SEPARATION AGREEMENT
Exhibit
99.1
THIS
SEPARATION AGREEMENT (this “Agreement”)
is
made and entered into as of December 12, 2005, by and between Xxxxxxx
Properties, Inc., a Maryland corporation (the “REIT”),
Xxxxxxx Properties, L.P., a Maryland limited partnership (the “Operating
Partnership”),
and
Xxxxxxx X. Xxxxxxxxx (the “Executive”).
WHEREAS,
the
REIT,
the Operating Partnership and the Executive have previously entered into
that
certain Employment Agreement, dated as of June 27, 2003 (the “Employment
Agreement”),
pursuant to which the Executive is currently employed as the Co-Chief Executive
Officer and President of the REIT and the Operating Partnership (collectively,
the “Company”).
WHEREAS,
pursuant to that certain Restricted Stock Agreement, dated as of June 27,
2003,
by and between the REIT, the Operating Partnership and the Executive (the
“Restricted
Stock Agreement”),
the
REIT issued to the Executive 460,526 shares of restricted common stock of
the
REIT (the “Restricted
Stock”).
WHEREAS,
pursuant to that certain Performance Award Agreement, dated as of April 1,
2005,
by and between the REIT, the Operating Partnership and the Executive (the
“Performance
Award Agreement”),
the
REIT granted to the Executive a Performance Award (as defined in the Performance
Award Agreement) under the Amended and Restated 2003 Incentive Award Plan
of
Xxxxxxx Properties, Inc., Xxxxxxx Properties Services, Inc. and Xxxxxxx
Properties, L.P..
WHEREAS,
the REIT and the Executive have previously entered into that certain
Noncompetition Agreement, dated as of June 27, 2003 (the “Non-Competition
Agreement”).
WHEREAS,
the Executive and the Company desire to specify the terms of the Executive’s
resignation from his positions as Co-Chief Executive Officer and President
of
the Company and member of the Board of Directors of the REIT, and as an employee
of the Company, and to provide for the termination of the Employment
Agreement.
WHEREAS,
in connection with the Executive’s resignation, the Executive and the Company
propose to enter into a Consulting Services Agreement (the “Consulting
Agreement”)
in the
form attached hereto as Exhibit
A,
pursuant to which the Company will retain the Executive to provide certain
consulting services to the Company as of the Effective Date (as defined
below).
NOW,
THEREFORE, in consideration of the foregoing recitals, the mutual promises
contained herein, and for other good and valuable consideration, the receipt
and
adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
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1.
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RESIGNATION;
TERMINATION OF EMPLOYMENT
AGREEMENT
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1.1. Resignation.
The
Executive hereby tenders, and the Company hereby accepts, the Executive’s
resignations from (a) his positions as the Co-Chief Executive Officer and
President of the Company and as an employee of the Company, and (b) his
position as an officer and/or employee of any and all subsidiaries and
affiliates of the Company, in each case effective as of January 1, 2006 (the
“Effective
Date”).
The
parties hereby acknowledge and agree that the Executive has tendered, and
the
Company has accepted, the Executive’s resignation, effective as of December 8,
2005, from his position as a member of the Board of Directors of the REIT
(the
“Board”)
and
any committee thereof. Notwithstanding anything contained herein or in the
Employment Agreement, the Executive’s resignation hereunder shall not be deemed
either a resignation for “Good Reason” or a termination for “Cause” for purposes
of, and each as defined in, the Employment Agreement. No
later
than the Effective Date, Executive shall return to the Company all Company
property in his possession, including without limitation, keys, credit cards,
telephone calling cards, computer hardware and software, cellular and portable
telephone equipment, personal digital assistant (PDA) devices, manuals, books,
notebooks, financial statements, reports and other documents.
1.2. Termination
of Employment Agreement.
