EMPLOYMENT AGREEMENT
Exhibit 99.6
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made as of this 11th day of December
2006, by and between Xxxxxxxxx X. Xxxxxxxx (“Executive”) and SSPF/CET Operating Company
LLC, a Delaware limited liability company (the “Company”).
W
I T N E S S E
T H:
WHEREAS, pursuant to an employment agreement, dated July 5, 2005 (the “Seller Employment
Agreement”), Executive currently serves as a senior executive of Columbia Equity Trust, Inc., a
Maryland corporation (“Seller”); and
WHEREAS, Executive acknowledges and agrees that this Agreement supersedes any rights Executive
may have under the Seller Employment Agreement, including any right to change in control,
severance, termination or similar payments or compensation under such agreement;
1. Employment Term. Subject to the provisions of Section 4 of this Agreement, the Company
hereby agrees to employ Executive and Executive hereby agrees to work in the employ of the Company,
subject to the terms and conditions of this Agreement, for the period commencing on the Closing
Date (the “Effective Date”) and ending on the last day of the month in which occurs the
first (1st) anniversary of the Effective Date (the “Initial Employment Term”);
provided, however, that upon any termination of the Merger Agreement in accordance
with its terms, this Agreement shall be null and void. Commencing on the last day of the Initial
Employment Term and each anniversary thereafter (each, an “Automatic Extension Date”), the
Initial Employment Term shall be automatically extended for an additional one (1) year unless
either the Company or Executive has given the other party prior written notice of the intention to
not extend this Agreement not less than sixty (60) days before the Automatic Extension Date. The
Initial Employment Term and any extensions thereof are referred to herein collectively as the
“Employment Term.” So long as Executive’s employment has not been earlier terminated,
then, upon the expiration of the Employment Term, Executive shall be considered to be an employee
of the Company “at will.”
2. Position, Duties and Responsibilities. During the Employment Term, Executive shall
serve as Senior Vice President of Asset Management. In addition, Executive shall serve in such
offices of subsidiaries and affiliates of the Company as reasonably requested by the Company,
without any additional compensation. Executive shall have the appropriate authority, duties and
responsibilities attendant with such positions and any other duties that may be assigned by the
Chief Executive Officer of the Company or the Company’s board of managers (the “Board”).
Executive shall devote his full time to the business of the Company and agrees to use his best
efforts, skill and ability to perform his duties and responsibilities consistent with this
Agreement. Executive shall devote his full business time, attention and energies to the business
of the Company; provided, however that nothing shall preclude Executive, subject to
prior approval from the Board (which shall not be unreasonably withheld), from engaging in any
professional, charitable, educational, religious or similar types of activities or accepting
appointment to or continuing to serve on any board of directors or trustees of any organization
engaged in any such activities; provided, further, in each case, and in the
aggregate, that such other activities do not inhibit or interfere with the performance of
Executive’s duties under this Agreement, or conflict in any way with the business of the Company.
3. Compensation.
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the Company as of such payment date. Thus, upon a termination of employment for any reason,
Executive shall continue to be entitled to receive, in addition to any other payment due to
Executive pursuant to Section 5 hereof, the unpaid portion of the Signing Payment on the first
(1st) anniversary of the Effective Date. This obligation shall fully survive the
termination of the Employment Term.
4. Termination.
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(i) Executive’s intentional and continued failure (other than by reason of mental or
physical illness) to perform reasonably assigned material duties if such failure has a
materially and demonstrably detrimental effect on the business operations of the Company or
if the Board reasonably and in good faith concludes such failure could reasonably be
expected to have a materially and demonstrably detrimental effect on the business operations
of the Company;
(ii) Executive’s willful misconduct in the performance of Executive’s duties;
(iii) Executive’s conviction of, or plea of guilty or nolo contendere to, a felony
under the laws of the United States or any state or political subdivision thereof;
(iv) Executive’s breach of any non-competition, non-disclosure or non-solicitation
provisions of this Agreement or of any other such agreement with the Company; or
(v) Executive commits any fraud, embezzlement, misappropriation of funds, or breach of
fiduciary duty against the Company, in each case of a material nature;
provided, however, that if such termination is based on any event set forth in
clause (i) or (ii) above, Executive shall have thirty (30) days after receipt of the Notice of
Termination in which to cure the failure, breach or infraction described in the Notice of
Termination and shall be afforded an opportunity to present his position or defense to the Board.
