Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of August 15, 1998, by and
between American Real Estate Investment Corporation, a Maryland corporation (the
"Company") and Xxxxxxx X. Xxxxxxxx ("Executive"), recites and provides as
follows:
W I T N E S S E T H:
WHEREAS, the Company is a self-administered Maryland
corporation, which owns, acquires, develops and leases office and industrial
properties;
WHEREAS, the Company desires to employ Executive to devote a
significant portion of his time (as hereinafter defined) to the business of the
Company, including, without limitation, the operation and management of the
Company and the properties, and to serve as the Senior Vice President and Chief
Financial Officer of the Company; and
WHEREAS, Executive desires to be so employed on the terms and
subject to the conditions hereinafter stated.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants,
promises and obligations of the parties provided for in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
A. DEFINITIONS.
For purposes of this Agreement, the following terms shall have
the following meanings (applicable to both the singular and plural forms of the
terms defined):
1. "Acquisition of Office or Industrial Property" means
engaging in the activity of soliciting, seeking to acquire, obtaining an option
or first right of refusal to acquire, or acquiring, any interest in an Office or
Industrial Property or in real property planned for development as an Office or
Industrial Property.
2. "Affiliate" means (i) any person directly or indirectly
controlling, controlled by, or under common control with such other person, (ii)
any executive officer, director, trustee or general partner of such other
person, and (iii) any legal entity for which such person acts as an executive
officer, director, trustee or general partner. The term "person" means and
includes any natural person, corporation, partnership, association, limited
liability company or any other legal entity.
3. "Board" means the Board of Directors of the Company.
4. "Closing Date" means August 15, 1998.
5. "Change in Control" means the happening of any of the
following:
(i) any "person," including a "group" (as such terms are
used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), but excluding
the Company, any entity controlling, controlled by or under
common control with the Company, any employee benefit plan
of the Company or any such entity, and, with respect to
Executive, Executive and any "group" (as such term is used
in Section 13(d)(3) of the Exchange Act) of which Executive
is a member), is or becomes the "beneficial owner" (as
defined in Rule 13(d)(3) under the Exchange Act), directly
or indirectly, of securities of the Company representing 50%
or more of either (A) the combined voting power of the
Company's then outstanding securities or (B) the then
outstanding shares (in either such case other than as a
result of an acquisition of securities directly from the
Company); or
(ii) any consolidation or merger of the Company or any
subsidiary where the stockholders of the Company,
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 50% or more of the voting securities of the
corporation issuing cash or securities in the consolidation
or merger (or of its ultimate parent corporation, if any);
or
(iii) there shall occur (A) any sale, lease, exchange or
other transfer (in one transaction or a series of
transactions contemplated or arranged by any party as a
single plan) of all or substantially all of the assets of
the Company, other than a sale or disposition by the Company
of all or substantially all of the Company's assets to an
entity, at least 50% of the combined voting power of the
voting securities of which are owned by persons in
substantially the same proportion as their ownership of the
Company immediately prior to such sale or (B) the approval
by stockholders of the Company of any plan or proposal for
the liquidation or dissolution of the Company; or
(iv) the members of the Board at the beginning of any
consecutive 24-calendar-month period (the "Incumbent
Directors") cease for any reason other than due to death to
constitute at least a majority of the members of the Board;
provided that any director whose election, or nomination for
election by the Company's stockholders, was approved by a
vote of at least a majority of the members of the Board then
still in office who were members of the Board at the
beginning of such 24-calendar-month period, shall be deemed
to be an Incumbent Director.
6. "Competitive Activity" means engaging in directly, through
an Affiliate, or being employed by any entity undertaking, or otherwise
undertaking to do any of the following within a 30-mile radius of any Property
of the Company: (i) Acquisition of Office or Industrial Property, (ii) Office or
Industrial Property Ownership or Leasing, (iii) Office or Industrial Property
Construction, (iv) Office or Industrial Property Entitlements, (v) Speculation,
or (vi) Office or Industrial Property Management and Operation.
7. "Employment Term" means the Initial Term, as herein
defined, and the successive annual renewals of this Agreement until terminated.
