AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit 10.3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (the “Agreement”) is made as of February 9,
2007 and amends and restates in its entirety the Amended and Restated Employment Agreement made as
of February 9, 2005, by and between Xxxxxx X. Xxxxxxx (“Employee”) and Brandywine Realty Trust, a
Maryland real estate investment trust (the “Company”).
BACKGROUND
The Company desires to employ Employee, and Employee desires to enter into the employ of the
Company, on the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements contained herein, and intending to
be legally bound hereby, the parties hereto agree as follows:
1. Employment. The Company hereby employs Employee, and Employee hereby accepts
employment by the Company, for the period and upon the terms and conditions contained in this
Agreement.
2. Office and Duties.
(a) Employee shall be employed by the Company as its President and Chief Executive Officer and
will serve as a member of the Board of Trustees of the Company (the “Board”) and Chair of the
Executive Committee of the Board, and shall perform such duties and shall have such authority as
may from time to time be specified by the Board. Employee shall report directly to the Board.
(b) Without further consideration, Employee shall, as directed by the Board, serve as a
director or officer of, or perform such other duties and services as may be requested for and with
respect to, any of the Company’s Subsidiaries. As used in this Agreement, the terms “Subsidiary”
and “Subsidiaries” shall mean, with respect to any entity, any corporation, partnership, limited
liability company or other business entity in which the subject entity has the power (whether by
contract, through securities ownership, or otherwise and whether directly or indirectly through
control of one or more intermediate Subsidiaries) to elect a majority of board of directors or
other governing body, including, in the case of a partnership, a majority of the board of directors
or other governing body of the general partner.
(c) Employee shall devote his full working time, energy, skill and best efforts to the
performance of his duties hereunder, in a manner which will faithfully and diligently further the
business interests of the Company and its Subsidiaries, provided, however, that Employee may serve
on the board of directors or similar body of other organizations, including publicly-traded
corporations or other entities, philanthropic organizations and organizations in which Employee has
made an investment so long as Employee’s activities with respect to the foregoing do not, in the
aggregate, in any significant way, interfere or conflict with, or detract from, his duties to the
Company under this Agreement and so long as Employee
accepts a position on the board of directors of a publicly-traded corporation only after first
reviewing the position with the Chairman of the Board and receiving the Chairman’s permission.
3. Term. Unless sooner terminated as hereinafter provided, the term of Employee’s
employment shall extend through the third anniversary of the date of this Agreement (the “Term”).
The Term shall automatically renew for additional one-year periods at the expiration of the then
current Term unless either party shall give notice of his or its election to terminate Employee’s
employment at least one (1) year prior to the end of the then-current Term, unless earlier
terminated as hereinafter provided.
4. Base Salary. For all of the services rendered by Employee to the Company and its
Subsidiaries, Employee shall receive an aggregate base salary of $600,000 per annum during the Term
of his employment hereunder. Such salary may be paid, at the election of the Company, either by
the Company or by one or more of its Subsidiaries, in such relative proportions as the Company may
determine, as earned in periodic installments in accordance with the Company’s normal payment
policies for executive officers. In the event that the Employee is also employed during any period
by a Subsidiary of the Company, the amount of the base salary payable by the Company during such
period shall be reduced by the amount of salary received by Employee during such period from such
Subsidiary. Employee’s base salary shall be subject to review by the Board or the Compensation
Committee of the Board (the “Compensation Committee”) not less frequently than annually, and
Employee shall receive such salary increases as the Board or Compensation Committee may from time
to time approve.
5. Bonus. Employee shall receive, during the term of his employment hereunder, such
annual bonus as the Board or Compensation Committee, in its sole discretion, may determine from
time to time. Any such bonus may be based on Employee’s annual performance goals as established by
the Board or Compensation Committee from time to time.
