EMPLOYMENT AGREEMENT BETWEEN JOSEPH M. COYLE AND GMH COMMUNITIES TRUST
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Exhibit 10.3
EMPLOYMENT AGREEMENT
BETWEEN
XXXXXX X. XXXXX
AND
GMH COMMUNITIES TRUST
This Employment Agreement (the "Agreement"), dated as of , 2004 ("Effective Date"), between GMH Communities Trust (the "Company"), and Xxxxxx X. Xxxxx (the "Executive"):
1. EMPLOYMENT.
the Base Salary in effect on January 1 (or, for the first year of the Initial Term, from the Effective Date until December 31, 2004) of the prior year multiplied by the percentage increase in the Consumer Price Index applicable to such year. The amount of the increase shall be determined before March 31 of each year and shall be retroactive to January 1. The Base Salary, including any increases, shall not be decreased during the Term. For purposes of this Agreement, the term "Base Salary" shall mean the amount established and adjusted from time to time pursuant to this Section 3.
total annual incentive bonus = individual performance bonus + corporate performance bonus
where:
individual performance bonus = individual performance level achieved (Threshold, Target, Superior or Outperformance percentage) × individual goals allocation percentage (20%) × Base Salary
corporate performance bonus = corporate performance level achieved (Threshold, Target, Superior or Outperformance percentage) × corporate goals allocation percentage (80%) × Base Salary
The percentages established for the Executive for the performance bonus levels for 2005 shall be 40% for Threshold Level and 80% for Target Level, 120% for Superior Level, and 175% for Outperformance Level. Except to the extent otherwise provided in Section 8, no bonus shall be payable unless the Executive was employed by the Company or a subsidiary as of the last day of the relevant calendar year. After 2005 the percentages shall not be less than the 2005 percentages for each performance bonus level without the written agreement of the Executive. For 2005 and thereafter, to the extent the Executive's annual incentive bonus exceeds either a performance bonus level of 100% or his then-current Base Salary, such excess bonus amount may, at the sole discretion of the Company, be paid to the Executive one-half in cash and one-half in Company Common Shares that shall vest ratably over a period of three (3) years from the date of payment and shall be subject to dividend payments, if any, by the Company. If Executive or the Company, as the case may be, fails to satisfy the performance criteria contained in such Bonus Policy for a calendar year, the Executive may be eligible to receive an incentive bonus for such calendar year, in such amount as is recommended by the Compensation Committee and subject to approval by the full Board (if such approval is required). The annual incentive bonus shall be paid to the Executive no later than thirty (30) days after the date on which final approval of the annual incentive bonus payable to the Executive for such calendar year is obtained. For purposes of this Agreement, the term "Annual Incentive Bonus" shall mean the amount established pursuant to this Section 4.
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(a) OPTION GRANTS. The Company may establish an equity incentive plan ("Equity Incentive Plan"). The Executive's eligibility for grants under the Equity Incentive Plan and the terms and conditions of such grants shall be determined by the Compensation Committee.
6. BENEFITS.
(i) ANNUAL PHYSICAL. The Company shall provide, at its cost, a medical examination for the Executive on an annual basis by a licensed physician in the Philadelphia, Pennsylvania area selected by the Executive. The results of such examination are the sole property of such Executive and shall be treated in confidence.
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favorable to him than the coverage provided to any other current officers and trustees. The provision of such insurance coverage will be at the sole cost of the Company or the Partnership.