The initial term of Executive's employment hereunder (the "Initial Term") shall
be for a period of two years, commencing on the Closing Date and continuing
until the second anniversary of the Closing Date, unless terminated earlier as
provided herein. After the second anniversary of the Closing Date, the term
shall be automatically renewed for successive one-year periods (subject to
termination as otherwise provided herein) unless either party notifies the other
party in writing prior to 90 days before the expiration of the Initial Term and
each annual renewal thereof, as applicable.
8. "Good Reason" means the occurrence, without Executive's
express written consent, of any one or more of the following events:
(a) a reduction in the annual base salary of
Executive;
(b) the removal or suspension from office without
cause of Executive or failure without cause to elect or appoint Executive as
Senior Vice President and Chief Financial Officer of the Company throughout the
Employment Term;
(c) any substantial alteration, including any
material diminution, in the nature or status of Executive's responsibilities as
Senior Vice President and Chief Financial Officer, or a change to Executive's
direct reporting relationship to the President of the Company, which substantial
alteration or change, respectively, is not remedied or cured as contemplated by
Section B, Paragraph 9(b) hereof;
(d) the assignment of any duties which are in any
significant respect inconsistent with Executive's status as Senior Vice
President and Chief Financial Officer of the Company, which inconsistent
assignment is not remedied or cured as contemplated by Section B, Paragraph 9(b)
hereof; and
(e) the relocation of Executive's office to more than
50 miles from Plymouth Meeting, Pennsylvania.
9. "Independent Director" means a member of the Board who is
defined as an "Independent Director" in the Amended and Restated Articles of
Incorporation of the Company, as filed with the Securities and Exchange
Commission, as amended.
10. "Involuntary Termination" means the breach by the Company
of any material provision of this Agreement and such breach continues for a
period of 14 days after the Independent Directors on the Board receive written
notice of such breach.
11. "Noncompetition Period" means the period beginning the
later of the date of the termination of the Employment Term, for whatever
reason, and the date on which Executive ceases to be a member of the Board and
ending one year from the date of such termination.
12. "Office or Industrial Property" means any Property that is
used in whole or in part for office or industrial space or office or
industrial-related purposes, whether in fee or leasehold, together with all
improvements and fixtures now or hereafter located thereon, all rights,
privileges and easements appurtenant thereto, and all tangible and intangible
personal property used in connection therewith.
13. "Office or Industrial Property Construction" means the
construction, renovation or repair of improvements on an Office or Industrial
Property by Executive or an Affiliate of Executive.
14. "Office or Industrial Property Entitlements" means
engaging in the process by which a person with an interest in an Office or
Industrial Property obtains necessary or desirable governmental approvals,
licenses, permits, entitlements or agreements for the commencement of Office or
Industrial Property Construction.
15. "Office or Industrial Property Management and Operation"
means engaging in directly or through an Affiliate, or being employed by any
entity undertaking, or otherwise undertaking the day-to-day management and
operation of an Office or Industrial Property, whether pursuant to a master
lease, management agreement or any other arrangement.
16. "Property" means any real property or any interest
therein.
17. "Speculation" means engaging in the activity of
soliciting, seeking to acquire, obtaining an option or a first right of refusal
to acquire, or acquiring, any interest in an Office or Industrial Property with
the intention at any time of acquiring (or obtaining an option or a first right
of refusal to acquire) or holding an Office or Industrial Property for
subsequent sale or other transfer to any person for purposes of Competitive
Activity.
18. "Termination Without Cause" means the termination of
Executive's employment (i) by the Company for any reason other than Termination
With Cause, or (ii) by Executive for Good Reason.
19. "Termination With Cause" means the termination of
Executive's employment by act of the Board for any of the following reasons:
(a) any material breach of this Agreement, consisting
of any gross or willful refusal, failure or neglect by Executive in connection
with the performance of his duties and fulfillment of his obligations under this
Agreement;
(b) (i) conduct by Executive that would result in
material injury to the reputation of the Company if he were retained in his
position with the Company, including (A) conviction of (or pleading nolo
contendere to) a felony under the laws of the United States or any State thereof
or of an equivalent crime under the laws of any other jurisdiction, (B)
commission of a crime of (1) moral turpitude, (2) dishonesty, (3) breach of
trust or (4) unethical business conduct, or (C) bankruptcy, insolvency or
general assignment
for the benefit of his creditors, or (ii) commission of any crime involving the
Company;
(c) any failure to comply substantially with any
written rules, regulations, policies or procedures of the Company, if such
non-compliance could be expected to have a material and adverse effect on the
Company's business, which has not been cured within 14 days after notice
thereof; or
(d) any failure to comply with the Company's internal
policies regarding xxxxxxx xxxxxxx or insider dealing which has not been cured
within 14 days after notice thereof.
20. "Voluntary Termination" means Executive's voluntary
termination of his employment hereunder (which does not include termination for
Good Reason), which may be effected by Executive's giving the Board 60 days'
written notice of Executive's desire to terminate his employment.
B. THE EMPLOYMENT RELATIONSHIP.
1. Employment. The Company shall employ Executive, and
Executive agrees to be so employed, in the capacity of Senior Vice President and
Chief Financial Officer of the Company to serve for the Employment Term, subject
to earlier termination as herein provided.
2. Services. Executive shall devote a significant portion of
his time, attention and effort to the Company's affairs. Specifically, Executive
shall have senior management authority and oversight responsibility with respect
to capital markets accounting, as well as the accounting, financial reporting,
budget processes and systems functions of the Company and its Office and
Industrial Properties, consistent with directions from the Board. As used
herein, "a significant portion of his time, attention and effort" shall mean
substantially all of Executive's working time devoted to business activities.
3. Compensation. (a) The Company initially shall pay Executive
for his services an annual base salary of $200,000, in equal installments not
less frequently than bi-weekly, subject to any increases in base compensation as
approved by the Compensation Committee of the Board (the "Compensation
Committee").
(b) During the Employment Term, in addition to the annual base
salary, Executive shall be eligible to receive, in the discretion of the
Company, an annual bonus ("Annual Bonus"). Notwithstanding the foregoing, for
the remainder of the first calendar year of employment, Executive shall receive
a guaranteed Annual Bonus in an amount equal to $37,500 and, for the second
calendar year of employment, Executive shall receive a guaranteed Annual Bonus
in an amount equal to $100,000. Each Annual Bonus payable under this Section B,
Paragraph 3(b) shall be payable to Executive during the first quarter of each
calendar year to follow the year for which the Annual Bonus is paid and in
accordance with the Company's customary procedures for payment of executive
bonuses.
(c) Effective as of the date hereof, the Company shall provide
Executive with
an interest-free, recourse loan during the Employment Term, such loan to be
evidenced by such promissory note as the Company may reasonably request
(including without limitation, in the discretion of the Company, provisions to
reflect the terms of this Paragraph 3(c)), in an amount necessary for Executive
to purchase 25,000 shares of Common Stock, par value $.001, of the Company (the
"Shares") on the American Stock Exchange; provided that Executive provides
documentation acceptable to the Company indicating the dollar amount of such
purchase. During the period commencing on the date of Executive's purchase of
such Shares, and ending on the first anniversary of such date, Executive shall
not, voluntarily or involuntarily, sell, transfer, anticipate, alienate or
assign the Shares and shall not pledge or encumber the Shares unless any
underlying debt obligation relating thereto is with full recourse to Executive,
other than to the Company, and shall take all such actions, consent to all such
arrangements and execute all such documents, as may be required by the Company
to ensure that the requirements of this sentence are met; provided, however,
that such Shares may be held jointly by Executive and Executive's wife if
Executive's wife agrees in a manner satisfactory to the Company (i) that the
terms of this sentence shall be applicable to her and (ii) to be bound by such
requirements. In addition to the Annual Bonus, Executive shall receive on each
of the first three anniversaries of the date hereof an additional bonus, for so
long as he continues to be employed hereunder, each in an amount equal to
$33,333.33 (or, if lower, the then-remaining amount of principal outstanding, if
any); provided that (i) the Company may retain each such additional bonus in
satisfaction of and as an offset to Executive's obligations under the loan and
(ii) without limiting the generality of Section D, Paragraph 5 hereof, the
Company may require Executive to pay to the Company at the time of the payment
of any such additional bonus the amount the Company in good xxxxx xxxxx
necessary to satisfy the Company's obligation to withhold federal, state or
local income or other taxes incurred by reason of such additional bonus (it
being expressly agreed that, notwithstanding the foregoing, Executive's
satisfaction of any tax-withholding requirements so imposed by the Company is a
condition precedent to the Company's obligation to pay each such additional
bonus). Notwithstanding the foregoing, the outstanding balance of the above
loan, if not earlier due, shall become due and payable 120 days after
Executive's Employment Term has terminated for any reason, other than an
Involuntary Termination or a Termination Without Cause. If the outstanding loan
balance becomes due and payable under the preceding sentence, and is not timely
repaid, then the outstanding loan balance shall thereupon begin to accrue
interest at The Wall Street Journal prime rate as used by First Union
Corporation (including its subsidiaries) in connection with mortgage loans made
thereby (or such other rate as is used thereby for such purposes), plus three
percentage points, compounded monthly.
