EXHIBIT 10.8
AMENDED AND RESTATED
EMPLOYMENT AND NONCOMPETITION AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AND NONCOMPETITION AGREEMENT
("Agreement") is made as of the 17th day of January, 2001 between Xxxx Xxxxxxxx
("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"), and amends and completely restates the Employment and
Noncompetition Agreement made as of the 17th day of July, 1998 (the "Original
Agreement"). If it shall be determined that any ambiguity or conflict exists
between any provision in this Agreement and any provision in any other agreement
entered into between Executive and the Employer, then, to the extent of any such
ambiguity or conflict, the provisions contained in this Agreement shall control.
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 sixth anniversary of the date of this Agreement (the
"Current Term"); PROVIDED, HOWEVER, that Section 8 hereof shall survive the
termination of this Agreement as provided therein. The Current Term shall
automatically be extended for successive nine (9) month periods (each a "Renewal
Term"), unless either party shall notify the other in writing at least six (6)
months prior to the expiration of the Current Term or the applicable Renewal
Term of its intention not to renew such Term. The period of Executive's
employment hereunder consisting of the Current Term and all Renewal Terms, if
any, is herein referred to as the "Employment Period" and any 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 with the title of Chief
Investment Officer of the Employer. Effective upon the termination of
employment of the current President of the Employer, Executive shall serve
the Employer with the title of President of the Employer. Executive will
report directly to Xxxxxxx X. Xxxxx, the Chief Executive Officer of the
Employer. As Chief Investment Officer, Executive shall be principally
responsible for all of the investment activities of Employer and shall
provide assistance to Employer's Chief Executive Officer in arranging
financing, debt and equity capital on behalf of the Employer. As President,
Executive shall be principally responsible for the management and
investment activities of Employer and shall provide assistance to
Employer's Chief Executive Officer in connection with all 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 Board of Directors of the Employer, but in all events such duties shall
be commensurate with his titles and positions with the Employer.
(b) BEST 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, or (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, or (iii)
serving on the board of directors of his family owned Long Island gas
station 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 in the metropolitan area of
Xxx Xxxx Xxxx (xxx "Xxx Xxxx Xxxx metropolitan area").
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 $400,000 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) FORGIVABLE LOAN. Within 60 days after the execution of this
Agreement by Employer and Executive, the Employer shall make a non-recourse
loan to Executive in the amount of $1,000,000, which shall bear interest at
the applicable federal rate. The outstanding principal balance of such loan
and all accrued interest shall be due and payable on the earliest of (i)
January 17, 2007, (ii) the date on which the Executive's employment is
terminated by the Employer for Cause, or (iii) the date on which the
Executive's employment is terminated by the Executive without Good Reason.
Such loan shall be secured by unrestricted shares of the Employer's common
stock ("Common Stock") that are beneficially owned by the Executive on the
date of the loan and that have a closing market value on such date of at
least $1,000,000. The Executive shall receive all dividends paid with
respect to such shares of Common Stock, and such shares shall be released
from collateral and returned to the Executive at the time such loan is
repaid from sources other than the collateral shares or forgiven pursuant
to this Section 3(b) or Section 7(a)(i) or upon the Executive's death or
disability.
If (i) the Employer achieves, in the aggregate, an 80% return (including
all dividends and stock appreciation) to shareholders during the period
beginning on January 1, 2001 and ending on December 31, 2006 and (ii) the
Executive continues to be employed by the
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Employer on the final date of the Current Term (January 17, 2007), then the
outstanding principal balance of such loan and all accrued interest shall
thereupon be forgiven by the Employer. Notwithstanding anything to the
contrary contained in this Agreement or any other agreement between
Executive and the Employer, if the terms of the non-recourse loan described
in this Section 3(c) are accelerated for any reason, the performance target
described in subsection (i) of the previous sentence shall not apply.
(c) 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 target annual performance
bonus shall not be less than $200,000. Each of the bonuses described in
this Section 3(c) shall be subject to applicable tax withholdings.
(d) 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 stock.
(e) EQUITY AWARDS.
(i) Effective as of the date that the Original Agreement was
executed by the Employer and Executive, Executive was granted 150,000
restricted shares of Common Stock (the "Original Grant"). The Original
Grant became vested and nonforfeitable as to 22,500 shares on July 17,
1999 and 22,500 shares on July 17, 2000. The Original Grant shall
become vested and nonforfeitable as to 22,500 shares on July 17, 2001,
30,000 shares on July 17, 2002 and 52,500 shares on July 17, 2003,
subject to (i) the Employer achieving either an 8% increase in funds
from operations (on a gross dollar 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. The Original Grant shall remain in
effect in accordance with its terms, except that 22,500 of the shares
eligible to become vested on July 17, 2003 will, upon satisfaction of
the otherwise applicable vesting requirements, be added to the grant
of 105,000 additional restricted shares described in the following
paragraph.
Effective as of the date that this Agreement is executed by the
Employer and Executive, Executive shall be granted 105,000 additional
restricted shares of Common Stock (the "Subsequent Grant"). Such grant
(together with the 22,500 shares carried over from the Original Grant)
shall become vested and nonforfeitable as to 30,000 shares on July 17,
2004, 30,000 shares on July 17, 2005, 30,000 shares on July 17, 2006
and 37,500 shares on January 17, 2007, 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
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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, for any vesting period ending in 2004, 2005, 2006
or 2007, (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 the 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 each 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 will
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.
(f) 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.
(g) 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,
modify or terminate any benefit plan or program as it sees fit from time to
time in the normal course of business.
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(h) VACATIONS. Executive shall be entitled to reasonable paid
vacations in accordance with the then regular procedures of the Employer
governing senior executive officers.
(i) 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 use its best efforts 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, in the reasonable good faith determination
of the Board of Directors, 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
three consecutive months or any 90 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 his duties
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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 the Board of Directors of the Employer concludes, in good faith
and after reasonable investigation, 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 failed to perform his duties hereunder in
a manner and at a level consistent with his position and past
performance after receiving notice from the Employer specifically
identifying the manner in which Executive has failed to perform (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).
(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 material failure by the Employer to
comply with the provisions of Section 3 or 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; (iii) a Force Out upon or following a Change-in-Control (as
such terms are defined in Section 6(d) below); (iv) a material
diminution of Executive's duties and responsibilities with respect to
the investment activities of the Employer, or (v) the Employer's
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requiring Executive to be based in an office located more than 50
miles from Manhattan.
(c) 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.
(d) 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
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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 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 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 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
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benefit plan that is discontinued) other than as a result of the
normal 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 50 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
(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:
(i) The Employer shall forgive the $1,000,000 non-recourse
loan provided in Section 3(b) of this Agreement (if such termination
occurs before January 17, 2007) and continue to pay Executive's Base
Salary (at the rate in
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effect on the date of his termination) and annual performance bonus
(based on the amount paid for the immediately preceding year) 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;
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) for the remaining term of the Employment Period
after the date of 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
compensation, income or benefits from services rendered to any person
or entity during the remaining term of Employment Period after the
date of Executive's termination, the Base Salary and bonus payments
due under Section 7(a)(i) will be reduced by the amount of such
compensation, income, or benefits, except that in no event shall the
Base Salary and bonus payments 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 one year 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 compensation,
income or benefits he will receive, and the date of receipt. Executive
shall also give prompt notice to the Employer of any changes in such
employment or income.
(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
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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) 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.
(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 even that Executive's
employment terminates due to his disability as defined in Section 6(a)(ii)
above,
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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 such
longer period as the Employer's Board of Directors may determine. 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 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(c).
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
12
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 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) during the Employment Period, Executive will not, in any
location, without the prior written consent of the Chairman of the
Board of Directors 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),
engage, participate or assist, as an owner, partner, employee,
consultant, director, officer, trustee or agent, in any business that
engages or attempts to engage, directly or indirectly, in any aspect
of the commercial real estate business (including, without limitation,
ownership, management, technology, parking, leasing and/or financing)
(all such direct or indirect activity or involvement described in this
Section 8(b)(i), the "Prohibited Activities"); and
(ii) in the event of a Change in Control during the Employment
Period, the prohibitions set forth in Section 8(b)(i) above shall
cease to apply, and in the alternative Executive will not, during the
Employment Period, without the prior written consent of the Chairman
of the Board of Directors of the Employer, engage in any Prohibited
Activites in any location in which the Employer is actively engaged in
that business; and
(iii) in the event that this Agreement is terminated (A) by the
Employer for Cause or (B) by the Executive for any reason other than
death, disability, Good Reason or the expiration of the term of the
Agreement, Executive will not,
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during the Noncompetition Period, without the prior written consent of
the Chairman of the Board of Directors of the Employer, engage in any
Prohibited Activities in any location; and
(iv) in the event that this Agreement is terminated for any of
the reasons set forth in Section 8(b)(iii) above, and a Change in
Control either has occurred prior to such termination or occurs
subsequent to such termination, the prohibitions set forth in Section
8(b)(iii) above shall not apply (or shall cease to apply), and in the
alternative Executive will not, during the Noncompetition Period,
without the prior written consent of the Chairman of the Board of
Directors of the Employer, engage in any Prohibited Activities in any
location in which the Employer is actively engaged in that business;
and
(v) 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 Chairman
of the Board of Directors 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 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 later of: (i) the first anniversary of the date of termination of
Executive's employment under this Agreement; or (ii) the earlier of (A) the
fifth Anniversary of the Original Agreement, or (B) the second 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 or leasing of office real estate
properties, regardless of where they are located if Executive's aggregate
direct cash equity investment in such entity constitutes less than fifteen
percent (15%) 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
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("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. Following termination of the Executive's
employment for any reason, the Executive shall not 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. Following termination of the
Executive's employment for any reason other than for Cause, the Employer
shall not disclose or cause to be disclosed any negative, adverse or
derogatory comments or information about the Executive.
(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 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
15
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.
(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 or injury 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 specified therein. 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:
Xxxx Xxxxxxxx
0 Xxxxxx Xxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
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(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 waive 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 waive 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.
13. SUCCESSORS. Neither this Agreement nor any rights hereunder may be
assigned or hypothecated by the Executive. This Agreement may be assigned by the
Employer and shall be binding upon, and insure to the benefit of, the Employer's
successors and assigns.
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.
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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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IN WITNESS WHEREOF, this Agreement is entered into as of the date and
year first above written.
January 17,2001
XX XXXXX REALTY CORP.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman
/s/ Xxxx Xxxxxxxx
------------------------------
Xxxx Xxxxxxxx
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