Exhibit 10.6
EMPLOYMENT AND NONCOMPETITION AGREEMENT
This EMPLOYMENT AND NONCOMPETITION AGREEMENT ("Agreement") is made as of
the 8th day of July, 1997 between Xxxxx Xxxxxxx ("Executive") and XX Xxxxx
Realty Corp., a Maryland corporation with its principal place of business at 00
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Employer").
1. TERM. The term of this Agreement shall commence on the date first
above written and, unless earlier terminated as provided in Section 3(f)(ii)(A)
and Section 6 below, shall terminate on the third anniversary of the date of
this Agreement (the "Original Term"); PROVIDED, HOWEVER, that Section 8 hereof
shall survive the termination of this Agreement as provided therein. The
Original Term may be extended for such period or periods, if any, as may be
mutually agreed to by Executive and the Employer (each a "Renewal Term"). If
the Employer intends not to extend the Original Term, the Employer will give
Executive at least six (6) months written notice of such intention. The period
of Executive's employment hereunder consisting of the Original Term and all
Renewal Terms, if any, is herein referred to as the "Employment Period".
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 titles of
Executive Vice President and Chief Operating Officer of the Employer.
Executive will report directly to Xxxxxxx X. Xxxxx, the Chief Executive
Officer of the Employer. Executive shall also serve as Chief Financial
Officer of the Employer for so long as the Employer desires and at the sole
discretion of the Employer. Any other person appointed as Chief Financial
Officer during the period of Executive's employment will report directly to
Executive. Executive's duties and authority shall be as 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. In
addition, within two years of the date first above written, Executive shall
be considered for the office of President of the Employer and for a seat on
the Employer's Board of Directors. Any such appointment shall be made at
the sole discretion of the Board of Directors.
(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.
(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 $200,000 per annum during the period
commencing upon Executive's reporting for work at the Employer through the
end of the Employment Period ("Base Salary"), subject to applicable
withholding. Base Salary shall be payable monthly in accordance with the
Employer's normal business practices.
(b) BONUSES. The Employer shall pay Executive a minimum yearly bonus
of $100,000, subject to applicable withholdings, payable respectively on
the first, second and third anniversaries of the date of this Agreement
(respectively, the "First Anniversary", the "Second Anniversary" and the
"Third Anniversary").
(c) STOCK LOAN. Upon completion of the initial public offering
("IPO") of the Employer's Common Stock, par value $.01 per share,
Employer agrees to provide to Executive a loan to purchase Common Stock
in the principal amount of $300,000 in accordance with the terms set
forth in Exhibit A hereto.
(d) INCENTIVE COMPENSATION. In addition to the Base Salary payable
to Executive pursuant to Section 3(a), during the Employment Period,
Executive shall be eligible to participate in any incentive compensation
plans in effect with respect to senior executive officers of the Employer,
subject to Executive's compliance with such criteria as the Employer's
Board of Directors, in its sole discretion, may establish for Executive's
participation in such plans from time to time, which criteria will be at
least
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as favorable as those criteria applicable to all other executive officers
of the Employer except Xxxxxxx X. Xxxxx and Xxxxx X. Xxxx. Any awards to
Executive under such plans will be established by the Employer's Board of
Directors, or a committee thereof, in its sole discretion.
(e) 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 stock option
and incentive plan (the "Plan"), which authorizes the grant of stock
options, stock awards and the making of loans to acquire stock, pursuant to
criteria at least as favorable as those criteria applicable to all other
executive officers of the Employer except Xxxxxxx X. Xxxxx and Xxxxx X.
Xxxx. It is the intention of the Employer, within eighteen (18) months of
the closing of the IPO, to design and implement performance based
compensation standards that will permit the Employer to award to Executive,
in the sole discretion of the Employer's Board of Directors or a committee
thereof, a material equity position in the Employer. Notwithstanding the
foregoing, it is specifically agreed that upon the closing of the IPO,
Executive shall receive options to purchase the greater of (i) 50,000
shares of the Employer's Common Stock; or (ii) the greatest number of
shares encompassed by any stock option award made to any executive officer
of the Employer other than Xxxxxxx X. Xxxxx or Xxxxx Xxxx on or prior to the
completion of the IPO (the "Options"). The exercise price per share of
the Options shall be equal to the IPO price. The Options shall have a
term of ten years, and shall be exercisable for one third of the shares
encompassed by the Options on each of the first, second and third
anniversaries of the date of completion of the IPO respectively. The
Options shall be exercisable only in accordance with the terms and
conditions of the Plan and in accordance with applicable federal, state
and local laws and regulations.
(f) EQUITY AWARDS.
(i) If the IPO is completed on or prior to the First
Anniversary, Executive will be awarded $200,000 worth of restricted
shares of the Common Stock of the Employer on each of the First
Anniversary, the Second Anniversary and the Third Anniversary. For
the purposes of any such awards, the shares awarded shall be valued as
of the date of the IPO.
(ii) If the IPO is not completed on or prior to the First
Anniversary, Executive shall have the option to:
(A) resign, and, in addition to the payments provided for
in Section 6 of this Agreement, receive a lump-sum cash payment
of $500,000 in complete satisfaction of the terms of this
Agreement; or
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(B) remain in the employment of the Employer under the
terms of this Agreement and on each of the First Anniversary,
Second Anniversary and Third Anniversary be awarded an equity
interest in existing property partnerships or service
corporations through which Xxxxxxx X. Xxxxx presently conducts
the commercial real estate business of XX Xxxxx Real Estate,
having an aggregate value of not less than $200,000, as valued by
such appraisal process as may be mutually and reasonably agreed
upon by Executive and the Employer. In the event that the IPO is
completed prior to the Second Anniversary or the Third
Anniversary, in lieu of the awards provided for in this Section
3(e)(ii)(B), Executive shall receive $200,000 worth of restricted
shares of common stock of the Employer on either or each of the
Second Anniversary and the Third Anniversary, as the case may be.
For the purposes of any such awards, the shares awarded shall be
valued as of the date of the IPO.
(g) 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.
(h) RELOCATION EXPENSES. The Employer will reimburse the Executive
on terms mutually and reasonably agreed upon by Executive and the Employer
for the customary and reasonable costs Executive incurs in relocating and
moving his household goods and belongings from Manlius, New York to the New
York City metropolitan area. Such costs shall include (i) customary and
reasonable moving and packing expenses incurred by Executive in moving such
household goods and belongings, (ii) customary and reasonable real estate
brokerage costs and closing costs incurred by Executive upon the sale of
his home in Manlius, New York, (iii) customary and reasonable closing costs
(including a maximum of one "point" on any related mortgage loan) incurred
by Executive upon purchase or lease of a residence in the New York City
metropolitan area, (iv) customary and reasonable rental costs (including
any customary and reasonable rental agent's commission) incurred by
Executive in connection with the temporary rental of a furnished one
bedroom apartment in the New York City metropolitan area for the period
from the beginning of Executive's employment through the month in which
Executive takes possession of a permanent residence in such area, but in no
event for more than six months, (v) reimbursement of costs actually
incurred by Executive for the purchase and use of (a) up to a total of four
round-trip coach class airline tickets between Syracuse, New York and New
York City for Executive's wife and (b) up to four round-trip coach class
airline tickets per month between New York City and Syracuse, New York for
Executive, both during the period from the beginning of Executive's
employment through Executive's taking possession of a permanent residence
in the New York City metropolitan area, and (vi) if the Internal Revenue
Service or any state or
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local taxing authorities takes the position that the relocation expenses
reimbursed pursuant to this Section 3(h) results in the receipt of taxable
income to Executive, an amount equal to the aggregate Federal, state, and
local income and employment taxes imposed on Executive as a direct result
of such reimbursement.
(i) OTHER EXPENSES. (i) The Employer will reimburse the Executive
$500 for the costs incurred by Executive in connection with Executive's
cancelled vacation plans during August 1997 and, (ii) if any medical
insurance expense pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985 is incurred by Executive solely as a result of a
delay of more than 60 days in Executive's eligibility for coverage under
Employer's medical plan, such insurance expense shall be reimbursed by
Employer to Executive.
(j) 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.
(k) VACATIONS. Executive shall be entitled to reasonable paid
vacations in accordance with the then regular procedures of the Employer
governing senior executive officers.