(d) Executive shall be entitled to full and complete
participation in the Company's Salary Reduction and Other Elective Simplified
Employee Pension-Individual Retirement Account Contribution Agreement as
documented on Form 5305A-SEP, to the extent in effect from time to time.
(e) In addition, the Company may from time to time pay
Executive such compensation or benefits as the Compensation Committee of the
Board may, in its discretion, award to Executive under any compensation, bonus,
stock purchase, stock option, profit sharing or other employee benefit plan that
may hereafter be adopted (any such compensation is referred to as "Incentive
Compensation"). Executive's Incentive Compensation will be consistent with the
Incentive Compensation available to other similarly situated senior executives
of the Company.
(f) Without limiting the generality of Paragraph 3(e),
effective as of the date hereof, Executive shall be granted an option (the
"Option") to purchase 50,000 shares of common stock of the Company at an
exercise price equal to the fair market value at such time. To the extent that
there has been no termination of Executive's employment and the Option has not
otherwise expired, one third of the shares subject to the Option shall vest
immediately upon grant, with an additional one third of the shares subject to
the Option to vest on each of the following two anniversaries of the date of
grant. The Option shall be subject to a definitive option award agreement
containing such other terms and conditions (including without limitation
provisions relating to termination of employment, method of exercise and
payment, withholding and nontransferability) as the Board determines in its sole
discretion which are not inconsistent with the foregoing provisions of this
Paragraph 3(f).
4. Benefits. The Company agrees to provide Executive with the
following benefits during the Employment Term:
(a) Vacation. Executive shall be entitled each year
to a paid vacation in accordance with the practices of the Company as
constituted by the Board.
(b) Employee Benefits. Executive shall be entitled to
all rights, benefits and privileges to which other management level employees of
the Company are entitled, including, but not limited to, any retirement,
pension, profit sharing, insurance, hospital or other plans which may now be in
effect or which may hereafter be adopted by the Company.
5. Expenses. The Company recognizes that Executive will have
to incur certain out-of-pocket expenses, including, but not limited to, travel
expenses, related to his services and the Company's business, and the Company
agrees to reimburse Executive for all reasonable expenses necessarily incurred
by him in the performance of his duties upon presentation of a voucher or
documentation reasonably acceptable to the Company indicating the amount and
business purposes of any such expenses. In addition, the Company shall reimburse
Executive, upon Executive's submission of proof of such expenses, for the
following costs of relocating from Smyrna, Georgia to the Villanova,
Pennsylvania area: direct costs associated with (i) the sale of Executive's
current residence, located in Smyrna, Georgia (excluding any loss that may have
been incurred in connection therewith), (ii) the purchase of a new residence
within the Villanova, Pennsylvania area (excluding the actual price of the
residence), (iii) the provision of temporary housing, for up to three months,
(iv) searching for a new residence, (v) the actual moving from Smyrna, Georgia
to the Villanova, Pennsylvania area and (vi) obtaining a new mortgage loan
(excluding any interest-related costs, but including "points" up to three
points). In the event Executive incurs federal, state or local income taxes
attributable to the Company's bearing such moving expenses, the Company shall
pay Executive an additional payment sufficient to offset any such income taxes
(excluding any interest or penalties) and any such income taxes imposed by
reason of such payment.
6. Termination in Case of Death or Disability. In case of
Executive's death or permanent disability (defined as physical or mental
inability, confirmed by a licensed physician, to
perform substantially all of the services described herein that continues for a
period of 180 consecutive or non-consecutive days in any 365-day period), the
Company may elect to terminate Executive pursuant to the terms of Section B,
Paragraph 8 hereof.
