Exhibit 10.3
AMENDED AND RESTATED EMPLOYMENT
AND NONCOMPETITION AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT
AND NONCOMPETITION AGREEMENT (“Agreement”) is made as
of the 16th day of April, 2007, between Gregory F. Hughes
(“Executive”) and SL Green Realty Corp., a Maryland
corporation with its principal place of business at 420 Lexington
Avenue, New York, New York 10170 (the “Employer”), and
hereby amends and restates, to be effective as of January 1, 2007
(the “Effective Date”), that certain Employment and
Noncompetition Agreement, dated as of February 3, 2004, between
Executive and the Employer (the “Prior Employment
Agreement”).
1.
Term . The term of this Agreement shall commence on
the Effective Date, shall continue for a period of three (3) years
from the Effective Date and, unless earlier terminated as provided
in Section 6 below, shall terminate on the third (3
rd
) anniversary of
the Effective Date (the “Original Term”). The
Original Term shall automatically be extended for successive six
(6) month periods (each a “Renewal Term”), unless
either party gives the other party at least three (3) months
written notice of non-renewal prior to the expiration of
the then current term. The period of Executive’s
employment hereunder consisting of the Original Term and all
Renewal Terms, if any, is herein referred to as the
“Employment Period.”
2.
Employment and Duties .
(a)
Duties . During the Employment Period, Executive shall
be employed in the business of the Employer and its
affiliates. Executive shall serve the Employer as a senior
corporate executive and shall have the title of Chief Operating
Officer and Chief Financial Officer of the Employer.
Executive will report to the Chief Executive Officer of the
Employer. Executive’s duties and authority shall be
those as would normally attach to Executive’s position as
Chief Operating Officer and Chief Financial Officer, including such
duties and responsibilities as are customary among persons employed
in similar capacities for similar companies, and as set forth in
the By-laws of the Employer and as otherwise established from time
to time by the Board of Directors of the Employer (the
“Board”) and the Chief Executive Officer of the
Employer, but in all events such duties shall be commensurate with
his position as Chief Operating Officer and Chief Financial Officer
of the Employer.
(b)
Best Efforts . Executive agrees to his employment as
described in this Section 2 and agrees to devote substantially all
of his business time and efforts to the performance of his duties
under this Agreement, except as otherwise approved by the Board;
provided, however, that nothing herein shall be interpreted to
preclude Executive, so long as there is no material interference
with his duties hereunder, from (i) participating as an officer or
director of, or advisor to, any charitable or other tax exempt
organization or otherwise engaging in charitable, fraternal or
trade group activities; (ii) investing and managing his assets as
an investor in other entities or business ventures; provided that
he performs no management or similar role (or, in the case of
investments other than those in entities or business ventures
engaged in the Business (as defined in Section 8), he performs a
management role comparable to the role that a significant limited
partner would have, but performs no day-to-day management or
similar role) with respect to such entities or ventures and such
investment does not violate Section 8 hereof; and provided,
further, that, in any case in which another party involved in the
investment has a material business relationship with the Employer,
Executive shall give prior written notice thereof to the Board; or
(iii) serving as a member of the Board of Directors of a for-profit
corporation with the approval of the Chief Executive Officer of the
Employer.
(c)
Travel . In performing his duties hereunder, Executive
shall be available for all reasonable travel as the needs of the
Employer’s business may require. Executive shall be
based in, or within 50 miles of, Manhattan.
3.
Compensation and Benefits . In consideration of
Executive’s services hereunder, the Employer shall compensate
Executive as provided in this Agreement.
(a)
Base Salary . The Employer shall pay Executive an
aggregate minimum annual salary at the rate of $500,000 per annum
during the Employment Period (“Base Salary”).
Base Salary shall be payable bi-weekly in accordance with the
Employer’s normal business practices and shall be reviewed by
the Board or Compensation Committee of the Board at least
annually.
