AMENDMENT AND RESTATEMENT OF
SEVERANCE AGREEMENT
AMENDMENT AND RESTATEMENT OF SEVERANCE AGREEMENT, dated as of the 15th day
of August, 2000 (the "Agreement") by and between Xxxxxxx Xxxxxx (the
"Executive"), and Reckson Associates Realty Corp., a Maryland corporation with
a principal place of business at 000 Xxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx
00000 (the "Employer") and amends, supersedes and completely restates the
Severance Agreement made as of February 25, 1998 by and among the Executive
and the Employer.
Terms used in this Agreement with the initial letter capitalized shall,
unless otherwise defined herein, have the meanings specified in the Amendment
and Restatement of Employment and Noncompetition Agreement, dated August 15,
2000, between the Employer and the Executive and in any amendment to or
restatement of such agreement (the "Employment Agreement").
W I T N E S S E T H :
WHEREAS, Executive and Employer have previously entered into the
Employment Agreement; and
WHEREAS, the Employer desires to continue to employ the Executive and the
Executive desires to continue to be employed by the Employer.
NOW THEREFORE, in consideration of the premises and subject to the terms
and conditions set forth herein, the parties hereto agree as follows:
1. Employment and Noncompetition Agreement. This Agreement is
supplementary to and, except as explicitly set forth herein, does not limit or
alter any of the terms and conditions established under the Employment
Agreement.
2. Term. The term and duration of this Agreement shall be identical to
the term of the Employment Agreement, provided, however, that if a
Change-in-Control shall occur during the Employment Period, the term of this
Agreement, the Employment Agreement and the Employment Period shall continue
in effect until the later of (i) the date on which the term of the Employment
Agreement otherwise would have ended or (ii) the date which is sixty months
beyond the end of the calendar year in which the Change-in-Control occurs.
Section 1 of the Employment Agreement is hereby amended in accordance with the
foregoing.
3. Termination and Severance Payments. Sections 7(a), (b) and (c) of the
Employment Agreement are hereby superseded in their entirety by this Section
3.
(a) At-Will Employment. Executive's employment pursuant to the
Employment Agreement is "at will" and may be terminated by the Employer at any
time with or without Good Reason, 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 this
Section 3 and in Sections 7(d) through 7(h) of the Employment Agreement.
(b) Termination by Executive. The Employment Period and Executive's
employment under the Employment Agreement may be terminated effective
immediately by Executive by written notice to the Board of Directors of the
Employer (i) within 30 days of the occurrence of 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
of the Employment Agreement, (ii) within 30 days of the occurrence of a
material failure by the Employer to comply with the provisions of Section 3 of
the Employment Agreement or a material breach by the Employer of any other
provision of the Employment Agreement, (iii) at any time during the 30 day
period beginning on the effective date of a Change in Control and the 30 day
period beginning one year after the effective date of a Change-in-Control, or
(iv) within 30 days of the occurrence of a Force Out. For this purpose, a
Force Out shall be deemed to have occurred in the event of:
(i) a change in duties, responsibilities, status or positions with
the Employer, which, in Executive's reasonable judgment, 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 Good Reason,
disability, retirement or death;
(ii) a reduction by the Employer in Executive's Base Salary as in
effect immediately prior to the Change-in-Control;
(iii) the failure by the Employer to continue in effect any of the
benefit plans, programs or arrangements 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, program or arrangement with substantially the same terms and to the
same extent and with the same rights as Executive had with respect to the
benefit plan, program or arrangement that is discontinued) other than as
a result of the normal expiration of any such benefit plan, program or
arrangement 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, programs or arrangements on
at least as favorable a basis to Executive as is 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, programs or
arrangements or deprive Executive of any material benefits enjoyed by
Executive at the time of the Change-in-Control;
(iv) the failure by the Employer to provide and credit Executive
with the number of paid vacation days to which Executive is then entitled
in accordance with the Employer's normal vacation policies as in effect
immediately prior to the Change-in-Control;
(v) the Employer's requiring Executive to be based in an office
located beyond a reasonable commuting distance from Executive's residence
immediately prior to the Change-in-Control, 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;
(vi) the failure by the Employer to obtain from any successor to the
Employer an agreement to be bound by this Agreement and the Employment
Agreement; or
(vii) any refusal by the Employer to continue to allow Executive to
attend to matters or engage in activities not directly related to the
business of the Employer which, prior to the Change-in-Control, Executive
was permitted by the Employer's Boards of Directors to attend to or
engage in.
