Exhibit 10.38
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (this “ Agreement ”), effective as of
the 18th day of December, 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 ”) and James A. Thomas (the
“ Executive ”).
WHEREAS, effective as of the date of
the closing of the initial public offering of shares of TPG’s
common stock , TPG and the Operating Partnership
(collectively, the “ Company ”) executed an
Employment Agreement (“ Employment Agreement ”)
with the Executive to embody the terms of the Executive’s
employment with the Company;
WHEREAS, the Company and the
Executive desire to amend the Employment Agreement to extend the
Employment Term (as defined below) for an additional three years
and to adjust the Executive’s compensation, subject to the
terms and conditions of this Agreement;
WHEREAS, the Company and the
Executive desire to amend the Employment Agreement to comply with
Section 409A of the Internal Revenue Code and the guidance and
regulations promulgated thereunder (“ Section 409A
”);
WHEREAS, the Executive desires to
accept continued employment with the Company, subject to 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 (3
rd
) 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 Chief Executive Officer of TPG and the
Operating Partnership and shall perform such employment duties as
are usual and customary for such positions and such other duties as
the Board of Directors of TPG (the “ Board ”)
shall from time to time reasonably assign to Executive. The
Executive shall report directly to the Board. In addition, during
the Employment Period, subject to the rules and requirements of the
charter of the nominating and corporate governance committee of the
Board, the Company shall use its best efforts to cause the
Executive to be nominated as a member of the Board and appointed by
the Board as Chairman of the Board; provided, however, that the
Company shall not be so obligated if cause exists for removal of
the Executive from the Board or
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for the failure to nominate or elect the
Executive to the Board. Provided Executive is so nominated, the
Executive hereby agrees to serve as a member and as Chairman of the
Board. 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.
(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 consistent with the Company’s conflicts of
interest policies and corporate governance guidelines in effect
from time to time, (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 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
.
(i) Base Salary
. During the Employment Period, the
Executive shall receive a base salary (the “ Base
Salary ”) of $120,000 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.
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(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 the target for the first annual bonus
hereunder shall be 200% of Base Salary, with 100% of Base Salary as
the target bonus and the additional 100% 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.
(iii) 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.
(iv) 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.
(v) 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.
(vi) 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.
(vii) 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.
(viii) Indemnification
Agreement . The parties
acknowledge that they have previously entered into an existing
Indemnification Agreement (“ Indemnification Agreement
”).
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.
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(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, “ Disability ” means a physical or
mental illness which renders Executive unable to perform his
essential duties for ninety (90) consecutive days or a total
of one hundred eighty (180) days in any twelve (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
Executives’ 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
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,
or of the Non-Competition Agreement.
The termination of employment of the
Executive shall not be deemed to be for Cause unless and until
there shall have been delivered to the Executive a copy of the
resolution duly adopted by the affirmative vote of a majority of
the Board, including at least two-thirds of the independent
directors, at a meeting of the Board called and held for such
purpose (after reasonable notice is provided to the Executive and
the Executive is given an opportunity to be heard before the
Board), finding that, in the good faith opinion of the Board,
sufficient Cause exists to terminate the Executive pursuant to this
Section 3(c) ; provided, that if the Executive is a
member of the Board, the Executive shall not participate in the
deliberations regarding such resolution, vote on such resolution,
nor shall Executive be counted in determining a majority of the
Board. 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
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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:
(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 failure of the Company to
use its best efforts to cause Executive to be nominated to serve as
a member of the Board, or if Executive is elected to the Board, the
failure of the Board to appoint Executive as Chairman of the Board
(except as provided in Section 2(a)), or 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) 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.
(iv) The Company’s failure to
cure a material breach of its obligations under this Agreement
within fifteen (15) business days after written notice is
delivered to the Board by Executive which specifically identifies
the manner in which the Executive believes that the Company has
breached its obligations under this Agreement.
(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 10(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:
(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 three
(3) (the “ Severance Multiple ”) times
$1,250,000; 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; and
(iv) Any unvested restricted stock
awards or unvested grants of Partnership Units in the Operating
Partnership to Executive 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.
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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 .
(b) For Cause or Without Good
Reason . If the
Executive’s employment shall be terminated by the Company for
Cause or by the Executive without Good Reason during the Employment
Period, the Company shall have no further obligations to the
Executive under this Agreement other than pursuant to Sections
6 and 7 hereof, and the obligation to pay to the
Executive the Accrued Obligations when due under California law and
to provide the Other Benefits.
(c) Death or
Disability . If the
Executive’s employment is terminated by reason of the
Executive’s death or Disability during the Employment
Period:
(i) The Accrued Obligations shall be
paid to the Executive’s estate or beneficiaries or to the
Executive, as applicable, in a lump-sum cash payment when due under
California law (not to exceed sixty (60) days after the Date
of Termination);
(ii) 100% of the Executive’s
then current annual Base Salary, as in effect on the Date of
Termination, shall be paid to the Executive’s estate or
beneficiaries or the Executive, as applicable, in a lump-sum cash
payment within 60 days following the Date of
Termination;
(iii) The Pro-Rated Annual Bonus
shall be paid to the Executive’s estate or beneficiaries or
to the Executive, as applicable, at the time when annual bonuses
a
