================================================================================
EMPLOYMENT AGREEMENT
FOR
XXXX X. XXXXXX
================================================================================
TABLE OF CONTENTS
PAGE
1. EMPLOYMENT. 2
2. SERVICES. 2
3. COMPENSATION AND BENEFITS. 4
4. TERMINATION OF EMPLOYMENT. 7
5. CONFIDENTIAL INFORMATION. 10
6. RETURN OF DOCUMENTS. 11
7. NONCOMPETE. 12
8. REMEDIES. 13
9. SUCCESSORS AND ASSIGNS. 13
10. TIMING OF AND NO DUPLICATION OF PAYMENTS 15
11. MODIFICATION OR WAIVER. 15
12. NOTICES. 15
13. GOVERNING LAW. 16
14. SEVERABILITY. 16
15. COUNTERPARTS. 16
16. HEADINGS. 17
17. ENTIRE AGREEMENT. 17
18. SURVIVAL OF AGREEMENTS. 17
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of January
31, 1997 by and between Xxxx X. Xxxxxx, an individual residing at 00 Xxxxx
Xxxxxx Xxxxx Xxxx, Xxx Xxxxx, Xxx Xxxx 00000 ("Executive"), and Cali Realty
Corporation, a Maryland corporation with offices at 00 Xxxxxxxx Xxxxx, Xxxxxxxx,
Xxx Xxxxxx 00000 ("Cali").
RECITALS
WHEREAS, Xxxxxx Xxxxxx Company, LLC, a New York limited liability company
and Xxxxxx Xxxxxx-Eastview North Company, L.P., a New York limited partnership
(collectively "RM") and Cali Realty, L.P., a Delaware limited partnership
("CRLP") and Cali have determined that it is in the best interests of the
parties' long term strategic growth to combine their respective properties and
related assets;
WHEREAS, in order to effectuate this combination, RM has agreed to
contribute certain properties and other assets located throughout southern New
York and Connecticut and owned or controlled by RM (the "Property") to designees
of CRLP, to cause certain key executives of RM to become part of the management
of Cali, and through RM's existing structure to continue to manage and operate
the properties being contributed by RM, all as of the closing (the "Closing
Date");
WHEREAS, Executive has served as a key executive of RM and, through such
service, has acquired special and unique knowledge, abilities and expertise; and
WHEREAS, Cali desires to employ Executive, and Executive desires to be
employed by Cali, pursuant to the terms set forth herein.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
and agreements set forth herein and for other good and valuable consideration,
the adequacy and receipt of which are hereby acknowledged, the parties hereto
agree as follows:
1. Employment.
Cali hereby agrees to employ Executive, and Executive hereby agrees
to be employed by Cali, for a term commencing on the date hereof and expiring on
January 31, 2000; provided, however, that commencing on January 31, 2000, and
each January 31 thereafter, the term of this Agreement shall be extended
automatically for one (1) additional year unless at least ninety (90) days prior
to the applicable expiration date either Cali or Executive shall have given
written notice that such party does not wish to extend this Agreement. The term
of this Agreement, as it may be extended from time to time in accordance with
this Paragraph 1, is referred to herein as the "Employment Period."
