Exhibit 10.11
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This amended and restated EMPLOYMENT AGREEMENT is dated as of March 22, 2002
between Pennsylvania Real Estate Investment Trust, a Pennsylvania business trust
("Company"), and Xxxxxxx X. Xxxx ("Executive").
BACKGROUND
Executive is currently the Executive Vice President-Acquisitions and
Secretary of Company. Company desires to continue to employ Executive, and
Executive desires to remain in the employ of Company, on the terms and
conditions contained in this Agreement. Executive has been and will continue to
be substantially involved with Company's operations and management and has and
will continue to have trade secrets and other confidential information relating
to Company and its customers; accordingly, the noncompetition agreement and
other restrictive covenants contained in Section 5 of this Agreement constitute
essential elements hereof.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and intending to be legally bound hereby, the parties hereto
agree as follows:
1. CAPACITY AND DUTIES
1.1 Employment; Acceptance of Employment. Company hereby employs Executive
and Executive hereby agrees to continue employment by Company for the period and
upon the terms and conditions hereinafter set forth.
1.2 Capacity and Duties.
(a) Executive shall serve as Executive Vice President-Acquisitions and
Secretary of Company and, subject to the supervision and control of the Chief
Executive Officer, shall have the duties and authority generally consistent with
such offices. Executive shall perform such other duties and shall have such
authority as may from time to time be specified by the Chief Executive Officer
and as shall be consistent with the status and authority of his current offices.
(b) Except as permitted by subsection (c) below, Executive (i) shall
devote his full working time, energy, skill and best efforts to the performance
of his duties hereunder, in a manner that will comply with Company's published
rules and policies in effect from time to time, and (ii) shall not be employed
by or participate or engage in or in any manner be a part of the management or
operation of any business enterprise other than Company and its Affiliates
without the prior written consent of Company, which consent may be granted or
withheld in the sole discretion of Company. "Affiliate" as used in this
Agreement means any person or entity controlling, controlled by, or under common
control with, Company. "Control," as used in the definition of Affiliate, means
the power to direct the management and policies of a person or entity, directly
or indirectly, whether through the ownership of voting securities, by contract,
or otherwise; the terms "controlling" and "controlled" shall have correlative
meanings. Further, any person or entity that owns beneficially, either directly
or through one or more intermediaries, more than 20 percent of the ownership
interests in a specified entity shall be presumed to control such entity for
purposes of the definition of Affiliate.
(c) Notwithstanding the provisions of Section 1.2(b) hereof, and subject
to Section 5.2 hereof, Executive shall be permitted to serve on the board of
directors or similar body of other organizations, including philanthropic
organizations and organizations in which the Executive has made an investment,
provided that Executive's activities with respect to the foregoing do not,
individually or in the aggregate, interfere with, detract from, or affect the
performance of his duties for Company under this Agreement.
2. TERM OF EMPLOYMENT
2.1 Term. The initial term of Executive's employment hereunder shall begin on
the date hereof and last until December 31, 2003, unless sooner terminated in
accordance with the other provisions hereof. Except as hereinafter provided, on
December 31, 2003 and on each subsequent anniversary thereof, the Term (as
hereinafter defined) shall be automatically extended for one year unless either
party shall have given to the other party notice of non-renewal of this
Agreement at least 120 days prior to the expiration of the Term. The initial
term of employment hereunder and each Term as extended is a "Term." If a
non-renewal notice is given as provided above, Executive's employment under this
Agreement shall terminate on the last day of the Term. If Executive's employment
is extended for calendar year 2004, Executive shall be entitled to continue his
participation in the New Plan (as defined herein) during such year on the same
basis as if the initial Term of this Agreement were scheduled to expire on
December 31, 2004.
3. COMPENSATION
3.1 Base Compensation. As compensation for Executive's services, Company
shall pay to Executive a salary at the annual rate of $190,000, payable in
periodic installments in accordance with Company's regular payroll practices in
effect from time to time. Executive's salary may be increased from time to time
pursuant to action taken or authorized by the Executive Compensation and Human
Resources Committee (the "Committee") of the Board of Trustees of Company. Once
increased, Executive's annual salary cannot be decreased without the written
consent of Executive. Executive's annual salary, as determined in accordance
with this Section 3.1, is hereinafter referred to as the "Base Salary." No less
than 15 days prior to the end of any fiscal year during the Term, Company shall
provide Executive with written notice of his Base Salary, bonus plan eligibility
and equity incentive awards, if any, for the following fiscal year. Such notice
shall provide sufficient information regarding Executive's bonus plan
eligibility so that Executive's maximum potential bonus is readily
ascertainable. Failure to provide such notice on a timely basis (such failure, a
"Compensation Notice Delinquency") shall not be deemed a breach by Company;
however, if the Compensation Notice Delinquency occurs during or after the final
year of the initial Term, Executive shall then be permitted to exercise his
termination right under Section 4.7 hereof.