6. Participation in Incentive Plans. In addition to Employee’s eligibility to receive
annual bonuses pursuant to Section 5, Employee shall be entitled to participate in short-term and
long-term incentive plans (including without limitation the Company’s 2006 Long-Term Outperformance
Program) as shall be maintained by the Company from time to time on such terms and conditions as
shall be established by the Board or Compensation Committee.
7. Prior Equity Awards. Nothing in this Agreement shall affect the terms and
conditions of options and restricted common shares of beneficial interest of the Company (“Common
Shares”) granted by the Company to Employee before the date of this Agreement. Such options and
restricted Common Shares shall continue in force as in effect immediately before the date of this
Agreement. Without limiting the generality of the foregoing, the options granted to Employee under
his employment agreement executed on August 8, 1994 (the “1994 Agreement”) shall remain in effect,
and those provisions of the 1994 Agreement which govern Employee’s entitlement to exercise such
options shall continue in effect as if such 1994 Agreement had not been terminated. In furtherance
of the foregoing, references in Section 4.1(b)(v) of the 1994 Agreement to “the Company” shall
hereafter be construed as references to the Company and its Subsidiaries.
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8. Fringe Benefits. Throughout the term of his employment and as long as they are
kept in force by the Company, Employee shall be entitled to participate in and receive the benefits
of any profit sharing plan, retirement plan, health or other employee benefit plan made available
to other executive officers of the Company.
9. Expenses. The Company shall reimburse Employee for all reasonable, ordinary and
necessary business expenses incurred by Employee in connection with the performance of Employee’s
duties hereunder upon receipt of vouchers therefor and in accordance with the Company’s regular
reimbursement procedures and practices in effect from time to time.
10. Vacation. Employee shall be entitled to a vacation of five (5) weeks during each
twelve (12) month period of his employment hereunder, during which time Employee’s compensation
hereunder shall be paid in full. Employee shall be permitted to carry over unused vacation during
each twelve (12) month period during the Term and use such unused vacation in any subsequent twelve
(12) month period during the Term.
11. Disability. If the Board determines in good faith by a vote of a majority of its
members (other than Employee) that Employee is unable to perform his duties hereunder due to
partial or total disability or incapacity resulting from a mental or physical illness or injury or
any similar cause for a period of one hundred and twenty (120) consecutive days or for a cumulative
period of one hundred and eighty (180) days during any twelve (12) month period, the Company shall
have the right to terminate Employee’s employment at any time thereafter.
12. Death. Employee’s employment shall terminate at the time of his death.
13. Termination of Employment for Cause. The Company may discharge Employee at any
time for Cause. Cause shall mean: (i) habitual intoxication; (ii) drug addiction; (iii)
intentional and willful violation of any express direction of the Board; (iv) theft,
misappropriation or embezzlement of the Company’s funds; (v) conviction of a felony; or (vi)
repeated and consistent failure of Employee to be present at work during regular hours without
valid reason therefor.
14. Termination of Employment Without Cause. The Board, in its sole discretion, may
terminate Employee’s employment hereunder without Cause upon thirty (30) days’ prior written notice
to Employee at any time.
15. Resignation For Good Reason. Employee’s resignation shall be treated as a
“Resignation for Good Reason” if Employee resigns within six (6) months after any of the following
circumstances, unless in the case of the circumstances set forth in paragraphs (b), (c) or (d)
below, such circumstances are fully corrected within thirty (30) days of Employee’s delivery of
notice to the Company:
(a) A reduction in Employee’s annual rate of base salary;
(b) A failure of the Company to make the payments required by Section 4 hereof;
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(c) A significant adverse alteration in the nature or status of Employee’s responsibilities
(and each of the non-election of Employee to the Board or removal of Employee as Chair of the
Executive Committee of the Board or the removal of Employee from the positions of President and
Chief Executive Officer shall be deemed to be a significant adverse alteration in the nature or
status of Employee’s responsibilities);
(d) Any other material breach by the Company of this Agreement;
(e) Relocation (without the written consent of Employee) of the Company’s executive offices to
a location more than thirty (30) miles from its current location; or
(f) Upon a Change of Control (as defined in Section 16).
16. Change of Control. For purpose of this Agreement, a “Change of Control” means:
(a) A “Change of Control” within the meaning of Section 1(d) of the Brandywine Realty Trust
Amended and Restated 1997 Long-Term Incentive Plan, as currently in effect; or
(b) The purchase of any Common Shares of the Company pursuant to a tender or exchange offer
other than an offer by the Company.
17. Payments Upon or After Termination of Employment.
(a) Voluntary Resignation Other than for Good Reason; Termination for Cause; Non-Renewal
of Employment Agreement. If Employee’s employment hereunder is terminated before the
expiration of the Term because of Employee’s voluntary resignation (other than a Resignation for
Good Reason) or because of the Company’s termination of Employee’s employment for Cause, the
Company, or at its direction, its Subsidiaries shall pay to Employee or, as appropriate, his legal
representatives, heirs or estate all amounts payable under Sections 4 and 8 accrued through the
applicable date of termination (the “Accrued Amount”) within 30 days after such date of
termination. If Employee’s employment is terminated by the Company for Cause or by the Employee
voluntarily (unless such termination of employment is a Resignation for Good Reason), the Company
shall have no obligation or liability hereunder after the date of termination to pay or provide
base salary, bonus compensation, fringe benefits, or any other form of compensation hereunder other
than to pay the Accrued Amount (but the Company shall not be relieved of any obligation under any
equity or equity-based award that by its terms has then vested and is no longer subject to
forfeiture or from any other obligation that has then accrued to the benefit of Employee, including
under the Company’s deferred compensation plan). If Employee’s employment is terminated at the
expiration of the Term following an election by the Company not to renew the Term pursuant to
Section 3, the Company, or at its direction, its Subsidiaries shall pay to Employee all amounts
payable under Sections 4 and 8 accrued through the applicable date of expiration (the “Accrued
Amount”) within 30 days after such date of expiration and, in addition, the Company, or at its
direction, its Subsidiaries shall (i) pay to Employee, in approximately equal monthly installments,
during the one-year period following such expiration, an amount equal in the aggregate to the sum
of the amounts paid or payable or
awarded to Employee pursuant to Sections 4, 5 and 6 hereunder for the calendar year preceding
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the calendar year in which such expiration occurs and (ii) during the one-year period following
such expiration continue to provide Employee with health care benefits at levels no less favorable
to him than those in effect immediately prior to such expiration. Whenever any provision of this
Agreement requires the Company or its Subsidiaries to pay to Employee an amount equal to or based
upon the amounts paid or payable or awarded to Employee pursuant to any of Sections 4, 5 and/or 6
hereunder for a prior calendar year or other prior period, such prior period amount shall be equal
to the cash amount paid or payable for such prior period and the fair market value of any non-cash
amount or award for such prior period. The fair market value of any non-cash amount or award for a
prior period shall be determined as of the date of the award and, in the case of restricted Common
Shares, shall equal the number of Common Shares subject to the award multiplied by the closing
share price of a Common Share on the date of the award, and in the case of any other non-cash
award, shall be determined by the Board or Compensation Committee using customary valuation
procedures as it may in its sole discretion select.
(b) Termination of Employment Because of Death. If Employee’s employment is
terminated as a result of the Employee’s death before the expiration of the Term, the Company shall
pay Employee’s legal representatives the Accrued Amount as of the date of Employee’s death, and, in
addition, the product of 2.99 times the greater of (1) the sum of (x) the then current annual base
salary payable to Employee pursuant to Section 4 plus (y) the amounts paid or payable or awarded to
Employee pursuant to Sections 5 and 6 hereunder for the calendar year preceding the calendar year
in which the death occurs or (2) the sum of (x) the current annual base salary payable to Employee
pursuant to Section 4 plus (y) the amounts paid or payable or awarded to Employee pursuant to
Sections 5 and 6 hereunder during the one-year period ending on the date of such death less the
proceeds, if any, receivable by Employee’s heirs and legal representatives from any life insurance
policy provided by the Company.