(b)
Incentive Compensation/Bonuses . In addition to Base
Salary, during the Employment Period, Executive shall be eligible
for and shall receive, upon approval of the Board or Compensation
Committee of the Board, such discretionary annual bonuses as the
Employer, in its sole discretion, may deem appropriate to reward
Executive for job performance. In addition, Executive shall
be eligible to participate in any other bonus or incentive
compensation plans in effect with respect to senior executive
officers of the Employer, as the Board or Compensation Committee of
the Board, in its sole discretion, may deem appropriate to reward
Executive for job performance. It is expressly understood
that, with respect to the awards made to Executive pursuant to the
SL Green Realty Corp. 2003 Long-Term Outperformance Compensation
Program, as amended December 2003 (the “2003 Outperformance
Plan”), the SL Green Realty Corp. 2005 Long-Term
Outperformance Plan Award Agreement, dated as of March 15, 2006
(the “2005 Outperformance Plan”) and the SL Green
Realty Corp. 2006 Long-Term Outperformance Plan Award Agreement,
dated as of October 23, 2006 (the “2006 Outperformance
Plan” and together with the 2003 Outperformance Plan and 2005
Outperformance Plan, the “Outperformance Plans”), the
provisions of the Outperformance Plans, as amended from time to
time, and not the provisions of this Agreement shall govern in
accordance with their terms, except: (i) to the extent the
provisions of this Agreement are specifically referred to or
incorporated into the Outperformance Plans and (ii) as specifically
provided otherwise in this Agreement.
(c)
Equity Awards . As determined by the Board or
Compensation Committee of the Board, in its sole discretion,
Executive shall be eligible to participate in the Employer’s
then current equity incentive plan (the “Plan”), which
authorizes the grant of stock options and stock awards of the
Employer’s common stock (“Common Stock”), LTIP
Units (“LTIP Units”) in SL Green Operating Partnership,
L.P. (the “OP”) and other equity-based awards.
Executive will be granted 37,000 shares of restricted Common Stock
or, at the Employer’s option, Class A Units (“OP
Units”) in the OP, on June 1, 2007, in accordance with and
subject to definitive documentation which is consistent with the
terms summarized on Exhibit A hereto and which is otherwise
consistent with the Employer’s general practices for
documentation. In addition, the Employer shall pay to
Executive an amount equal to the dividends and distributions that
Executive would have received with respect to the 37,000 shares of
restricted Common Stock or OP Units to be issued under this Section
3(c) in respect of all dividends and distributions having a record
date prior to the issuance date of such shares or OP Units and on
or after January 1, 2007. With respect to each such dividend
or distribution, this payment shall be made on the later of (i) the
date hereof or (ii) the payment date established for all
stockholders or unitholders for such dividend or
distribution. In addition, the Employer shall pay Executive
an additional cash amount (the “Full Value Gross-Up
Amount”) with respect to the shares of restricted Common
Stock or OP Units granted pursuant to this Section 3(c), intended
to serve generally as a tax gross-up, upon each date on which any
of such shares or OP Units vest, equal to 40% of the value of such
shares
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or OP Units included in Executive’s
taxable income on such date. Additionally, with respect to
the option to purchase 100,000 shares of Common Stock granted on
February 1, 2004, 10,000 of the 30,000 shares otherwise scheduled
to vest thereunder in 2009, shall vest as of the date hereof.
Except as specifically provided otherwise in this Agreement, the
vesting and other terms of all existing stock options, shares of
restricted stock, OP Units, LTIP Units and other equity-based
awards granted to Executive by the Employer prior to the date
hereof shall remain unchanged.
(d)
GKKM Bonus . Executive shall be entitled to receive
from the Employer the incentive bonus described in Exhibit B
hereto (the “GKKM Bonus”) if any Sale Event (as defined
in that certain First Amended and Restated Limited Liability
Company Operating Agreement of GKK Manager LLC
(“GKKM”), as amended from time to time) occurs during
the Employment Period. The amount of the GKKM Bonus to be
paid shall be based on the purchase price for GKKM (the “GKKM
Purchase Price”) in such Sale Event as set forth on
Exhibit B. Any GKKM Bonus payable pursuant to this Section may
be paid in the form of cash or any other non-cash consideration
constituting part of the GKKM Purchase Price, at the option of the
Employer, and, in addition, if all of the equity holders of GKKM
receive their distributions from GKKM relating to a Sale Event in
shares of stock in Gramercy Capital Corp. (“GKK”), then
the Employer may pay the GKKM Bonus in the form of such
shares. Any non-cash consideration constituting part of the
GKKM Purchase Price shall be deemed to have such value as is
determined by the Employer, in its reasonable discretion, for
purposes of determining whether any GKKM Bonus is payable and
valuing any non-cash considered paid to Executive as the GKKM
Bonus.
(e)
Expenses . Executive shall be reimbursed for all
reasonable business related expenses incurred by Executive at the
request of or on behalf of the Employer, provided that such
expenses are incurred and accounted for in accordance with the
policies and procedures established by the Employer. Any
expenses incurred during the Employment Period but not reimbursed
by the Employer by the end of the Employment Period, shall remain
the obligation of the Employer to so reimburse
Executive.