2
3.2 Bonuses. Executive is eligible for and shall participate in Company's
bonus plans listed on Schedule 3.2 hereto and shall participate in the other
bonus plans of Company in place from time to time for the executive officers of
Company to the extent determined by the Committee. For fiscal year 2002,
Executive shall be eligible for a bonus under Company's Incentive Bonus
Opportunity Plan in an amount up to $133,000.
3.3 Employee Benefits. In addition to the compensation provided for in
Sections 3.1 and 3.2, Executive shall be entitled, during the Term, to
participate in such of Company's employee benefit plans and benefit programs,
including medical benefit programs, as may from time to time be provided by
Company for its executive officers. Company shall use its commercially
reasonable efforts to provide Executive with health insurance through a
preferred provider, traditional indemnity or equivalent plan. Company shall pay,
or reimburse Executive for, the premiums associated with continuing the
Equitable Life Disability Insurance Policy currently maintained for Executive's
benefit at the same benefit level as currently in effect.
3.4 Vacation. During the Term, Executive shall be entitled to a paid vacation
of 25 days during each calendar year or such additional number of days as is
provided in the Employee Handbook published from time to time by Company (the
"Company Employee Handbook"). Executive's right to carry forward unused vacation
days for a calendar year to any future calendar year shall be governed by
Company's Employee Handbook as in effect from time to time.
3.5 Expense Reimbursement. Company shall reimburse Executive for all
reasonable expenses incurred by him in connection with the performance of his
duties hereunder in accordance with its regular reimbursement policies as in
effect from time to time and upon receipt of itemized vouchers and such other
supporting information therefor as Company may reasonably require.
3.6 Incentive Plan. The Committee has established a new long-term incentive
plan (the "New Plan"), a copy of which has been given to Executive. Executive
will be granted $150,000 of Restricted Shares during the first quarter of 2002
and $300,000 of the Performance Units, as such terms are defined in the New
Plan. Company's agreement to issue Performance Units pursuant to this Agreement
is conditioned upon receipt of shareholder approval of the portion of the New
Plan related to Performance Units.
3.7 Nonqualified Retirement Plan. Company hereby acknowledges that Executive
is entitled to continue receiving benefits under, and in accordance with, the
terms of Company's Supplemental Retirement Plan for Xxxxxxx X. Xxxx, as amended.
3
4. TERMINATION OF EMPLOYMENT
4.1 Death of Executive. If Executive dies during the Term, Company shall
thereafter be obligated to continue to pay the Base Salary to Executive's estate
for the remainder of the Term or, if the remainder of the Term is less than one
year, for a period of 12 months, periodically in accordance with the Company's
regular payroll practices and, within 30 days of the death of Executive, shall
pay any other amounts (including salary, bonuses, vacation pay, expense
reimbursement, etc.) that have been fully earned by, but not yet paid to,
Executive under this Agreement as of the date of Executive's death. If, for the
year in which Executive dies, Company achieves the performance goals established
in accordance with any cash bonus plan in which Executive participates, Company
shall pay Executive's estate an amount equal to the bonus that Executive would
have received had he been employed by Company for the full year, multiplied by a
fraction, the numerator of which is the number of calendar days Executive was
employed in such year and the denominator of which is 365. Upon Executive's
death (a) each outstanding option granted to Executive before, on or after the
date hereof shall become vested and shall be immediately exercisable in
accordance with the terms thereof, (b) each outstanding nonqualified stock
option ("NQSO") granted to Executive before, on or after the date hereof shall
be exercisable until the earlier of (i) the later of 180 days after the death of
Executive or the period following the death of Executive that is set forth in
the relevant stock option agreement, or (ii) the scheduled expiration date of
such option, (c) the exercise period of each incentive stock option ("ISO")
granted to Executive before, on or after the date hereof shall be governed by
the terms of the relevant ISO Agreement, (d) the vesting of all restricted
shares granted to Executive shall be governed by the terms of the plan or other
document pursuant to which they were issued, and (e) Executive's spouse and
dependents (if any) shall be entitled for the balance of the Term or, if the
balance of the Term is less than one year, for a period of 12 months, to
continue to receive medical benefits insurance coverage at Company's expense if
and to the extent Company was paying for such benefits for Executive's spouse
and dependents at the time of Executive's death. Executive's spouse and
dependents shall be entitled to such rights as they may have to continue
coverage at their sole expense as are then accorded under Part 6 of Subtitle B
of Title I of the Employee Retirement Income Security Act of 1974, as amended
("COBRA"), for the COBRA coverage period following the expiration of the period,
if any, during which Company paid such expense.