Effective as of the Effective Date, the Employment Agreement shall automatically
terminate and be of no further force and effect, and neither the Company
nor the
Executive shall have any further obligations thereunder; provided,
however,
that the
Company’s obligation to pay to the Executive the Accrued Obligations and the
Other Benefits (each as defined in the Employment Agreement) and the provisions
of Section 8 (Certain Additional Payments by the Company) and Section 9
(Confidential Information and Non-Solicitation) of the Employment Agreement
shall survive the termination of the Executive’s employment and the termination
of the Employment Agreement.
1.3. Accelerated
Vesting of Restricted Stock.
Notwithstanding anything contained in the Restricted Stock Agreement, subject
to
the effectiveness and non-revocation of the Executive Release (as defined
below), 52,632 shares of the Restricted Stock which are unvested as of the
Effective Date (the
“Executive
Shares”)
shall
vest, and the restrictions thereon shall lapse, as of June 27, 2006, provided
that the Consulting Agreement has not theretofore been terminated either
(i) by
the Company on account of a “material event of default” by the Executive or (ii)
by the Executive without “cause” (each as defined in the Consulting Agreement).
The remaining 105,264 shares of the Restricted Stock which are unvested as
of
the Effective Date shall be subject to repurchase by the Company in accordance
with the Restricted Stock Agreement. In addition, in the event that, prior
to
June 27, 2006, the Consulting Agreement is terminated either (i) by the Company
on account of a “material event of default” by the Executive or (ii) by the
Executive without “cause,” the Executive Shares which are unvested as of such
termination shall thereupon be subject to repurchase by the Company in
accordance with the Restricted Stock Agreement. The parties hereby agree
that
this Section 1.3 shall constitute an amendment to the Restricted Stock
Agreement.
1.4. Continued
Eligibility for Annual Bonus.
Notwithstanding any contrary provisions of the Company’s annual bonus plan or
otherwise, at the time when annual bonuses are paid to the Company’s other
senior executives for the 2005 calendar year (but in no event later than
March
15, 2006) and in accordance with the terms of the Employment Agreement, the
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Executive
shall be paid an annual bonus under such plan in an amount equal to the annual
bonus to which the Executive would have been entitled had his employment
with
the Company not become subject to this Separation Agreement.
1.5. Performance
Award.
Executive hereby acknowledges that the Performance Award Agreement provides
that
in the event of a termination of the Executive’s employment with the Company for
any reason, the Executive’s right to receive payment of the Performance Award
shall be forfeited to the extent that the Performance Award is not vested
as of
the date of termination. Executive further acknowledges that neither the
Performance Award nor any portion thereof is vested as of the date hereof,
and,
to the extent that the Performance Award is not vested as of the Effective
Date,
all of the Executive’s right, title and interest in the Performance Award shall
thereupon be forfeited.
1.6. Consulting
Agreement.
In
connection with the execution of this Agreement, the parties hereby agree
to
execute the Consulting Agreement, which shall
become effective as of the Effective Date.
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2.
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MUTUAL
RELEASE
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2.1. Executive’s
Release.
The
Executive agrees that, as of the Effective Date, he shall execute and deliver
to
the Company a release of claims in substantially the form attached hereto
as
Exhibit
B
(the
“Executive
Release”).
Notwithstanding the foregoing, it shall be a condition to the Executive’s right
to receive the payments and benefits set forth in Sections 1.3 and 1.4 above
that the Executive execute, deliver to the Company and not revoke the Executive
Release.
2.2. Company’s
Release.
The
Company agrees that, as of the Effective Date, it shall execute and deliver
to
the Executive a release of claims in substantially the form attached hereto
as
Exhibit
C.
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3.
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CONFIDENTIALITY,
NON-SOLICITATION AND
NONCOMPETITION
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3.1. Reaffirmation
of Prior Agreements.
Executive hereby acknowledges and agrees that the Executive is bound by certain
confidentiality and non-solicitation covenants set forth in Section 9 of
the
Employment Agreement and certain noncompetition covenants set forth in the
Noncompetition Agreement. Notwithstanding anything contained in this Agreement,
Executive hereby reaffirms the covenants and provisions set forth in the
Noncompetition Agreement and in Section 9 of the Employment Agreement and
acknowledges and agrees that the Noncompetition Agreement and the provisions
of
Section 9 of the Employment Agreement shall survive the termination of the
Executive’s employment with the Company and shall remain in full force and
effect.
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4.
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INDEMNIFICATION
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4.1. Survival
of Prior Agreement.
The
parties hereby acknowledge and agree that the REIT is bound by certain covenants
and obligations set forth in that certain Indemnification Agreement, dated
as of
June 27, 2003, by and between the REIT and the
3
Executive
(the “Indemnification
Agreement”).
Notwithstanding anything contained in this Agreement, the REIT hereby
acknowledges and agrees that the Indemnification Agreement shall survive
the
termination of the Executive’s employment with the Company and shall remain in
full force and effect in accordance with the terms and conditions thereof.
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5.
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DISPUTE
RESOLUTION
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5.1. Arbitration.
Any
disagreement, dispute, controversy or claim arising out of or relating to
this
Agreement or the interpretation of this Agreement or any arrangements relating
to this Agreement or contemplated in this Agreement or the breach, termination
or invalidity thereof shall be settled by final and binding arbitration
administered by JAMS/Endispute in Los Angeles, California in accordance with
the
then existing JAMS/Endispute Arbitration Rules and Procedures for Employment
Disputes. In the event of such an arbitration proceeding, the Executive and
the
Company shall select a mutually acceptable neutral arbitrator from among
the
JAMS/Endispute panel of arbitrators. In the event the Executive and the Company
cannot agree on an arbitrator, the Administrator of JAMS/Endispute will appoint
an arbitrator. Neither the Executive nor the Company nor the arbitrator shall
disclose the existence, content, or results of any arbitration hereunder
without
the prior written consent of all parties. Except as provided herein, the
Federal
Arbitration Act shall govern the interpretation, enforcement and all
proceedings. The arbitrator shall apply the substantive law (and the law
of
remedies, if applicable) of the state of California, or federal law, or both,
as
applicable, and the arbitrator is without jurisdiction to apply any different
substantive law. The arbitrator shall have the authority to entertain a motion
to dismiss and/or a motion for summary judgment by any party and shall apply
the
standards governing such motions under the Federal Rules of Civil Procedure.
The
arbitrator shall render an award and a written, reasoned opinion in support
thereof. Judgment upon the award may be entered in any court having jurisdiction
thereof.
5.2. Waiver
of Jury Trial.
By
submitting a dispute to arbitration, the parties hereto understand that they
will not enjoy the benefits of a jury trial. Accordingly, the parties hereto
expressly waive the right to a jury trial.
5.3. Nonexclusive
Remedy.
Notwithstanding the above provisions regarding arbitration, the parties each
retain their respective rights to seek injunctive relief or other provisional
remedies provided under the law in any court having competent jurisdiction.
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6.
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MISCELLANEOUS
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6.1. Section
409A of the Code.
To
the
extent applicable,
this
Agreement shall be interpreted in accordance with Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”),
and
Department of Treasury regulations and other interpretive guidance issued
thereunder. Notwithstanding any provision of this Agreement to the contrary,
the
Company may adopt such amendments to this Agreement or adopt other policies
and
procedures (including amendments, policies and procedures with retroactive
effect), or take any other actions, that the Company determines are necessary
or
appropriate to (a) exempt the amounts and benefits provided hereunder from
Section 409A of the Code and/or preserve the intended tax treatment of such
amounts or benefits, or (b) comply with the requirements of Section 409A
of
4
the
Code
and related Department of Treasury guidance.
6.2. Withholding.
The
Company may withhold from any amounts payable or benefits provided under
this
Agreement such Federal, state, local or foreign taxes as shall be required
to be
withheld pursuant to any applicable law or regulation.
6.3. Severability.
In
construing this Agreement, if any portion of this Agreement shall be found
to be
invalid or unenforceable, the remaining terms and provisions of this Agreement
shall be given effect to the maximum extent permitted without considering
the
void, invalid or unenforceable provision.
6.4. Successors.
This
Agreement is personal to the Executive and without the prior written consent
of
the Company shall not be assignable by the Executive otherwise than by will
or
the laws of descent and distribution. This Agreement shall inure to the benefit
of and be enforceable by the Executive’s legal representatives. This Agreement
shall inure to the benefit of and be binding upon the Company and its successors
and assigns. The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially
all of
the business and/or assets of the Company to assume and agree to perform
this
Agreement in the same manner and to the same extent that the Company would
be
required to perform it if no such succession had taken place. As used in
this
Agreement, “Company” shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees
to
perform this Agreement by operation of law, or otherwise.
6.5. Final
and Entire Agreement.
This
Agreement represents the final and entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior agreements
(including, without limitation, the Employment Agreement, subject to Section
3.1
hereof), negotiations and discussions between the parties hereto and/or their
respective counsel with respect to the subject matter hereof; provided,
however,
that
notwithstanding the foregoing, this Agreement shall not supersede or otherwise
affect (i) the Indemnification Agreement, (ii) the Noncompetition Agreement,
or
(iii) except as provided herein, the Restricted Stock Agreement, and each
of the
Indemnification Agreement, the Noncompetition Agreement and the Restricted
Stock
Agreement shall remain in full force and effect. Any amendment to this Agreement
must be in writing, signed by duly authorized representatives of the parties,
and stating the intent of the parties to amend this Agreement.
6.6. Consultation
with Counsel.
The
Executive acknowledges that (a) he has consulted with or has had the
opportunity to consult with independent counsel of his own choice concerning
this Agreement and has been advised to do so by the Company, and (b) he has
read and understands the Agreement, is fully aware of its legal effect, and
has
entered into it freely based on his own judgment.
6.7. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of California, without reference to principles of conflict of laws
that
would result in the application of any law other than that of the State of
California.
5
6.8. Cooperation
in Legal Proceedings.
The
Executive agrees that, after the Effective Date, upon the reasonable request
of
the Company, he shall cooperate with and assist the Company in undertaking
and
preparing for legal and other proceedings relating to the affairs of the
Company
and its subsidiaries. The Executive shall be reimbursed for the reasonable
expenses he incurs in connection with any such cooperation and/or assistance,
and shall receive from the Company reasonable per
diem
compensation in connection therewith.
6.9. Non-Disparagement.
The
Executive agrees that he will not make any statement, publicly or privately,
which would reasonably be expected to disparage the REIT, the Operating
Partnership, any of their subsidiaries or any of their respective employees,
officers or directors. The REIT and the Operating Partnership agree that
they
will not make any statement, publicly or privately, which would reasonably
be
expected to disparage the Executive.
6.10. Notices.
All
notices and other communications hereunder shall be in writing and shall
be
given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If
to the
Executive: at the Executive’s most recent address on the records of the Company;
If
to the
REIT or the Operating Partnership:
Xxxxxxx
Properties, Inc.
000
Xxxx
Xxxxx Xxxxxx
Xxx
Xxxxxxx, XX 00000
Attn:
General Counsel
with
a
copy to:
Xxxxxx
& Xxxxxxx
000
Xxxx
Xxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
Attn:
Xxxxxx X. Xxxxxx, Esq.
or
to
such other address as either party shall have furnished to the other in writing
in accordance herewith. Notice and communications shall be effective when
actually received by the addressee.
6.11. Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be an
original, but all of which taken together shall constitute one
instrument.
[Signature
Page Follows]
6
IN
WITNESS WHEREOF, the parties hereto have each executed this Agreement as
of the
date first above written.