2. Services.
During the Employment Period, Executive shall hold the position of
Executive Vice President and shall serve as a member of the Board of Directors
of Cali (the "Board"). Executive shall devote his best efforts and substantially
all of his business time, skill and attention to the business of Cali, and shall
be primarily responsible for the supervision of the operation of the Property
contributed to Cali by RM and agrees to participate actively in devising and
implementing Cali's corporate strategy. Specifically, Executive agrees to meet
at both Cranford, New Jersey and
2
Elmsford, New York at least twice a month with Cali's senior management to plan
future investments and geographical growth. Executive shall also perform such
duties as are customarily performed by similar executive officers of Cali and as
may be more specifically enumerated from time to time by the Board or the
Executive Committee of the Board, if any; provided, however, that the foregoing
is not intended to (a) preclude Executive from (i) owning and managing personal
investments, including real estate investments, subject to the restrictions set
forth in Paragraph 7 hereof or (ii) engaging in charitable activities and
community affairs, or (b) restrict or otherwise limit Executive from (i)
conducting the real estate development, acquisition or management activities as
and to the extent permitted pursuant to Section 26 of the Contribution and
Exchange Agreement dated January 24, 1997 by and between Cali, CRLP and RM (the
"Contribution and Exchange Agreement"), or (ii) acquiring and conducting real
estate development and management activities with respect to properties which
may be purchased by the RM Principal pursuant to Sections 8.3 or 27.5 of the
Contribution and Exchange Agreement, provided that the performance of these
activities referred to in clauses (a) and (b) does not prevent Executive from
devoting substantially all of his business time to Cali.
Executive shall be based in Elmsford, NY, subject to reasonable travel
requirements, in an office comparable to the office previously provided to
Executive by RM.
Subject to the approval of a general and administrative budget by CRLP
and/or Cali and within the parameters of such budget, Executive jointly with
Xxxxxxx X. Xxxxx shall select RM's property management and leasing teams and
members of such
3
management and leasing teams shall become employees of Cali on the Closing Date.
In addition, Executive jointly with Xxxxxxx X. Xxxxx shall, in June 1997 and
again in June 1998, have the sole and absolute authority to allocate options to
purchase 120,000 shares of Common Stock (as hereinafter defined) (i.e., 150,000
shares less 30,000 shares underlying the Warrants (as hereinafter defined)
transferred to the Warrant Transferees (as hereinafter defined)) at then current
fair market value and subject to the provisions of the Plan (as hereinafter
defined) to Cali employees who are part of such management and leasing teams;
provided, however, that Executive may not allocate any of such 120,000 options
to himself or to Xxxxxxx X. Xxxxx. Any of the foregoing options which are not
actually granted in 1997 may be granted in 1998 and any of the foregoing options
not granted in 1998 may be granted in 1999, provided that all such options shall
be granted at then current fair market value.
3. Compensation and Benefits.
During the Employment Period, Cali shall pay Executive a minimum
annual base salary in the amount of $225,000 (as adjusted from time to time,
(the "Annual Base Salary")), payable in accordance with Cali's normal payroll
practices. In addition, Executive shall be eligible for incentive compensation
payable each year in such amounts as may be determined by the Compensation
Committee of the Board (the "Compensation Committee") based upon, among other
factors, growth in Funds from Operations per Common Share (as hereinafter
defined) for the year. Executive's Annual Base Salary shall be reviewed annually
in accordance with the policy of Cali from time to time and may be subject to
adjustment based on, among other things, Executive's performance, as determined
in the sole discretion of the Compensation
4
Committee. Cali shall have the right to deduct and withhold from such
compensation all social security and other federal, state and local taxes and
charges which currently are or which hereafter may be required by law to be so
deducted and withheld. In addition to the compensation specified above,
Executive shall be entitled to the following benefits:
(a) participation in the Employee Stock Option Plan of Cali Realty
Corporation (the "Plan"), and other benefit plans (including without
limitation Cali's Section 401(k) Savings/Retirement Plan) made
generally available to executives of Cali;
(b) during the 1997 calendar year, participation in any health
insurance, disability insurance, group life insurance or other
welfare benefit programs which were maintained by RM and which are
assumed by Cali on the Closing Date (the "RM Plans") and other Cali
welfare plans, if any, providing benefits of the type not provided
under any of the RM Plans, and thereafter, participation in any
health insurance, disability insurance, group life insurance or
other welfare benefit programs made generally available to
executives of Cali with respect to which Executive shall be granted
credit for all service with RM and its affiliates and their
respective predecessors prior to the Closing Date; and
(c) reimbursement for reasonable business expenses incurred by Executive
in furtherance of the interests of Cali.
