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Exhibit 10.7
AGREEMENT
AGREEMENT, dated as of January 1, 1998, by and between VORNADO
REALTY TRUST, a Maryland unincorporated business trust and Vornado Realty LP, a
Delaware Operating Partnership (hereinafter referred to as "Employer") and
XXXXXX XXXXXX, an individual (hereinafter referred to as "Employee").
IN CONSIDERATION of the mutual covenants herein contained, and other
good and valuable consideration, the parties hereto agree as follows:
1. Employment.
Employer hereby agrees to employ Employee, and Employee agrees to
serve as Executive Vice President-Finance and Administration of Employer during
the Period of employment, as defined in Section 2.
2. Period of Employment.
The "Period of Employment" shall be the period commencing on January
1, 1998 and, subject to the provisions of this Agreement, ending three years
thereafter on December 31, 2000.
3. Duties During the Period of Employment.
Employee shall devote his full business time, attention and best
efforts to the affairs of Employer and its subsidiaries during the Period of
Employment; provided, however, that Employee may engage in other activities,
such as activities involving charitable, educational, religious and similar
types of organizations (all of which are deemed to benefit Employer), speaking
engagements, membership on the board of directors of non-profit organizations,
and similar type activities to the extent that such other activities do not
materially impair the
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performance of his duties under this Agreement, or inhibit or conflict in any
material way with the business of Employer and its subsidiaries, and to the
extent Employer does not object to such other activities.
4. Cash Compensation.
Employer shall pay to Employee during the first year of the Period
of Employment a salary ("Base Compensation") at an annual rate of $425,000.00,
to be paid in equal biweekly installments. Employer shall pay to Employee during
the second year of the Period of Employment a salary at an annual rate equal to
the salary paid Employee during the first year of the Period of Employment,
increased by a factor which is equal to 125% of the percentage increase in the
Consumer Price Index (as hereafter defined) during the period from January 1998
through December 1998, to be paid in equal biweekly installments. Employer shall
pay to Employee during the third year of the Period of Employment a salary at an
annual rate equal to the salary paid Employee during the second year of the
Period of Employment increased by a factor which is equal to 125% of the
percentage increase in the Consumer Price Index during the period from January
1999 through December 1999, to be paid in equal biweekly installments. For
purposes of this Agreement, the "Consumer Price Index" shall mean the Revised
Consumer Price Index for Urban Wage Earners and Clerical Workers - All Items
(CPI-W), Northeast Region, Class A, on the base 1982-84=100, published by the
Bureau of Labor Statistics of the U.S. Department of Labor. Increases in Base
Compensation resulting from the above, if any, shall then constitute the Base
Compensation for all purposes of this Agreement. Employee's Base Compensation
shall not be reduced during the term of this Agreement.
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5. Stock Options.
During each year in the Period of Employment, the Employer shall
grant Employee share options to purchase 75,000 shares of Employer's Common
Shares of Beneficial Interest ("Stock") pursuant to the terms of the Employer's
1993 Omnibus Share Plan at a purchase price per share equal to the fair market
value of the Stock on the date the options are granted. Such options shall be
granted at the discretion of the Compensation Committee of the Board of Trustees
of the Employer, at the first meeting of the Committee in which options are
ordinarily granted. Employer shall take all necessary actions to ensure that
such options qualify, to the extent permitted, as "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended, and successor provisions.
6. Other Employee Benefits.
(a) Vacation and Sick Leave.
Employee shall be entitled to paid annual vacation periods and to
sick leave in accordance with Employer's policy.
(b) Automobile.
Employer shall provide Employee with the use of an automobile of the
same quality as that provided to other corporate officers of equal or similar
position and pay all expenses incurred by Employee in connection with the use of
the automobile.
(c) Regular Reimbursed Business Expenses.
Employer shall reimburse Employee for all expenses and disbursements
reasonably incurred by Employee in the performance of his duties during the
Period of Employment, and
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such other facilities or services as Employer and Employee may, from time to
time, agree are reimbursable.
(d) Employee Benefit Plans or Arrangements.
In addition to the cash compensation provided for in Section 4
hereof and the stock options provided in Section 5 hereof, Employee, subject to
meeting eligibility provisions and to the provisions of this Agreement, shall be
entitled to participate in all employee benefits plans of Employer, as presently
in effect or as they may be modified or added to by Employer from time to time,
including, without limitation, plans providing retirement benefits, medical
insurance, life insurance, disability insurance, and accidental death or
dismemberment insurance. Without limiting the foregoing, Employee shall be
entitled to tax preparation and financial planning assistance of $15,000 per
calendar year and upon approval by an insurance carrier, a $3 million five-year
renewal term life insurance policy or at Employee's election other life
insurance with a comparable cost to Employer.
7. Termination and Termination Benefits.
The termination of Employee's employment during the Period of
Employment by Employee or Employer shall not be treated as a breach of this
agreement.
(a) Termination by the Employer Without Cause.
The Employer may terminate the Period of Employment and Employee's
employment hereunder without "Cause" upon written notice to Employee. For
purposes of this Section 7(a), a termination of the Period of Employment by the
Employer without Cause shall include any termination or nonextension by the
Employer (other than a termination for Cause as defined in Section 7(b) below).
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(b) Termination by the Employer for Cause.
Subject to the following paragraph, the Employer may terminate the
Period of Employment and Employee's employment hereunder for "Cause" upon
written notice to Employee. For purposes of this Section 7(b), a termination for
Cause shall only mean a termination as a result of (i) Employee's willful
misconduct with regard to Employer or to any entity in control of, controlled by
or under common control with the Employer (an "Affiliate"), including, but not
limited to, any preferred stock subsidiary of the Employer that is materially
economically injurious to Employer, (ii) Employee's conviction of, or plea of
guilty or nolo contendere to, a felony (other than a traffic violation) or (iii)
Employee's willful and continued failure to use reasonable business efforts to
attempt to substantially perform his duties hereunder (other than such failure
resulting from Employee's incapacity due to a physical or mental illness or
subsequent to the issuance of a notice of termination by Employee for Good
Reason) after demand for substantial performance is delivered by Employer in
writing that specifically identifies the manner in which Employer believes
Employee has not used reasonable business efforts to attempt to substantially
perform his duties.
For purposes of this Section 7(b), in addition to the other legal
requirements to be "willful", no act, or failure to act, by Employee shall be
considered "willful" unless committed in bad faith and without a reasonable
belief that the act or omission was in the best interests of Employer. In
addition, no action or inaction shall give rise to a right of Employer to
terminate this Agreement and Employee's employment hereunder for Cause pursuant
to the preceding paragraph unless and until Employer has delivered to Employee a
copy of a resolution duly adopted by a majority of the Board of Trustees
("Board") at a meeting of the Board called and held for such purpose after
reasonable (but in no event less than thirty (30) days notice to
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Employee and an opportunity for Employee, together with his counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
Employee was guilty of any conduct set forth in the preceding paragraph and
specifying the particulars thereof in detail. This Section 7(b) shall not
prevent Employee from challenging in any court of competent jurisdiction the
Board's determination that Cause exists or that Employee has failed to cure any
act (or failure to act) that purportedly formed the basis for the Board's
determination.
(c) Termination by Employer Due to Disability.
If, due to illness, physical or mental disability, or other
incapacity, Employee is substantially unable, for one hundred and eighty (180)
consecutive days, to perform his duties hereunder, Employer may terminate the
Period of Employment and his Employment hereunder upon at least thirty (30)
days' prior written notice to Employee given after one hundred eighty (180)
days, and provided Employee does not return to the substantial performance of
his duties on a full-time basis within such thirty (30) day period.
(d) Termination by Employee With Good Reason.
Subject to the following paragraph, Employee may terminate the
Period of Employment and his employment hereunder for "Good Reason" upon written
notice to Employer. For purposes of this Section 7(d), a termination for Good
Reason shall mean a termination as a result of (unless otherwise consented to in
writing by Employee) (i) the failure to appoint Employee to the positions set
forth in Section 1, the alteration of the duties, responsibilities and authority
of Employee as set forth in Section 1 in a manner that is materially and
adversely inconsistent with such duties, and responsibilities or authority or a
change to Employee's position or title; (ii) a failure by Employer to pay when
due any compensation to Employee or to substantially provide any benefit to
Employee; (iii) the relocation of Employer's
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principal executive offices to a location other than the New York Metropolitan
area or relocation of Employee's own office location from that of the principal
offices; (iv) any purported termination of Employee's employment for Cause which
is not effected pursuant to the procedures of Section 7(b) (and for purposes of
this Agreement, no such purported termination shall be effective); (v)
Employer's material breach of any material term contained in this Agreement;
(vi) a Change in Control (as defined below), or (vii) any requirement that
Employee report to anyone other than the Board, the President of Employer or the
Chief Executive Officer of Employer. Employee's right to terminate his
employment hereunder for Good Reason shall not be affected by his incapacity due
to physical or mental illness.
For purposes of this Section 7(d), no action or inaction shall give
rise to the right of Employee to terminate the Period of Employment and
Employee's employment hereunder for Good Reason unless a written notice is given
by Employee to the Employer within one hundred twenty (120) days after Employee
has actual knowledge of the occurrence of the event giving rise to Employee's
right to terminate pursuant to this Section 7(d), and such event has not been
cured within thirty (30) days after such notice. Employee's continued employment
during the one hundred and twenty (120) day period referred to above in this
Section 7(d), shall not constitute consent to, or a waiver of rights with
respect to, any act or failure to act constituting Good Reason hereunder.
For purposes of this Section 7(d), "Change in Control" shall mean
the occurrence of any one of the following:
(i) individuals who, as of January 1, 1998, constitute the
Board (the "Incumbent Trustees") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a trustee subsequent to
January 1, 1998 whose election or
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nomination for election was approved by a vote of at least two-thirds of the
Incumbent Trustees then on the Board (either by a specific vote or by approval
of the proxy statement of Employer in which such person is named as a nominee
for trustee, without objection to such nomination) shall be an Incumbent
Trustee, provided, however, that no individual initially elected or nominated as
a trustee of Employer as a result of an actual or threatened election contest
with respect to trustees or as a result of any other actual or threatened
solicitation of proxies by or on behalf of any person other than the Board shall
be an Incumbent Trustee.
(ii) any "person" (as such term is defined in Section 3(a)(9)
of the Securities Exchange Act of 1934 (the "Exchange Act") and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes, after January
1, 1998, a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of Employer representing 30% or more of
the combined voting power of Employer's then outstanding securities eligible to
vote for the election of the Board (the "Employer's Voting Securities"),
provided, however, that an event described in this paragraph (ii) shall not be
deemed to be Change in Control if any of the following becomes such a beneficial
owner: (A) Employer or any majority-owned subsidiary (provided, that this
exclusion applies solely to the ownership levels of Employer or the
majority-owned subsidiary), (B) any tax-qualified, broad-based employee benefit
plan sponsored or maintained by Employer or any majority-owned subsidiary, (C)
any underwriter temporarily holding securities pursuant to an offering of such
securities, (D) any person pursuant to a Non-Qualifying Transaction (as defined
in paragraph (iii)), (E) Employee or any group of persons including Employee (or
any entity controlled by Employee or any group of persons including Employee) or
(F) (i) any of the partners (as of January 1, 1998) in Interstate Properties
("Interstate") including immediate family members and family trusts or
family-only partnerships
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and any charitable foundations of such partners (the "Interstate Partners"),
(ii) any entities the majority of the voting interests of which are beneficially
owned by the Interstate Partners, or (iii) any "group" (as described in Rule
13d-5(b) (i) under the Exchange Act) including the Interstate Partners,
provided, that the Interstate Partners beneficially own a majority of Employer's
Voting Securities beneficially owned by such group (the persons in (i), (ii) and
(iii) shall be individually and collectively referred to herein as, "Interstate
Holders");
(iii) the consummation of a merger, consolidation, share
exchange or similar form of transaction involving Employer or any of its
Subsidiaries, or the sale or other disposition of all or substantially all of
Employer's assets (a "Business Transaction"), unless immediately following such
Business Transaction (y) more than fifty percent (50%) of the total voting power
of the entity resulting from such Business Transaction or the entity acquiring
Employer's assets of the Operating Partnership in such Business Transaction (the
"Surviving Corporation") is beneficially owned, directly or indirectly, by the
Interstate Holders or Employer's shareholders immediately prior to any such
Business Transaction, and (z) no person (other than the persons set forth in
clauses (A), (B), (C), or (F) of paragraph (ii) above or any tax-qualified,
broad-based employee benefit plan of the Surviving Corporation or its
Affiliates) beneficially owns, directly or indirectly, 30% or more of the total
voting power of the Surviving Corporation (a "Non-Qualifying Transaction"); or
(iv) Board approval of a liquidation or dissolution of
Employer, unless the voting common equity interests of an ongoing entity (other
than a liquidating trust) are beneficially owned, directly or indirectly, by
Employer's shareholders in substantially the same proportions as such
shareholders owned Employer's outstanding voting common equity interests
immediately prior to such liquidation and such ongoing entity assumes all
existing obligations of
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Employer under this Agreement and any equity grant.
(e) Termination by Employee Other Than Pursuant to Section 7(d).
Employee may terminate this Agreement and Employee's employment hereunder at any
time, for any reason upon ninety (90) days' prior written notice to Employer.
(f) Death Benefit. Notwithstanding any other provision of this
Agreement, the Period of Employment shall terminate on the on the date of
Employee's death. In such event, (i) Employee's estate shall be paid the amount
specified in Section 7(g)(i) below and one (1) times Employee's annual rate of
Base Salary and (ii) Employer shall provide Employee's spouse and dependents
with welfare benefits as provided in Section 7(g)(ii) for one (1) year from the
date of death.
(g) Termination Compensation. Upon the termination of the Period of
Employment and Employee's employment hereunder (including any nonextension of
the Period of Employment), Employer shall provide Employee with the payments and
benefits set forth below. Employee acknowledges and agrees that the payments and
benefits set forth in this Section and elsewhere herein and in other written
grants and agreements constitute liquidated damages for termination of his
employment hereunder (including any nonextension of the Period of Employment).
(i) Upon a termination of the Period of Employment and
Employee's employment hereunder, Employee shall be entitled to promptly receive
(A) his Base Compensation through the effective date of termination, (B) if such
termination is other than pursuant to Section 7(b) hereof, any annual earned
bonus for any completed fiscal year, (C) if such termination is pursuant to
Sections 7(a), 7(c) or 7(d) hereof, a pro rata share of Employee's annual target
bonus for the fiscal year of termination, (D) the benefits, fringes and
perquisites,
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including without limitation accrued vacation (provided that if the termination
is pursuant to Section 7(b) or 7(e) hereof, only such payment of accrued
vacation as is required by law or Employer's vacation policy), provided pursuant
to Section 6 hereof up to the effective date of such termination and (E) any
other amount due to Employee under any other program or plan of Employer.
(ii) In the event of a termination of the Period of Employment
and Employee's employment pursuant to Section 7(a) (such reference shall
include, without limitation, a nonextension by Employer of this Agreement) or
7(d) hereof, Employee shall also be entitled to (A) receive an amount (the
"Severance Amount") equal to the sum of (x) three times Employee's annualized
Base Compensation (as in effect on the date of such termination or, if greater,
immediately prior to the Good Reason event, if any, based on which the
termination of employment occurs) and (y) three times Employee's Bonus Severance
Amount (as defined herein). The "Bonus Severance Amount" shall mean an amount
equal to the average of all annual bonuses earned by the Employee from Employer
in the two (2) fiscal years ending immediately prior to Employee's termination;
provided, however, that if Employee's termination occurs during fiscal 1998, the
"Bonus Severance Amount" shall be the higher of Employee's annual bonus amount
for the 1997 fiscal year or Employee's annual target bonus for 1998 (the
Severance Amount shall be payable in a lump sum within thirty (30) days of such
termination) and (B) Employee shall become fully vested in any stock options
granted to Employee by the Board. In the event of a termination pursuant to
Section 7(a), 7(c) or 7(d) hereof, Employee (his spouse and his dependents, if
applicable) shall also be entitled to continue to participate in the medical,
dental, hospitalization and life insurance programs existing on the date of
termination (or any replacement plans for any such plans) with regard to senior
executive officers of a similar level
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(or their cash equivalents, and, if Employer provides a cash payment in lieu of
such benefits, it shall be calculated on a grossed-up tax basis as if Employee
had remained an employee) for three (3) years from the date of termination;
provided, that Employee shall be obligated to make all employee contributions
required to receive such benefits under Employer's programs and that such
continued benefits shall terminate on the date or dates Employee receives
equivalent coverage and benefits, without waiting period or pre-existing
conditions limitations, under the plans and programs of a subsequent employer
(such coverage and benefits to be determined on a coverage-by-coverage or
benefit-by-benefit, basis). Employee shall not be entitled to any compensation
or benefits pursuant to this Section 7(g)(ii) if his employment hereunder is
terminated pursuant to Section 7(b) or as a result of Employee's voluntary
termination pursuant to Section 7(e).
(h) No Mitigation. All amounts due hereunder shall be paid without
any obligation to mitigate and such amounts shall not be reduced by or offset by
any other amounts earned by Employee or any claims of Employer.
8. Non-Competition and Non-Disclosure.
In consideration of the benefits to be provided to Employee
hereunder, Employee covenants that he will not, without the consent in writing
of Employer, (a) during the Period of Employment and the twelve (12) month
period following his termination of employment for any reason other than
pursuant to Section 7(c) hereof, Employee will not engage in any business
otherwise competitive with that of Employer or any of its subsidiaries in the
States of New Jersey, New York, Pennsylvania, Maryland, Massachusetts and
Connecticut; and (b) upon termination of the Period of Employment for any reason
whatsoever, Employee will not for a period of two years thereafter, (i) solicit
or aid in soliciting any employees of Employer or its
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subsidiaries to leave their employment, or (ii) copy, remove from Employer or
its subsidiaries, disclose or make any use of, any client list, confidential
business information with respect to clients, material relating to the practices
or procedures of Employer or its subsidiaries, or any other proprietary
information. Employee acknowledges that the restrictions, prohibitions and other
provisions of this Section 8 are reasonable, fair and equitable in scope, terms
and duration, are necessary to protect the legitimate business interests of the
Employer and are a material inducement to the Employer to enter into this
Agreement. It is the intention of the parties hereto that the restrictions
contained in this paragraph be enforceable to the fullest extent permitted by
applicable law. Therefore, to the extent any court of competent jurisdiction
shall determine that any portion of the foregoing restrictions is excessive,
such provision shall not be entirely void, but rather shall be limited or
revised only to the extent necessary to make it enforceable. Should Employee
engage in or perform, directly or indirectly, any of the acts prohibited by
Section 8 hereof, it is agreed that the Employer shall be entitled to full
injunctive relief, to be issued by any competent court of equity, enjoining and
restraining Employee and each and every other person, firm, organization,
association, or corporation concerned therein, from the continuance of such
violative acts. The foregoing remedy available to Employer shall not be deemed
to limit or prevent the exercise by the Employer of any or all further rights
and remedies which may be available to the Employer hereunder or at law or in
equity.
9. Burden and Benefit.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, personal and legal
representatives, successors and assigns. In the event of the death of Employee
at or after his termination, any amounts due hereunder shall be paid to his
estate unless he has designated a beneficiary.
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10. Legal Fees and Expenses.
If any contest or dispute shall arise between Employer and Employee
regarding any provision of this Agreement or any equity grant or other agreement
or compensation arrangement specifically set forth or provided for herein,
Employer shall reimburse Employee for all legal fees and expenses reasonably
incurred by Employee in connection with such contest or dispute, but only if
Employee is successful in respect of substantially all of the Employee's claims
brought and pursued in connection with such contest or dispute. Such
reimbursement shall be made as soon as practicable following the resolution of
such contest or dispute (whether or not appealed) to the extent Employer
receives reasonable written evidence of such fees and expenses.
11. Governing Law.
This Agreement is governed by and is to be construed and enforced in
accordance with the laws of the State of New Jersey. If under such law any
portion of this Agreement is at any time deemed to be in conflict with any
applicable statute, rule, regulation or ordinance, such portion shall be deemed
to be modified or altered to conform thereto or, if that is not possible, to be
omitted from this Agreement; and the invalidity of any such portion shall not
affect the force, effect and validity of the remaining portion hereof.
12. Notices.
All notices under this Agreement shall be in writing and shall be
deemed effective when delivered in person (in the Employer's case to its
Secretary) or twenty-four (24) hours after deposit thereof in the U.S. mails,
postage prepaid, for delivery as registered or certified mail -- addressed, in
the case of Employee, to him at his residential address, and in the case of
Employer, to its corporate headquarters, attention of the Secretary, or to such
other address as
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Employee or Employer may designate in writing at any time or from time to time
to the other party. In lieu of notice by deposit in the U.S. mail, a party may
give notice by telegram or telex.
13. Amendment.
No provisions of this Agreement may be amended, modified, or waived
unless such amendment or modification is agreed to in writing signed by Employee
and by a duly authorized officer of the Employer, and such waiver is set forth
in writing and signed by the party to be charged. No waiver by either party
hereto at any time of any breach by the other party hereto of any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
14. Survival.
The respective obligations of, and benefits afforded to, Employee
and Employer as provided in Section 8 of this Agreement shall survive the
termination of this Agreement.
15. No Conflict of Interest.
During the Period of Employment, Employee shall not directly, or
indirectly render service, or undertake any employment or consulting agreement
with another entity without the express written consent of the Board of Trustees
of the Employer.
16. Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one of the same instrument.
17. Section Headings.
The section headings in this Agreement are for convenience of
reference only, and they form no part of this Agreement and shall not affect its
interpretation.
18. Miscellaneous.
This Agreement constitutes the entire understanding between
Employer and Employee relating to employment of Employee by Employer and
supersedes and cancels all prior written and oral agreements and understandings
with respect to the subject matter of this Agreement. Any prior agreement of
the parties hereto in respect of the subject matter contained herein is hereby
terminated and canceled.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the year and day first above written.
VORNADO REALTY TRUST and
VORNADO REALTY LP
By: /s/ Xxxxxx Xxxx
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Xxxxxx Xxxx
Title: Chairman of the Board of
Trustees
/s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
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