EXHIBIT 10.70
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into as of the
17th day of May, 2004 between Home Properties, L.P., a New York limited
partnership (the "Company"), Home Properties, Inc., a Maryland corporation
("HME") and Xxxxxx X. Xxxxxxxxxx, an individual residing at 0 Xxxxxxx Xxxx,
Xxxxxxxxx, Xxx Xxxx 00000 ("Employee").
WHEREAS, the Company and the Employee desire to enter into this Employment
Agreement to formalize the terms pursuant to which Employee will continue to be
employed by the Company, including a covenant by the Employee not to compete
with the Company and HME.
NOW, THEREFORE, in consideration of the mutual promises, benefits and
covenants herein contained, the Company and Employee hereby agree as follows:
1. Effective Date; Term. This Agreement shall be effective on January 1, 2004
(the "Commencement Date") and shall terminate on December 31, 2006 (the "Term")
unless terminated sooner in accordance with section 4 of this Agreement.
2. Duties. During the term of this Agreement, subject to the direction and
control of the Board of Directors of HME, the Employee shall serve in the
capacity of Chief Executive Officer and President and shall perform and
discharge well and faithfully any management and other duties consistent with
the position of Chief Executive Officer and President as may be assigned to the
Employee by the Board of Directors of HME (the "Board of Directors"). Employee
shall devote substantially all of his business time to the interests and
business of the Company, HME and their subsidiaries and affiliates except during
a customary vacation period of four weeks per year, periods of illness and other
absences beyond his control.
3. Compensation, Benefits and Expenses.
3.1 Base Salary and Bonus. During the period from the Commencement Date through
December 31, 2004, the Company shall pay to Employee a Base Salary of $475,000
to be paid in equal installments pursuant to the Company's standard payroll
policies subject to withholding or deductions as may be mutually agreed between
the Company and Employee or required by law. The Base Salary to be paid to
Employee for calendar years 2005 and 2006 shall be determined in the discretion
of the Compensation Committee of the Board of Directors (the "Compensation
Committee"), but in no event shall such Base Salary be less than $475,000 per
year.
3.2 Incentive Compensation. Employee shall receive incentive compensation
pursuant to the Company's Incentive Compensation Plan. While the Company has the
right to change or eliminate the Incentive Compensation Plan, for so long as the
Incentive Compensation Plan is structured as it is currently structured, the
factor to be applied to the Employee's salary under the Incentive Compensation
Plan to determine the amount of the bonus to be paid shall be a minimum of12%.
The Incentive Compensation to be paid to Employee in 2004 shall be based on the
Company's performance in 2003, continuing in like progression with the bonus to
be paid in any year based on the prior year's performance, including a payment
to be made to the Employee in 2007 based on the Company's 2006 performance.
Notwithstanding the above, Employee acknowledges that pursuant to the Incentive
Compensation Plan whether any bonus is to be paid and the amount of that bonus
is completely in the discretion of the Compensation Committee.
3.3 Stock Option Grants and Restricted Stock Awards. On an annual basis, the
Company shall review the performance of the Company and the Employee and the
Company may provide the Employee with additional compensation in the form of
long term equity incentives such as stock options and restricted stock if the
Compensation Committee determines that the performance of the Company and the
Employee's contribution to the Company warrants the payment of such additional
consideration.
3.4 Fringe Benefits. During the period of his employment, Company shall provide
Employee with such fringe benefits as shall be determined by the Compensation
Committee, provided, such fringe benefits shall be no less favorable than those
provided to other senior executives of HME or the Company (or their subsidiaries
or affiliates).
3.5 Expenses. During the term of this Agreement, the Company authorizes Employee
to incur reasonable and necessary expenses in the course of performing his
duties and rendering services hereunder, and the Company shall reimburse
Employee for all such expenses within thirty (30) days after Employee renders to
the Company an account of such expenses and such other substantiation as the
Company may reasonably request. The Company shall provide Employee with an
office, office equipment and clerical support at the Company's corporate office.
4. Termination.
4.1 Termination. This Agreement may be terminated by the Company (after approval
by the Board of Directors) at any time with or without "Cause" or by Employee at
any time with or without "Good Reason".