In addition, Executive shall be entitled to receive such bonuses and options to
purchase shares of common stock, par value $0.01 per share, of Cali (the "Common
Stock") as the Board shall approve, in its sole discretion, including, without
limitation, options and bonuses contingent upon Executive's performance and the
achievement of specified financial and operating objectives for Funds from
Operations per Common Share.
As further consideration for Executive agreeing to serve as an officer and
entering into this Agreement upon the terms set forth herein, including, without
limitation, the terms relating to non-competition set forth in Paragraph 7
below, Cali is
5
issuing to Executive and certain members of the management and leasing teams
designated by Executive (the "Warrant Transferees"), warrants to purchase an
aggregate of 200,000 shares of Common Stock at a purchase price equal to fair
market value on the Closing Date ("Warrants"). Executive's Warrants shall be
evidenced by the Warrant Agreement dated January 31, 1997 which shall include,
but not be limited to, the following provisions: vesting over a three year
period with one third (1/3) of the Warrants vesting on the first, second and
third anniversaries of the date of the Warrant Agreement and non-transferability
provisions. For purposes of this issuance "fair market value" shall mean the
closing price as quoted on the New York Stock Exchange at the end of the last
business day preceding the date of the grant as reported in the New York edition
of the Wall Street Journal. In accordance with the written direction of
Executive as provided to Cali, Executive shall receive Warrants to purchase
170,000 shares of Common Stock and the Warrant Transferees shall receive
Warrants to purchase an aggregate of 30,000 shares of Common Stock. Since
Executive has directed Cali to issue the aforementioned Warrants to the Warrant
Transferees, Executive shall receive in July 1997 and again in July 1998,
options to purchase 15,000 shares of Common Stock on each such date at a
purchase price of then current fair market value and subject to the provisions
of the Plan.
For purposes of this Agreement, "Funds from Operations per Common Share"
shall mean (i) net income (loss) before minority interest of unit holders,
computed in accordance with generally accepted accounting principles ("GAAP"),
excluding gains (or losses) from debt restructuring and sale of property, plus
real estate return, depreciation and amortization as calculated in accordance
with the National
6
Association of Real Estate Investment Trusts definition published in March 1995,
as amended from time to time, and as applied in accordance with the accounting
practices and policies of the Cali in effect from time to time on a consistent
basis to the entire Employment Period, divided by (ii) the sum of (A) the
primary weighted average number of outstanding shares of Common Stock as it
appears in the Cali's financial statement for the applicable period and (B) the
primary weighted average number of outstanding limited partnership units of
CRLP, for the applicable period.
4. Termination of Employment.
(a) In the event (i) Cali terminates Executive's employment for
Cause (as hereinafter defined) or (ii) Executive terminates his employment
without Good Reason (as hereinafter defined), Cali shall pay Executive any
unpaid salary accrued through and including the date of termination (the
"Accrued Amount"). In addition, in such event, Executive shall be entitled (i)
to exercise any Warrants and/or options which have vested and are exercisable in
accordance with the terms of this Agreement, the applicable Warrant Agreement,
stock option agreement or the Plan, and (ii) to retain any shares awarded to
Executive which are fully vested on the date of termination. Except for any
rights which Executive may have to the Accrued Amount, vested Warrants and/or
options and vested share awards, Cali shall have no further obligations
hereunder following such termination.