(l) OTHER BENEFITS. During the Employment Period, the Employer shall
provide to Executive such other benefits, including 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.
4. INDEMNIFICATION AND LIABILITY INSURANCE. 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 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.
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(a) INDEMNIFICATION BY EXECUTIVE. Executive agrees to indemnify the
Employer and its affiliates and their respective directors, officers and
employees 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
Executive to defend the Employer and its affiliates and their respective
directors, officers and employees, and judgments, fines and amounts paid in
settlement actually and reasonably incurred by or imposed on any
indemnified party) in connection with any action, suit or proceeding
resulting from breach of any other contract or agreement to which Executive
may be a party, or any restrictive covenant by which Executive may be
bound, and Executive hereby warrants that his execution of this Agreement,
and performance of duties hereunder, does not constitute the breach of any
other contract or agreement to which Executive may be a party, and does not
constitute the breach of any restrictive covenant by which Executive may be
bound.
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 hereunder on a full-time basis, the Employer may
terminate the Executive's employment hereunder.
(iii) CAUSE. The Employer may terminate the 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)
the Executive engaged in conduct which is a felony under the laws of
the United States or any state or political subdivision
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thereof; (ii) the Executive engaged in conduct constituting breach of
fiduciary duty, gross negligence or willful misconduct relating to the
Employer, fraud or dishonesty or willful or material misrepresentation
relating to the business of the Employer; or (iii) the Executive
breached his obligations or covenants under Section 8 of this
Agreement in any material respect.
(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 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; or (iii) a Change-in-Control
(as such term is defined in Section 6(d) below).
(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.
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(i) A "Change-in-Control" shall be deemed to have occurred after
the effective date of the IPO 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, as of the date of the closing of the
IPO, 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 subsequent to the closing of the IPO 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 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
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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 Chief Executive Officer or
the equivalent of the surviving entity of any event listed in the foregoing
clauses (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 followed by:
(A) a change in duties, responsibilities, status or
positions with the Employer, which, in Executive's reasonable
judgment, 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 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
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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 beyond a reasonable commuting distance from
Executive's residence immediately prior to the Change-In-Control,
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 continue to pay Executive's Base Salary
for the remaining term of the Employment Period after the date of
Executive's termination, or for one year, whichever period is longer,
at the rate in effect on the date of his termination and on the same
periodic payment dates as payment would have been made to Executive
had the Employment Period not been terminated;
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(ii) For the remaining term of the Employment Period, or for one
year, whichever period is longer, 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) For purposes of any stock option plan of the Employer,
if any, Executive shall be treated as if he had remained in the employ
of the Employer for the remaining term of the Employment Period after
the date of Executive's termination, or for one year, whichever period
is longer, so that Executive may exercise any exercisable options and
Executive's other rights shall continue to vest during the remaining
term of the Employment Period with respect to any options previously
granted under such plans except as otherwise provided in such plans;
(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 payments and benefits due under
Section 7(a) will be reduced by the amount of such compensation,
income, or benefits, except that in no event shall the payment and
benefits due under Section 7(a) be reduced to less than the amount of
such payments and benefits 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.
(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, subject to the terms of Section
3(f)(ii)(A) above, 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.
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(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 yearly bonus described in
Section 3(b) 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. Any unexercised or unvested stock options
shall remain exercisable or vest upon Executive's death only to the extent
provided in the applicable option plan and option agreements.
(d) TERMINATION BY REASON OF DISABILITY. In the event that
Executive's employment terminates due to his disability as defined in
Section 6(a)(ii) above, Executive shall be entitled to be paid his Base
Salary plus any applicable pro rata portion of the yearly bonus described
in Section 3(b) above for a period of three months from the date of such
termination, or such longer period as the Employer's Board of Directors may
determine. Any unexercised or unvested stock options shall remain
exercisable or vest upon such termination only to the extent provided in
the applicable option plan and option agreements.
(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 hereby agrees to submit to any such
dispute to arbitration pursuant to the terms of this Section 7(e). 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. CONFIDENTIALITY; 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
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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 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; 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. The Executive further agrees that, during the
Employment Period and at all times thereafter, he shall keep confidential
and shall not release, use or disclose without prior written permission of
the Employer, all Confidential Information developed by him on behalf of
the Employer or provided to him by the Employer, excepting only such
information as was already known to him prior to the commencement of his
employment by the Employer or such information as is already known to the
public.