(b) FOR CAUSE. At the election of the Company and subject to the provisions of this Section 7(b), immediately upon written notice by the Company to the Executive of his termination for Cause. For purposes of this Agreement, "Cause" for termination shall be deemed to exist solely in the event of (i) the conviction of the Executive of, or the entry of a plea of guilty or nolo contendere by the Executive to, a felony (exclusive of any felony relating to negligent operation of a motor vehicle and not including a conviction, plea of guilty or nolo contendere arising solely under a statutory provision imposing criminal liability upon the Executive on a per se basis due to the Company offices held by the Executive, so long as any act or omission of the Executive with respect to such matter was not taken or omitted in contravention of any applicable policy or directive of the Board), (ii) a willful breach of his duty of loyalty which is materially detrimental to the Company, or (iii) a willful failure to perform or adhere to explicitly stated duties that are consistent with the terms of this Agreement, or the Company's reasonable and customary guidelines of employment or reasonable and customary corporate governance guidelines or policies, including without limitation any business code of ethics adopted by the Board, or to follow the lawful directives of the Board (provided such directives are consistent with the terms of this Agreement), which, in any such case, continues for thirty (30) days after written notice from the Board to the Executive. For purposes of this Section 7(b), no act, or failure to act, on the Executive's part will be deemed "willful" unless done, or omitted to be done, by the Executive not in good faith and without a reasonable belief that the Executive's act, or failure to act, was in the best interest of the Company. The parties agree that in order to terminate the Executive pursuant to Subsections (ii) and (iii) hereof, the Company shall first be required to prove to the reasonable satisfaction of the Executive that he engaged in improper conduct under these Subsections, and if the Executive shall not agree with the Company's assessment of his conduct, then the Executive shall not be terminated until an arbitrator, as provided for in Section 13(b), has determined that the Executive's conduct constituted improper conduct under the applicable Subsection.
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occurring without the Executive's written consent, provided the Executive notifies the Company of his determination that Good Reason exists, with such notification to occur within 60 days of the time at which the Executive knows or should know of the action or omission on which such determination is based:
(i) failure by the Company to renew this Agreement on at least comparable terms at the conclusion of the Initial Term or of either Successor Term,
(ii) a material reduction of the Executive's duties, responsibilities or reporting requirements, or the assignment to the Executive of any duties, responsibilities, or reporting requirements that are inconsistent with his positions as Executive Vice-President, as the case may be,
(iii) a reduction by the Company in the Executive's annual Base Salary,
(iv) a material reduction or loss of employee benefits or material fringe benefits, both in terms of the amount of the benefit and the level of the Executive's participation therein, enjoyed by the Executive under the employee benefit and welfare plans of the Company, including without limitation such benefits as group health, dental, 401(k), accident, disability insurance, or group life insurance, that is caused by the Company except as is required by applicable law,
(v) absent the Executive's prior written consent, the requirement by the Company that the principal place of business at which the Executive performs his duties be changed to a location that is outside of a 35 mile radius of Newtown Square, Pennsylvania.
(vi) a material breach by the Company of any provision of this Agreement that continues for a period of thirty (30) days after Executive provides written notice to the Company of such breach.
(i) an amount equal to two (2) times (three (3) times if, in connection with a Change of Control, either the Executive terminates employment with the Company for Good Reason or the Company terminates the Executive without Cause), the Executive's Base Salary and Annual Incentive Bonus (determined at the Superior Level for both compensation and individual performance for the year in which the termination of employment occurs) (the "Applicable Amount"), provided, however, that in the event of a resignation by the Executive for Good Reason pursuant to Section 7(d)(i) after notice of non-renewal of this Agreement by the Company with respect to the second Successor Term, the multiplier shall be limited to one (1) times the Applicable Amount, and
(ii) the prorated amount of the Annual Incentive Bonus at the Superior Level for both corporate and individual performance for the year in which the termination of employment occurs, pro rated for the portion of such year during which the Executive was employed prior to the effective date of his termination, and
(iii) an amount equal to accrued but unpaid Base Salary through the date of termination plus any other compensation then due and owing from the Company.
(iv) The sum of the amounts payable under subsections (i), (ii) and (iii) hereof is referred to herein as his "Severance Payment."
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(v) The Severance Payment shall be made in a single, lump sum cash payment no later than ten (10) days after the effective date of the Executive's termination of employment.
(vi) The Company shall allow the Executive to continue to participate during the three-year period commencing on the date of termination (the "Severance Period") in any healthcare, dental, vision and prescription drug plans in which the Executive was entitled to participate immediately prior to his termination, to the same extent and upon the same terms as the Executive participated in such plans prior to his termination, provided that the Executive's continued participation is permissible or otherwise practicable under the general terms and provisions of such benefit plans and programs. During the Severance Period, the Company shall pay for the Executive's continued participation in said healthcare, dental, vision and prescription drug plans, including but not limited to premiums for such programs. To the extent that continued participation is neither permissible nor practicable, the Company shall take such actions as may be necessary to provide the Executive with substantially comparable benefits (without additional cost to the Executive) outside the scope of such plans, including, without limitation, reimbursing the Executive for his costs in obtaining such coverage, such as COBRA premiums paid by the Executive and/or his eligible dependents. If the Executive engages in regular employment after his termination of employment (whether as an executive or as a self-employed person), any employee benefit and welfare benefits received by the Executive in consideration of such employment which are similar in nature to the healthcare, dental, vision and prescription drug plans provided by the Company will relieve the Company of its obligation under this Section 8(a)(vi) to provide comparable benefits to the extent of the benefits so received.