If the failure, breach or infraction is timely cured by Executive or the Board determines that
Cause for Executive’s termination does not exist, the Notice of Termination shall become null and
void.
(i) a demotion of Executive or a material diminution in Executive’s duties, functions
and responsibilities with respect to the Company;
(ii) the Company’s causing Executive to relocate his employment more than fifty (50)
miles from the location of Executive’s principal office on the Effective Date;
(iii) a substantial reduction of Executive’s Base Salary, as such may be increased from
time to time after the date of this Agreement;
(iv) the Commingled Pension Trust Fund (Special Situation Property) of JPMorgan Chase
Bank, N.A., a trust governed by the laws of New York (“SSPF”) changes its investment
focus from a value-added strategy to a lower risk strategy;
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(v) the net asset value of SSPF falls below $1.25 billion; or
(vi) SSPF fails to make (or cause to be made) within two years from the Effective Date
at least $80 million of additional capital contributions to SSPF/CET PI LLC which are used
to make equity investments in New Investments (as defined in the Company LLC Agreement);
provided, however, if Executive desires to terminate his employment for Good
Reason, Executive must provide the Notice of Termination within thirty (30) days after the
occurrence of the event or circumstance providing such basis and if the Notice of Termination is
based on an event described in Sections 4(d)(i)-(iii), the Company shall have thirty (30) days
after its receipt of Executive’s Notice of Termination in which to cure or remedy the grounds
identified as Good Reason in the Notice of Termination; provided, further, that
Good Reason under Sections 4(d)(iv)-(vi) shall not exist unless Executive shall have previously or
simultaneously furnished notice to the Company that Executive is electing to redeem all his Common
Units (as defined in the Company LLC Agreement) pursuant to the Company LLC Agreement. If the
grounds for Good Reason are timely cured or remedied by the Company, Executive’s Notice of
Termination shall become null and void.
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agreement, related plan, limited liability company agreement or operating agreement, as
applicable.
For purposes of this Agreement,
“Cash Accrued Benefits” shall mean (i) any unpaid Base Salary earned or accrued
through the Date of Termination, (ii) any accrued but unused vacation benefit, and (iii) any
reimbursement for business expenses owed to Executive by the Company.
“Accrued Benefits” shall mean all payments and benefits other than the Cash Accrued
Benefits to which Executive may be entitled under the terms of any applicable compensation
arrangement or employee benefit plan or program (including COBRA, disability or death benefit
plans) of the Company.
“Maximum Bonus” shall mean the greater of (i) the highest aggregate Annual Bonus paid
to Executive by the Company (or by Seller, or Seller’s predecessor for 2004 as disclosed in the
prospectus for the initial public offering of Seller’s common stock) for any of the three (3)
calendar years prior to the year that includes the Date of Termination or (ii) the Target Annual
Bonus that Executive was eligible to receive for the calendar year that includes the Date of
Termination. In no event shall the Maximum Bonus include the Signing Payment.
“Pro Rata Portion” of Executive’s Maximum Bonus shall be calculated by multiplying the
Maximum Bonus by a fraction, the numerator of which shall be the number of calendar days elapsed in
the year in which the Date of Termination occurs, up to and including the Date of Termination, and
the denominator of which shall be 365.
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(i) a lump sum payment, within ten (10) days following the Date of Termination, in an
amount equal to the Cash Accrued Benefits;
(ii) the Accrued Benefits;
(iii) a severance benefit of an amount equal to the product of one (1) and Executive’s
Base Salary (at the rate in effect on the Date of Termination), payable in twelve (12) equal
monthly installments commencing on the first month’s anniversary of the Date of Termination
(or such later date as required to comply with Section 409A, if applicable);
(iv) an amount equal to the Pro Rata Portion of Executive’s Maximum Bonus, payable in a
lump sum within ten (10) days of the Date of Termination (or such later date as required to
comply with Section 409A, if applicable);
(v) medical or health insurance benefits to Executive, his spouse and eligible
dependents, if applicable, at no cost to Executive, his spouse and eligible dependents, if
applicable, for twelve (12) months following the Date of Termination of employment;
provided, however, that if applicable law or the terms of such plan prohibit
the continued participation of Executive, or his spouse and eligible dependents, if
applicable, the Company shall make a cash payment to Executive that is sufficient, on an
after-tax basis, to allow Executive to obtain insurance that provides substantially the same
benefits as the Company-provided medical or health insurance benefit or plan; and
(vi) all of Executive’s outstanding options, restricted stock awards and any other
equity rights granted by the Company to Executive shall continue to be governed by the grant
agreement, related plan, limited liability company agreement or operating agreement, as
applicable.
