EXHIBIT 10.5
FORM OF EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement") made as of the ___ day of June,
1997 by and between ______________ residing at _______________, ______________,
_______ (hereinafter referred to as "Employee") and Boston Properties, Inc., a
Delaware corporation, with a principal place of business at 0 Xxxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000 (hereinafter referred to as the "Company").
1. TERM. The term of this Agreement shall commence on the closing of the
initial public offering (the "IPO") of the Company's common stock and shall
terminate on the third anniversary of the closing of the IPO (the "Term"). The
Term shall be extended automatically for additional one-year periods (each a
"Renewal Term"), unless notice that this Agreement will not be extended is given
by either party to the other not less than thirty (30) days prior to the
expiration of the Term (as extended by any Renewal Term). (The period of
Employee's employment hereunder within the Term (as extended by any Renewal
Term) is herein referred to as the "Employment Period").
2. EMPLOYMENT/DUTIES.
(a) During the Employment Period, Employee shall be employed in the
business of the Company and its affiliates. Employee shall serve as an officer
of the Company with the title _______________________ and, upon the reasonable
request of the Board of Directors of the Company, as director and/or officer of
any of its affiliates. Employee's duties and authority shall be commensurate
with his title and position with the Company.
(b) Employee agrees to his employment as described in this Paragraph
2 and agrees to devote substantially all of his working time and efforts to the
performance of his duties hereunder, except as otherwise approved by the Board
of Directors. Notwithstanding the foregoing, nothing herein shall be interpreted
to preclude Employee from (i) engaging in Minority Interest Passive Investments
(as defined below), including Minority Interest Passive Investments in, or
relating to the ownership, development, operation, management, or leasing of,
commercial real estate properties, or (ii) participating as an officer or
director of, or advisor to, any charitable or other tax exempt organization;
PROVIDED that such activities and related duties and pursuits do not restrict
Employee's ability to fulfill his obligations as an officer and employee of the
Company as set forth herein.
Engaging in a "MINORITY INTEREST PASSIVE INVESTMENT" means acquiring,
holding, and exercising the voting rights associated with an investment made
through (i) the purchase of securities (including partnership interests) that
represent a non-controlling,
minority interest in an entity or (ii) the lending of money, in either case with
the purpose or intent of obtaining a return on such investment but without
management by Employee of the property or business to which such investment
directly or indirectly relates and without any business or strategic
consultation by Employee with such entity.
3. COMPENSATION.
(a) BASE SALARY. The Company shall pay Employee an annual salary of
______________________________ during the Employment Period ("Base Salary").
Base Salary shall be payable in accordance with the Company's normal business
practices (including tax withholding), but in no event less frequently than
monthly. Employee's Base Salary shall be reviewed no less frequently than
annually by the Company and may be increased but not decreased during the
Employment Period.
(b) BONUSES. Commencing on the first annual compensation
determination date established by the Company during the Employment Period and
on each such date thereafter, the Company shall review the performance of the
Company and of Employee during the prior year, and the Company may provide
Employee with additional compensation as a bonus if the Board of Directors, or
any compensation committee thereof, in its discretion, determines that
Employee's contribution to the Company warrants such additional payment and the
Company's anticipated financial performance for the present period permits such
payment.
4. BENEFITS.
(a) MEDICAL/DENTAL INSURANCE. During the Employment Period, Employee
shall be entitled to participate in any and all medical and dental insurance
plans as in effect from time to time for senior executives of the Company and
based on Employee's Base Salary. Such participation shall be subject to (i) the
terms of the applicable plan documents, (ii) generally applicable policies of
the Company, and (iii) the discretion of the Board of Directors of the Company
or any administrative or other committee provided for in, or contemplated by,
such plan.
(b) LIFE INSURANCE/DISABILITY INSURANCE. During the Employment
Period, the Company shall provide Employee with such life and/or disability
insurance as the Company may from time to time make available to senior
executives of the Company.