(vii) The Executive's stock options, if any, awarded under the Equity Incentive Plan (or any other or successor plan) shall immediately become 100% vested and he shall have at least a two-year period following the effective date of his termination of employment in which to exercise his vested stock options, including those stock options that vested upon his termination of employment.
(viii) The Executive's restricted Common Shares awarded under the Equity Incentive Plan (or any other or successor plan) shall immediately become 100% vested and all restrictions shall lapse.
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Cause or by the Executive without Good Reason, the Company shall pay the Executive his accrued Base Salary and, with respect to a termination by the Executive without Good Reason, any amount of Annual Incentive Bonus fully earned and payable through the date of termination and payable under the applicable Incentive Bonus policy, expense reimbursements and all other compensation related payments that are payable as of his termination of employment date and that are related to his period of employment preceding his termination date. The Executive shall be entitled to exercise his vested stock options, determined as of his termination date, pursuant to the terms of the option grant. Unless the Company and the Executive agree otherwise, the Executive shall forfeit all unvested options and any unvested Restricted Share Grants not acquired by the Executive for consideration, subject to Section 9(b) below, and the Company has the right to repurchase any unvested Restricted Share Grants that the Executive acquired for consideration in accordance with the terms of the Equity Incentive Plan (with the result that if the Executive acquired such unvested Restricted Share Grants for any consideration, the Executive shall at most be entitled to a return of such consideration). The Executive shall also be entitled to all benefits accrued and vested under any employee benefit plan of the Company.
(i) the acquisition by any person, entity or affiliated group, excluding the Company or any employee benefit plan of the Company or any entity controlled directly or indirectly by the Company, of more than 50% of the then outstanding voting shares of the Company,
(ii) the consummation of any merger or consolidation of the Company into another company, such that the holders of the voting shares of the Company immediately prior to such merger or consolidation hold less than 50% of the voting power of the securities of the surviving company or the parent of such surviving company,
(iii) the complete liquidation of the Company or the sale or disposition of all or substantially all of the Company's assets, such that after the transaction, the holders of the voting shares of the Company immediately prior to the transaction hold less than 50% of the voting securities of the acquiror or the parent of the acquiror, or
(iv) Trustees of the Company are elected such that a majority of the members of the Board shall have been members of the Board for less than two years, unless the election or nomination for election of each new trustee who was not a trustee at the beginning of such two-year period was approved by a vote of at least two-thirds of the trustees then still in office who were trustees at the beginning of such period, or
(v) a majority of the Board of the Company votes in favor of a decision that a Change of Control has occurred.
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(i) In the event that any payment or benefit received or to be received by the Executive in connection with a change in control or a termination of the Executive's employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any person whose actions result in a change in control or any person affiliated with the Company or such person) (all such payments and benefits being hereinafter called "Total Payments"), is in an amount such that the Executive will be subject (in whole or in part) to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended ("Excise Tax") on such payments and benefits, then the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of the Excise Tax and any federal, state and local tax on the Gross-Up Payment, will be equal to the Total Payments. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on such date, net of the maximum deduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(ii) The Executive or the Company may request, prior to the time any payments under this Agreement are made, a determination of whether any or all of the Total Payments will be subject to the Excise Tax and, if so, the amount of such Excise Tax and the federal, state and local tax imposed on the Gross-Up Payment. If such a determination is requested, it shall be made promptly, at the Company's expense, by tax counsel selected by the Executive and approved by the Company (with such approval not being unreasonably withheld), and such determination shall be conclusive and binding on both parties. The Company agrees to provide any information reasonably requested by such tax counsel. Tax counsel may engage accountants or other experts, at the Company's expense, to the extent deemed necessary or advisable for them to reach a determination. For these purposes, the term "tax counsel" shall mean a law firm with expertise in federal income tax matters.
