Exhibit 10.32
XXXXXXX PROPERTIES, INC.
000 XXXX XXXXX XXXXXX, XXXXX 0000
XXX XXXXXXX, XXXXXXXXXX 00000-0000
November 8, 2002
Xx. Xxxx X. Xxxxxxx
0000 Xxxx Xxx Xxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000-0000
RE: EMPLOYMENT TERMS
Dear Xxxx:
Xxxxxxx Properties, Inc. (the "REIT") and Xxxxxxx Properties, L.P.
(the "Operating Partnership" and together with the REIT, the "Company") are
pleased to offer you the position of Senior Vice President, Leasing of the REIT
and the Operating Partnership on the following terms, effective as of the date
of the closing of the initial public offering of shares of the REIT's common
stock (the "Effective Date"):
1. POSITION, DUTIES AND RESPONSIBILITIES. As of the Effective Date, you
will be employed as Senior Vice President, Leasing of the REIT and the Operating
Partnership. In the capacity of Senior Vice President, Leasing, you will have
such duties and responsibilities as are normally associated with such position.
Your duties may be changed from time to time by the Company, consistent with
your position. You will report to the President of the REIT or the Operating
Partnership, as applicable, and will work at our principal offices located in
downtown Los Angeles (or such other location in the Los Angeles area as the
Company may utilize as its principal offices), except for travel to other
locations as may be necessary to fulfill your responsibilities. At the Company's
request, you will serve the Company and/or its subsidiaries and affiliates in
other offices and capacities in addition to the foregoing. In the event that you
serve in any one or more of such additional capacities, your compensation will
not be increased beyond that specified in this letter. In addition, in the event
your service in one or more of such additional capacities is terminated, your
compensation, as specified in this letter, will not be diminished or reduced in
any manner as a result of such termination for so long as you otherwise remain
employed under the terms of this letter.
2. BASE COMPENSATION. During your employment with the Company, the Company
will pay you a base salary of $275,000 per year, less payroll deductions and all
required withholdings, payable in accordance with the Company's normal payroll
practices and prorated for any partial month of employment. Your base salary may
be subject to increase pursuant to the Company's policies as in effect from time
to time.
3. ANNUAL BONUS. In addition to the base salary set forth above, you will
be eligible to participate in the Company's incentive bonus plan applicable to
similarly situated executives of
the Company. The amount of your annual bonus will be based on the attainment of
performance criteria established and evaluated by the Company in accordance with
the terms of such bonus plan as in effect from time to time, provided that,
subject to the terms of such bonus plan, your target annual bonus will initially
be a minimum of 60% of your annual base salary for such year, and your maximum
annual bonus will initially be 90% of your annual base salary for such year.
Your bonus will be payable semi-annually in a manner determined by the Company
in accordance with the bonus plan.
4. RESTRICTED STOCK AWARDS. Subject to adoption by the Board of Directors
of the REIT and approval by the REIT's stockholders of the REIT's incentive
award plan (the "Incentive Plan"), the REIT will grant you the following
restricted stock awards under the Incentive Plan:
(a) Initial Grant. The REIT shall, as of the Effective Date, grant
you a number of shares of the REIT's common stock (the "Initial Restricted
Stock") equal to the quotient obtained by dividing (x) $500,000 by (y) the
initial public officering price of a share of the REIT's common stock. The
Initial Restricted Stock will be granted to you at a purchase price of $0.01 per
share; provided, however, that the aggregate purchase price of the Initial
Restricted Stock shall not exceed $1,000. The Initial Restricted Stock will vest
in full on the Effective Date. Consistent with the foregoing, the terms and
conditions of the Initial Restricted Stock will be set forth in a restricted
stock agreement to be entered into by you and the REIT which will evidence the
grant of the Initial Restricted Stock; and
(b) Subsequent Grant. Provided that your employment with the Company
has not terminated, the REIT shall, upon the earlier to occur of (i) the date on
which the REIT makes its annual grants to similarly situated executives under
the Incentive Plan for the year following the year in which the Effective Date
occurs, or (ii) the first anniversary of the Effective Date, grant you a number
of shares of the REIT's common stock (the "Subsequent Restricted Stock") equal
to the quotient obtained by dividing (x) $2,000,000 by (y) the fair market value
(as determined under the Incentive Plan) of a share of the REIT's common stock
on the date of grant. The Subsequent Restricted Stock will be granted to you at
a purchase price of $0.01 per share. The Subsequent Restricted Stock will vest
as follows: twenty-five percent (25%) of the shares of the Subsequent Restricted
Stock will vest on the date on which the Subsequent Restricted Stock is granted
to you, and, subject to your continued employment with the Company, twenty-five
percent (25%) of the shares of the Subsequent Restricted Stock will vest on each
of the first, second and third anniversaries of the date of such grant. In the
event of a termination of your employment by the Company without cause (as
defined below) following the date of grant of the Subsequent Restricted Stock,
the Subsequent Restricted Stock will thereupon immediately vest in full.
Consistent with the foregoing, the terms and conditions of the Subsequent
Restricted Stock will be set forth in a restricted stock agreement to be entered
into by you and the REIT which will evidence the grant of the Subsequent
Restricted Stock.
5. ADDITIONAL PAYMENT. As soon as practicable but in no event more than 30
days after the Effective Date, the Company will pay you a lump-sum cash payment
of $500,000, subject to payroll deductions and all required withholdings.
2
6. BENEFITS AND VACATION. You will be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
maintained or sponsored by the Company from time to time which are applicable to
other similarly situated executives of the Company, subject to the terms and
conditions thereof. You will also be eligible for standard benefits, such as
medical insurance, sick leave, vacations and holidays to the extent applicable
generally to other similarly situated executives of the Company.
7. COMPENSATION GROSS-UP. The amount of compensation payable to you
pursuant to Sections 2, 3, 4 and 5 above will be "grossed up" as necessary (on
an after-tax basis) to compensate for any additional social security withholding
taxes due as a result of your shared employment by the Operating Partnership,
the REIT and, if applicable, any subsidiary and/or affiliate thereof.
8. CONFIDENTIAL AND PROPRIETARY INFORMATION. As a condition of your
employment with the Company, you agree that during the term of such employment
and any time thereafter, you will not directly or indirectly disclose or
appropriate to your own use, or the use of any third party, any trade secret or
confidential information concerning the REIT, the Operating Partnership, Xxxxxxx
Services, Inc., a Maryland corporation, their respective subsidiaries or
affiliates (collectively, the "Xxxxxxx Group") or their businesses, whether or
not developed by you, except as it is required in connection with your services
rendered for the Company. You further agree that, upon termination of your
employment, you will not receive or remove from the files or offices of the
Xxxxxxx Group any originals or copies of documents or other materials maintained
in the ordinary course of business of the Xxxxxxx Group, and that you will
return any such documents or materials otherwise in your possession.
9. NON-SOLICITATION. You further agree that during the term of such
employment and for one year after your employment is terminated, you will not
directly or indirectly solicit, induce, or encourage any employee, consultant,
agent, customer, vendor, or other parties doing business with any member of the
Xxxxxxx Group to terminate their employment, agency, or other relationship with
the Xxxxxxx Group or such member or to render services for or transfer their
business from the Xxxxxxx Group or such member and you will not initiate
discussion with any such person for any such purpose or authorize or knowingly
cooperate with the taking of any such actions by any other individual or entity;
provided, however, that after the termination of your employment, it shall not
be a violation of this Section 9 for you to conduct business with any tenants or
prospective tenants of the Xxxxxxx Group so long as such activities do not
violate Section 8 above.
10. AT-WILL EMPLOYMENT. Your employment with the Company is "at-will," and
either you or the Company may terminate your employment for any reason
whatsoever (or for no reason) by giving 30 days prior written notice of such
termination to the other party. This at-will employment relationship cannot be
changed except in a writing signed by you and an authorized representative of
the Company.
11. NON-CAUSE TERMINATION. Should the Company terminate your employment
without cause (as defined below), then, in addition to any other amounts payable
to you through the date of termination of your employment, the Company will pay
you a lump-sum cash
3
severance payment equal to the sum of (x) 100% of your then current annual base
salary, plus (y) 100% of your target annual bonus (assuming that you had
remained employed) for the year in which the termination of employment occurs,
plus (z) in the event that such termination of employment occurs prior to the
first anniversary of the Effective Date, $500,000; provided, however, that in no
event shall you or your estate or beneficiaries be entitled to any such payments
hereunder upon any termination of your employment by reason of your total and
permanent disability or your death. Your right to receive the severance payments
set forth herein is conditioned on and subject to your execution and
non-revocation of a general release of claims against the Xxxxxxx Group, in a
form reasonably acceptable to the Company. For purposes of this letter, "cause"
shall mean
(i) your willful and continued failure to substantially perform your
duties with the Company (other than any such failure resulting from your
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to you by the Company, which demand
specifically identifies the manner in which the Company believes that you
have not substantially performed your duties;
(ii) your willful commission of an act of fraud or dishonesty
resulting in economic or financial injury to the Company or its
subsidiaries or affiliates;
(iii) your conviction of, or entry by you of a guilty or no contest
plea to, the commission of a felony or a crime involving moral turpitude;
(iv) a willful breach by you of your fiduciary duty to the Company
which results in economic or other injury to the Company or its
subsidiaries or affiliates; or
(v) your willful and material breach of your covenants set forth in
Section 8 or 9 above.
For purposes of this provision, no act or failure to act on your part will be
considered "willful" unless it is done, or omitted to be done, by you in bad
faith or without reasonable belief that your action or omission was in the best
interests of the Company.
12. COMPANY RULES AND REGULATIONS. As an employee of the Company,
you agree to abide by Company rules and regulations as set forth in the
Company's Employee Handbook or as otherwise promulgated.
13. PAYMENT OF FINANCIAL OBLIGATIONS. The payment or provision to you by
the Company of any remuneration, benefits or other financial obligations
pursuant to this letter will be allocated to the Operating Partnership, the REIT
and, if applicable, any subsidiary and/or affiliate thereof in accordance with
the Employee Sharing and Expense Allocation Agreement, by and between the REIT,
the Operating Partnership, and Xxxxxxx Services, Inc., as in effect from time to
time.
4
14. WITHHOLDING. The Company may withhold from any amounts payable under
this letter such Federal, state, local or foreign taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
15. ENTIRE AGREEMENT. As of the Effective Date, this letter and the
employment terms set forth herein comprise the final, complete and exclusive
agreement between you and the Company with respect to the subject matter hereof
and replace and supersede any and all other agreements, offers or promises,
whether oral or written, made to you by any member of the Xxxxxxx Group or any
entity (a "Predecessor Employer"), or representative thereof, whose business or
assets any member of the Xxxxxxx Group succeeded to in connection with the
initial public offering of the REIT's common stock or the transactions related
thereto. You agree that any such agreement, offer or promise between you and any
member of the Xxxxxxx Group or a Predecessor Employer (or any representative
thereof) is hereby terminated and will be of no further force or effect, and you
acknowledge and agree that upon your execution of this letter, you will have no
right or interest in or with respect to any such agreement, offer or promise. In
the event that the Effective Date does not occur, this letter (including,
without limitation, the immediately preceding sentence) will have no force or
effect.
16. PROOF OF RIGHT TO WORK. As required by law, this offer of employment
is subject to satisfactory proof of your right to work in the United States.
[SIGNATURE PAGE FOLLOWS]
5
Please confirm your agreement to the foregoing by signing and dating the
enclosed duplicate original of this letter in the space provided below for your
signature and returning it to Xxxx Xxxxxxxxx. Please retain one fully-executed
original for your files.
Sincerely,
Xxxxxxx Properties, Inc.,
a Maryland corporation
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Co-Chief Executive Officer and
President
Xxxxxxx Properties, L.P.,
a Maryland limited partnership
By: Xxxxxxx Properties, Inc.
Its: General Partner
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Co-Chief Executive Officer and
President
Accepted and Agreed,
this 8th day of November, 2002.
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Xxxx X. Xxxxxxx
6