(c) Termination of Employment Because of Disability. If Employee’s employment is
terminated by the Company for disability before the expiration of the Term, the Company shall pay
Employee the Accrued Amount as of the date of such termination, and, in addition, the consideration
described in Sections 4 and 8 hereof, at the rate in effect at the date of termination, until one
year after Employee becomes eligible to receive benefits pursuant to the disability insurance
policy provided by the Company, at the rate in effect at such date of termination, less the amount
of disability insurance proceeds receivable by Employee, provided that such period shall not exceed
two years in the aggregate. In addition, Employee shall be entitled to receive an amount equal to
the product that results from multiplying the sum of the amounts paid or payable or awarded to
Employee pursuant to Section 5 and 6 hereunder for the calendar year prior to the year in which
Employee’s employment is terminated for disability multiplied by a fraction, the numerator of which
is the number of days that elapsed prior to the termination during the year in which the
termination occurs and the denominator of which is 365.
(d) Termination of Employment by Company Without Cause; Resignation for Good Reason.
If Employee’s employment is terminated by the Company without Cause, or Employee Resigns for Good
Reason, within thirty (30) days following the date of such termination of employment, the Company
shall pay Employee the Accrued Amount as of the date of such termination, and in addition, the
Company shall make a cash lump sum payment
to Employee equal to the sum of (1) the “Gross-Up Payment,” as defined and more fully provided
for
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in Section 17(g) below plus (2) the product of 2.99 times the greater of (i) the sum of (x) the
then current annual base salary payable to Employee pursuant to Section 4 plus (y) the amounts paid
or payable or awarded to Employee pursuant to Sections 5 and 6 hereunder for the calendar year
preceding the calendar year in which such termination of employment occurs or (ii) the sum of (x)
the then current annual base salary payable to Employee pursuant to Section 4 plus (y) the amounts
paid or payable or awarded to Employee pursuant to Sections 5 and 6 hereunder during the one-year
period ending on the date of such termination.
(e) Coordination of Benefits. In the event that Employee is employed by a Subsidiary
of the Company at the time of termination of employment, any amounts payable to the Employee
pursuant to this Section 17 shall be reduced by the amounts paid to Employee by any such
Subsidiary.
(f) Further obligations. Upon the payment of the amounts payable under this Section
17, neither the Company nor any of its Subsidiaries shall have any further obligations hereunder
to Employee (or to his estate, heirs, beneficiaries, or legal representatives, as appropriate, or
otherwise) to pay or provide any base salary, bonus compensation, or fringe benefits; provided that
if Employee Resigns for Good Reason or the Company terminates Employee’s employment without Cause,
Company shall, at its own expense, for a thirty-six (36) month period after the date of termination
of employment, arrange to provide Employee with life, disability, accident and health insurance
benefits substantially similar to those which Employee was entitled to receive immediately prior to
such date of termination; and provided further that the Company shall not be relieved of any
obligation under any equity or equity-based award that by its terms has then vested and is no
longer subject to forfeiture or from any other obligation that has then accrued to the benefit of
Employee, including under the Company’s deferred compensation plan.
(g) “Gross-Up Payment.”
(i) For purposes of this Agreement, the term “Gross-Up Payment” means an amount such that the
net amount retained by Employee, after deduction of the excise tax imposed under section 4999 of
the Internal Revenue Code of 1986, as amended (the “Code”) or any successor provision of law
(“Excise Tax”), on the “Total Payments” (as hereinafter defined) and any federal, state and local
income tax, employment tax and Excise Tax upon the payment provided for by this Section 17(g),
shall be equal to the excess of the Total Payments (including the payment (referred to as the
“Gross—Up Payment”) in clause (1) of Section 17(d) and in this Section 17(g)) over the payment
provided for by this Section 17(g).