(f)
Health and Welfare Benefit Plans . During the
Employment Period, Executive and Executive’s immediate family
shall be entitled to participate in such health and welfare benefit
plans as the Employer shall maintain from time to time for the
benefit of senior executive officers of the Employer and their
families, on the terms and subject to the conditions set forth in
such plan. Nothing in this Section shall limit the
Employer’s right to change or modify or terminate any benefit
plan or program as it sees fit from time to time in the normal
course of business so long as it does so for all senior executives
of the Employer.
(g)
Vacations . Executive shall be entitled to paid
vacations in accordance with the then regular procedures of the
Employer governing senior executive officers.
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(h)
Other Benefits . During the Employment Period, the
Employer shall provide to Executive such other benefits, as
generally made available to other senior executives of the
Employer; provided that it is acknowledged that the
Employer’s Chief Executive Officer may be provided with
additional benefits not made available to Executive.
4.
Indemnification and Liability Insurance . The Employer
agrees to indemnify Executive to the extent permitted by applicable
law, as the same exists and may hereafter be amended, from and
against any and all losses, damages, claims, liabilities and
expenses asserted against, or incurred or suffered by, Executive
(including the costs and expenses of legal counsel retained by the
Employer to defend Executive and judgments, fines and amounts paid
in settlement actually and reasonably incurred by or imposed on
such indemnified party) with respect to any action, suit or
proceeding, whether civil, criminal administrative or investigative
in which Executive is made a party or threatened to be made a
party, either with regard to his entering into this Agreement with
the Employer or in his capacity as an officer or director, or
former officer or director, of the Employer or any affiliate
thereof for which he may serve in such capacity. The Employer
also agrees to secure and maintain officers and directors liability
insurance providing coverage for Executive. The provisions of this
Section 4 shall remain in effect after this Agreement is terminated
irrespective of the reasons for termination.
5.
Employer’s Policies . Executive agrees to
observe and comply with the reasonable rules and regulations of the
Employer as adopted by the Board and the Chief Executive Officer
from time to time regarding the performance of his duties and to
carry out and perform orders, directions and policies communicated
to him from time to time by the Board and the Chief Executive
Officer, so long as same are otherwise consistent with this
Agreement.
6.
Termination . Executive’s employment hereunder
may be terminated under the following circumstances:
(a)
Termination by the Employer .
(i)
Death . Executive’s employment hereunder shall
terminate upon his death.
(ii)
Disability . If, as a result of Executive’s
incapacity due to physical or mental illness or disability,
Executive shall have been incapable of performing his duties
hereunder even with a reasonable accommodation on a full-time basis
for the entire period of four consecutive months or any 120 days in
a 180-day period, and within 30 days after written Notice of
Termination (as defined in Section 6(d)) is given he shall not have
returned to the performance of his duties hereunder on a full-time
basis, the Employer may terminate Executive’s employment
hereunder.
(iii)
Cause . The Employer may terminate Executive’s
employment hereunder for Cause. For purposes of this
Agreement, “Cause” shall mean Executive’s:
(A) engaging in conduct which is a felony; (B) material breach of
any of his obligations under Sections 8(a) through 8(e) of this
Agreement; (C) willful misconduct of a material nature or gross
negligence with regard to the Employer or any of its affiliates;
(D) material fraud with regard to the Employer or any of its
affiliates; or (E) failure to competently perform his duties which
failure is not cured within 30 days after receiving notice from the
Employer specifically identifying the manner in which Executive has
failed to perform (it being understood that, for this purpose, the
manner and level of Executive’s performance shall not be
determined based on the financial performance (including without
limitation the performance of the stock) of the
Employer).
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(iv)
Without Cause . Executive’s employment hereunder
may be terminated by the Employer at any time with or without Cause
(as defined in Section 6(a)(iii) above), by the Chief Executive
Officer of the Employer or a majority vote of all of the members of
the Board upon written notice to Executive, subject only to the
severance provisions specifically set forth in Section
7.
(b)
Termination by Executive .
(i)
Disability . Executive may terminate his employment
hereunder for Disability within the meaning of Section 6(a)(ii)
above.
