Exhibit 10.8
GARY R. SIEGEL
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this
“ Agreement ”) is dated the 20 th day
of December, 2005, but effective for all purposes and in all
respects as of the closing of the “IPO Transactions”
(as defined below), by and between REPUBLIC PROPERTY TRUST, a
Maryland real estate investment trust (the “ Company
”), and Gary R. Siegel (the “ Executive
”).
WHEREAS, the Company and Republic
Property Limited Partnership, a Delaware limited partnership and
wholly owned operating partnership subsidiary of the Company (the
“ Operating Partnership ”), are engaging in
various related transactions pursuant to which, among other things,
(i) the Operating Partnership would acquire interests in
various limited liability companies that own real estate
properties, and (ii) the Company would effect an initial
public offering of its common shares of beneficial interest, par
value $0.01 per share, and contribute the proceeds therefrom for a
like number of units of partnership interest in the Operating
Partnership (the “ IPO ”, and together with the
other transactions in connection therewith, the “ IPO
Transactions ”); and
WHEREAS, in connection with the IPO
Transactions, the Company wishes to offer employment to the
Executive, and the Executive wishes to accept such offer, on the
terms set forth below.
Accordingly, the parties hereto
agree as follows:
1.
Term . The Company hereby employs the
Executive, and the Executive hereby accepts such employment for an
initial term commencing as of the date of closing of the IPO
Transactions and ending on December 31, 2009, unless sooner
terminated in accordance with the provisions of Section 4 or
Section 5 (the period during which the Executive is employed
hereunder being hereinafter referred to as the “ Term
”). The Term shall be subject to automatic one-year
renewals unless either party hereto notifies the other, in
accordance with Section 7.4, of non-renewal at least ninety
(90) days prior to the end of any such Term. Notwithstanding
the employment of the Executive by the Company, the Company shall
be entitled to pay the Executive from the payroll of any subsidiary
of the Company.
2.
Duties . The Executive, in his capacity as General
Counsel and Chief Operating Officer shall, unless the Board of
Trustees of the Company (the “Board”) determines
otherwise, report directly to the Company’s Chief Executive
Officer Mark R. Keller (or his successor) and faithfully perform
for the Company the duties of said office and shall perform such
other duties of an executive, managerial or administrative nature
as shall be specified and designated from time to time by the Board
of Trustees of the Company (the “ Board ”)
(including the performance of services for, and serving on the
Board of Directors of, any subsidiary or affiliate of the Company
without any additional compensation). The Executive shall
devote substantially all of the Executive’s business time and
effort to the performance of the Executive’s duties
hereunder; provided, however, that in no event shall this sentence
prohibit the Executive from performing other activities, whether
personal, charitable, investment (including real estate
investment activities) or business and any other activities
approved by the Board, so long as such activities do
not materially and adversely
interfere with the Executive’s duties to the Company or
otherwise violate the terms of the Executive’s
Non-Competition Agreement (as defined below) executed by the
Executive and the Company; and provided, further, that,
notwithstanding the foregoing, the Executive shall have the right
to continue to act as a trustee of various trusts for the benefit
of family members of Richard L. Kramer (whether such trusts are in
existence now or in the future) and, in connection therewith, to
act as a manager of various Kramer family investment entities in
which one or more of the trusts is an equity owner, and nothing
contained in this Section 2 shall be construed in a manner
which could cause the Executive to have to violate any fiduciary
duty that he may have to any such trusts or family investment
entities so long as such activities do not materially and adversely
interfere with the Executive’s duties for the Company.
The Board may delegate its authority to take any action under this
Agreement to the Compensation Committee of the Board of Trustees
(the “ Compensation Committee ”).
3.
Compensation
.
3.1
Salary . The Company shall pay the Executive
during the Term a base salary at the rate of $360,000 per annum
(the “ Annual Salary ”), in accordance with the
customary payroll practices of the Company applicable to senior
executives generally. The Annual Salary may be increased
annually by an amount as may be approved by the Board or the
Compensation Committee, and, upon such increase, the increased
amount shall thereafter be deemed to be the Annual Salary for
purposes of this Agreement.
3.2
Bonus . The Executive will be
eligible to participate in the Company’s annual bonus plan
(the “ Bonus
Plan ”), the terms of which
will be established by the Compensation Committee. For each
fiscal year, the Executive shall have the opportunity to earn a
bonus determined by the Committee in its sole discretion, taking
into consideration the relative contribution by the Executive to
the business of the Company and such other performance goals and
factors as the Committee deems relevant with the following targets:
threshold target – 50% of Salary;
target – 80% of Salary; and above target –
100% of salary; provided, however that, no minimum bonus amount is
guaranteed.