(b) In the event of termination of Executive's employment as a
result of either (i) Executive's death or Disability (as hereinafter defined),
(ii) termination by Cali for any reason other than Cause or (iii) termination by
Executive of his employment for Good Reason, Cali shall pay to Executive (A) the
Accrued Amount, (B) the unpaid
7
salary, at the rate then in effect without reduction, from the date of
termination through the end of the Employment Period remaining (assuming no such
termination occurred) and (C) a pro-rata portion, based upon the number of days
in the period beginning with January 1 of the calendar year in which such
termination occurred and ending with the date the Employment Period ends
(assuming such termination did not occur), of the average annual amount of
incentive compensation payments paid to Executive during each previous year of
Executive's employment hereunder. The aforesaid amount shall be payable, at the
option of Executive, his estate or his personal representative, either (i) in
full immediately upon such termination or (ii) monthly over the remainder of the
Employment Period. In addition, Executive shall be entitled, at the option of
Executive, his estate or his personal representative, within ninety (90) days
(one (1) year in the case of termination as a result of Executive's death or
Disability) of the date of such termination, (i) to exercise any Warrants and/or
options to purchase shares of Common Stock that have vested (including, without
limitation, by acceleration in accordance with the terms of the Plan or Warrant
Agreement) and are exercisable in accordance with the terms of this Agreement,
any applicable Warrant Agreement, stock option agreement or the Plan, (ii) to
retain any shares of Common Stock awarded to Executive which are vested on the
date of termination, and (iii) to require Cali (upon written notice delivered
within one hundred eighty (180) days following the date of Executive's
termination) to repurchase all or any portion of Executive's vested Warrants or
options (including without limitation Warrants and options, if any, which have
vested by acceleration in accordance with the terms of the Plan or stock option
agreement or Warrant Agreement) to purchase shares of Common Stock at a price
equal to the
8
difference between the Fair Market Value (as hereinafter defined) of the shares
of Common Stock for which the Warrants or options to be repurchased are
exercisable and the exercise price of such Warrant or option as of the date of
Executive's termination of employment.
(c) For purposes of this Agreement:
(i) "Cause" shall mean (A) the willful and continued failure
by Executive to substantially perform his duties
hereunder (other than any such failure resulting from
Executive's incapacity due to physical or mental
illness) for a period of thirty (30) days after written
demand for substantial performance is delivered by Cali
specifically identifying the manner in which Cali
believes Executive has not substantially performed his
duties, or (B) willful misconduct by Executive which is
materially injurious to Cali, monetarily or otherwise,
or (C) the willful violation by Executive of the
provisions of Paragraph 5 or 7 hereof. For purposes of
this Paragraph 4(c)(i), no act, or failure to act, on
Executive's part shall be considered "willful" unless
done, or omitted to be done, by him not in good faith
and without reasonable belief that his action or
omission was in furtherance of the interests of Cali.
(ii) "Disability" shall mean the determination by Cali, upon
the advice of an independent qualified physician,
reasonably acceptable to Executive, that Executive has
become physically or mentally incapable of performing
his duties under this Agreement and such disability has
disabled Executive for a cumulative period of one
hundred eighty (180) days within a twelve (12) month
period.
(iii) "Fair Market Value" shall mean the average of the
closing price on the New York Stock Exchange of the
Common Stock on each of the trading days within the
thirty (30) days immediately preceding the date of
termination of Executive's employment;
(iv) "Good Reason" shall mean (A) any assignment to Executive
of any duties materially different from those
contemplated by Paragraph 2 hereof, or any limitation of
the powers of Executive in any respect not contemplated
by Paragraph 2 hereof or other material breach of this
Agreement by Cali,
9
(B) a material reduction in Executive's Annual Base
Salary as in effect at the time in question, or any
other material failure by Cali to comply with Paragraph
3 hereof, provided, however, that in the event Executive
is not awarded a bonus or other discretionary payment or
discretionary award described in Paragraph 3, it shall
not be deemed a failure, (C) Cali shall have given
notice pursuant to Paragraph 1 hereof that it does not
wish to extend this Agreement, except in connection with
termination of Executive's employment for Cause or by
reason of death or Disability, or (D) failure of Cali to
obtain the assumption of the obligation to perform this
Agreement by any successor as contemplated in Paragraph
9(a) hereof.
(d) Any termination of Executive's employment by Cali or any such
termination by Executive (other than on account of death) shall be communicated
by written Notice of Termination to the other party hereto. 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 shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Executive's employment under the provision so
indicated.
5. Confidential Information.
(a) Executive understands and acknowledges that during his
employment with Cali, he will be exposed to Confidential Information (as defined
below), all of which is proprietary and which will rightfully belong to Cali.
Executive shall hold in a fiduciary capacity for the benefit of Cali such
Confidential Information obtained by Executive during his employment with RM and
Cali and shall not, directly or indirectly, at any time, either during or after
his employment with Cali, without Cali's prior written consent, use any of such
Confidential Information or disclose any of such Confidential Information to any
individual or entity other than Cali or its employees,
10
except as required in the performance of his duties for Cali or as otherwise
required by law. Executive shall take all reasonable steps to safeguard such
Confidential Information and to protect such Confidential Information against
disclosure, misuse, loss or theft.
(b) The term "Confidential Information" shall mean any information
not generally known in the relevant trade or industry or otherwise not generally
available to the public, which was obtained from Cali or its predecessors or
which was learned, discovered, developed, conceived, originated or prepared
during or as a result of the performance of any services by Executive on behalf
of Cali or its predecessors including without limitation RM. For purposes of
this Paragraph 5, Cali shall be deemed to include any entity which is
controlled, directly or indirectly, by Cali and any entity of which a majority
of the economic interest is owned, directly or indirectly, by Cali.
6. Return of Documents.
Except for such items which are of a personal nature to Executive
(e.g., daily business planner), all writings, records, and other documents and
things containing any Confidential Information shall be the exclusive property
of Cali, shall not be copied, summarized, extracted from, or removed from the
premises of Cali, except in pursuit of the business of Cali or at the direction
of Cali, and shall be delivered to Cali, without retaining any copies, upon the
termination of Executive's employment or at any time as requested by Cali.
11
7. Noncompete.
Executive agrees that:
(a) During the Employment Period and, unless (i) Cali terminates
Executive's employment hereunder without Cause, (ii) Executive terminates his
employment hereunder with Good Reason or (iii) Cali shall have given notice
pursuant to Paragraph 1 hereof that it does not wish to extend this Agreement
(except in connection with termination of Executive's employment for Cause or by
reason of death or Disability), for a one (1) year period thereafter, Executive
shall not, directly or indirectly, within the State of New York, the State of
New Jersey, the State of Connecticut or the State of Pennsylvania engage in, or
own, invest in, manage or control any venture or enterprise engaged in any
development, acquisition or management activities with respect to
office-service, office or industrial or flex property, without regard to whether
or not such activities compete with Cali. Nothing herein shall prohibit
Executive from being a passive owner of not more than five percent (5%) of the
outstanding stock of any class of securities of a corporation or other entity
engaged in such business which is publicly traded, so long as he has no active
participation in the business of such corporation or other entity. Moreover the
foregoing limitations shall not be deemed to restrict or otherwise limit
Executive from (i) conducting real estate development, acquisition or management
activities as and to the extent permitted pursuant to Section 26 of the
Contribution and Exchange Agreement or (ii) acquiring and conducting real estate
development and management activities with respect to properties which may be
purchased by the RM Principal pursuant to Sections 8.3 or 27.5 of the
Contribution and Exchange Agreement, provided that during the
12
Employment Period, the performance of such activities does not prevent Executive
from devoting substantially all of his business time to Cali.
(b) If, at the time of enforcement of this Paragraph 7, a court
shall hold that the duration, scope, area or other restrictions stated herein
are unreasonable, the parties agree that reasonable maximum duration, scope,
area or other restrictions may be substituted by such court for the stated
duration, scope, area or other restrictions.
(c) For purposes of this Paragraph 7, Cali shall be deemed to
include any entity which is controlled, directly or indirectly, by Cali and any
entity of which a majority of the economic interest is owned, directly or
indirectly, by Cali.