4.2 Definition of Cause. As used herein "Cause" shall be determined in good
faith solely by the Corporate Governance/Nominating Committee of the Board of
Directors in the reasonable and good faith exercise of its discretion and shall
mean: (a) dishonest or fraudulent actions by Employee in the conduct of his
duties for the Company or the conviction of Employee of a felony; (b) death of
Employee; (c) a material failure by Employee to devote substantially all of his
business time to the business of the Company; (d) a material failure by Employee
to follow the Company's good faith instructions and directives that is not cured
by the Employee within 60 days after receiving notice; (e) unreasonable and
material neglect, refusal or failure by Employee to perform the duties assigned
to him that is not cured by the Employee within 60 days after receiving notice;
(f) Employee's material breach of this Agreement that is not cured by the
Employee within 60 days after receiving notice; (g) Employee's material breach
of any portion of paragraph 6 of this Agreement; (h) Employee's breach of the
Code of Business Conduct and Ethics of Home Properties, Inc. and its Affiliated
Companies and/or the Company's Code of Ethics for Senior Financial Officers (the
"Code of Ethics"); (i) any other act or omission which subjects the Company, HME
or any of their related entities to substantial public disrespect, scandal or
ridicule; (j) any governmental regulatory agency recommends or orders that the
Company terminate the employment of the Employee or relieve him of his duties;
or (k) physical or mental disability of Employee that prevents him from
performing his duties for 90 consecutive days or for an aggregate of 180 days in
any twelve-month period.
4.3 Definition of Good Reason. As used herein, "Good Reason" shall mean: (a) a
material breach of this Agreement by the Company or HME that is not cured within
60 days after receiving notice of such breach with the determination as to
whether there has been a breach and whether the breach is material to be
determined solely by the Corporate Governance/Nominating Committee of the Board
of Directors in the reasonable and good faith exercise of its discretion; (b);
or (b) any requirement by the Company that Employee relocate to a principal
place of business outside of the Rochester, New York metropolitan area.
4.4 Termination for Cause or Without Good Reason. In the event that: (a) the
Company terminates this Agreement for Cause; or (b) Employee resigns or
terminates without Good Reason, then, in any such event, Employee's rights to
receive any payments and benefits pursuant to this Agreement shall, effective
upon the date of termination or expiration of his employment, terminate in all
respects, except that the Company shall pay to Employee any payments and
benefits hereunder that are accrued and unpaid up to such date (which amount
shall not include any bonus under the Company's Incentive Plan for services
rendered during the year in which the termination occurs), and shall reimburse
Employee for any expenses incurred as of such date pursuant to paragraph 3.5
hereof. In the event of any termination described in subparagraph (a) and (b) of
this Section 4.4, then all rights of any kind under any existing stock option
held by the Employee expire immediately and all shares of restricted stock held
by the Employee as to which the restrictions have not lapsed in accordance with
the provision of the award shall be forfeited.
4.5 Termination Without Cause or for Good Reason. In the event that: (a) the
Company terminates for any reason other than for Cause; or (b) Employee resigns
or terminates for Good Reason, then in any such event: (i) the Company shall pay
to Employee any payments and benefits hereunder that are accrued and unpaid up
to, and shall reimburse Employee for any expenses incurred pursuant to paragraph
3.5 hereof prior to, the date of termination or expiration; (ii) the Company
shall pay to the Employee within twenty business days after termination or
expiration of his employment, a lump sum equal to the greater of two or the
number of full years remaining in the Term multiplied by (x) Employee's Base
Salary, (y) incentive compensation determined in accordance with Paragraph 3.2
for the year preceding the date of termination of employment and (z) the Equity
Compensation Value (as described in Section 4.6); (iii) the Company shall pay to
the Employee prior to March 31 of the year following termination, the incentive
compensation for Employee would have earned based on his targeted bonus as
provided in Paragraph 3.2 hereof if he had been an Employee on December 31 of
the year of termination; (iv) all restrictions on restricted stock held by the
Employee shall lapse; and (v) all options previously issued to the Employee
shall vest and remain exercisable for one year following the date of
termination. In the event that the termination occurs before the amount of the
incentive compensation for services rendered in the year preceding the date of
termination have been finally determined, then the payment to Employee shall be
an estimate based on the Employee's targeted bonus with an adjustment to be made
promptly upon the determination of the actual amount pursuant to the Company's
Incentive Compensation Plan. In addition to the above payment, the fringe
benefits provided to Employee during the Term of this Agreement pursuant to
Section 3.3 hereof shall continue until the earlier to occur of : (i) December
31, 2006; and (ii) Employee receives substantially equivalent benefits from a
subsequent employer.