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EXECUTIVE
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/s/
Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx
X. Xxxxxxxxx
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XXXXXXX
PROPERTIES, INC.,
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a
Maryland corporation
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By:
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/s/ Xxxxxx X. Xxxxxxx III |
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Name:
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Xxxxxx X. Xxxxxxx III |
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Title:
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Chairman
and Co-Chief Executive Officer
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XXXXXXX
PROPERTIES, L.P.,
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a
Maryland limited partnership
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By:
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Xxxxxxx
Properties, Inc.
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Its:
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General
Partner
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By:
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Xxxxxx X. Xxxxxxx III |
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Name:
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Xxxxxx X. Xxxxxxx III |
| Title: |
Chairman
and Co-Chief Executive Officer
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EXHIBIT
A
CONSULTING
SERVICES AGREEMENT
A-1
EXHIBIT
B
GENERAL
RELEASE
For
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, except for rights created by that certain Separation Agreement,
dated as of December 12, 2005, by and between Xxxxxxx Properties, Inc. (the
“REIT”), Xxxxxxx Properties, L.P. (the “Operating Partnership”) and the
undersigned, the undersigned does hereby release and forever discharge the
“Releasees” hereunder, consisting of the REIT, the Operating Partnership,
Xxxxxxx Services, Inc. and each of their partners, subsidiaries, associates,
affiliates, successors, heirs, assigns, agents, directors, officers, employees,
representatives, lawyers, insurers, and all persons acting by, through, under
or
in concert with them, or any of them, of and from any and all manner of action
or actions, cause or causes of action, in law or in equity, suits, debts,
liens,
contracts, agreements, promises, liability, claims, demands, damages, losses,
costs, attorneys’ fees or expenses, of any nature whatsoever, known or unknown,
fixed or contingent (hereinafter called “Claims”), which the undersigned now has
or may hereafter have against the Releasees, or any of them, by reason of
any
matter, cause, or thing whatsoever from the beginning of time to the date
hereof. The Claims released herein include, without limiting the
generality of the foregoing, any Claims in any way arising out of, based
upon,
or related to the employment or termination of employment of the undersigned
by
the Releasees, or any of them; any alleged breach of any express or implied
contract of employment; any alleged torts or other alleged legal restrictions
on
Releasee’s right to terminate the employment of the undersigned; and any alleged
violation of any federal, state or local statute or ordinance including,
without
limitation, Title VII of the Civil Rights Act of 1964, the Age Discrimination
In
Employment Act, the Americans With Disabilities Act, and the California Fair
Employment and Housing Act.
THE
UNDERSIGNED ACKNOWLEDGES THAT HE HAS BEEN ADVISED BY LEGAL COUNSEL AND IS
FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH
PROVIDES AS FOLLOWS:
“A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.”
THE
UNDERSIGNED, BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY
RIGHTS HE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON
LAW
PRINCIPLES OF SIMILAR EFFECT.
IN
ACCORDANCE WITH THE OLDER WORKERS BENEFIT PROTECTION ACT OF 1990, THE
UNDERSIGNED IS HEREBY ADVISED AS FOLLOWS:
(A) HE
HAS
THE RIGHT TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS RELEASE;
B-1
(B) HE
HAS
TWENTY-ONE (21) DAYS TO CONSIDER THIS RELEASE BEFORE SIGNING IT;
AND
(C) HE
HAS
SEVEN (7) DAYS AFTER SIGNING THIS RELEASE TO REVOKE THIS RELEASE, AND THIS
RELEASE WILL BECOME EFFECTIVE UPON THE EXPIRATION OF THAT REVOCATION
PERIOD.
The
undersigned represents and warrants that there has been no assignment or
other
transfer of any interest in any Claim which he may have against Releasees,
or
any of them, and the undersigned agrees to indemnify and hold Releasees,
and
each of them, harmless from any liability, Claims, demands, damages, costs,
expenses and attorneys’ fees incurred by Releasees, or any of them, as the
result of any such assignment or transfer or any rights or Claims under any
such
assignment or transfer. It is the intention of the parties that this
indemnity does not require payment as a condition precedent to recovery by
the
Releasees against the undersigned under this indemnity.
The
undersigned agrees that if he hereafter commences any suit arising out of,
based
upon, or relating to any of the Claims released hereunder or in any manner
asserts against Releasees, or any of them, any of the Claims released hereunder,
then the undersigned agrees to pay to Releasees, and each of them, in addition
to any other damages caused to Releasees thereby, all reasonable attorneys’ fees
incurred by Releasees in defending or otherwise responding to said suit or
Claim.
The
undersigned further understands and agrees that neither the payment of any
sum
of money nor the execution of this Release shall constitute or be construed
as
an admission of any liability whatsoever by the Releasees, or any of them,
who
have consistently taken the position that they have no liability whatsoever
to
the undersigned.
IN
WITNESS WHEREOF, the undersigned has executed this Release as of this ____
day
of ___________, 2006.
Xxxxxxx
X. Xxxxxxxxx
EXHIBIT
C
GENERAL
RELEASE
For
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, except for rights created by that certain Separation Agreement,
dated as of December 12, 2005, by and between Xxxxxxx Properties, Inc. (the
“REIT”), Xxxxxxx Properties, L.P. (the “Operating Partnership,” and together
with the REIT, the “Company”), and Xxxxxxx X. Xxxxxxxxx (the “Executive”), the
Company does hereby release and forever discharge, the “Releasees” hereunder,
consisting of the Executive and his heirs and assigns, of and from any and
all
manner of action or actions, cause or causes of action, in law or in equity,
suits, debts, liens, contracts, agreements, promises, liability, claims,
demands, damages, losses, costs, attorneys’ fees or expenses, of any nature
whatsoever, known or unknown, fixed or contingent (hereinafter called “Claims”),
which the REIT, the Operating Partnership or any of their subsidiaries now
has
or may hereafter have against the Releasees, or any of them, by reason of
any
matter, cause, or thing whatsoever from the beginning of time to the date
hereof. The Claims released herein include, without limiting the
generality of the foregoing, any Claims in any way arising out of, based
upon,
or related to the employment or termination of employment of the Executive
by
the Releasees, or any of them.
The
Company represents and warrants that there has been no assignment or other
transfer of any interest in any Claim which it may have against Releasees,
or
any of them, and the Company agrees to indemnify and hold Releasees, and
each of
them, harmless from any liability, Claims, demands, damages, costs, expenses
and
attorneys’ fees incurred by Releasees, or any of them, as the result of any such
assignment or transfer or any rights or Claims under any such assignment
or
transfer. It is the intention of the parties that this indemnity does not
require payment as a condition precedent to recovery by the Releasees against
the Company under this indemnity.
The
Company agrees that if it hereafter commences any suit arising out of, based
upon, or relating to any of the Claims released hereunder or in any manner
asserts against Releasees, or any of them, any of the Claims released hereunder,
then the Company agrees to pay to Releasees, and each of them, in addition
to
any other damages caused to Releasees thereby, all reasonable attorneys’ fees
incurred by Releasees in defending or otherwise responding to said suit or
Claim.
The
Company further understands and agrees that neither the payment of any sum
of
money nor the execution of this Release shall constitute or be construed
as an
admission of any liability whatsoever by the Releasees, or any of them, who
have
consistently taken the position that they have no liability whatsoever to
the
Company.
C-1
IN
WITNESS WHEREOF, the REIT and the Operating Partnership have executed this
Release as of this ____ day of ___________, 2006.
XXXXXXX
PROPERTIES, INC.,
a
Maryland corporation
By:
Name:
Title:
XXXXXXX
PROPERTIES, L.P.,
a
Maryland limited partnership
By:
Xxxxxxx Properties, Inc.
Its:
General Partner
By:
Name:
Title:
