in the aggregate, interfere with, detract from, or
affect the performance of his duties for Company under this
Agreement.
2. TERM OF
EMPLOYMENT
2.1 Term .
The initial term of
Executive’s employment hereunder shall begin on the Effective
Date and last until December 31, 2009 (the “Expiration
Date”), unless sooner terminated in accordance with the other
provisions hereof. Except as hereinafter provided, on the
Expiration Date and on each subsequent anniversary thereof, the
Term (as hereinafter defined) shall be automatically extended for
one year unless either party shall have given to the other party
notice of non-renewal of this Agreement at least 120 calendar days
prior to the expiration of the Term. The initial term of employment
hereunder and each term as extended is a “Term.” If a
non-renewal notice is given as provided above, Executive’s
employment under this Agreement shall terminate (within
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the meaning of Section 4.8 hereof) on the
last calendar day of the Term. If the non-renewal notice is given
by Company, such termination of employment shall be a termination
by Company without Cause, within the meaning of Section 4.4
hereof.
3. COMPENSATION
3.1 Base Compensation . As
compensation for Executive’s services, Company shall pay to
Executive a salary at the initial annual rate of $307,716, payable
in periodic installments in accordance with Company’s regular
payroll practices in effect from time to time. Effective as of
January 1, 2009 and as of any later date, Executive’s
salary may be increased pursuant to action taken or authorized by
the Executive Compensation and Human Resources Committee (the
“Committee”) of the Board. Executive’s annual
salary cannot be decreased without the written consent of
Executive. Executive’s annual salary, as determined in
accordance with this Section, is hereinafter referred to as the
“Base Salary.” No later than April 10 during any
fiscal year during the Term, Company shall provide Executive with
written notice of his Base Salary, bonus plan eligibility and
equity incentive awards, if any, for the current fiscal year. Such
notice shall provide sufficient information regarding
Executive’s bonus plan eligibility so that Executive’s
maximum potential bonus is readily ascertainable. Failure to
provide such notice on a timely basis (such failure, a
“Compensation Notice Delinquency”) shall not be deemed
a breach by Company; however, Executive shall then be permitted to
exercise his termination right under Section 4.7
hereof.
3.2 Bonuses .
Executive is eligible for and shall
participate in Company’s bonus plans listed on Schedule 3.2
hereto and shall participate in the other bonus plans of Company in
place from time to time for the executive officers of Company to
the extent determined by the Committee.
3.3 Employee Benefits . In addition to
the compensation provided for in Sections 3.1 and 3.2 hereof,
Executive shall be entitled, during the Term, to participate in
such of Company’s employee benefit plans and benefit
programs, including medical benefit programs, as may from time to
time be provided by Company for its executive officers. Company
shall use its commercially reasonable efforts to provide Executive
with health insurance through a preferred provider, traditional
indemnity or equivalent plan.
3.4 Vacation .
During the Term, Executive shall be
entitled to a paid vacation of 25 business days during each
calendar year or to such additional number of days as is provided
in the Employee Handbook published from time to time by Company
(the “Company Employee Handbook”). Executive’s
right to carry forward unused vacation days for a calendar year to
any future calendar year shall be governed by Company’s
Employee Handbook as in effect from time to time.
3.5 Expense Reimbursement . Company
shall reimburse Executive for all reasonable expenses incurred by
him in connection with the performance of his duties hereunder in
accordance with its regular reimbursement policies as in effect
from time to time and upon receipt of itemized vouchers and such
other supporting information therefor as Company may reasonably
require.
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3.6 Equity Plans
. Executive shall be
entitled, during his employment hereunder, to participate in such
of Company’s equity incentive plans and programs
(“Equity Plans”) as may from time to time be provided
by Company for its executive officers at such level as shall be
determined by the Committee or the Board, as
appropriate.
3.7 Nonqualified Retirement Plan .
Company has previously entered into a nonqualified supplemental
executive retirement plan with Executive whereby Company has
credited a bookkeeping account maintained by it for Executive with
a deemed contribution of $25,000 per fiscal year. Company
acknowledges that Executive is entitled to continue receiving
benefits under and in accordance with the terms of such plan. Each
additional deemed contribution shall be credited during the Term as
of the first calendar day of each fiscal year of Company beginning
with its 2004 fiscal year, and shall earn interest at the rate of
10 percent, compounded annually. Executive shall at all times be
fully vested in such account, and such account shall be paid to
Executive in the manner and at the time(s) specified in such
plan.
4. TERMINATION OF
EMPLOYMENT
4.1 Death of Executive . If Executive
dies during the Term, Company shall thereafter be obligated to
continue to pay the Base Salary to Executive’s estate for the
remainder of the Term or, if the remainder of the Term is less than
one year, for a period of 12 months, periodically in accordance
with the Company’s regular payroll practices and, within 30
calendar days of the death of Executive, shall pay any other
amounts (including salary, bonuses, vacation pay, expense
reimbursement, etc.) that have been fully earned by, but not yet
paid to, Executive under this Agreement as of the date of
Executive’s death. If, for the year in which Executive dies,
Company achieves the performance goals established in accordance
with any cash bonus plan in which Executive participates, Company
shall pay Executive’s estate, within the period in the
following year that begins January 1 and ends March 15,
an amount equal to the bonus that Executive would have received had
he been employed by Company for the full year, multiplied by a
fraction, the numerator of which is the number of calendar days
Executive was employed in such year and the denominator of which is
365. Upon Executive’s death, (i) each outstanding option
granted to Executive before, on or after the date hereof shall
become vested and shall be immediately exercisable in accordance
with the terms thereof, (ii) each outstanding nonqualified
stock option (“NQSO”) granted to Executive before, on
or after the date hereof shall be exercisable until the earlier of
(A) the later of 180 calendar days after the death of
Executive or the period following the death of Executive that is
set forth in the relevant stock option agreement, or (B) the
scheduled expiration date of such option, (iii) the exercise
period of each incentive stock option (“ISO”) granted
to Executive before, on or after the date hereof shall be governed
by the terms of the relevant ISO agreement, (iv) anything to
the contrary in any other existing agreement or plan
notwithstanding, all outstanding restricted shares granted to
Executive that (A) are subject to vesting solely based on the
passage of time and
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Executive’s continued employment shall
become immediately vested, and (B) are subject to vesting
based upon the performance of Company (however measured) shall
remain restricted shares under the terms of the applicable
restricted share award agreement (the “Award”) and
shall vest or be forfeited in whole or in part under the terms of
such Award as if Executive’s employment had not terminated,
and (v) Executive’s spouse and dependents (if any) shall
be entitled for the balance of the Term or, if the balance of the
Term is less than one year, for a period of 12 months, to continue
to receive medical benefits insurance coverage at Company’s
expense if and to the extent Company was paying for such benefits
for Executive’s spouse and dependents at the time of
Executive’s death. Executive’s spouse and dependents
shall be entitled to such rights as they may have to continue
coverage at their sole expense as are then accorded under Part 6 of
Subtitle B of Title I of the Employee Retirement Income Security
Act of 1974, as amended (“COBRA”), for the COBRA
coverage period following the expiration of the period, if any,
during which Company paid such expense.
4.2 Disability of
Executive . If
Executive is or has been materially unable for any reason to
perform his duties hereunder for 120 calendar days during any
period of 150 consecutive calendar days, Company shall have the
right to terminate Executive’s employment (within the meaning
of Section 4.8 hereof) upon 30 calendar days’ prior
written notice to Executive at any time during the continuation of
such inability, in which event Company shall thereafter be
obligated to pay to Executive, within the 30-calendar-day period
following his termination of employment, a lump sum equal to
(i) the greater of the amount of his Base Salary computed
through the remainder of the Term or his Base Salary, in either
case minus (ii) any disability payments reasonably projected
to be received by Executive from disability insurance policies paid
for by Company during the longer of the remainder of the Term or 12
months following his termination of employment. Both the portion of
the calculation in (i) of the preceding sentence and the
portion of the calculation in (ii) of the preceding sentence
shall be discounted from the dates that the Base Salary or
disability payments (as applicable) would have been payable during
the relevant period following termination in accordance with
Company’s regular payroll practices or in accordance with
such disability insurance policies (as applicable) to present value
on the date of payment. The discount rate shall be equal to 200
basis points plus the London Interbank Offered Rate for a one-month
period set forth in The Wall Street Journal (the “WSJ”)
on the date of termination of employment or, if the WSJ is not
published on such date, the first day following such termination on
which the WSJ is published. Company shall also, within 30 calendar
days of such termination, pay any other amounts (including salary,
bonuses, vacation pay, expense reimbursement, etc.) that have been
fully earned by, but not yet paid to, Executive under this
Agreement as of the date of such termination. If, for the year in
which Executive’s employment is terminated pursuant to this
Section, Company achieves the performance goals established in
accordance with any cash bonus plan in which Executive
participates, Company shall pay Executive, within the period in the
following year that begins January 1 and ends March 15,
an amount equal to the bonus that Executive would have received had
he been employed by Company for the full year, multiplied by a
fraction, the numerator of which is the number of calendar days
Executive was employed in the year in which his employment is
terminated and the denominator of which is 365. Upon termination of
Executive’s employment pursuant to this Section,
(i) each outstanding option granted to
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Executive before, on or after the date hereof
shall become vested and shall be immediately exercisable in
accordance with the terms thereof, (ii) each outstanding NQSO
granted to Executive before, on or after the date hereof shall be
exercisable until the earlier of (A) the later of 180 calendar
days after the termination of Executive’s employment pursuant
to this Section or the period following the termination of
Executive’s employment for the reason set forth in this
Section that is set forth in the relevant stock option agreement,
or (B) the scheduled expiration date of such option,
(iii) the exercise period of each ISO granted to Executive
before, on or after the date hereof shall be governed by the terms
of the relevant ISO agreement, (iv) anything to the contrary
in any other existing agreement or plan notwithstanding, all
outstanding restricted shares granted to Executive that
(A) are subject to vesting solely based on the passage of time
and Executive’s continued employment shall become immediately
vested, and (B) are subject to vesting based upon the
performance of Company (however measured) shall remain restricted
shares under the terms of the applicable Award and shall vest or be
forfeited in whole or in part under the terms of such Award as if
Executive’s employment had not terminated, and
(v) Executive shall be entitled for the balance of the
scheduled Term or, if the balance of the Term is less than one
year, for a period of 12 months, to continue to receive at the
Company’s expense medical benefits coverage for Executive and
his spouse and dependents (if any) if and to the extent Company was
paying for such benefits to Executive and Executive’s spouse
and dependents at the time of such termination. Executive and his
spouse and dependents shall be entitled to such rights as they may
have to continue coverage at his or their sole expense as are then
accorded under COBRA for the COBRA coverage period following the
expiration of the period, if any, during which Company paid such
expense.
