Exhibit 10.10
REIMBURSEMENT AGREEMENT
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THIS REIMBURSEMENT AGREEMENT (the "AGREEMENT"), dated as of March 24, 2004,
is between Atlantic Realty Trust, a Maryland real estate investment trust (the
"TRUST"), and Xxxx X. Xxxxxxx, a trustee and officer of the Trust, (the
"MEMBER").
WHEREAS, the United States Internal Revenue Service (the "IRS") is in
the process of auditing certain of the income tax returns of the Trust (the
"TRUST AUDIT"); and
WHEREAS, the Member, a trustee and officer of the Trust, was
previously a trustee and officer of RPS Realty Trust ("RPS"), a
predecessor-in-interest to the Trust; and
WHEREAS, RPS was previously audited by the IRS (the "RPS AUDIT") in
proceedings that ultimately resulted in a very favorable settlement for RPS and
the Trust; and
WHEREAS, several allegations have been made in the Trust Audit
proceedings that were previously asserted in the RPS Audit proceedings and
ultimately proved unfounded; and
WHEREAS, in the event the Trust Audit does not produce the desired
results the IRS examining agent is attempting to achieve or ultimately results
in a favorable outcome for the Trust as was achieved in the RPS Audit, such
examining agent may proceed to conduct or cause to be conducted audits of the
personal taxes of each of the joint trustees and officers of RPS and the Trust,
including the Member (each such audit, a "MEMBER AUDIT"); and
WHEREAS, while the Member may be entitled to indemnification relating
to claims, actions or proceedings against the Member solely for his actions as a
trustee or officer of the Trust pursuant to the Trust's Declaration of Trust,
Bylaws and/or Maryland law and is covered by director and officer insurance, he
believes that this Agreement is desirable to augment such protection in light of
the fact that it may be difficult or impossible to prove that the initiation of
an audit of his personal taxes is directly connected to (i) his position as a
trustee and officer of the Trust, (ii) the RPS Audit or (iii) the Trust Audit;
and
WHEREAS, the Board of Trustees of the Trust believes that the Member
should be indemnified for certain expenses incurred by him in connection with
any Member Audit and that in the event the Member is unable to link such audit
to (i) his position as an officer and trustee of the Trust, (ii) the RPS Audit
or (iii) the Trust Audit, he should still, in good faith, be entitled to
compensation for his incurrence of such expenses pursuant a contractual
obligation of the Trust;
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. REIMBURSEMENT; PROCEDURE FOR REIMBURSEMENT. (a) The Trust shall
reimburse the Member for all reasonable fees
and expenses, including, without limitation, the reasonable fees and expenses of
accountants and legal counsel (collectively, "EXPENSES"), incurred in connection
with any Member Audit in an amount not to exceed $50,000.00 (the "FISCAL YEAR
MAXIMUM AMOUNT") for each fiscal year during the term of this Agreement.
Notwithstanding anything to the contrary herein, in the event a Member Audit is
conducted and it shall be proven that the Member failed to properly file such
Member's taxes, the Trust shall not be required to reimburse the Member for any
(i) amounts of federal, New York State or New York City income taxes found by
the auditors to be delinquent, due or owing, (ii) interest associated with the
failure of the Member to make the payments set forth in subsection (i) of this
section on or prior to the date on which such payment was due or (iii) penalties
associated with (x) the Member's failure to properly file the Member's taxes,
(y) the Member's failure to make any tax payment on time or (z) otherwise
incurred in connection with the foregoing subsections (i) and (ii).
Notwithstanding anything to the contrary herein, Member Audits shall only
include audits of any Member with respect to tax years commencing on or after
January 1, 2000 and ending no later than one year following the final
settlement, termination, dismissal or other conclusion of the Trust Audit (each
a "TAX YEAR").
(b) The Member shall provide to the Trust a written request for
reimbursement (the "REIMBURSEMENT REQUEST") and a statement setting forth the
derivation of the Expenses for which the Member is requesting reimbursement (the
"REIMBURSEMENT INVOICE"). Upon receipt by the Trust of the Reimbursement Request
and the Reimbursement Invoice, the Trust shall reimburse the Member for all
Expenses set forth in the Reimbursement Request up to the Maximum Amount, within
thirty (30) days of receipt thereof; PROVIDED, HOWEVER, such Expense amounts
shall not be paid to the extent such amounts are contested in good faith by the
Trust ("CONTESTED AMOUNTS"). Any Contested Amounts shall be settled promptly by
the Member and the Trust. For purposes of this Agreement, the "MAXIMUM AMOUNT"
shall be the lesser of (i) the amount of the Reimbursement Request and (ii) an
amount equal to (a) the number of years this Agreement has been in effect
multiplied by (b) the Fiscal Year Maximum Amount minus (c) any amount previously
paid to the Member under any previous Reimbursement Request.
2. TERM. This Agreement shall be effective as of the date first above
written and shall continue in existence until the earlier of (i) three years
following the filing of any tax return relating to the final Tax Year to which
the Agreement is applicable, unless a Member Audit has been initiated in which
case, until the final settlement, termination, dismissal or other conclusion of
all Member Audits for each of the Tax Years and (ii) termination by mutual
agreement of the parties hereto set forth in writing and signed by the parties
hereto or their successors and assigns.
3. MODIFICATION. This Agreement may not be amended or modified except by a
written instrument duly executed by the Trust and the Member.
4. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding
of the parties with respect to the subject matter hereof and supersedes any
prior or contemporaneous understandings, agreements or representations by or
between the parties.
5. BINDING EFFECT. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and the respective successors and assigns,
PROVIDED HOWEVER that neither party shall be entitled to assign or delegate any
of its rights or duties hereunder without first obtaining the express prior
written consent of other party.
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6. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which, taken together,
shall constitute one and the same document.
7. HEADINGS. The headings in this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
8. GOVERNING LAW. This Agreement shall be governed by and construed under
the laws of the state of New York, without regard to conflict of laws
principles.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
ATLANTIC REALTY TRUST
By: /S/ XXXXX X. XXXXXXX
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Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President
Chief Financial Officer
XXXX X. XXXXXXX
/S/ XXXX X. XXXXXXX
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