Exhibit 10.40
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 Randall L. Scott (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 five 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 fifth 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 an Executive Vice President of TPG and
the Operating Partnership and shall perform such employment duties
as are usual and customary for such positions. 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 .
(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
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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 150% of Base Salary, with 100% of
Base Salary as the target bonus and the additional 50% 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 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.
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.
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(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 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 Philadelphia County, or requiring Executive
to be based a location more than fifty (50) miles from the
Company’s principal office in Philadelphia.
(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
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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.
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 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; and
(iv) Any unvested Incentive Units
(as defined in the Thomas Properties Group 2004 Equity Incentive
Plan, as amended), or restricted stock in the Company granted to
Executive shall become immediately vested in full; and
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(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.
(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
are paid to the Company’s other senior executives for the
fiscal year of the Company in which the Date of Termination
occurs;
(iv) If 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 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
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