4.3 Termination for Cause .
Executive’s employment hereunder shall terminate (within the
meaning of Section 4.8 hereof) immediately upon notice that
Company is terminating Executive for Cause, in which event Company
shall not thereafter be obligated to make any further payments
hereunder other than amounts (including salary, bonus, vacation
pay, expense reimbursement, etc.) that have been fully earned by,
but not yet paid to, Executive under this Agreement as of the date
of such termination and which shall be paid within 30 calendar days
of such termination. Upon termination of Executive’s
employment pursuant to this Section, (i) each outstanding NQSO
granted to Executive before, on or after the date hereof that is
vested and currently exercisable as of the date Executive’s
employment is terminated pursuant to this Section shall remain
exercisable until the earlier of (A) the later of 30 calendar
days after the termination of Executive’s employment pursuant
to this Section or the period following the termination of
Executive’s employment for the reason set forth in this
Section that is set forth in the relevant stock option agreement,
or (B) the scheduled expiration date of such option,
(ii) the exercise period of each ISO granted to Executive
before, on or after the date hereof shall be governed by the terms
of the relevant ISO agreement, (iii) all vested restricted
shares granted to Executive shall be delivered to Executive free
and clear of any restrictions, other than pursuant to applicable
securities laws, and (iv) Executive and his spouse and
dependents shall have such rights (if any) to continue medical
benefits coverage at his or their sole expense following
termination for Cause as are then accorded under COBRA for the
COBRA coverage period. “Cause” shall mean the
following:
(a) (i) fraud in connection with
Executive’s employment, (ii) theft, misappropriation or
embezzlement of funds of Company or its Affiliates, or
(iii) an act resulting in termination pursuant to the
provisions of the “Code of Conduct” (as defined in
Section 6.15 hereof);
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(b) indictment of Executive for a
crime involving moral turpitude;
(c) breach of Executive’s
obligations under Section 5.1 hereof or Section 5.2
hereof;
(d) failure of Executive to perform
his duties to Company (other than on account of illness, accident,
vacation or leave of absence) after written demand for substantial
performance which specifically identifies the manner in which
Executive has failed to perform that persists for more than 30
calendar days after such notice to him; or
(e) Executive’s repeated abuse
of alcohol or drugs.
4.4 Termination Without Cause or for Good
Reason
(a) If at any time during the Term
(i) Executive’s employment is terminated (within the
meaning of Section 4.8 hereof) by Company for any reason other
than Cause or the death or disability of Executive or
(ii) Executive’s employment is terminated by Executive
for “Good Reason” (as hereinafter defined):
(1) Company shall, on or before
Executive’s last day of full-time employment hereunder, pay
Executive all amounts (including salary, bonuses, vacation pay,
expense reimbursement, etc.) that have been fully earned by, but
not yet paid to, Executive under this Agreement as of the date of
such termination. In addition, subject to subsection
(c) below, Company shall pay Executive a lump-sum cash payment
equal to the greater of (x) (A) Executive’s then
current Base Salary through the end of the Term plus (B) an
amount equal to the average of the percentages of Base Salary that
were paid to Executive as cash bonuses in each of the last three
full calendar years multiplied by Executive’s then current
Base Salary (the “Average Bonus”) and further
multiplied by a fraction, the denominator of which is 365 and the
numerator of which is the number of days in the calendar year that
expired prior to termination of employment and (y) two times
(A) Executive’s then current annual Base Salary plus
(B) an amount equal to the Average Bonus. The portion of the
lump-sum cash payment contemplated by the preceding
sentenc