(ii)
With Good Reason . Executive’s employment
hereunder may be terminated by Executive with Good Reason by
written notice to the Board providing at least ten (10) days notice
prior to such termination. For purposes of this Agreement,
termination with “Good Reason” shall mean the
occurrence of one of the following events within sixty (60) days
prior to such termination:
(A)
a material change in duties, responsibilities, status or positions
with the Employer that does not represent a promotion from or
maintaining of Executive’s duties, responsibilities, status
or positions, except in connection with the termination of
Executive’s employment for Cause, disability, retirement or
death;
(B)
a failure by the Employer to pay compensation when due in
accordance with the provisions of Section 3, which failure has not
been cured within 5 business days after the notice of the failure
(specifying the same) has been given by Executive to the
Employer;
(C)
a material breach by the Employer of any provision of this
Agreement, which breach has not been cured within 30 days after
notice of noncompliance (specifying the nature of the
noncompliance) has been given by Executive to the
Employer;
(D)
the Employer’s requiring Executive to be based in an office
located more than 50 miles from Manhattan;
(E)
a reduction by the Employer in Executive’s Base Salary to
less than the minimum Base Salary set forth in Section
3(a);
(F)
the failure by the Employer to continue in effect an equity award
program or other substantially similar program under which
Executive is eligible to receive awards;
(G)
a material reduction in Executive’s benefits under any
benefit plan (other than an equity award program) compared to those
currently received (other than in connection with and proportionate
to the reduction of the benefits received by all or most senior
executives or undertaken in order to maintain such plan in
compliance with any federal, state or local law or regulation
governing benefits plans, including, but not limited to, the
Employment Retirement Income Security Act of 1974, shall not
constitute Good Reason for the purposes of this Agreement);
or
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(H)
the failure by the Employer to obtain from any successor to the
Employer an agreement to be bound by this Agreement pursuant to
Section 16 hereof, which has not been cured within 30 days after
the notice of the failure (specifying the same) has been given by
Executive to the Employer.
In addition, any termination by
Executive within eighteen (18) months following a Change-in-Control
shall be deemed to be a termination with Good Reason.
(iii)
Without Good Reason . Executive shall have the right
to terminate his employment hereunder without Good Reason, subject
to the terms and conditions of this Agreement.
(c)
Definitions . The following terms shall be defined as
set forth below.
(i)
A “Change-in-Control” shall be deemed to have occurred
if:
(A)
any Person, together with all “affiliates” and
“associates” (as such terms are defined in Rule 12b-2
under the Securities Exchange Act of 1934 (the “Exchange
Act”)) of such Person, shall become the “beneficial
owner” (as such term is defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Employer representing 25% or more of either (1) the combined
voting power of the Employer’s then outstanding securities
having the right to vote in an election of the Board (“Voting
Securities”) or (2) the then outstanding shares of all
classes of stock of the Employer (in either such case other than as
a result of the acquisition of securities directly from the
Employer); or
(B)
the members of the Board at the beginning of any consecutive
24-calendar-month period commencing on or after the date hereof
(the “Incumbent Directors”) cease for any reason other
than due to death to constitute at least a majority of the members
of the Board; provided that any director whose election, or
nomination for election by the Employer’s stockholders, was
approved by a vote of at least a majority of the members of the
Board then still in office who were members of the Board at the
beginning of such 24-calendar-month period, shall be deemed to be
an Incumbent Director; or
(C)
the stockholders of the Employer shall approve (1) any
consolidation or merger of the Employer or any subsidiary that
would result in the Voting Securities of the Employer outstanding
immediately prior to such merger or consolidation representing
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) less than 50% of the total
voting power of the voting securities of the surviving entity
outstanding immediately after such merger or consolidation or
ceasing to have the power to elect at least a majority of the board
of directors or other governing body of such surviving entity, (2)
any sale, lease, exchange or other transfer (in one transaction or
a series of transactions contemplated or arranged by any party as a
single plan) of all or substantially all of the assets of the
Employer, if the shareholders of the Employer and unitholders of
the OP taken as a whole and considered as one class immediately
before such transaction own, immediately after consummation of such
transaction, equity securities and partnership units possessing
less than 50% percent of the surviving or acquiring company and
partnership taken as a whole
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or (3) any plan
or proposal for the liquidation or dissolution of the
Employer.
Notwithstanding the foregoing, a
“Change-in-Control” shall not be deemed to have
occurred for purposes of the foregoing clause (A) solely as the
result of an acquisition of securities by the Employer which, by
reducing the number of shares of stock or other Voting Securities
outstanding, increases (x) the proportionate number of shares of
stock of the Employer beneficially owned by any Person to 25% or
more of the shares of stock then outstanding or (y) the
proportionate voting power represented by the Voting Securities
beneficially owned by any Person to 25% or more of the combined
voting power of all then outstanding Voting Securities; provided,
however, that if any Person referred to in clause (x) or (y) of
this sentence shall thereafter become the beneficial owner of any
additional stock of the Employer or other Voting Securities (other
than pursuant to a share split, stock dividend, or similar
transaction), then a “Change-in-Control” shall be
deemed to have occurred for purposes of the foregoing clause
(A).
(ii)
“Person” shall have the meaning used in Sections 13(d)
and 14(d) of the Exchange Act; provided however, that the term
“Person” shall not include (A) Executive or (B) the
Employer, any of its subsidiaries, or any trustee, fiduciary or
other person or entity holding securities under any employee
benefit plan of the Employer or any of its subsidiaries. In
addition, no Change-in-Control shall be deemed to have occurred
under clause (i)(A) above by virtue of a “group” (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act)
becoming a beneficial owner as described in such clause, if any
individual or entity described in clause (A) or (B) of the
foregoing sentence is a member of such group.
(d)
Notice of Termination . Any termination of
Executive’s employment by the Employer or by Executive (other
than on account of death) shall be communicated by written Notice
of Termination to the other party hereto in accordance with
Section 12 of this Agreement. For purposes of this
Agreement, a “Notice of Termination” shall mean a
notice which shall indicate the specific termination provision in
this Agreement relied upon and, as applicable, shall set forth in
reasonable detail the fact and circumstances claimed to provide a
basis for termination of Executive’s employment under the
provision so indicated. Executive’s employment shall
terminate as of the effective date set forth in the Notice of
Termination (the “Termination Date”), which date shall
not be more than thirty (30) days after the date of the Notice of
Termination. For avoidance of doubt, a notice of non-renewal
pursuant to Section 1 shall not be considered a Notice of
Termination.
7.
Compensation Upon Termination; Change-in-Control
.
(a)
Termination By Employer Without Cause or By Executive With Good
Reason . If (i) Executive is terminated by the
Employer without Cause pursuant to Section 6(a)(iv) above, or (ii)
Executive shall terminate his employment hereunder with Good Reason
pursuant to Section (6)(b)(ii) above, then the Employment Period
shall terminate as of the Termination Date and Executive shall be
entitled to the following payments and benefits, subject to
Executive’s execution of a mutual release agreement with the
Employer in form and substance reasonably satisfactory to Executive
and the Employer, whereby, in general, each party releases the
other from all claims such party may have against the other party
(other than (A) claims against the Employer relating to the
Employer’s obligations under this Agreement and certain other
specified agreements arising in connection with or after
Executive’s termination, including, without limitation,
Employer’s obligations hereunder to provide severance
payments and benefits and
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accelerated
vesting of equity awards and (B) claims against Executive relating
to or arising out of any act of fraud, intentional misappropriation
of funds, embezzlement or any other action with regard to the
Employer or any of its affiliated companies that constitutes a
felony under any federal or state statute committed or perpetrated
by Executive during the course of Executive’s employment with
the Employer or its affiliates, in any event, that would have a
material adverse effect on the Employer, or any other claims that
may not be released by the Employer under applicable law) (the
“Release Agreement”), which the Employer shall execute
within five (5) business days after such execution by Executive,
and the effectiveness and irrevocability of the Release Agreement
with respect to Executive (with the date of such effectiveness and
irrevocability being referred to herein as the “Release
Effectiveness Date”):
(i)
Promptly following the Release Effectiveness Date, but no later
than the regular payroll payment date for the period in which the
Release Effectiveness Date occurs (the “Payment Date”),
Executive shall receive any earned and accrued but unpaid Base
Salary and a prorated annual cash bonus equal to (A) the average of
the annual cash bonuses (including any portion of the annual cash
bonus paid in the form of shares of Common Stock, OP Units, LTIP
Units or other equity awards, as determined at the time of grant by
the Compensation Committee of the Board, in its sole discretion,
and reflected in the minutes or consents of the Compensation
Committee of the Board relating to the approval of such equity
awards, but excluding any annual or other equity awards made other
than as payment of a cash bonus) paid to Executive by the Employer
in respect of the two most recently completed fiscal years (the
“Average Annual Cash Bonus”) multiplied by (B) a
fraction, t
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