(c) Certain Benefits upon Termination by Executive. Except as
specifically provided in this Section 3 or in Sections 7(d) through 7(h) of
the Employment Agreement or as otherwise required by law, all compensation and
benefits to Executive under the Employment Agreement shall terminate on the
date of termination of the Employment Period. Notwithstanding the foregoing,
if the Employment Period is terminated pursuant to Section 3(b) or if
Executive's employment is terminated by the Employer other than for Good
Reason, Executive shall be entitled to the following benefits:
(i) The Employer shall pay the Executive (x) his or her full
Base Salary though the date of termination at the rate in effect on
such date, (y) compensation for accrued but unused vacation time,
plus (z) a pro rata portion of the Executive's incentive
compensation for the calendar year in which the event of termination
occurs, assuming that the Executive would have received incentive
compensation for such full calendar year equal to the product of (A)
the Base Salary that would be payable to the Executive pursuant to
subsection 3(a) of the Employment Agreement for such full calendar
year and (B) the greater of (a) 1/2 or (b) a percentage equal to the
following
(I) the sum of (x) the cash bonus awarded to the Executive
for the immediately preceding fiscal year, (y) the product
of the price per share of Common Stock on the date of
termination (as equitably adjusted to reflect any changes in
the capitalization of the Employer) and the aggregate number
of shares of Common Stock granted, sold or covered by
options or loans awarded to the Executive as incentive
compensation for the immediately preceding fiscal year, and
(z) the value of all other incentive compensation paid or
awarded to the Executive for the immediately preceding
fiscal year (including, without limitation, all such
incentive compensation includible in the Executive's gross
income and reported on an Internal Revenue Service Form
W-2), divided by (II) the Executive's Base Salary for the
immediately preceding fiscal year,
(the greater of clauses (a) and (b) being herein referred to as the
"Deemed Bonus Percentage");
(ii) The Employer shall pay as severance to the Executive, not
later than the tenth day following the date of termination, a lump
sum severance payment (the "Severance Payment") equal to the
aggregate of all compensation that would have been due to the
Executive hereunder had his or her employment not been so terminated
(without duplication of subsection 3(c)(i) above), including,
without limitation, (A) Base Salary (at the greater of the rate
payable pursuant to subsection 3(a) of the Employment Agreement or
the highest rate then payable to any Executive Vice President of the
Employer), and (B) all incentive compensation which would have been
due to the Executive pursuant to subsection 3(b) of the Employment
Agreement, through the expiration of this Agreement (as such
Agreement may continue in effect under Section 2 hereof in the event
of a Change-in-Control) assuming that the Executive would have
received incentive compensation for each calendar year through the
expiration of this Agreement (as such Agreement may continue in
effect under Section 2 hereof in the event of a Change-in-Control)
equal to the product of (x) the Base Salary payable to the Executive
pursuant to clause (A), and (y) the Deemed Bonus Percentage (or, if
greater, the highest Deemed Bonus Percentage determined with respect
to any Executive Vice President of the Employer), payable in the
same proportions of cash, grants of securities, loans to purchase
securities, loan forgiveness and gross-up payments as the incentive
compensation paid to the Executive for the immediately preceding
fiscal year; provided, however, that such Severance Payment shall
not be payable to the Executive until (I) the Executive has executed
and delivered to the Employer a general release in a form to be
determined by the Employer in good faith, and (II) any applicable
revocation period with respect to such release has expired. For
purposes of determining Executive's annual compensation in the
preceding sentence, compensation payable to the Executive by the
Employer shall include, without limitation, every type and form of
compensation includible in the Executive's gross income in respect
of his or her employment by the Employer (including, without
limitation, all income reported on an Internal Revenue Service Form
W-2), compensation income recognized as a result of the Executive's
exercise of stock options or sale of the stock so acquired and any
annual incentive compensation paid in cash or securities to such
Executive;
(iii) An amount equal to the Additional Amount pursuant to
Section 5 below and an amount equal to the Income Tax Payment
pursuant to Section 6 below;
(iv) For the remaining term of the Employment Agreement,
Executive shall continue to receive all benefits described in
Section 3 of the Employment Agreement existing immediately prior to
the date of termination (without taking into account any changes in
such benefits effected in violation of the Employment Agreement) and
any other benefits then provided by Employer to Executive in
addition to those described in Section 3 of the Employment
Agreement, including, but not limited to, the life insurance
coverage provided by Employer to Executive and the automobile
provided by Employer to Executive and automobile insurance and
maintenance in respect of such automobile. For purposes of the
application of such benefits, Executive shall be treated as if he or
she had remained in the employ of the Employer with a Base Salary at
the rate in effect on the date of termination;
(v) For purposes of any equity compensation plan of the
Employer, (x) any stock options or other awards (including
restricted stock grants) of the Executive under such plan shall vest
and become exercisable upon any such termination, and (y) Executive
shall be treated as if he or she had remained in the employ of the
Employer for the remaining term of the Employment Agreement after
the date of Executive's termination so that Executive shall be
entitled to exercise any exercisable options or other rights;
(vi) For purposes of any section 401(k) plan or other deferred
compensation plan of the Employer, Executive shall be treated as if
he or she had remained in the employ of the Employer for the
remaining term of the Employment Agreement after the date of
Executive's termination so that Executive may continue to receive
all matching contributions as provided by the Employer in connection
with such plan or any other contributions by Employer in connection
with such plan as in effect immediately prior to such termination;
(vii) The amount of any outstanding loans made by the Employer
to the Executive, together with any interest accrued on any such
loans, and any related "tax" loans made by the Employer to the
Executive in respect of tax liabilities owing as the result of the
forgiveness of such loans (including forgiveness pursuant to the
terms of this Section 3(c)(vii)), together with any interest accrued
on any such tax loans, shall be deemed forgiven and Executive shall
have no further liability in respect thereof;
(viii) If, in spite of the provisions above, any benefits or
service credits under any benefit plan or program of the Employer
may not be paid or provided under such plan or program to Executive,
or to Executive's dependents, beneficiaries or estate, because
Executive is no longer considered to be an employee of the Employer,
the Employer shall pay or provide for payment of such benefits and
service credits to Executive, or to Executive's dependents,
beneficiaries or estate, for the remaining term of the Employment
Agreement; and
(ix) Nothing herein shall be deemed to obligate Executive to
seek other employment in the event of any such termination and any
amounts earned or benefits received from such other employment will
not serve to reduce in any way the amounts and benefits payable in
accordance herewith.
4. Expenses. Section 3(d) of the Employment Agreement is hereby
supplemented by this Section 4. In addition to the expenses referred to in
Section 3(d) of the Employment Agreement, the Employer shall pay all legal
fees and related expenses (including the costs of experts, evidence and
counsel) incurred by the Executive as they become due as a result of (i) the
termination of the Employment Period or Executive's employment pursuant to
this Agreement or the Employment Agreement (including all such fees and
expenses, if any, incurred in contesting or disputing any such termination),
(ii) the Executive seeking to obtain or enforce any right or benefit provided
by this Agreement, the Employment Agreement or by any other plan or
arrangement maintained by the Employer under which the Executive is or may be
entitled to receive benefits or (iii) any action taken by the Employer against
the Executive, unless and until such time that a final judgement has been
rendered in favor of the Employer and all appeals related to any such action
have been exhausted; provided however, that the circumstances set forth above
occurred on or after a Change-in-Control.
5. Additional Amount. Whether or not Section 3 is applicable, if in
the opinion of tax counsel selected by the Executive and reasonably acceptable
to the Employer, the Executive has received or will receive any compensation
or recognize any income (whether or not pursuant to this Agreement, the
Employment 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)(1) of the Code (or for which a tax is
otherwise payable under Section 4999 of the Code), 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
Section 4 shall be paid by the Employer to the Executive within 30 days of
each written request therefor made by the Executive.
6. Income Tax Payment. Whether or not Section 3 is applicable, if
(i) the Executive has received or will receive any compensation or recognize
any income (whether or not pursuant to this Agreement, the Employment
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) in connection with a "Change-in-Control" (as that term may be
interpreted in this Agreement, the Employment Agreement or any plan or other
arrangement of the Employer), and (ii) such compensation or income represents
non-cash compensation or income (including, without limitation, non-cash
compensation or income attributable to the vesting or exercise of stock
options and other awards (including restricted stock grants) under any stock
option plan of the Employer), then the Employer shall pay the Executive in
cash an amount (the "Income Tax Payment") equal to the sum of (A) all federal,
state and local income taxes payable by Executive with respect to such
non-cash compensation or income, plus (B) all federal, state and local income
taxes payable by Executive with respect to any such Income Tax Payment. The
Income Tax Payment shall be paid by the Employer to the Executive within 30
days of the written request therefor made by the Executive.
7. Notices. Any notice required or permitted hereunder shall be in
writing and shall be deemed sufficient when given by hand, by nationally
recognized overnight courier or by express, registered or certified mail,
postage prepaid, return receipt requested, and addressed to the Employer or
Executive, as applicable, at the address indicated above (or to such other
address as may be provided by notice).
8. Miscellaneous. This Agreement (i) may not be assigned by
Executive without the prior written consent of the Employer and (ii) may be
assigned by the Employer and shall be binding upon, and inure to the benefit
of, the Employer's successors and assigns. Headings herein are for convenience
of reference only and shall not define, limit or interpret the contents
hereof.
9. Amendment. This Agreement may be amended, modified or
supplemented by the mutual consent of the parties in writing, but no oral
amendment, modification or supplement shall be effective.
10. Severability. If a court of competent jurisdiction adjudicates
any one or more of the provisions hereof as invalid, illegal or unenforceable
in any respect, such provision(s) shall be ineffective only to the extent and
duration of such invalidity, illegality or unenforceability and such
invalidity, illegality or unenforceability shall not affect the remaining
substance of such provision or any other provision of this Agreement and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision had been limited or modified (consistent with its general intent) to
the extent necessary so that it shall be valid, legal and enforceable. If it
shall not be possible to so limit or modify such invalid, illegal or
unenforceable provision, this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein, and the
parties will use their best efforts to substitute a valid, legal and
enforceable provision which, insofar as practicable, implements the purpose
and intent of the provision originally contained herein.
11. Governing Law. This Agreement shall be construed and governed by
the laws of the State of New York.
IN WITNESS WHEREOF, this Agreement is entered into as of the date and
year first above written.
RECKSON ASSOCIATES REALTY CORP.
By:
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Name:
Title:
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Xxxxxxx Xxxxxx