4.6 Provisions Relating to Equity Compensation.
(a) The Equity Compensation Value shall be calculated for the year in which
the termination occurs and for each of the two preceding calendar years and then
divided by three. If no awards had been made in the year in which the
termination occurs, then the value of the awards made during the three years
prior to the year in which the termination occurs shall be averaged. In valuing
awards for purposes of making this calculation, all awards shall be treated as
if fully vested when granted, restricted stock grants shall be valued by
reference to the fair market value on the date of grant of the Company's common
stock, par value $.01 per share and other equity-based compensation awards shall
be valued at the value established by the Compensation Committee. The value of
any option may be determined by the Compensation Committee at any time after its
grant date by setting such value at the value determined by a nationally
recognized accounting firm or employee benefits compensation firm, selected by
such Committee, that calculates such value in accordance with a Black-Scholes
formula or variations thereof using such parameters and procedures (including,
without limitation, parameters and procedures used to measure the historical
volatility of the Company's common stock as of the relevant grant date) as the
Compensation Committee and/or such firm deems reasonably appropriate. In all
events, if the parameters used for valuing any option for purposes of this
section are the same as the parameters used for valuing any other options for
purposes of disclosure or inclusion in the Company's financial statements or
financial statement footnotes, then such parameters shall be deemed reasonable.
(b) Notwithstanding the definition of "Cause" or "Good Cause" which may
appear in the Company's equity benefit/compensation plans, for so long as this
Agreement is in effect, the provisions of this Agreement shall govern except if
the reason for the termination is the death or disability of the Employee in
which event the provisions of the Company's equity benefit/compensation plans
shall govern the vesting of stock options and the lapsing of restrictions on
restricted stock.
4.7 Termination Following A Change of Control. In the event of a "Change of
Control" as defined in the Company's Executive Retention Plan (including any and
all amendments thereto) (the "Retention Plan") and a subsequent termination of
the Employee's employment either by the Company or the Employee as described in
Section 3(a) of the Retention Plan, the benefits to be paid to the Employee upon
such a termination shall be as provided in the Executive Retention Plan, except
that the Employee shall be paid three times his Base Salary (as defined in the
Retention Plan) and three times the last bonus which was awarded to him under
the Bonus Plan (as defined in the Retention Plan).
5. Notices. Any notices or other communications under this Agreement shall be in
writing and shall be given by personal delivery or by a nationally recognized
overnight delivery service, and shall be deemed given when personally delivered,
or on the next business day following delivery to a nationally recognized
overnight delivery service:
(i) if to Employee, addressed to:
Xxxxxx X. Xxxxxxxxxx
0 Xxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
(ii) if to the Company, addressed to:
Home Properties, L.P.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxx and Xxx XxXxxxxxx
or to such other address or addresses as either party shall have specified in
writing to the other party hereto. Any notices to be issued hereunder by the
Company shall be issued by the Corporate Governance/Nominating Committee of the
Board of Directors on behalf of the Company.
6. Covenants as to Confidential Information and Non-Compete.
6.1 Non-Compete. The Employee recognizes that by virtue of his status as an
employee and a member of HME's Board of Directors he is obligated to uphold his
fiduciary and other obligations to the Company and HME and comply with all of
the restrictions set forth in the Code of Ethics, which is attached hereto and
incorporated herein by reference. Employee acknowledges and agrees that he will
fully and faithfully abide by the Code of Ethics for so long as he is an
employee and/or a member of HME's Board of Directors. In addition, the Employee
acknowledges and recognizes the highly competitive nature of the Company's
business and agrees that during the term of this Agreement, and in the event
this Agreement is terminated for any reason other than with Cause or without
Good Reason, until January 1, 2007, Employee will not, directly or indirectly,
without the written consent of the Real Estate Investment Committee of the Board
of Directors, own, manage, operate, control, be employed by, or participate in
or be connected with any entity owning or having financial interest in, whether
direct or indirect, a business entity which is in the business of owning,
operating, acquiring, developing or otherwise dealing in Market-Rate (as
subsequently defined) multifamily residential real properties in the United
States and Canada. In addition, in the event this Agreement is terminated for
Cause or without Good Reason then, for two years after the termination of this
Agreement, Employee will not, directly or indirectly, without the written
consent of the Real Estate Investment Committee of the Board of Directors, own,
manage, operate, control, be employed by, or participate in or be connected with
any entity owning or having financial interest in, whether direct or indirect, a
business entity which is in the business of owning, operating, acquiring,
developing or otherwise dealing in Market-Rate multifamily residential real
properties in the United States and Canada. A property shall be deemed
"Market-Rate" if there is no project-based governmental assistance for residents
of the property, if there is no government subsidized interest rates that apply
to the financing for the property and if no interests in the entity owning the
property have been sold to a third party for purposes of that party acquiring
tax credit benefits. From and after the termination of this Agreement for any
reason the above restrictions shall not be violated if and to the extent that
the Employee owns, manages, operates, controls, is employed by or participates
in or is connected with any entity owning or having a financial interest in a
business entity which owns, operates, acquires, develops or otherwise deals in
any multifamily residential real property consisting: (a) fifty (50) or fewer
apartment units wherever located; (b) two hundred (200) or fewer apartment units
if the property is located in a state in which the Company does not own real
property at the time that the acquisition or transaction occurs; and/or (c) to
the extent that the Employee's interest in any entity consists of less than a 5%
limited partnership interest in the case of a partnership and less than 5% of
the outstanding vesting shares in the case of a corporation in all cases so long
as such ownership, management, operation or control does not violate the Code of
Ethics.