3.3
Share-Based
Compensation—IPO Award . The Executive may be awarded such
restricted shares, share options and other equity-based awards
under the Company’s equity compensation plans (“
Equity Awards ”) as the Compensation Committee
determines to be appropriate. Upon the IPO, the Executive
shall receive an award of restricted shares, subject to the terms
and conditions of the Company’s 2005 Omnibus Long-Term
Incentive Plan, equal to 28,932 restricted shares. Such
restricted shares shall be fully vested; provided, that, the sale,
transfer or other disposition of the restricted shares by the
Executive shall be prohibited until July 1, 2007, subject to
the terms and conditions of the Company’s 2005 Omnibus
Long-Term Incentive Plan. Notwithstanding the foregoing, the
Executive may transfer such restricted shares (i) as a bona
fide gift or gifts or by will or intestacy, or (ii) to any
trust for the direct or indirect benefit of the Executive or the
immediate family of the Executive, provided that any such transfer
shall not involve a disposition for value. The Company shall pay to
the Executive a cash bonus equal to $289,315, which cash bonus
shall be withheld by the Company, to the extent necessary, to pay
the withholding taxes associated with the restricted share grant
and this cash bonus.
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3.4
Benefits – In
Genera l. The
Executive shall be permitted during the Term to participate in any
group life, hospitalization or disability insurance plans, health
programs, pension and profit sharing plans and similar benefits
that may be available to members of executive management of the
Company generally, on the same terms as may be applicable to such
other executives, in each case to the extent that the Executive is
eligible under the terms of such plans or programs. During
the Term, the Company shall maintain customary liability insurance
for trustees and officers and list the Executive as a covered
officer.
With respect to each such benefit
plan and program, service with the Company or any of its affiliates
(as applicable) shall be included for purposes of determining
eligibility to participate (including waiting periods, and without
being subject to any entry date requirement after the waiting
period has been satisfied), vesting (as applicable) and entitlement
to benefits. The medical plan or plans maintained by the Company
shall waive all limitations as to pre-existing conditions,
exclusions and waiting periods with respect to participation and
coverage requirements. With respect to vacation benefits provided
by the Company, the vacation benefit of Executive shall include all
hours of accrued but unused vacation and sick time hours,
respectively, with the Company or any of its affiliates.
3.5
Vacation . During the Term, the Executive shall be
entitled to vacation of four (4) weeks per year.
3.6
Expenses . The Company shall pay or reimburse the
Executive for all ordinary and reasonable out-of-pocket expenses
actually incurred (and, in the case of reimbursement, paid) by the
Executive during the Term in the performance of the
Executive’s services under this Agreement; provided that the
Executive submits such expenses in accordance with the policies
applicable to senior executives of the Company
generally.
4.
Termination upon Death or
Disability . In the
event that the Executive dies during the Term, the obligations of
the Company to or with respect to the Executive shall terminate in
their entirety except as otherwise provided under this
Section 4. If the Executive becomes eligible for
disability benefits under the Company’s long-term disability
plans and arrangements (or, if none apply, would have been so
eligible under the most recent plan or arrangement), the Company
shall have the right, to the extent permitted by law, to terminate
the employment of the Executive upon notice in writing to the
Executive and such termination in and of itself shall not be, nor
shall it be deemed to be, a breach of this Agreement; provided,
that, the Company will have no right to terminate the
Executive’s employment if, in the opinion of a qualified
physician reasonably acceptable to the Company, it is reasonably
certain that the Executive will be able to resume the
Executive’s duties on a regular full-time basis within 90
days of the date the Executive receives notice of such
termination.
Upon death or other termination of
employment by virtue of disability (i) the Executive (or the
Executive’s estate or beneficiaries in the case of the death
of the Executive) shall have no right to receive any compensation
or benefit hereunder on and after the Effective Date of the
Termination other than Annual Salary earned and accrued under this
Agreement prior to the Effective Date of the Termination, any bonus
for the prior year not yet paid, and other benefits, including
payment for accrued but unused vacation, earned and accrued under
this Agreement prior to the Effective Date of the Termination (and
reimbursement under this Agreement for
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expenses incurred but not paid prior
to the Effective Date of the Termination) and an amount equal to
the product of (x) the Executive’s Target Annual Bonus
(hereafter defined) for the fiscal year of the Executive’s
death or disability and (y) a fraction, the numerator of which is
the number of days in the current fiscal year through the Effective
Date of the Termination, and the denominator of which is 365;
(ii) all Equity Awards held by the Executive shall become
fully vested and exercisable; and (iii) this Agreement shall
otherwise terminate upon the Effective Date of the Termination and
there shall be no further rights with respect to the Executive
hereunder (except as provided in Section 7.13). For
purposes of this Section 4, (i) the “ Effective
Date of the Termination ” shall mean the date of death or
the date on which a notice of termination by virtue of disability
is given or any later date (within thirty (30) days after the
giving of such notice) set forth in such notice of termination, and
(ii) ” Target Annual Bonus” shall mean 80%
of the Executive’s Salary.
For the avoidance of doubt, the
Executive acknowledges and agrees that the payments set forth in
this Section 4 constitute liquidated damages for termination
of his employment during the Term upon death or by virtue of
disability.
5.
Other Terminations of
Employment .
5.1
Termination for Cause;
Termination of Employment by the Executive Without Good
Reason .
(a)
For purposes of this Agreement,
“ Cause ” shall mean:
(i)
the Executive’s conviction for
(or pleading nolo contendere to) any felony;
(ii)
the Executive’s commission of
an act of fraud, theft or dishonesty related to the business of the
Company or its affiliates or the performance of the
Executive’s duties hereunder;
(iii)
the willful and continuing failure
or habitual neglect by the Executive to perform the
Executive’s duties hereunder;
(iv)
any material violation by the
Executive of the covenants contained in Section 6 or that
certain Non-Competition Agreement dated as of the date hereof
between the Executive and the Company (the
“Non-Competition Agreement” ); or
(v)
the Executive’s willful and
continuing material breach of this Agreement.
For purposes of this
Section 5.1, no act, or failure to act, by Executive shall be
considered “willful” unless committed in bad faith and
without a reasonable belief that the act or omission was in the
best interests of the Company or its subsidiaries.
Notwithstanding the foregoing, if there exists (without regard to
this sentence) an event or condition that constitutes Cause under
clause (iii), (iv) or (v) above, the Executive shall have
30 days from the date written notice is given by the
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Company of such event or condition
to cure such event or condition and, if the Executive does so, such
event or condition shall not constitute Cause hereunder.
(b)
For purposes of this Agreement,
“ Good Reason ” shall mean, unless otherwise
consented to by the Executive:
(i)
the material reduction of the
Executive’s authority, duties and responsibilities, or the
assignment to the Executive of duties materially and adversely
inconsistent with the Executive’s position or positions with
the Company and its subsidiaries;
(ii)
a reduction in Annual Salary of the
Executive except in connection with a reduction in compensation
generally applicable to senior management employees of the
Company;
(iii)
the failure by the Company to obtain
an agreement in form and substance reasonably satisfactory to the
Executive from any successor to the business of the Company to
assume and agree to perform this Agreement;
(iv)
a requirement by the Company that
the Executive’s work location be moved more than fifty (50)
miles from the Company’s principal place of business in
Washington, D.C.; or
(v)
the Company’s material and
willful breach of this Agreement.
Notwithstanding the foregoing, if
there exists (without regard to this sentence) an event or
condition that constitutes Good Reason under clause (i), (ii),
(iv) or (v) above, the Company shall have 30 days from
the date on which the Executive gives the written notice thereof to
cure such event or condition and, if the Company does so, such
event or condition shall not constitute Good Reason
hereunder. Further, an event or condition shall cease to
constitute Good Reason one (1) year after the event or
condition first occurs or at any time at which there exists an
event or condition which serves as the basis of a termination of
the Executive’s employment for Cause.
(c)
The Company may terminate the
Executive’s employment hereunder for Cause and such
termination in and of itself shall not be, nor shall it be deemed
to be, a breach of this Agreement. If the Company terminates
the Executive for Cause, (i) the Executive shall have no right
to receive any compensation or benefit hereunder on and after the
Effective Date of the Termination other than Annual Salary and
other benefits, including payment for accrued but unused vacation
(but excluding any bonuses except as provided in the Bonus Plan)
earned and accrued under this Agreement prior to the Effective Date
of the Termination (and reimbursement under this Agreement for
expenses incurred but not paid prior to the Effective Date of the
Termination); and (ii) this Agreement shall otherwise
terminate upon the Effective Date of the Termination and the
Executive shall have no further rights hereunder (except as
provided in Section 7.13). For purposes of this
Section 5.1(c), the “ Effective Date of the
Termination ” shall mean the date on which a notice of
termination is given or any later date (within thirty (30) days
after the giving of such notice) set forth in such notice of
termination.
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(d)
The Executive may terminate his
employment without Good Reason. If the Executive terminates
the Executive’s employment with the Company without Good
Reason: (i) the Executive shall have no right to receive any
compensation or benefit hereunder on and after the Effective Date
of the Termination other than Annual Salary and other benefits,
including payment for accrued but unused vacation (but excluding
any bonuses except as provided in the Bonus Plan) earned and
accrued under this Agreement prior to the Effective Date of the
Termination (and reimbursement under this Agreement for expenses
incurred but not paid prior to the Effective Date of the
Termination); and (ii) this Agreement shall otherwise
terminate upon the Effective Date of the Termination and the
Executive shall have no further rights hereunder (except as
provided in Section 7.13). For purposes of this
Section 5.1(d), the “ Effective Date of the
Termination ” shall mean the date on which a notice of
termination is given or any later date (within thirty (30) days
after the giving of such notice) set forth in such notice of
termination.
(e)
In the event the Company elects not
to renew this Agreement as contemplated in Section 1 above,
the Executive shall receive (i) a cash payment equal to one
(1) times the sum of: (x