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(c) EXPENSES. The Company shall promptly reimburse Employee for all
reasonable business expenses incurred by Employee during the Employment Period
in accordance with the practices of the Company for senior executives of the
Company, as in effect from time to time.
(d) VACATION. During the Employment Period, Employee shall receive
paid vacation annually in accordance with terms determined for such Employee by
the Company, but in no event shall Employee receive less than four weeks of paid
vacation per year.
(e) STOCK OPTIONS. During the Employment Period, Employee shall be
entitled to stock options in an amount to be determined by the Board of
Directors, or any compensation committee thereof, in its discretion under the
Boston Properties, Inc. 1997 Stock Option and Incentive Plan (the "Stock Option
Plan").
(f) AUTOMOBILE. During the Employment Period, the Company shall
provide Employee with a reasonable automobile allowance, such amount to be
determined in the Company's sole discretion and to be paid to Employee no less
frequently than monthly.
(g) OTHER BENEFITS. During the Employment Period, the Company shall
provide to Employee such other benefits, including the right to participate in
such retirement or pension plans, as are made generally available to employees
of the Company from time to time. Such participation shall be subject to (i) the
terms of the applicable plan documents, (ii) generally applicable policies of
the Company, and (iii) the discretion of the Board of Directors of the Company
or any administrative or other committee provided for in, or contemplated by,
such plan.
5. INDEMNIFICATION. To the full extent permitted by law and subject to
the Company's Certificate of Incorporation and Bylaws, the Company shall
indemnify Employee with respect to any actions commenced against Employee in his
capacity as a director or officer or former director or officer of the Company,
or any affiliate thereof for which he may serve in such capacity, and the
Company shall advance on a timely basis any expenses incurred in defending such
actions. The obligation to indemnify hereunder shall survive the termination of
this Agreement. The Company agrees to use its best efforts to secure and
maintain directors' and officers' liability insurance with respect to Employee.
6. COMPANY AUTHORITY/POLICIES. Employee agrees to observe and comply with
the rules and regulations of the Company as adopted by its Board of Directors
respecting the performance of his duties and to carry out and perform orders,
directions and policies communicated to him from time to time by the Board of
Directors.
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7. RECORDS/NONDISCLOSURE/COMPANY POLICIES.
(a) GENERAL. All records, financial statements and similar documents
obtained, reviewed or compiled by Employee in the course of the performance by
him of services for the Company, whether or not confidential information or
trade secrets, shall be the exclusive property of the Company. Employee shall
have no rights in such documents upon any termination of this Agreement.
(b) CONFIDENTIAL INFORMATION. Employee will not disclose to any
person or entity (except as required by applicable law, the rules of the New
York Stock Exchange, or otherwise in connection with the performance of his
duties and responsibilities hereunder), or use for his own benefit or gain, any
confidential information of the Company obtained by him incident to his
employment with the Company. Employee shall take all reasonable steps to
safeguard any confidential information and to protect such confidential
information against disclosure, misuse, loss, or theft. The term "CONFIDENTIAL
INFORMATION" includes, without limitation, financial information, business
plans, prospects, and opportunities which have been discussed or considered by
the management of the Company, but does not include any information which has
become part of the public domain by means other than Employee's non-observance
of his obligations hereunder.
This Paragraph 7 shall survive the termination of this Agreement.
8. TERMINATION/SEVERANCE.
(a) GENERAL.
(i) AT WILL EMPLOYMENT. Employee's employment hereunder is "at
will" and, therefore, may be terminated at any time, with or without cause, at
the option of the Company, subject only to the severance obligations under this
Paragraph 8.
(ii) NOTICE OF TERMINATION. Except for termination as specified
in Subparagraph 8(b), any termination of Employee's employment by the Company or
any such termination by Employee shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a "NOTICE
OF TERMINATION" shall mean a notice which shall indicate the specific
termination provision hereunder relied upon by the terminating party.
(iii) DATE OF TERMINATION. "DATE OF TERMINATION" shall mean: (A)
if Employee's employment is terminated by his death, the date of his death; (B)
if Employee's employment is terminated on account of disability under
Subparagraph 8(c), the date on which Notice of Termination is given; (C) if
Employee's employment is terminated by the Company under Subparagraph 8(d),
thirty (30) days after the date on which a Notice of Termination is given; (D)
if Employee's employment is terminated by the Company under
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Subparagraph 8(e)(i), ninety (90) days after the date on which a Notice of
Termination is given; and (E) if Employee's employment is terminated by Employee
under Subparagraph 8(e)(ii) or 8(f), thirty (30) days after the date on which a
Notice of Termination is given.
(b) DEATH. Employee's employment hereunder shall terminate upon his
death. If Employee's employment terminates by reason of his death, the Company
shall, within ninety (90) days of death, pay in a lump sum amount to such person
as Employee shall designate in a notice filed with the Company or, if no such
person is designated, to Employee's estate, Employee's accrued and unpaid Base
Salary to his date of death, plus his accrued and unpaid bonus under Paragraph
3. All unvested stock options and stock-based grants shall immediately vest in
Employee's estate or other legal representatives and become exercisable or
nonforfeitable, and Employee's estate or other legal representatives shall have
one (1) year from the Date of Termination, or remaining option term, if earlier,
to exercise the stock options. For a period of one (1) year following the Date
of Termination, the Company shall pay such health insurance premiums as may be
necessary to allow Employee's spouse and dependents to receive health insurance
coverage substantially similar to the coverage they received prior to the Date
of Termination. In addition to the foregoing, any payments to which Employee's
spouse, beneficiaries, or estate may be entitled under any employee benefit plan
shall also be paid in accordance with the terms of such plan or arrangement.
Such payments, in the aggregate, shall fully discharge the Company's obligations
hereunder.
(c) DISABILITY. If, as a result of Employee's incapacity due to
physical or mental illness, Employee shall have been absent from his duties
hereunder on a full-time basis for one hundred eighty (180) calendar days in the
aggregate in any twelve (12) month period, the Company may terminate Employee's
employment hereunder. During any period that Employee fails to perform his
duties hereunder as a result of incapacity due to physical or mental illness,
Employee shall continue to receive his accrued and unpaid Base Salary and
accrued and unpaid bonus under Paragraph 3, until Employee's employment is
terminated due to disability in accordance with this Subparagraph (c) or until
Employee terminates his employment in accordance with Subparagraph (e)(ii) or
(f), if earlier. All unvested stock options and stock-based grants shall
immediately vest and become exercisable or nonforfeitable, and Employee shall
have one (1) year from the Date of Termination, or remaining option term, if
earlier, to exercise the stock options. For a period of one (1) year following
the Date of Termination, the Company shall pay such health insurance premiums as
may be necessary to allow Employee, Employee's spouse and dependents to receive
health insurance coverage substantially similar to the coverage they received
prior to the Date of Termination. In addition to the foregoing, any payments to
which Employee may be entitled under any employee benefit plan shall also be
paid in accordance with the terms of such plan or arrangement. Such payments, in
the aggregate, shall fully discharge the Company's obligations hereunder.
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(d) TERMINATION BY THE COMPANY FOR CAUSE.
(i) At any time during the Employment Period, the Company may
terminate Employee's employment hereunder for Cause. "CAUSE" shall mean: (A)
gross negligence or willful misconduct by Employee in connection with the
performance of his material duties hereunder; (B) a breach by Employee of any of
his material duties hereunder (for reasons other than physical or mental
illness) and the failure of Employee to cure such breach within thirty (30) days
after written notice thereof by the Company; (C) conduct by Employee against the
material best interests of the Company or a material act of common law fraud
against the Company or its affiliates or employees; or (D) conviction of
Employee of a felony and such conviction has a material adverse affect on the
interests or reputation of the Company.
(ii) If Employee's employment is terminated by the Company for
Cause, then the Company shall, through the Date of Termination, pay Employee his
accrued and unpaid Base Salary. Thereafter, the Company shall have no further
obligations to Employee except as otherwise provided hereunder; PROVIDED that
any such termination shall not adversely affect or alter Employee's rights under
any employee benefit plan of the Company in which Employee, at the Date of
Termination, has a vested interest, unless otherwise provided in such employee
benefit plan or any agreement or other instrument attendant thereto.
Notwithstanding the foregoing and in addition to whatever other rights or
remedies the Company may have at law or in equity, all stock options and other
stock-based grants held by Employee, whether vested or unvested as of the Date
of Termination, shall immediately expire on the Date of Termination if
Employee's employment is terminated by the Company for Cause.
(e) TERMINATION BY THE COMPANY WITHOUT CAUSE OR BY EMPLOYEE FOR GOOD
REASON.
(i) At any time during the Employment Period, the Company may
terminate Employee's employment hereunder without Cause if such termination is
approved by the Board of Directors. Any termination by the Company of Employee's
employment hereunder which does not (A) constitute a termination for Cause under
Subparagraph (d)(i), (B) result from the death or disability of the Employee
under Subparagraph (b) or (c), or (C) result from the expiration of the Term (as
extended by any Renewal Term), shall be deemed a termination without Cause.
(ii) At any time during the Employment Period, Employee may
terminate his employment hereunder for Good Reason. "GOOD REASON" shall mean:
(A) a substantial adverse change, not consented to by Employee, in the nature or
scope of Employee's responsibilities, authorities, powers, functions, or duties
under this Agreement or (B) a breach by the Company of any of its material
obligations hereunder and the failure of the Company to cure such breach within
thirty (30) days after written notice thereof by Employee.
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(iii) If Employee's employment is terminated during the
Employment Period by the Company without Cause or if Employee terminates his
employment during the Employment Period for Good Reason, then the Company shall,
through the Date of Termination, pay Employee his accrued and unpaid Base Salary
and his accrued and unpaid bonus under Paragraph 3. In addition, subject to
signing by Employee of a general release of claims in a form and manner
satisfactory to the Company,
(A) the Company shall pay Employee an amount (the
"Severance Amount") equal to the sum of (x) his Base Salary under Subparagraph
3(a) payable for the period in which the noncompetition provision of Paragraph 9
is in effect or would have been in effect but for the last subparagraph of
Paragraph 9 (the "Noncompetition Period") and (y) the amount of his cash bonus,
if any, received in respect of the immediately preceding year under Subparagraph
3(b) multiplied by the number of full and fractional calendar years during the
Noncompetition Period. Notwithstanding the foregoing, in the event the Company,
in its sole discretion, elects to waive the noncompetition provision of
Paragraph 9, the Company shall not be obligated to pay or continue to pay a
Severance Amount in excess of the sum of (xx) Employee's annual Base Salary
under Subparagraph 3(a) and (yy) the amount of his cash bonus, if any, received
in respect of the immediately preceding year under Subparagraph 3(b). The
Severance Amount shall be paid in monthly installments over a 12-month period,
or if longer, the Noncompetition Period; and
(B) Employee shall receive all rights and benefits
granted or in effect with respect to Employee under the Stock Option Plan and
agreements with Employee pursuant thereto. The vesting and exercise of any stock
options and the forfeitability of any stock-based grants held by Employee shall
be governed by the terms of the Stock Option Plan and the related agreements
between Employee and the Company.
(f) VOLUNTARY TERMINATION BY EMPLOYEE. At any time during the
Employment Period, Employee may terminate his employment hereunder for any
reason, including, but not limited to, Good Reason in accordance with
Subparagraph (e)(ii). If Employee's employment is terminated by Employee other
than for Good Reason, then the Company shall, through the Date of Termination,
pay Employee his accrued and unpaid Base Salary. Thereafter, the Company shall
have no further obligations to Employee except as otherwise expressly provided
hereunder; PROVIDED any such termination shall not adversely affect or alter
Employee's rights under any employee benefit plan of the Company in which
Employee, at the Date of Termination, has a vested interest, unless otherwise
provided in such employee benefit plan or any agreement or other instrument
attendant thereto.
(g) NO MITIGATION. Without regard to the reason for the termination
of Employee's employment hereunder, Employee shall be under no obligation to
mitigate damages with respect to such termination under any circumstances and in
the event Employee
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is employed or receives income from any other source, there shall be no offset
against the amounts due from the Company hereunder.
9. NONCOMPETITION. Because Employee's services to the Company are special
and because Employee has access to the Company's confidential information,
Employee covenants and agrees that during the Employment Period and until the
later of (i) the end of the Term and (ii) the end of a one-year period following
the termination of Employee's employment with the Company for any reason,
Employee shall not, without the prior written consent of the Company (which
shall be authorized by approval of the Board of Directors of the Company,
including the approval of a majority of the independent Directors of the
Company), directly or indirectly:
(a) engage, participate or assist in, either individually or as an
owner, partner, employee, consultant, director, officer, trustee, or agent of
any business that engages or attempts to engage in, directly or indirectly, the
acquisition, development, construction, operation, management, or leasing of any
commercial real estate property in any of the Company's Markets (as hereinafter
defined) at the time of Employee's termination of employment;
(b) intentionally interfere with, disrupt or attempt to disrupt the
relationship, contractual or otherwise, between the Company or its affiliates
and any tenant, supplier, contractor, lender, employee, or governmental agency
or authority; or
(c) call upon, compete for, solicit, divert, or take away, or attempt
to divert or take away any of the tenants or employees of the Company or its
affiliates, either for himself or for any other business, operation,
corporation, partnership, association, agency, or other person or entity.
"Market" as used herein means an area covering a 25 mile radius around (x)
any property or land owned by the Company, under development by the Company or
with respect to which the Company has an agreement or option to acquire a
property, development or land or (y) any property or development for which the
Company provides third party development or management services; PROVIDED that
for any such property, development or land located in New York City, no such
radial area shall extend beyond New York City.
This Paragraph 9 shall not be interpreted to prevent Employee from engaging
in Minority Interest Passive Investments or any other activity permitted under
Subparagraph 2(b). This Paragraph 9 shall survive the termination of this
Agreement.
Notwithstanding anything to the contrary herein, the noncompetition
provision of this
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Paragraph 9 shall not apply if Employee's employment terminates after a Change
of Control. For this purpose a "Change of Control" shall be deemed to occur if
persons who, as of the effective date of the Company's IPO, constitute the
Company'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 Board,
provided that any person becoming a director of the Company subsequent to such
date whose election was approved by a vote of at least two-thirds of the
Incumbent Directors or whose nomination for election was approved by a
nominating committee comprised of Incumbent Directors shall, for purposes of
this Agreement, be considered an Incumbent Director.
10. CONFLICTING AGREEMENTS. Employee 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.
11. NOTICES. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee, on the date of such
receipt or (ii) if mailed by domestic certified or registered mail with postage
prepaid, on the third business day after the date postmarked. Addresses for
notice for the parties are as shown above, or as subsequently modified by
written notice.
12. MISCELLANEOUS. This Agreement (i) constitutes the entire agreement
between the parties concerning the subjects hereof and supersedes any and all
prior agreements or understandings, (ii) may not be assigned by Employee without
the prior written consent of the Company, and (iii) may be assigned by the
Company and shall be binding upon, and inure to the benefit of, the Company's
successors and assigns. Headings herein are for convenience of reference only
and shall not define, limit or interpret the contents hereof.
13. AMENDMENT. This Agreement may be amended, modified or supplemented by
the mutual consent of the parties in writing, but no oral amendment,
modification or supplement shall be effective.
14. ARBITRATION; OTHER DISPUTES. Any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively by arbitration
in Boston, Massachusetts, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered in any court
having jurisdiction. Notwithstanding the above, the Company shall be entitled to
seek a restraining order or injunction in any court of competent jurisdiction to
prevent any continuation of any violation of Paragraph 7 or 9 hereof.
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In the event that the Company terminates Employee's employment for Cause under
Subparagraph 8(d)(i) and Employee contends that Cause did not exist, then the
Company's only obligation shall be to submit such claim to arbitration and the
only issue before the arbitrator will be whether Employee was in fact terminated
for Cause. If the arbitrator determines that Employee was not terminated for
Cause by the Company, then the only remedies that the arbitrator may award are
(i) the Severance Amount specified in Subparagraph 8(e)(iii)(A), (ii) the costs
of arbitration, (iii) Employee's attorneys' fees, and (iv) the acceleration of
Employee's stock options in accordance with Subparagraph 8(e)(iii)(B). If the
arbitrator finds that Employee was terminated for Cause, the arbitrator will be
without authority to award Employee anything, and the parties will each be
responsible for their own attorneys' fees, and they will divide the costs of
arbitration equally. Furthermore, should a dispute occur concerning Employee's
mental or physical capacity as described in Subparagraph 8(c), a doctor selected
by Employee and a doctor selected by the Company shall be entitled to examine
Employee. If the opinion of the Company's doctor and Employee's doctor conflict,
the Company's doctor and Employee's doctor shall together agree upon a third
doctor, whose opinion shall be binding. This Paragraph 14 shall survive the
termination of this Agreement.
15. LITIGATION AND REGULATORY COOPERATION. During and after Employee's
employment, Employee shall reasonably cooperate with the Company in the defense
or prosecution of any claims or actions now in existence or which may be brought
in the future against or on behalf of the Company which relate to events or
occurrences that transpired while Employee was employed by the Company; PROVIDED
that such cooperation shall not materially and adversely affect Employee or
expose Employee to an increased probability of civil or criminal litigation.
Employee's cooperation in connection with such claims or actions shall include,
without limitation, being available to meet with counsel to prepare for
discovery or trial and to act as a witness on behalf of the Company at mutually
convenient times. During and after Employee's employment, Employee also shall
cooperate fully with the Company in connection with any investigation or review
of any federal, state or local regulatory authority as any such investigation or
review relates to events or occurrences that transpired while Employee was
employed by the Company. The Company shall also provide Employee with
compensation on an hourly basis calculated at his final base compensation rate
for requested litigation and regulatory cooperation that occurs after his
termination of employment, and reimburse Employee for all costs and expenses
incurred in connection with his performance under this Paragraph 15, including,
without limitation, reasonable attorneys' fees and costs.
16. EFFECTIVENESS. This Agreement is conditioned and shall become
effective only upon the completion of the IPO.
17. SEVERABILITY. If any provision of this Agreement shall to any extent
be held void or unenforceable (as to duration, scope, activity, subject or
otherwise) by a court of competent jurisdiction, such provision shall be deemed
to be modified so as to constitute a
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provision conforming as nearly as possible to the original provision while still
remaining valid and enforceable. In such event, the remainder of this Agreement
(or the application of such provision to persons or circumstances other than
those in respect of which it is deemed to be void or unenforceable) shall not be
affected thereby. Each other provision of this Agreement, unless specifically
conditioned on the voided aspect of such provision, shall remain valid and
enforceable to the fullest extent permitted by law; any other provisions of this
Agreement that are specifically conditioned on the voided aspect of such invalid
provision shall also be deemed to be modified so as to constitute a provision
conforming as nearly as possible to the original provision while still remaining
valid and enforceable to the fullest extent permitted by law.
18. GOVERNING LAW. This Agreement shall be construed and regulated in all
respects under the laws of the State of Delaware.
IN WITNESS WHEREOF, this Agreement is entered into as of the date and year
first above written.
BOSTON PROPERTIES, INC.
By:
Name: Xxxxx X. Xxx
Title: Chief Financial Officer
_________________________________
May 23, 1997
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