(i) a lump sum payment, within ten (10) days following the Date of Termination, in an
amount equal to the Cash Accrued Benefits;
(ii) the Accrued Benefits;
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(iii) an amount equal to the product of one and one-half (11/2 ) times the sum of
Executive’s Base Salary at the rate then in effect plus Executive’s Maximum Bonus; payable
in a lump sum within ten (10) days following the Date of Termination (or such later date
required to comply with Section 409A, if applicable);
(iv) outstanding options and other equity awards that include an exercise period shall
remain exercisable until the earlier of the expiration date of such award or the third
anniversary of the Date of Termination; provided, however, that such option
and other equity awards and Executive’s rights thereunder otherwise shall remain subject to
the terms of the applicable grant agreement and related plan; and;
(v) medical or health insurance benefits to Executive, his spouse and eligible
dependents, if applicable, at no cost to Executive, his spouse and eligible dependents, if
applicable, for eighteen (18) months following the Date of Termination of employment;
provided, however, that if applicable law or the terms of such plan prohibit
the continued participation of Executive, or his spouse and eligible dependents, if
applicable, the Company shall make a cash payment to Executive that is sufficient, on an
after-tax basis, to allow Executive to obtain insurance that provides substantially the same
benefits as the Company-provided medical or health insurance benefit or plan.
The amount payable under the preceding paragraphs (ii), (iii), and (iv) shall be subject to
compliance with Section 5(g).
For purposes of this Agreement, “Liquidity Event” shall mean (i) the liquidation,
dissolution or winding up of the Company, (ii) the sale or other disposition of all or
substantially all of the Company Assets in a single transaction or series of related transactions
pursuant to which the Company fails to reinvest (or commit to reinvest) within one-hundred and
eighty (180) days of such transaction or series of related transactions more than fifty (50%)
percent of the net cash proceeds of such transaction or series of related transactions, (iii) a
merger, statutory share exchange, recapitalization, reclassification, consolidation or other
similar transaction involving the Company, or (iv) the sale or transfer of a majority of the
outstanding Common Units, to one Person or a group of Persons, in each case in clauses (iii) and
(iv) above under circumstances in which the holders of the outstanding voting Common Units,
immediately prior to such transaction, own less than a majority of the combined voting power of the
outstanding voting securities of the Company, or the surviving or resulting corporation or
acquirer, as the case may be, immediately following such transaction or series of related
transactions. The terms “Company Assets,” “Common Units” and “Person” shall
have the meanings set forth in the Company LLC Agreement.
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the event of Executive’s death, his estate) executes and delivers to the Company an agreement
releasing the Company, its subsidiaries and affiliates, and its and their officers, directors,
managers, employees and members (and the directors, trustees, officers or employees of any such
direct or indirect members) from all liability (other than the payments and benefits under this
Agreement) in a form reasonably satisfactory to the Company and such agreement has become
effective.
6. Excise Tax Gross-Up. In the event that it shall be determined that any payment, award,
benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by (i)
the Company (or any of its affiliated entities), (ii) any entity which effects a Liquidity Event to
or for the benefit of Executive, or (iii) by the Seller pursuant to the Seller Employment
Agreement, would constitute a Parachute Payment (as defined in Section 280G of the Code) and result
in the imposition on Executive of an excise tax under Section 4999 of the Code, then, in addition
to any other benefits to which Executive is entitled under this Agreement, Executive shall be paid
by the Company an amount in cash equal to the sum of the excise taxes payable by Executive by
reason of receiving Parachute Payments plus the amount necessary to put Executive in the same
after-tax position (taking into account any and all applicable federal, state and local excise,
income or other taxes at the highest applicable rates on such Parachute Payments and on any payment
under this Section 6 as if no excise taxes had been imposed with respect to Parachute Payments).