4.2 Disability of Executive. If Executive is or has been materially unable
for any reason to perform his duties hereunder for 120 days during any period of
150 consecutive days, Company shall have the right to terminate Executive's
employment upon 30 days' prior written notice to Executive at any time during
the continuation of such inability, in which event Company shall thereafter be
obligated to continue to pay Executive's Base Salary for the remainder of the
Term or, if the remainder of the Term is less than one year, for a period of 12
months, periodically in accordance with the Company's regular payroll practices
and, within 30 days of such notice, shall pay any other amounts (including
salary, bonuses, vacation pay, expense reimbursement, etc.) that have been fully
earned by, but not yet paid to, Executive under this Agreement as of the date of
such termination. The amount of payments to Executive under disability insurance
policies paid for by the Company shall be credited against and shall reduce the
Base Salary otherwise payable by the Company following termination of
employment. If, for the year in which Executive's employment is terminated
pursuant to this Section, Company achieves the performance goals established in
accordance with any cash bonus plan in which Executive participates, Company
shall pay Executive an amount equal to the bonus that Executive would have
received had he been employed by Company for the full year, multiplied by a
fraction, the numerator of which is the number of calendar days Executive was
employed in such year and the denominator of which is 365. Upon termination of
Executive's employment pursuant to this Section, (a) each outstanding option
granted to Executive before, on or after the date hereof shall become vested and
shall be immediately exercisable in accordance with the terms thereof, (b) each
outstanding NQSO granted to Executive before, on or after the date hereof shall
be exercisable until the earlier of (i) the later of 180 days after the
termination of Executive's employment pursuant to this Section or the period
4
following the termination of Executive's employment for the reason set forth in
this Section that is set forth in the relevant stock option agreement, or (ii)
or the scheduled expiration date of such option, (c) the exercise period of each
ISO granted to Executive before, on or after the date hereof shall be governed
by the terms of the relevant ISO Agreement, (d) the vesting of all restricted
shares granted to Executive shall be governed by the terms of the plan or other
document pursuant to which they were issued, and (e) Executive shall be entitled
for the balance of the scheduled Term or, if the balance of the Term is less
than one year, for a period of 12 months, to continue to receive at the
Company's expense medical benefits coverage for Executive and Executive's spouse
and dependents (if any) if and to the extent Company was paying for such
benefits to Executive and Executive's spouse and dependents at the time of such
termination. Executive and his spouse and dependents shall be entitled to such
rights as they may have to continue coverage at his or their sole expense as are
then accorded under COBRA for the COBRA coverage period following the expiration
of the period, if any, during which Company paid such expense.
4.3 Termination for Cause. Executive's employment hereunder shall terminate
immediately upon notice that Company is terminating Executive for Cause, in
which event Company shall not thereafter be obligated to make any further
payments hereunder other than amounts (including salary, bonus, vacation pay,
expense reimbursement, etc.) that have been fully earned by, but not yet paid
to, Executive under this Agreement as of the date of such termination and which
shall be paid within 30 days of such termination. Upon termination of
Executive's employment pursuant to this Section, (a) each outstanding NQSO
granted to Executive before, on or after the date hereof that is vested and
currently exercisable as of the date Executive's employment is terminated
pursuant to this Section shall remain exercisable until the earlier of (i) the
later of 30 days after the termination of Executive's employment pursuant to
this Section or the period following the termination of Executive's employment
for the reason set forth in this Section that is set forth in the relevant stock
option agreement, or (ii) or the scheduled expiration date of such option, (b)
the exercise period of each ISO granted to Executive before, on or after the
date hereof shall be governed by the terms of the relevant ISO Agreement, (c)
all vested restricted shares granted to Executive shall be delivered to
Executive free and clear of any restrictions, other than pursuant to applicable
securities laws, and (d) Executive and his spouse and dependents shall have such
rights (if any) to continue medical benefits coverage at his or their sole
expense following termination for Cause as are then accorded under COBRA for the
COBRA coverage period. "Cause" shall mean the following:
5
(a) fraud in connection with Executive's employment or theft,
misappropriation or embezzlement of funds of Company or its Affiliates or a
willful violation of the provisions of the Code of Business Conduct of the
Company with respect to the purchase or sale of securities of the Company;
(b) indictment of Executive for a crime involving moral turpitude;
(c) breach of Executive's obligations under Sections 5.1 or 5.2 of this
Agreement;
(d) failure of Executive to perform his duties to Company (other than on
account of illness, accident, vacation or leave of absence) after written demand
for substantial performance which specifically identifies the manner in which
Executive has failed to perform that persists for more than 30 calendar days
after such notice to him; or
(e) Executive's repeated abuse of alcohol or drugs.
4.4 Termination Without Cause or for Good Reason.
(a) If at any time during the Term (1) Executive's employment is
terminated by Company for any reason other than Cause or the death or disability
of Executive or (2) Executive's employment is terminated by Executive for Good
Reason (as hereinafter defined):
(i) Company shall, on or before Executive's last day of full-time
employment hereunder, pay Executive all amounts (including salary, bonuses,
vacation pay, expense reimbursement, etc.) that have been fully earned by, but
not yet paid to, Executive under this Agreement as of the date of such
termination plus a lump sum cash payment equal to the greater of (x) (A)
Executive's then current Base Salary through the end of the Term plus (B) an
amount equal to the average of the percentages of Base Salary that were paid to
Executive as cash bonuses in each of the last three full calendar years
multiplied by Executive's then current Base Salary ("Average Bonus") and further
multiplied by a fraction, the denominator of which is 365 and the numerator of
which is the number of days in the calendar year that expired prior to
termination of employment and (y) (A) Executive's then current annual Base
Salary plus (B) an amount equal to the Average Bonus. The portion of the lump
sum cash payment contemplated by the preceding sentence that represents
Executive's Base Salary shall be discounted from the dates that the Base Salary
would have been payable in accordance with Company's regular payroll practices
at the time of termination during the relevant period following termination to
present value on the date of payment at a discount rate equal to 200 basis
points plus the London Interbank Offered Rate for a one month period set forth
in The Wall Street Journal (the "WSJ") on the date of termination of employment
or, if the WSJ is not published on such date, the first day following such
termination on which the WSJ is published; provided, however, if the Executive
is entitled to the lump sum payment set forth in the preceding sentence, by
written notice to the Company within ten days of such termination, Executive may
elect to receive his Base Salary included in the computation of such lump sum
payment in accordance with the Company's regular payroll practices during the
relevant period following termination, rather than as part of such lump sum
payment, in which event, such periodic payments of Base Salary shall not be
discounted as provided in this sentence;
6
(ii) Executive shall be entitled for the balance of the Term or, if
the balance of the Term is less than one year, for a period of 12 months, to
continue to receive at Company's expense medical benefits coverage for Executive
and Executive's spouse and dependents (if any) if and to the extent Company was
paying for such benefits to Executive and Executive's spouse and dependents at
the time of such termination. Executive and his spouse and dependents shall be
entitled to such rights as he or they may have to continue coverage at his or
their sole expense as are then accorded under COBRA for the COBRA coverage
period following the expiration of the period, if any, during which Company paid
such expense; and
(iii) Anything to the contrary in any other existing agreement or
document notwithstanding, each outstanding stock grant (other than those issued
pursuant to the New Plan) and stock option granted to Executive before, on or
after the date hereof shall become immediately vested and exercisable on the
date of such termination, and, with respect to each outstanding NQSO granted to
Executive before, on or after the date hereof, such NQSO shall remain
exercisable until the earlier of (i) the later of 180 days after the termination
of Executive's employment pursuant to this Section or the period following the
termination of Executive's employment for the reason set forth in this Section
that is set forth in the relevant stock option agreement, or (ii) the scheduled
expiration date of such option. The exercise period of each ISO granted to
Executive before, on or after the date hereof shall be governed by the terms of
the relevant ISO Agreement. Vesting and other rights with respect to future
stock grants shall be governed by the plans or terms under which they may be
granted.
(b) "Good Reason" shall mean the following:
(i) a material breach of Company's obligations to Executive
hereunder, provided that Executive shall have given written notice thereof to
Company, and Company shall have failed to remedy the breach within 20 calendar
days after such notice;
(ii) the relocation of Executive's principal business office outside
the metropolitan Philadelphia area without the consent of Executive; or
(iii) the receipt by Executive of written notice that Company elects
not to renew this Agreement under Section 2.1 hereof.
(c) Notwithstanding the foregoing, Company shall not be obligated to make
any payments under this Section 4.4 unless Executive has executed and delivered
to Company a further agreement, to be prepared at the time of Executive's
termination of employment, that shall provide (i) an unconditional release by
Executive of all claims, charges, complaints and grievances, whether known or
unknown to Executive, against Company and any Affiliate through the date of
Executive's termination of employment; (ii) an undertaking to maintain the
confidentiality of such agreement; and (iii) an undertaking to indemnify Company
if Executive breaches such agreement.