(ii) For purposes of determining whether any of the Total Payments will be subject to Excise
Tax and the amount of such Excise Tax,
(A) any payments or benefits received or to be received by Employee in connection with a
Change of Control or Employee’s termination of employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company or a Subsidiary, any person
whose actions result in a Change of Control or any person affiliated with the Company or such
person (the “Total Payments”)) shall be treated
as “parachute payments” (within the meaning of section 280G(b)(2) of the Code) unless, in the
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opinion of a tax advisor selected by the Company’s independent auditors and reasonably acceptable
to Employee, such payments or benefits (in whole or in part) do not constitute parachute payments,
including by reason of section 280G(b)(4)(A) of the Code, and all “excess parachute payments”
(within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to Excise Tax
unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered (within the meaning of section
280G(b)(4)(B) of the Code), or are otherwise not subject to Excise Tax; and
(B) the value of any noncash benefits or deferred payment or benefit shall be determined by
the Company’s independent auditors in accordance with the principles of sections 280G(d)(3) and (4)
of the Code. For purposes of determining the amount of the Gross-Up Payment, Employee shall be
deemed to pay federal income tax 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 Employee’s residence on the date of
Employee’s termination of employment (or such other time as is hereinafter described), net of the
maximum reduction in federal income taxes which could be obtained from the deduction of such state
and local taxes.
(iii) Notwithstanding the foregoing, if the Excise Tax is subsequently determined to be less
than the amount taken into account hereunder at the time of termination of Employee’s employment,
Employee shall 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 being repaid by Employee to the extent that such repayment
results in a reduction in Excise Tax or a federal, state or local income tax deduction), plus
interest on the amount of such repayment at the rate provided in section 1274(b)(2)(B) of the Code.
If the Excise Tax is subsequently determined to exceed the amount taken into account hereunder at
the time of termination of Employee’s employment (including by reason of any payment the existence
or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or
additions payable by Employee with respect to such excess) at the time that the amount of such
excess is finally determined. Employee and the Company shall each reasonably cooperate with the
other in connection with any administrative or judicial proceedings concerning the existence or
amount of liability for Excise Tax with respect to the Total Payments. Such additional payment
shall be made within thirty (30) days following the date Employee notifies the Company that he is
subject to the Excise Tax.
(iv) The Company shall promptly pay in advance or reimburse Employee for all reasonable legal
fees and expenses incurred in good faith by Employee in connection with any tax audit or proceeding
to the extent attributable to the application of section 4999 of the Code to any payment or benefit
provided hereunder.
18. Prior Agreement. This Agreement is the successor to the Amended and Restated
Employment Agreement between Employee and the Company dated as of February 9, 2005. Employee
represents to the Company that (a) there are no other agreements or
understandings with the Company to which Employee is a party relating to employment, benefits
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or retirement, (b) there are no restrictions, agreements or understandings whatsoever to which
Employee is a party which would prevent or make unlawful his execution of this Agreement or his
employment hereunder, (c) his execution of this Agreement and his employment hereunder shall not
constitute a breach of any contract, agreement or understanding, oral or written, to which he is a
party or by which he is bound, and (d) he is free and able to execute this Agreement and to
continue in the employment of the Company.
19. Key Man Insurance. The Company shall have the right at its expense to purchase
insurance on the life of Employee in such amounts as it shall from time to time determine, of which
the Company shall be the beneficiary. Employee shall submit to such physical examinations as may
be required, and shall otherwise cooperate with the Company, in connection with the Company
obtaining such insurance.
20. Miscellaneous.
(a) Controlling Law. This Agreement, and all questions relating to its validity,
interpretation, performance and enforcement, shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania.
(b) Compliance with Section 409A. If payments due to Employee are subject to the
requirements of Prop. Treas. Reg. § 1.409A-3(g)(2) (or any successor provision), then
notwithstanding any other provision of this Agreement (or any otherwise applicable plan, policy,
agreement or arrangement), such payments that are otherwise due within six months following
Employee separation from service will be deferred (with interest at 5% per annum) and paid to
Employee in a lump sum immediately following that six month period.
(c) Notices. All notices, requests, demands and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have been duly given,
made and received when delivered in person against receipt, or when sent by United States
registered or certified mail, return receipt requested, postage prepaid, addressed as set forth
below:
| (i) | If to Employee: |
Xxxxxx X. Xxxxxxx
0 Xxxxx Xxxx
Xxxxxxxxx, XX 00000
0 Xxxxx Xxxx
Xxxxxxxxx, XX 00000
| (ii) | If to the Company: |
Brandywine Realty Trust
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: General Counsel
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: General Counsel
In addition, notice by mail shall be by air mail if posted outside of the continental United
States.
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Any party may alter the address to which communications or copies are to be sent by giving
notice of such change of address in conformity with the provisions of this paragraph for the giving
of notice.
(d) Binding Nature of Agreement. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns and shall be binding upon Employee, his
heirs and legal representatives.
(e) Execution in Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any party who executes the
same, and all of which shall constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.
(f) Provisions Separable. The provisions of this Agreement are independent of and
separable from each other, and no provision shall be affected or rendered invalid or unenforceable
by virtue of the fact that for any reason any other or others of them may be invalid or
unenforceable in whole or in part.
(g) Entire Agreement. This Agreement contains the entire understanding among the
parties hereto with respect to the subject matter hereof and supersedes all prior agreements and
understandings, inducements or conditions, express or implied, oral or written, except as herein
contained. The express terms hereof control and supersede any course of performance and/or usage
of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or
amended other than by an agreement in writing.
(h) Section and Paragraph Headings. The section and paragraph headings in this
Agreement are for convenience only; they form no part of this Agreement and shall not affect its
interpretation.
(i) Gender, Etc. Words used herein, regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or plural, and any other
gender, masculine, feminine or neuter, as the context requires.
(j) Number of Days. In computing the number of days for purposes of this Agreement,
all days shall be counted, including Saturdays, Sundays and holidays; provided, however, that if
the final day of any time period falls on a Saturday, Sunday or holiday, then the final day shall
be deemed to be the next day which is not a Saturday, Sunday or holiday.
(k) Survival. The provisions of Sections 7, 11, 12, 13, 14, 15, 16, 17, 18 and this
Section 20 shall survive the expiration or termination of the term of Employee’s employment
hereunder.
(l) Assignability. This Agreement is not assignable by Employee. It is assignable by
the Company only (i) to any subsidiary of the Company so long as the Company agrees to guarantee
such subsidiary’s obligations hereunder, or (ii) subject to Sections 15 and 17,
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to a person which is a successor in interest to the Company in the business operated by it or
which acquires all or substantially all of its assets.
(m) Liability of Trustees, etc. No recourse shall be had for any obligation of the
Company hereunder, or for any claim based thereon or otherwise in respect thereof, against any
past, present or future trustee, shareholder, officer or employee of the Company, whether by virtue
of any statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all
such liability being expressly waived and released by each party hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered on the
date first above-written.
| BRANDYWINE REALTY TRUST |
||||
| By: | ||||
| Title: | ||||
| EMPLOYEE |
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|
Xxxxxx X. Xxxxxxx |
||||
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GUARANTEE
In the event that the Company fails to perform its obligations under the foregoing Employment
Agreement, Brandywine Operating Partnership, L.P. shall promptly perform the obligations of the
Company arising thereunder which have not been performed in strict accordance with the terms and
conditions thereof.
| BRANDYWINE OPERATING PARTNERSHIP, L.P. | ||||||
| By: | BRANDYWINE REALTY TRUST, its general partner | |||||
| By: | ||||||