The calculation under this Section 6 shall be as determined by the Company’s accountants or if the
Company’s accountants are precluded from performing such services, the Board shall appoint another
nationally recognized public accounting firm to make the determinations required hereunder.
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breach of this covenant or any breach of other confidentiality obligations by third parties or
(ii) made legitimately available to Executive by a third party without breach of any
confidentiality obligations.
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employment terminates, would severely injure the Company. Executive understands and agrees
that the restrictions contained in this Section 7 are reasonable and are required for the Company’s
legitimate protection, and do not unduly limit his ability to earn a livelihood.
8. Surrender of Company Property. Upon Executive’s termination of employment for any
reason, Executive shall promptly surrender and deliver to the Company all property of the Company
and all documents, correspondence and any other information, of any type whatsoever, from the
Company or any of its agents, servants, employees, suppliers, and existing or potential customers,
that came into Executive’s possession by any means whatsoever, during the course of Executive’s
employment.
9. Waiver. The failure of a party to enforce any term, provision, or condition of this
Agreement at any time or times shall not be deemed a waiver of that term, provision, or condition
for the future, nor shall any specific waiver of a term, provision, or condition at one time be
deemed a waiver of such term, provision, or condition for any future time or times.
10. Disputes.
a. Governing Law. This Agreement shall be governed by and construed in accordance
with the law of the State of New York without giving effect to principles of conflicts of law.
c. Jurisdiction and Choice of Forum. Executive and the Company irrevocably submit to
the exclusive jurisdiction of any state or federal court located in New York or the District of
Columbia for the adjudication of any dispute hereunder other than any action for injunction to
compel performance under Section 7 of this Agreement.
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11. Representations and Warranties. Executive represents and warrants that, other than the
Seller Employment Agreement (which shall be superseded by this Agreement as of the Effective Date
hereunder), (i) he is not bound by any employment agreement, and (ii) he is not bound by any
restrictive covenant or agreement that limits his right to enter into this Agreement and perform
his duties hereunder.
12. Miscellaneous.
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taken place. Failure of the Company to obtain such assumption and agreement prior to the
effectiveness of any such assignment or succession shall be a breach of this Agreement and shall
entitle Executive to resign from the employ of the Company and to receive the Termination Benefits
and other benefits under this Agreement in the same amount and on the same terms as Executive would
be entitled to hereunder if he terminated his employment for Good Reason. References in this
Agreement to the “Company” include the Company as hereinbefore defined and any such assignee or
successor as described above which assumes and agrees to perform this Agreement by operation of law
or otherwise.
If to Executive:
Xxxxxxxxx X. Xxxxxxxx
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Fax No.: 000-000-0000
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Fax No.: 000-000-0000
If to the Company:
SSPF/CET Operating Company LLC
c/o X.X. Xxxxxx Investment Management Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxx
Fax No.: 000-000-0000
c/o X.X. Xxxxxx Investment Management Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxx
Fax No.: 000-000-0000
With a copy (which shall not constitute notice) to:
c/o X.X. Xxxxxx Investment Management Inc.
X.X. Xxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
X.X. Xxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
and
Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxx, Esq.
Fax Number: (000) 000-0000
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxx, Esq.
Fax Number: (000) 000-0000
or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notices and communications shall be effective when actually received by addressee.
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shall not be eligible for severance benefits under any plan, program or policy of the Company
or the Seller or their affiliates or pursuant to the Seller Employment Agreement. This Agreement
can only be changed or modified pursuant to a written instrument duly executed by each of the
parties hereto. Executive hereby acknowledges that any change in control, severance, termination
or similar payments or compensation for which Executive is eligible under the Seller Employment
Agreement is hereby waived.
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SSPF/CET Operating Company LLC: | ||||||
By: | /s/ Xxxxxxxxx X. Xxxx | |||||
Name: Xxxxxxxxx X. Xxxx Title: Vice President |
||||||
EXECUTIVE: | ||||||
/s/ Xxxxxxxxx X. Xxxxxxxx | ||||||
Xxxxxxxxx X. Xxxxxxxx |
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