(iii) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder, the Executive will repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment, without any interest thereon. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder, the Company will make an additional Gross-Up Payment in respect of such excess and in respect of any portion of the Excise Tax with respect to which the Company had not previously made a Gross-Up Payment (plus any interest, penalties or additions to tax payable by the Executive with respect to such excess and such portion) at the time that the amount of such excess or such portion is finally determined, without any interest thereon.
(iv) Each party agrees to notify the other party, in writing, of any claim that, if successful, would require the payment by the Company of a Gross-Up Payment or might entitle the Company
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to a refund of all or part of any previous Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Executive or Company is informed in writing of such claim or otherwise becomes aware of such claim. If notice of the claim arose as a result of a claim made against the Executive by a taxing authority, Executive shall not pay such claim prior to the expiration of the thirty (30) day period following the date on which he gives notice to the Company. If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall: (A) give the Company any information reasonably requested by the Company relating to such claim, (B) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney selected by the Executive and approved by the Company (with such approval not being unreasonably withheld), (C) cooperate with the Company in good faith in order to effectively contest such claim, and (D) permit the Company to reasonably participate in any proceedings relating to such claim. The Company shall bear and pay directly all costs and expenses (including legal fees and additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses.
(v) Notwithstanding the foregoing, the Company shall control all audits and proceedings taken in connection with any claim, audit or proceeding involving Excise Taxes or Gross-Up Payments and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of any such claim, audit or proceeding and may, at its sole option, either direct the Executive to pay the tax claimed and xxx for a refund or contest the tax in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such tax and xxx for a refund, the Company shall advance the amount of such payment to the Executive, (including interest or penalties with respect thereto) and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance. The Company shall be required to consult with and keep the Executive fully apprised of developments and actions being considered or taken with respect to such claim, audit or proceeding. The Company's control of the contest shall be limited to issues with respect to which such a Gross-Up Payment would be payable or refundable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue. Each party agrees to keep the other party fully apprised of developments concerning such claim, audit or proceeding and to cooperate with the other in good faith in order to effectively resolve such claim, audit or proceeding.
(vi) For purposes of this Subsection (c), a determination of whether a payment is subject to Excise Tax, including but not limited to, a determination of change in control, shall be made pursuant to Section 280G of the Internal Revenue Code of 1986, as amended.
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processes, and trade secrets, as such information may exist from time to time, which the Executive acquired or obtained by virtue of work performed for the Company, or which the Executive may acquire or may have acquired knowledge of during the performance of said work. The Executive shall not, during the Term or for a two (2) year period after the Term, disclose all or any part of the Confidential Information to any person, firm, corporation, association, or any other entity for any reason or purpose whatsoever, directly or indirectly, except as may be required by law or pursuant to his employment hereunder, unless and until such Confidential Information becomes publicly available other than as a consequence of the breach by the Executive of his confidentiality obligations hereunder by law or in any judicial or administrative proceeding (in which case, the Executive shall provide the Company with notice). In the event of the termination of his employment, whether voluntary or involuntary and whether by the Company or the Executive, the Executive shall deliver to the Company all documents and data pertaining to the Confidential Information and shall not take with him any documents or data of any kind or any reproductions (in whole or in part) or extracts of any items relating to the Confidential Information. The Company acknowledges that prior to his employment with the Company, the Executive has lawfully acquired extensive knowledge of the industries and businesses in which the Company engages in business, and that the provisions of this Section 10 are not intended to restrict the Executive's use of such previously acquired knowledge.
In the event that the Executive receives a request or is required (by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar process) to disclose all or any part of the Confidential Information, the Executive agrees to (a) promptly notify the Company in writing of the existence, terms and circumstances surrounding such request or requirement, (b) consult with the Company on the advisability of taking legally available steps to resist or narrow such request or requirement, and (c) assist the Company in seeking a protective order or other appropriate remedy. In the event that such protective order or other remedy is not obtained or that the Company waives compliance with the provisions hereof, the Executive shall not be liable for such disclosure unless disclosure to any such tribunal was caused by or resulted from a previous disclosure by the Executive not permitted by this Agreement.
11. NON-COMPETITION AND NONSOLICITATION. During the Term and for a period of 18 calendar months after the termination of the Executive's employment (the "Noncompete Period"), the Executive shall not, directly or indirectly, either as a principal, agent, employee, employer, stockholder, partner, member, director, trustee or in any other capacity whatsoever: (a) engage or assist others engaged, in whole or in part, in any business which is engaged in a business or enterprise that is substantially similar to any primary segment of the business of the Company that the Company was engaged in during the period of the Executive's employment with the Company, or (b) without the prior consent of the Board, employ or solicit the employment of, or assist others in employing or soliciting the employment of, any individual employed by the Company (other than the Executive's personal assistant or Executive's secretary) at any time during the six (6) month period prior to any termination of the Executive's employment with the Company; provided, however, that the provisions of this Section 11 shall not apply in the event the Company materially breaches this Agreement.
Further, nothing in this Section 11 shall prohibit (a) Executive from making any investment in a public company, or where he is the owner of five percent (5%) or less of the issued and outstanding voting securities of any entity, provided such ownership does not result in his being obligated or required to devote any substantial amount of managerial efforts; or (b) Executive from being engaged in activities permitted under Section 1(c).
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The Executive agrees that the restraints imposed upon him pursuant to this Section 11 are necessary for the reasonable and proper protection of the Company and its subsidiaries and affiliates, and that each and every one of the restraints is reasonable in respect to subject matter, length of time and egographic area. The parties further agree that, in the event that any provision of this Section 11 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too great a time, too large a geographic area or too great a range of activities, such provision shall be deemed to be modified to permit its enforcement to the maximum extent permitted by law.
13. DISPUTES.
(b) ARBITRATION. Excluding only requests for equitable relief by the Company under Section 13(a), in the event that there is any claim or dispute arising out of or relating to this Agreement or the breach hereof, and the parties hereto shall not have resolved such claim or dispute within 60 days after written notice from one party to the other setting forth the nature of such claim or dispute, then such claim or dispute shall be settled exclusively by binding arbitration in Xxxxxxxxxx County, Pennsylvania, in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association ("Rules"), by an arbitrator mutually agreed upon by the parties hereto or, in the absence of such agreement, by an arbitrator selected according to such Rules. Notwithstanding the foregoing, if either the Company or the Executive shall request, such arbitration shall be conducted by a panel of three (3) arbitrators, one selected by the Company, one selected by the Executive and the third selected by agreement of the first two arbitrators, or, in the absence of such agreement, in accordance with such Rules. Judgment upon the award rendered by such arbitrator(s) shall be entered in any Court having jurisdiction thereof upon the application of either party. The parties agree to use their reasonable best efforts to have such arbitration completed as soon as is reasonably practicable. Notwithstanding anything herein to the contrary, except as provided in (c) below, each party shall bear its own costs and expenses incurred in connection with the arbitration.
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16. GENERAL.
| If to the Company, to: | GMH Communities Trust 00 Xxxxxx Xxxxx Xxxxxxx Xxxxxx, XX 00000 Attn: Board of Trustees |
|
With a Mandatory copy to: |
GMH Communities Trust 00 Xxxxxx Xxxxx Xxxxxxx Xxxxxx, XX 00000 Attn: General Counsel |
If to Executive, at his last residence shown on the records of the Company.
Any such notice shall be effective (i) if delivered personally, when received, and (ii) if sent by overnight courier, when receipted for, provided a copy of such communication is sent, as described above.
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instrument. In making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart.
(g) GOVERNING LAW. This Agreement and the performance hereof shall be construed and governed in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to principles of conflicts of law.
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(l) CONSUMER PRICE INDEX. For purposes of this Agreement, the term "CPI" refers to the Consumer Price Index as published by the Bureau of Labor Statistics of the United States Department of Labor, U.S. City Average, All Items for Urban Wage Earners and Clerical Workers (1982-1984=100). If the CPI is hereafter converted to a different standard reference base or otherwise revised, the determination of the CPI adjustment shall be made with the use of such conversion factor, formula or table for converting the CPI, as may be published by the Bureau of Labor Statistics, or, if the bureau shall no longer publish the same, then with the use of such conversion factor, formula or table as may be published by an agency of the United States, or failing such publication, by a nationally recognized publisher of similar statistical information.
| GMH COMMUNITIES TRUST | |||||
By: |
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| Name: | XXXXXX X. XXXXX | ||||
| Its: | |||||
Dated: , 2004 |
Dated: , 2004 |
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EMPLOYMENT AGREEMENT BETWEEN XXXXXX X. XXXXX AND GMH COMMUNITIES TRUST