7
(d) If Executive's employment is terminated by Executive for Good Reason
within 18 months of a Change of Control of Company, Section 4.5 hereof shall
govern the rights and obligations of the parties and this Section shall be of no
effect.
4.5 Change of Control.
(a) If, during a Term, there should be a Change of Control (as defined
herein), and within 18 months thereafter either (1) Executive's employment shall
be terminated by Company for any reason other than for death, disability or
Cause or (2) Executive's employment is terminated by Executive for Good Reason:
(i) Company shall, on or before Executive's last day of full-time
employment hereunder, pay to Executive all amounts (including salary, bonuses,
vacation pay, expense reimbursement, etc.), that have been fully earned by, but
not yet paid to, Executive under this Agreement as of such termination plus a
lump sum cash payment equal to the greater of (x) (A) Executive's Base Salary
through the end of the Term plus (B) an amount equal to the Average Bonus
multiplied by a fraction, the denominator of which is 365 and the numerator of
which is the number of days in the calendar year that expired prior to
termination of employment and (y) (A) Executive's then current annual Base
Salary and (B) an amount equal to the Average Bonus; and
(ii) Executive shall be entitled for the balance of the Term or, if
the balance of the Term is less than one year, for a period of 12 months, to
continue to receive medical benefits coverage for Executive and Executive's
spouse and dependents (if any), to the extent Executive was so entitled prior to
such termination, at Company's expense if and to the extent Company was paying
for such benefits to Executive and Executive's spouse and dependents at the time
of such termination. Executive and his spouse and dependents shall be entitled
to such rights as he or they may have to continue coverage at his sole expense
as are then accorded under COBRA for the COBRA coverage period following the
expiration of the period during which Company paid such expense.
(b) Anything to the contrary in any other agreement or document now or
hereafter existing notwithstanding, upon a Change of Control and without regard
to whether Executive's employment is thereafter terminated, Executive shall
become fully vested as of the time immediately before such Change of Control in
all then existing stock grants, each stock option previously issued to him
thereupon shall become immediately vested and exercisable, without regard to
continued employment or performance-based vesting standards, and each NQSO shall
remain exercisable until the earlier of (i) the later of 180 days after the
Change of Control or the period following a Change of Control that is set forth
in the relevant stock option agreement, or (ii) the scheduled expiration date of
such option. The exercise period of any ISO granted to Executive before, on or
after the date hereof shall be governed by the terms of the relevant ISO
Agreement.
8
(c) Notwithstanding anything to the contrary in this Section 4.5, if the
amounts otherwise payable to Executive would, in the opinion of Company's
regularly engaged independent certified public accountants, constitute "excess
parachute payments" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended, and if the net payment to Executive (after giving
effect to the excise tax imposed by Section 4999 of the Internal Revenue Code
and to federal, state and local income and employment taxes payable by Executive
on such amounts) would be increased by reducing the total compensation payable
pursuant to this Section 4.5 to the maximum amount that may be paid to Executive
without such payment constituting an "excess parachute payment," then the
compensation payable under this Section 4.5 shall be so reduced. To the fullest
extent possible, such reduction shall be effected through a reduction in the
number of restricted shares which would otherwise vest or shall be effected
through such changes in compensation and benefits as Executive shall determine
and as shall be reasonably satisfactory to Company.