7. Termination With Cause; Voluntary Termination. The Company
may terminate this Agreement upon a determination that an event has occurred
within the definition of Termination With Cause; provided, however, in the case
of a Termination With Cause based upon clauses (a) or (b) of such definition,
the Company shall provide Executive written notice of such grounds for
termination. If Executive shall suffer Termination With Cause or shall cease
being an employee of the Company on account of a Voluntary Termination, then (i)
Executive shall not be entitled to any compensation after the effective date of
such Voluntary Termination or Termination With Cause (except compensation
accrued but unpaid on the date of such event); (ii) any continued rights and
benefits Executive may have under employee benefit plans and programs of the
Company upon such a termination, if any, shall be determined in accordance with
the terms of such plans and programs; and (iii) Executive shall have no further
rights to any other compensation or benefits hereunder or granted hereunder on
or after the termination of employment, or any other rights hereunder.
8. Termination Upon Death or Disability. Upon death or other
termination of employment by virtue of disability, then (i) Executive shall not
be entitled to any compensation after the effective date of such termination
(except compensation accrued but unpaid on the date of such event); (ii) all
outstanding unvested Options granted under Paragraph 3(f) shall vest and shall
otherwise be exercisable in accordance with their terms; and (iii) Executive
shall have no further rights to any other compensation or benefits hereunder or
granted hereunder on or after the termination of employment, or any other rights
hereunder. Any continued rights and benefits that Executive, or Executive's
estate or other legal representatives, may have under employee benefit plans and
programs of the Company upon such death or disability shall be determined in
accordance with the terms and provisions of such plans and programs.
9. Involuntary Termination or Termination Without Cause. (a)
If Executive shall suffer an Involuntary Termination or a Termination Without
Cause, then (i) the Company shall pay Executive cash compensation in a lump sum
equal to (A) Executive's base salary (based on Executive's base salary at the
time of such termination) plus (B) the prior year's Annual Bonus under Paragraph
3(b) or, if greater, $100,000 (except as set forth in Section B, Paragraph 10
hereof); (ii) the Company shall continue to provide, for the longer of one year
or the remainder of the Employment Term, Executive with the level of
health/medical insurance or coverage provided to Executive at the time of such
termination; it being expressly understood and agreed that nothing in this
clause (ii) shall restrict the ability of the Company to amend or terminate such
plans and programs from time to time in its sole discretion; provided, however,
that the Company shall in no event be required to provide any coverage after
such time as Executive becomes entitled to receive benefits of the same type
from another employer or recipient of Executive's services (and provided,
further, that such entitlement shall be determined without regard to any
individual waivers or other similar arrangements); (iii) all outstanding
unvested Options granted under Paragraph 3(f) shall vest and shall otherwise be
exercisable in accordance with their terms; (iv) subject to Executive's
satisfaction of any tax-withholding obligations as contemplated by Section B,
Paragraph 3(c) hereof, the Company shall forgive $300,000 of the loan made by
the Company to Executive under
Section B, Paragraph 3(c) hereof (or, if lower, the outstanding balance
thereof); and (v) except as provided in Section B, Paragraph 10, Executive shall
have no further rights to any other compensation or benefits hereunder or
granted hereunder on or after the termination of employment, or any other rights
hereunder. Any continued rights and benefits that Executive may have under
employee benefit plans and programs of the Company upon such termination shall
be determined in accordance with the terms and provisions of such plans and
programs.
(b) Notwithstanding the foregoing, (i) neither Good Reason nor
grounds for Involuntary Termination shall be deemed to exist unless written
notice of termination on account thereof (specifying a termination date no less
than 14 days and no more than 21 days from the date of such notice) is given no
later than 90 days after the time at which the event or condition purportedly
giving rise to Good Reason or the Involuntary Termination first occurs or
arises; and (ii) if there exists (without regard to this clause (ii)) an event
or condition that constitutes Good Reason or grounds for Involuntary
Termination, the Company shall have 14 days from the date notice of such a
termination is given to remedy or cure such event or condition and, if the
Company does so, such event or condition shall not constitute Good Reason or
grounds for Involuntary Termination, respectively, hereunder.
