EXHIBIT 10.9
EMPLOYMENT AND NONCOMPETITION AGREEMENT
This EMPLOYMENT AND NONCOMPETITION AGREEMENT ("Agreement") is made as of
the 26 day of February, 2001 between Xxxxxxx Xxxx ("Executive") and XX Xxxxx
Realty Corp., a Maryland corporation with its principal place of business at 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Employer").
1. TERM. The term of this Agreement shall commence on the date first
above written and, unless earlier terminated as provided in Section 6 below,
shall terminate on the third anniversary of the date of this Agreement (the
"Original Term"); PROVIDED, HOWEVER, that Section 8 hereof shall survive the
termination of this Agreement as provided therein. The Original Term may be
extended for such period or periods, if any, as may be mutually agreed to in
writing by Executive and the Employer (each a "Renewal Term"). If either party
intends not to extend the Original Term, such party will give the other party at
least six (6) months' written notice of such intention. If either party gives
such notice with less than six(6) months remaining in the Original Term, the
term of this Agreement shall be extended until the date which is six (6) months
after the date on which the notice is given. The period of Executive's
employment hereunder consisting of the Original Term and all Renewal Terms, if
any, is herein referred to as the "Employment Period" and an anniversary of the
date of this Agreement is herein referred to as an "Anniversary."
2. EMPLOYMENT AND DUTIES.
(a) DUTIES. During the Employment Period, Executive shall be employed
in the business of the Employer and its affiliates. Executive shall serve
the Employer as a senior corporate executive and, effective no later than
March 31, 2001, shall have the title of Chief Operating Officer of the
Employer. Executive will report to the Chief Executive Officer of the
Employer and, from time to time, as directed by the Chief Executive
Officer, to the President of the Employer. The Executive shall be
principally responsible for the operations and the capital markets
activities of the Employer and shall provide assistance to Employer's Chief
Executive Officer in connection with such activities. Executive's duties
and authority shall be as further set forth in the By-laws of the Employer
and as otherwise established from time to time by the Chief Executive
Officer of the Employer, but in all events such duties shall be
commensurate with his position as Chief Operating Officer of the Employer.
(b) BUSINESS TIME AND EFFORTS. Executive agrees to his employment as
described in this Section 2 and agrees to devote substantially all of his
business time and efforts to the performance of his duties under this
Agreement, except as otherwise approved by the Board of Directors of the
Employer; PROVIDED, HOWEVER, that nothing herein shall be interpreted to
preclude Executive from (i) participating as an officer or director of, or
advisor to, any charitable or other tax exempt organization or otherwise
engaging in charitable, fraternal or trade group activities; (ii) investing
his assets as a passive investor in other entities or business ventures,
provided that he performs no
management or similar role with respect to such entities or ventures and
such investment does not violate Section 8 hereof; and/or serving as a
member of the Board of Directors of a for-profit corporation with the
approval of the Chief Executive Officer of the Company.
(c) TRAVEL. In performing his duties hereunder, Executive shall be
available for all reasonable travel as the needs of the Employer's business
may require. Executive shall be based within 25 miles of Manhattan.
3. COMPENSATION AND BENEFITS. In consideration of Executive's services
hereunder, the Employer shall compensate Executive as provided in this
Section 3.
(a) BASE SALARY. The Employer shall pay Executive an aggregate
minimum annual salary at the rate of $350,000 per annum during the
Employment Period ("Base Salary"), subject to applicable tax withholding.
Base Salary shall be payable monthly in accordance with the Employer's
normal business practices. Solely for the purpose of determining whether
Executive's Base Salary payable under this Section 3(a) should be
increased, the Base Salary shall be subject to review by the Employer's
Board of Directors or Compensation Committee at least once annually.
(b) BONUSES. During the Employment Period, Executive shall receive
such discretionary annual bonuses as the Employer's Board of Directors, in
its sole discretion, may deem appropriate to reward Executive for job
performance; PROVIDED, HOWEVER, that Executive's annual performance bonus
shall not be less than $150,000. Each of the bonuses described in this
Section 3(b) shall be subject to applicable tax withholdings.
(c) STOCK OPTIONS. During the Employment Period, in the sole
discretion of the Employer's Board of Directors or a committee thereof,
Executive shall be eligible to participate in the Employer's then current
Stock Option and Incentive Plan (the "Plan"), which authorizes the grant of
stock options, stock awards and the making of loans to acquire the
Employer's common stock ("Common Stock"). In addition, it is specifically
agreed that effective as of the date that this Agreement is executed by
Employer and Executive, Executive shall be granted options to purchase
50,000 shares of the Common Stock (the "Options"). The Options may be
granted under the Plan or outside of the Plan. The exercise price per share
of the Options shall be equal to the fair market value per share of the
Common Stock on the date of the execution of this Agreement by the Employer
and Executive. The Options shall have a term of ten years, and shall become
vested and nonforfeitable as to 20% of the shares covered thereby on each
of the first five Anniversaries, subject to the Executive remaining
employed by the Employer except as otherwise provided herein. The Options
shall be exercisable only in accordance with the terms and conditions of
the Plan and in accordance with applicable federal, state and local laws
and regulations; however, if there is any conflict between this Agreement
and the Plan, this Agreement shall govern.