(d) A "Change of Control" of Company shall mean:
(1) The acquisition by an individual, entity, or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30 percent or
more of the combined voting power of the then outstanding voting securities of
Company entitled to vote generally in the election of trustees (the "Outstanding
Shares"); provided, however, that the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from Company
unless, in connection therewith, a majority of the individuals who constitute
the Board of Trustees of Company as of the date immediately preceding such
transaction cease to constitute at least a majority of the Board, (ii) any
acquisition by Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by Company or any entity controlled by
Company, (iv) any acquisition by any individual, entity, or group in connection
with a Business Combination (as defined below) that fails to qualify as a Change
of Control pursuant to paragraphs (3) or (4) below, or (v) any acquisition by
any Person entitled to file Form 13G under the Exchange Act with respect to such
acquisition; or
(2) Individuals who, as of the date hereof, constitute the Board of
Trustees of Company (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a trustee subsequent to the date hereof whose appointment, election, or
nomination for election by Company's shareholders was approved by a vote of at
least a majority of the trustees then comprising the Incumbent Board (other than
an appointment, election, or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the trustees of Company) shall be, for
purposes of this Agreement, considered as though such person were a member of
the Incumbent Board; or
9
(3) Approval by the shareholders of Company of a reorganization,
merger, or consolidation, or sale or other disposition of all or substantially
all of the assets of Company (a "Business Combination"), in each case, if,
following such Business Combination all or substantially all of the individuals
and entities who were the beneficial owners of the Outstanding Shares
immediately prior to such Business Combination beneficially own, directly or
indirectly, less than 40 percent of, respectively, the then outstanding shares
of equity securities and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of trustees or
directors, as the case may be, of the entity resulting from such Business
Combination (including, without limitation, an entity which, as a result of such
transaction, owns Company or all or substantially all of Company's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as such beneficial owners held their ownership, immediately prior to
such Business Combination, of the Outstanding Shares; or
(4) Approval by the shareholders of Company of a Business
Combination, if, following such Business Combination all or substantially all of
the individuals and entities who were the beneficial owners of the Outstanding
Shares immediately prior to such Business Combination beneficially own, directly
or indirectly, 40 percent or more but less than 60 percent of, respectively, the
then outstanding shares of equity securities and the combined voting power of
the then outstanding voting securities entitled to vote generally in the
election of trustees or directors, as the case may be, of the entity resulting
from such Business Combination (including, without limitation, an entity which,
as a result of such transaction, owns Company or all or substantially all of
Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as such beneficial owners held their
ownership, immediately prior to such Business Combination, of the Outstanding
Shares, and (i) any Person (excluding any employee benefit plan (or related
trust) of Company or such entity resulting from such Business Combination)
beneficially owns, directly or indirectly, 30 percent or more of, respectively,
the then outstanding shares of equity securities of the entity resulting from
such Business Combination or the combined voting power of the then outstanding
voting securities of such entity except to the extent that such ownership
existed prior to the Business Combination, or (ii) at least a majority of the
members of the board of trustees or directors of the entity resulting from such
Business Combination were not members of the Incumbent Board at the time of the
execution of the initial agreement or of the action of the Board providing for
such Business Combination, or (iii) the Chief Executive Officer of Company at
the time of the execution of the initial agreement providing for such Business
Combination is not appointed or elected to a comparable or higher position with
the entity resulting from such Business Combination, or (iv) the executive
officers of Company holding the title of Executive Vice President or higher at
the time of the execution of the initial agreement for such Business Combination
constitute less than a majority of the executive officers holding comparable or
higher titles of the entity resulting from such Business Combination; or
10
(5) Approval by the shareholders of Company of a complete liquidation
or dissolution of Company.
Approval by the shareholders of Company of a Business Combination following
which all or substantially all of the individuals and entities who were the
beneficial owners of the Outstanding Shares immediately prior to such Business
Combination beneficially own, directly or indirectly, 60 percent or more of,
respectively, the then outstanding shares of equity securities and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of trustees or directors, as the case may be, of the
entity resulting from such Business Combination (including, without limitation,
an entity which, as a result of such transaction, owns Company or all or
substantially all of Company's assets either directly or through one or more
subsidiaries) shall not constitute a "Change of Control" unless following such
transaction the provisions of paragraphs (1) or (2) are independently satisfied.
4.6 Voluntary Termination. In the event Executive's employment is voluntarily
terminated by Executive without Good Reason, Company shall not be obligated to
make any further payments to Executive under this Agreement other than amounts
(including salary, bonuses, vacation pay, expense reimbursement, etc.) that have
been fully earned by, but not yet paid to, Executive as of the date of
Executive's termination. Executive shall also have such rights to continue
medical coverage at his sole expense following such voluntary termination as are
then accorded under COBRA.
4.7 Special Termination Right. Executive shall have the right to terminate
his employment hereunder upon 90 days prior written notice to Company at any
time within 30 days of (a) the occurrence during or after the final year of the
initial Term of a Compensation Notice Delinquency or (b) the date on which he is
notified pursuant to Section 3.1 hereof of his Base Salary and bonus plan
eligibility with respect to any fiscal year of Company commencing after the end
of the initial Term of this Agreement. Upon termination of Executive's
employment pursuant to this Section, Company shall not be obligated to make any
further payments to Executive under this Agreement other than amounts (including
salary, bonuses, vacation pay, expense reimbursement, etc.) that have been fully
earned by, but not yet paid to, Executive as of Executive's termination.
4.8 Rights Under New Plan. Executive shall have such rights to Restricted
Shares and Performance Units following termination of employment as are accorded
to Executive under the New Plan.
5. RESTRICTIVE COVENANTS
5.1 Confidentiality. Executive acknowledges a duty of confidentiality owed to
Company and shall comply with the confidentiality section of Company's Employee
Handbook as in effect from time to time.
5.2 Noncompetition. During the term of Executive's employment and for one
year after termination of Executive's employment by Company for Cause or by
Executive for other than either Good Reason or pursuant to his special
termination right under Section 4.7, Executive shall not directly or indirectly
engage, or assist any other person or entity to engage, anywhere within 25 miles
of any property in which Company or an Affiliate has a direct or indirect
ownership interest, in any activity which competes in whole or in part with the
activities of Company or any Affiliate during the term of employment or at the
time of such termination, as applicable. The duration of Executive's covenants
set forth in this Section 5.2 shall be extended by a period of time equal to the
number of days, if any, during which Executive is finally determined to be in
violation of the provisions hereof.
11
5.3 Injunctive and Other Relief.
(a) Executive acknowledges that the covenants contained in Sections 5.1,
5.2 and 6.3 are fair and reasonable in light of the consideration paid
hereunder, and that damages alone shall not be an adequate remedy for any breach
by Executive of his covenants contained herein. Accordingly, in addition to any
other remedies that Company may have, Company shall be entitled to injunctive
relief in any court of competent jurisdiction for any breach or threatened
breach of any such covenants by Executive. Nothing contained herein shall
prevent or delay Company from seeking, in any court of competent jurisdiction,
specific performance or other equitable remedies in the event of any breach or
intended breach by Executive of any of his obligations hereunder.
(b) In addition to such equitable relief with respect to Sections 5.1,
5.2 and 6.3, Company shall be entitled to monetary damages for any breach in an
amount deemed reasonable to cover all actual and consequential losses, plus all
monies received by Executive as a result of said breach and all costs and
attorneys' fees incurred by Company in enforcing this Agreement, provided,
however, that Company shall have no right to set off any such monetary damages
against amounts owed by Company to Executive under this Agreement or any other
agreement between the parties. Any action initiated by Company for monetary
damages related to any such breach shall be subject to Section 6.1 hereof.
6. MISCELLANEOUS
6.1 Arbitration.
(a) All disputes arising out of or relating to this Agreement that cannot
be settled by the parties shall be settled by arbitration in Philadelphia,
Pennsylvania, pursuant to the rules and regulations then obtaining of the
American Arbitration Association; provided, that nothing herein shall preclude
Company from seeking, in any court of competent jurisdiction, specific
performance or other equitable remedies in the case of any breach or threatened
breach by Executive of Section 5.1, Section 5.2 or Section 6.3. The decision of
the arbitrators shall be final and binding upon the parties, and judgment upon
such decision may be entered in any court of competent jurisdiction.
12
(b) Discovery shall be allowed pursuant to the intendment of the United
States Federal Rules of Civil Procedure and as the arbitrators determine
appropriate under the circumstances.
(c) The arbitration tribunal shall be formed of three arbitrators, one to
be appointed by each party and the third to be appointed by the first two
arbitrators. Such arbitrators shall be instructed to apply the contractual
provisions hereof in deciding any matter submitted to them.
(d) The cost of any arbitration proceeding hereunder shall be borne
equally by the parties. Each party shall be responsible for his or its own legal
fees and expenses associated with any such arbitration.
6.2 Prior Employment. Executive represents and warrants that he is not a
party to any other employment, non-competition, joint venture, partnership, or
other agreement or restriction that could interfere with his employment with
Company or his or Company's rights and obligations hereunder; and that his
acceptance of continued employment with Company and the performance of his
duties hereunder will not breach the provisions of any contract, agreement, or
understanding to which he is party or any duty owed by him to any other person.
Executive warrants and covenants that, while an employee of Company, he will not
hereafter become a party to or be bound by any such conflicting agreement.
6.3 Solicitation of Employees. During the term of Executive's employment and
for two years thereafter, Executive shall not directly or indirectly solicit or
contact any person who is employed by Company or any Affiliate with a view to
the engagement or employment of such person by any person or entity or otherwise
interfere with the employment relationship of any employee of Company or of any
Affiliate.
6.4 Indemnification. Company shall indemnify and defend Executive against all
claims arising out of Executive's activities as an officer or employee of
Company or its Affiliates to the fullest extent permitted by law and under
Company's Trust Agreement. In addition to the foregoing, Executive shall, upon
reasonable notice, furnish such information and proper assistance to Company as
may reasonably be required by Company in connection with any litigation in which
it or its Affiliates are, or may become, parties. After termination of
Executive's employment, Executive shall be fairly compensated for providing
assistance to Company that is more than incidental; provided, however, that the
failure of Company and Executive to agree on such compensation shall not be the
basis on which Executive withholds any information or assistance.
6.5 Severability. The invalidity or unenforceability of any particular
provision or part of any provision of this Agreement shall not affect the other
provisions or parts hereof. If any provision hereof is determined to be invalid
or unenforceable by a court of competent jurisdiction by reason of the duration
or geographical scope of the covenants contained therein, such duration or
geographical scope, or both, shall be considered to be reduced to a duration or
geographical scope to the extent necessary to cure such invalidity.
13
6.6 Assignment. This Agreement shall not be assignable by Executive, and
shall be assignable by Company only to an Affiliate or to any person or entity
that becomes a successor in interest (by purchase of assets or shares, or by
merger, or otherwise) to Company in the business or a portion of the business
presently operated by Company. Subject to the foregoing, this Agreement and the
rights and obligations set forth herein shall inure to the benefit of, and be
binding upon, the parties hereto and each of their respective permitted
successors, assigns, heirs, executors and administrators. An assignment by the
Company permitted under this Section 6.6 shall not itself constitute a
termination of Executive's employment hereunder.
6.7 Notices. All notices hereunder shall be in writing and shall be
sufficiently given if hand-delivered, sent by documented overnight delivery
service or registered or certified mail, postage prepaid, return receipt
requested, or by telegram or telecopy (confirmed by U.S. mail), receipt
acknowledged, addressed as set forth below or to such other person and/or at
such other address as may be furnished in writing by any party hereto to the
other. Any such notice shall be deemed to have been given as of the date
received, in the case of personal delivery, or on the date shown on the receipt
or confirmation therefor, in all other cases. Any and all service of process and
any other notice in any action, suit, or proceeding shall be effective against
any party if given as provided in this Agreement; provided that nothing herein
shall be deemed to affect the right of any party to serve process in any other
manner permitted by law.
(a) If to Company:
Pennsylvania Real Estate Investment Trust
000 Xxxxx Xxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Chairman, Executive Compensation and Human Resources
Committee of the Board of Trustees
With a copy to:
Drinker Xxxxxx & Xxxxx LLP
Xxx Xxxxx Xxxxxx
00xx & Xxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxx, Esquire
(b) If to Executive:
Xxxxxxx X. Xxxx
0 Xxxxxxxx Xxxx
Xxxxxxx, XX 00000-0000
With a copy to:
Cozen X'Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: E. Xxxxxx Xxxxxxxxxx, Esquire
14
6.8 Entire Agreement and Modification. This Agreement constitutes the entire
agreement between the parties hereto with respect to the matters contemplated
herein and supersedes and replaces all prior agreements and understandings with
respect thereto, including but not limited to, any currently existing employment
agreement between Executive and the Company and any Affiliate. Neither the
failure nor any delay on the part of any party to exercise any right, remedy,
power, or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, power, or privilege preclude
any other or further exercise of the same or of any other right, remedy, power,
or privilege with respect to any occurrence or be construed as a waiver of any
right, remedy, power, or privilege with respect to any other occurrence.
6.9 Governing Law. This Agreement is made pursuant to, and shall be construed
and enforced in accordance with, the internal laws of the Commonwealth of
Pennsylvania (and United States federal law, to the extent applicable), without
giving effect to otherwise applicable principles of conflicts of law.
6.10 Headings; Counterparts. The headings of Sections and subsections in this
Agreement are for convenience only and shall not affect its interpretation. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed to be an original and all of which, when taken together, shall be deemed
to constitute but one and the same Agreement.
6.11 Delegation. Any action hereunder that may be taken or directed by the
Board may be delegated by the Board to a committee of the Board or to an
individual trustee or officer, and the determination of a committee or
individual shall have the same effect hereunder as a determination of the Board.
6.12 Company Assets. Executive acknowledges that no trustee, officer,
director or shareholder of Company or any Affiliate is liable to Executive in
respect of the payments or other matters set forth herein.
15
6.13 Amendment. No provision of this Agreement may be amended, modified, or
waived except in a writing signed by Executive and such officer as may be
specifically designated by Company to sign on its behalf.
6.14 No Mitigation. In no event shall Executive be required to seek other
employment or take any other action by way of mitigation of the amounts payable
to Executive under this Agreement, and such amounts shall not be reduced whether
or not Executive obtains other employment after termination of his employment
hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first set forth above.
PENNSYLVANIA REAL ESTATE
INVESTMENT TRUST
By: /s/ Xxxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: President and Chief Operating
Officer
/s/ Xxxxxxx X. Xxxx
--------------------------------------------
Xxxxxxx X. Xxxx
16
Schedule 3.2
Company Bonus Plans
Incentive Bonus Opportunity Plan
17