10. Termination Upon a Change in Control. If, within the
one-year period to follow a Change in Control, Executive shall suffer a
termination other than by reason of death or disability or a Termination With
Cause, then, in lieu of the amount provided for under clause (i) of the first
sentence of Section B, Paragraph 9 hereof, Executive shall receive two times
such amount, and, in addition to such other payments and benefits as may be
provided for under Section B, Paragraph 9 hereof, (i) any and all outstanding
unvested options held by Executive shall vest and become immediately exercisable
otherwise in accordance with their terms and (ii) subject to Executive's
satisfaction of any tax-withholding obligations as contemplated by Section B,
Paragraph 3(c) hereof, the Company shall forgive the outstanding balance on the
loan made by the Company to Executive under Section B, Paragraph 3(c) hereof.
11. Indemnification. The Company agrees that for the
Employment Term, provisions of the Company's bylaws regarding indemnification
and advancement of expenses of officers and directors shall not be amended to
adversely effect Executive nor shall the Company's articles of incorporation be
amended to adversely effect Executive's rights with respect to limitation of
liability, indemnification or advancement of expenses.
C. AGREEMENT NOT TO COMPETE
Except as explicitly provided herein, Executive agrees, for
the entire Employment Term and Noncompetition Period, to the following
covenants, effective within the United States:
1. Competitive Activity Restriction. Executive, personally or
through any Affiliate of Executive, shall not conduct any Competitive Activity
other than through the Company, unless a majority of the Board, which majority
must include a majority of the Independent Directors, have determined that such
Competitive Activity will not have a material adverse effect on the business or
operations of the Company. Notwithstanding any other provision of this
Agreement, and without limiting any obligations to the Company that Executive
may have without
regard hereto, Executive agrees that, during the time he is employed by the
Company, Executive shall present to the Company all opportunities that arise to
engage in Competitive Activities unless Executive reasonably determines that
such opportunities are not appropriate for the Company.
2. No Beneficial Ownership. Executive shall not beneficially
own directly or indirectly any beneficial interest in any entity engaged in any
Competitive Activity other than the Company, except for any interest in a
company traded on a nationally recognized public securities exchange (including
The Nasdaq National Market), provided such interest does not exceed 5% of the
outstanding capital stock of such company.
3. Loans. Executive shall not directly or indirectly make any
loan to, or hold any note evidencing a loan from, any entity engaged in any
Competitive Activity.
4. Competitive Entity. Executive shall not be a director or
trustee, partner, officer, principal, agent or employee of, or consultant to
(whether for compensation or not), or work in any other capacity for, any entity
engaged in any Competitive Activity.
5. Notification to Independent Directors. If Executive or any
Affiliate of Executive desires to engage in any Competitive Activity, Executive
shall describe fully the proposed activity in a written notice (the "Disclosure
Notice") to the Company and the Independent Directors. A Disclosure Notice shall
only pertain to a specific proposed project and the referenced proposed project
shall be described therein with specificity as to timing, location, scope and
the extent of Executive's involvement, financially and in terms of his time
commitment. A Disclosure Notice may not request approval for any conceptual or
non-project specific activity or for any activity that is prohibited by this
Agreement.
6. Confidential Information. Executive shall keep secret and
retain in strictest confidence, and shall not use for his benefit or the benefit
of others, except in connection with the business and affairs of the Company and
its Affiliates, all confidential matters relating to the Company's business and
the business of any of its Affiliates, learned by Executive heretofore or
hereafter directly or indirectly from the Company or any of its Affiliates (the
"Confidential Company Information"), including, without limitation, information
with respect to (i) sales figures (whether per property or otherwise), (ii)
profit or loss figures (whether per property or otherwise), and (iii) customers,
clients, tenants, and customer lists; and shall not disclose such Confidential
Company Information to anyone outside of the Company except with the Company's
express written consent and except for Confidential Company Information which is
at the time of receipt or thereafter becomes publicly known through no wrongful
act of Executive's or is received from a third party not under an obligation to
keep such information confidential and without breach of this Agreement.
7. No Interference or Solicitation. Notwithstanding any other
provision of this Agreement, during the Noncompetition Period, Executive shall
not directly or indirectly (i) solicit or endeavor to entice away any existing
client of the Company or any potential client of the Company whom the Company
was actively soliciting during the time of Executive's directorship, or any
person who during the Employment Term or the one-year period which follows the
expiration of the Employment Term was or is a client of the Company, (ii) hire,
solicit or otherwise
encourage any employee or independent contractor of the Company to leave the
employment of, or terminate any contractual relationship with, the Company, or
(iii) hire any employee or independent contractor who has left the employment or
other service of the Company or any of its Affiliates within the six-month
period which follows the termination of such employee's or independent
contractor's employment or other service with the Company and its Affiliates, or
(iv) otherwise interfere with, disrupt or attempt to disrupt the relationships,
contractual or otherwise, between the Company and its employees or independent
contractors or solicit or encourage any employee or independent contractor of
the Company to engage in any Competitive Activity.
8. Return of Property. All memoranda, notes, lists, records,
property and any other tangible product and documents (and all copies thereof),
whether visually perceptible, machine-readable or otherwise, made, produced or
compiled by Executive or made available to Executive concerning the business of
the Company or its Affiliates, (i) shall at all times be the property of the
Company (and, as applicable, any Affiliates) and shall be delivered to the
Company at any time upon its request, and (ii) upon Executive's termination of
employment, shall be immediately returned to the Company; provided, however,
that Executive may retain a copy of his "rolodex" (or other similar record of
names and addresses) maintained from time to time in the ordinary course.
D. MISCELLANEOUS PROVISIONS.
1. Notices. All notices or deliveries authorized or required
pursuant to this Agreement shall be deemed to have been given when in writing
and when (i) deposited in the U.S. mail, certified, return receipt requested,
postage prepaid, or (ii) otherwise delivered by hand or by overnight delivery,
against written receipt, by a common carrier or commercial courier or delivery
service addressed to the parties at the following addresses or to such other
addresses as either may designate in writing to the other party:
To the Company: American Real Estate Investment Corporation
Plymouth Meeting Executive Campus
000 X. Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To Executive: Xxxxxxx X. Xxxxxxxx,
2. Entire Agreement. This Agreement contains the entire
understanding between the parties hereto with respect to the subject matter
hereof and shall not be modified in any manner except by written instrument
signed by or on behalf of the parties hereto. This Agreement shall be binding
upon and inure to the benefit of the heirs, successors and assigns of the
parties hereto.
3. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA.
4. Assignment. Executive acknowledges that his services are
unique and personal. Executive may not assign his rights or delegate his duties
or obligations under this Agreement except (a) his rights to compensation and
benefits hereunder may be transferred by will or operation of law and (b) his
rights under employee benefit plans or programs described in Section B,
Paragraph 4(b) may be assigned or transferred in accordance with the terms of
such plans or programs, or regular practices thereunder. Executive's rights and
obligations under this Agreement shall inure to the benefit of and shall be
binding upon Executive's heirs and personal representatives.
5. Withholding. The Company shall be entitled to withhold from
any payments or deemed payments any amount of tax withholding required by law.
6. Titles and Headings. Titles and headings to sections and
paragraphs in this Agreement are inserted for the convenience of reference only
and are not intended to be a part of or to affect the meaning or interpretation
of this Agreement.
7. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
8. Amendments. No amendment, modification, waiver or
supplement to this Agreement shall be binding on any of the parties hereto
unless it is in writing and signed by the parties in interest at the time of the
modification, and further provided any such modification is approved by a
majority of the Independent Directors. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any such right, power
or privilege nor any single or partial exercise of any such right, power or
privilege, preclude any other or further exercise thereof or the exercise of any
other such right, power or privilege.
9. No Third-Party Beneficiaries. This Agreement is solely for
the benefit of the parties to this Agreement and should not be deemed to confer
upon third parties any remedy, claim, liability, reimbursement, claims or action
or other right in excess of those existing without reference to this Agreement.
10. Maximum Legal Enforceability; Time of Essence. Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. Without prejudice to any rights or remedies otherwise available to
any party to this Agreement, each party hereto acknowledges that damages would
not be an adequate remedy for any breach of the provisions of this Agreement and
agrees that the obligations of the parties hereunder shall be specifically
enforceable. Time shall be of the essence as to each and every provision of this
Agreement.
11. Specific Performance. (a) Executive acknowledges that the
obligations undertaken by him pursuant to this Agreement are unique and that the
Company will not have an adequate remedy at law if he shall fail to perform any
of his obligations hereunder, and Executive therefore confirms that the
Company's right to specific performance of the terms of Section C of this
Agreement is essential to protect the rights, interest and goodwill of the
Company. Accordingly, in addition to any other remedies that the Company may
have at law or in equity, the Company shall have the right to have all
obligations, covenants, agreements and other provisions of Section C of this
Agreement specifically performed by Executive, and the Company shall have the
right to obtain preliminary and permanent injunctive relief to secure specific
performance and to prevent a breach or contemplated breach of Section C of this
Agreement by Executive. Executive acknowledges that the Company will have the
right to have the provisions of Section C of this Agreement enforced in any
court of competent jurisdiction, it being agreed that any breach or threatened
breach of Section C of this Agreement would cause irreparable injury to the
Company and its business and that money damages would not provide an adequate
remedy to the Company.
(b) Any controversy or claim arising out of or relating to
this Agreement or the breach of this Agreement that is not resolved by Executive
and the Company (or its Affiliates, where applicable), other than controversies
or claims arising under Section C, to the extent necessary for the Company (or
its Affiliates, where applicable) to avail itself of the rights and remedies
provided under Section D, Paragraph 11(a) hereof, shall be submitted to
arbitration in Philadelphia, Pennsylvania in accordance with Pennsylvania law
and the procedures of the American Arbitration Association. The determination of
the arbitrator(s) shall be conclusive and binding on the Company (or its
Affiliates, where applicable) and Executive and judgment may be entered on the
arbitrator(s)' award in any court having jurisdiction.
12. Survival. Anything contained in this Agreement to the
contrary notwithstanding, the provisions of Section C hereof, Section D,
Paragraphs 5 and 11 hereof, and the other provisions of this Section D (to the
extent necessary to effectuate the survival of Section C and Section D,
Paragraphs 5 and 11), shall survive termination of this Agreement and any
termination of Executive's employment hereunder.
13. Operations of Affiliated Parties. Executive agrees that he
will refrain from authorizing any Affiliate to perform any activities that would
be prohibited by the terms of this Agreement if they were performed by him.
Notwithstanding anything to the contrary contained in this Agreement, Executive
shall not be required by the terms of this Agreement to violate any fiduciary
duty existing on the date hereof that he owes to a third party.
14. Existing Agreements. Executive represents to the Company
that he is not subject or a party to any employment or consulting agreement,
non-competition covenant or other agreement, covenant or understanding which
might prohibit him from executing this Agreement or limit his ability to fulfill
his responsibilities hereunder.
15. Parachutes. If all, or any portion, of the payments
provided under this Agreement, either alone or together with other payments and
benefits which Executive receives or is entitled to receive from the Company or
an affiliate, would constitute an excess "parachute
payment" within the meaning of Section 280G of the Code (whether or not under an
existing plan, arrangement or other agreement) (each such parachute payment, a
"Parachute Payment"), and would 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 possible applicable rates on such Parachute Payments (including
without limitation any payments under this Paragraph 15) as if no excise taxes
had been imposed with respect to Parachute Payments (the "Parachute Gross-up")).
Except as may otherwise be agreed to by the Company and Executive, the amount or
amounts (if any) payable under this Paragraph 15 shall be as conclusively
determined by the Company's independent auditors (who served in such capacity
immediately prior to a Change in Control (or, if applicable, a change in control
which is not a Change in Control)). If such independent auditors refuse to make
the required determinations, then such determinations shall be made by a
comparable independent accounting firm of national reputation selected by the
Company and reasonably acceptable to Executive.
16. Further Assurances. The parties to this Agreement will
execute and deliver or cause the execution and delivery of such further
instruments and documents and will take such other actions as any other party to
the Agreement may reasonably request in order to effectuate the purpose of this
Agreement and to carry out the terms hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first written above.
AMERICAN REAL ESTATE INVESTMENT
CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
XXXXXXX X. XXXXXXXX
-----------------------------
/s/ Xxxxxxx X. Xxxxxxxx
Address and other contact information for
Xxxxxxx X. Xxxxxxxx as of the date hereof
(not to be included with any public filings
of this Agreement.)
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