8. Remedies.
The parties hereto agree that Cali would suffer irreparable harm
from a breach by Executive of any of the covenants or agreements contained in
Paragraph 5, 6 or 7 of this Agreement. Therefore, in the event of the actual or
threatened breach by Executive of any of the provisions of Paragraph 5, 6 or 7
of this Agreement, Cali may, in addition and supplementary to other rights and
remedies existing in its favor, apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce or prevent any violation of the provisions thereof.
9. Successors and Assigns.
(a) Cali shall 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 Cali, by agreement in form and substance satisfactory
to Executive, to
13
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that Cali would be required to perform it if no such succession
had taken place. Failure of Cali to obtain such agreement prior to the
effectiveness of an such succession shall be a breach of this Agreement and
shall entitle Executive to compensation from Cali in the same amount and on the
same terms as he would be entitled to hereunder if he terminated his employment
for Good Reason, except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be deemed the date of
termination. In the event of such a breach of this Agreement, the Notice of
Termination shall specify such date as the date of termination. As used in this
Agreement, "Cali" shall mean Cali as hereinbefore defined and any successor to
all or substantially all of its business and/or its assets as aforesaid which
executes and delivers the agreement provided for in this Paragraph 9 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law. Any cash payments owed to Executive pursuant to this Paragraph
9 shall be paid to Executive in a single sum immediately prior to the
consummation of the transaction with such successor.
(b) This Agreement and all rights of Executive hereunder shall inure
to the benefit of and be enforceable by Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee, or other designee or, if there be no
such designee, to Executive's estate.
14
10. Timing of and No Duplication of Payments
All payments payable to Executive pursuant to this Agreement shall
be paid as soon as practicable after such amounts have become fully vested and
determinable. In addition, Executive shall not be entitled to receive duplicate
payments under any of the provisions of this Agreement.
11. Modification or Waiver.
No amendment, modification, waiver, termination or cancellation of
this Agreement shall be binding or effective for any purpose unless it is made
in a writing signed by the party against whom enforcement of such amendment,
modification, waiver, termination or cancellation is sought. No course of
dealing between or among the parties to this Agreement shall be deemed to affect
or to modify, amend or discharge any provision or term of this Agreement. No
delay on the part of Cali or Executive in the exercise of any of their
respective rights or remedies shall operate as a waiver thereof, and no single
or partial exercise by Cali or Executive of any such right or remedy shall
preclude other or further exercise thereof. A waiver of right or remedy on any
one occasion shall not be construed as a bar to or waiver of any such right or
remedy on any other occasion.
12. Notices.
All notices or other communications required or permitted hereunder
shall be made in writing and shall be deemed to have been duly given if
delivered by hand or delivered by a recognized delivery service or mailed,
postage prepaid, by express, certified or registered mail, return receipt
requested, and addressed to Cali or
15
Executive, as applicable, at the address set forth above (or to such other
address as shall have been previously provided in accordance with this Paragraph
11).
13. Governing Law.
THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW JERSEY, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAWS THEREUNDER.
14. Severability.
Whenever possible, each provision and term of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision or term of this Agreement shall be held to be prohibited by
or invalid under such applicable law, then, subject to the provisions of
Paragraph 7(b) above, such provision or term shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating or affecting in
any manner whatsoever the remainder of such provisions or term or the remaining
provisions or terms of this Agreement.
15. Counterparts.
This Agreement may be executed in separate counterparts, each of
which is deemed to be an original and both of which taken together shall
constitute one and the same agreement.
16
16. Headings.
The headings of the Paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute a part hereof and shall
not affect the construction or interpretation of this Agreement.
17. Entire Agreement.
This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all other prior agreements
and undertakings, both written and oral, among the parties with respect to the
subject matter hereof.
18. Survival of Agreements.
The covenants made in Paragraphs 4, 5, 6 and 7 each shall survive
the termination of this Agreement.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
17
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first above written.
CALI REALTY CORPORATION
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and
General Counsel
EXECUTIVE
/s/ Xxxx X. Xxxxxx
----------------------------------
Xxxx X. Xxxxxx
18