(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 and (ii) in the event that this Agreement is
terminated by the Employer for Cause or by Executive other than for Good
Reason, Executive will not, without the prior written consent of the Board
of Directors of the Employer which shall include the unanimous consent of
the Directors who are not officers 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), during the
Noncompetition Period:
(i) engage, participate or assist, as an owner, partner,
employee, consultant, director, officer, trustee or agent, in any
business that engages or attempts to engage in, directly or
indirectly, the acquisition, development,
13
construction, operation, management or leasing of any office real
estate property anywhere in the New York City metropolitan area;
(ii) seek, solicit, or engage in any attempt to establish for
himself or for any other person or entity, a business relationship
with any person or entity who was a client or customer of the
Employer, or who was solicited to become a client or customer of the
Employer, during the Employment Period ("Employer Clients") (for
purposes of this Section 8(b)(ii) only, the term "Employer Clients"
shall not include tenants in properties owned or managed by the
Employer, unless such Employer Clients are otherwise clients or
customers of the Employer; all other uses of the term "Employer
Clients" herein shall include such tenants);
(iii) engage in any activity to interfere with, disrupt or
damage the business of the Employer, or its relationships with any
Employer Client, employee, supplier or other business relationship;
(iv) engage in business with, or provide advice or services to,
any Employer Client solicited by the Executive in breach of Section 8
of this Agreement (whether or not such services are compensated);
(v) receive, or cause any other person or entity to receive, any
compensation, consideration, or income, in any form, from any Employer
Client solicited by him in breach of Section 8 of this Agreement; or
(vi) 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 Third Anniversary or (ii) the first anniversary of the
date of termination of Executive's employment under this Agreement.
(d) PASSIVE INVESTMENTS. 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 the
shares or other ownership interests of such entity are publicly
14
traded and Executive's aggregate investment in such entity constitutes less
than one percent (1%) 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 ("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; or (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. If
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
15
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: (i) he shall assist the Employer in
maintaining the business of the clients and customers with whom the
Executive has a relationship; and (ii) he shall take all steps reasonably
requested by the Employer to effect a successful transition of those
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 hereunder.
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 travel expenses,
including 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 unreasonably interfere with Executive's
then current employment.
(j) SURVIVAL. The provisions of this Section 8 shall survive
termination of the Executive's employment. 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
16
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:
Xxxxx Xxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000
(b) if to the Employer:
XX Xxxxx Realty Corp.
00 Xxxx 00xx 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 waiver 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 waiver 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 circumstance 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 thereof) 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 inure 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
17
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.
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.
18
IN WITNESS WHEREOF, this Agreement is entered into as of the date and year
first above written.
XX XXXXX REALTY CORP.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
/s/ Xxxxx Xxxxxxx
--------------------------------
Xxxxx Xxxxxxx
19
TERMS SHEET
STOCK LOAN TO XXXXX X. XXXXXXX
Borrower: Xxxxx X. Xxxxxxx, pursuant to terms of
Employment Agreement.
Amount: $300,000.
Term: Three years.
Interest Rate: The Federal mid-term "Applicable Federal
Rate" as in effect from time to time.
Purpose: Acquisition of Company Common Stock
pursuant to Company Stock Option Plan.
Security: Pledge of acquired shares.
Funding Date: One year from date employment agreement is
executed.
Per Share Acquisition Price: The price per share of Common Stock on the
New York Stock Exchange on the date of
funding.
Repayment: One-third of Stock Loan (together with
accrued interest on the Stock Loan) will be
forgiven each year during the term of the
Stock Loan, provided Borrower is then
employed by the Company. In the event of a
Change of Control of the Company, or the
Borrower's death or permanent disability or
termination of his employment by the
Company without cause, the outstanding
principal amounts of the Stock Loan will be
forgiven in full. In the event Borrower
leaves the employ of the Company or is
terminated with cause, the outstanding
amount of the Stock Loan will be
immediately due and payable. The
outstanding amount shall be equal to the
amount then due and owing, pro rated for
the number of months elapsed for the year
in which termination occurs.