6.2 Confidential Information. In addition to the obligations of confidentiality
as set forth in the Code of Ethics, the Employee recognizes and acknowledges the
existence of confidential business matters, trade secrets, and proprietary
information of the Company and HME, including but not limited to customer lists
sales, products, markets, inventions, marketing strategies and plans, research,
practices, procedures, current and planned corporate strategies, strategic
customers and business partners, and the identity, skills and interest of its
employees, which matters are valuable, special, and unique assets of the
Company's and HME's business. The Employee shall not, during or after the term
of employment with the Company, disclose the Company's or HME's confidential
business matters to any person, firm, corporation, partnership, association or
other entity for any reason or purpose whatsoever, without the prior written
consent of the Board of Directors, except as required by law or pursuant to
legal process.
6.3 Remedies for Breach of Section 6. The Employee further acknowledges that (a)
compliance with entire Section 6 is necessary to protect the Company's and HME's
business and goodwill; (b) a breach of Section 6 will irreparably and
constitutionally damage the Company and HME; and (c) an award of money damages
will not be adequate to remedy such harm. Consequently, Employee agrees that,
and in addition to other remedies, in the event he breaches or threatens to
breach any of these covenants, the Company and HME shall be entitled to both:
(1) a preliminary or permanent injunction to prevent the continuation of such
harm; and (2) money damages, insofar as they can be determined, including,
without limitation, all reasonable costs and attorneys' fees incurred by the
Company and/or HME in the enforcement of the provision.
6.4 Enforceability. The Employee acknowledges and agrees that the provisions of
this Agreement are reasonable and necessary for the protection of the Company
and HME. If, however, a final judicial determination is made by a court having
jurisdiction that the time or territory or any other restriction contained in
Section 6.1 is an unreasonable or otherwise unenforceable restriction against
the Employee, the provisions of Section 6.1 shall not be rendered void but shall
be deemed amended to apply as to the maximum time and territory and to the other
extent as this court may judicially determine or indicate to be reasonable.
7. Breach of Agreement. Each party agrees to indemnify and hold harmless the
others from and against any loss, liability, damages, judgments, suits, costs or
expenses (including the costs of investigating and enforcing each party's rights
under this Agreement and attorneys' fees and expenses) relating to or arising
from any breach by any party of the terms of this Agreement.
8. Governing Law. ALL QUESTIONS PERTAINING TO THE VALIDITY, CONSTRUCTION,
EXECUTION AND PERFORMANCE OF THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH, AND BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO
ITS PRINCIPLES OF CONFLICTS OF LAW.
9. Entire Agreement. This Agreement and the benefit plans referred to herein
constitute the entire agreement of the parties hereto with respect to the
matters contained herein, and no modification, amendment or waiver of any of the
provisions of this Agreement shall be effective unless in writing and signed by
each of the parties hereto. No failure to exercise any right or remedy hereunder
shall operate as a waiver thereof. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
representatives, successors and assigns.
10. Headings. The paragraph and subparagraph headings contained in this
Agreement are for reference purposes only and shall not affect the construction
or interpretation of this Agreement.
11. Counterparts. This Agreement may be executed in several counterparts, and
all counterparts so executed shall constitute one agreement, binding on the
parties hereto, notwithstanding that both parties are not signatory to the
original or the same counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the dates
set forth below, effective as of the date first above written.
Date: May 6, 2004 HOME PROPERTIES, L.P.
By: Home Properties, Inc.
Its: General Partner
By: /s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Executive Vice President
HOME PROPERTIES, INC.
Date: May 17, 2004 By: /s/ Xxxxxxxx X. Xxxxx, Xx.
Xxxxxxxx X. Xxxxx, Xx.
Chair of Compensation
Committee of the Board of Directors
Date: May 6, 2004 /s/ Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxxxx