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(d) EQUITY AWARDS. Effective as of the date that this Agreement is
executed by the Employer and Executive, Executive shall be granted 30,000
restricted shares of Common Stock. Such grant may be granted under the Plan
or outside of the Plan. The grant shall become vested and nonforfeitable as
to 33 1/3% of such shares on the first Anniversary, 33 1/3% of such shares
on the second Anniversary and 33 1/3% of such shares on the third
Anniversary in each case subject to (i) the Employer achieving either a 10%
increase in funds from operations (on a per share basis) or a 15% total
return (including all dividends and stock appreciation) to shareholders
during the last fiscal year completed before the applicable vesting date,
and (ii) the Executive remaining employed by the Employer except as
otherwise provided herein. Furthermore, (i) if the Employer achieves either
an increase in funds from operations (on a per share basis) of at least 8%
(but less than 9%) or a total return to shareholders of at least 13% (but
less than 14%) during the last fiscal year completed before an applicable
vesting date, then 80% of the restricted shares that otherwise would have
become vested on such vesting date shall become vested, (ii) if the
Employer achieves either an increase in funds from operations (on a per
share basis) of at least 9% (but less than 10%) or a total return to
shareholders of at least 14% (but less than 15%) during the last fiscal
year completed before the applicable vesting date, then 90% of the
restricted shares that otherwise would have become vested on such vesting
date shall become vested, and (iii) if the Employer achieves a total return
to shareholders in the top one-third of a peer group of companies (to be
determined for such year by the Compensation Committee of the Employer's
Board of Directors) during the last fiscal year completed before the
applicable vesting date, then 100% of the restricted shares that otherwise
would have become vested on such vesting date shall become vested. If
necessary to reach a vesting threshold for any period, the Compensation
Committee of the Employer's Board of Directors shall determine such amounts
by averaging cumulative increases and returns on a look-back or
look-forward basis. The Employer shall pay Executive an additional cash
amount as a tax gross-up upon each vesting date equal to 40% of the value
of the shares included in Executive's taxable income on such date.
Executive will receive the full cash dividends attributable to all
nonforfeited shares of restricted stock, regardless of whether such shares
have become vested on the record date for such dividends.
(e) EXPENSES. Executive shall be reimbursed for all reasonable
business related expenses incurred by Executive at the request of or on
behalf of the Employer, provided that such expenses are incurred and
accounted for in accordance with the policies and procedures established by
the Employer.
(f) MEDICAL INSURANCE. During the Employment Period, Executive and
Executive's immediate family shall be entitled to participate in such
medical benefit plan as the Employer shall maintain from time to time for
the benefit of senior executive officers of the Employer and their
families, on the terms and subject to the conditions set forth in such
plan. Nothing in this section shall limit the Employer's right to change or
modify or terminate any benefit plan or program as it sees fit from time to
time in the normal course of business so long as it does so for all senior
executives of the Employer.
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(g) VACATIONS. Executive shall be entitled to reasonable paid
vacations in accordance with the then regular procedures of the Employer
governing senior executive officers.
(h) OTHER BENEFITS. During the Employment Period, the Employer shall
provide to Executive such other benefits, including disability insurance,
sick leave and the right to participate in such retirement or pension
plans, as are made generally available to senior executive officers and
employees of the Employer from time to time, as well as the services of an
exclusive personal assistant.
4. INDEMNIFICATION AND LIABILITY INSURANCE. Executive hereby warrants
that his execution of this Agreement, and performance of duties hereunder, does
not constitute the breach of any other executed contract to which Executive may
be a party, and does not constitute the breach of any restrictive covenant by
which Executive may be bound. The Employer agrees to indemnify Executive to the
extent permitted by applicable law from and against any and all losses, damages,
claims, liabilities and expenses for which such indemnified party has not
otherwise been reimbursed (including the costs and expenses of legal counsel
retained by the Employer to defend the Executive and judgments, fines and
amounts paid in settlement actually and reasonably incurred by or imposed on
such indemnified party) with respect to any actions commenced against Executive
either with regard to his entering this Agreement with the Employer or in his
capacity as an officer or director, or former officer or director, of the
Employer or any affiliate thereof for which he may serve in such capacity. The
Employer also agrees to secure and maintain officers and directors liability
insurance providing coverage for Executive.
5. EMPLOYER'S POLICIES. Executive agrees to observe and comply with the
reasonable rules and regulations of the Employer as adopted by its Board of
Directors from time to time regarding the performance of his duties and to carry
out and perform orders, directions and policies communicated to him from time to
time by the Employer's Board of Directors.
6. TERMINATION. The Executive's employment hereunder may be terminated
under the following circumstances:
(a) Termination by the Employer.
(i) DEATH. The Executive's employment hereunder shall
terminate upon his death.
(ii) DISABILITY. If, as a result of the Executive's incapacity
due to physical or mental illness or disability, the Executive shall
have been incapable of performing his duties hereunder even with a
reasonable accommodation on a full-time basis for the entire period of
four consecutive months or any 120 days in a 180-day period, and
within 30 days after written Notice of Termination (as defined in
Section 6(c)) is given he shall not have returned to the performance
of
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his duties hereunder on a full-time basis, the Employer may terminate
Executive's employment hereunder.
(iii) CAUSE. The Employer may terminate Executive's employment
hereunder for Cause. For purposes of the Agreement, "Cause" shall mean
that: (i) Executive engaged in conduct which is a felony under the
laws of the United States or any state or political subdivision
thereof; (ii) Executive engaged in conduct constituting a material
breach of fiduciary duty, gross negligence or willful and material
misconduct relating to the Employer, material fraud or willful and
material misrepresentation relating to the business of the Employer;
(iii) Executive materially breached his obligations or covenants under
Section 8(a) of this Agreement; or (iv) Executive repeatedly failed to
competently perform his duties after receiving notice from the
Employer specifically identifying the manner in which Executive has
failed to competently perform and being given sufficient time to
correct his incompetent performance (it being understood that, for
this purpose, the manner and level of Executive's performance shall
not be determined based on the financial performance of the Employer).
Clause (iv) of this Section shall be null and void after the first
eighteen (18) months of this Agreement.
(iv) WITHOUT CAUSE. Executive's employment hereunder may be
terminated by the Employer at any time with or without Cause (as
defined in Section 6(a)(iii) above), by a majority vote of all of the
members of the Board of Directors of the Employer upon written notice
to Executive, subject only to the severance provisions specifically
set forth in Section 7.
(b) Termination by the Executive.
(i) DISABILITY. The Executive may terminate his employment
hereunder for Disability within the meaning of Section 6(a)(ii) above.
(ii) WITH GOOD REASON. Executive's employment hereunder may be
terminated by Executive with Good Reason effective immediately by
written notice to the Board of Directors of the Employer. For purposes
of this Agreement, with "Good Reason" shall mean: (i) a failure of the
Board of Directors of the Employer to elect Executive to offices with
the same or substantially the same duties and responsibilities as set
forth in Section 2 or to continue Executive's reporting relationship
as set forth in Section 2; (ii) a failure by the Employer to comply
with the provisions of Section 3; (iii) a material breach by the
Employer of any other provision of this Agreement which has not been
cured within 30 days after notice of noncompliance (specifying the
nature of the noncompliance), has been given by the Executive to the
Employer; or (iv) a Force Out upon or following a Change-in-Control
(as such terms are defined in Section 6(d) below).
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(iii) NOTICE OF TERMINATION. Any termination of the Executive's
employment by the Employer or by the Executive (other than termination
pursuant to subsection (a)(i) hereof) shall be communicated by written
Notice of Termination to the other party hereto in accordance with
Section 10 of this Agreement. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and, as
applicable, shall set forth in reasonable detail the fact and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated.
(c) DEFINITIONS. The following terms shall be defined as set forth
below.
(i) A "Change-in-Control" shall be deemed to have occurred if:
(A) any Person, together with all "affiliates" and
"associates" (as such terms are defined in Rule 12b-2 under the
Securities Exchange Act of 1934 (the "Exchange Act")) of such
Person, shall become the "beneficial owner" (as such term is
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Employer representing 40% or
more of either (A) the combined voting power of the Employer's
then outstanding securities having the right to vote in an
election of the Employer's Board of Directors ("Voting
Securities") or (B) the then outstanding shares of all classes of
stock of the Employer (in either such case other than as a result
of the acquisition of securities directly from the Employer); or
(B) individuals who constitute the Employer's Board of
Directors (the "Incumbent Directors") cease for any reason,
including, without limitation, as a result of a tender offer,
proxy contest, merger or similar transaction, to constitute at
least a majority of the Employer's Board of Directors, provided
that any person becoming a director of the Employer whose
election or nomination for election was approved by a vote of at
least a majority of the Incumbent Directors shall, for purposes
of this Agreement, be considered an Incumbent Director; or
(C) the stockholders of the Employer shall approve
(1) any consolidation or merger of the Employer or any subsidiary
where the stockholders of the Employer, immediately prior to the
consolidation or merger, would not, immediately after the
consolidation or merger, beneficially own (as such term is
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, shares representing in the aggregate at least 50% of
the voting shares of the corporation issuing cash or securities
in the consolidation or merger (or of its ultimate parent
corporation, if any), (2) any sale, lease, exchange or other
transfer (in one transaction or a series of transactions
contemplated or arranged by any
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party as a single plan) of all or substantially all of the assets
of the Employer or (3) any plan or proposal for the liquidation
or dissolution of the Employer;
Notwithstanding the foregoing, a "Change-in-Control" shall not be
deemed to have occurred for purposes of the foregoing clause (A)
solely as the result of an acquisition of securities by the Employer
which, by reducing the number of shares of stock or other Voting
Securities outstanding, increases (x) the proportionate number of
shares of stock of the Employer beneficially owned by any Person to
40% or more of the shares of stock then outstanding or (y) the
proportionate voting power represented by the Voting Securities
beneficially owned by any Person to 40% or more of the combined voting
power of all then outstanding Voting Securities; PROVIDED, HOWEVER,
that if any Person referred to in clause (x) or (y) of this sentence
shall thereafter become the beneficial owner of any additional stock
of the Employer or other Voting Securities (other than pursuant to a
share split, stock dividend, or similar transaction), then a
"Change-in-Control" shall be deemed to have occurred for purposes of
the foregoing clause (A). In addition, notwithstanding the foregoing,
a "Change-in-Control" shall not be deemed to have occurred if
Xxxxxxx X. Xxxxx continues to serve as Chairman of the Board of
Directors or the equivalent of the surviving entity of any event
listed in the foregoing clause (A), (B) or (C) and no Force Out (as
defined below) has occurred with respect to the Executive.
(ii) A "Force Out" shall be deemed to have occurred in the
event of a Change-in-Control together with or followed by:
(A) a change in duties, responsibilities, status or
positions with the Employer that does not represent a promotion
from or maintaining of Executive's duties, responsibilities,
status or positions as in effect immediately prior to the
Change-in-Control, or any removal of Executive from or any
failure to reappoint or reelect Executive to such positions,
except in connection with the termination of Executive's
employment for Cause, disability, retirement or death;
(B) a reduction by the Employer in Executive's Base
Salary or bonus compensation as in effect immediately prior to
the Change-in-Control;
(C) the failure by the Employer to continue in effect
any of the benefit plans including, but not limited to stock
option and equity awards, in which Executive is participating at
the time of the Change-in-Control of the Employer (unless
Executive is permitted to participate in any substitute benefit
plan with substantially the same terms and to the same extent and
with the same rights as Executive had with respect to the benefit
plan that is discontinued) other than as a result of the normal
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expiration of any such benefit plan in accordance with its terms
as in effect at the time of the Change-in-Control, or the taking
of any action, or the failure to act, by the Employer which would
adversely affect Executive's continued participation in any of
such benefit plans on at least as favorable a basis to Executive
as was the case on the date of the Change-in-Control or which
would materially reduce Executive's benefits in the future under
any of such benefit plans or deprive Executive of any material
benefits enjoyed by Executive at the time of the
Change-in-Control; PROVIDED, HOWEVER, that any such action or
inaction on the part of the Employer, including any modification,
cancellation or termination of any benefits plan, undertaken in
order to maintain such plan in compliance with any federal, state
or local law or regulation governing benefits plans, including,
but not limited to, the Employment Retirement Income Security Act
of 1974, shall not constitute a Force Out for the purposes of
this Agreement.
(D) the Employer's requiring Executive to be based in an
office located more than 25 miles from Manhattan, except for
required travel relating to the Employer's business to an extent
substantially consistent with the business travel obligations
which Executive undertook on behalf of the Employer prior to the
Change-in-Control;
(E) the failure by the Employer to obtain from any
successor to the Employer an agreement to be bound by this
Agreement pursuant to Section 13 hereof; or
(F) during the first eighteen months of this Agreement,
the termination, for whatever reason, of Xxxxxxx X. Xxxxx'x
service as Chairman of the Board of Directors of the Employer.
(iii) "Person" shall have the meaning used in Sections 13(d) and
14(d) of the Exchange Act; provided however, that the term "Person"
shall not include (A) Xxxxxxx X. Xxxxx or Xxxxx X. Xxxx, or (B) the
Employer, any of its subsidiaries, or any trustee, fiduciary or other
person or entity holding securities under any employee benefit plan of
the Employer or any of its subsidiaries.
7. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(a) TERMINATION WITHOUT CAUSE OR WITH GOOD REASON. If (i) Executive
is terminated without Cause pursuant to Section 6(a)(iv) above, or
(ii) Executive shall terminate his employment hereunder with Good Reason
pursuant to Section (6)(b)(ii) above, then the Employment Period shall
terminate as of the effective date set forth in the written notice of such
termination (the "Termination Date") and Executive shall be entitled to the
following benefits:
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(i) The Employer shall continue to pay Executive's Base Salary
(at the rate in effect on the date of his termination) and annual
performance bonus (based on the amount paid for the immediately
preceding year or, if the termination takes place prior to a bonus
having been previously so paid, the sum of $150,000.00) for the
remaining term of the Employment Period after the date of Executive's
termination, on the same periodic payment dates as payment would have
been made to Executive had the Employment Period not been terminated
for the remaining term of the Employment Period after the date of
Executive's termination; PROVIDED, HOWEVER, that if such termination
occurs upon or following a Change-in-Control, the Employer shall
continue to pay Executive's Base Salary (at the rate in effect on the
date of his termination) and annual performance bonus (based on the
highest amount paid for the three preceding years or, if the
termination takes place prior to a bonus having been previously so
paid, the sum of $150,000) for the remaining term of the Employment
Period after the date of Executive's termination. It is expressly
agreed that the Executive shall receive a bonus for each remaining
year of this Agreement and that the bonus will be paid in a lump sum
within thirty (30) days after the Executive's termination.
(ii) For the remaining term of the Employment Period, Executive
shall continue to receive all benefits described in Section 3 existing
on the date of termination, including, but not limited to, any bonuses
or equity awards described in Section 3 of this Agreement, subject to
the terms and conditions upon which such benefits may be offered. For
purposes of the application of such benefits, Executive shall be
treated as if he had remained in the employ of the Employer with a
Base Salary at the rate in effect on the date of termination;
(iii) Any unvested shares of restricted stock granted to the
Executive by the Employer shall become vested on the date of the
Executive's termination, any unexercisable stock options granted to
the Executive by the Employer shall become exercisable on the date of
the Executive's termination, and any unexercised stock options granted
to the Executive by the Employer shall remain exercisable until the
earlier of (A) the date on which the term of such stock options
otherwise would have expired, or (B) the second January 1 after the
date of the Executive's termination;
(iv) If Executive obtains other employment, or receives any
wages for services rendered to any person or entity during the
remaining term of Employment Period after the date of Executive's
termination, the payments due under Section 7(a)(i) will be reduced by
the amount of such wages, except that in no event shall the payment
due under Section 7(a)(i) be reduced to less than the amount of such
payments that would have been received by Executive over a
twelve-month period. Executive shall give prompt notice to the
Employer of any such employment undertaken or services rendered by
him, which notice shall include a description of the wages he will
receive, the date of receipt, and a copy
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of each relevant agreement or contract. Executive shall also give
prompt notice to the Employer of any changes in such employment or
wages.
(v) If in the opinion of tax counsel selected by the Executive
and reasonably acceptable to the Employer, the Executive has or will
receive any compensation (including without limitation as a result of
the accelerated vesting of equity awards) or recognize any income
(whether or not pursuant to this Agreement or any plan or other
arrangement of the Employer and whether or not the Employment Period
or the Executive's employment with the Employer has terminated) which
will constitute an "excess parachute payment" within the meaning of
Section 280G(b)(l) of the Internal Revenue Code (the "Code") (or for
which a tax is otherwise payable under Section 4999 of the Code or any
successor provision thereto), then the Employer shall pay the
Executive an additional amount (the "Additional Amount") equal to the
sum of (i) all taxes payable by the Executive under Section 4999 of
the Code with respect to all such excess parachute payments and any
such Additional Amount, plus (ii) all federal, state and local income
taxes payable by Executive with respect to any such Additional Amount.
Any amounts payable pursuant to this paragraph (v) shall be paid by
the Employer to the Executive within 30 days of each written request
therefor made by the Executive.
(b) TERMINATION FOR CAUSE OR WITHOUT GOOD REASON. If (i) Executive is
terminated for Cause pursuant to Section 6(a)(iii)(i-iii) above, or
(ii) Executive shall voluntarily terminate his employment hereunder without
Good Reason pursuant to Section 6(b)(ii) above, then the Employment Period
shall terminate as of the effective date set forth in the written notice of
such termination (the "Termination Date") and Executive shall be entitled
to receive only his Base Salary at the rate then in effect until the
Termination Date and any outstanding stock options held by Executive shall
expire in accordance with the terms of the stock option plan or option
agreement under which the stock options were granted.
(i) If Executive is terminated for Cause pursuant to Section
6(a)(iii)(iv) above during the first eighteen months of this
Agreement, the Employer shall pay within thirty days after the
termination, an amount equal to Executive's annual Base Salary (at the
rate in effect on the date of his termination) and annual performance
bonus (based on the amount paid in the preceding year or, if the
termination takes place prior to a bonus having been previously paid,
the sum of $150,000.00). Further (i) any unexercised stock options
shall remain exercisable until the earlier of (A) the date on which
the term of such stock options otherwise would have expired or (B) the
second January 1 after the date of the Executive's termination; and
(ii) any unvested stock options shall vest and any restricted shares
shall vest just as if the Executive were employed through his next
anniversary and without regard to the performance requirements set
forth in Section 3(d) of this Agreement.
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(ii) If in the opinion of tax counsel selected by the Executive
and reasonably acceptable to the Employer, the Executive has or will
receive any compensation (including without limitation as a result of
the accelerated vesting of equity awards) or recognize any income
(whether or not pursuant to this Agreement or any plan or other
arrangement of the Employer and whether or not the Employment Period
or the Executive's employment with the Employer has terminated) which
will constitute an "excess parachute payment" within the meaning of
Section 280(G)(b)(l) of the Internal Revenue Code (the "Code") (or for
which a tax is otherwise payable under Section 4999 of the Code or any
successor provision thereto), then the Employer shall pay the
Executive an additional amount (the "Additional Amount") equal to the
sum of (i) all taxes payable by the Executive under Section 4999 of
the Code with respect to all such excess parachute payments and any
such Additional Amount, plus (ii) all federal, state and local income
taxes payable by Executive with respect to any such Additional Amount.
Any amounts payable pursuant to this paragraph shall be paid by the
Employer to the Executive within thirty days of each written request
therefor made by the Executive.
(c) TERMINATION BY REASON OF DEATH. If Executive's employment
terminates due to his death, the Employer shall pay Executive's Base Salary
plus any applicable pro rata portion of the annual performance bonus
described in Section 3(c) above for a period of six months from the date of
his death, or such longer period as the Employer's Board of Directors may
determine, to Executive's estate or to a beneficiary designated by
Executive in writing prior to his death. If such death occurs during a
vesting period, a pro rata portion of the unvested shares of restricted
stock granted to the Executive that otherwise would have become vested upon
the conclusion of such vesting period shall become vested on the date of
the Executive's termination due to his death, and a pro rata portion of the
unexercisable stock options granted to the Executive that otherwise would
have become exercisable upon the conclusion of such vesting period shall
become exercisable on the date of the Executive's termination due to such
death. Furthermore, upon such death, any unexercised stock options granted
to the Executive shall remain exercisable until the earlier of (A) the date
on which the term of such stock options otherwise would have expired, or
(B) the second January 1 after the date of the Executive's termination due
to his death.
(d) TERMINATION BY REASON OF DISABILITY. In the event that
Executive's employment terminates due to his disability as defined in
Section 6(a)(ii) above, Executive shall be entitled to be paid his Base
Salary plus any applicable pro rata portion of the annual performance bonus
described in Section 3(c) above for a period of six months from the date of
such termination, or for such longer period as such benefits are then
provided with respect to other senior executives of the Employer. If such
disability occurs during a vesting period, a pro rata portion of the
unvested shares of restricted stock granted to the Executive that otherwise
would have become vested upon the conclusion of such vesting period shall
become vested on the date of the Executive's
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termination due to his disability, and a pro rata portion of the
unexercisable stock options granted to the Executive that otherwise would
have become exercisable upon the conclusion of such vesting period shall
become exercisable on the date of the Executive's termination due to such
disability. Furthermore, upon such disability, any unexercised stock
options granted to the Executive shall remain exercisable until the earlier
of (A) the date on which the term of such stock options otherwise would
have expired, or (B) the second January 1 after the date of the Executive's
termination due to his disability.
(e) ARBITRATION IN THE EVENT OF A DISPUTE REGARDING THE NATURE OF
TERMINATION. In the event that the Executive's employment is terminated by
the Employer for Cause or by Executive for Good Reason, and either party
contends that such Cause or Good Reason did not exist, the parties agree to
submit such claim to arbitration before the American Arbitration
Association ("AAA"), and Executive and Employer hereby agrees to submit to
any such dispute to arbitration pursuant to the terms of this Section 7(e).
In such a proceeding, the only issue before the arbitrator will be whether
Executive's employment was in fact terminated for Cause or for Good Reason,
as the case may be. If the arbitrator determines that Executive's
employment was terminated by the Employer without Cause or was terminated
by Executive for Good Reason, the only remedy that the arbitrator may award
is an amount equal to the severance payments specified in Section 7, the
costs of arbitration, and Executive's attorneys' fees. If the arbitrator
finds that Executive's employment was terminated by the Employer for Cause
or by the Executive without Good Reason, the arbitrator will be without
authority to award Executive anything, and the parties will each be
responsible for their own attorneys' fees, and the costs of arbitration
will be paid 50% by Executive and 50% by the Employer.
8. CONFIDENTIALLY; PROHIBITED ACTIVITIES. The Executive and the Employer
recognize that due to the nature of his employment and relationship with the
Employer, the Executive has access to and develops confidential business
information, proprietary information, and trade secrets relating to the business
and operations of the Employer. The Executive acknowledges that such information
is valuable to the business of the Employer, and that disclosure to, or use for
the benefit of, any person or entity other than the Employer, would cause
irreparable damage to the Employer. The Executive further acknowledges that his
duties for the Employer include the duty to develop and maintain client,
customer, employee, and other business relationships on behalf of the Employer;
and that access to and development of those close business relationships for the
Employer render his services special, unique and extraordinary. In recognition
that the good will and business relationships described herein are valuable to
the Employer, and that loss of or damage to those relationships would destroy or
diminish the value of the Employer, the Executive agrees as follows:
(a) CONFIDENTIALITY. During the term of this Agreement (including any
renewals), and at all times thereafter, the Executive shall maintain the
confidentiality of all confidential or proprietary information of the
Employer ("Confidential Information"), and, except in furtherance of the
business of the Employer or as specifically required by
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law or by court order, he shall not directly or indirectly disclose any
such information to any person or entity; nor shall he use Confidential
Information for any purpose except for the benefit of the Employer. For
purposes of the Agreement, "Confidential Information" includes, without
limitation: client or customer lists, identities, contacts, business and
financial information (excluding those of Executive prior to employment
with Employer); investment strategies; pricing information or policies,
fees or commission arrangements of the Employer; marketing plans,
projections, presentations or strategies of the Employer; financial and
budget information of the Employer; new personnel acquisition plans; and
all other business related information which has not been publicly
disclosed by the Employer. This restriction shall apply regardless of
whether such Confidential Information is in written, graphic, recorded,
photographic, data or any machine readable form or is orally conveyed to,
or memorized by, the Executive.
(b) PROHIBITED ACTIVITIES. Because Executive's services to the
Employer are essential and because Executive has access to the Employer's
Confidential Information, Executive covenants and agrees that:
(i) (A) during the Employment Period, and (B) in the event
that this Agreement is terminated (I) by the Employer for Cause or
(II) by the Executive for any reason other than death, disability,
Good Reason or the expiration of the term of the Agreement, Executive
will not, without the prior written consent of the Board of Directors
of the Employer which shall include the unanimous consent of the
Directors who are not officers of the Employer, directly or indirectly
(individually, or through or on behalf of another entity as owner,
partner, agent, employee, consultant, or in any other capacity),
during the Noncompetition Period, engage, participate or assist, as an
owner, partner, employee, consultant, director, officer, trustee or
agent, in the acquisition, development, management, leasing or
financing of any office real estate property anywhere in the New York
City metropolitan area (it being understood that the restrictions
regarding financing activities shall not apply with respect to any
termination of this Agreement by the Executive upon or after the
occurrence of a Change-in-Control); and
(ii) during the Employment Period, and during the two-year
period following the termination of the Executive by either party for
any reason (including the expiration of the term of the Agreement),
Executive will not, without the prior written consent of the Board of
Directors of the Employer which shall include the unanimous consent of
the Directors who are not officers of the Employer, directly or
indirectly (individually, or through or on behalf of another entity as
owner, partner, agent, employee, consultant, or in any other
capacity), solicit, encourage, or engage in any activity to induce any
Employee of the Employer to terminate employment with the Employer, or
to become employed by, or to enter into a business relationship with,
any other person or entity. For purposes of this subsection, the term
Employee means any individual who is an
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employee of or consultant to the Employer (or any affiliate) during
the six-month period prior to Executive's last day of employment.
(c) NONCOMPETITION PERIOD. For purposes of this Section 8, the
Noncompetition Period shall mean the period commencing on the date of
termination of Executive's employment under this Agreement and ending on
the earlier of (i) the date on which the term of this Agreement otherwise
would have expired, or (ii) the first anniversary of the date of
termination of Executive's employment under this Agreement.
(d) PASSIVE INVESTMENTS. During the term of Employment Period,
notwithstanding anything contained herein to the contrary, Executive is not
prohibited by this Section 8 from making investments in any entity that
engages, directly or indirectly, in the acquisition, development,
construction, operation, management, financing or leasing of office real
estate properties, regardless of where they are located if Executive's
aggregate investment in such entity constitutes less than one percent (1%)
of the equity ownership of such entity.
(e) EMPLOYER PROPERTY. The Executive acknowledges that all originals
and copies of materials, records and documents generated by him or coming
into his possession during his employment by the Employer are the sole
property of the Employer ("Employer Property"). During his employment, and
at all times thereafter, the Executive shall not remove, or cause to be
removed, from the premises of the Employer, copies of any record, file,
memorandum, document, computer related information or equipment, or any
other item relating to the business of the Employer, except in furtherance
of his duties under the Agreement. When the Executive terminates his
employment with the Employer, or upon request of the Employer at any time,
the Executive shall promptly deliver to the Employer all originals and
copies of Employer Property in his possession or control and shall not
retain any originals or copies in any form.
(f) NO DISPARAGEMENT. For one year following termination of the
Executive's employment for any reason, the Executive shall not
intentionally disclose or cause to be disclosed any negative, adverse or
derogatory comments or information about (i) the Employer and its parent,
affiliates or subsidiaries, if any; (ii) any product or service provided by
the Employer and its parent, affiliates or subsidiaries, if any; (iii) the
Employer's and its parent's, affiliates' or subsidiaries' prospects for the
future. For one year following termination of the Executive's employment
for any reason, the Employer shall not disclose or cause to be disclosed
any negative, adverse or derogatory comments or information about the
Executive. Nothing in this Section shall prohibit either the Employer or
the Executive from testifying truthfully in a judicial or administrative
proceeding in response to a subpoena.
(g) REMEDIES. The Executive declares that the foregoing limitations
in Sections 8(a) through 8(f) above are reasonable and necessary for the
adequate protection of the business and the goodwill of the Employer. In
any restriction contained in this
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Section 8 shall be deemed to be invalid, illegal or unenforceable by reason
of the extent, duration or scope thereof, or otherwise, then the court
making such determination shall have the right to reduce such extent,
duration, scope, or other provisions hereof to make the restriction
consistent with applicable law, and in its reduced form such restriction
shall then be enforceable in the manner contemplated hereby. In the event
that the Executive breaches any of the promises contained in this Section
8, the Executive acknowledges that the Employer's remedy at law for damages
will be inadequate and that the Employer will be entitled to specific
performance, a temporary restraining order or preliminary injunction to
prevent the Executive's prospective or continuing breach and to maintain
the status quo. The existence of this right to injunctive relief, or other
equitable relief, or the Employer's exercise of any of these rights, shall
not limit any other rights or remedies the Employer may have in law or in
equity, including, without limitation, the right to arbitration contained
in Section 7(e) hereof and the right to compensatory and monetary damages.
In the event that a final non-appealable judgment is entered in favor of
one of the parties, that party shall be reimbursed by the other party for
all costs and attorneys' fees incurred by such party in such action.
Executive hereby agrees to waive his right to a jury trial with respect to
any action commenced to enforce the terms of this Agreement.
(h) TRANSITION. Regardless of the reason for his departure from the
Employer, the Executive agrees that at Employer's sole costs and expense,
for a period of not more than thirty (30) days after termination of
Executive, he shall take all steps reasonably requested by the Employer to
effect a successful transition of client and customer relationships to the
person or persons designated by the Employer, subject to the Executive's
obligations to his new employer.
(i) COOPERATION WITH RESPECT TO LITIGATION. During the Employment
period and at all times thereafter, Executive agrees to give prompt written
notice to the Employer of any claim relating to the Employer and to
cooperate fully, in good faith and to the best of his ability with the
Employer in connection with any and all pending, potential or future
claims, investigations or actions which directly or indirectly relate to
any action, event or activity about which Executive may have knowledge in
connection with or as a result of his employment by the Employer
hereinunder. Such cooperation will include all assistance that the
Employer, its counsel or its representatives may reasonably request,
including reviewing documents, meeting with counsel, providing factual
information and material, and appearing or testifying as a witness;
provided, however, that the Employer will reimburse Executive for all
reasonable expenses, including travel, lodging and meals, incurred by him
in fulfilling his obligations under this Section 8(i) and, except as may be
required by law or by court order, should Executive then be employed by an
entity other than the Employer, such cooperation will not materially
interfere with Executive's then current employment.
(j) SURVIVAL. The provisions of this Section 8(a) shall survive
termination of the Executive's employment and those of Section 8(b) shall
survive for the periods
15
specified therein following termination. The covenants contained in Section
8 shall be construed as independent of any of other provisions contained in
this Agreement and shall be enforceable regardless of whether the Executive
has a claim against the Employer under the Agreement or otherwise.
9. CONFLICTING AGREEMENTS. Executive hereby represents and warrants that
the execution of this Agreement and the performance of his obligations hereunder
will not breach or be in conflict with any other agreement to which he is a
party or is bound, and that he is not now subject to any covenants against
competition or similar covenants which would affect the performance of his
obligations hereunder.
10. NOTICES. All notices or other communications required or permitted to
be given hereunder shall be in writing and shall be delivered by hand and or
sent by prepaid telex, cable or other electronic devices or sent, postage
prepaid, by registered or certified mail or telecopy or overnight courier
service and shall be deemed given when so delivered by hand, telexed, cabled or
telecopied, or if mailed, three days after mailing (one business day in the case
of express mail or overnight courier service), as follows:
(a) if to the Executive:
Xxxxxxx Xxxx
00, Xxxxx Xxxxxx
Xxx, Xxx Xxxx 00000
(b) if to the Employer:
XX Xxxxx Realty Corp.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
or such other address as either party may from time to time specify by
written notice to the other party hereto.
11. AMENDMENTS. No amendment, modification or waiver in respect of this
Agreement shall be effective unless it shall be in writing and signed by the
party against whom such amendment, modification or waiver is sought.
12. SEVERABILITY. If any provision of this Agreement (or any portion
thereof) or the application of any such provision (or any portion thereof) to
any person or circumstances shall be held invalid, illegal or unenforceable in
any respect by a court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof (or the remaining
portion hereof) or the application of such provision to any other persons or
circumstances.
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13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of both parties and their respective successors and assigns,
including any corporation with which or into which the Employer may be merged or
which may succeed to its assets or business, PROVIDED, HOWEVER, that the
obligations of the Employee are personal and shall not be assigned by him. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
personal and legal representatives, executors, administrators, assigns, heirs,
distributees, devisees and legatees.
14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other party.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed entirely within such State, without regard to the conflicts
of law principles of such State.
16. CHOICE OF VENUE. Executive agrees to submit to the jurisdiction of the
United States District Court for the Southern District of New York or the
Supreme Court of the State of New York, New York County, for the purpose of any
action to enforce any of the terms of this Agreement.
17. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter. The parties hereto shall not be liable or bound to any other
party in any manner by any representations, warranties or covenants relating to
such subject matter except as specifically set forth herein.
18. PARAGRAPH HEADINGS. Paragraph headings used in this Agreement are
included for convenience of reference only and will not affect the meaning of
any provision of this agreement.
19. BOARD APPROVAL. Employer represents that its Board of Directors has
approved the economic terms of this Agreement.
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20. IN WITNESS WHEREOF, this Agreement is entered into as of the date and
year first above written.
February 26, 2001
XX XXXXX REALTY CORP.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman
/s/ Xxxxxxx X. Xxxx
-------------------------------
Xxxxxxx Xxxx
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